McClintock Value-Add Industrial | Hanson Capital

McClintock Business Center

525 S McClintock Dr. Tempe, AZ 85281

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Opportunity Summary

525 S. McClintock Dr. is a ±40,000 SF industrial asset situated on 2.5 acres in the heart of Tempe’s highly constrained infill industrial corridor. The building is currently vacant and was most recently occupied by a single user; however, it was originally designed and entitled as a six-tenant multi-bay facility with the previous tenant creating pass-through functionality between bays. The property’s location along McClintock Drive provides exceptional access to the Loop 202, ASU, and the broader Southeast Valley labor base, making it well-positioned to capture sustained demand from small-bay industrial users seeking infill, last-mile, and service-oriented space in Tempe, which is one of the most supply-constrained submarkets in the Phoenix MSA.

The business plan centers on returning the asset to its original six-bay configuration through a comprehensive interior and exterior renovation program, repositioning the building to meet current market demand for small-bay, multi-tenant industrial space. At a total basis of approximately $6.3 million, the acquisition reflects a price per square foot ($157/SF) that is materially below current replacement cost, providing downside protection and a compelling entry point relative to new construction. By restoring the property’s intended multi-tenant layout and modernizing the asset, the investment is positioned to capitalize on tight small-bay availability, diversified tenant demand, and strong leasing fundamentals in the Tempe infill industrial market.

Minimum Investment $50,000

Key Information

  • Purchase Price: $6.30 Million
  • TI/Leasing Budget: $1.34 Million
  • Equity Required: $3.61 Million
  • Close of Raise: 4/30/26
  • Zoning: I-1
  • Stabilized Cash on Cash - Institutional Class 5.96%
  • Stabilized Cash on Cash - Investor Class 4.17%
  • IRR: 15.04%
  • Equity Multiple: 1.32
  • Purchase Yield | Stabilized Yield: 0.00 | 7.31
  • Estimated Loan Term: 5 Years
  • Fixed | Variable Rate: Fixed
  • LTC: 60.00%
  • Estimated Loan Rate: 6.5%
  • Estimated Hold Period: 2 Years
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Property Details

  • Building Size: 40,000 SF
  • Lot Size: 2.53 Acres
  • Zoning: I-1
  • Market: Phoenix (Tempe) Arizona
  • Freeway Access: HWY 101 and HWY 202
  • Year Built: 1982
  • Construction Type: Masonry

Business Plan

McClintock Shallow Bay Value-Add

525 S McClintock Dr, Tempe AZ 85281

The investment strategy at 525 S. McClintock Dr. is focused on repositioning the property from a vacant single-tenant configuration back to its originally designed six-bay, multi-tenant industrial format, aligning the asset with current demand for small-bay industrial space in Tempe’s supply-constrained infill market. The interior renovation plan is designed to deliver functional, market-ready suites that appeal to a broad range of local and regional users. Improvements will include the installation of HVAC systems in bays that currently lack climate control, ensuring consistent usability across all suites. Each bay will be outfitted with a dedicated office component featuring new flooring, modern lighting and fixtures, and fresh paint, creating a clean and professional environment suitable for service, light manufacturing, and distribution tenants. Warehouse areas will be upgraded with new high-efficiency lighting, painted surfaces, and a full concrete floor grind and seal, enhancing both aesthetics and durability while reducing long-term maintenance.

Exterior improvements will reinforce the asset’s visibility and curb appeal along McClintock Drive and position the property as a premier small-bay industrial offering within Tempe. Planned upgrades include a full exterior repaint, enhanced monument and building signage, targeted asphalt repairs and re-striping. These improvements are intended to create a cohesive, modern appearance that supports leasing velocity and tenant retention while minimizing future capital requirements. Upon stabilization, the property is projected to achieve rental rates of approximately $1.40 per square foot per month on a NNN basis, which is supported by recent small-bay leasing activity in the submarket. At this rental level, the business plan is expected to generate compelling cash-on-cash returns while benefiting from an entry basis well below replacement cost, providing both income growth and downside protection.

Market Analysis

Shallow Bay Industrial Outperforming Big Box Distribution

According to Matthews Real Estate (Q4 2025), nearly 90% of recent construction has targeted buildings over 100,000 SF, pushing vacancy in that segment to 16% and creating clear downward pressure on rents. Large-format space is oversupplied, competing aggressively, and conceding economics.

Meanwhile, the small bay segment tells a completely different story.

Commercial Properties Inc. reports that sub-50,000 SF buildings have maintained some of the tightest vacancy in the entire industrial market, holding below 5% as recently as Q3 2025. Demand from local and regional users remains durable, while new supply has been minimal.

The result:
• Institutional capital is concentrated in oversupplied big box product
• Small bay remains structurally undersupplied
• Vacancy is tight
• Tenant demand is diversified and sticky

In a market where 90% of new supply is chasing the top end, small bay offers the opposite trade: constrained supply, durable demand, and significantly stronger fundamentals.

Location

McClintock Shallow Bay Value-Add

525 S McClintock Dr, Tempe AZ 85281

Why 525 S McClintock Dr Makes Sense

  • Ideal Bay Size: Smaller bays drive consistent demand with a diversified tenant base.
  • Clear Upside: Value add through lease-up of vacancy.
  • Below Replacement Cost: $157/SF
  • Demonstrated Business Plan: We executed an identical business plan on similar bay sizes at our McKemy project down the street in 2025.

Returns Overview

Underwriting Assumptions

  • Replacement Rental Rate: $1.40/SF NNN
  • Vacancy Timing Upon Lease Expiration: 15 months to total lease up
  • Exit Cap Rate: 6.00
  • Sale Price: $275/SF
  • Deal Time Horizon: 2 Year

Partnership Structure

Distributions and Fees

  • Monthly distributions of operating profits
  • 2.0% 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.
  • 100% of distributions following the satisfaction of the 8% preferred return will be paid to the General Partner as a “Catch Up” until the General Partner has received an amount equal 2.67% of the aggregate distributions
  • Equity partner with 70/30 split of profits beyond satisfying the 8% Preferred Return and General Partner Catch Up. General Partner will receive a 30% carried interest in the net profits, with the remaining 70% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
  • Investor Preferred Return – 8%
  • General Partner Catch up – 2.67%
  • Pre 13% IRR Hurdle Investor/General Partner Distribution Ratio – 70/30 split
  • Post 13% IRR hurdle Investor/General Partner Distribution Ratio – 60/40 split

Investor Class

  • Equity partner with 70/30 split of profits. General Partner will receive a 30% carried interest in the net profits, with the remaining 70% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
  • Pre 13% IRR Hurdle Investor/General Partner Distribution Ratio – 70/30 split
  • Post 13% IRR hurdle Investor/General Partner Distribution Ratio – 60/40 split

Company Overview

McClintock Shallow Bay Value-Add

525 S McClintock Dr, Tempe 85281

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 $350,000,000 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 roughly $350,000,000 in assets under management and over 1.6 million square feet.

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.

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Chris Hanson

Founder

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