Construction is completed at 999 Playa del Norte, a 94,000-square-foot speculative office building that the broker said is the only single-tenant opportunity along Tempe Town Lake.
The $45 million building was developed by Irgens, and totals six stories, including three levels of parking and three levels of Class A space with 360-degree views of Tempe Town Lake and Arizona State University campus.
Located on the north side of Tempe Town Lake, the building offers high visibility from the freeway and will allow tenants to access the building without navigating the traffic that builds up when crossing the lake, according to Andrew Cheney, principal with Lee & Associates and leasing broker for the building.
Despite the pandemic, Derek Flottum, vice president of development for Irgens, said Tempe will remain a strong office submarket once Covid-19 subsides.
“Tempe is the location that will always be the leader for the market office rents,” he said. “You can’t recreate this anywhere else in the city. It’s an irreplaceable location, and it will continue to be the best office market on the other side (of the pandemic).”
Cheney said that there have been notable new leases in Tempe even during the pandemic. The Watermark, the other office building on the north side of the lake, reached 95% occupancy and signed some key tenants during the pandemic.
“With office becoming more experiential, the experience on Tempe Town Lake is tough to duplicate,” Cheney said.
The entirety of the building is available for lease. Irgens has plans to move its Phoenix office into the building, but Flottum said the company wants to give tenants the option of taking the entire space.
Cheney said there has been some interest from potential tenants in occupying the full building, as well as some who are interested in only leasing a portion.
The Covid-19 pandemic has taken a toll on the Phoenix office market. According to Lee & Associates research, the market saw negative net absorption of -550,501 square feet in the first quarter, meaning more companies are moving out or reducing their footprint than new tenants are signing leases or expanding. The market vacancy rate also increased to 17.7%.