Luhrs Parking Garage
Phoenix, AZ | Off-Market Acquisition | May 2023
Overview
Luhrs Parking Garage is institutional grade, Class A property located within a 3-minute walk from the Phoenix Suns and Arizona Diamondbacks stadiums. The asset was acquired in an off-market, direct-to-owner transaction, and sourced via our network here in the Nation’s #1 market, Phoenix, AZ.
About the Project
As any good investor knows, the three most important qualities when you’re analyzing a piece of property are Location, Location and Location. In our collective 50 years of experience as a company – we’ve never found a more satisfactory asset in this regard. This phenomenal piece of property sits within 2 blocks of 30 top restaurants, the Phoenix Convention Center (over 900,000 sq. ft. of meeting and exhibition space), 5 major hotels (with over 3,000 collective rooms) and mere footsteps from the Phoenix Suns and Arizona Diamondbacks arenas.
The Challenge
You may be asking yourself why anyone would be looking to sell this incredible asset… The short answer is, the current owners of the Luhrs Garage are in the midst of 1.) a major debt maturity issue 2.) the dissolution of their partnership. The bank has the capability of foreclosing on the asset in short order and the owners need to sell — quickly. These folks are willing to take a significant price cut in order to make the deal happen prior to their loan extension expiring. These two factors provide a great opportunity for Sunrise purchase a high-quality, stabilized asset, at well-below replacement cost, in one of the hottest markets in the nation – and lend a helping hand.
The Plan
Our first step with Luhrs is to adjust parking rates to fall in line with city-wide standards to boost revenue, immediately impacting our bottom line. An exhaustive citywide study has shown that Luhrs Garage has 8% below average rates on transient transit, hourly rates, and monthly parking contracts. By making minor adjustments to these rates, we can enhance our profitability without incurring additional expenses. Furthermore, we intend to reassess flat rates for large sporting and entertainment events, especially considering the likely surge in demand following recent news such as Kevin Durant joining the Phoenix Suns. Due to some observed complacency with the current operations, we see a major opportunity to cut day-to-day costs, renegotiate contracts and explore alternatives to boost NOI with other regional and national operators.
The Outlook
We intend to buy, improve, and hold the Luhrs Parking Garage for decades to come. Between the optimizing rates and improving operational efficiency while catering to a diverse set of parking demand drivers in Phoenix, we expect to significantly increase the NOI and overall value of the property. It’s a historical, generational asset in Downtown Phoenix that will provide stable, recurring income for many years into the future. This visibility of income provides safe, predictable cash flow (and clarity) for our Fund 3 partners.