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TABLE OF CONTENTS January-February 2012
Ongoing healthcare, education and hospitality projects (left) are an indication that the commercial real estate industry in Arizona is on its way back up as we look to the state's next 100 years. Full recovery, however, won't be felt for at least another 2 to 3 years, experts say.
THE NEXT 100 YEARS JANUARY - FEBRUARY 2012
FEATURES
4 6 8
Editor’s Letter
20 School Work
New to Market
22 Project News
Companies to Watch
26 Industry Leaders
Building momentum for the short- and long-term
Projects in the pipeline
Th irty companies that could have an impact on the industry in 2012
18 Construction
Public projects are providing work for general contractors
06
The ABCs of renovating two Valley specialty schools
A health club inside Chase Field and a new movie theater
The best and brightest in their respective industry sector
28 Centennial
Infrastructure key to growth in the next 100 years
08
28
CORRECTIONS
COMING NEXT ISSUE
» Tom Goderre is District Operations Manager
» 2012 Annual Real Estate Outlook » 7th Annual RED Award Winners » Construction In Indian Country 2 | January-February 2012
at Gilbane Building Company.
AZRE on the Go: AZREMagazine.com
» Michael Tiffany closed HUD insured loans for an aggregate amount in excess of $2B.
Trusted partners, expert dealmakers Jones Lang LaSalle is proud to have represented some of Phoenix’s most prominent clients in 2011. Bringing together strong market expertise and perspective, our team provided smart real estate solutions spanning both geographic and industry sectors. We are deeply thankful to our clients for their trust and business, and look forward to delivering even greater results in 2012! Banner Health Steve Corney, Pat Williams, Andrew Medley and Vicki Robinson 196,000 square feet Chandler, Arizona
Scottsdale Centre Dennis Desmond, Brian Ackerman, Don Mudd, John Bonnell and Brett Abramson 164,000 square feet Scottsdale, Arizona
Bar-S Foods John Pierson, Jon Lange, Steve Corney and Pat Williams 34,000 square feet Phoenix, Arizona
SXC Health Solutions Pat Williams and Steve Corney 66,000 square feet Phoenix, Arizona
Dick’s Sporting Goods Bill Honsaker, Tony Lydon and Marc Hertzberg 600,000 square feet Goodyear, Arizona Prologis Marc Hertzberg and Tony Lydon 302,000 square feet Tolleson, Arizona
Toyota Greg Bast and Wally Hale 133,000 square feet Chandler, Arizona TSYS Acquiring Solutions Greg Bast, Wally Hale and Bill Honsaker 104,000 square feet Tempe, Arizona
Schoeller Arca Systems Marc Hertzberg and Tony Lydon 154,000 square feet Goodyear, Arizona
+1 602 282 6300 www.us.joneslanglasalle.com/phoenix
MAGAZINE.COM President & CEO Michael Atkinson Publisher Cheryl Green Vice President of Operations Audrey Webb AZRE: ARIZONA COMMERCIAL REAL ESTATE EDITORIAL Managing Editor Michael Gossie Editor Peter Madrid Assistant Editor Kristine Cannon Contributing Writer Donna Hogan Interns Kaitlyn Carl | Hayden Harrison | Isabelle Novak Erick O’Donnell ART Senior Graphic Designer Brandon Devine Senior Graphic Designer Mike Mertes
Building Momentum for 2012
DIGITAL MEDIA Director Kim Milton Web & Graphic Designer Melissa Gerke Interns
I
wouldn’t exactly call it a construction boom, but drive around the Valley and it’s evident that local general contractors are staying busy as we enter 2012. Living near Downtown Phoenix, from my front door I can see the crane at the Sundt-DPR construction site for the University of A rizona’s Health Science Education Building. Stroll into the downtown area and rising from CityScape is the Kimpton Palomar Hotel, which Hunt Construction Group is building. There is even a construction site I pass each day on my way to and from work. At Third Street and Earll, Layton Construction is building the new Cigna Medical Group Center. And on a recent trip to find inexpensive gasoline, I passed three construction sites on Baseline Road alone: company banners were f lying for K itchell, Adolfson & Peterson and LGE Design Build. In this issue of AZRE magazine, we take a look at construction of public projects, which is keeping the industry busy. As a wrap-up to our Centennial Series, we look ahead to the next 10, and even 100 years. Finally, we honor the Industr y Leaders who were picked from our 2011-2012 People to K now publication, and we feature 30 Companies to Watch in Commercial Real Estate in 2012. Here’s to 2011, with the hopes that 2012 is prosperous to all.
Roxy Baldovin | Michael Owen | Clarice Wziatek Valeria Andrews | Eric Shepperd | Jeff Webb Cory Bergquist | Sterling Grey MARKETING/EVENTS Manager Whitney Fletcher Intern Morgan Johnson SALES Account Managers John Abbey | Kevin Small OFFICE Special Projects Manager Sara Fregapane Executive Assistant Kathy Mutschler Database Solutions Manager Cindy Johnson ARIZONA BUSINESS MAGAZINE Senior Account Manager David Harken Account Managers Michelle McBay | Shannon Spigelman RANKING ARIZONA Vice President / Sales & Marketing Lenore Grobstein EXPERIENCE ARIZONA | PLAY BALL Account Managers Lisa Grant | Bobbie Darzes SCOTTSDALE LIVING Account Manager David Silver AZ BIG MEDIA EXPOS HOME & FAMILY SUPER EXPO HOME & LIFE SUPER EXPO WOMEN'S SUPER EXPO Exhibit Directors Kerri Blumsack | Sheri King | Tina Robinson
Editor (602) 424-8844 peter.madrid@azbigmedia.com
HOME & DESIGN IDEA CENTER Showroom Manager Joanne Stanley Account Manager Marianne Avila Event Coordinator Sara Fregapane
AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602) 277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2011 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media. 4 | January-February 2012
3101 North Central Avenue, Suite 1070 Phoenix, Arizona 85012 (602) 277-6045 · www.azbigmedia.com
DISTRIBUTION CENTERS
BUILD-TO-SUITS
FOREIGN TRADE ZONES
ROCKEFELLER GROUP DEVELOPMENT CORPORATION IS PLEASED TO BE REPRESENTED ON ITS CURRENT DEVELOPMENTS IN ARIZONA BY THE FOLLOWING BROKERS: In Chandler and Gilbert
Phil Breidenbach, SIOR Paul Sieczkowski, SIOR Rob Martensen, CCIM, SIOR Lindsey Carlson Steve Larsen
Colliers International 2390 E. Camelback Road Suite 100 Phoenix, AZ 85016 602-222-5000 tel. colliers.com/phoenix
In Tucson
Peter Douglas, SIOR Rob Glaser, CCIM, SIOR
PICOR 1100 N. Wilmot Street Suite 200 Tucson, AZ 85712 520-748-7100 tel. www.picor.com
For information regarding current Rockefeller Group Development Corporation projects, please contact: Tom McCormick, SIOR, FRICS
Mark Singerman, LEED® AP
Senior Vice President and Regional Development Officer
Assistant Vice President and Regional Director - Arizona
RGDC-CA@rockgrp.com
RGDC-AZ@rockgrp.com
rockgroupdevelopment.com
OUR CLIENTS INCLUDE: BMW OF NORTH AMERICA LUCENT TECHNOLOGIES DELTA AIRLINES UNILEVER COSMETICS INTERNATIONAL S E I K O CORPORATION OF AMERICA CRATE AND BARREL TIAA-CREF MORGAN STANLEY PEARSON E D U C AT I O N NOVARTIS AT&T Chandler MCGRAW-HILL Corporate COMPANIES TIME INC. TEJON Center* RANCH SPORTCRAFT F E D E McClintock RAL E and XPRESS Desert Breeze Blvd. WYNDHAM GARDEN HOTELS Chandler LEHMAN BROTHERS BMW OF NORTH AMERICA Rockefeller Group LUCENT TECHNOLOGIES DELTA AIRLINES UNILEVER Chandler Crossroads COSMETICS INTERNATIONAL Gilbert and Queen Creek Roads S E I K O CORPORATION OF Chandler AMERICA CRATE AND BARREL TIAA-CREF MORGAN Rockefeller PGroup STANLEY EARSON EDUCA T I O N 101 NOVARTIS Chandler AT&T MCGRAW-HILL Loop 101 at Chandler Blvd. COMPANIES TIME INC. TEJON Chandler RANCH SPORTCRAFT www.rgdcchandler101.com F E(The D EASU R AW.L P. Carey E X Evening PRESS WYNDHAM GARDEN HOTELS MBA Program wil be located at LEHMA N B R O T Chandler 101.) H E R S BMW OF NORTH AMERICA LUCENT TECHNOLOGIES Rockefeller DELTA AIRLINES Group UNILEVER North INTERNATIONAL Gateway COSMETICS SWarner E I K O Road CORPORATION OF and Recker Road AMERICA Gilbert CRATE AND BARREL TIAA-CREF MORGAN STANLEY PEARSON E D URockefeller C A T I O N Group NOVARTIS AT&TGilbert Crossroads MCGRAW-HILL COMPANIES TIME INC. TEJON Germann Rd. and Mustang Drive RANCH SPORTCRAFT Gilbert FEDERAL EXPRESS WYNDHAM GARDEN HOTELS Rockefeller Group LEHMAN BROTHERS Distribution Center** BMW OF NORTH AMERICA AirportTECHNOLOGIES Submarket LUCENT Tucson UNILEVER DELTA AIRLINES COSMETICS INTERNATIONAL S*20,500 E I K O SFCORPORATION OF NEW CLASS A OFFICE AMERICA CRATE AND AVAILABLE; LEED–CERTIFIED SILVER BARREL MORGAN **UP TOTIAA-CREF 62,500 SF NEW HIGH STANLEY EARSON CUBE WAREHOUSEPAVAILABLE E D U C AT I O N NOVARTIS AT&T MCGRAW-HILL COMPANIES TIME INC. TEJON RANCH SPORTCRAFT FEDERAL EXPRESS WYNDHAM GARDEN HOTELS LEHMAN BROTHERS BMW OF NORTH AMERICA LUCENT TECHNOLOGIES DELTA AIRLINES UNILEVER COSMETICS INTERNATIONAL S E I K O CORPORATION OF AMERICA CRATE AND BARREL TIAA-CREF MORGAN STANLEY PEARSON E D U C AT I O N NOVARTIS AT&T MCGRAW-HILL COMPANIES TIME INC. TEJON RANCH SPORTCRAFT FEDERAL EXPRESS WYNDHAM GARDEN HOTELS
NEW TO MARKET
EDUCATION 1
1 MCCORD HALL AT THE W.P. CAREY SCHOOL OF BUSINESS Developer: Arizona State University General Contractor: DPR Construction Architect: Building design by Kohn Pedersen Fox Associates, New York; RSP Architects, Tempe Location: Adjacent to W.P. Carey School of Business facilities, Lemon St. and Normal Ave., Tempe Size: 129,000 SF Arizona State University broke ground on Homecoming Day in October on the $57M building and renovation of existing facilities at the W.P. Carey School of Business. McCord Hall will be environmentally friendly with less water and energy use than similar buildings and a solar array on the roof. Estimated completion is 2Q 2013.
2
3 6 | January-February 2012
2 ASU DOWNTOWN PHOENIX CAMPUS STUDENT RECREATION CENTER Developer: Arizona State University General Contractor: Sundt Construction Architect: Gabor Lorant Architects Location: South of 350 N. 1st Ave., Phoenix Size: 70,000 SF Scope of work on the $21M project will include a new 70,000 SF recreation facility distributed over 4 levels, including a large gym, strength and cardio spaces, multi-purpose rooms, exercise nutrition and wellness educational spaces and a rooftop leisure pool. It will be pursuing LEED Silver certification. Estimated completion is 2Q 2013. 3 MOHAVE MIDDLE SCHOOL CAMPUS REBUILD Developer: Scottsdale Unified School District General Contractor: Chasse Building Team Architect: Brock, Craig, and Thacker Architects Location: 5520 N. 86th St., Scottsdale Size: 134,974 SF The new facility in this $25M renovation project will include just two existing buildings and be complemented with five new buildings including a 2-story classroom, media center, administration building and district annex to replace the aging structures on site. Amenities will include natural lighting, integrated technology features and alternative learning spaces. Estimated completion is 4Q 2013.
NEW TO MARKET
RETAIL 1 GATEWAY 101 Developer: FLW 101, LLC General Contractor: JAVCON, Inc. Architect: Butler Design Group Broker: Grubb & Ellis Location: NEC Loop 101 and Frank Floyd Wright Blvd., Scottsdale Size: 34,200 SF The $10M retail center has leases signed by Starbucks, Vitamin Shoppe, Bruegger’s Bagels, Teharu Sushi, PetClub, Jersey Mike’s, and Tide Dry Cleaning. Estimated completion is 2Q 2012.
1
2 STETSON WINERY AND EVENT CENTER Developer: Stetson Winery, LLC General Contractor: Taylor’s Rolling Thunder Architect: R Group Architecture and Planning, Inc. (Rex Ruge) Location: 10965 N. Moonscape Way, Kingman Size: 6,500 SF building with adjacent patios and gazebo A winery and event center located in a vineyard, this project in Kingman has been designed by the architect to fit into the western Arizona landscape and surroundings. The main building will include a tasting room, gift shop and wine-making area. The facility can accommodate 350 people in the patio and tasting room area. Exterior amenities include a patio with a stone fireplace and a fountain. Expected completion is 2Q 2012.
2
PUBLIC 1 PHOENIX-MESA GATEWAY AIRPORT TERMINAL EXPANSION PHASE II Developer: Phoenix-Mesa Gateway Airport General Contractor: Sundt Construction Architect: DWL Architects Location: 5835 S. Sossaman Rd., Mesa Size: 30,475 SF The $9.9M project will include the expansion of departure gates from six to eight, increase the baggage claim area — including a more prominent arrival meeting space — and add additional restroom facilities. Expected completion is 4Q 2012.
MIXED-USE 1 PHOENIX BIOMEDICAL PARKING STRUCTURE Developer: The Boyer Company Owner: The Boyer Company General Contractor: DPR Construction Architect: SmithGroup JJR/Watry Location: SEC 5th St. and Fillmore, Phoenix Size: 1,250 parking stalls DPR is working with the City of Phoenix and developer The Boyer Company on a design-build structure which will provide a minimum of 850 and as many as 1,250 parking stalls. It will serve the growing Phoenix Biomedical Campus. Currently the structure is planned for all stalls to be above-grade with a potential retail shell component. Estimated start is 4Q 2012 and completion of 3Q 2013.
MEDICAL 1 CIGNA MEDICAL GROUP CENTER Developer: Clarius Partners, LLC General Contractor: Layton Construction Architect: Orcutt | Winslow Broker: CBRE Location: 3131 N. 3rd St., Phoenix Size: 93,500 SF This new medical office building will replace CIGNA’s current Clyde Wright Center, which opened in 1982. The 3-story facility will be a state-of-the-art healthcare center, the shell of which will pursue LEED Silver certification and will encompass outpatient surgery, family practice, radiology and other specialties. Subcontractors include Caruso Turley Scott, ccrd partners, Taylor Rymar, Kimley Horn and Buesing Corp. Expected completion is 4Q 2012.
1 7
COMPANIES TO WATCH BY PETER MADRID
30
Companies to Watch
in
Commercial R e a l Estate 2012
A
s the economy begins to show signs of improvement,
and Maravilla Scottsdale Resort Retirement Community as
the commercial real estate industry in Arizona is
the general contractor. Weitz's commitment to serving the
positioning itself to bounce back.
community will lead to the opening of the Sojourner Center's
Entering 2012, here are 30 companies to keep your eyes on.
Most are established names, with a few newcomers to watch.
newest residential duplex, The Weitz House, to shelter and care for local victims of domestic violence.
In general contracting ‌ Adolfson & Peterson recently
In development ‌ The Alter Group and John F. Long
completed Devine Legacy on Central, an affordable housing
Properties will jointly develop three major business parks in
development. It is the fi rst affordable housing community to open
West Phoenix totaling in excess of 1,500 acres. The parks will
along the Phoenix Metro light rail line. It consists of 65 urban
offer every type of commercial space and are expected to drive
style apartments at the Campbell and Central light rail station.
economic expansion for West Phoenix. The three parks com-
The Weitz Company moves into 2012 with two large
bined exceed the amount of acreage in the Scottsdale Airpark.
Valley projects in progress; Sky Train at Phoenix Sky Harbor
The land in the three West Valley parks includes substantial
International Airport as the design-builder with Bombardier
acreage fronting both sides of the Loop 101 freeway.
8 | January-February 2012
COMPANIES TO WATCH
Adolfson & Peterson Devine Legacy on Central recently opened its doors. Devine Legacy, built by Adolfson & Peterson, is the fi rst affordable housing community to open along the light rail. Adolfson & Peterson recently completed the renovation and expansion of two specialty schools totaling more than 60,000 SF. A-P.COM
Bjerk Builders
Bjerk is a general contractor that works hard to improve commercial buildings, including medical and dental offices in Arizona. It’s most recent projects include Family Eyecare in Glendale and the Cardinale Mazda dealership in Mesa. Besides its medical/dental division, Bjerk offers electrial and drywall services throughout Metro Phoenix. BJERKBUILDERS.COM
CBRE
With more than 400 employees in the Phoenix market, CBRE serves real estate owners, investors and occupiers. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CBRE.COM
The Alter Group The Chicago-based company is developing three major business parks in West Phoenix. When the project is fully built, an estimated 65,000 jobs will be created. The land includes acreage fronting both sides of the Loop 101. The Alter Group will also be pursuing healthcare projects in Arizona as that industry continues to remain hot. ALTERGROUP.COM
Carlson Real Estate Company
Carlson develops and manages commercial real estate in three states including Arizona. Developments in the Valley include Gilbert 202 Commerce Center. Carlson Real Estate also is helping develop and plan an industrial park in Buckeye. Its office properties include Cotton Corporate Center in Phoenix. CARLSONREALESTATE.BIZ
Chasse Building Team Th is up-and-coming general contractor is taking advantage of a brisk school construction market. It is working on a $25M renovation and building project in the Scottsdale Unified School District. The Mohave Middle School campus rebuild inlcudes five new buildings, including a 2-story classroom and a media center. CHASSEBUILDINGTEAM.COM
COLLIERS INTERNATIONAL
Commercial Properties Inc. CPI has spent the past 30 years growing its market share and client base to become a leader in Metro Phoenix. Top 2011 deals: $3.7M industrial sale, 75,000 SF, Andy Jaffe; $3.46M industrial lease, John Soldo; $3.13M office sale, 33,636 SF, Ken Elmer; $2.365M land sale, 140,000 SF, Donn Kinzle; and $2.07M retail lease, Josh Gosnell and Trent Rustan. CPIAZ.COM
Colliers International
With offices in Phoenix and Scottsdale, Colliers is a full-service commercial real estate fi rm providing services to clients locally and globally for more than 30 years. Its professionals specialize in the sale and lease of office, industrial, retail, multi-family, investments, and land. Colliers provides asset resolution, property management, mortgage banking, and valuation and appraisal services. COLLIERS.COM 9
COMPANIES TO WATCH
D.P. Electric Th is hometown business was founded in 1990 by Daniel J. Puente, a past winner of the W.P. Carey Spirit of Enterprise Gary L. Trujillo Minority Enterprise Award. D.P. Electric builds and provides electrical systems for commercial real estate projects throughout Arizona. Recent projects include the Phoenix Convention Center and Sky Harbor International Airport. DPELECTRIC.COM
Gilbane
From its Western Region headquarters in Phoenix, Gilbane offers construction and program management in pharmaceutical, criminal justice, higher education, K-12, sports, healthcare, life sciences, public assembly and aviation projects. One of its signature projects, set to open in February 2012, is the new Maricopa County Superior Court Tower in Downtown Phoenix. GILBANECO.COM
IMCOR
A mechanical subcontractor based in Phoenix, IMCOR installs a variety of systems in buildings throughout the Southwest. Its services also include general construction, air-conditioning and ventilation, and piping and plumbing. It recently helped make upgrades to Banner Good Samaritan Hospital in Phoenix. IMCOR also specializes in high priority scheduled shutdown projects within clean rooms, chillers, cooling towers, pumps, and boiler additions or replacements. IMCOR-AZ.COM
Keystone Commercial Capital
Keystone is a full service commercial mortgage banking company servicing $1.5B in commercial real estate loans. Recent transactions include a $59M manufactured housing community and $17M multi-family property. Keystone provides access to short- and long-term fi xed and floating rate loan programs as well as construction, bridge, mezzanine and joint venture equity placements. KEYSTONECOMMERCIALCAPITAL.COM 10 | January-February 2012
Gensler The Phoenix office of this architecture, design, planning and consultanting fi rm boasts some impressive interior designs in Arizona. Th is includes law offices at CityScape in Downtown Phoenix to the Walkup Skydome at Northern Arizona University in Flagstaff. In 2010, its designs for the Banner Health Primary Data Center and a Bank of America branch won AIA Arizona Merit Awards. GENSLER.COM
Hunt Construction Group
Major construction projects include the new Chicago Cubs spring training facility in Mesa and the Twin Arrows Casino outside of Flagstaff. Arizona State's baseball team will likely play its games at the Cubs' new facility once it is built. Twin Arrows will be the Navajo Nation's fi rst Arizona casino. Hunt also is fi nishing construction on the Kimpton Palomar Hotel at CityScape. HUNTCONSTRUCTIONGROUP.COM
Jones Lang LaSalle Large industrial leases are the specialty of Jones Lang LaSalle's brokers. In the past 18 months JLL has brokered deals involving the 1.4 MSF Amazon lease and the 153,000 SF Scholler Arca Systems lease. JLL's Phoenix office delivers custom solutions by leveraging its expert knowledge of the local market and the fi rm's resources. It prides itself on delivering winning strategies and solid execution. JONESLANGLASALLE.COM
Kitchell Kitchell’s presence in the commercial real estate market goes beyond general contractor projects. The Phoenix-based company also specializes in property management and real estate development. Its most notable project in 2011 was the Phoenix Children's Hospital, which officially opened last January. KITCHELL.COM
CENTENNIAL SERIES
Valley Par tn e rs h ip I s You r Advocate For R e s p on s ib le R e al E s tate Deve lop me n t
FASTER FORWARD Navigating the seas of change.
• Represents the Industry at City and County Government Meetings
Colliers International is charting the course as the first true alternative to real-estateas-usual. As an investor, owner or occupier, your real estate strategy will never feel adrift. Our local specialists, throughout more than 500 offices in 61 countries worldwide, allow you to tap hidden opportunities, moving your business forward. Welcome aboard.
www.colliers.com Master-Salt Cellar-AZBusMag-12.10:Layout 1
12/7/10
• Lobbies at the Arizona State Legislature to Support Real Estate Development • Presents Informative Events on
Fresh Seafood... Featuring the Valley’s largest selection of fresh
Cutting Edge Real Estate Issues,
fish and seafood • Live Maine lobster, Alaskan
Including 12 Monthly Breakfasts
King Crab and Yakimono Hawaiian Ahi are just
• The Best Networking Events in the Real Estate Business
some of the delicacies that make the Salt Cellar Restaurant so popular • Maryland crab cakes, shrimp San Remo on artichoke pasta as well as charcoal broiled fish and Cajun-style blackened seafood are additional menu items you’ll want to try • Quiet, cozy and intimate, the Salt Cellar is a favorite
Find Out More At:
www.valleypartnership.org
for those who appreciate fine seafood • Don’t miss our popular twin happy hours daily from 4:00pm to 7:00pm and again from 10:00pm to 1:00am.
Richard R. Hubbard President & CEO MEDIA SPONSOR
550 N. Hayden Rd • Scottsdale, AZ
Phoenix +1 602 222 | Scottsdale +1 480 596 9000 (480)5000 947-1963 • www.saltcellarrestaruant.com
Dinner served nightly
68 March-April 2011
11
3:33 P
COMPANIES TO WATCH
Lawrence & Geyser Development
Layton Construction
LAWRENCEANDGEYSER.COM
LAYTON-CONST.COM
Th is Tempe-based company is behind the renovation of the NEC of Seventh Ave. and McDowell in one of Phoenix’s historic neighborhoods. The majority of Lawrence & Geyser projects are in the Metro Phoenix area, although it has developed sites around the state of Arizona, California and Oklahoma. It has developed and re-developed more than 1.2 MSF in more than 40 properties.
Mark-Taylor
Mark-Taylor has developed more than 15,000 apartment units in the Southwest. One of its Valley projects is the $44M, 383unit Parcland Crossing in Gilbert, scheduled to open in late 2012. Mark-Taylor, one of Arizona’s largest apartment developers, was founded by Jeff rey Mark and Scott Taylor, who have deep roots in the apartment development and management markets. MARK-TAYLOR.COM
Th is Utah-based general contractor recently broke ground on a new, 93,500 SF building in Phoenix for Cigna Medical Group. Nationally Layton is the ninth largest healthcare contractor in the U.S. In 1987, Layton opened its Phoenix office to diversify geographically. Major projects include the $70M Mesa Arts Center, hotel projects for the Marriott Corporation and a major facility at Sky Harbor Airport.
McCarthy Building Companies
McCarthy is more than a leading general contractor in healthcare and K-12 school projects. It recently celebrated the opening of Casino Del Sol’s 250,000 SF casino expansion and 215-room, 10-story hotel tower in Tucson. McCarthy’s Southwest Division recently completed its largest project to date, a 17-megawatt solar photovoltaic plant in Gila Bend. MCCARTHY.COM
Commercial Real Estate Services Worldwide
McShane Construction Company
McShane is the general contractor for First Solar’s 1.3 MSF manufacturing facility in Mesa. It will be the fi rst development at the former General Motors Proving Grounds. Based in Chicago, McShane projects include multi-family and affordable housing communities, public and private healthcare facilities and corporate and governmental office buildings. MCSHANE-CONSTRUCTION.COM
Plaza Companies
Th is developer, the City of Peoria and BioAccel formed a partnership for the Peoria Incucelerator. It will be a host for bioscience startup companies with the goal of attracting high-paying jobs. Plaza Companies specializes in the development, acquisition, management and leasing of medical office properties, senior living communities and bioscience/biotech centers in Arizona. THEPLAZACO.COM 12 | January-February 2012
NAI Horizon
NAI Horizon is brokering some large industrial sales. Recent deals include the off -market sales of two West Phoenix distribution and manufacturing buildings totaling 244,295 SF. Besides industrial properties, NAI Horizon also specializes in investment, land, medical, multi-family, office, property management, retail, special asset solutions and valuation services. NAIHORIZON.COM
RED Development
RED recently completed the fi rst phase of CityScape, the 1.1 MSF mixed-use project that has changed the landscape of Downtown Phoenix. Currently, RED is also shaping the largest retail development between Dallas and Oklahoma City — Rayzor Ranch Town Center. RED is also developer of choice for retailers, including Fresh & Easy Neighborhood Market. REDDEVELOPMENT.COM
FOCUSED
on maintaining world-class standards
At Carlson Real Estate Company, we are focused on maintaining world-class standards in all that we do. Our portfolio is high quality and we match it with the same level of customer service. By constantly considering the best interests of our tenants and partners, we achieve winning results for all. With more than 20 years of experience in the Phoenix market, we have the foundation to uphold these standards well into the future.
proud to be chosen as one of ARIZONA’S TOP 30 COMPANIES IN COMMERCIAL REAL ESTATE TO WATCH IN 2012
www.carlsonrealestate.biz
2012_Corporate_AZRE_F.indd 1
12/15/2011 4:30:34 PM
CommerCial Development With vision Sunbelt Holdings is a large scale real estate management, investment and development company. Since 1979, we have been involved in real estate activities from commercial real estate and land development to residential communities. Our ability to produce award winning projects which strengthen the local community and improve the quality of life has assured our longevity. Our projects are diverse in nature and serve as valuable partners in the community in which they reside. We invite you to peruse SunbeltHoldings.com. There you can learn about our history, our projects, our people and our partners.
6720 North Scottsdale Road • Suite 160 • Scottsdale, Arizona 85253-4424
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COMPANIES TO WATCH
SmithGroupJJR One of Arizona’s premiere architecture, engineering and planning fi rms is now SmithGroupJJR. Formerly a SmithGroup subsidiary, JJR is a specialist in landscape architecture, planning, urban design and civil engineering. The award-winning Musical Instrument Museum in Scottsdale is one of SmithGroupJJR's signature projects in recent years. SMITHGROUPJJR.COM
Sunbelt Holdings
Along with the City of Peoria and the Greater Phoenix Economic Council (GPEC), Sunbelt Holdings unveiled plans for a 500acre commercial development between Vistancia and the newly-opened Loop 303. Sunbelt Holdings is building a 1.5-mile stretch of road to connect the Loop 303 from Vistancia. The Lone Mountain Road project is being paid for by Sunbelt.
SUNBELTHOLDINGS.COM
The Weitz Company
In 2012 Weitz will complete the Maravilla Scottsdale Resort Retirement Community in Scottsdale; move into the next phase of the PHX Sky Train as the design-build partner with Bombardier; and focus on tenant improvements and opportunities in solar, hospitality, education and healthcare. WEITZ.COM
Is ARS §33-1319 Bed Bugging You? Mitigate Landlord/Tenant Liability
K9 Bed Bug Detectives Call Nose Knows @ 480-370-4767 Independently certified to meet National Pest Management Association (NPMA) Best Management Practices (BMP) for Bed Bugs AZ OPM Business License #8917
Discreet*Certified*Licensed NoseKnowsllc.com 14 | January-February 2012
Speedie & Associates
Analyzing the earth under construction sites is what Speedie & Associates is all about. The fi rm helps clients adapt their buildings to their geological environment. Speedie & Associates serves a variety of clients, including office buildings, factories, schools, airports, and power generators. Speedie & Associates is headquartered in Phoenix with offices in Flagstaff and Tucson. SPEEDIE.NET
Sundt Construction
Schools, fi re stations, freeways, light rail facilities all have one thing in common in Arizona: the Sundt Construction stamp of superior workmanship. Projects from the Tucson-based general contractor are also prevalent worldwide. Currently under construction by Sundt (a joint venture with DPR) is the University of Arizona's Health Sciences Education Building in Downtown Phoenix SUNDT.COM
Wood/Patel
Under extreme weather conditions, survey crews from this civil engineering company worked night and day to help set the foundation for a home in the northeastern Arizona town of Pinon, that was featured on ABC-TV’s “Extreme Makeover: Home Edition.” Wood/Patel and 75 subcontractor consultants combined on the Yazzie family residence. WOODPATEL.COM
IM AZRE ¼ MarApr 0211A
2/3/2011
HVAC . Sheet Metal ❖
Plumbing . Process Piping ❖
HVAC & Plumbing Service and Repairs ❖
Maintenance Agreements ❖
Renewable Energy / Solar Innovations ❖
CAD / BIM Design ❖
Building Automation Systems ❖
Firefighters Breathing Air Systems
interstate mechanical corporation 1841 East Washington Street . Phoenix, AZ 85034 602-257-1319 . 800-628-0211 . Fax 602-271-0674 www.imcor-az.com
Building the Southwest since 1974
with major commercial, industrial, civic and medical projects
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15
NEWSMAKERS BY PETER MADRID
»
McCarthy Southwest, a division of McCarthy Building Companies Inc., hired Shad Bowman as director of business development and promoted Steve Gotschall and Shawn Ingram to vice president of operations within the Water Services team. Bowman has 13 years of Bowman experience in environmental and water resource issues at both the program and project levels in positions with American Water, Earth Tech, Tetra Tech and the ADEQ. As VP of operations, Gotschall and Ingram will be responsible for ensuring projects are delivered in a true collaborative environment that leads to the projects being on time and Ingram Gotshall under budget.
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Todd Folger joined CBRE’s Retail Services Group as a first vice president. Folger comes to CBRE from SRS Real Estate Partners, formerly Staubach Retail, where he has worked since 1999. During that time, he gained considerable experience in tenant representation, acquisition, development, strategic planning and disposition.
» Thomas Beck joined Westwood Professional Services’ land group. Beck will lead civil engineering and site development efforts from Westwood’s Scottsdale office and will be responsible for providing overall civil design and project management services on land and energy development projects throughout the Southwest. Beck has more than 30 years of civil engineering experience on a variety of public infrastructure and private land development projects in Arizona, California, Colorado, and Guam. » Michael Kasulaitis and Aric Adams joined Voit Real Estate Services’ Phoenix office. The duo joins Voit from Cushman & Wakefield. Kasulaitis is a member of NAIOP and the Arizona Commercial Brokers Association. Adams has been in the commercial real estate business since 1999. » Laura Smith was named area man-
Smith
ager for the Arizona region of Dominium, an apartment development and management company. She will assist Dominium in maintaining current relationships and growing the company’s regional market share. Smith previously was with NRP Group in Houston.
» Steve Wilson was hired as a project superintendent and Melinda F. Jones, CPSM, was hired as business development manager at W.E. O’Neil Construction. Wilson is a 16-year vet-
16 | January-February 2012
eran of the construction industry with projects throughout Arizona. Jones joins the firm with more than 11 years of marketing and business development experience in the architectural/engineering/construction industry.
» Longtime employees Mike Hoover and Eric Hedlund were promoted to serve as dual COOs at Sundt Construction. The promotion will split the management of operating entities between Hoover and Hedlund, creating an optimized organizational structure for the company. Scot Bennett joined Sundt to serve as a business development representative in the Southwest District.
Carlson
» Lindsey Carlson was promoted to associate vice president–Office Properties Solutions Group at Colliers International in Greater Phoenix. Carlson joined Colliers in 2003 as an intern. Carlson is a leader of the Colliers’ Blue Innovation Group, whose focus is to enhance the knowledge, expertise and skills of young brokers.
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Jeff Miyaoka was named regional director of property management at Vestar Property Management. He will be responsible for all property management functions for Vestar’s California portfolio. Prior to joining Vestar, Miyaoka held positions with Developers Diversified Realty, Kimco Realty, The Irvine Company, Miyaoka Madison Marquette and Trizec Hahn. He is an active member of ICSC and is a certified CSM.
» Phoenix architect Lawrence Enyart, FAIA, of LEAArchitects, LLC received the Silver Medal from the AIA Western Mountain Region at its awards gala in Las Vegas. The Silver Medal is the region's highest AIA honor. » Jeff Raymond joined Land Advisors Organization as a Resort and Golf Properties Specialist. Raymond specializes in the sales and marketing, and development strategies of master planned resort communities and high-end properties. » Martin Mondejar, Valerie Robinson and TJ Chasty were promoted and Arnaud Longeau joined Hobbs+Black Architects. Longeau, RA, PMP, LEED AP BD+C, joined Hobbs+Black as vice president and director of the Arizona office. » Johnson Carlier, Inc., welcomed back two senior-level field employees, Randall Tisai as project superintendent and Dean Badger as senior project manager. » Ward Simpson was hired to lead the project management division of Rider Levett Bucknall. Simpson has managed the efforts of architectural, engineering and management consulting firms for more than 37 years, 25 in Phoenix.
• 24-hour emergency services due to water damage,
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17
CONSTRUCTION BY DONNA HOGAN
Going Public Government-funded and school bond projects keep Arizona construction companies busy during economic downturn
O
f the 15 Arizona school districts that asked voters in November to approve bonds to build or renovate educational facilities, 11 got the go-ahead despite the lingering recession. That’s good news for many of the state’s construction companies that have relied on publicly-funded projects to boost business and keep workers employed as private investment in new buildings plummeted with the economy. And for public entities with the need and the seed money, it’s a good time to snag a good deal in a highly competitive market for construction materials and services. But while public projects have helped, government spending has not been the great savior of the industry, according to Arizona’s construction company leaders. The recession has taken its toll on public building plans with shrinking tax revenue sopping up funds pegged for new schools, city halls, police stations or libraries. And as absolutely essential projects get checked off the list, public spending is expected to dwindle. However, at least some projects are still getting budgeted and built, says Bo Calbert, president of McCarthy Building Companies’ Southwest Region. “From 2003 to 2007, we probably had our best market in decades, but by 2008, everybody knew we were in trouble,” Calbert says.
18 | January-February 2012
Currently under construction is the first phase of the PHX Sky Train (above); completed public projects include (opposite page) the Maricopa County Superior Court Tower and Chandler's new City Hall.
“Private (projects) stopped overnight. Public work continued.” Citing a recent market outlook report for Phoenix-MesaScottsdale, Calbert says overall construction value slipped 40% in 2008 from its 2007 high, tumbled another 23% in 2009 and 27% in 2010. The report predicts 2011 value will increase 40% when the final numbers are compiled, but will sag slightly this year (2012) before heading back up in 2013.
BUILDING DURING THE RECESSION Much of the 2011 increase is a result of federal stimulus funding for schools, infrastructure, solar-fueled projects and other green upgrades, Calbert says. Among the infrastructure projects McCarthy landed is construction of the $140M, first phase of the PHX Sky Train, a people mover
CONSTRUCTION
pegged to connect Phoenix Sky Harbor International Airport visitors and employees to the terminals, light rail system and parking lots. McCarthy’s usually packed education division had a 2011 workload valued at about $110M, Calbert says. That‘s down from a high of $170M in 2008. And about 40% of the 2011 business was out-of-state work as McCarthy took jobs in New Mexico to make up for Arizona’s shortfall. “Public work has kept us going, but we had to go beyond Arizona,” he says. Among the school projects McCarthy snagged during the recession is a $25M addition and renovation for Barry Goldwater High School, says Terry Bohl, the company’s education services director. Parts of that multi-faceted project were completed during summer 2011 break, and other non-disruptive work is still ongoing, he says. During the summer break, McCarthy completed 600,000 SF of school construction in Metro Phoenix, including new buildings, renovations and mechanical upgrades. Still in the works is a new, $12M, 80,000 SF elementary school in Chandler, Bohl says. Chandler is one of the few Arizona cities able to afford other-thanschool public projects during the downturn. The city broke ground on a $74M city hall complex in mid-2009. After leasing, saving and budgeting for 25 years, Chandler didn’t have to borrow money to build it, says spokeswoman Jane Poston. Best of all, Chandler’s project came in $10M under original budget thanks to the sagging economy. “We had significant cost savings building in a recession,” Poston says. Designing a much-needed firehouse as solar-fueled and LEEDcertified helped Gilbert land a $3M federal grant from the American Recovery and Reinvestment Act, says spokeswoman Beth Lucas. Maricopa County also saved a bundle by opting to build during the recession, says Thomas Goderre, district operations manager for Gilbane Building Company. Gilbane teamed with Ryan Companies US on a 700,000 SF superior court tower in Downtown Phoenix (construction value $260M). “The Maricopa County Court Tower project was bid and constructed at the perfect time for Maricopa County, Gilbane/Ryan and the subcontractor community,” Goderre says. “The county was able to realize construction cost savings in the range of $15M to $20M compared to a normal construction climate, while Gilbane/Ryan and the local subcontractors were able to put a lot of people to work during a very tough economic downturn.” The court tower was completed in November. That, along with a new Phoenix Police precinct and four ASU student recreation centers, are among the publicly funded projects that “helped us weather the storm,” Goderre says.
LOOKING FOR NEW OPPORTUNITIES In Arizona, about 75% of Gilbane’s business has been publicly funded projects, he says, but Goderre sees that changing as public money dries up and private investment returns to the market. Sundt Construction vice president Jeff Fairman says he also believes privately funded projects will take over more of his company’s resources during the next few years as cities and school districts continue to get squeezed. Tempe-based Sundt bills about $1B in a normal year. Business has dropped overall during the recession, but the company’s 50/50 ratio of public/private business has so far remained static, Fairman says. Sundt has about $500M worth of public work in progress right now, but most of that is in multi-year projects, he says. Both the volume of new business and overall construction value have shrunk as pre-recession plans that weren’t shelved were at least downsized. “The bells and whistles went away,” he says. Besides building the new Chandler City Hall complex, Sundt landed a potpourri of publicly-funded projects during the economic downturn including K-8 and higher education buildings, municipal infrastructure projects, a federal courthouse and a U.S. Marine Corps simulator facility in Yuma. Mesa-based Caliente Construction has specialized in upgrading or repurposing existing facilities during the downturn, says CEO Lorraine Bergman. The company is renovating old post office space to accommodate a student center for ASU’s Downtown Phoenix campus. Caliente has several projects completed or ongoing to make security, technology or mechanical improvements in public buildings from schools to prisons, Bergman says. “It’s come down to necessity. You can’t let the buildings fall apart,” she says. Kitchell president Jim Swanson says the public sector produces “a sizable piece of our business,” typically employing about 30 percent of the company’s workforce in Arizona and California. Commercial construction work is down for nearly all of Kitchell’s business segments, Swanson says. And public projects in no way take up the slack, he says. Instead, he’d give props to the healthcare industry for keeping his business healthy. calienteconstruction.com gilbaneco.com kitchell.com mccarthy.com sundt.com
19
CONSTRUCTION BY PETER MADRID
The ABC'' s of renovation & conversion
Arizona School for the Arts
Two Valley specialty schools tap local resource for its expertise
Cost: $1.5M
T
Size: 39,500 SF Cost: $3.6M Architect: Orcutt | Winslow AAEC Coronado campus Size: 22,000 SF Architect: DLR Group
ransforming existing building space into classrooms presented a great challenge for two specialty school projects in the Valley. But in selecting Adolfson & Peterson Construction as general contractor, Arizona School For the Arts and the Arizona Agribusiness & Equine Center knew they turned to the right folks.
ARIZONA SCHOOL FOR THE ARTS Th is renovation was a three-phased project that spanned more than three school years. The work on Phase I included complete interior demolition of 14,000 SF of previous office space and renovated to include four science classrooms, four piano classrooms, four orchestra and strings classrooms, a teachers workroom, two conference rooms, administration support offices, and two main offices; one for the principal and one for the assistant principal. The work on Phase II consisted of roughly 4,000 SF of interior space demolition and renovation of office space into classrooms. This phase included the build-out of four classrooms, and four administration offices. This phase also included complete roof replacement, HVAC replacement and some on site improvements. The main feature of this phase is the storefront glass wall at the main entry to the administration front desk on the west side of the building and the matching storefront glass wall at the east end of the same corridor. These have become the iconic and hallmark feature of the school. Phase III — the largest scope of the three — consisted of complete interior demolition of a 20,000 SF, two-story office building and renovating it into classrooms, ballet dance rooms and office space, as well as a new 1,500 SF masonry restroom tower and new on-site improvements. One of the distinct features of this phase is the complete 20 | January-February 2012
removal of the existing masonry and punched windows face of the building to now include a new glass curtain wall system on the entire north face of the building on the second floor so as to provide more natural light into the dance studios and provide an architectural feature that ties the phases together.
ARIZONA AGRIBUSINESS & EQUINE CENTER The AAEC Coronado campus consisted of the conversion of an existing medical plaza into classrooms for the specialized charter school. The project included the full buildout of four buildings at the existing plaza. The first building was converted to a front office with staff offices and classroom space; another included multi-purpose space and additional classrooms; the third consisted of four classrooms; and the final included a biotechnology lab, computer technology classrooms, prep room, science labs and lecture space.
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CONSTRUCTION: PROJECT NEWS
SCOTTSDALE’S SONORA VILLAGE GETS NEW ANCHOR The newly enhanced Sonora Village, 15515 N. Hayden Rd., Scottsdale, landed a new anchor with the construction of Studio Movie Grill (above). Developer for the $6M, 42,000 SF theater was Westwood Financial. VCC was the general contractor; DVA was the architect. Merrill Companies is handling brokerage services. Studio Movie Grill is a 9-screen, upscale theater that features first-run movies, complete dining and a bar. D.L. WITHERS, DLP GROUP RENOVATING CHANDLER PREP SCHOOL The Chandler Unified School District High School Prep Academy, 1150 W. Erie St., is undergoing a $7.8M, 73,000 SF renovation by D.L. Withers Construction and the DLR Group. Work includes renovation of an existing 52,466 SF elementary school, construction of a new gym with lockers and restrooms, new student parking lot, a new high school soccer field and outdoor basketball court. Expected completion is 2Q 2012. MOUNTAINSIDE FITNESS BUILDING CLUB INSIDE CHASE FIELD Brycor Builders of Chandler is the general contractor for the Mountainside Fitness center that will become the nation’s first fitness club inside a Major League Baseball stadium at Chase Field, home of the Arizona Diamondbacks. SaemischDiBella Architects is architect of the $650,000, 12,000 SF project. The club will occupy 10,000 SF along the main concourse, including a cycle room with glass windows visible to patrons inside the ballpark. Mountainside will also occupy a mezzanine level to be used as a cardio studio. Expected completion is 1Q 2012. DPR CONSTRUCTION GIVING KARSTEN MANUFACTURING A FACELIFT DPR Construction is providing construction management and general contractor services for PING (Karsten Manufacturing) as part of the club maker’s Campus Master Plan Renovation. Phase 1 is a build-out of 94,000 SF of office space; Phase 2 is construction of 135,000 SF of warehouse/office tower; Phase 3 is relocation of manufacturing into Building 113; Phase 4 is construction of 40,000 SF of office space to house test facility groups; and Phase 5 is demolition of multiple buildings and construction of a test facility (driving range). Architect is Weiss/Magness Architects.
NEW ARENA FOCAL POINT OF GCU’S $200M EXPANSION PROJECT A 5,000-seat, 135,000 SF arena (above), the focal of Grand Canyon University’s $200M expansion efforts, was a financial boon to Arizona’s construction industry with its $40M price tag. GC was Perini Building Company. Subs included Aluglas, Cannon & Wendt, Coreslab, E&K of Phoenix, Facilitec, Harris Arizona Rebar, Kimbrell Electric, Kovach, Meyer & Lundahl, Progressive Roofing, Schuck & Sons, Sun Valley Masonry and TD Industries. Architects were Architekton (Tempe) and 360 Architecture (Kansas City, Mo.)
CONSTRUCTION P&Z TOWN OF PARADISE VALLEY On November 10, 2011, the Town of Paradise Valley Town Council approved the 2012 General Plan update. The plan will be voted on by the public at the March 13, 2012, election and will be identified as “Proposition 438.” For more information: paradisevalleyaz.gov.
CITY OF SCOTTSDALE The Federal Emergency Management Agency is in the process of updating flood insurance rate maps for North Scottsdale. The new maps identify approximately 700 properties north of Lone Mountain Rd. within a special flood hazard area. The new maps are open for public appeal prior to adoption in late 2012 or early 2013. For more information, contact Ashley Couch, City of Scottsdale Stormwater Manager and Floodplain Administrator, (480) 312-4317.
CITY OF SURPRISE The City of Surprise City Council will consider a new fee for permits to replace water heaters and water softeners at the January 17, 2012 Work Session. For more information, call (623) 222-3070.
TOWN OF GILBERT The Town of Gilbert is in the process of reviewing the Town Code in order to offer new opportunities for businesses to promote themselves. The code change would allow small-scale, promotional and community events as temporary uses, not requiring a special events permit. For more information, contact the Town of Gilbert public information officer, (480) 503-6766. P&Z column by Dave Coble and Karl Woodard, MEUP, with Coe & Van Loo Consultants Inc. cvlci.com
22 | January-February 2012
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25
INDUSTRY LEADERS BY PETER MADRID
No. 1 in Their Field A ZRE honor s the top leade r s of 2011-2012
W
e are impressed by the many individuals who are passionate about Arizona’s commercial real estate industry. Each year AZRE magazine pays recognition to a group of industry leaders who rise above the norm. Th is year those
leaders were chosen from the 10 industry sectors identified in our annual People to Know publication. These leaders were announced and honored at a reception on Nov. 10. For our first issue of 2012, we asked: What trend or growth area in your particular I N COM M E RCIAL
R E A L E S TAT E
industry do you foresee aiding economic development in Arizona in 2012?
Architects/Engineers MICHAEL MEDICI, AIA President SmithGroupJJR “Arizona is primed to make huge economic development strides. Utilizing our natural resources and demographics, Arizona is positioned well for continued growth. SmithGroupJJR has a broad range of market focus areas: workplace, education, healthcare and science and technologies. Th is diversity has positioned us to be at the ‘right place at the right time.’ For example, Arizona’s healthcare systems are still trying to catch up with the tremendous growth over the past 15 years. Our expertise in local, regional and national design of healthcare facilities has our team servicing several key providers throughout the region. On the other end of the spectrum, Arizona provides a tremendous setting for both the solar and data center industries. Our integration of architects and engineer, provides the perfect combination for our technologies studio, which specializes in the design of mission critical facilities and renewable industries.” Attorneys DON J. MINER Director Fennemore Craig PC “Some silver linings can flow from the dark clouds of economic difficulties. The high numbers of foreclosures and failed condominium projects have helped cause an increased demand for multi-family housing. In 2012 in Arizona we will see benefits from the increased demand for multi-housing in the form of increased values for apartment projects and we may even see some openings for planning and development of multi-family housing in underserved areas. In 2012 I believe we will also see an expansion of the trend of firming up of office rents that will help landlords. Both those trends should help improve economic expansion in our state.” 26 | January-February 2012
Attorneys MICHAEL E. TIFFANY Managing Attorney Tiffany & Bosco “The real estate market recovery started with the acquisition of existing Class A apartments. Healthcare has also been a strong sector, followed by industrial. The real economic benefit has been caused by the construction of new projects, which started in a meaningful way in 2011. Homebuilding has been a part of this, but not at the usual level. Initially, the source of funding was government insured lenders. However, many of the traditional lenders have returned to the market. The increased employment from new construction gives a significant boost to the economy. The major uncertainty is the financial crisis in Europe. The recovery will continue to be weak until there is a long-term solution to that problem. Bottom line, I am optimistic. Brokers ANTHONY J. LYDON Managing Director-Industrial/ Supply Chain Logistics Solutions Jones Lang LaSalle “We are seeing — and will continue to see — energy/HR-centric industrial employers choose Metro Phoenix for our strategic location near California, our right-to-work environment and our low risk of natural disasters. Employers who are Foreign Trade Zone-qualified will reap additional and substantial real estate and equipment cost savings that stack up competitively against any other state in the country. Arizona’s sustained demographic growth and relatively young population reinforce these benefits. These inherent strengths will remain key drivers for companies that are seeking industrial space solutions and will help Arizona win those corporate space commitments.”
INDUSTRY LEADERS Developers/Investors KURT ROSENE Senior VP Alter Group “I believe that there will be three key factors to watch in 2012: Government: “On the local level, Arizona has made significant strides over the last year to become competitive in the job attraction arena. New funds have been appropriated, allowing the state to compete to attract jobs, coupled with the introduction of the Arizona Commerce Authority this now places Arizona in the competitive arena with other Sunbelt states.” Healthcare: “On the federal level, healthcare reform, if adopted, will greatly accelerate the need for medical office facilities. We will see a need for additional medical office space and ancillary mini-hospital facilities reaching out to the local level of services closer to the roof tops.” Technology: “Both the office and industrial markets in Phoenix are experiencing growth due to the technology sector. Growth in distribution is being fueled by Internet shopping. Many of the large office deals are companies directly related to technology.” Economic Development/ City Planners CHRISTINE MACKAY Economic Development Director City of Chandler “Arizona has made significant in-roads over the past few years as a force to be reckoned with as a location opportunity for both corporate expansions and early stage companies looking for a place to grow. In 2012, I expect we will continue to see the glut of inventory on the market reduced by these companies looking to take advantage of the business platform they find in our market. Further, the economic downturn has taught cities how to be more collaborative and open to new, creative ideas and I expect we will see this expand in 2012 as communities work to grow their employment base.” Finance/Accounting WILLIAM L. SPART Senior Vice President Wells Fargo Bank-Real Estate “Within the commercial real estate finance industry there are more institutions entering the field as values stabilized. In 2011 we witnessed tighter spreads while advance rates increased a bit versus 2009/2010 time period. This trend appears to be continuing in 2012. As a result there are more participants in the market taking advantage of historical low prices as values are starting to stabilize. Until supply is in equilibrium with demand, construction of new product will be a fraction of pre-2007 levels. The creation of jobs is the key to long-term absorption and ultimately the return of price appreciation.”
General Contractors HAMILTON ESPINOSA National Healthcare Leader DPR Construction “A path to a better future for construction must aid in Arizona’s economic development efforts. DPR is focusing on supporting our clients’ needs, to do more with less. We are able to do this using lean construction techniques to minimize waste, Integrated Project Delivery, and a number of increasingly high-tech tools, to increase efficiency and quality. With these tools, we, and Arizona, may offer a company considering relocating or expanding here, the best deal in cost, speed to market and value.” Property Managers MARK STROMGREN, RPA Vice President, General Manager of Real Estate Services NorthMarq “Technology appears to be the big factor to aid in economic development from an operational perspective. Property managers are virtually never away from their computers with smart phones. Th is leads to faster solutions to problems and greater tenant satisfaction. There is also new Internet-based software for tenants to call in service orders any time of day or night. A better bottom line also encourages more real estate investment.” Subcontractors DANIEL PUENTE Founder & President D.P. Electric Inc. “Our success throughout the recession can be credited to the strong relationships that we have built with our trusted general contractors. Arizona’s real estate industry was hit the hardest in this recession. But I also think it will be the first to come back and slowly carry us out of this recession.” Up and Comers KIMBERLY MICKELSON Marketing Associate Small Giants “Social media is becoming a large factor in aiding economic development, particularly in commercial real estate and within the architectural, engineering, and construction industry. The emerging trends I see are promoting local and regional businesses, linking job seekers to jobs, strengthening or rebranding a firm’s image, and creating an awareness to a larger targeted audience.” 27
How Phoenix looks in the next 10 or even 100 years depends on a strong economy and infrastructure such as the light rail (right). Photos courtesy of GPEC. Arizona in the future (Page 30) might include taking advantage of solar shades over our interstate freeway system. Gensler rendering.
28 January-February 2012
CENTENNIAL SERIES
Cranes, Trains and Automobiles Arizona’s economic strength and growth the next 100 years depend on the creation of new buildings and new infrastructure | By Peter Madrid
A
high-speed train between Phoenix and Tucson. Toll roads on I-10 and I-17. A new shopping mall. Three outlet centers. A major development in West Phoenix. New casinos. Solar manufacturing plants. A light rail that extends from Phoenix to Gilbert. A new interstate — I-11 — linking Phoenix and Las Vegas. State-of-the-art sports facilities. Reality or wish list? As Arizona looks ahead to its next 100 years, the future of the commercial real estate industry hinges on new infrastructure to keep the state’s economic engine churning while meeting the demands of a growing population. Since the recession unloaded on the commercial real estate industry in the mid-2000s, it’s been an uphill climb for those
in the industry, including general contractors, architects, engineers, subcontractors, developers and brokers. “We will see a population shift to urban areas with a focus on transit- oriented development,” predicts Bryan Dunn, senior vice president at Adolfson & Peterson Construction. “Commercial property will need to be re-purposed into alternate uses due to the glut of vacant space in the real estate market. “We will need to find creative ways to own and operate buildings in the future. There is a growing demand for public/ private partnerships for municipal and educational facilities, similar to what has been done in Europe,” Dunn says. AZRE magazine asks some experts in commercial real estate how they see the industry changing in Arizona over the next decade and beyond. Here are their responses:
Planning and Development “In the next 10 years, Arizona will fi nally adopt Tax Increment
Financing (TIF) to remain competitive in the business world. The new normal is for less reliance on homebuilding as a jobs industry. Two more high rise office buildings with mixed uses on the lower floors will be built in Downtown Phoenix. In the next 100 years, high-speed rail will run between Phoenix and Tucson in the Sun Corridor and a new, man-made lake/reservoir will be created north of Phoenix to collect upstream snow melt and serve the needs of Metro Phoenix.” — Jon Froke, Planning Director, City of Glendale “During the next 10 years, smaller developments that require less off -site infrastructure and result in lighter commitments from homebuilders are likely. Infrastructure requirements/ costs will be lower and fi nancial commitments will be smaller, both of which are desirable to fi nanciers and homebuilder shareholders recovering from the recent downturn. “In the next 100 years, development and homebuilding will undergo some of the most rapid changes ever. In Metro Phoenix and the Tucson area, densities will undoubtedly increase dramatically; we will grow upward rather than outward, as large metropolitan areas eventually do. The materials builders use will change dramatically, looking and feeling different. There will be stronger and lighter materials. Although hard to imagine, many unique, innovative homebuilding products that will be used the homes of the future have already been developed, we continue to wait for them to be rolled out to consumers. “The continued development of solar technologies is going to have huge impact on all types of commercial development in Arizona. Imagine buildings - retail, office, industrial, homes not needing to be hooked up to the grid because they produce all of the energy necessary for their usage. The development of 'net-zero' facilities in this market, where sun is plentiful, will have a dramatic positive effect on Arizonan’s lives.” — Jim Belfiore, President, Belfiore Real Estate Consulting
Brokerage “The beginning of the change is going on right now. The exchange of ownership has and will have an impact on our industry in the next 10 years. In the RTC days it took about 15 years to fully recover, this current cycle will take 5-7 years to process all of the inventory and for the next wave of owners to re-trade the properties. Banks, special servicers and the FDIC will be in charge of real estate for the long term and all 29
of the assets that are currently under their control won’t make it back into private hands in total for 10 years. “The medical use of retail space will be in full force; everything about this makes sense. Retail buildings, namely big box spaces, have the power, the lower rents and the parking already in place to handle a medical user. This will create truly mixed-use locations. “Internet sales fulfillment centers will hit a critical mass, even if and/or when the state begins to charge them sales tax, even at a much lower rate. Phoenix is well located; we have a growing economy and it makes a lot of sense that those are now starting to pop up here. “In the next 100 years, buildings will be far more energy efficient; materials to build buildings will be so much more advanced than we can even imagine. In commercial buildings, there will be more bodies per square foot, more technology, less employees, smaller office size requirements. Thousands of new businesses will be created.” — Pete Bolton, Managing Director/Exec. VP, Grubb & Ellis “Real estate growth over the next decade will be far more restrained than in the boom period in the 10 years before the onset of the recession. During that time, commercial property inventories routinely expanded by anywhere from 3% to 5% annually, driven by growing tenant demand for space and rents that steadily pushed higher. A return to that environment is unlikely anytime soon. “Forecasting out over the next 100 years presents a pretty daunting challenge … but all of the demographic trends show Arizona will remain a growth market over the next century and population growth will spur demand for both commercial and residential real estate. Beyond demographics and quality of life factors, we believe global economic patterns will support growth in Arizona.” — Bob Mulhern, Managing Director, Colliers International
Architecture “All industries, including commercial real estate and architecture, will need to continue to evolve and adapt to emerging technologies — specifically in the fields of alternative energy and sustainability. I believe the next few years of those 10 years a lot of attention will need to be spent on repurposing existing buildings and facilities. We will obviously need to remain flexible to adapt to the process of becoming stabilized. “Because technology and technological advances are changing at an exponential rate, I think the next 100 years is beyond reasonable comprehension. Who would have thought 100 years ago that we would be where we are today? However, architecture and real estate haven’t significantly changed over the past 100 years, but we also have not had the multi30 January-February 2012
plying pace of technology at our disposal. Who knows, things like tele-transporting may be a reality over the next century, which of course would drastically change architecture and commercial real estate.” — Patrick Hayes, President and CEO, PHArchitecture
Legal “For approximately the first third or half of the next 10 years, commercial real estate will need to focus on absorption and modification to meet current needs of those projects that resulted from overbuilding during prior ‘blow and go’ times in our industry. Arizona will need to adapt its economy to more self-sustaining business that is not so dependent upon growth and real estate development. Thus, over the next 100 years Arizona will need to modify its tax and development schemes to accommodate more industry and manufacturing." — Don Miner, Director, Fennemore Craig PC
Construction “The impact construction will have in Arizona will start with job creation. As the market comes back, the industry will be a leader in putting people back to work. We will need people to fill both direct construction jobs, and jobs that are indirectly related to construction. Every $1B spent in construction results in a total of 20,000 direct and indirect jobs. These jobs will help the middle class, the hardest hit in the last few years in terms of job loss." — Eric Hedlund, Executive VP/COO, Sundt Construction
Finance “Financing will always be a key part to Arizona’s growth. How products and services will be delivered will continue to evolve. As the market heals more competition enters into the marketplace thereby giving more investors access to capital. Assuming the economy has healed and is robust, I see a lot more choices for investors, developers and consumers in the next 10 years in terms of the availability of financing." — William L. Spart, Senior VP, Wells Fargo Bank
Quality Training Ensures Safety and Encourages Professional Growth At Delta, we recognize the value of our affiliation with the Associated Builders’ Alliance which allows us to offer nationally certified craft training programs. Our in-house training facility supports an accredited four-year apprenticeship curriculum, and our ongoing training program spotlights professional milestones and safety excellence. When you consider Delta Diversified for any project, you can be assured that safety and workforce excellence are deeply embedded in our company philosophy.
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