A Seattle-based company owned by the co-founder of Microsoft purchased Tempe Gateway in June, an eight-story building with commercial and retail space on Mill Avenue. According to one official, the purchase is a sign of an economic turnaround in Tempe.
Vulcan Real Estate, a division of billionaire businessman Paul Allen’s investment company, paid about $35 million for the property, located on a corner of West Third Street and South Mill Avenue, and is now ready to lease.
Lori Mason Curran, Vulcan Real Estate's director of investment strategy, said company officials think the Greater Phoenix area is poised for growth in the future and a prime location for the company’s first venture outside of the Seattle area.
"We wanted to find a market ... where we saw some good growth prospects," Curran said. "We thought it was a good time to get into the market and to take advantage of what we see as being a positive economic picture in the next few years."
Construction of the building finished last year by Opus West Corp., the original backers for the project. The building was later foreclosed after Opus West filed for Chapter 11 bankruptcy last July.
Curran said the building is ready to be leased and hopes to sign the first tenant as soon as next week. Due to company policy, Curran refused to comment on the identities of prospective tenants, but mentioned that they’d be leasing about a quarter of the building’s 260,000 square feet.
Casaundra Brown, director of marketing and public relations for Downtown Tempe Community, said she believes the new owners will contribute to Mill Avenue’s unique qualities.
“They’re not going to take just any lease that comes into them,” Brown said. “They want to be very strategic about who they put in there and make sure it’s beneficial to not only them but to the people who visit downtown Tempe.”
Brown said Vulcan’s purchase of the Gateway building is one sign of the economic turnaround the community is seeing.
“It’s an incredible thing for downtown Tempe, because it definitely proves that we are a valuable area,” she said. “We’ve had 21 openings in the past year, and we’ve had a couple closings since then … but we have a lot of openings coming in the fall.”
Jay Butler, associate professor of real estate for the W. P. Carey School of Business, said those involved with the project may be optimistic, but filling the property might be an issue.
“It’s not like they haven’t been trying to rent space in this building, but office market throughout the Valley is not in real good shape,” Butler said. “If you look at retail on downtown Mill [Avenue], there’s ups and downs. You’ve got a lot of empty space [and] turnover.”
Curran said that filling the building with tenants will encourage other retailers to fill up vacant spaces on Mill Avenue.
“ASU should look forward to having that Mill Avenue become more and more vibrant over time.”
Reach the reporter at joseph.schmidt@asu.edu
