The 501 Gateway Office Building Sale: What It Means for Phoenix Real Estate Investors
The Phoenix real estate market has made headlines again with the sale of the 501 Gateway office building for $18 million. Located at 501 N. 44th St., this prime property sits strategically near Phoenix Sky Harbor International Airport and downtown Tempe. Let’s dive into what makes this transaction significant and what it signals for investors eyeing the Phoenix market.
A Prime Location with Unique Features
The 501 Gateway building boasts 102,305 square feet across four stories, offering flexible floor plans, an on-site café, structured parking, and easy access to major transportation hubs like freeways and light rail. Built in 1997, the building has aged gracefully thanks to renovations by its previous owner, Milwaukee-based Irgens. These updates not only modernized the space but also attracted significant tenants, boosting its value in a competitive market.
For investors, these features underscore the importance of positioning properties near high-demand areas like airports, business hubs, and public transit. Proximity to such amenities makes a building more attractive to tenants and, ultimately, buyers.
A Lucrative Investment for the Seller
Irgens purchased the property in 2016 for $17 million and invested in renovations to enhance its appeal. The sale for $18 million represents not only a monetary gain but also a testament to strategic property management and value-adding improvements. It’s a textbook example of how thoughtful upgrades can elevate a building’s market position, even in a competitive real estate landscape.
Why the Gateway Submarket is Heating Up
The Gateway submarket, where 501 Gateway is located, has emerged as a rising star in Phoenix’s commercial real estate scene. Office spaces in this area are competitively priced, averaging $30 per square foot—much lower than the $46 in the Camelback Corridor or $42 in Tempe. For businesses, this translates to significant cost savings while still benefiting from a central location.
Eric Wichterman, Chris Toci, and Mike Coover of Cushman & Wakefield, who facilitated this sale, have noted a growing trend in Gateway submarket transactions. This is the third building they’ve sold in the area this year, highlighting its attractiveness to investors seeking high returns without the hefty price tags of neighboring submarkets.
What This Means for Phoenix Real Estate Investors
The 501 Gateway sale is a compelling case study for investors. It highlights the value of targeting submarkets with untapped potential, where properties are priced competitively yet offer excellent amenities. Whether you’re considering office spaces or looking to expand your portfolio with single-family homes in nearby areas, Gateway exemplifies the growth and affordability that make Phoenix a real estate hotspot.
Final Thoughts
The Phoenix metro area continues to evolve as a dynamic market for real estate investment. For those seeking opportunities, keeping an eye on emerging submarkets like Gateway could be the key to maximizing returns. As this sale demonstrates, strategic location, thoughtful upgrades, and expert property management are the ingredients for a successful investment.