Historic Heard Building Auctioned to Local Investors in Downtown Phoenix
The iconic Heard Building, a cornerstone of Phoenix’s history and the city’s first skyscraper, now has a new owner. On November 26, local real estate investors led by Everardo Chavez secured the eight-story structure for $5.5 million during a public auction.
A Historic Property with a Modern Vision
Built in 1919, the 77,000-square-foot building stands as a testament to downtown Phoenix’s evolution. Known for its prominent Mexican grizzly bear mural, the property holds sentimental and architectural significance. Chavez and his family plan to preserve its history while implementing modern renovations to enhance its appeal and boost occupancy.
“We have major plans for remodeling the building,” said Chavez, whose family manages a $140 million portfolio of commercial properties, single-family homes, and land across the Valley.
Auction Details and Financial Background
The auction followed a notice of trustee sale filed in August after Expansive, the building’s prior owner and a national coworking operator, defaulted on its $11.7 million debt. SMS Financial VW LLC, the lender managing the foreclosure process, initiated the sale, which opened with a $5.2 million bid.
Expansive had acquired the Heard Building for $11.4 million in 2019 but struggled with loan obligations amid declining demand for office spaces. Despite these challenges, the company operated coworking spaces at the Heard Building and other Phoenix locations but declined to comment on the auction’s outcome.
Challenges Facing Downtown Office Spaces
Like many urban centers, downtown Phoenix has grappled with high office vacancy rates, which reached 28.5% in Q3 of 2024, according to Stream Realty Partners. Negative net absorption and the impacts of remote work have led to significant restructuring in the office market.
John Bonnell, managing director at Stream Realty, noted that while downtown Phoenix faces challenges, its growing residential population and proximity to public transit and amenities position it for future growth. “It’s going to take more people living there and key tenants making a commitment, but the potential is there,” he said.
The Future of the Heard Building and Downtown Phoenix
The Heard Building’s new owners aim to capitalize on downtown’s unique advantages, from competitive lease rates to proximity to bioscience hubs and higher education campuses. Their planned renovations signal optimism for the area’s recovery and future.
As Phoenix continues its downtown transformation, the Heard Building serves as a reminder of the city’s historic roots while pointing toward a revitalized future.
