Acquisition and Investment
Spokane company gobbles up properties in Phoenix, plans new buildings here
By Linn Parish
Spokane Journal of Business
Crown West Realty LLC, the Spokane-based owner of the big Spokane Business & Industrial Park, is on an aggressive building-acquisition spree in Phoenix, having been involved with two recent purchases there worth more than $80 million, including one earlier this month.
Those acquisitions, made through a joint venture, bring to six the number of Phoenix-area properties—together worth more than $160 million—that Crown West has acquired in less than three years. And more activity in Phoenix likely is on the horizon, says Crown West President Richard Rollnick.
Meanwhile, Rollnick says, the company plans next year to build four new buildings, with a combined more than 90,000 square feet of floor space, in its sprawling business and industrial park at 3808 N. Sullivan here.
“We will continue to bring properties on line there,” Rollnick says. “We think the Spokane economic environment has improved markedly.”
Dean Stuart, Crown West’s director of marketing, says design work on the new structures will be completed yet this year. Weather permitting, Crown West will start construction in March and will complete them next July. He says cost estimates aren’t available yet.
In late 2001, when Crown West disclosed plans to build its newest structure, the company said it would cost $3.6 million, or $45 a square foot, to develop that 80,000-square-foot structure. At that rate, the company would spend more than $4 million to develop the four new structures.
Crown West currently is demolishing two older office buildings at the northern end of the park, two blocks east of the complex’s main northern entrance, to make way for construction of three of the planned new structures, each with 20,000 square feet of office and warehouse space.
Many of the buildings that comprise the 67-building, 545-acre industrial park were constructed as part of a U.S. Naval supply depot several decades ago.
The fourth planned new structure will be built along Euclid Avenue, at the south end of the park, Stuart says. That structure will include 33,000 square feet of office and warehouse space and will be located just west of the last structure Crown West built, an 80,000-square-foot building that outdoor electronics-cabinet maker Purcell Systems Inc. plans to move into next February. The new building will be similar in design to the building that Purcell has leased.
In Phoenix, joint ventures that Crown West manages have bought two properties in the last four months.
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Earlier this month, a joint venture between Crown West and St. Paul Properties, of St. Paul, acquired for about $32.5 million the nine-story, 235,000-square-foot Camelback Center, in a Phoenix financial district.
The property currently is only 40 percent occupied, and Crown West plans to make $8 million in upgrades to boost the office building’s appeal and attract more tenants, Rollnick says.
“Camelback Center has underperformed over the last three years due primarily to unfavorable market dynamics and poorly defined leasing strategies by previous ownership,” he says.
Crown West plans to market part of the building as smaller office suites of between 1,500 square feet and 5,000 square feet of office space each on lower floors, and large chunks of space on upper floors.
Current tenants in that building include offices of Principal Financial Group and CNA Insurance, among others.
That transaction follows one that another joint venture between Crown West and St. Paul Properties reported in August. That month, the company bought the Arizona Business Park, in northern Phoenix, for about $52 million. That property includes 10 buildings with a total of 440,000 square feet of floor space, and currently is fully occupied.
The headquarters for Bank One Corp. currently is located there, as are operations for Wells Fargo Bank, the Arizona Conservatory for the Arts and Academics, and a number of other tenants.
Rollnick says Crown West plans to continue buying properties in the Phoenix area as a key part of its growth strategy.
“This is a very dynamic market,” he says. “It has growth in just about every direction. You’ve got a huge labor pool, great infrastructure, and a lot of companies locating (in the Phoenix area).”
Formed in 1996, Crown West has offices in Phoenix and New York City in addition to its headquarters here. The company currently owns and manages about 7.2 million square feet of industrial and business properties along with 600 acres of land.
Of that, about 4.2 million square feet of floor space is in the Spokane Business & Industrial Park.