Phoenix's Arizona Center sells for $126 million; new owner plans $25 million in renovations

Catherine Reagor | The Republic | azcentral.com

Downtown Phoenix’s Arizona Center has sold for $126 million. Its new owners plan to pump another $25 million into renovating the office and retail development.

San Diego-based Parallel Capital Partners teamed with New York-based Angelo, Gordon and Co. to buy the 16-acre development, which was built in 1989.

The Arizona Center is located on the southeast corner of Third and Van Buren streets. It has two 20-story office towers, open-air retail space, a 3.5-acre urban garden, a 24-screen AMC movie theater and more than three acres of vacant land.

The development opened to much fanfare because it was the first major retail project built in downtown Phoenix for decades. But several major retailers including the Gap closed stores in the Arizona Center after a few years because there weren’t enough shoppers.

Now Arizona State University’s downtown campus and a growing number of restaurants, entertainment venues and housing developments are bringing more people to central Phoenix.

A few weeks ago, the Christown Spectrum shopping center in midtown Phoenix sold for $115 million.

Matt Root, CEO of Parallel Capital Partners, said his group will invest more than $25 million to “reinvent and upgrade the landmark” property.

“The transaction allows for the development of an additional 3.9 million square feet of improvements and upgrades,” he said in a statement about the deal.

Parallel’s renovation plans for Arizona Center include expanding its retail space, adding parking and upgrading landscaping.

Chicago-based Equity Commonwealth sold the downtown development. It paid $136 million for the complex in 2011.

About 89 percent of the space at Arizona Center is leased, according to Parallel. The property's big tenants include Arizona Public Service Co., Snell & Wilmer, Fox Sports Arizona, ASU and SmithGroup architects.

“Phoenix is in recovery mode, and we believe downtown will capture the economic benefits of the new cycle’s first revolutions,” Root said. “Arizona Center is the quintessential trophy property, and we are thrilled to add it to our portfolio.