JANUARY-FEBRUARY 2013
BIRTH OF A SIGNATURE SCIENCE PARK Continuum evolving into a state-of-the-art business, tech campus
SPECIAL SECTION p. 30
SPECIAL SECTION p. 27
AZRE READERS WILL RECEIVE A $500 DISCOUNT* JANUARY Wed. Fri. Sun. Mon. Thu. Thu. Wed.
2 4 6 14 17 24 30
FEBRUARY PHILADELPHIA UTAH MEMPHIS OKLAHOMA CITY MILWAUKEE L.A. CLIPPERS L.A. LAKERS
7:00 7:00 6:00 7:00 7:00 8:30 8:30
TO BOOK A SUITE CALL COLLIN KRICKL 602-379-7850 OR CKRICKL@SUNS.COM
* Limited time offer on all suites rented during January and February
Fri. Sun. Fri. Sun. Tue.
1 10 22 24 26
DALLAS OKLAHOMA CITY BOSTON SAN ANTONIO MINNESOTA
7:00 6:00 7:00 6:00 7:00
Find out who had the BIGGEST, BEST and MOST NOTABLE projects of 2012.
February 28, 2013 6:00pm - 8:00pm Arizona Biltmore Cocktail & Dinner Reception • Education • Hospitality • Industrial • Healthcare • Multi-Family • Office • Public • Redevelopment • Retail • Most Challenging • Most Sustainable • Tenant Improvement
Visit AZREmagazine.com or call 602.277.6045 to reserve your seat. RSVP by February 21, 2013
‘Appy’ New Year: You can now take AZRE with you
T
his is when technology is so cool — AZRE magazine has its own app for Android phones and the website is getting a facelift. AZRE magazine has had a website — azremagazine.com — for a little more than a year. Reveiws from people in the commercial real estate industry have been very positive. Starting in January we are making it easy to navigate, and directing readers to the top reads of the day. What I’m most excited about is the AZRE magazine app for Android phones that has been available for a few months now. This is all you have to do to get it: >> Go to the Google Play Store App on your Android phone. (The AZRE app has yet to be approved for Apple products; but we’ve applied.). >> Go to the search field and enter “azre magazine”z in the search bar. >> Follow the prompt and download the app. I’m so excited that I forgot to mention the highlights of this issue, which are: a special section celebrating the 35th anniversary of The Weitz Company in Arizona; the International Council of Shopping Centers (ICSC); the Institute of Real Estate Management (IREM); a look at Continuum in Chandler; and 40 companies to watch in commercial real estate in 2013. Really? Is it 2013 already? Time to start working on the March/April issue. Time does fly when you’re having fun.
Sponsored in part by Editor (602) 424-8844 peter.madrid@azbigmedia.com 2 | January-February 2013
the good of the
GAME
The GAME is on during Waste Management Phoenix Open week. Day and night. And, thanks to the GAME, The Thunderbirds give millions of dollars each year to hundreds of Valley charities. Your support of the Waste Management Phoenix Open helps enrich the quality of life for so many. GAME ON! JANUARY 28 — FEBRUARY 3, 2013
•
TPC SCOTTSDALE
Scan here to get the fun started!
CON T E N T S BIRTH OF A BUSINESS PARK
6
January/February 2013
8 16 FEATURES
6 8
New to Market Projects in the pipeline
Project News RJM building an indoor shooting center in Tempe; RSP Architects designing two projects on 7th Street in Phoenix
16
Construction Arizona’s sports venues get a facelift; Cubs get a new spring training facility in Mesa
18
Economic Development Continuum is a strategic piece in Chandler’s recruitment of high tech companies
12
20
14
27
Executive Q&A Four faces of industry leadership
After Hours Spectra Contract Flooring’s president is a marathon man
40 Companies to Watch From general contractors to developers to architects
IREM Aims High Group’s members bring value enhancements to their properties
On The Cover: Continuum rises from the site of the old Motorola plant in Chandler, poised to become Arizona’s next state-of-the-art business park. Rendering courtesy of PHArchitecture Correction: Haydon Building Corp. is general contractor for the South Mountain Community Library, an Honor winner at the 2012 AIA Arizona Design Awards.
COMING NEXT ISSUE
» » » »
8th Annual RED Awards 2013 Commercial Real Estate Outlook CoreNet Global Arizona McCarthy Building Companies
4 | January-February 2013
Free AZRE app for android online with this QR code
SPECIAL SECTIONS
30
ICSC As the economy begins to bounce back, so does Arizona’s retail market. AZRE and the International Council of Shopping Centers (ICSC) look at several aspects of retail, including the Valley’s power centers and thoughts from the brokerage community.
41
WEITZ At The Weitz Company, employees are guided by a set of core values which are an integral part of the culture. It’s been that way as Weitz celebrates 35 years in Arizona. 3101 N. Central Avenue Suite 1070 Phoenix, Arizona 85012
Facility Opened February 2012 – www.spofit.org – 5031 East Washington / Phx AZ Architect: Baldinger Studios
2410 East Osborn, Phoenix, AZ 85016 Commercial General Contractor – License # 093242 B-01
602-200-9775 www.caliberconstruction.com
NEW TO MARKET
MULTI-FAMILY 1
1Ò SAN CAPELLA Developer: Mark-Taylor General Contractor: Mark-Taylor Architect: Mark-Taylor Location: Hardy Dr. and Elliot Rd., Tempe Size: 384 units
The $50M community is an example of “The Next Generation of Mark-Taylor,” a phrase the company uses to describe the evolution of apartment communities over the past two decades. Features include kitchen islands, custom wood cabinets, clean steel appliances, distressed wood plank flooring, oiledbronze fixtures, pendant lighting and direct-access garages. San Capella will offer a 24/7 fitness facility that includes virtual personal trainers and a yoga room, a cyber café with MAC and PC options, a social lounge and an outdoor cabana that includes a poolside kitchen. Expected completion is 3Q 2013.
2 2Ò ENCORE ON FIRST AVENUE Developer: Urban Development Partners | PacifiCap Group General Contractor: Okland Construction Architect: SERA (Portland, Ore.) Location: 25 W. First Ave., Mesa Size: 93,000 SF The $17M, 81-unit project will serve as housing for independent seniors. It is conveniently located along the light rail in Mesa. Expected completion is 4Q 2013.
EDUCATION 3
4Ò PHOENIX COLLEGIATE ACADEMY Developer: Phoenix Collegiate Academy General Contractor: hardison/downey construction Architect: Brenden Architect Location: 12th St. and Broadway, Phoenix Size: 20,000 SF The $2.1M project is a single-story high school classroom building for PCA, a public charter school for grades 5-12. The new facility will include classrooms, science labs, a library, a computer lab and administration space. Subcontractors include PH Structural, Sequoia Trail Engineers, Adobe Drywall, Apache Pipelines, Arctic Air, Barrett-Homes Contractors, Modern Paving, Pinnacle Plumbing, Pro Steel Erectors, Fine Line, RCI Systems, ReSource Arizona, Sierra Masonry, Sun Valley Masonry, Wilson Electric and Western Innovations. Expected completion is 3Q 2013. 6 | January-February 2013
PUBLIC 5Ò BARRY AND PEGGY GOLDWATER LIBRARY AND ARCHIVES Developer: BPGLA board of directors General Contractor: Nitti-Graycor Architect: TBD Location: SEC of Macdonald and First Ave., Mesa Size: 40,000 SF The $30M, 3-story project will house a collection of manuscripts, photographs and rare books belonging to the former Senator. The building, which will pursue LEED certification, will include a changing gallery, permanent exhibition, reading room, lecture hall, cafe and archival storage. Expected completion is in 2016.
4
6Ò MORENCI COMMUNITY CENTER & DAYCARE FACILITY Developer: Freeport-McMoRan Copper & Gold General Contractor: Haydon Building Corp. Architect: Barker Rinker Seacat Architecture Location: Manzanita Rd. and Burro Alley, Morenci Size: 55,200 SF (community center); 6,700 SF (daycare center) The $15M multi-faceted project will include indoor/outdoor aquatics, a climbing wall, jogging track, 2-court gym, 2 racquetball courts, 2 fitness areas, indoor playground, child watch space, and a cafe. The detached facility will include daycare rooms, office space, storage space and a kitchen. Expected completion is 1Q 2014.
5
RETAIL 6
7Ò THE YARD Developer: WDP Partners General Contractor: UEB Builders Architect: RSP Architects Location: 5632 N. 7th St., Phoenix Size: 12,696 SF The Yard is a perfect example of urban infill. It was born out of creative visioning by Todd Chester (WDP), Sam Fox (Fox Restaurant Concepts) and Mike Rumpeltin (RSP) and the adaptive re-use of an existing 1950s motorcycle dealership and repair shop. Tenants include a “fish house,” a new concept for Fox Restaurants in addition to a 4,000 SF Culinary Dropout restaurant. Subcontractors include OMB, W West and PK Associates. Expected completion is 1Q 2013.
HEALTHCARE 8Ò TUCSON MEDICAL CENTER WEST CAMPUS EXPANSION Developer: Tucson Medical Center General Contractor: J.E. Dunn Construction Architect: Hobbs + Black Associates and DLR Group Location: 5301 E. Grand Rd., Tucson Size: 200,000 SF The $74M medical facility consists of a main surgery department with 24 operating rooms, 40 patient rooms, 58 PACU rooms and 45 prep/ recovery rooms. It also includes the Orthopedic Institute consisting of 6 radiology rooms, 74 exam rooms and 38 physician offices and a 633stall precast parking garage. Subcontractors include Schuff Steel, Suntec, Borderland Construction, T-PAC, Sun Mechanical, Wilson Electric, MKB Construction and Kone Elevators. Expected completion is 2Q 2013.
7
7
CONSTRUCTION: PROJECT NEWS
Ronald McDonald House
Ò RJM CONSTRUCTION BUILDING INDOOR SHOOTING CENTER IN TEMPE RJM Construction is general contractor for the $1.125M ($775,000 in TI) C2 Tactical Indoor Shooting Range being added to the list of tenants at Emerald Center in Tempe. The 17,121 SF facility will include 23 air-conditioned shooting lanes and more than 4,800 SF of retail and classroom space for training classes. C2 will also offer a corporate VIP area and conference room that allows private access to corporate lanes. C2 Tac Holding, LLC, is the developer; PHArchitecture is the design firm, and Lee & Associates is the broker. Expected completion is late January.
Ò RSP DESIGNING TWO PROJECTS ON 7TH ST. RSP Architects and Wetta Partners are the architect and developer, respectively, for two projects on 7th St. in Phoenix. Postmark, 741 E. Highland, is a 10,302 SF adaptive re-use of an iconic, mid-century post office building. It will be refurbished and retrofitted with a mix of commercial tenants that may include retail and restaurant uses. The Shops at 7th and Osborn, 546 E. Osborn, is a 9,700 SF construction of a new, freestanding restaurant as well as adaptive re-use of two existing buildings. One is a former church (it will become 4,200 SF of new commercial), and the other is former school (3,800 SF of new commercial lease space). Cassidy Turley will handle brokerage duties for both projects.
Ò MCCARTHY ADDING 72 INPATIENT BEDS AT YRMC McCarthy Building Companies is undertaking a $14.5M buildout of the third and fifth floors at the Yuma Regional Medical Center. The project will add 72 new inpatient beds and increases YRMC’s total bed count to 441. The project is on an accelerated schedule with construction to complete in seven months. Architect for the 66,000 SF build-out is Archsol, LLC. Subcontractors include E&K, Walters and Wolf, Kris Kraft, Miko Mechanical, and Delta Diversified. Expected completion is 1Q 2013. >> McCarthy recently completed the $7.1M, 45,000 SF restoration of the Emerson Court historic building at 1817 N. 7th St. in Phoenix. The building will serve as the district’s administrative offices. The restoration includes a new HVAC system, new electrical system, MEP systems, structural improvements and various tenant and site improvements to accommodate the needs of the district. ADM is the architect. Subs included LeBlanc, Pueblo Mechanical, Jen Electric, Irontree Plumbing and Pete King. 8 | January-February 2013
Ò DPR PROJECTS INCLUDE EMERGENCY CENTER, BUSINESS LOBBY DPR Construction is building the $10M Sonoran Health and Emergency Center, a 41,790 SF, 3-story outpatient services facility on a 4.44-acre site at 33423 N. 32nd Ave., Phoenix. The project is a shell and core with first-floor tenant improvements consisting of an emergency department and outpatient imaging center. There is future medical office leasable space on the second and third floors. John C. Lincoln Health Network is the owner and Devenney Group is the architect. Expected completion is 4Q 2013. >> DPR and Gensler are renovating the Digital Realty Trust Chandler Lobby and Digital Realty Trust 120 EVB lobby. The Chandler project is a total renovation of the existing lobby along with the renovation of the management office, first floor and second floor restrooms, as well as a second floor break room and conference room. The 120 EVB projects is a total renovation of the existing lobby, including the renovation of the management office and first floor and concourse restrooms. The project also includes a new security office, elevator cab work and new terrazzo flooring.
Ò HKS, UEB TEAM UP FOR RONALD MCDONALD HOUSE Metro Phoenix will be home to a third Ronald McDonald House, and the first in the East Valley, when a former healthcare facility on the campus of Cardon Children’s Medical Center in Mesa is converted into a 10,255 SF home away from home. HKS is the architect and Urban Edge Builders (UEB) is the general contractor. When the $2.1M renovation, funded primarily through donations, is complete in late 2013, Ronald McDonald House Charities will be able to accommodate up to 79 families a night at its three facilities. The new facility will feature 16 bedrooms, including three apartments with kitchens for families with children with suppressed immune systems, a community kitchen and dining room, play area for children and outdoor area for adults.
Ò NATIONS GROUP TO PROVIDE PROJECT MANAGEMENT FOR SCHOOL Nations Group has been selected as the project management firm for Gratton Investments and Happy Valley Schools Inc. to build a new East Campus in Queen Creek. The K-6 campus will provide Happy Valley Schools a third location. Nations Group was selected based upon its extensive knowledge and experience in project management, project development and finance solutions. The primary responsibility will be to provide the day-to-day project management oversight of the design and construction. The 500-student school will be located on 5.5 acres and will open in 3Q 2013.
9
CONSTRUCTION
PLANNING & ZONING Ò TOWN OF BUCKEYE The Town of Buckeye Development Services opened its doors to its new “one-stop-shop,” which consolidates Development Services into one location on the second floor of Town Hall, 530 E. Monroe Ave. Town leaders had appealed for its creation so customers could easily obtain services such as building permits and plan reviews in a more timely manner. Town staff has studied and surveyed the needs of development individuals and development entities over time so as to improve and reorganize the process as well as reorganizing staff to facilitate the improved process. The Town’s goal is to meet developer and resident needs in a more efficient manner. Town Manager Stephen Cleveland and other staff members involved in the project say the new center will be a successful tool in attracting new business.
Ò CITY OF GOODYEAR The City of Goodyear is proposing text amendments revising multiple sections of the City’s Zoning Ordinance and Subdivision Regulations. These amendments are intended to clarify and prescribe various review and approval processes and to clarify the applicability of certain standards. More information regarding Case Numbers 12-220-00001 Zoning Ordinance-Text Amendment & Case Number 12-2201-00002 Subdivision Regulations-Text Amendment can be found at goodyearaz.gov.
Ò CITY OF COOLIDGE The Arizona Department of Transportation (ADOT) is studying the feasibility of a possible transit system between Phoenix and Tucson. Systems being considered are some form of a light rail system or a bus system. ADOT is currently considering as many as seven different alternatives. At least one of those alternatives would be routed through the City of Coolidge. City leaders are intending to lobby ADOT to choose the Coolidge route, which would assure the placement of a station facility there. City leaders see this not only as an opportunity for growth and revitalization but also as a potential for realization of a planned downtown civic and activity center. ADOT plans to have a final routing decision by the end of 2013. However, for the system to become a reality, some major obstacles must be overcome such as environmental, development and construction issues, along with funding and financial issues.
Ò CITY OF TEMPE The City of Tempe will hold a series of open houses to gather feedback on a proposed Transportation Master Plan (TMP). The series will address the needs for mobility and accessibility within, around and through Tempe. The purpose of the TMP is to be used to guide the further development of Tempe’s multi-modal transportation system and its integration with the City’s land use plans. The public will be introduced to the concept to be used in the plan. Residents are being encouraged to attend. Information is available at tempe.gov/transportationplan or call Nancy Ryan at (480) 350-8096. 10 | January-February 2013
Ò PINAL COUNTY Transportation in western Pinal County has been improved with an agreement between the Ak-Chin Indian Community and the County’s Board of Supervisors that will allow widening of the Maricopa-Casa Grande Highway, making it six lanes. The agreement also benefits Ak-Chin’s community entertainment complex and involves the sale of 22.3 acres of easement by the community to the County. Similar agreements may be forthcoming with the Gila River Indian Community, which will allow for additional lane improvements to I-10 between Phoenix and Casa Grande. >> The Gila River Indian Community (GRIC) has agreed to make 30,000 acre-feet of water available to the County for a 100year lease, which would help stimulate County growth for future development. The agreement is between the GRIC and SRP, which will help with the storage of the water in numerous locations across Pinal County.
Ò CITY OF MARICOPA The City has adopted the 2012 International Residential Code (IRC) and the 2012 International Energy Conservation Code (IECC). The IECC became effective Jan. 1, but the IRC does not become effective until July 1. With a request from the Home Builders Association, the City agreed to the making of a few amendments to the codes that included a relaxation for the duct leakage standards in the IECC. Builders are able to continue to pull permits off standard plans for an existing parcel until the parcel is completed. For additional information, contact Jackson Moll at mollj@hbaca.org or (602) 274-6545.
Ò CITY OF PHOENIX Administration of Fire New Construction Inspections (FNCI) is no longer a part of the Fire Department and became a part of the Planning & Development Department. Presently, all fire inspection requests should be directed to Planning & Development at its Automated Inspection Request System (AIRS) at (602) 495-0800. For scheduling and questions, also call (602) 262-7811. Bob Winters, the FNCI Supervisor, can be reached at (602) 501-1632, and Mariola Sullivan, the Commercial Inspections Supervisor, can be reached at (602) 262-5073.
Ò CITY OF CHANDLER The City of Chandler recently initiated a self-certification program similar to the one in Phoenix that would permit a speedier permitting process. The Phoenix program, which allows design professionals to self-certify plans in order to get building permits, has been deemed successful by City officials. The City hopes to mirror that success with its program that places a greater responsibility on the design professionals and results in much less review times. The P&Z column is compiled by Dave Coble and George Cannataro with Coe & Van Loo Consultants, cvlc.com.
Fortitude-HalfPg_Layout 1 12/13/11 7:40 AM Page 1
Fortitude
A contractor’s reputation for excellence grows by completing projects on time, within budget, and by continually exceeding expectations.
Building Successful Arizona Projects for 26 Years
480.497.2300 • fax: 480.497.9610 • www.bjerkbuilders.com
License B1-088897
11
EXECUTIVE Q&A BY PETER MADRID
Debbie Willis, CPM
Justin D. Steltenpohl
Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: Like the majority of people in property management, I kind of fell into it. I went to work for P.B. Bell 30 years ago as a temporary accounts payable clerk — and never left. What has kept me in this industry so long is the opportunity to be involved in so many aspects of business. I love to tell my story to people just coming into the business. I am proof that if you work hard, and have passion about what you do, you can be successful.
Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: My real estate clients are the best to work with and that is what initially attracted me to this industry. These clients are savvy, ambitious business people who understand that the real estate market, both residential and commercial, are the key drivers to economic growth and success in Phoenix and across Arizona.
PRESIDENT OF PROPERTY SERVICES THE P.B. BELL COMPANIES Years in commercial real estate: 32 Years at company: 30
Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: So much has changed that it’s easier to answer “what hasn’t changed?” The only things that come to mind that haven’t changed is that the pool PH is still 7.4, winter lawns still have to be planted, and you can never anticipate a resident’s response to why they couldn’t pay their rent. Over the past couple decades, our industry has done an amazing job of developing and managing rental housing that truly meets the needs of its residents. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: Surrounding myself with talented people and then listening to them. Th irty years of being in the same industry with the same company, it can be easy to get in a rut. Hiring the right people to keep me and the company up to date, relevant and competitive has been a major key to my success.
Dan Hinkson
PRESIDENT SIGMA CONTRACTING, INC. Years in commercial real estate: 35 Years at company: 30 Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: There is something special about creating something lasting and guiding someone’s dream to reality. It’s exciting to become involved in a project with a client and to build something that will impact their lives. Working side jobs and on construction projects with my father from the age of 12, I learned a lot about doing the job right the fi rst time. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: Computers were non-existent in the construction industry. Plans were hand drawn, and the field superintendent often worked directly with the project architect to resolve issues. Project managers did not exist as a career choice. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: The strong, long-term relationships that we have developed and maintained with our clients, employees and subcontractors. We have been fortunate to associate with many incredibly talented, ethical and good people. We recently completed the project management for The Salvation Army on the Phoenix Kroc Center. I was involved with this project for more than six years. 12 | January-February 2013
PARTNER SQUIRE SANDERS (U.S.) LLP Years in commercial real estate: 13 Years at company: I started working at Squire Sanders right out of law school. Other than a short period with Meritage Homes, have continued to work here the past 14 years.
Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: For decades, Phoenix’s real estate industry experienced practically unbridled growth and was one of the main engines for economic prosperity for the state and the region. The recent downturn in the real estate market has caused many in the industry to tighten their belts and to approach the “new normal” with a cautious optimism. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: My main goal and priority as an attorney is to help my clients accomplish their business goals and counsel them through difficult situations. I am the most proud when I see my clients succeed — when they are able to reach that next level of growth and when they complete an important project or development.
David Cheatham
MANAGING PRINCIPAL VELOCITY RETAIL GROUP, LLC Years in commercial real estate: 28 Years at company: 21 years at CBRE. Helped start Staubach Retail Services West in Phoenix in April 2005. When Roger Staubach ended the license agreement, the company name changed to Velocity Retail Group, LLC in May 2009. Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: I came out of college when the country was going through a major recession very similar to what we’ve been going through the past few years. One of my mentors had encouraged me that the industry would be a great fit for my strengths and personality. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: The fundamentals of the industry have stayed very similar. The retail arena is always changing, morphing and transforming, even to this day. Technology, the Internet and the smartphone are structurally changing how the American consumer shops. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: Our team. I am most proud of assembling a phenomenal, talented pool of diverse team members that are able to bring their own individual gifts to create solutions for our clients. We have been able to keep our core group together for over a decade despite the radical changes in market conditions the past several years.
AFTER HOURS
Knowing more about the people we work with is the fun side of the business. It helps start conversations and strengthens business relationships. To nominate a colleague, request an After Hours form from Peter Madrid, peter.madrid@azbigmedia.com. PHOTOGRAPHY MIKE MERTES
What accomplishment are you especially proud of?:
President of Spectra Contract Flooring With Spectra for 15 years Born in Ventura, Calif., but was raised in Scottsdale Received B.S. in Business Management from the University of Phoenix Wife Cindi; has three children ages 18-24
Responsibilities:
Lester manages the overall business of Spectra Contract Flooring, including supplying and installing commercial flooring products to end-users and general contractors.
Favorites:
Sports/teams: Arizona State University’s teams, Arizona Cardinals, Suns and Diamondbacks. Activities: Long-distance running and is currently adjusting to the empty-nester lifestyle. Destinations: Rocky Point, Mexico and Pinetop are Lester’s preferred getaway spots, but he’s looking forward to a European cruise in the future.
What did you think you’d be when you were growing up?: A sportscaster for a major network. 14 | January-February 2013
What would people be surprised to know about you?: Returned to college a couple of years ago to complete my degree and I recently graduated. I often refer to this college experience as my education marathon.
Advice:
Received: Respect all individuals you come in contact with, regardless of his or her title and attributes. To Share: Be a student of your trade by consistently learning new information and skills to serve all stakeholders in your projects. When pursuing goals, think: “It can be done.”
on AZREmagazine.com
➙
VINCE LESTER
Raising three children, with the two oldest earning college degrees and now my youngest is attending ASU. Additionally, finishing seven marathons, which includes the New York City Race in 2009. I am very proud of all of my associates at Spectra Contract Flooring and the reputation we have earned.
Visit AZREmagazine.com to see what Tina does After Hours. Tina Smith, an attorney at Ballard Spahr, is a Chicago native and fan of anything Frank Sinatra.
QUALITY • CRAFTSMANSHIP • TRAINING DEMAND THE BEST. DEMAND SMACNA ARIZONA CONTRACTORS
To learn more, visit www.smacna-az.org or call
(602) 734-0214
Follow us:
15
CONSTRUCTION: SPORTS VENUES BY COOPER RUMMELL
ROOTING FOR THE HOME TEAMS Arizona’s sports venues getting a facelift; new Cubs facility springs up in Mesa
W
ith spring training baseball just around the corner, the NFL in the playoffs, the NBA nearing the midpoint of its season and Arizona’s two major colleges competing year-round, the construction industry is teaming up to build and renovate sports venues in the state. These sports facilities play a vital role in the Arizona economy as they play host to hundreds of thousands of fans each year. They come to watch more than a month of spring training baseball in glorious weather. They also flock to the Arizona State University and the University of Arizona in the fall to cheer on the Sun Devils and Wildcats.
Riverview Park: Spring training facility of the Chicago Cubs 16 | January-February 2013
Lowell-Stevens Football Facility: Arizona Stadium, Tucson
Ò PEORIA SPORTS COMPLEX CLUBHOUSE RENOVATIONS Contractor: Mortenson Construction Architect: Populous Ground breaking; Expected completion: 4/13; 1Q 2014 Estimated Cost: $30M Summary: Home to the San Diego Padres and Seattle Mariners, the Peoria Sports Complex will undergo clubhouse renovations at the end of the 2013 Cactus League season. The complex is unique in that it was the first spring training facility in the nation to house two teams. Both teams have distinct needs for their training facilities. “Externally, the buildings are designed to represent the uniqueness of both teams”, says Mortenson Vice President Chris Norcross. Both teams also have a distinct internal layout of the clubhouses, due to the teams’ different training philosophies. In less than one year, Mortenson plans to further the distinct identity of each team through these renovations. Ò RIVERVIEW PARK: SPRING TRAINING FACILITY OF THE CHICAGO CUBS Contractor: Hunt Construction Architect: Populous, DWL Ground breaking; Expected completion: 7/11/12; 4Q 2014 Estimated Cost: $99M Summary: After several years of negotiating and waiting, ground was broken in Mesa to transform the existing Riverview Park into the new spring training facilities for the Chicago Cubs. Despite a year of negotiations, the Cubs will no longer be sharing the facilities with the Arizona State University baseball team. Riverview Park will seat more than 15,000 fans, which is a 2,500-seat increase from the storied Hohokam Park, the Cubs’ current Cactus League park. Several practice fields will be developed as well as concession stands, parking spaces and other amenities for fans and players. Together, Hunt, Populous and DWL will develop the surrounding area into a signature park featuring creative aquatic and lighting designs.
Ò LOWELL-STEVENS FOOTBALL FACILITY: ARIZONA STADIUM, UA Contractor: Mortenson Construction Architect: Heery International Ground breaking; Expected completion: 1/20/12; 3Q 2013 Estimated Cost: $72.3M Summary: For the past several years, the home of the Arizona Wildcats football team has seen a slow metamorphosis into a transformed stadium. After completing the south end zone renovations, the university began renovating the north end zone. Known as the Lowell-Stevens Football Facility, the north end zone renovations will add around 5,000 new box and club seats to the Tucson stadium. The renovations have not impeded Wildcat play, and development has continued during the football season. Ò SUN DEVIL STADIUM: ASU FOOTBALL Contractor: N/A Architect: N/A Project Announced: April 2012 Estimated Cost: $300M Summary: Pac-12 competition will continue to heat up with the renovation of Sun Devil Stadium. Still in its early stages, the stadium renovations could feature a new district of outside concessions that will transform the ASU tailgating experience. Along with the stadium renovations, ASU is discussing a possible 330-acre development for housing and retail. Current renderings of the improved stadium include a canopy that will significantly decrease the temperature inside Sun Devil Stadium during the hot months. ASU Senior Associate Athletic Director for Communications Rocky Harris says the goal of the project is to bring the stadium up to the standards of every other Pac-12 team stadium. The Devils will not, however, relocate the stadium completely. Harris says the stadium’s famed location between the buttes is priceless. 17
ECONOMIC DEVELOPMENT BY PETER MADRID
‘WHERE ENVIRONMENT MEETS TECHNOLOGY’ Continuum is poised to become Arizona’s next world-class, state-of-the-art business park
A
s the City of Chandler positions itself to become a major player in attracting technology and bioscience companies, a state-of-the-art, 152-acre business park rises from the site of the old Motorola plant amid pastures where cows still graze. Continuum, located along the fast-growing Price Corridor, boasts of its high-capacity infrastructure, advanced voice and data communications, landscaped open spaces, and access to a world-class workforce. “Continuum is a key, strategic piece in our recruitment of high-tech companies,” says Christine Mackay, economic development director for the City of Chandler. “We want companies to come to a place where they feel connected, where they feel a sense of place. With its amenities, such as the water features and points of contemplation, that’s what Continuum offers.” Developing the $750M project is Capital Commercial Investments of Austin, Texas. As Continuum stands now, much of the infrastructure is in place. Buildings on the site include an existing 512,000 SF office and research and development Motorola facility and a 1 MSF modular data center designed by PHArchitecture and built by J.E. Dunn for CyrusOne. When completed, the data center will house 250 CyrusOne employees and executives. It is expected to become the largest of its kind in the U.S. with a capacity of 110 megawatts delivered from a substation to be built on the property. “Continuum has been a long time in the making and to see it take shape has been extremely rewarding,” says Kevin Miller, senior vice president southwest region for Capital Commercial. “The project has been well received within the community, and we continue to receive positive feedback.” Capital Commercial got the project off the ground in 2009 with help from Chandler on zoning issues and $10M to help with infrastructure. The CBRE team of David Carder and Luke Walker will handle the leasing. Because Capital Commercial and its partners tend to be cash buyers, their properties are mainly debt-free. “In this particular case, the City of Chandler has been a great partner in the rezoning and overhaul of the infrastructure,” Miller adds. In order for a project the magnitude of Continuum to succeed, collaboration is crucial. Mainly, Miller says, it’s the collaboration of multiple entities over several years to design
18 | January-February 2013
a premier park that will generate potentially thousands of jobs and a massive economic impact to the City of Chandler and surrounding areas. “Trying to take a vision perceived by everyone differently and putting it onto paper is one of the most difficult tasks to overcome,” Miller says. “It takes a team that knows what the goal is at the end to work through all the challenges to finalize something that, in turn, will be great for each.” The City of Chandler was instrumental with the design for the infrastructure, with PHArchitecture taking it to the next level with its architectural fl air. Capital Commercial then worked with what vision it would like to see the park developed into and collaborated with the City of Chandler and the architect to have an approved preliminary design package for potential buildings. “Capital Commercial is making quite an investment,” Mackay says. “When you’re under a microscope with a project
Continuum’s Coolness
Brian Silvester, Senior Project Manager at PHArchitecture on the Continuum project, breaks down some of its “cool features.”
For a really cool video, go to pharchitecture.com/continuum-park. The site includes meandering roadways around the existing centrally located Motorola parcel. Included is a naturally meandering lake system with multiple “point-of-contemplation” pedestrian seating areas. The Continuum design concept resulted in the use of natural and man-made materials such as natural stone veneer adjacent to cast-inplace concrete. Due to the success of video animation of the park, a PDP (Preliminary Development Plan) book was produced which would serve as a design tool for all future developments. A steel globe feature within the round-about (a lakes component)
perpetuates the Continuum identity. The globe was commissioned by Tucson artist Rebecca Thompson. The cradle base is a hybrid of a man-made element with laser cut lettering juxtaposed with a painted rust finish. “Natural water” features are the heart and soul of Continuum. Water is used as an essential resource, civilizing the park environment with added richness and quality of space. Pedestrian routes and accessible “green space” are distributed, providing a balanced ecology. The lush, densely landscaped open space interacts cohesively with the water features, intensifying the connective relationships between a structured environment and the landscaped environment.
of this magnitude, everything has to be on the table. This is a project that could shape future business in the City of Chandler.” By loose definition, Continuum means: completely separate items that are not alike but that are exactly equal and identical when they touch each other. From that definition springs the project’s motto: “Where environment meets technology.” Within the first hour of their initial meeting, Capital Commercial and PHArchitecture were on the same page regarding the vision of the site being a world-class, stateof-the-art business park, Patrick Hayes, president/CEO of PHArchitecture, recalls. Within the first couple of weeks the specifics of the concept were established and advanced, he says. It took several meetings with the City of Chandler to bring them on board that Continuum was not going to be an ordinary business park. “We created a computer graphic digital animation ‘Fly-By’ of the park so they (and others involved) could fully comprehend
the concept,” Hayes says. “Once they saw the conceptual imagery through the 3-D animation, the city was fully engaged in working with the design and development team to achieve the final environment that is finalizing today. It took nearly 18 months of meetings and exchange of ideas and information to finalize the Plan Area Development (PAD), which is essentially rewriting zoning and development guidelines specifically for Continuum. Th is ensures that all future development within the park will meet the highest standards conceived and established for the park to ensure optimum success.” The overall concept of Continuum is for it to be a place where companies don’t necessarily need to be, but be afraid not to be there, Hayes says. The remodel of the existing Motorola building and the CyrusOne project, as the first two projects, are the initial phases that embrace the very original design concept and set the bar for all future developments. “Th is is going to be a fun ride,” Hayes says. 19
40 COMPANIES TO WATCH BY CAROLINA LOPEZ
COMPANIES TO WATCH In Commercial Real Estate in 2013
The commercial real estate industry is gaining momentum. Looking back, 2012 was a strong year with the completion of various major projects and the ground breaking of a few others. Moving forward, AZRE magazine identifies 40 companies to watch in 2013. They were selected on what they accomplished last year — and also based on their plans and projects for the new year. Buoying the industry in 2012 and on in to 2013 is the construction of upscale multi-family apartments and student housing at both Arizona State University 20 | January-February 2013
and the University of Arizona in Tucson. Healthcare projects also dominated headlines in Arizona’s commercial real estate industry, with a new cancer center breaking ground in Downtown Phoenix and a 110,000 SF addition slated for the MD Anderson Cancer Center in Gilbert. Brokers also witnessed an uptick in leasing activity in the retail, office and industrial markets. Spec industrial warehouses also grabbed the headlines, as did two new ground up office buildings in Phoenix and Chandler. New retail projects included outlet malls in Glendale and in Chandler.
Broadstone Lincoln is one of three Alliance Residential luxury apartment complexes.
Adolfson & Peterson Construction fast-tracked four charter schools and started another multi-family project in Gilbert. Some of the projects completed and started in 2012 include: Paideia Academy of South Phoenix, Odyssey Institute for Advanced Studies and Scottsdale Unified School District — Yavapai Elementary Addition. A&P continued to take the lead in the construction of multihousing projects with Argo at Town Lake in Temp. a-p.com The Alter Group This national commercial real estate firm has plans to break ground on 605,000 SF spec warehouse at Buckeye Logistics Center. Kurt Rosene oversees more than 5 MSF in the Southwest for the company and directs build-to-suit and property development activities. The Alter Group has been recognized by NAIOP as a National Developer of the Year. altergroup.com Beal /Derkenne Construction This full-service commercial general contracting firm, founded in 2010, has established a presence in Phoenix. Services include general contracting, construction design management, pre-construction management, consulting, construction management, owner representation and cost management. Current Arizona projects include the The Hub on ASU’s Tempe campus and Park Avenue in Tucson. bdconstruct.com Caliber Construction This service-oriented construction group has work in commercial, medical, remodeling, residential and interiors. One of Caliber’s projects includes the 57,000 SF Children’s Rehabilitative Service Center, built for DMG at Park Central Mall in Phoenix. Caliber’s work on the Virginia G. Piper Sports and Fitness Center for Persons with Disability (SPOFIT) earned the company a 2012 RED Award for Best Public Project. caliberconstruction.com CBRE closed the deal on the $137M Fountainhead Office Plaza in Tempe. Five property managers won 2012 BOMA TOBY Awards (Marie Dunn, Serena Wedlich, Margaret Foster, Michael Chadwick and Maricella Nunez). CBRE also had three winners in the inaugural Big Deals: Mindy Korth, Office Sales; Broker Team of Tom Adelson, Kevin Callihan, Jim Fijan and Jerry Roberts; and Top Sales Firm, led by Craig Henig, Senior Managing Director. cbre.com
Alliance Residential Company, an ownership, development and management company, is headquartered in Phoenix and has 17 regional offices. It has three Broadstone projects in the works: Waterfront (259 luxury units), Lincoln (264 luxury units) and Camelback (270 ultra luxury units). Nationally, Alliance has 4,000 units in production. allresco.com Banner Health is one of the largest nonprofit hospital systems in the nation, Banner is building its new health clinics around the Valley and expanding Banner Estrella Medical Center Tower II, which will provide enough additional capacity to meet patient care demand. Completion of this project is expected to be in 2015. Banner also announced it is adding another 110,000 SF to the MD Anderson Cancer Center in Gilbert. bannerhealth.com Bernards The Phoenix office of Bernards will oversee grading of the first 11 neighborhoods in the 2,400-acre, multi-phase development of Eastmark at the former General Motors Proving Grounds in Mesa. Former Kitchell executive Mike Rock joined Bernards as vice president of its Phoenix office, which was established just a few years ago by Director of Operations Carl McFarland and Director of Client Development Tom Harrison. bernards.com Cassidy Turley Through October of 2012, Cassidy Turley Arizona completed 876 transactions. They include: Scottsdale Horizon, 154,766 SF retail, $38M sale; Steele Park Apartments, 366,201 SF multi-family, $34.35M sale; Paradise Valley Corporate Center, 198,472 SF office, $26.98M sale; and The Boulevard at Surprise Point, 141,507 SF retail, $17.5M sale. cassidyturley.com CHASSE Building Team is working on the ICAN neighborhood building for youth in Chandler. In the community, more than 500 people attended the Boys & Girls Club Compadre Branch Grand Opening. During the ceremony, ribbons were cut, time capsules were sealed, and kids went on a “green” scavenger hunt to uncover some of the club’s sustainable aspects. chassebuildingteam.com
21
40 COMPANIES TO WATCH Colliers, a full-service commercial real estate fi rm that specializes in the sale and lease of retail, office, investments, land and multi-family, won two 2012 Big Deals awards. Bob Mulhern won for Managing Director/ President or Principal and Cindy Cooke won for MultiFamily Investments. colliers.com Commercial Properties Inc. (CPI) was established in 1981 and provides landlord and tenant leasing, sales and investment, and property management services. Its listings include 55.5 MSF and more than 100 projects under property management. CPI’s brokerage team has more than 350 years of cumulative experience in the commercial real estate arena, and several of its veterans have been with the firm for more than 10 years. cpiaz.com DMB Associates Th is Arizona-based, diversified real estate company is the driving force behind Eastmark, the former Mesa Proving Grounds. Its goal is to become a hub for major industry, entrepreneurialism and vibrant daily living. DMB is also a member of Local First Arizona, supporting and sharing its commitment to build vibrant communities. dmbinc.com DPR Construction Th is national commercial contractor and construction manager completed work on University of Arizona Health Sciences Education Building. DPR is currently working on the W.P. Carey School of Business McCord Hall and Vanguard Health System West Valley Medical Center. dpr.com Gilbane has completed more than $400M of construction management projects in Arizona, including the Maricopa County Downtown Court Tower, ASU’s Interdisciplinary Science and Technology Building, City of Phoenix Crime Laboratory, Arizona State Health Laboratory, John C. Lincoln Healthcare renovations and the Polly Rosenbaum State Archives Building. gilbaneco.com
Douglas Allred Company’s University & I-10 office building in Phoenix.
22 | January-February 2013
Core Construction CORE recently completed ASU’s Polytechnic student housing, built Phase I of CAC Maricopa Campus and also completed the Integrated Education Building and the Incubator at Gateway Community College. Upcoming projects include Central Arizona College Maricopa Campus and Higley USD Middle Schools. coreconstruct.com Cushman & Wakefield It was a solid year for Larry Downey, Bo Mills, Mark Detmer and Chris Toci of real estate services firm Cushman & Wakefield. Downey was named Vice Chairman, a title reserved for an elite few throughout the firm’s worldwide offices. The company’s highlight was negotiating the lease of the 1.267 MSF Fowler Destruction Center for Amazon. cushwake.com Douglas Allred Company Th is San Diego-based company currently is developing two office buildings in Arizona. Allred Park Place in Chandler will be occupied by software firm Infusionsoft, which is relocating from Gilbert. Allred I-10 and University will be an 80,000 SF, single-story development in Phoenix. douglasallredco.com Gensler Current design projects in progress and continuing through 2013 include ASU Block 12 MixedUse Building, which was designed along with Architekton; City of Maricopa City Hall and Police Facility; City of Casa Grande Dispatch Center and Library Improvements; Apollo Group/University of Phoenix; and renovation projects, including those at Fennemore Craig, Snell & Wilmer and Lewis & Roca. gensler.com hardison/downey construction Currently building Roosevelt Point, a $52M, 2-building, upscale apartment project in Downtown Phoenix and San Tan Village Apartments in Gilbert. In 2012, it worked on Arizona School for the Arts Phase 4, Rancho Solano Ventura Campus, ASU Villas at Vista del Sol Student Housing, ASU West Dining Facility and City of Phoenix Mayor’s Art Gallery at City Hall. hardisondowney.com
23
40 COMPANIES TO WATCH Hunt is building Twin Arrows Casino near Flagstaff, the Navajo Nation’s first Arizona casino.
Hensel Phelps Construction Co. has been doing business in Arizona since 1978. It is working on the PHX Sky Train, developing EnviroMission’s Solar Tower and the UA Cancer Center in Downtown Phoenix. Western District projects include retail and mixed-use facilities, parking structures, hospitality, multi-family residential, commercial, public and private sector offices, higher education and laboratory facilities. henselphelps.com Irgens The year in review for Irgens: In September it closed on the Shea Medical Plaza acquisition, a 45,000 SF medical office building in Scottsdale. Looking ahead to 2013, Irgens has teamed with CBRE to complete Phase II of a development at Estrella. Irgens also has partnered with hospitals, health systems, physicians and other service providers to create successful healthcare and senior living facilities. irgens.com Kovach had a tough act to follow after completing work at Banner MD Anderson Cancer Center in Gilbert, but it followed up nicely with copper work at the HSEB in Downtown Phoenix. Other 2012 projects included the completion of Gateway Community College Integrated Education Building Phase II and PHX Sky Train’s 44th Street Station. Entering 2013, work includes the Maricopa County Sheriff ’s Office Headquarters Building Enclosure, Manzanita Hall Enclosure, Banner Estrella Medical Center, ASU Downtown Recreation & Wellness Center and ASU Tempe Student Recreation Center. kovach.net Mark-Taylor Residential took advantage of a robust multifamily market and is developing three projects: San Marquis in Tempe ($24M, 224 units); Parcland Crossing in Chandler ($44M, 383 units); and San Norterra in North Phoenix (338 units). All three are branded as part of Mark-Taylor’s “The Next Generation” of residences. mark-taylor.com Mortenson Construction After building Salt River Fields at Talking Stick, Mortenson scores in 2013 with the University of Arizona Stadium north end zone project and a major renovation of the spring training baseball Peoria Sports Complex. Salt River Fields won the 2012 RED Award for Most Challenging Project. It was the first spring training facility to be built on Native American land. mortenson.com 24 | January-February 2013
Hunt Construction Group Hunt is building two of the state’s major projects: Twin Arrows Casino near Flagstaff and the Chicago Cubs new spring training facility in Mesa. It also is working on the cancer center at the Mayo Clinic Phoenix campus. The Navajo Nation broke ground March 21 on a $150M casino project along Interstate 40 east of Flagstaff. It is tribe’s first casino in Arizona. Plans call for a hotel, conference center, spa and golf course at the site. huntconstructiongroup.com J.E. Dunn Construction Building a state-of-the-art data center for CyrusOne at Continuum in Chandler. J.E. Dunn has completed more than 20 Arizona healthcare projects, including Oasis Hospital, Mountain Vista and West Valley medical centers. It is currently building the 200,000 SF Tucson Medical Center West Campus. Recently completed projects include UMB Bank’s first, full-service banking center in Arizona and Sun Edison Saddle Mountain, a 15 mW solar field. jedunn.com Lee & Associates Sales included the $125.4M Tucson Spectrum Shopping Center, Jan Fincham and Patrick Dempsey, principals. Top industrial leases included 238,450 SF, Communication Test Design; and 115,900 SF, System Services of America. Founding Principal Craig Coppola won a Big Deals award for Office Leasing — Broker. lee-associates.com McCarthy Building Companies continued a hot streak of K-12 education projects in Arizona. It also completed the 17 mW APS Cotton Center Solar Station in Gila Bend and built Chandler’s 30th elementary school. It was part of the team that won the 2012 RED Award for Special Merit: Education. It was GC for P.L. Julian Elementary School. mccarthy.com Nathan & Associates successfully closed escrow on more than 1,323 lots with 10 different builders in a project known as The Bridges in the Southeast Valley. Total sales volume was in excess of $37M. In the Northwest Valley, it brokered ±500 finished lots to six builders in Vistancia. nathanandassociatesinc.com Hensel Phelps is general contractor for the new UA Cancer Center in Downtown Phoenix.
Sundt Construction is GC for the new Tucson Joint Courts building.
Okland Construction Major work for this Salt Lake City-based general contractor in 2013 includes the Cancer Treatment Centers of America in Goodyear and a new Mormon temple in Gilbert. Its new 24,000 SF office was designed to physically illustrate the values of the company. Simple industrial materials were used in an elegant way to best reveal the process of construction. The structure is organized around a central courtyard that provides spaces for outdoor gatherings. okland-const.com P.B. Bell currently is developing multi-family projects in Gilbert, North Scottsdale and two in Chandler. Stonefield will be a luxury apartment community in Chandler that will feature 194 units. The estimated time when units will be available for leasing is November 2013. In addition, P.B. Bell manages close to 6,000 Class A-C units in Metro Phoenix and Tucson. pbbell.com Ryan Companies US finished construction on the 210,000 SF Phoenix FBI building and announced plans to build Hayden Ferry Lakeside Phase III. Ryan is celebrating its 75th anniversary this year. Ryan’s Western Region headquarters at 3900 Camelback Center sets the standard for “green” Class A space in Phoenix. The design features large, stair-step terraced balconies and tinted glass exterior. The building has underground, reserved parking and excellent views of Camelback Mountain. ryancompanies.com
Orion Real Estate Services continues to grow. Its most significant deal included Arrowhead Health Center, a 103,216 SF medical office building for $19.86M, the largest singleasset medical office transaction of 2012 in Metro Phoenix. Other deals: CityScape at Lakeshore, a 214-unit multi-family complex in Tempe, $22.65M; and Pala Mesa, 256 units in Mesa, $22.6M. orionires.com Renaissance Companies Building Dick’s Sporting Goods distribution center in Goodyear. This $28.6M, 600,000 SF industrial project is a design-build for Merit Partners. Another project is the SAS Injection Molding Facility in Goodyear. It is a $5M, 150,000 SF tenant improvement of a facility that produces totes for warehouse grocery stores. renaissancecos.com SmithGroupJJR designed the Central Arizona College Maricopa Campus, Banner Health Verrado, Ironwood Cancer and Treatment Center and the VA Campus Mental Health Building. SmithGroupJJR was the architect for two 2012 RED Award winners: Westin Phoenix Downtown (Hospitality) and DPR Headquarters (Most Sustainable). smithgroupjjr.com The Weitz Co. With expertise in retail, hospitality, senior living, golf and clubhouse, tenant improvement and office construction, Weitz celebrates 35 years in Arizona. One of its major projects in 2012 was the PHX Sky Train. Weitz was a design-build partner to Bombardier Transportation for the train guideways and operation and maintenance facility. Whitestone REIT This real estate company owns and operates community centered properties, which are visibly located and serve a 5-mile radius in culturally diverse neighborhoods. A recent acquisition was Fountain Square, a 118,209 SF community center on Bell Rd. near 7th St. The densely populated trade area serves the Moon Valley and Paradise Valley neighborhoods in North Phoenix, which has contributed to the stable tenancy at Fountain Square. whitestonereit.com Ryan Companies US is the developer and general contractor for Hayden Ferry Lakeside III in Tempe.
Sundt Construction Co. This Arizona-based general contractor completed several high-profile projects, including UA’s Health Sciences Education Building and ASU’s Interdisciplinary Science and Technology Building 4. Sundt also is building the ASU Downtown Recreational Center and Phoenix-Mesa Gateway Airport Terminal expansion. Sundt started work on the Pima County/City of Tucson Courts Complex. In 2013, projects include the John M. Roll U.S. Courthouse in Yuma. sundt.com Wells Fargo With more than 110 commercial banking offices nationwide, Wells Fargo’s customers are businesses with annual revenues between $10M and $500M, including manufacturers, wholesalers, retailers, distributors, importers and service companies. wellsfargo.com 25
INSTITUTE OF REAL ESTATE MANAGEMENT BY PETER MADRID
STRATEGY FOR SUCCESS IREM members bring value enhancements to properties, steering them as an asset rather than merely maintaining them
M
aximizing the value of investment real estate and promoting top-fl ight management through education and information-sharing are principals upon which the Institute of Real Estate Management is built. In the eyes of IREM members, good management matters and wellmanaged properties pay dividends in terms of value and in the quality of life for residents, tenants and customers. How do members of IREM Greater Phoenix Chapter No. 47 add value enhancements to properties and steer them as an asset rather than just maintaining them? As his team at Cushman & Wakefield Arizona begins positioning an asset, says Chad Littell, Senior Associate | Capital Markets Group, they first develop a strategic plan that includes management, leasing and investment sales professionals.
27
INSTITUTE OF REAL ESTATE MANAGEMENT
“We begin with the end in mind,” he says. “The strategic plan aims to target the most desirable tenants and lease structures, ascertain the ideal occupancy rate and timing for disposition, and lowers operating expenses where feasible. Typically, the larger the space, the more lead time the tenant will have in making their decision.” Offering a plain, white shell with several easels featuring building-standard fi nishes may be the best marketing strategy for a large distribution space, Littell explains. For smaller tenants, they often make leasing decisions less than 60 days before taking occupancy, and the landlord that mentions a “permitting process” loses. “Since it can cost up to 70 percent more to re-tenant a suite, provide tenants with a clean and safe work environment to enjoy so that the only reasons they could leave would be cost, oftentimes controllable, and function,” Littell advises. Beginning with the disposition in mind guides a team through each property decision. If the market will not pay a premium for anything leased above a certain threshold, there is no benefit to spend money on lease-up costs to achieve a higher occupancy. Oftentimes it is more important to do the “right” deal rather than many deals that hurt the underwriting during the sale. Expenses are also a key area in the process that is often overlooked, Littell says, especially with triple net leases, through an understanding of the overall cost-to-lease or own a particular building compared to the competitor down the street. At Cassidy Turley, becoming a strategic partner with clients is how it approaches its relationships, says Vice President, Principal Alisa Timm. “The process of how to develop and implement a strategic plan came in part from my education as a CPM through IREM, which teaches not only about the details of operating expenses and how to manage them most effectively, but more so about the broad picture of the life of an asset,” Timm says. Tenant communication and management are keys to driving income to the property through tenant retention, she adds. “No matter where the asset is in its life cycle, we have the ability to make value enhancements by introducing new technology to older properties or maintaining the sophisticated systems that are embedded in new properties. Creating a strategic plan to drive income to the bottom line is what we excel at.” Each of her team’s property managers are either CPMs or enrolled as candidates. “I consider the CPM to be the equivalent of a master’s degree in asset management and a requirement to be a senior level manager,” Timm says. Megan Sherwood, a listing broker with close to 25 years of real estate leasing, sales and management experience, is a senior VP with Transwestern’s healthcare advisory team in Phoenix. She holds a CPM designation. “At Transwestern, we are especially adept at 28 | January-February 2013
Alisa Timm
Chad Littell
Megan Sherwood
identifying the needs of our clients and matching those needs with office environments that allow them to excel in every way possible,” Sherwood says. “Th is depth of service begins with locating a building that is well-suited for our client and also making sure the tenant is a good fit for the building.” Coupling the level of service provided by Transwestern with the expertise she has gained through her association with IREM and the intensive process of becoming a CPM ensures that the best tenant/building match can occur. “Transwestern is very supportive of IREM, so it’s important that we utilize IREM standards in guiding our clients to the most optimal property for their business needs,” she says. For example, with Transwestern’s medical clients, there are certain benchmarks it looks for in a building: adequate parking, proper HVAC system, top-rate janitorial service to keep the spaces clean and green-energy standards for sustainability. “If one of those elements is missing, we won’t consider the building,” Sherwood says. “My association with IREM has earned me knowledge and expertise to excel in my career above and beyond expectations. And I continue to apply what I’ve learned to all leasing strategies for Transwestern and our clients.”
If you go
IREM-CCIM 2013 Economic Forecast What: Learn from some of the industry’s best about the future of real estate at the IREM-CCIM Economic Forecast. Arizona Congressman David Schweikert is scheduled to be this year’s keynote speaker. When: Jan. 24, Noon-6 p.m. Where: Tempe Center for the Arts, 700 W. Rio Salado Pkwy. More information: iremccimforecast.com
IREM Greater Phoenix Chapter No. 47 President
GENNA GOLDBERG THE ECONOMIC CLIMATE IS CHALLENGING. WHAT CONCERNS ARE FACING YOUR MEMBERS? The real threat of a serious shortage of talent is just around the corner. Managers in property management, as well as all industries, will be forced to focus more than ever on identifying, attracting, developing, rewarding and retaining qualified staff. Th is task will be made even more challenging in the face of declining profit margins, higher labor costs and competing career options.
WHAT FINANCIAL ISSUES ARE OF GREAT CONCERN? With mounting demands from property owners and clients, expectations are rising among tenants and residents. Property management has come to be regarded as a commodity service. Management companies must continually satisfy their customers to remain competitive.
WHAT CHALLENGES DO YOU SEE IREM MEMBERS FACING?
Taking risks and managing risks play a key role in how organizations create profits and value and is inevitable in all business environments. Th is is especially true of the business of real estate management where risk exists at multiple levels. There are all kinds of risks associated with being an employer and with running a business, as well as risks associated with the properties being managed and those who live, work, shop, and do business there. September 11, 2001 changed how risk will be viewed forever. Then came Katrina, again reshaping the risk landscape. And more recently, Superstorm Sandy. The definition of unpredictable events was altered and the demand for the capacity to respond to future unpredictable events has increased. WHERE DOES IREM STAND ON SUSTAINABILITY ISSUES? As the leader in the real estate management industry, IREM has the opportunity to promote the sustainable use of resources. Ensuring an environmentally sustainable future not only benefits the users of real
estate and protects our natural resources, but is critical for the long-term economic prosperity of property owners and managers. Adopting sustainable practices will keep properties more competitive by: reducing maintenance and operating expenses; using energy more efficiently; employing cleaner sources of energy; improving NOI; expanding marketing opportunities; and making properties better places to live and work. WHAT IS ON IREM’S RADAR FOR 2013? Technology ranks as the top strategic issue for the real estate management industry, equally confronting managers of both commercial and multifamily properties who are challenged to stay on the cutting edge of new advancements and evolving applications. Genna Goldberg is Senior Property Manager for The Muller Company, earning CPM designation in 2007; CPM of the Year in 2010.
Get in the Know with
People to Know AZRE Magazine is proud to invite you and your guests to attend a cocktail reception honoring the 2013 People to Know in Commercial Real Estate.
March 21, 2013 | 5-8 p.m. Cocktails & Appetizers will be served!
Registration Opens February 1, 2013 PTK will be published March 2013
Title Sponsors:
Deadline for space reservation: February 8, 2013
Event Sponsor:
For advertising information & sponsorship opportunities: 602.277.6045
29
INTERNATIONAL COUNCIL OF SHOPPING CENTERS BY PETER MADRID
GETTING BACK TO BUSINESS Developers share their thoughts and visions as the Valley’s power centers push past tough times
30 | January-February 2013
The headline on the website of a popular retail magazine a few years back pretty much said it all: “Recession Fallout: Malls Struggle in Western U.S.” The article made mention of the “once-booming” states of California, Nevada and Arizona. With Metro Phoenix’s retail power centers on the mend, AZRE magazine asked the following questions to some of those developers: w What unique strategies did your property (or properties) undertake to navigate through the recession? w Did you take any different paths to mitigate the changing shopping attitudes of customers?
(left) CityScape is a high-rise, mixeduse development in Downtown Phoenix consisting of residential, retail, office and hotel components. The project covers three Downtown Phoenix city blocks and is located between First Ave. and First St., and between Washington and Jefferson streets. It is centrally located in the middle of Downtown Phoenix, within walking distance of US Airways Center, Chase Field, Comerica Theatre, the Orpheum Theatre and the Phoenix Convention Center. (right) Metrocenter is bounded roughly by I-17, 35th St., and Dunlap and Peoria avenues. Its anchor stores include Macy's, Dillard's clearance center and Sears, with two vacant anchors last occupied by Macy's (which moved to its current location in 2006) and JCPenney. The mall features more than 100 stores, a 12-screen movie theater and a food court.
CITYSCAPE
“RED (Development) was well positioned in 2008 to expand its focus from development to include other key disciplines that became even more important as the real estate landscape changed. Specifically, RED was able to grow by deploying the company’s sizable expertise in the ongoing management and acquisition of existing properties — a stable and growing niche that continues to thrive. Because of this, RED is succeeding as a partner of choice for national retailers, real estate investors and property owners when it comes to maximizing asset value and performance. Strong access to capital also is enabling RED to grow through acquisitions in select markets. “Retailers certainly have had to address consumers’ increased emphasis on value since 2008. But for retail property owners and operators, the essentials remain much the same: great amenities, excellent locations, the right merchandise mix for the market and, of course, top-drawer operations — from safety and cleanliness to beautiful settings. Even as shoppers continue to integrate technology into their shopping patterns, making sure that the physical experience at our retail properties exceeds expectations is a key part of what helps RED shopping destinations succeed. “CityScape has become an integral and vibrant part of Downtown Phoenix, and yes, that is absolutely a great feeling. Our company is actually headquartered at CityScape, so we know firsthand how terrific it is to have a world-class hotel and lots of great dining, entertainment choices and sports venues just steps away. A robust urban heart of the city had been missing for so long, and we are very pleased to be part of Steve Maun this exciting new chapter for Phoenix.”
METROCENTER
"Metrocenter’s purchase by New York-based Carlyle Development Group toward the end of the recession marked a new era for the property and created an example of opportunity that could be created from a recession. The property has had to navigate many recession challenges, including Phoenix’s high degree of unemployment, the result that this has in decreasing disposable income on the part of customers and the stress that these fundamentals cause for tenants. However, this purchase has allowed Metrocenter to stabilize and to position itself for a comeback as the market recovers. "For a 1.3 MSF mall such as Metrocenter, we understand that we must be open to new ideas and directions and must utilize all of the resources available in this market. For example, we invite co-brokerage deals while many malls still do not, and we have initiated partnerships with local experts like Kimber Lanning to spread our message and encourage all types of new opportunities, particularly within the local vendor market. "Recognizing that shoppers are becoming more value-oriented customers, we’ve focused on creating a mall environment that mixes value with experience. For example, we have one of the busiest Sears stores in the state. We are also home to 501c3 tenants like the Phoenix Conservatory of Music and Native Health. Every mall has its iconic element. For Metrocenter, the prevailing moniker is longevity. This is a huge footprint that will remain a Phoenix retail landmark. It will not be the Metrocenter of the 1980s or 1990s, but it will be a mall that meets the needs of today’s Metrocenter shopper. "The next 24 months will be an exciting time Brent Meszaros of vision and change at Metrocenter."
— Steve Maun, Managing Partner and President, RED Development — Brent Meszaros, General Manager 31
INTERNATIONAL COUNCIL OF SHOPPING CENTERS (left) Westgate City Center is a regional destination for shopping, entertainment, commercial office and luxury residential. Anchored by Jobing.com Arena, home of the NHL Phoenix Coyotes, it has become one of the premier entertainment destinations in the region, attracting a projected 22M visitors annually.
DE RITO PARTNERS
“Our key strategic initiative was bringing the 330,000 SF Tanger Outlets to Westgate, which opened in November (2012), to establish a critical mass of retail and a regional destination shopping draw that had been missing at Westgate. With the addition of the Tanger Outlets, Westgate is poised to consistently draw shoppers from a 20 to 40 mile radius, a far wider reach than most traditional shopping environments. “We took a hard look at our tenant roster, identified those who are successful and a fit for our vision for the Westgate Entertainment District, and have extended, and in some cases expanded, leases with those tenants. In other cases, we’ve made the decision to upgrade or replace in certain categories. We have substantially increased the number and type of events held in the Entertainment District to solidify the property as a unique, fun and active destination with something happening on-property more than 250 days a year. “Westgate is different today than it was a couple years ago. With the addition of the Tanger Outlets, the retail footprint of Westgate has more than doubled. Owners iStar Financial have invested hundreds of thousands of dollars in capital improvements in the past year, and have planned to similarly invest in new Jeff Teetsel improvements in the next year.”
“We continue to be a nimble group, enabling us to react in a very timely manner to ever-changing market conditions. The management group is in the trenches with everyday activities, working with the teams to accomplish our goals. In the past two years, the company has realized a 35 percent growth in the size of brokerage, which is virtually unheard of in our industry. “To support our long-range forecasting and create new revenue streams, we have added new companies inside our platform. In addition to De Rito Partners, Inc. and De Rito Partners Development, Inc., we have launched De Rito Property Management, offering premier-quality property management services for retail properties of any size, and DP Opportunity Investors having purchased 30 retail assets, offering individually tailored property solutions and specializing in acquisitions of distressed properties and value-added opportunities. “In the face of tough economic times and the increased usage of online shopping avenues, it has become even more necessary to offer opportunities that bring people out to the shopping center. In addition to the iconic McDonald’s Rock N’ Roll Classic Car Show, we are adding new events like our weekly Scottsdale Street Fair that showcases individual tenants in 10x10 booths and includes everything from arts, crafts, food vendors, entertainment and a kids zone. The shopping center will also be the race-packet pickup host to more than 10,000 racers participating in Arizona’s fi rst Hot Chocolate Race 5/15k in December. We continue to build our database for our monthly email blasts and Facebook post everyday with our tenants’ offers, events and happenings at the center to encourage social interaction and visits to the shopping center. We are also seeking out and leasing to Internet-proof retailers such as Mountainside Fitness, Octane Raceway, Goodwill, Toni & Guy Hairdressing Academy and a variety of restaurants. “Key to our long-term plan for the continued growth of our company is capturing an even larger segment of this ever-changing market. We want to continue to be on the cutting edge. As President of the Brokerage, I think it is important to support the efforts of ICSC, and I currently serve on the steering committee Stan Sanchez for ICSC Hispanic Initiative.”
— Jeff Teetsel, Development Director, Westgate Entertainment District
— Stan Sanchez, President-Brokerage, De Rito Partners
WESTGATE ENTERTAINMENT DISTRICT (Glendale)
32 | January-February 2013
INTERNATIONAL COUNCIL OF SHOPPING CENTERS
‘EXPERIENCE RETAIL’ COMES ALIVE AT SCOTTSDALE QUARTER
O
n May 18, 2006, Glimcher Realty Trust announced plans for a 650,000 SF mixed-used development in the heart of Scottsdale. The goal was to create a dynamic, outdoor urban environment that would feature sophisticated architectural design, comfortable pedestrian plazas, a grand central park space and a variety of upscale shopping, dining and entertainment options. However, in late 2005 when Glimcher CEO Michael Glimcher was envisioning a new kind of shopping destination, there was little indication the bottom was about to fall out of the U.S. economy. Despite naysayers and a bad economy, we announced a roster of fi rst-to-market, upscale retailers and restaurants in October 2008, just a month after experts say the recession took its biggest toll. Many people, both within and outside the company, were skeptical of the project. However, management was certain the location was prime for redevelopment and that it could draw both a work and nightlife crowd. In 2009, Scottsdale Quarter opened. As we started to see some stability in the market and were focusing on Phase Two, there was a lot of discussion about the impact of the recession. Some of the key takeaways included the popularity of fast fashion, with trendy retailers such as H&M coming to the forefront. Restaurants and entertainment also grew in popularity. Scottsdale Quarter opened with Brio Tuscan Grille and added iPic in 2010. Apple introduced the iPhone, giving us the first look at omni-channel retailing. As we continued leasing Phase Two and considered our new normal, Glimcher honed in on a concept we call Experience Retail: we had successfully created a destination. It wasn’t just a place to shop or a place to eat or watch a movie. It was the place to be to eat, shop and spend your time. When we talk about Experience Retail, we talk about all of the things you can’t do online. You can’t do yoga, go running or have a salad and a glass of wine with your girlfriends. Scottsdale Quarter features many new-to-market concepts from both coasts designed to make the center part of the shoppers’ daily lives. With stores like lululemon, DryBar, Make Meaning, iPic and Apple, it’s typical
34 | January-February 2013
for people to find themselves at the Quarter multiple times a week and in some cases, multiple times a day. Because of the success with Experience Retail and Scottsdale Quarter, which has seen sales of more than $1,000 per square foot and sits at two-thirds Experience Retail concepts, many Richard Hunt developers have visited the center to see what General Manager we are doing there. Retailers are bringing new Scottsdale Quarter concepts to the center. In early November, the Quarter welcomed a new three-story showroom concept from Restoration Hardware. We have also taken the Experience Retail concept more broadly throughout the company, adding stores that offer shoppers an experience like The Art of Shaving, lululemon, Brio and Apple, to the various centers in our portfolio. Because of management’s foresight, Scottsdale Quarter was able to overcome the obstacles presented by the recession and as a result, create a truly unique experience.
If you go
ICSC Southwest Idea Exchange What: Each year, regional industry professionals gather at the ICSC Southwest Idea Exchange to network and learn more from one another in breakout sessions and speaker panels. When: Feb. 20-21 Where: Phoenix Convention Center, 100 N. 3rd St. More information: icsc.org/apps/meeting_display. php?meeting=2013S
Accelerating success.
Spread your wings Timing is critical in the ever-changing landscape of commercial real estate. At Colliers International, we offer a fresh approach and stable performance to get you where you want to go. We make navigation easier for investors and users of commercial space—lifting you higher. www.colliers.com | Phoenix +1 602 222 5000 | Scottsdale +1 480 596 9000 35
ULI INTERNATIONAL COUNCIL OF SHOPPING CENTERS BY PETER MADRID
Simon Premium Outlet Mall
A NEW OUTLET FOR SHOPPERS Developers adding more than 700,000 SF to Valley’s retail industry
I
n one fell swoop, more than 700,000 SF was added to the Valley’s retail scene the past two quarters with the opening of a Tanger Factory Outlet Center at Westgate in Glendale and the spring opening of the Phoenix Premium Outlets adjacent to Wild Horse Pass Hotel & Casino in Chandler. Retailers at the Tanger Factory Outlet, which opened last November, include Gap Outlet, Banana Republic Factory Store, Brooks Brothers Factory Store, Calvin Klein, Cole Hahn, H&M, IZOD, J. Crew, Michael Kors, Nike Factory Store and White House Black Market. “Th is project is an excellent fit for
36 | January-February 2013
Westgate, the Sports and Entertainment District, and for the City of Glendale,” Planning Director Jon Froke says of the 368,000 SF, $100M site at the Loop 101 and Glendale Ave. “Extensive landscaping, open space, and storm water retention areas will enhance the area. The approved design will offer another visually attractive commercial project to Glendale.” Although the general contractor and architect — C70 Builders and Adams & Associates — were not local, construction of the Tanger Outlet did generate more than 700 construction jobs. “We are pleased to begin construction in this dynamic Phoenix market,” says Steven B. Tanger, President and CEO. “The area serves as an excellent opportunity for our outlet concept. “Phoenix has such a healthy regional population coupled with one of the most
vibrant visitor markets. We feel confident they will enjoy our leading brand names and designer outlet stores offering substantial savings. We are happy to find a home in Glendale.” On the Gila River Indian Community, Simon Property Group is planning a spring opening for the Phoenix Premium Outlet, which is being built by Kitchell. Phase I of the project will be comprised of 360,000 SF housing 90 outlet stores featuring highquality designer and name brands. The milestone culminates this spring with the opening of the property that will house approximately 90 outlet stores. “The Phoenix Premium Outlets at Wild Horse Pass will be a premiere addition to an already stellar destination here within Arizona,” says Barney Enos Jr., Council Representative, District 4. “We’re excited to be part of everything here at Wild Horse Pass,” says Steven Dworkin, Senior Vice President of Development, Simon Property Group. Simon projects more than $140M in annual retail sales and approximately $11M in annual sales tax revenue. Dworkin estimated the center would generate more than 500 construction jobs and 800 to 1,000 "full time" and "part time" jobs once the center opens.
37
INTERNATIONAL COUNCIL OF SHOPPING CENTERS BY PETER MADRID
OPEN FOR BUSINESS Arizona’s retail sector making a comeback as housing market improves and consumer confidence returns
A
fter hitting bottom in 2011, retail operations in Metro Phoenix made positive strides in 2012 as the housing market improved and consumer confidence was restored. As the retail industry enters 2013, there are positive signs, experts say. “There were several (positive signs) in 2012,” says Jami Savage, a vice president at CBRE. “First being vacancy, which declined from 12.4% at the end of 2011 to 11.3% at the end of 3Q 2012. Another good sign was the average asking lease rate, which increased to $16.10 PSF from $15.95 PSF one year ago. The most positive signal was more than 1.2 MSF of positive absorption, compared to approximately 549,222 SF of negative absorption in 2011.” Adds Pete O’Neil, research manager at Colliers Greater Phoenix, “I think it’s safe to say the Phoenix retail market is slowly coming back after an extended downturn and that there is plenty of room for improvement. Retailers are expanding, but there are significant vacancies, and the prevailing trend is that businesses are looking to move into smaller footprints. As a result, existing vacant spaces will likely need to be reconfigured to adapt to new uses, and overall metro vacancy is likely to remain elevated, even as leasing activity accelerates.” According to Dave Cheatham, managing principal at Velocity Retail Group, in 4Q 2008, Metro Phoenix started a difficult decline that spanned 12 consecutive quarters. Th is negative absorption in the retail sector, he adds, had not been
38 | January-February 2013
experienced since the late 1980s. “Th is was finally reversed at the start of 2012, and we have moved into tepid absorption throughout this year,” Cheatham says. “Th is absorption has been possible because there has been virtually no new retail construction to add additional speculative space to the marketplace. One of the other positives that happened in 2012 was the reintroduction of traditional big box retailers, as they restart their limited expansion programs.” Retailers such as Walmart, TJX and Hobby Lobby are doing new stores, Cheatham says. There is also an influx of a limited amount of new retailers entering the marketplace that helped jump-start dormant shopping centers. Examples include Winco Foods, Garden Ridge and Conn’s Appliances. “We have also seen a slow down of national bankruptcies,” Cheatham adds. “Over the past several years, these bankruptcies added 3.7 MSF of vacancy to the Phoenix inventory.” According to Reisreports.com, the recession brought construction in the community-neighborhood shopping center sector to a near halt in Metro Phoenix, but not before negative absorption drove the rate to its cyclical peak in 1Q 2011. By the end of the 2Q 2012, it had decreased, down 30 basis points for the quarter, down 60 year-over-year. Three years of negative rent growth with rates of loss diminishing by the year, according to Reisreport.com, have finally come to an end in the local community-neighborhood
shopping center market. Many shopping centers that were planned before the recession remained on the shelf in 2012, especially in the outlying/growth areas of the Valley, according to Ed Beeh, executive vice president of SRS Real Estate Partners. “I believe that some of these projects will begin to move forward in the next few years, but 2012 was not a year of any substantial new construction activity in the retail sector,” Beeh says. “The estimate of available retail space greater than 10,000 SF is still well above 200. Much of this space is obsolete and not suited for retail, and until this space is leased or converted to non-retail uses, we will not see any substantial absorption improvement.” Another positive trend, according to Beeh, is that investor demand has changed from a very negative view of Arizona in 2011 to the point where the Valley is now one of the top target markets for many national investors. The lack of investment product will remain an issue in the short term, and combined with historic low lending rates, pricing will continue to push higher through 2013, Beeh adds. Retailers are exploring smaller footprints for future development and downsizing existing stores. Internet sales are continuing to increase, and retailers will need to adjust their operations to combat Internet sales and retain their customer base, Beeh says. What challenges does the Metro Phoenix retail sector face in 2013? The challenges are two-fold, O’Neil says. The first is the overhang of vacant
space brought on by the recession, and the second is the evolving nature of retail tenants’ space needs. Many retailers are adapting to current economic conditions, and they're changing businesses by targeting smaller spaces, he says. As a result, owners of large blocks cannot assume they will replace a vacating tenant with a similar retailer. Rather, landlords must be creative when backfilling empty blocks. This trend has begun to take shape with several gyms, discount stores and other merchants expanding into previously vacant boxes. “We still need the fundamentals that drive our retail business to continue recovery, thereby enabling retail real estate the opportunity to recover as well,” says Jon Cowen, Senior Director of the Retail Advisory Group of Cushman & Wakefield Arizona. “Housing growth, unemployment and job growth all need to get stronger to allow retail to fully rebound.” Down the interstate in Tucson, slow and steady increase in activity characterizes the Tucson market of 2012. There was the usual summer doldrums that bled into the elections, bringing activity to a
Dave Cheatham
Pete O'Neil
Jami Savage
slower pace, says Greg Furrier, Principal Retail Properties for PICOR Real Estate Services in Tucson. Large development projects that have begun to show activity include the Bridges at Kino and Ajo and the former Mervyn’s center at Broadway and Craycroft. “The Tucson retail market has begun to look better in the past two quarters with asking rents increasing,” Furrier says. “Also, the Hispanic shoppers’ importance in the marketplace continues to grow and influence both Arizona and Mexico border areas. Positive housing news and solid retailer performance during 2012 on a national basis has cast a positive spin on the market.
Ed Beeh
Jon Cowen
Significant trends in the Tucson market? According to Furrier, retail sectors expanding include fitness centers, fast food, fast casual and sit-down restaurants such as Chuze Fitness, Smashburger, Paradise Bakery, Culver’s and Starbucks. Gas and convenient store retailers have been competing for new sites and expanding existing stores such as QuikTrip and Circle K. “The consumer attitude about the direction of the national economy will continue to dominate the retail real estate sector,” Furrier says. “As the economy continues to grow, the consumer attitude is expected to improve, which will result in needed confidence.”
39
40 | January-February 2013
2013 p.42
DOING IT THE ‘WEITZ WAY’
p.44
NOTABLE PROJECTS
p.52
35 YEARS IN ARIZONA
p.54
Q&A: MIKE BONTRAGER
PUBLISHED BY
WEITZ BY PETER MADRID
Doing it the ‘Weitz Way’ At The Weitz Company, employees are guided by a set of core values which are an integral part of the culture of this Iowa-based general contractor celebrating 35 years in Arizona. These values are the foundation of how Weitz builds projects, manages its work and treats employees, owners and partners. They are:
42 | January-February 2013
>> Honesty and integrity; >> Respect for people; >> Performance with absolute reliability; >> Long-term perspective; >> Nurturing personal growth.
Celebrating 35 years in Arizona, The Weitz Company builds its reputation upon a set of 5 core values
Photo courtesy of Bombardier Transportation
“At Weitz, we are all about customer advocacy,” says Brendan Morrow, director of senior living, whose major projects include the $73M, 453,000 SF Maravilla Scottsdale that opened in May 2012. “While we plan and work hard on schedule, quality and budget, we also create a project specific plan on how to exceed customer expectations. What can we do that goes above and beyond the things that a lot of builders do well. “We try to put ourselves in the owner’s shoes and do what we think is the right thing for their benefit.” In 2009, Weitz entered into a collaboration with Bombardier Transportation and the City of Phoenix — big shoes to fi ll — on one of its signature projects in Arizona: a portion of the PHX Sky Train at Sky Harbor International Airport. And according to those involved, this particular project was a testament to Weitz’s Core Values. “Although it was ‘sticks and bricks,’ this project was very unique,” says Bob Beaver, Weitz senior project supervisor for Sky Train. “It dictated doing things we had never done before. That process including looking at the big picture with subcontractors such as Suntec. We really didn’t know each other. But as the project evolved and picked up speed, we had a ton of respect for each of them. “Through that process, the ‘Weitz Way,’ building relationships — also with Wilson Electric — was clearly evident,” Beaver adds. In addition to the technical aspects and stringent requirements everyone faced, says Marty Szafranski, project manager for Wilson Electric, there was a huge amount of coordination with the logistical aspects. “Getting equipment up there (on the elevated guideways) was a challenge,” Szafranski recalls. “But we all sat down in the trailer and charted out who goes first, second ... getting the cables and concrete up there. As we looked at each, we started coming up with ideas. We pretty much piggybacked off each other." In regards to Wilson’s involvement and the partnerships, Szafranski added, “We really started looking out for each other’s scope of work. We integrated with one another. The goal was to do it efficiently
and safely. Everyone was looking out for each other. We were side by side from the beginning all the way to this day.” From his company’s standpoint, Derek Wright, vice president of Suntec Concrete, says the collaborative effort started with the realization of how technically demanding the job was. “No one had done or seen something like this before,” Wright says. “Weitz took the lead, and everyone quickly learned. Their knowledge and the staff they put in charge were an immense help. The mock-ups and learning process were essential to the overall. Without that we had no real idea of what the product would look like.” A big part of the collaborative effort included “team exercises,” even before construction began. A facilitator was brought in to organize these exercises. “It truly helped us learn about the people we’d be working with,” Wright recalls. “It made us dig a little deeper. “Some people were more outspoken and drove the train,” Wright says with a laugh. “It helped understand that some people were assertive and some were laid back. Th is kind of forced all that stuff to fall away. As the project evolved, people put their differences and egos aside.” PHX Sky Train was the fifth project of its kind on which John Housley, startup installation manager with Bombardier, had worked. He says he viewed working with Weitz as a “real team effort.” It wasn’t just Bombardier or Weitz. It was “us.” Housley says he recalls an instance that stood out in his mind — and even impressed him. “We had been in the trailer about a month or two,” Housley recalls. “Bob sends an email out and asks us to write something about ourselves — likes and dislikes. They brought a lunch into the conference room. We read off some funny things ... some crazy things. It pulled us together. You learned a lot of things about the guys you were working with. That was the first thing that really grabbed me and the Bombardier team.” And to think it all started with just one meeting. “That’s the culture of this company,” Beaver says. “We are like a family.” 43
WEITZ PROJECTS
Maravilla Scottsdale Developer: Senior Resources Group ◆ Architect: Allen + Philp Location: Scottsdale ◆ Size: 453,000 SF; 106,000 SF parking Value (construction cost): $72.9M ◆ Completion date: May 1, 2012 Subcontractors: Suntec Concrete Inc. DBA I A A Concrete, JBS Plumbing, DP Electric, HACI Mechanical Contractors, Construction Products Distributors, Paul Johnson Drywall, Loftco, ValleyCrest Landscape, Phoenix Pipelines, Ricor
This first phase of the master plan consists of a living area comprised of 118 independent units, 60 units of memory and nurse care, plus 39 casitas. Amenities include fitness facilities, indoor swimming pool, movie theater, full-service restaurant and a casual cafe, library, art gallery, spa, internet café, and both underground and private-garage parking. The richly detailed buildings of Spanish Colonial architecture, designed by Allen + Philp Architects and Interiors of Scottsdale, frame serene views of the McDowell Mountain range and emphasize the elegance of desert Southwest living.
Sagewood is a 278-residence, luxury retirement community featuring resort-like amenities with two clubhouses and a health center providing quality longterm healthcare, assisted living, skilled nursing and memory care. Located in the desert where North Phoenix meets Scottsdale, Sagewood focuses on fitness, nutrition, active life and overall well-being and offers a range of independent living options featuring detached casitas and villas, lofts and apartment homes.
Sagewood Developer: LCS Development ◆ Architect: Todd & Associates Location: Phoenix ◆ Size: 488,387 SF Value (construction cost): $82M ◆ Completion date: January 7, 2009 Subcontractors: Caruso Turley Scott, David Evans and Associates, LSW Engineers Arizona, Suntec, RKS Plumbing & Mechanical, Wilson Electric, Midstate Mechanical, Triad Steel, Pete King Construction, Schuck & Sons, ValleyCrest Landscape, Phoenix Pipelines, Construction 70
44 | January-February 2013
45
WEITZ PROJECTS
Sky Harbor Terminal 4 Retail Renovation Developer: City of Phoenix ◆ Architect: TranSystems Corporation Location: Phoenix ◆ Size: 167,000 SF Value (construction cost): $25M ◆ Completion date: June 15, 2006 Subcontractors: LSW Engineers for mechanical, plumbing and electrical; Nabar Stanly Brown for structural; Schuler and Schook, Abacus Project Management; Able Steel, Aero Automatic Sprinkler, Dickens Quality Demo, E & K of Phoenix, IMCOR, Scuderi Tile, Vickers/Hari, Wilson Electric, Young Electric Sign Co.
Mayo Clinic Collaborative Research Building Developer: Hornaday Development, LLC ◆ Architect: Deutsch Associates Location: Scottsdale ◆ Size: 118,000 SF Value (construction cost): $27.4M ◆ Completion date: May 24, 2005 Subcontractors: Wood/Patel & Associates, TKG Consulting Engineers, Paul Koehler, Vollmer and Associates, Tri-City Mechanical, Hi-Tech Fabrication, Suntec Concrete, Markham Contracting Co., C.D.S. Framing, Workspaces, Cable Solutions, Diversified Interiors of El Paso, ISEC
46 | January-February 2013
Sky Harbor’s Terminal 4 retail renovation required an extensive amount of collaboration among various stakeholders, including the City of Phoenix, aviation officials and store owners, as well as additional contractors on-site. Its scope included the north side retail redevelopment, which now features 16 new stores along with a new design that reflects Arizona’s natural beauty and diversity. The concourse retail space features dramatic lighting against a backdrop of overhanging cliff projections mimicking a canyon floor. Construction was conducted during normal business hours behind temporary drywall partitions and progressed in phases minimizing its impact on travelers.
This 3-story-plus-basement, 110,000 SF bio-research facility includes laboratory space, tenant improvement build-outs for lab support, office space and an 8,000 SF central plant on the Mayo Clinic Shea Campus at 134th and Shea. The mechanical systems, lab accessories and finishes were all customized to provide a state-of-the-art research facility. In addition to standard office building utilities, laboratory compressed air, laboratory vacuum, deionized water, natural gas, nitrogen and oxygen were piped to the labs throughout the building. The central plant was designed to serve the building with future capacity for the possibility of further development on Mayo’s campus.
WEITZ PROJECTS
44 Monroe Developer: Grace Communities ◆ Architect: Tucker Sadler Architects Location: Phoenix ◆ Size: 488,387 SF Value (construction cost): $82M ◆ Completion date: Jan. 7, 2009 Subcontractors: Paul Koehler Consulting Structural Engineers, Wilson Electric, WD Manor, Suntec Concrete, Complete Roofing and Waterproofing, Tri-City Mechanical
This former Phoenix Chamber of Commerce building is located in the downtown cultural and entertainment district and features 34 floors of high-rise residences, above-grade parking accommodations for residents, and 3,600 SF of ground-floor retail space. Chosen to reflect the beauty of the Arizona sunsets, the structure’s color palette collaborates with its linear elements to form a cohesive design that can be observed from the lobby. Unique amenities include a rooftop clubhouse, a state-of the-art fitness center, a sound-proof business center and conference center with wireless access, a billiard room and a swimming pool/spa on the eighth floor featuring an outdoor terrace and sun deck.
Located at the 187-acre Riverwalk Arizona mixed-use park in Scottsdale, this 3-story, 158,600 SF build-to-suit corporate office is set on prime land owned by the Salt River Pima-Maricopa Community. The building is oriented to the manmade riverwalk feature in the park, as well as in accordance with feng shui principles to assure a pleasant work environment for its employees. In addition, the building’s shape with its large glass volume and deep red precast concrete replicate the nearby mountains. Medicis at Riverwalk Developer: The Alter Group ◆ Architect: PHArchitecture Location: Scottsdale ◆ Size: 158,600 SF Value (construction cost): $17.6M ◆ Completion date: April 22, 2008 Subcontractors: Erickson and Meeks Engineering, TLCP, Mechanical Designs, McGrew Engineering, TW Steel, Midstate Mechanical, RKS Plumbing, Specified Electrical Contractors, Hardrock Concrete, Sun Valley Masonry, CoreSlab, Ancon
48 | January-February 2013
It Takes a Team! Thank you to the Weitz Co. for your partnership, collaboration and teamwork in building the best in Arizona. We look forward to many more years together making the built environment great.
Experience Concrete Like Never Before.
602-997-0937
•
suntecconcrete.com
WEITZ PROJECTS
SGA Corporate Center at Kierland Developer: Southwest Property Ventures, Services Group of America Architect: Langdon Wilson Architects Location: Phoenix ◆ Size: 488,387 SF Value (construction cost): $26.1M ◆ Completion date: Dec. 31, 2007 Subcontractors: Energy Systems Design, TLCP Structural, Inc.; Floor Associates Landscape Architects, David Evans & Associates, Inc.; Corbins, Baker Concrete, HACI, CDP (RW Metals), KT Fabricators, Mirage, Tpac, Sun Valley, CDS, Ironhorse, MJ Schneider Plumbing, Suntec Concrete
Located in the Kierland Commons district, this 5-story Class A office building is comprised of a steel structure frame with an EIFS, decorative-stone facade and glass skin. The building also includes one level of underground parking and a detached 2-story precast parking structure. Originally constructed for longtime client (Southwest Property Ventures) midway through construction, Services Group of America (SGA) purchased the facility for its new corporate headquarters. SGA incorporated the tenant improvement into the contract, which required extensive modifications to the shell building.
Weitz’s portion of Sky Train is the design (with Bombardier) and construction of the running surface (atop the concrete structure) that provides the steering, guidance, communications and main power for the train operation along with the commissioning and quality acceptance of the system itself. Weitz completed the first phase and is now beginning Phase 1A.
Sky Train Design-Build Partner to Bombardier for Train Guideway (both phases) and Operation and Maintenance Facility Developer: The City of Phoenix and Bombardier ◆ Architect: RNL Design (O&MF); Bombardier (Guideway) Location: Phoenix ◆ Size: 35,000 SF (O&MF); 4.4 miles (Guideway) Value (construction cost): $89M, including Phase 1A; $69M for Phase 1 only ◆ Completion date: Phase 1, Aug. 30, 2012; Phase 1A, Nov. 1, 2014 Subcontractors: CTS (for MSF), Structural Grace (for Stage 1 Guideway), and TLCP (for Stage 1A Guideway); CK Group (for Stage 1) and Hilgart Wilson (for Stage 1A); Kraemer Consulting Engineers (for M/P) and Meade Engineering (for E); Suntec, Quail Plumbing (under contract with Artic Air), Wilson Electric, Artic Air, Bell Steel (under contract with CPD), Arizona Professional Painting (paint), ValleyCrest, PHX Pipelines, Construction 70 (for MSF) and Ricor (for Spur Expansion) 50 | January-February 2013
WEITZ: 35 YEARS IN ARIZONA
The roots of The Weitz Company stem from a small carpentry shop founded in 1855 by Charles H. Weitz, an entrepreneurial German immigrant in Des Moines, Iowa. Weitz opened its doors in Arizona in 1978. And 35 years later, it is still “Building in Good Company.”
BY KELLY BILLINGS
“Pack your bags team, we’re heading to Phoenix.” Weitz arrives in Phoenix to begin building Friendship Village of Tempe.
1978 1980 “Jumping in with both feet.” Weitz wins its first project in its new locale — Holiday Inn Metrocenter starts in June.
1985 “Go big or go home!” Weitz aims to become part of the Phoenix skyline with the start of Abacus Tower, a 16-story building in midtown Phoenix for client the Lee Company. Weitz went on to build four more Lee projects in the '80s. It begins construction on its second project with Westcor — a milestone project for the developer and a Tempe landmark — the Buttes Resort. Weitz now has 42 projects totaling more than $115M completed during its first five years in Arizona.
1996-99
1990 “On the grow.” Volume at the end of 1990 more than triples 1989’s $22M to $68M. Weitz finds itself in the middle of changing the local retail scene as it completes Superstition Springs Mall in Mesa.
“A new niche.” As retail continues to grow strong, Weitz sees an increase in the need for preconstruction services for both end user and developer-led office projects. By the end of the '90s and into the new millennium, Weitz finds another niche and becomes a leader in office projects. Late '90s projects include Amkor Technology, Hypercom, AT&T, and Squaw Peak Corporate Center. The last three years of the 90’s witness more than 25 office projects start.
1980 1988
“We like it here — let’s stay awhile.” A new location is established in Arizona as Weitz sets up a permanent office in the Valley to compete in the Arizona and Southwest construction market.
“Retail — from East to West and everything in between.” Arrowhead Towne Center Mall is completed in Glendale as Weitz goes becomes a leading retail contractor in the Valley with a portfolio that now includes Superstition Springs Center, Arrowhead Towne Center, Paradise Valley Mall, Metrocenter, Desert Sky and power centers in the Valley.
1981 “Pleased to meet you — we are The Weitz Company.” Starts its first project with Westcor, Hotel Westcourt (now the Four Points by Sheraton). Little did Weitz know this relationship would lead the company to more than 70 projects totaling $313M and more than 6 MSF.
52 | January-February 2013
1993
“Ready and willing to step out of our comfort zone.” Due to slowing in the private sector, Weitz steps into the public sector by successfully bidding the Arizona State Courts project for $24M. Weitz goes on to complete a total of $114M in public work in the late '80s and early '90s including the ASU West Campus, the Arizona Cardinals’ training facility in Tempe, Tempe Diablo Stadium and the Nogales border station.
2004 “No matter how big we grow, we still live by our core values.” Arizona revenue tops $247M for 2004 and Weitz is now in its second year of being ranked No. 1 for General Contractors by Ranking Arizona. More high-profile projects put Weitz in the news as it begins the long awaited Sky Harbor Terminal 4 retail renovation project (set to complete in 2007, but finishes in record time of just 22 months) along with the Mayo Clinic Collaborative Research Building in Scottsdale and the highly anticipated retail project of Scottsdale Waterfront.
2012 “Facing economic challenges — sometimes down but never out.” Maravilla is finished in Scottsdale and the Sky Train project enters into its second phase. Large, private projects that once had Weitz at full throttle have hit the brakes. As the economy starts to gain momentum, Weitz sees great opportunities on the horizon and looks forward its next 35 years in Arizona.
2002 “A visit from the past.” Just shy of the 25th anniversary of the project that brought Weitz to the Valley, Friendship Village of Tempe contracts with Weitz to build a $47M expansion to the campus. Senior living projects continue to be an area of unparalleled expertise for Weitz both locally and nationally.
2008 “There’s an obstacle up ahead — it’s called the economy.” Although 2008 finishes with an impressive $217M in revenue for its Southwest office, Weitz is starting to slowly creep up to a tremendous challenge — the downward spiral of the economy.
2003
2000 “Still going strong into Y2K.” With Y2K comes the inception of Weitz Lite, a streamlined division of the Southwest Business Unit concentrating on TI, renovation and smaller projects. This concept takes off and attracts several repeat clients such as APS, American Express, Wells Fargo and The Alter Group. Weitz Lite (operating as Weitz) has built more than 115 projects for APS and more than 80 for The Alter Group.office projects start.
“Weitz hits the gas.” Several high-profile projects start construction and are leveraging Weitz’s recognition in the Southwest. The $20M, U.S. Courthouse and Federal Building renovation in Downtown Phoenix begins; the $70M, 564,000 SF J.W. Marriott StarrPass Resort breaks ground in Tucson; the $50M Wells Fargo Ocotillo Corporate Center breaks ground in Chandler, along with the first phase of the Friendship Village Expansion in Tempe.
2007 “Residential high-rise projects in Downtown Phoenix give Weitz a new recognition.” As 2007 ends, Weitz finishes the Summit at Copper Square, the 23-story condominium and is in the midst of a new 34-story, $80M project called 44 Monroe. Both prove successful for Weitz's recognition as a contractor capable of building large, complex projects, overcoming challenges a downtown environment presents. However, there were at the forefront of the condo market bust in Metro Phoenix. Weitz Southwest reaches a revenue high at $270M.
2009 “Just keep building.” Weitz passes the halfway point in the construction of Sagewood, the largest senior living project it has built in Arizona. Construction is also underway for CityScape in Downtown Phoenix and Barneys NY at Scottsdale Fashion Square. Weitz also kicks off its designbuild partnership with Bombardier Transportation and the City of Phoenix on PHX Sky Train.
53
WEITZ
Q&A Mike Bontrager
Executive Vice President, Southwest
THE WEITZ COMPANY HAS MADE ITS MARK IN ARIZONA FOR 35 YEARS. HOW PROUD ARE YOU OF THAT COMMITMENT — AND THE COMPANY SLOGAN “BUILD IN GOOD COMPANY?”
It’s hot, but we love it here. Weitz has been committed to Arizona and will continue this commitment long after I retire. Arizona is a growing, thriving state that we are proud to be a part of. “Build in Good Company” is about customer advocacy. Our employees genuinely care about the service they provide. They take it as a personal challenge to achieve the best possible outcome for the whole project, not just our role in it. We go out of our way to solve problems that aren’t directly related to the project — for example, community outreach programs, our customers customer education sessions, etc. HOW WAS THE WEITZ COMPANY AFFECTED BY THE GREAT RECESSION, WHICH TOOK ITS TOLL IN ARIZONA ON THE COMMERCIAL REAL ESTATE INDUSTRY?
Weitz shifted people from the commercial projects into the Industrial and federal military projects. We couldn’t shift them all, and the overall company downsized. Some people, including me, got to work in our Honolulu office. It was tough duty, but someone had to do it. In Arizona, we looked for projects that would sustain us through the down cycle. Working at Sky Harbor, the world’s friendliest airport, and building senior living projects like Sagewood and Maravilla helped us weather the downturn. 54 | January-February 2013
AS PRESIDENT SOUTHWEST, WHAT PROJECT (OR PROJECTS) ARE YOU MOST PROUD OF?
It’s difficult to single any out. All of them have a unique story. I like the projects where our clients were in disbelief of our short construction schedule. We love when we can prove just how critical it is to solve the problems before we turn a shovel of dirt. Spend the time up front and go fast in the field. It proves itself every time — BIM, comprehensive document review, lean last planner constraint-based scheduling, prefabrication and a robust QA/QC program are used on every project. Then there are projects like the house we built through donations for Sojourner Center. We are proud to help the community. THE WEITZ COMPANY RECENTLY WAS PURCHASED BY OCI CONSTRUCTION GROUP OF EGYPT. WHAT NEW OPPORTUNITIES DOES THAT PRESENT FOR THE COMPANY?
OCI has never built in the U.S. before. They, like many global companies, want a presence in the largest economy in the world. Weitz has customers with operations in several countries. Now we are better able to service them wherever they may be located. OCI has worked in 55 countries. Being part of a company that built the world’s tallest building, the Burj
Mike Bontrager has 29 years experience in the construction industry, 26 with The Weitz Company. He recently returned to Phoenix as Executive Vice President in May 2012 after serving as Vice President of Watts, Weitz’s federal contracting subsidiary, and President of Weitz’s Industrial Group. He has experience as an engineer, project manager, superintendent, construction manager, estimator and several executive leadership roles.
Khalifa in Dubai, has its advantages. Weitz will bring this expertise and resource to the U.S. OCI has extensive P3 (Public Private Partnership) experience. Weitz now has the ability to finance projects. The first of these projects will start in mid 2013. DO YOU SEE PROMISING SIGNS IN ARIZONA’S COMMERCIAL REAL ESTATE INDUSTRY IN 2013?
We are starting the climb out of the basement. I don’t expect 2013 to be the year to remember, but 2014 will certainly trend upward. Weitz is hiring both here in Arizona and nationally. Our revenue will increase 30 percent nationally and 25 percent in Arizona.
BUILDING ARIZONA’S NATURAL BEAUTY SINCE 1973 Proud to work with great contractors like WEITZ over the years. Here’s to many more!
55