Sumitomo Corporation of Americas plans to submit the former Collier Center, an office high-rise in downtown Phoenix, to a sweeping renovation, after which the company will reintroduce the approximately 600,000-square-foot building as 201 E. Washington.
Sumitomo will invest $10 million in the capital improvement program, and is working alongside Transwestern Real Estate Services, which spearheads leasing and management at the property, to facilitate the endeavor.
SCOA has owned the 23-story building at 201 E. Washington, originally developed in 2001 by The Barron Collier Co. and Opus West, since December 2019, when it acquired the property from GE Asset Management for $190 million. Now, however, the company believes is the right time to rebrand the asset and present it to the market anew.
“Phoenix is the beneficiary of some of the strongest in-migration in the country for both individuals and corporations, and we see this trend only accelerating. 201 Washington is located at the absolute center of this activity, and the iconic renovations underway will position the project as the premier destination in a premier growth market,” Jim Achen Jr., senior vice president Transwestern, told Commercial Property Executive.
SCOA, the New York-based investment arm of Japan’s Sumitomo Corp., left the announcement of the repositioning plan to Transwestern, which describes the project as an undertaking that will transform the property beyond recognition.
The top-of-the-line renovations will include such additions as a new tenant amenity lounge, a conference center, a library, event space and bike storage room. A resort-style fitness center and a group fitness studio are also on the list of new offerings. Additionally, upgrades will include advanced touchless technology and safe space planning strategies to accommodate the pandemic-era environment.
Phoenix rising from the ashes
The Greater Phoenix area, like most other metropolises across the U.S., continues to grapple with COVID-19’s negative impact on the office market. The lackluster statistics carried over into the first quarter of 2021, with negative absorption and a vacancy rate in the high teens; although, the Downtown Phoenix submarket fared slightly better, with a vacancy rate of 12.7 percent, according to a report by Avison Young.
Downtown Phoenix has an edge of sorts, according to Achen. “Downtown Phoenix has undergone a transformation and is now a hub for job growth, innovation and research,” he said, attributing the change to the substantial increase in size and scope of private sector employers in the area and the growing presence of Arizona State University, The University of Arizona and Thunderbird School of International management.
“Given these drivers, the demand for housing has grown at exponential rates and, at last count, there were approximately 18 cranes in the skyline, most of which were delivering hundreds of multifamily units each. The Phoenix Suns basketball arena has completed a massive renovation and the Arizona Diamondbacks Stadium is next. The renaissance of these venues, plus the unprecedented demand for, and delivery of, housing has created a vibrant 24/7 walkable community that employers will find highly desirable,” Achen added.
Phoenix has something else going for it: California. As noted in the Avison Young report, recent large deals for corporate occupiers and relocating start-ups from The Golden State are helping assure a positive outlook for the Phoenix office market. Meanwhile, SCOA and Transwestern have already commenced 201 E. Washington’s renovation program, which will be executed in three phases. The work is on schedule to reach completion in the fourth quarter of 2021.