49th Ave Low Coverage Industrial

230 S 49th Ave
Phoenix, AZ 85043

Opportunity Summary

Located in the heart of the 202 & I-10 industrial corridor, 49th ave represents a unique opportunity to acquire a property at close to land basis and create value by repositioning the site as an extremely desirable low coverage industrial asset with heavy power and heavy industrial zoning. We will be demolishing a portion of the building that experienced fire damage and maintaining 36,000 SF of structure with an excess land as a secured yard. Low coverage sites in the southwest valley demand a premium, with trades in the past year over $300/SF, well below our basis of $129/SF on the new footprint of the building. We will bringing in a brand new 3,000 amp SES to the building, providing another attractive differentiator to comparable properties in the market.

 

Combining an infill location, a highly desirable low coverage site, heavy zoning, and heavy power, 49th Ave represents an excellent site for potential tenants and users and provides an attractive investment opportunity for us and our partners.

Key Information

  • Purchase Price: $4.65 Million
  • TI/Leasing Budget: $1.52 Million
  • Equity Required: $2.89 Million
  • Close of Raise: 01/30/2025
  • Zoning: A2 Heavy Industrial
  • Institutional Class IRR: 21.88%
  • Investor Class IRR: 20.40%
  • Institutional Class Equity Multiple: 1.48
  • Investor Class Equity Multiple: 1.44
  • Purchase Yield/Stabilized Yield: 0.00/9.44
  • Est. Loan Term: 3 YR, IO
  • LTC: 63%
  • Estimated Loan Rate: 8.38%
  • Estimated Hold Period: 2 Years

Property Details

  • Buildings – 1
  • Building Size – 36,000 SF
  • Lot Size – 4.00 Acres
  • Zoning – A-2  Heavy Industrial
  • Market – Southwest Phoenix
  • Major Cross Streets – 51st Ave and Jefferson
  • Freeway Access – 202 Fwy approximately 2.4 miles, I-10 approximately 1.4 miles
  • Year Built – 1982
  • Metal Construction, 22′ Clear

Business Plan

49th Ave Low Coverage Industrial

230 S 49th Ave, Phoenix AZ

49th ave is a unique investment opportunity, providing us the opportunity to transform this site into a functional low coverage manufacturing building in a bustling industrial submarket. The key to our business plan is our renovation plan. Exterior improvements include demolishing the fire damaged portion of the building, re-cladding the existing structure shut, addition of overhead doors, paving and asphalt upgrades creating a larger functional yard and exterior paint. Interior upgrades include lighting upgrades, installation of Big Ass Fans for cooling, upgrading the lighting, update of the interior restrooms and a general clean up of the interior of the building. We underwritten a $1,375,000 improvement budget providing a significant buffer (30%) above our construction quote from our general contractor.

 

By repositioning the site we have we are targeting a new lease rate of $1.45/SF spread across the new 36,000 SF building, which captures the value of the excess land. We have seen other buildings in the area with less differentiating factors that are leasing north of $1.50/SF. With this we expect our new NOI at the property to push well north of $626,000 per year in the first year of the lease term providing significant cash flow and a new value north of $9,000,000 at a 7 cap. This value combined with the in place cash flow after lease up has us targeting a XX IRR and XX EM at the end of (which year)

Market Analysis

Southwest Valley Industrial Overview

The Southwest Valley has regularly been one of the most active and strongest industrial submarkets in the metro area. Major corporate users, regional companies, and local businesses have always looked to the area for space that meets local and regional distribution needs. The West Valley overall has historically been a strong performing area, often outperforming the overall Phoenix market. Strong employment growth and major headline corporate commitments have the national capital markets focused on the West Valley.

According to Cushman and Wakefield the Southwest Valley industrial market, of which 49th ave is in, experienced 387,548 SF of net absorption in Q3 2024. The submarket continues to be a major storyline as one of the nation’s most resilient real estate markets. Manufacturing buildings like 49th ave within the submarket currently boast a 2.7% vacancy rate, creating demand for space with no new deliveries of that product YTD.

Location

49th Ave Low Coverage Industrial

230 S 49th Ave, Phoenix AZ

Why 49th Ave Makes Sense

  • Infill location
  • Close to major highways
  • Low coverage site
  • Heavy power
  • Attractive single tenant size
  • Strong market fundamentals
  • Excellent basis

Returns Overview

Underwriting Assumptions

  • Replacement Rental Rate: $1.45/SF/Month NNN
  • Suite Vacancy: 12 months
  • Exit Cap Rate: 7.0
  • Sale $/SF: $256
  • Deal Time Horizon: 2 Years

Partnership Structure

Distributions and Fees

  • Monthly distributions of operating profits
  • 1.5% acquisition fee
  • 1% asset management fee on Equity Raised
  • 1% disposition fee

Institutional Class

  • Preferred Return of 8% on all cash flow until 8% annualized return is realized.
  • Equity partner with 75/25 split of profits beyond satisfying the 8% Preferred Return. General Partner will receive a 25% carried interest in the net profits, with the remaining 75% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
    1. 0-8% IRR to LP 100%
    2. 8-13% IRR to LP – 75/25 split
    3. 13%+ IRR to LP – 65/35 split

Investor Class

  • Equity partner with 75/25 split of profits. General Partner will receive a 25% carried interest in the net profits, with the remaining 65% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
    1. 0-13% IRR to LP – 75/25 split
    2. 13%+ IRR to LP – 65/35 split

Company Overview

49th Ave Low Coverage Industrial

230 S 49th Ave, Phoenix Az

At Hanson Capital Group, experience is not just a metric—it’s our foundation. Boasting over 100 years of combined expertise in real estate, we’ve cultivated a reputation for excellence and strategic insight in the market. Our formidable investments, nearing $300,000,000 under management, are a testament to our sustained success. Driving our vision forward is a harmonized team of executives and directors. CEO Chris Hanson, COO Zach Price, Managing Director of Acquisitions Chris Pike, and Managing Director of Asset Management Jim Tainter lead the charge. Together, they craft the trajectory for Hanson Capital Group, ensuring we remain at the forefront of the real estate industry.

Established in 2008, Hanson Capital Group embarked on its mission to become a trusted auction bidding service provider and create a lasting enterprise focused on creating wealth for ourselves and our partners. Aligning with prominent institutions, our dedication and energy quickly became evident, resulting in the acquisition of over 1,500 single-family homes out of foreclosure within an impressive six-year span. However, our sights were set higher. Identifying a unique opportunity to elevate our bidding pursuits, Hanson Capital, LLC was established in 2010 as a state-licensed mortgage bank. Today, Hanson Capital thrives as a leading hard money and bridge debt lender, and, to date, has overseen transactions exceeding $500 million, while consistently maintaining an equity portfolio averaging $40 million.

While our initial investments were rooted in real estate backed lending, in 2010 we began our pursuit of direct investment in value-add multifamily assets. After nearly a decade of that value-add multifamily strategy, and after buying and selling a few thousand apartment doors, our focus shifted in 2018 towards industrial real estate, which continues to be the focus today.

We are now deeply entrenched in industrial real estate within the so-called “Sun Belt”, with a notable presence in strategic areas like California, Arizona, and Texas. The result of this commitment is over $250,000,000 in industrial real estate and 1.27 million square feet of current assets under management.

Our process is invaluable to our success. All investment decisions are made by our investment committee in accordance with our Investment Policy Statement (IPS). Strategically crafted, the IPS emphasizes our central mission: capitalizing on inefficiencies in real estate to provide sustainable returns through proven and disciplined investment and management strategies. Every facet of the IPS has been intricately designed to demystify our methodologies, underscoring our commitment to transparency, accountability, and the responsible management of entrusted capital. The IPS also guides us in making informed, consistent decisions, helping to mitigate risks, and optimize returns, while ensuring that our actions align with our long-term investment objectives.

Ready to invest?

×

Chris Hanson

Founder

Lorem ipsum dolor sit amet, consectetur adipisicing elit. Quas saepe dolore eligendi. Laudantium saepe est in, quis obcaecati neque aspernatur consectetur necessitatibus molestias possimus et vel, rem quidem dolorum numquam.

Lorem ipsum dolor sit amet, consectetur adipisicing elit. Quas saepe dolore eligendi. Laudantium saepe est in, quis obcaecati neque aspernatur consectetur necessitatibus molestias possimus et vel, rem quidem dolorum numquam.