Looming vacancies will leave downtown Phoenix high-rise half-empty
[Source: Jan Buchholz, Phoenix Business Journal] — Freeport-McMoRan Copper & Gold Inc.’s decision to vacate one of downtown Phoenix’s high-rises in the middle of an economic recession will leave a prominent building with a significant hole to fill. As city and downtown officials herald the deal to combine the mining giant’s corporate headquarters with a Westin hotel in the new One Central Park East building, the potential loser is Mitsubishi Estate New York Inc., which purchased One North Central in March 2008 for $127 million.
With Freeport-McMoRan vacating 185,000 square feet and another major tenant, Ryan Cos., vacating about 20,000 square feet, Mitsubishi will be faced with 50 percent vacancy — and the challenge of filling the space in a very difficult real estate market. Ryan, which developed One North Central in part as a build-to-suit for Phelps Dodge Corp. in 2000, is moving into a new building it will finish soon at 3900 E. Camelback Road. Phelps Dodge merged with Freeport in 2007, creating a much larger mining company.
Colliers International in Phoenix is the leasing agent and representative for the 410,000-square-foot One North Central, but could not get permission from Mitsubishi to discuss that company’s plans to fill the space. According to research firm CoStar, the building currently is 97 percent leased — but that will drop to 50 percent within six to seven months, when Freeport and Ryan vacate. “I don’t think the folks who bought One North Central knew what they were getting into. No question, One North Central will face difficulties,” said Tyler Wilson, senior associate with Grubb & Ellis/BRE Commercial LLC in Phoenix.
Andrew Cheney, a Phoenix broker with Lee & Associates, is more optimistic. “Mitsubishi will feel pain in the short term, but has the staying power to re-lease it at recessionary lease rates,” he said. [Note: To read the full article, visit Looming vacancies will leave downtown Phoenix high-rise half-empty.]
Posted on December 18, 2009, in Downtown Vitality, Office Space and tagged Andrew Cheney, Colliers International, Freeport-McMoRan, Grubb & Ellis, Lee & Associates, Mitsubishi, One Central Park East, One North Central, Ryan Cos., Tyler Wilson, Westin. Bookmark the permalink. Leave a comment.