Multifamily investor upgrades Scottsdale HQ as high interest rates, soft rents cause deals to dry up – The Business Journals

With new signage, tenant leases and renewals and building improvements, Cardone Capital is seeing some early returns as a new landlord in Scottsdale.
Late last year, Cardone Capital purchased the former Promenade Corporate Center office building complex in north Scottsdale. The two buildings total more than 250,000 square feet of office space and are now home to Cardone Capital’s second headquarters and family of companies. The complex has been renamed the Cardone Corporate Center.
As it finalized the purchase of its second headquarters, the Aventura, Florida-based real estate investment group, which is led by founder Grant Cardone, had big plans to start acquiring a few thousand multifamily units throughout Phoenix to bring those under Cardone’s 10X brand. So far, the market hasn’t presented many attractive opportunities.
“Rents have gotten soft and there have been some slowdowns with leasing and rent growth,” said Ryan Tseko, executive vice president of Cardone Capital. “I haven’t been able to buy much of any multifamily in the last year because of the interest rates and where the debt [market] is. … We’re still very active but haven’t been able to pull the trigger on any acquisitions in Arizona.”
Tseko said the firm has a few multifamily deals in the pipeline, namely in Florida, but the current market conditions across the board have slowed down the speed at which they’d acquire more.
Cardone Capital bought its new headquarters from an entity linked to investment banking giant Goldman Sachs and real estate firm Lincoln Property Co. Cardone Capital paid $56.5 million for the office buildings at 16427 and 16435 N. Scottsdale Road. Barry Gabel and Chris Marchildon, then-of CBRE Group Inc., brokered the deal.
On the landlord side, Cardone Capital committed to making $15 million of capital improvements to the complex, such as updating the lobby, planting 50 palm trees and putting down artificial turf in the center courtyard as well as building out new spec suites for office users. 
“The amount of energy going into that complex now is really good,” Tskeo said. “We’re moving and making a lot of great progress.”
Lee & Associates Arizona’s Colton Trauter and Bill Blake are the listing brokers for the Cardone Corporate Center. Cardone Capital is working with LGE Design Build and McCarthy Nordburg as general contractor and architect, respectively, for building improvements. Ryan Cos. is also now managing the property, Tseko said.
Tseko said the firm has renewed leases for some of the existing tenants in the complex but also added professional service firms SBR Management and Asset Preservation Wealth & Tax as new tenants. The two took 8,000 and 3,000 square feet, respectively. Tseko said he’s also pursuing a co-working operator to join the Cardone Corporate Center.
According to Trauter and Blake’s marketing brochure for the buildings, there are five suites available for lease that total just over 41,000 square feet. Each space carries an asking leasing rate of $37 per square foot full-service, meaning the tenant pays the base rent while the landlord handles operating expenditures, like maintenance and support costs.
The going rate for an office in the Northeast Valley/Scottsdale submarket was $33.67 per square foot across all classes as of the first quarter of 2023. Class A office space in the Phoenix metro has an average asking rate of $38.15 per square foot, according to a Q1 2023 market report by CBRE.
Four companies make up the Cardone family of companies: Cardone Capital, business management firm Cardone Ventures, event company Grant Cardone Enterprises, and health and wellness company 10X Health. All will have a presence at the Scottsdale complex.
Cardone, individually or through Cardone Capital, manages a real estate portfolio that includes over 11,900 apartment units and 500,000 square feet of commercial office and retail space valued at over $4 billion, the company said. Cardone has successfully tapped social media to attract crowdfunding investments in real estate deals, mostly multifamily, according to sister publication South Florida Business Journal.
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