CBRE Facilitates $14.4 Million Sale of Flex Industrial Property

CBRE arranged the $14.4 million sale of 8312 South Hardy Drive, in Tempe, Ariz., a 75,340 -sq.-ft.-building, to SIN 360 Dental. A 40,916 sq. ft. back office space within the building has been converted to 20,000 sq. ft. of office space and 20,916 sq. ft. of air-conditioned warehouse space for the buyer’s business. CBRE's Charles Miscio, Jamie Swirtz and Mike Parker represented the seller, Tempus Realty, based in Little Rock, Ark., in the transaction.

"Our collaboration using both office & industrial sales and leasing brokers to cast the widest net in marketing this hybrid property underscores the effectiveness of our conversion strategy. Turns out the prospective tenant was the first user to tour the space following construction completion which occurred 10 days earlier, and they immediately engaged us with an offer," said Miscio, senior vice president at CBRE. "While not every suburban back-office building is suitable for conversion, there is significant market demand for this type of product, provided the building possesses certain inherent characteristics that allow it to transition from office to a flex industrial use."

Strategically situated on 7.54 acres near the full diamond interchange at Interstate 10 (I-10) and Warner Road in south Tempe, the property already featured an 18-foot clear height. It was zoned for heavy industrial use, making the office-warehouse conversation feasible. The 21,000 sq.ft. The rear office area of the building was demolished to create a high-ceiling, air-conditioned warehouse space. The conversion also included the addition of two grade-level loading doors. The building boasts an additional 1.4 acres of parking, which could be converted to a storage yard or a 20,000 – 25,000 sq. ft. warehouse building.

“The typical new industrial building development has less than 25% office finish. Most new industrial developers in the market cannot provide an office finish ratio greater than 25% due to the capital expense required given current construction costs or without significant out-of-pocket expenses from the tenant. There is an underserved niche in the industrial market for flex industrial properties with an office finish exceeding 25%,” said Parker, executive vice president at CBRE. “The ability to convert an existing back-office space to have a warehouse component fills a void in the marketplace for certain types of high-tech or office-intensive businesses that still require a warehouse component for their business operation.”

Greg Hopley and Dillon Hopley of Colliers represented SIN 360 Dental in the transaction.