PHOENIX BUSINESS JOURNAL
By: Kristena Hansen
August 30, 2012
Holualoa Companies, a Tucson-based investment firm that specializes in reviving underperforming real estate properties, handed over $20.55 million this month to take over a nearly 162,000-square-foot shopping center at a prominent Scottsdale intersection.
East Thunderbird Square South, which is anchored by a Smart & Final grocery store on the northwest corner of Thunderbird and Scottsdale roads, has struggled with high vacancy and a foreclosure in the wake of the recession.
The project was sold by Gregg Williams of Trident Pacific Real Estate Group, also in Scottsdale, who had been the asset’s court-appointed receiver since it went into foreclosure last year, according to CBRE Inc. in Phoenix, which represented the seller. Public records in the Maricopa County Recorder’s Office show the previous owner, East Thunderbird 05 A LLC, had defaulted on its $33.4 million-loan for the property.
East Thunderbird, which was built in phases during the late 1980s, has also had issues retaining a strong tenant base in recent years, posting a 36-percent vacancy rate when Holualoa Companies, which is headed by President Michael Kasser, closed the deal. Three outparcels where a Burger King, M&I Bank and Taco Bell are located were not part of the sale.
By comparison, retail space in north Scottsdale — the submarket in which East Thunderbird is located — boasted a 10-percent vacancy rate in the second quarter, faring better than the Valley-wide average of 11.3 percent for the period, according to second-quarter retail data by CBRE.
East Thunderbird, however, is well positioned for a vibrant future as the economy rebounds, said Glenn Smigiel, principal at CBRE who helped broker the deal. The project is located in a dense residential area with higher-income residents and the surrounding area’s scarce developable land is sure to drive up rental rates, he said.
“East Thunderbird Square is located in one of the Valley’s strongest submarkets, which is likely to be one of the first areas to emerge from the current economic recession,” Smigiel said in a statement. “In addition, the property has 57,776 square feet of vacant space offering significant upside potential through lease up.”