Southwest Value Partners pays $86M and sets a Phoenix office record

Southwest Value Partners paid $86 million in cash for Esplanade III, a 223,000-square-foot high-rise at 2415 East Camelback Road in Phoenix's Camelback Corridor, setting the year's price record for metro Phoenix office purchases. The Nashville- and San Diego-based firm closed the purchase of the 10-story building from an LLC tied to Transwestern and C-III Capital Partners on August 26, according to PRED's records; The Real Deal first reported the sale.

The seller bought the property in 2019 for $60.2 million, or $270 a square foot; at $86 million, the basis works out to roughly $386 a foot, a basis up 43 percent from that entry. That markup prices the building's 83.4 percent occupancy and the corridor's leasing momentum, not any broad recovery in office, and it makes the buyer's move a corridor call—one the corridor has been delivering on.

Esplanade III sits in the 1.3 million-square-foot Esplanade campus, which includes other Class A buildings, dining, and a direct connection to Biltmore Fashion Park, and Monarch Alternative Capital and Tourmaline have poured more than $60 million into renovations at Esplanade I, II, IV and V—a sign the campus is being run as a competitive asset rather than a legacy holding. Tenants in the building include Vestar, Vanguard Realty Advisors, Barclay Group, Velocity Retail Group, Husch Blackwell and Pederson Group; JLL's Will Mast, Ben Geelan and Charlie von Arentschildt represented the seller.

The renovations matter for the new buyer because Esplanade III's rent roll is only part of the story: Cushman & Wakefield data cited by the Phoenix Business Journal put Camelback asking rents at $43 a square foot against $30 across the metro, and Phoenix-area leasing activity rose 12.9 percent in the second quarter from the prior quarter, with Class A properties driving the increase. A 43 percent rent premium over the metro figure, concentrated in buildings like this one, supports a basis that would look aggressive in most other office markets.

Southwest Value Partners has been accumulating Phoenix office assets at scale, which makes the trade read as a portfolio move rather than a trophy hunt: last year it bought seven office buildings across the metro, more than 1.5 million square feet, from City Office REIT for $296 million, and it owns the four-building Arroyo campus in Tempe. Add Esplanade III's 223,000 square feet and the firm's known Phoenix holdings exceed 1.7 million square feet before counting the Tempe campus, which gives it reason to underwrite Camelback rents from its own leasing experience rather than a broker's forecast. It can hold the building through a lease roll that a one-off buyer would have priced more harshly.

Earlier coverage of this deal flagged the roll: a 4.4-year weighted average lease term, by this publication's accounting, was the main risk embedded in the basis. The closing price confirms the buyer accepted that risk in exchange for the corridor's rent growth.

This year's record still sits below the metro's peak prices: in 2024, Hines sold the 24th at Camelback II building to Solar Farms LLC for $97.8 million, and Columbus Properties paid New York Life $86.1 million for 24th at Camelback I earlier that year. The Esplanade III price lands within $100,000 of that second comp, so a price that looked aggressive in 2024 now reads as a floor for a well-leased Class A building in Camelback.

None of this says Phoenix office has cleared its distress; overall vacancy in the metro remains elevated. But the clearing price being discovered here is a private investment firm, all cash, paying a 43 percent premium to the seller's 2019 basis on a building that was 16.6 percent vacant. The deal is a clean example of the trade-to-trade pricing that will define the office recovery: owners stop waiting for a sector-wide turn and let individual buildings find their number. The next Camelback comp will tell whether this is a floor or a one-off.