Q4 2025 Case Study: Value-Add Execution at Mesa Ridge Business Park

Get an exclusive look into BKM's impressive property transformation at this 153K SF asset in Mesa, AZ.

Situated on more than 11 acres in Arizona’s dynamic Mesa submarket, Mesa Ridge Business Park offers a best-in-class, 153,252-square-foot investment opportunity in one of Arizona’s premier industrial hubs.
Located adjacent to the Mesa-Falcon Field Airport and the neighboring 1.35M-square-foot Boeing manufacturing center, the property consists of six industrial buildings and a two-story office component.
Prior ownership operated under a cash-flow strategy that limited reinvestment and modernization. Even so, it demonstrated strong historical performance, reinforcing Mesa’s favorable market fundamentals.

Aesthetic Appeal:

High quality construction and a prime airport-adjacent location establishes the property as a premier asset in Mesa’s industrial market.
Strategic upgrades including fresh paint and a full landscape renovation further enhance curb appeal and visibility.
Outdated office buildouts receive light renovations to modernize interiors while appealing to a wide range of the local tenant base.

Financial Appeal:

Increases capital exposure in one of the nation’s top performing industrial markets, creating sustained value in BKM’s portfolio.
High occupancy at-purchase provides opportunity to drive high in-place yield and on-going cash flow throughout the hold.
25% mark-to-market opportunity offers significant upside as leases roll.
Plans call to exit at a 4.75% cap rate for $55.9M, increasing asset value by 46%.

Numerous factors lead BKM to pursue the deal, including attractive repositioning opportunities and a strategic location.

Low Deferred Maintenance: The asset was well-maintained prior to purchase, allowing BKM the opportunity to focus capital projects on modernizing the exterior rather than upgrading building systems.
Strategic Location: The location is well-suited for demographic and sector-related growth, as local infrastructure continues to develop and industrial occupiers seek space outside of Phoenix proper.
Tenant Diversification: The park provided a diverse array of tenant industries at acquisition, varying across 11 different sectors. The largest tenant—occupying 10,436 SF—only occupied 6.8% of NRA, reducing exposure to credit risk.

The Phoenix metro has experienced approximately 15% population growth between 2015-2025, with factors such as employment opportunities and a lower cost of living driving migration trends.
The Mesa submarket has had 0 deliveries in the past 12 months and only 38,000 SF of deliveries in the past five years, eliminating supply-side pressure and driving demand for small-bay product.
Demand is driven primarily by local businesses in Mesa, with the nearby residential population providing a deep local customer base. As such, the average new deal size since early 2024 has been 3,700 SF—supporting the need for high quality small-bay space.
Rent growth in the submarket is projected to average 4.25% over the next four years, signaling a return to normalization among market fundamentals.

BKM is committed to maintaining a diverse array of tenant industries across its portfolio, providing insulation from industry downturns and reducing overall credit exposure.

Total CapEx: $2.7M improvement program focused on enhancing functionality, tenant experience, and long-term asset performance.
Tenant Improvements: $867K in tenant improvements plus $130K in speculative TIs to modernize and reconfigure suites for a broader tenant base.
Building Systems: $114K invested in essential systems, including roof repairs and HVAC upgrades, to ensure operational reliability.
Cosmetic Upgrades: $870K allocated to exterior paint, refreshed signage, upgraded landscaping, and parking lot improvements to strengthen curb appeal.

41% increase in NOI between 2022 when the property became fully operational and present day, with projected NOI to grow another 21% by the end of the hold in 2027.
96% average occupancy to date.
36% increase in in-place rents between acquisition and disposition, with average in-place rents of $1.05/ft in 2022, and $1.43/ft in Q3 of 2025. Rates are projected to rise to $1.59/ft at disposition, representing a 51% growth in rates
32% average annual mark-to-market increases on lease expirations between 2022 and Q3 2025.
13% of NRA is currently signed at or above MLA. Current leases are 13.5% under-market, giving BKM the opportunity to roll a greater portion of tenants to market before disposition.
77% average quarterly retention at the park, which exceeds the underwritten retention rate of 75%.
22 total leases were executed at the project by the BKM team between 2022 and Q3 2025, representing half of NRA.
Executed 58,244 square feet of rollovers across 22 suites since acquisition, which equates to about 38% of NRA.