A 1928 Phoenix office tower becomes a $135 million hotel

The Security Building, a Phoenix midrise that has stood as an office tower since 1928, is slated for a $135 million redevelopment by CivicGroup and Sunflower Development into a 255-room hotel, Connect CRE reports, with 15,000 square feet of meeting space that includes the original 5,500-square-foot 1928 ballroom.

The conversion will add five food-and-beverage outlets — several bars, a three-meal restaurant, and an upscale eatery — while crews strip out drywall, carpet, non-historic walls, and cubicles to expose the historic structure, a process that must finish before the hotel build-out begins; construction is targeted for the first quarter of 2027 and opening in the fourth quarter of 2028.

The conversion works because Maricopa County owns the Security Building and will continue to lease it to the development team as a hotel for at least 20 years, a tenure that gives CivicGroup and Sunflower something a standard office acquisition would not: two decades under a government owner unlikely to flip the asset mid-cycle.

The county is effectively the long-dated partner in the conversion, likely banking on appreciation and civic reuse rather than on squeezing current office rent out of a 1920s floor plate.

The office-clearing trade this publication has argued the market is moving toward runs through this deal: the tower's value no longer rests on what an office tenant would pay per square foot but on what 255 hotel rooms, meeting space, and a 1928 ballroom sold as event venues can produce.

The developers are underwriting the hotel operation itself, and the county's two-decade hold answers the financing question most conversion deals never get past; Phoenix will now test whether the next use can clear the old office price.