AZRE magazine July/August 2016 by AZ Big Media

JULY-AUGUST 2016

Most Influential Women in Commercial Real Estate p. 32

INSIDE:

IIDA p. 28

PRIDE AWARDS

AZCREW p. 41 LEADERSHIP

ABA p. 57 TRAINING

POWERING YOUR PROSPERITY John Gochberg Steve Macy Michael Frazzetta Zach Goldman TGM Associates Avid Outdoorsmen Walker & Dunlop borrower since 2012

Commercial Real Estate Finance Commercial Real Estate Finance www.walkerdunlop.com www.walkerdunlop.com

California loans will be made pursuant to a Finance Lenders Law License from the Department of Business Oversight.

Hello readers,

llow me to introduce myself, my name is David McGlothlin, University of Arizona School of Journalism graduate and newest associate editor at AZ Big Media. I’m a Phoenix native, food junkie and sports lover. If I’m not traveling or exploring new adventures, then I’m probably trying to replicate a dish from Food Network or practicing my golf swing. Before joining the AZ Big Media team, I covered this year’s legislative session at the Capitol as the UA Don Bolles fellowship recipient. Prior to that, I worked at the Arizona Daily Star, Tucson Weekly and as the editor in chief and news editor of the UA student newspaper, The Daily Wildcat. I want to give a nod to the amazing colleagues, mentors and sources that I’ve worked with during that time. Today, I'm again surrounded by another great staff and an opportunity to cover another fascinating beat. Within my first two weeks on the job, I had the privilege of meeting this year’s most influential women in commercial real estate (pg. 32). Their achievements and career success reflect the progression of the market, which is bouncing back from the economic downturn of ’08. This issue also features what is believed to be the largest commercial real estate single-day sales event in Arizona history (pg. 14), totaling $248 million. The market update (pg. 24) looks at several Tucson projects in the pipeline that reflects its expanding sectors. Also in this issue, Mark Minter of the Arizona Builders Alliance shares his thoughts on the state of the market and what’s next (pg. 57). AZCREW joins the issue on page 41 to highlight leadership and speak about the gender wage gap. I’m looking forward to bringing you the latest and greatest from the commercial real estate industry. Your thoughts, comments, concerns and insights matter to me, so please share them. Stop me at the next commercial real estate function. Reach out with news or tips. Send me an email or give me a ring in the office (602-424-8830). Last but not least, try to stay cool 'til September.

David McGlothlin Associate editor, AZRE david.mcglothlin@azbigmedia.com

2 | July-August 2016

President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editor: David McGlothlin Interns: Jesse Canales | Matt Durack Contributing writers: Lisa Atkins | Erin Davis | John Klobucar Steven La Terra | Tim Lawless | Cheryl Lombard | Rebecca Timmer ART Art director: Mike Mertes Graphic designer: Anita Richey Intern: Shannon Finn DIGITAL MEDIA Digital editor: Jesse A. Millard MARKETING/EVENTS Marketing & events manager: Heidi Maxwell Marketing coordinator: Kristina Venegas OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Cindy Johnson AZ BUSINESS MAGAZINE Senior account manager: David Harken Account managers: Ann McSherry | Bailey Young AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Jeff Craig AZ BUSINESS LEADERS Director of sales: Sheri Brown RANKING ARIZONA Director of sales: Sheri King EXPERIENCE ARIZONA | PLAY BALL Director of sales: Jayne Hayden CREATIVE DESIGNER Director of sales: Joe Freedman AZ BUSINESS ANGELS Director of sales: Felix Mayo

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. ©2016 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.

CONTENTS

FEATURES 2 Editor’s Letter 6 Up Front 12 Executive Profile 14 Big Deals

18 Legislative Update

24 Tucson Market Update

28 International Interior Design Association: Pride Awards

32 Most Influential Women in Commercial Real Estate

41 AZCREW

57 Arizona Builders Alliance

On the cover:

AZRE's 2016 Most Influential Women in Commercial Real Estate were photographed by AZ Big Media’s Mike Mertes at the Phoenix offices of Squire Patton Boggs. They are, from left, Lourdes Lopez, PCL Construction; Cheryl Lombard, Valley Partnership; Martha Abbott, SmithGroupJJR; Trudi Hummel, Gould Evans; Tammy Carr, Mortenson Phoenix Operating Group; Joyce Grossman, Arizona Association for Economic Development (AAED); Christine Veldhuizen, Cushman & Wakefield; Virginia Loring, Pimara Paul Koehler Structural Engineering; Pat Watts, Deco Communities; Jennifer Schrader, Caliber, The Wealth Development Company; and Cathy Teeter, CBRE. Missing: Rebecca Lynne Burnham, Greenberg Traurig. 4 | July-August 2016

GO TO store.azBIGmedia.com to purchase subscriptions, digital issues and plaques

UP FRONT PROJECT NEWS

N. PHOENIX PROJECT COMING TO LIFE Evergreen Development is ramping up construction at its 31-acre Trellis on Bell community at 12th Street and Bell Road in North Phoenix. The Phoenixbased developer is beginning construction on the community’s residential apartments, while new restaurant and retail tenants Café Rio, Blaze Pizza and Arizona Hair Company have signed leases to help anchor the 12,171-squarefoot shops building. Freestanding drive-thru restaurants Raising Cane’s and Kneaders Bakery round out the first phase of the retail development. Trellis on Bell is expected to be fully completed by 2018.

KITCHELL WILL BUILD CANCER CENTER AT PCH Kitchell has been tapped to build out the future Center for Cancer and Blood Disorders at Phoenix Children’s Hospital (on the second floor of the hospital), for which a $15 million campaign was recently launched. The “Hope Lives Here” campaign’s Honorary Co-chairs are Arizona Diamondback Paul Goldschmidt and his wife Amy. The project designer is the Phoenix office of Hobbs + Black. 6 | July-August 2016

Home, suite home Valley posts high percentage of luxury apartment construction By JESSE A. MILLARD

ranes are everywhere in Downtown Phoenix and around the Valley as development continues to explode. But what exactly are they building? Chances are it's some sort of luxury development, whether it's apartments to rent or condominiums to buy. These high-end multifamily properties seem to have always popped up in Scottsdale, but Phoenix especially has enjoyed a boom. Phoenix had 18 new rental properties open in 2015. What makes those openings unique on the national stage is that 95 percent of the new developments are deemed "luxury." It put Phoenix at No. 2 among mature metros in the country for the percentage of high-end units. Scottsdale, in particular, had 100 percent luxury rental new-builds. According to a RENTCafé study, Phoenix saw an 800 percent increase in high-end multifamily properties from 2012 to 2015. This trend isn't just in Phoenix, it's national, as 75 percent of all new apartments built in 2015 were highend, according to the study. But it's not just luxury residential developments that are exploding, but the residential space as a whole. In his April State of the City Address, Phoenix

Mayor Greg Stanton said there are 3,500 residential units in the pipeline or under construction. That's a big number. An ASU W.P. Carey School of Business Economic report released in mid-May shows the same sort of growth the mayor talked about. The report said Arizona's economy is currently in the boom, while warning that growth will be much slower in the future. The outlook still looks great for apartments, though. Elliott Pollack, one of the authors of the ASU report, said the outlook for apartments in the future is "excellent."

LUXURY DEMAND Everyone has been hearing about Millennials packing up the car to move into the hippest city centers around the country, with Phoenix being no different. Yet, Baby Boomers have been doing the same, said Tracy Hoskins, director of development services at Walt Danley Realty. Boomers and Millennials alike want the ease of access, walk ability and a vibrant lifestyle that high-end downtown living brings, Hoskins said. It's no longer just the young professional singles and couples we might have thought were traditionally drawn

PROJECT NEWS

MANUFACTURER PLANS NEW FACILITY IN PEORIA

to that, she said. People, Baby Boomers included, want a walk-and-leave lifestyle that allows them to live in an urban lifestyle. These desires have been driving the demand, she said. "(Baby Boomers) are just kind of tired of the huge lawns to take care of," she added. "They dont want to spend their weekends at Home Depot." The increase of growth has been a response to the growing demand for homes in downtown areas, Hoskins says. Downtown Phoenix isn't as grungy as its reputation was only a few years ago. Downtown Phoenix has become vibrant and folks are noticing. Bryan Fasulo, regional property manager at Pinnacle Property Management Services, said these high-end developments are revitalizing the area, turning Phoenix into a true downtown. "I was flabbergasted when I moved to Phoenix in 2001 and saw our downtown," said Fasulo, who moved here after stints in New York and the Bay Area. "I was like, 'What do you mean people don't hang out downtown?'" Phoenix and Tempe have also become tech hubs and employees relocating to Arizona have been filling up the higherend developments, Fasulo said.

LUXURY ISN’T WHAT IT USED TO BE These new high-end luxury developments aren't like they used to be either, Fasulo said. Twenty years ago, luxury in a multifamily property just meant fancy finishes, Fasulo explained, but it's way more than that now. It's a lifestyle. Work life isn't nine-to-five anymore. When folks get home, they just want to relax without a care in the world, so their home is starting to take care of them, Fasulo said. Many luxury communities take extra steps to care for its residents. The Standard, a new Scottsdale luxury apartment complex is partnered with the Hotel Valley Ho to give its residents pool, spa and room service access. The Millennials moving into these places especially have this sentiment. They're the on-demand generation who grew up on the Internet. As they enter adult life, Millennials want immediate services in their homes, too, Fasulo explained. With things like concierge services, on-site fitness studios and residential activities, the face of a luxury complex is changing. Residents also want to be able to walk out of their home to the hottest restaurant in town.

Commercial Properties, Inc. brokered the sale of 8.16 acres of land in Peoria to TYR Tactical, which purchased the site for $2.8 million. Chad Dearmore represented the seller, Narazona Corporation. Dearmore put the buyer in touch with LGE Design Build to develop their new facility. “When large scale companies like TYR Tactical are looking to construct a brand new facility, putting them in contact with Industry leaders such as LGE Design Build to develop their project was a natural fit,” Dearmore said.

ELDORADO ON 1ST COMING TO SCOTTSDALE Eldorado on 1st, a new mixed-use residential development concept designed by renowned Phoenix architect Will Bruder in the heart of Scottsdale’s Urban Arts District, broke ground in May. The development combines spacious and functionally poetic living spaces, innovative architecture, artistic design and highest quality materials with a location providing future homeowners with immediate access to the numberless arts, dining, cultural and entertainment amenities in Downtown Scottsdale. Construction is expected to be complete by early 2017. 7

UP FRONT

Sunny days for land owners

Tax incentives, opportunity to export energy drive sale of land for solar developments By JESSE A. MILLARD

rizona may be lacking many things, but it is certainly ripe with land. There are 9.2 million acres of publicly held land in the Arizona Land Trust and there are plenty of private land owners with parcels available, too. Solar land developers have taken notice. Since the Solar Investment Tax Credit was extended last year and San Diego announced that it planned to be 100 percent renewable over the next 20 years, solar developers are locking

8 | July-August 2016

down viable land parcels in Arizona for future solar development. Arizona State Land Department Commissioner Lisa Atkins says much of the available public land is a good fit for solar development. On the department’s web site, there is even a tool that scores how good a land parcel would be for development, she says. Solar developers picking up public parcels isn’t something new, she adds. When the alternative energy conversations were just starting to gain

traction in the early 2000s, there were many developers who were acquiring large swaths of land to identify where a variety of different sized solar developments could be placed, Atkins says.

TAX INCENTIVES The Solar Investment Tax Credit — which first went into effect in 2006 — helped spur the solar energy industry. In turn, the sale of land that could be used for future solar developments increased. But developers aren’t just grabbing public land. In 2009, shortly after the Solar Investment Tax Credit was extended for the first time, Vermaland, one of the largest land owners in the state, saw a large jump in land sales for future

Lisa Atkins

Michelle De Blasi

has been extended once again, the folks at Vermaland are seeing another boost in land sales for solar developments. “Ever since the (Solar Investment Tax Credit) and a few other things have happened, there has been a huge, sort of rush to come in and tie up land,” Verma says, “and it’s not even necessarily to even develop right now.” Verma says five deals were completed recently, and there are a few more in the works.

WHAT THEY WANT

solar developments, says Anita Verma, director of marketing at Vermaland. That initial boost in sales didn’t last. Vermaland saw a lull in land grabs when utility quotas were reached, Verma says. And there was a pesky recession that got in the way. Arizona’s recovery may have been slower than much of the nation’s, but the outlook has been picking up. One thing Atkins and the department have noticed are that land purchases for solar developments go along with increases in demand for more energy. Last year, 91,000 residents moved to Arizona, according to University of Arizona Economic Forecast data released in March. Now that the ITC

Atkins says many of the developers going the public land route are much more specific with their solar land purchases. Picking the land for a solar development is a part of an overall business decision, she says, not just thought of in a vacuum. Verma says developers who are usually building utility-scale projects — anywhere from 50 to 100 megawatts — are looking from land in the 500- to 5,000-acre range. What developers want most of all, Verma says, is accessible flat land close to the current grid infrastructure. Proximity to grid infrastructure is especially important because building lines out to a substation or transmission lines can be one of the more pricier parts of the development, she says. The State Land Department uses 21 weights to determine a land’s solar score on its online parcel viewer. From the department’s experiences, there are a lot of variables that go into a land purchase for solar development, Atkins says. Finding the right land has been difficult even though there has been an increase in developers looking for land suitable for solar development, says Michelle De Blasi, co-chair of

Anita Verma the Arizona Energy Consortium and director at Fennemore Craig.

TAX CREDITS AND CALIFORNIA De Blasi has been hearing about recent land grabs in the wake of the Solar Investment Tax Credit extension and Verma cites that as one of the main reasons for these recent land grabs. Verma says Arizona developers have been also looking into supplying Californians with solar and renewable energy. There are already transmission lines owned by California utilites in Arizona that developers can tap into, she says. “That’s been a big trend we’re seeing — people coming in and looking to build here and transmit to California,” Verma says. California wants to have 50 percent of its energy to consist of renewable energy by 2030, and San Diego wants to be 100 percent renewable within 20 years. De Blasi has been hearing a bit about developers looking to supply California with solar energy, but developers in Arizona who want to send their solar energy still have hurdles to overcome to meet California’s intermittent energy requirements, De Blasi says. Solar development has been growing in Arizona, and with it are land purchases, especially as solar technology starts to advance. The tax credits don’t hurt either, even as the industry matures. “The industry itself has been trying to come into line with the rest of the energy industry in terms of not having to have incentives to be cost competitive,” De Blasi says. “It’s come a long way in that realm.” But those tax credits are still important to investors, she adds. 9

UP FRONT

Downtown uprising Growth of ASU in Phoenix leads to apartment construction boom By JOSHUA DELAUDER, CRONKITE NEWS

everal new apartments are being built in and around Downtown Phoenix, many with amenities built exclusively for students and most within walking distance of the downtown Arizona State University campus. These projects — five scheduled to come online later this year — will be available to rent just around the time the new law school will be opening, which could prove useful to students, many of whom will be moving downtown. There are currently 628 students enrolled for the 2017 school year in ASU’s Sandra Day O’Connor College of Law, according to U.S. News and World Report. The Law School Admission Council puts the average attendance around 600 to 700. Many of these students could be looking for someplace to stay this fall. At least five of these new apartments are being built in and around Downtown Phoenix: Illuminate, Linear, Proxy 333, Edison Midtown and Capital Place Apartments. Nate Smith, a freshman sports journalism major at ASU’s Walter Cronkite School of Journalism, said he likes having all these options for apartments. “The more options you have the more secure and confident you’d be with your decision after you’ve observed all your options,” Smith said. A couple of new condominiums — Portland on the Park and en Hance Park — are also being built downtown. But these are most likely out of the range of most college students or recent graduates: Portland's website prices the least expensive condo there at $235,000. This price is to buy, not rent. Apartments have been getting built faster than residential homes are going up, according to Ken Clark, a realtor for Home Smart Elite Group and a member

10 | July-August 2016

IMAGE COURTESY OF CCBG ARCHITECTS

of the Arizona House of Representatives. “The last time I looked at it, last summer, there was a 6-to-1 ratio of apartments being built to owneroccupied (houses),” he said. “Meaning, for every one-owner occupied home being built, there were six apartment units (being built).” With approximately 350 listings for vacant lots, according to Zillow, there is plenty of room for prospective projects. But many of these apartments are getting built right across the street from each other, which Clark said does not violate any kind of zoning laws. “That’s intended and that’s not necessarily a problem,” he said. Clark said one problem with building so many apartments in one general vicinity is that they can push out other businesses. “My concerns about some of the developments going in downtown is that it could crowd out locally owned businesses which have been the driving force for downtown redevelopment and you could end up just having franchises,” he said. Smith said the closeness of the apartments is not really a big issue for him. “It just promotes some healthy competition in my opinion,” he said. Dan Carroll, an agent with Realty One Group, said many of the contractors do a lot of research into where they want to build. “If somebody has already got the

jump on them and they have a vacant parcel across the street from a project that almost constructed or already constructed,” he said, “They aren’t going to break ground if they think they aren’t going to fill those units.” One issue is when so many apartments going up, property taxes could go up, but it depends on the type of property, Clark said. “If you’re talking about an apartment building that’s next to 10 little houses that have been there for 70 years, their property taxes could go up, but they’re not supposed to because (of) the assessor assessing their value based on similar homes like them,” he said. “Their property taxes might not go up, unless they’re turned into businesses.” The cost of a current one-room apartment at the nearby student apartment, Roosevelt Point, is $990 to $1,030. This can be expensive to students on a strict budget. Many of the student apartments can choose to charge the higher prices because of how close they are to downtown, Carroll said. “Proximity is desirable and if something is more desirable, there is more demand for it and they can charge more,” he said. “You can bridge the gap,” he said. “Let’s say there’s a brand-new product at a $1,000 a month and an existing product at $500 a month. Why don’t you, with the existing product, consider moving up to $750?”

EXECUTIVE PROFILES

Shifting focus New DMB president sees urban redevelopment as future for Valley

By MATT DURACK

rent Herrington, president and CEO of DMB Associates Inc., finds his company in the middle of a major change in strategy. DMB, known for building large masterplan communities, now shifts its focus to urban redevelopment style projects aiming for more infill and adaptive reuse. He took over for former president Charley Freericks in February and describes the company’s current environment as an interesting time. Traditionally, DMB would build out their developments horizontally, which uses a greater amount of square footage on community amenities and occasionally large golf courses. However, Herrington believes this opportunity has run its course in the Phoenix area. “We’ve sprawled about as far as you could sprawl,” he said. Herrington has had his foot in the world of expansive communities since he was a child. His father worked for Exxon, a pioneer on that front, and Herrington’s family lived in one of the first large masterplan communities in Houston. Before joining DMB, he worked for many years as a manager on masterplan communities, including Disney’s “Celebration, Florida” project.

12 | July-August 2016

PHOTO BY MIKE MERTES, AZ BIG MEDIA

While at DMB he has led projects such as Scottsdale’s DC Ranch and Silverleaf, and a large 1,000-acre community on the island of Kauai called Kukui`ula. Herrington said the company now must reorient itself away from the horizontal focus of the sprawling communities it developed before, and approach the redevelopment that DMB is doing now with a more vertical focus. He references a mixed-use building that the company is currently developing, called One Scottsdale, as an example. The development is 70 acres, which Herrington said in the company’s old world was not very big, but is enormous in the urban development market they’ve entered. He attributes the shift in development to the mindset of younger consumers. He noted many people living in the city have a strong desire to live in densely populated areas. “Younger housing consumers frankly don’t want to live in Buckeye and commute an hour to their job,” he said. “Younger consumers are just not wired that way. They don’t want to live in a cul-de-sac an hour away from all the things they like to do.” With the One Scottsdale development, Herrington

aims to create a luxury environment that urban professionals will enjoy. The rise of infill activity going on in Phoenix excites Herrington who envisions Phoenix as a high-density city in the near future. He is highly critical of the current sprawling nature of the city, and sees the opportunity his company is presented with as a chance to make a positive impact on the city. “Why are people continuing to build at the edges,” asked Herrington. “Why wouldn’t you come and put people and shopping and dining and entertainment and recreation, and put it a mile from downtown, not 30 or 40 or 50 miles from downtown?” He noted some of the prime real estate in Downtown Phoenix is currently occupied by undesired businesses, which forces newer developments to set up shop near the outskirts of the city. Herrington hopes that DMB projects will stimulate a lot of other urban development projects to start happening, and hopes this will bring more vibrancy to the city’s urban areas. “I think that DMB has the ability to do things now that will have a catalytic impact,” he said.

I N

C OM M E RCIAL

R EAL

E S TAT E

AZRE Magazine combines the top people to know with the top projects to know – all in one special annual issue!

[ BRoKeRS ]

Pete Bolton executive vice president, managing director Newmark Grubb Knight Frank 2398 e. Camelback Rd., #950 602.952.3800 ngkf.com

2016 EDITION AZRE: ARIZO

Craig Henig Senior managing director, Arizona market leader CBRe 2415 e. Camelback Rd. 602.735.5555 cbre.com/phoenix

NA COMM ERCIA L REAL

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Terry Martin-Denning President NAI Horizon 2944 N. 44th St., #200 602.955.4000 naihorizon.com

PEOPLE &

Bob Mulhern Managing director Colliers International 2390 e. Camelback Rd., #100 602.222.5000 colliers.com/phoenix

PROJECTS TO KNOW

Senior director Cushman & wakefield 2555 e. Camelback Rd., #300 Phoenix, Arizona 85016 602.253.7900 cushmanandwakefield.us

[ ARTS-E

fter graduating with a degree in psychology, Jackie Orcutt became a risk management consultant for a sorority. After traveling for two years with that job, she returned to Phoenix. Commercial real estate was never meant to stick in Orcutt’s plans, but once she was in she couldn’t look back. She started her career at CBRE in 2007 and moved to Cushman & Wakefield four years later. Since then, she has completed more than 11 million square feet of transactions valued at more than $510 million. Her clients include American Realty Advisors, Clarion Partners, Everwest, Liberty Property Trust and ProLogis. “If I can emphasize one thing, I’m here because of a whole group of people who worked with me,” Orcutt says of her mentors, including her mother, Cathy Teeter, regional director of sales management at CBRE. “She set the tone. I juggle a lot, but that’s how I was raised.” Orcutt notably worked with industrial team Bo Mills and Mark Detmer at Cushman & Wakefield before they joined JLL. Her decision to stay at C&W after their departure would be one of the defining moments of her career. In 2014, she was named a top five producer in the Phoenix office. “You will be rewarded for the risks you can take,” she says, adding, “But I’m a planner, so my risks are very calculated.”

2015

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GOING, GOING, GONE Behind the scenes of single-day sales event record By DAVID MCGLOTHLIN

he Ritz-Carlton Residences in Paradise Valley secured property reservations for 89 of the 91 villas released at a single day, private sales event on June 11 totaling $248,760,000. A few days later, all 91 villas were spoken for bringing the sales total to $257 million. “We believe it was the largest real estate event ever in Arizona,” said Jan Bracamonte, spokeswoman for Five Star Development, the Scottsdale-based development company. It is also being called the largest undertaking of a new master-planned community to feature a Ritz-Carlton with Residences in close to a decade with an estimated project value of approximately $2 billion. Brendan Mann, president of the Solvere Group in charge of sales and

14 | July-August 2016

marketing, shared details about why the event was such a success and what made it possible. “This is the new generation of luxury resorts combining a luxury hotel with exceptional, Brendan Mann fully-serviced homes and high-end shopping, all in one destination,” he said. “When we are finished, this will be one of the most premier destinations in the world and will be truly one-of-a-kind.” The entire 105-acre project includes a 200-room Ritz-Carlton resort surrounded by 91 single-level villas

and 45 single-family homes. The Residences are comprised of singlelevel villas sitting within six buildings, each two- or three-stories tall and ranging in size from 1,500 to more than 4,000 square feet. Floor plans offer one- to four-bedroom residences and prices range from the low $1 million to more than $5 million. Mann said, “The offering was a fulfillment of what people were looking for.” Residents didn’t want to leave Paradise Valley nor did they want to live and maintain a 10,000 to 12,000-square-foot home anymore he explained. People retained interest in the Residences since the project was initially halted in 2008 because of the economic downturn. Mann said people wanted to be a part of

It’s the big deals and the brokers who make them, that make the market an interesting one to watch. Here are the Top 5 notable sales from March 15, 2016 to May 31, 2016. Source: Cushman & Wakefield research department, Colliers International and Costar.

the community because it is a rare opportunity in Arizona combining a lock and leave lifestyle in addition to the peace of mind that comes with the level of hospitality and care provided by the ladies and gentlemen of the Ritz-Carlton. “We are very fortunate to have more demand than supply,” Mann added. The initial list of interested buyers totaled 700-plus people from around the world including Canada, Dubai and Mexico. Of that number, 150 people registered to attend the event, which lasted from 9:30 a.m. to 5 p.m. on Saturday. A team of less than 40 people, all with different tasks and areas of expertise, worked together to ensure the event’s success. Mann said all that really matters at the end of the day are if “the people feel as though they’ve chosen a fantastic home that will be the best thing for them.” By using non-property specific reservations for the event, the sales team were able to help buyers find the ideal home based on availability and what’s most important about the property to the homeowner. Mann said, “The order was established by when they registered with us.” Although some people were disappointed to not reserve the property they originally selected, most of the buyers were happy and excited to secure a spot. More opportunities to own property inside the Ritz-Carlton are coming up including the opening of a townhouse community next year. Mann encourages those interested to call or go online to register for the interest list to receive details. “Getting their name in and registered now is really one of the catalyst to be in a position to make a choice in the future because we will always honor when people registered to create the selection order,” he added. Five Star Development plans to break ground on the project this summer with completion of the residences and hotel by the end of 2018.

INDUSTRIAL/SALES

OFFICE/SALES

RIVERSIDE BUSINESS CENTER 4570 W. Lower Buckeye Rd., Phoenix 603,909 SF: $39M BUYER: Exeter Property Group SELLER: Duke Realty Corporation LISTING BROKERAGE: JLL

DESERT RIDGE CORPORATE CENTER 20830-20860 N. Tatum Blvd., Phoenix 275,208 SF: $69.1M BUYER: Bahrain Mumtalakat Holding Company SELLER: Regent Properties, Inc. LISTING BROKERAGE: N/A

10 WEST LOGISTICS CENTER 6200 W. Van Buren St., Buiding A,Phoenix 659,618 SF: $35M BUYER: New York Life Insurance Company SELLER: Crow Holdings LISTING BROKERAGE: Cushman & Wakefield

90 MOUNTAIN VIEW I & II 9977-9999 N. 90th St., Scottsdale 184,544 SF: $43.9M BUYER: Bahrain Mumtalakat Holding Company SELLER: Regent Properties, Inc. LISTING BROKERAGE: N/A

ESTRELLA BUSINESS PARK 1002 S. 63rd Ave., Phoenix 250,157 SF: $16.9M BUYER: Exeter Property Group SELLER: Duke Realty Corporation LISTING BROKERAGE: JLL ROSE GARDEN BUSINESS PARK 20801-20823 N. 19th Ave. and 1801-1831 W. Rose Garden Lane, Phoenix 161,846 SF: $12.94M BUYER: BKM Capital Partners SELLER: Pacific Equities Capital Management Corp. LISTING BROKERAGE: N/A 2021 S. 51ST AVE., PHOENIX 69,842 SF: $10.1M BUYER: Exeter Property Group SELLER: Duke Realty Corporation LISTING BROKERAGE: Cushman & Wakefield

5651 W. TALAVI BLVD., GLENDALE 152,936 SF: $27M BUYER: Bahrain Mumtalakat Holding Company SELLER: Regent Properties, Inc. LISTING BROKERAGE: N/A PRINCESS MEDICAL CENTER 8573 E. Princess Dr., Scottsdale 102,251 SF: $16M BUYER: Centum Health Properties SELLER: The Plaza Companies LISTING BROKERAGE: Cushman & Wakefield 827 W. GROVE AVE., MESA 228,000 SF: $14M BUYER: Mid-West Group of Companies SELLER: RRS & Company LISTING BROKERAGE: JLL

LAND/SALES

MULTIFAMILY/SALES

RETAIL/SALES

21432 N. 75TH AVE., GLENDALE 5 acres: $26.5M BUYER: MS Arrowhead, LLC SELLER: MS-RCS Arrowhead LLC LISTING BROKERAGE: N/A

CITRINE APARTMENTS 4900 N. 44th St., Phoenix 278,538 SF: $93.912M BUYER: Simpson Housing SELLER: JLB Partners, LP LISTING BROKERAGE: N/A

ARCADIA VILLAGE 3923-3967 E. Camelback Rd., Phoenix 37,922 SF: $19.65M BUYER: Crow Holdings Capital - Investment Partners SELLER: David A & Jill Christenholz LISTING BROKERAGE: Cushman & Wakefield

SEC WILLIAMS FIELD ROAD AND VA DRIVE, GILBERT 32.9 acres: $13,693,600 BUYER: Intercapital Development SELLER: Arcus Private Capital Solutions LISTING BROKERAGE: N/A CHANDLER CORPORATE CENTER 370 NORTHWEST MCCLINTOCK DR., CHANDLER 26.38 acres: $8,456,240 BUYER: PL Chandler Corporate Center LLC SELLER: Sooner Land of Chandler LLC LISTING BROKERAGE: Colliers 225 W. INDIAN SCHOOL RD., PHOENIX 7.02 acres: $8.2M BUYER: Evergreen Development Co. SELLER: Phoenix Motor Co. LISTING BROKERAGE: De Rito ADORA TRAILS PARCEL 10 SEC RIGGS AND COLDWATER BOULEVARD, CHANDLER HEIGHTS 19.12 acres: $7,643,478 BUYER: Maracay Homes SELLER: Taylor Morrison of Arizona, Inc. LISTING BROKERAGE: Nathan & Associates

SARATOGA RIDGE 450 E. Bell Rd., Phoenix 732,464 SF: $75.5M BUYER: ROC Fund III SELLER: Variable Annuity Life Insurance Company LISTING BROKERAGE: Cushman & Wakefield

VAL VISTA TOWNE CENTER 1395 E. Warner Rd., Gilbert 93,372 SF: $16.7M BUYER: CIRE Partners SELLER: North American Development Group LISTING BROKERAGE: CBRE

DESERT HORIZON 6636 N. 58th St., Scottsdale 463,810 SF: $71.215M BUYER: Weidner Apartment Homes SELLER: Waterton Associates LLC LISTING BROKERAGE: CBRE

SOUTHSHORE TOWN CENTER 4015-4245 S. Arizona Ave., Chandler 40,651 SF: $13.125M BUYER: David Loeb SELLER: A & C Properties, Inc. LISTING BROKERAGE: NGKF

RESERVE AT ARROWHEAD 7701 W. St. John Rd., Glendale 483,480 SF: $64.5M BUYER: Weidner Apartment Homes SELLER: Eaton Vance Corp. LISTING BROKERAGE: Marcus & Millichap

TRI-CITY PAVILIONS 1870-1984 W. Main St., Mesa 96,790 SF: $13.1M BUYER: BKR Lamar Retail Services SELLER: J.G. Management LISTING BROKERAGE: CBRE

MONTE VIEJO APARTMENTS 2220 E. Beardsley Rd., Phoenix 330,048 SF: $58.55M BUYER: Bridge Investment Group Partners, LLC SELLER: Equity Residential LISTING BROKERAGE: Marcus & Millichap

ARROWHEAD GATEWAY 17560-17570 N. 75th Ave., Glendale 35,684 SF: $10.1M BUYER: NLT Properties LLC SELLER: Pacific Wet Land LISTING BROKERAGE: Phoenix Commercial Advisors

BIG DEALS: The 856unit Saratoga Ridge Apartments in Phoenix sold for $75.5 million. The buyer was ROC Fund III and the seller was Variable Annuity Life Insurance Company. The listing brokerage was Cushman & Wakefield.

16 | July-August 2016

LEGISLATIVE UPDATE

How did commercial real estate fare at the Capitol this year?

f the 10 issues identified by the NAIOP-AZ Board as top priorities, nine were resolved successfully at the State Legislature this session. In a nutshell, we were able to stave off three property tax shifts to commercial real estate while advancing changes to two bills that protect taxpayer petition and disclosure rights and improve the property tax process. We also advanced two bills to the finish line where cities were poised to enact ordinances contrary to the smooth operations of business. Below is a synopsis of the bill number, short description, our position, and how the legislation ultimately fared in priority order. Most importantly, our Board was pleased Prop 123 was approved by the people in mid-May as a way to infuse more resources into schools without raising taxes. 1. HB2130: Environmental Energy Usage Reporting in Commercial Buildings and City Preemption. (SUPPORT) This was re-passage of the bill to bar cities from enacting energy usage requirements on landlords of commercial buildings or face misdemeanors and fines for noncompliance (SB1241) due to litigation brought by Tempe Councilwoman Lauren Kuby who objected to cities also being pre-empted from banning plastic

18 | July-August 2016

before proceeding with taxing authority. We provided key supporting testimony in Senate and championed support at the Arizona Chamber. Signed into law by the governor March 11, 2016.

Tim Lawless NAIOP-AZ

bag usage in grocery stores in the same bill. NAIOP-AZ joined with numerous other trade associations and we provided lead testimony. Signed into law by the governor March 14, 2016. 2. SB1487: Shared Revenue Penalties for Cities that Flout State Laws. (SUPPORT) This bill was strongly supported by the Governor and the Senate President and was run as further leverage in passing HB2130 and saving us litigation costs due to the Kuby lawsuit. Signed into law by the governor March 17, 2016. 3. HB2440: Election Requirements for Municipal Improvement Property Tax Districts. (SUPPORT) This bill requires that municipal improvement taxing districts must obtain more than 50 percent support of property owners

4. SB1402: Class 6 Property Tax Treatment for Grand Canyon University and other For-Profit Higher Ed Institutions. (OPPOSE) This bill would significantly lower the tax bills of for-profit higher education entities and be a tax shift and therefore increase to our members. DO NOT EXPECT IT TO PASS as bill is stuck in House Rules at press time due to opposition from Realtors Assn. and Arizona Tax Research Assn. (ATRA). 5. HB2065/SB1519: Vision Screening in Schools. (SUPPORT) This bill positions NAIOP-AZ to support K-12 reform issues that have a high ROI to the taxpayer by significantly improving student academic performance. NAIOP-AZ provided lead testimony in multiple committees. BILL DIED IN SENATE after passing the House with a bi-partisan vote of 45-13 due to amendments to take DHS out of an administrative oversight role. 6. SB1504: Donation Drop Boxes Required to Gain Private Property Owner Consent. (SUPPORT) We were

part of a large coalition led by Goodwill Industries and supported by ICSC to protect private property rights of retail owners. Our contract lobbying firm, Veridus, was the lead. Signed into law by the governor March 24, 2016. 7. SB1306: County Impact Fee Reform Procedures. (SUPPORT) Bill mimics the impact fee reforms we enacted for cities a number of years ago led by the Home Builders. Signed into law by the governor May 18, 2016. 8. HB2693: Sales Tax Expansion and Income Tax Reduction. (MONITOR/OPPOSE) Bill did not receive a hearing and is therefore dead. We were concerned that a sales tax expansion could include commercial lease sales that would chill transactions. BILL DIED/NOT HEARD. 9. HB2538: Municipal Bonds and Property Tax Levies. (OPPOSED INITIALLY/NOW NEUTRAL) Original bill allowed cities to stockpile and over collect debt reserve funds levied on secondary property taxes which is not good for our members as the process lacks transparency and increases taxes. We provided slip of opposition in Senate and then ATRA got an amendment on Senate floor that requires more clarity when bonds are â&#x20AC;&#x153;defeasedâ&#x20AC;? or paid earlier than scheduled. Signed into law with favorable amendment by the governor May 18, 2016. 10. No Bill Number. Coyotes Arena/Hotel Sales Tax Increment Financing (TIF). (OPPOSED) A secret bill was drafted to place the Coyotes Arena in either Tempe, Phoenix, or Mesa that included a hotel and ancillary retail development that would receive unfair treatment through the recapture of sales tax revenue through TIF to help underwrite a bond sale. Given that we have at least six members who are planning to build hotels in Tempe alone, we are opposed to the State providing favorable tax treatment to both the hotel and retail but not necessarily the arena only. Given our opposition and from others, BILL DIED/NOT HEARD. Our NAIOP-AZ Board was also gratified that Prop 123 passed on the May 17th special election ballot that will inject $3.5B more into K-12 schools over the next ten years from State Land Trust proceeds. Our organization was one of the top funders in favor of the proposition and supported the measure primarily because it was a way to provide more resources for schools without also raising general taxes. In regards to next session, we are already planning to advocate a further reduction in the property tax assessment ratio used to calculate property taxes which is currently at 18 percent for all businesses. This burden is 1.8 times the property tax rate paid by homeowners. This move towards greater equity for all types of property owners will help us attract and grow more high wage jobs for the state and we will ameliorate the tax shift to homeowners by again toggling the homeowners rebate as we successfully did more than a decade ago when we first brought the assessment ratio from 25 percent to 20 percent and then more recently from that amount to now 18 percent for all businesses. Tim Lawless is president at NAIOP-AZ.

What is next for our Valley cities?

ur local cities and towns are where we can make the most difference for responsible development. Valley Partnership was proud to support Debra Stark for the recent appointment by the Phoenix City Council to replace Bill Gates in Council District 3. This appointment and November election is one of the most important in our Valley. Why? The Phoenix City Council will be voting on many important issues in the very near term - from how we fund a new sports stadium (or not), the push and pull between how we develop, where we develop, how pay for new infrastructure, and replace aging infrastructure. All in all - how we deal with change in one of the largest cities in the nation. There is not a better person in the field than Debra Stark to balance all of these factors and make a decision for what is best for her constituents. The same is true with the recent election in Tempe of Randy Keating to its City Council. No, he is not related to Charles Keating. Instead, he is Cheryl L. Lombard very passionate Valley Partnership about Tempe and making it a magnet for high-paying jobs and innovation and Valley Partnership was very happy to support his candidacy. Most of these discussions are not unique to just Phoenix and Tempe. Mesa, Goodyear, Peoria, Buckeye, Surprise, and all our Valley cities are trying to attract the business, leverage, strengthen, and expand their own assets, and keep residents happy. Valley Partnership supports responsible development and is proud to partner with these municipalities to find solutions that work for each unique local community. As the vast majority of public policy decisions about development happen at the local level, we plan on engaging with other municipal candidates that support the balance of these needs in key elections across the Valley in late 2016. I hope you join us in doing the same. Please visit valleypartnership.org to find out more about the Valley Partnership election platform. Cheryl Lombard is president and CEO of Valley Partnership. 19

LEGISLATIVE UPDATE

ECONOMIC DEVELOPMENT WINS

n the early hours of May 7th, the Arizona Legislature gaveled to a close its 2016 regular session. The Legislature also passed its fiscal year 2017 budget. Gov. Doug Ducey applauded lawmakers for their work. “This budget is proof that government can live within its means and be responsible with the people’s money, while continuing to make strategic investments in our K-12 schools, higher education, child safety and public safety,” he said in a statement. The legislative session was a success for economic development and the priorities of the Arizona Association for Economic Development. Several bills of note to economic developers made it through the system and were signed into law by Gov. Ducey.

WORKFORCE DEVELOPMENT Last year, the Joint Technological Education Districts (JTEDs) were cut out of the budget. Lawmakers responded to the economic development and business community and restored those funds not just for 2017, but also the prior fiscal 20 | July-August 2016

to agency for businesses looking to locate and grow in Arizona. The Legislature reauthorized the ACA for an additional two years with a few additional provisions. The ACA will continue its work marketing the state and enhancing business in Arizona.

DATA CENTERS Rebecca Timmer AAED

year. JTEDs provide career and technical education for high school students preparing them for technical careers in specified fields. Today’s students are tomorrow’s workforce!

ARIZONA COMMERCE AUTHORITY The Arizona Commerce Authority (ACA) was created in 2011 as a component of the first “jobs package.” Each state agency must go through a sunset review process and the ACA is no different. The sunset hearings last November resulted in a recommendation that the ACA be reauthorized as the go-

In recent years, the Arizona Legislature passed incentives for data centers to locate in Arizona. A bill passed this year changes the requirements and qualifications for the tax relief allotted to the owner, operator or qualified collocation tenant of a certified data center. It allows the data centers to include costs of improvements of owned or leased land, buildings, improvements, modular data centers or computer data center equipment. The General Effective date for these and other legislation passed this year is August 6, 2016.

Rebecca Timmer is the governmental affairs chair for the Arizona Association for Economic Development (AAED).

Collaborating to protect Lake Mead R ecently Central Arizona Project (CAP) and the Arizona Department of Water Resources (ADWR) hosted a second Colorado River Shortage Update. CAP and ADWR presented the latest information about the near-term outlook for the river and how Arizona can keep the river out of shortage in 2017. The update also featured a look at what needs to happen going forward to protect Lake Mead, the reservoir that supplies Arizona, Nevada, California and Mexico. Last April, at the first of these shortage events, much of the discussion was concentrated on whether or not shortage would be declared for 2016, and all eyes were on the Bureau of Reclamation’s August 2015, 24-month study. Each month, the Bureau’s study projects Lake Mead levels two years into the future. The August results are extremely important to Arizona, because that is the month the Bureau uses each year to determine whether to declare a shortage for the following calendar year, which would result in a reduction of Arizona’s supply from the Colorado River. We avoided shortage in 2016 due to our collective efforts to conserve water in Lake Mead and a fortuitous boost from Mother Nature’s precipitation-the so-called “Miracle May.” We can

Lisa Atkins

Central Arizona Project be proud of the success we collectively created to bring us to this point. Together, we’re improving the health of the Colorado River. However, the drought continues, the serious situation on the Colorado River persists, and more effort is required by all Colorado River users. The work ahead will not be easy. Collectively, the reservoirs along the Colorado River are at less than 50 percent capacity. Whether or not the drought eases, we will also still have an over-allocated river to address. Even in years with normal precipitation, more is taken out of Lake Mead than flows into the reservoir. This is the “Structural Deficit.” The Colorado River system has reached a tipping point, signaling the need for Colorado River water users,

regardless of State, priority, or use sector, to work even more quickly and diligently to address the ongoing imbalances between supply and demand, increase conservation to benefit the system itself, and to take proactive measures to increase Colorado River water supplies. For CAP, this has meant working closely with those who use CAP water to find ways to reduce demand and increase conservation. We have made great strides in protecting Lake Mead through the voluntary participation of our municipal, agricultural and Tribal stakeholders, and changing the way CAP operates. We will continue to work alongside our customers to cope with water shortage in the lake. CAP and ADWR have also been taking cooperative actions with others who depend on the Colorado River to avoid shortages and support our reservoirs. Future success is possible only with even more collaborative efforts that go beyond what we are already doing to protect the river. All Colorado River water users have a responsibility to safeguard the health of the river, conserve water wherever and whenever possible, and seek opportunities for cooperative programs that benefit the river system. State Land Commissioner Lisa Atkins is president of the board of directors at the Central Arizona Project. 21

LEGISLATIVE UPDATE

Cross-border partnerships further mutual benefit

he relationship between Arizona and our southern neighbor continues to catalyze a myriad of discussions. In April, the 108th Arizona Town Hall focused on ways to strengthen and grow economic ties between Arizona and Mexico for mutual benefit and prosperity. The robust recommendations resulting from the intense dialogue created a roadmap of short- and long-term actions — there’s something for everyone. This spirit of partnership continues as experts on both sides of the border convene to explore business opportunities in commercial, industrial and residential real estate development and tourism between Arizona and Sonora, Mexico. In May, the inaugural U.S.-Mexico Real Estate Investment Summit took place in Sonora, Mexico, co-hosted by the U.S.-based Accesso Group and the popular Mexican magazine, Inmobiliare. The Urban Land Institute, Arizona District Council was proud to be an Alliance Partner in this groundbreaking event. The day-long program was very well attended by both U.S. and Mexican developers, investors and service providers facilitating

22 | July-August 2016

Steven La Terra ULI

cross-border investments and business interests. Held in Hermosillo, Sonora’s economic and political capital, the conference featured the Honorable Claudia Pavlovich, governor of Sonora and many international dignitaries, who conveyed unity in their desire to enhance business relations between the two regions and countries. As stated in the 108th Arizona Town Hall Final Report, “The border does not divide Arizona and Mexico, it connects us and should be viewed as a bi-national region.” Understanding trends and innovations in the realm of real estate investment and finance is

critical to success, although there also appears to be a general lack of understanding regarding culture and cross-border business practices which adds complexity. There is a great deal of interest to engage in cross-border business partnerships, and programs like the Summit are a positive, strategic step in establishing broader ties. Throughout summit dialogues, Sonora Gov. Pavlovich showed great support for new real estate development, suggesting that several new resorts are being sought in Guaymas, Puerto Peñasco, Kino Bay, San Carlos and Hermosillo. She seemed intent on seeing these developments occur during her six-year term and willing to lead the effort to secure new investment. It appears as though the table is set and opportunities are plentiful. Through the initiative of individuals willing to step up and lead the charge, perhaps now is the ideal time to get started and effectuate a vision of mutual prosperity.

Steven La Terra is chair of Urban Land Institute’s Arizona District Council and managing director of Meyers Research, LLC, a Kennedy Wilson Company.

TUCSON UPDATE

Rising in the South Tucson commercial development market moves in the right direction

By DAVID MCGLOTHLIN

24 | July-August 2016

he recent rejuvenation of Tucson’s downtown district helps attract Millennials and outside interests to Southern Arizona where the climate is ripening for growth and economic development. “The climate is swinging towards a more predevelopment attitude and a lot of it has to do with the national economy,” said David Ollanik, Sundt Construction project director in Tucson. Downtown remains a hot spot for commercial expansion, but several other projects are in the pipeline across the city to meet growing needs for housing, goods, services and infrastructure. “We have a thriving central business district that is attractive to Millennials,” said Barbi Reuter, chief operating officer for Cushman and Wakefield, PICOR. “That really sets a tone for the market.” The Tucson market is primed for the construction of new multimillion-dollar facilities in the commercial and medical sectors, as well as moves by new companies into existing commercial spaces. Companies like Sunquest Information Systems, a global leader in the laboratory and diagnostic solutions, chose Tucson for its new headquarters. Sunquest signed an 11-year lease to occupy the 83,000 square feet of office space that was formerly the Muscular Dystrophy Association headquarters, and will employ between 180 and 200 people. Other companies such as HomeGoods, a store offering off-price home fashions, picked Tucson as the site for constructing its new 800,000-square-foot West Coast distribution center, which has already broken ground. The project is anticipated to create up to 900 jobs, with a total economic impact of $873 million. Joe Snell, president and CEO of Sun Corridor Inc., said, “This win builds on the success of other name brands who have recognized that locating in Southern Arizona makes economic sense, such as Target.com, La Costeña/Arizona Canning Company and others.” Reuter mentioned other outside interests are taking note of the economic benefits of moving to Southern Arizona. “We hear Tucson is on the shortlist for more major firms,” she explained. In the meantime, Reuter said the medical office market is one sector where Tucson is seeing the most growth and opportunity. Tucson Medical Center and Banner-University Medical Center both plan to expand with construction of new facilities on opposite sides of town to provide medical services and offices for physicians. TMC will construct a 40,000-square-foot medical building at

David Ollanik

Barbi Reuter

Joe Snell 25

TUCSON UPDATE Houghton and Drexel roads to meet under-served healthcare needs on the southeast side of town. Banner-UMC, one of the nation’s top academic medical centers, will build a ninestory patient tower at its current location north of the University of Arizona’s campus. Other noteworthy projects include a facelift to the Tucson airport and Pima County animal shelter. The Tucson International Airport Optimization Project will relocate security checkpoints, upgrade the infrastructure and open more concession spaces to increase airport revenue. Sundt Construction expects the project to be completed by 2017. Sundt was also contracted by Pima County to design and build a new Pima Animal Care Center after voters approved the project in 2014. It will replace the old center that was built in 1968. Ollanik said, overall, the business community would like to see the market progress more quickly, but it is moving in the right direction. “It’s going to move along at a slow and steady pace,” he added.

University of Arizona Engineering Innovation Building

HIGH-PROFILE PROJECTS IN TUCSON Banner – University Medical Center Contractor: Sundt Construction and DPR Joint Venture Developer: Banner Health Size: 689,000 square feet Location: 1501 N. Campbell Ave. Completed: 2019 Cost: $400 million Features: 336 private patient rooms, 22 operating rooms, 240 private rooms and room to accommodate 96 more beds

Pima Animal Care Center

Contractor: Sundt Construction Developer: Pima County Size: Approximately 60,000 square feet Location: 4000 N. Silverbell Rd. Completed: November 2017 Cost: $22 million Features: More kennels, a surgery suite, laboratory, clinics, administrative and law enforcement offices and a community room 26 | July-August 2016

Tucson International Airport Optimization Project

Contractor: Sundt Construction Developer: Tucson Airport Authority Size: 35,800 square feet Location: 7250 S. Tucson Blvd. Completed: 2017 Cost: $23 million Features: Relocation of two existing security checkpoints to a new, enhanced configuration, expanded pre- and post-security concessions and building infrastructure upgrades

University of Arizona Engineering Innovation Building Contractor: Sundt Construction Developer: University of Arizona Size: 107,000 square feet Location: 1209 E. 2nd St. Completed: TBD Cost: $50 million

Sunquest Information Systems Headquarters

Owner: Sunrise Campbell Investors Property Manager: Larsen Baker Size: 83,000 square feet Location: 3300 E. Sunrise Dr. Completed: 2016 Cost: $9.1 million

Home Goods West Coast Distribution Center

Developer: Layton Real Estate Contractor: Layton Real Estate Size: 800,000 square feet Location: 3649 E. Corona Rd. Completed: Summer 2016 Cost: WND

COMING NEXT ISSUE Featured topics include:

• Arizona Multihousing Association • NAIOP • BOMA/Building Owners & Managers Association

For additional information, call 602.277.6045 or visit,

azBIGmedia.com

INTERNATIONAL INTERIOR DESIGN ASSOCIATION

Designed for success IIDA’s PRIDE Awards recognize excellence in interior design projects By ERIN DAVIS

he International Interior Design Association is the only worldwide design organization that solely focuses on commercial work. It has more than 13,000 members in 33 chapters around the globe, including the IIDA Southwest Chapter. Annually, IIDA’s major events include the PRIDE Awards, recognizing excellence in interior design projects; the UnVeiled trade show; a charity build day in Albuquerque; and the Masquerade Ball in Tucson. Biennially, the chapter holds Couture, a fashion show using unconventional building materials, or Connect4, a charity build day in all four City Centers. Here are the winners of the 2016 PRIDE Awards. (Clockwise from top) EDUCATION AWARD OF MERIT: The Environmental and Natural Resources Building II at the University of Arizona borrows from the iconic imagery of the region; striking landforms of canyon and mesa, the dramatic play of light, shade and shadow, the painted sky of sunsets and the desert monsoons, highly adapted flora and fauna, natural sequences and systems, with purpose and fundamental response to the site and setting. PHOTO BY BILL TIMMERMAN

DESIGN EXCELLENCE: Gould Evans earned a Design Excellence Award for its 521 S. 3rd Street Studio renovation. The 521 Studio is located in the heart of Phoenix’s downtown warehouse district within a historic paper distribution building. Renovations sought to maintain the building’s integrity and gritty vibe while creating an open and collaborative working environment with breakout areas for small meetings. PROVIDED PHOTO

BEST OF SHOW: The judges who looked at the Southland Industries Tenant Improvement project commented that, “The space celebrates being an engineer, clear design intent, clean and consistent theme. The design is bold yet simple, easy to understand, graphics were well used, inviting, nice place to work, great textures and plan arrangement.” PROVIDED PHOTO 28 | July-August 2016

Tucson International Airport Optimization Project 29

IIDA

Industry Appreciation: Andy Green, Tarkett Outstanding Service: Kai Ekbundit Partner of the Year: Emser Student Award of Merit: Pollination Station, Travis Bradley, Yubailu Cao, Dani Kachorsky, Jennifer Cox IIDASW Chapter Graduate Award: Lauren Copeland, Arizona State University Lifetime Achievement Award: Beth Harmon-Vaughan Education Awards of Merit: Environment + Natural Resources Building 2, University of Arizona, richärd+bauer; Science + Health Building, richärd+bauer Education Design Excellence Award: Saint Xavier University, SmithGroupJJR Healthcare Award of Merit: Tulsa Cancer Institute, Gensler Commercial Office Under 10,000SF Design Excellence Awards: 521 S. 3rd Street Studio Renovation, Gould Evans; Cresa Remodel and Expansion, SmithGroupJJR Commercial Office 10,000 SF-25,000 SF Award of Merit: Alliance Financial, DAVIS Commercial Office 10,000 SF-25,000 SF Design Excellence Award: Southland Industries Tenant Improvement, SmithGroupJJR Commercial Office Over 25,000 Awards of Merit: DriveTime Headquarters, Phoenix Design One; Marina Heights Building D Confidential Tenant, DAVIS; Sprouts Farmers Market Corporate Headquarters, RSP Architects Single Space Awards of Merit: Anchor Centre Lounge, Phoenix Design One; R-Tech Lobby, Evolution Design, Inc. Single Space Design Excellence Award: Lew Wolff Training Complex Entry, Gensler Hospitality, Retail and Restaurant Awards of Merit: Republic Services, SmithGroupJJR; The Alameda Renovation, Gensler Hospitality, Retail and Restaurant Design Excellence Award: Beacom Institute of Technology Dakota State University, SmithGroupJJR Best of Show: Southland Industries Tenant Improvement, SmithGroupJJR. 30 | July-August 2016

EDUCATION DESIGN EXCELLENCE AWARD: SmithGroupJJR's project represents the first building for Saint Xavier University’s new campus in Gilbert. The judges appreciated the use of color and the thoughtful massing of the space. PROVIDED PHOTO

INFLUENTIAL WOMAN: IIDA’s Lifetime Achievement Award went to Beth Harmon-Vaughan, who brings more than 30 years of experience to her role as managing director of Gensler in Phoenix. She serves on the Taliesin West Board of Stewards for the Frank Lloyd Wright Foundation, is a committee member for the Phoenix Community Alliance and an adjunct professor at ASU. PHOTO BY SHAVON ROSE, AZ BIG MEDIA

Thank you to our Fantastic clients & industry partners For collaborating with us on award-winning designs! www.gensler.com

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2016 MOST MOSTINFLUENTIAL INFLUENTIAL

WOMEN WOMEN IN INCOMMERCIAL COMMERCIAL

REAL REALESTATE ESTATE By ERIN DAVIS

he 12 women who made AZRE’s Most Influential Women in Commercial Real Estate list are an extraordinary bunch. While that seems implied in the recognition, it’s something that goes beyond their professional achievements. Many of these women had to work their way through the ranks to a C-suite. One was a dealer in a casino. Another aspired to be a librarian. And one of the Most Influential Women was an ink-and-paint person on an animated Steven Spielberg movie. While all of the Most Influential Women in Commercial Real Estate likely know what it’s like to be the only female voice in a boardroom, they also impact their communities and their industry. And all of them are changing the Arizona landscape one deal, building, drawing and deadline at a time.

MARTHA ABBOTT

Vice president and studio leader SmithGroup JJR During her 26 years practicing architecture, Abbott has built a diverse portfolio of public and private work encompassing corporate, municipal, entertainment, mixed-use and higher education projects. She is particularly interested in promoting and fostering integrated project delivery and sustainable environments.

Advice: “Find a good mentor that will advocate for you,

support and promote other women and accept that when appropriation of ideas happen, it’s a good thing.”

Greatest accomplishment: “When I started in this

industry and looking for new employment opportunities, I looked for companies that had strong women in positions of leadership, with the intent that those would be more progressive and real promoters of women. Just recently someone said to me they wanted me to be their mentor because they see me as a leader who engages, challenges and provides opportunities. The fact that someone saw qualities in me that I aspired to early in my career is incredibly rewarding and makes me feel I have made an impact on the people I am with every day.”

REBECCA LYNNE BURNHAM Shareholder Greenberg Traurig

Burnham represents real estate interests in connection with the acquisition, planning, development, financing, operation and sale of real estate developments, as well as legislative and public policy matters pertaining to economic development and land use.

Advice: “Always be thoughtful and prepared, but don’t be afraid to lead or take risks.”

Greatest accomplishment: “On behalf of the Arizona

Homebuilders Association, serving as a negotiator and principal drafter of Arizona’s military airport compatibility legislation, which established a framework for land-use planning around Arizona’s five military airbases and became ‘model legislation’ for other states. By restricting residential development in close proximity to the bases, the bases’ ability to continue their mission was secured and Arizona has been able to retain a strong military presence with its attendant economic benefits.”

Surprising fact: “I put myself through the last years of college and law school by working summers and holidays as a high-limit ’21’ and baccarat dealer at Harrah’s, Lake Tahoe. I actually had to take a pay cut to become a lawyer.” 33

MOST INFLUENTIAL WOMEN TAMMY CARR

Principal Mortenson Phoenix Operating Group With project experience spanning multiple markets, including municipal, healthcare, manufacturing, industrial, hospitality, and corporate sectors, Carr brings more than 18 years of experience to her position for Mortenson.

Advice: “Assure you understand your

client, team or partner’s objectives. If you do not know what their drivers are, value will be hard to deliver. Women bring a unique perspective to the industry, it is up to you to connect your insight to real value. Honing your communication skills, confidence to speak up and continual learning is critical for success.”

Greatest accomplishment: “Becoming a partner/principal of a local architecture firm at age 32. This was particularly rewarding as I don’t

possess a technical industry degree. It was recognition of my business acumen and leadership skills, which has inspired other women within the industry to seek key leadership roles and propelled my career.”

Surprising fact: “I have future aspirations to spend my preretirement days serving the community full-time as a municipal elected official. We’ll see where that takes me.”

JOYCE GROSSMAN

Executive director Arizona Association for Economic Development (AAED) Since 2011, Grossman has served as executive director of AAED, whose mission is to serve as Arizona’s unified voice advocating for responsible economic development through an effective program of professional education, public policy and collaboration. Previously, Grossman was a deputy director with the City of Phoenix, serving in departments that include Community & Economic Development, the mayor’s office and Phoenix Convention Center.

Advice: “You can make it happen and do not take no for

an answer. Continue to persevere if your gut tells you it is possible and you can make a difference. Be creative. You can do things differently than what has been done before and succeed.”

Greatest accomplishment: “I am extremely prideful of

AAED’s track record in providing outstanding professional education programming for those in the economic development field. This training keeps them on the cutting edge of job creation and wealth generation.”

Surprising fact: “Indie rock bands follow me on Twitter and ask my advice on various aspects of their band’s operations.”

34 | July-August 2016

MOST INFLUENTIAL WOMEN TRUDI HUMMEL

Principal and board chair Gould Evans Hummel co-founded the Phoenix studio in 1996 for Gould Evans, a national architectural practice with six studios across the country. With 30 years of experience as an architect and design leader in the public and private sectors, she is skilled at engaging clients in an intellectual partnership that solves the design problem in an unexpectedly meaningful way.

Advice: “Focus on the big picture, trusting and empowering

those with whom you work. And get involved in your community, speaking up and taking risks. It’s both impactful and personally inspiring.”

Greatest accomplishment: “Winning the Biodesign

Institute for Arizona State University was a huge turning point and our largest and most complex project at the time. We are also quite honored to work with (Salt River Pima– Maricopa Indian Community) on their new Justice Center, a beautiful integration of natural materials with their community’s rich landscape.”

Surprising fact: “If I had not become an architect, I wanted to be a librarian — just me and the books.”

CHERYL LOMBARD President and CEO Valley Partnership

Lombard has more than 20 years experience in politics, public affairs, media and community relations, and nonprofit management. Before joining Valley Partnership in March 2015, Lombard was the government relations director for The Nature Conservancy in Arizona and successfully led public policy changes on water and other natural resources issues.

Advice: “Be yourself.” Greatest accomplishment: “Passing

the California Bar Exam on the first try. It was so rewarding because it was so much information packed into my head with the unknown of what was going to be thrown at you with the test over a three-day period.”

Surprising fact: “My first job

when I moved to Los Angeles in the early 1990s was as a digital ink and 36 | July-August 2016

paint person on an animated movie called ‘We’re Back! A Dinosaur’s Story,’ produced by Steven Spielberg’s Amblimation animation studio. No

credit given in the movie, but it was so much fun (and not on my resume). It was really just a computer version of paint by numbers.”

LOURDES LOPEZ Project engineer PCL Construction

Lopez is president of the Greater Phoenix Chapter of the National Association of Women in Construction (NAWIC).

Advice: “Try something that intimidates you. It has the

potential to mold you into a better version of yourself. My greatest learning experiences have taken place when I stepped outside of my own comfort zone.”

Greatest accomplishment: “I have been voted by my

peers as president of NAWIC, chair of the Arizona Water Association Young Professionals Committee, and am a recipient of an ENR 2016 Southwest 20 Under 40 award. Having been voted by my peers into these positions is a demonstration of their respect towards me and confidence in my skills and knowledge.”

Surprising fact: “I love to trail run and weight train. As busy as my schedule tends to be, I make time so I can rack up a few miles on the trails and spend time in the gym. I’ve surpassed my expectations by getting to the point where I can run up to 18 miles on a trail and deadlift 185 pounds.”

VIRGINIA LORING

President Pimara Paul Koehler Structural Engineering Loring leads the Native American Salt River PimaMaricopa Indian Community member-owned structural engineering company. Loring is also an officer for the Salt River Business Owners Association and the American Indian Chamber of Commerce of Arizona. She has been involved with the development of many projects on the Salt River Pima Maricopa Reservation.

Advice: “As a woman working in the business world, I

surround myself with people who have the same mind set and values as I do. Keep your life in balance. When you are centered within the world, everything will fall into place. Be creative and allow your mind to be open to new ideas and to never stop believing in yourself and your dreams.”

Greatest accomplishment: “Establishing a

business, working at it to make it successful and finding great satisfaction in seeing that it can benefit others.”

Surprising fact: “The fact that as a Native American Woman I have three companies all dealing with a different aspect of business.” 37

MOST INFLUENTIAL WOMEN

JENNIFER SCHRADER

Co-founder and chief operating officer Caliber, The Wealth Development Company Schrader sets the asset investment standard for Caliber, The Wealth Development Company’s acquisition strategy. She ensures the $160 million worth of hotels, apartment buildings, single-family homes, commercial properties and self-storage facilities are performing with maximum positive outcome. She oversees management of the company’s day-to-day operations, critical to generating revenue and accomplishing business goals.

Advice: “Hire and retain incredible

people, even if that means hiring someone with more experience than you.

Greatest accomplishment: “Investor value creation. I am proud

of Caliber’s incremental growth and ability to provide an alternative wealth development strategy for our clients. We have consistently provided secure and above market returns at all of our properties. This results in community betterment and investor peace of mind.”

Surprising fact: “Growing up in Detroit, I have a loyalty and love American manufactured cars. This love has driven me to implement efficient and cost cutting systems at all of our properties. It is often driven by innovation and infusion of technology.”

CATHY TEETER

Regional director of sales management CBRE Teeter serves as regional director for the Southwest, leading CBRE’s Advisory & Transaction Services Occupier group in the Phoenix, Las Vegas, Salt Lake City, Albuquerque and Tucson markets. In this role, she is responsible for development of CBRE’s occupier business and sales professionals. Prior to joining CBRE, Teeter spent more than 25 years with Cushman & Wakefield, where she most recently served as the senior operations manager for their offices in Arizona and Nevada. She is an active member of the Society of Human Resources Management (SHRM) and NAIOP.

Advice: “ It is important to understand the financial side of the business. You need to build this knowledge base if you want to truly be an advisor to your clients.”

Greatest accomplishment: “I have had the pleasure

of hiring a lot of very talented people and it is incredibly rewarding to see people I have mentored do well.”

Surprising fact: “I grew up on a farm in Minnesota and my first job was feeding the chickens and gathering eggs.” 38 | July-August 2016

MOST INFLUENTIAL WOMEN CHRISTINE VELDHUIZEN Vice president of operations and designated broker Cushman & Wakefield

Veldhuizen manages the Phoenix operations for a full-service commercial real estate firm with 175 licensees and total headcount of more than 300. Advice: “The answer is always ‘no’ if you don’t ask so don’t ever be afraid to ask for what you want. It is important to be confident and not be afraid to speak up, you almost always come across better than you think you do.”

Greatest accomplishment: “Managing the day-to-day

operations and the staff of our company through its many ‘brands and identities’, including BRE, Cassidy Turley, DTZ and now Cushman & Wakefield. It is rewarding because my role has changed dramatically with each of the transitions. Through every transition I have been given a new role with new responsibilities that have allowed me to grow and learn, and I have been able to remain with the same company and group of people that I really enjoy.”

Surprising fact: “I was the first place finisher in my category of the inaugural Pat’s Run in 2005.”

PAT WATTS

Co-founder Deco Communities Watts co-founded Deco and Starpointe Communities and has been extensively involved in real estate and operating businesses since 1986. Prior to founding Starpointe, Watts was the vice president of real estate investment for Vancouver, B.C.-based Anthem Properties, Ltd.,

Advice: “My advice to women is no different than to men

in the industry; to be successful in real estate requires great flexibility. Be prepared to change strategies. All asset types — office, retail, industrial and particularly residential — are being impacted by the changing cultural and economic realities in the US. Be open to continual changes in direction.”

Greatest accomplishment: “Working with my partners

to develop the Cabana brand of apartment renovations during the height of the recession in Phoenix is my greatest professional accomplishment. Not only did the Cabana brand allow our company to weather the recession, it is a brand that was so often copied in Phoenix that it noticeably changed the apartment market.” Surprising fact: “I was a competitive figure skater and still love to be on the ice.” 40 | July-August 2016

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AZCREW

PLAYING CATCH-UP How can women close the compensation gap in commercial real estate? By JOHN KLOBUCAR

44 | July-August 2016

here’s no doubt commercial real estate is on the upswing in the Valley. Agreements are being brokered, projects are becoming shovelready and occupancy is increasing. However, the unfortunate truth is that when the deals are made, more often than not, women are not involved in the handshake. In 2016, men continue to dominate the field of commercial real estate and construction. The disparity is not only in the numbers of women in the field, but also in the compensation between genders.

First, one has to ask, “why the imbalance?” The answer appears rooted in our parents’ generation, as women were not encouraged to go into business as they are now. Instead, young women were pointed toward professions like teaching and nursing. As times have changed, more women have entered the commercial real estate field, but the lack of parity still exists. Barbi Reuter is chief operating officer with Cushman & Wakefield | PICOR Commercial Real Estate Services in Tucson and a board member of the business networking organization, CREW Network. “We have seen a decrease in willingness to accept commissionbased work since our CREW Network benchmarking studies began 10 years ago,” says Reuter. “Perhaps a more conservative post-recession approach.”

GAP CONTINUES Research done by CREW Network shows the largest gaps between men and women exist in income and the number of women in C-suite positions. “Research over a 10-year period shows that parity in opportunity has improved over time, but a significant income gap still exists,” says Reuter. “Our 2015 study revealed a 23 percent difference in median total compensation between genders.” Reuter adds the highest disparity was in brokerage and development. “Women negotiate compensation far less frequently than men, and this income disparity compounds over time.” In 2015, the median total annual compensation, including bonuses, compensation and profit sharing, was $150,000 for men and $115,000 for women in commercial real estate, according to the CREW Network’s third comprehensive benchmark study. The CREW Network has more than 70 chapters and 10,000 members. There are chapters in both Phoenix and Tucson. Reuter encourages those in the industry to join, support and network within CREW Network and its local chapters, “but consider that attracting women is one issue, supporting and advocating for their growth and advancement is another.” Reuter suggests becoming a mentor or sponsor for women in your own organization and industry.

MAKING A DIFFERENCE “Increasing female representation at senior levels of commercial real estate organizations sets the tone,” says Reuter. “It demonstrates an inclusive culture that embraces breadth of opportunity. Encourage women in our organizations to strengthen their networks, both within the company and externally within the industry.” 45

AZCREW

Samantha Pinkal Closing the gap starts at the ground level for attracting more women to the commercial real estate and construction industries. “I think the most effective thing we can do is create role models by intentionally and purposefully supporting the women who are already in the industry,” says Samantha Pinkal, business development manager at The Weitz Company in Phoenix. “The leaders of our industry should be actively encouraging their female employees to seek leadership positions and provide them with the resources they need to do so, whether that’s training, opportunity, mentoring, or becoming a champion for them. I know my career would have been very different had I not had a mentor and a champion for me at Weitz.” When asked if progress is being made, Pinkal says, from her perspective, ”absolutely.” She adds that she is surrounded by more women at Weitz and other construction companies in leadership and decision making positions than ever before. Pinkal says that she sees “significantly more women” in the construction management and engineering programs at universities across the country than when she was in school. “So while we’re not at complete parity yet,’ she says, “the gap is shrinking each year and it is evident.”

EPIPHANY MOMENTS Sometimes it takes a single moment in life that can inspire a young woman to pursue a career in commercial real estate or construction, experts say. Pinkal’s path to the construction 46 | July-August 2016

industry can be traced back to Girl Scouts — and gorillas. While growing up in southwest Nebraska, Pinkal’s Girl Scout troop designed and built a gazebo in order to receive the Scouts’ highest achievement — the Gold Award. It appears it was here she was bit by the building bug. In high school she excelled in drafting and building construction classes. When it

“I think the most effective thing we can do is create role models by intentionally and purposefully supporting the women who are already in the industry” – Samantha Pinkal

was time for college, Pinkal landed at Pittsburg State University in Kansas, whose athletic teams are nicknamed the Gorillas. She earned her degree in construction management and then began her career at Weitz. “The really amazing part of the story is that shortly after I started, Weitz interviewed me to be the contractor for Girl Scouts Arizona Cactus-Pine’s renovation of Camp Sombrero (in Phoenix),” she says. Pinkal says she was the project engineer on the interview team and she got to tell the Girl Scouts how they were the ones who had inspired her career, “And that’s why I was standing in front of them that day.”

Barbi Reuter

Cindy C. Winters

Construction of the camp is underway at the site on 16th Street and Dobbins Road. Cindy Winters is principal and CEO of Eagle Commercial Realty Services in Phoenix. She believes younger generations need to be made more aware of the commercial real estate and construction fields. According to Winters, both industries should “reach out to the high schools and colleges in their communities to engage with young women to communicate that these types of jobs are a viable career path.” Winters is one who also believes in the power of the CREW Network. A chapter director for AZCREW, Winters says CREW and similar organizations offer networking and mentoring support in addition to scholarships to young women pursuing careers in real estate. “This past year, AZCREW provided $5,000 scholarships to two recipients in Arizona State University’s Masters in Real Estate Development Program,” she says. Like Pinkal, Winters also believes there is a brighter future ahead for women in a commercial real estate industry that is still dominated by men. Women are making strides and Winters says she sees more of them attending industry-related events than she did 25 years ago. Where the disparity is more evident, she says, is in upper management. “Women in the C-suite positions are still a rarity,” says Winters. “I believe mentoring young women professionals by both women and men in the senior leadership roles is the key to breaking this barrier.”

AZCREW

Real estate development Take a professional cue from AZCREW to boost career

By ERIN DAVIS

48 | July-August 2016

rofessional development — is it a passing trend tied to phonetically intelligent buzzwords like “wheelhouse” and “bandwidth?” Or, is it a growing necessity in a competitive and rising job market? Although it is rather nice rolling off the tongue, professional development is by no means to be underestimated. It has become a vital traction component for employment acquisition and upward mobility. So coveted is professional development to local commercial real estate professionals, that AZCREW recently established a committee for the sole purpose of its perpetuation.

AZCREW COMMERCIAL REAL ESTATE PROFESSIONAL DEVELOPMENT CHEAT SHEET DO

Heidi Learner

Marsha Petrie Sue

“Professional development was identified as an area of need when we conducted our strategic planning in 2015,” says Alisa Timm, director of management services for Lincoln Property Company and chair of AZCREW’s Professional Development committee. “We recognized that this was a particularly important factor to add value to our membership, so we made it a top priority.” Important indeed. According to a recent NREI story published in March, women in commercial real estate are seeking and filling in more roles in higher-level positions like senior vice president and managing director (since 2005). These positions are competitive among all genders, making professional development all the more lucrative as not simply a resume booster, but a requirement for women in commercial real estate. Still in its infancy, the AZCREW Professional Development Committee has decided to test the waters by conducting two major half-day workshops this year. The first, in late September, will feature keynote Marsha Petrie Sue, author and expert on leadership, communication and personal development. “In this seminar she’ll focus on how to deal with other people, particularly difficult personalities in the workplace,” Timm says, “and will speak to how to position yourself for growth and upward movement.” In November, the AZCREW Professional Development Committee 50 | July-August 2016

Cathy Teeter

Alisa Timm

has arranged for Savills Studley Chief Economist Heidi Learner to conduct a session involving development from start to finish. “We are women from many different disciplines within commercial real estate,” Timm says, “It will be interesting to see how we work together as providers within the development process from dirt to profit and all the layers in between.” CREW statistics continue to reflect that regardless of their discipline or positioning within commercial real estate, women are feeling a higher level of career satisfaction and perceived success. In 2015, 76 percent of women reported an increase in career gratification, an increase from 71 percent in 2005. On a local level, Timm and her professional development counterparts believe that holding strong to AZCREW’s strategic plan and boosting support and mentorship will continue to raise job satisfaction and career advancement. “I have a real passion for giving back to not only support younger women,” Timm says, “but also to mid-career individuals and those mature in their careers. We are all constant learners.” As AZCREW’s professional development efforts move forward, the committee will continue to assess what their members are looking for. “We want to know some of the challenges they face in their careers,” Timm says, “and we’d like to offer information and education specifically directed to them.”

Obtain a designation: “Whether you go for your CPM, CCIM or MAI, depending on what field of expertise you’re in,” says CBRE Southwest Regional Director Cathy Teeter, “getting a designation will force you to go above and beyond your current knowledge base, and will demonstrate a higher level of commitment — it’s not an easy process.” Evaluate your personality: “Do a very honest appraisal of your personality and comfort level,” says Alisa Timm, director of management services for Lincoln Property Company. “Sometimes I see people in careers where they think they really want to be a supervisor but don’t care for people all that much. Ask yourself if you like risk, or not. Ask as many questions to help evaluate what works for you and what doesn’t.” Network: “I think networking has always been important and always will be,” Teeter says, “not only for your own career, but ultimately to help others become successful in theirs.”

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AZCREW

MAKEOVER New marketing and branding strategy boosts AZCREW’s profile By ERIN DAVIS

AZCREW Phoenix, a chapter of CREW Network, has a whole new look.

Who better to guide the organization in its rebranding endeavors than Small Giants — leaders in marketing revision and revival. AZRE visited with Danielle Feroleto, owner of Small Giants and the visionary and storyteller of AZCREW’s new strategic plan, to discuss the exciting impact the rebranding efforts have had, including a rapidly increasing membership. AZRE: Were you involved with AZCREW prior to assisting them with their rebranding endeavors? Can you share with readers about your partnership with the organization? DANIELLE FEROLETO: AZCREW has always been an outstanding organization to connect female business professionals in the commercial real estate industry. I joined AZCREW for the first time when I just started out in the industry and I wanted to be well connected to thoughtful, committed and bold female peers. I’ve witnessed the organization's evolution through the years, and one of the areas I see exciting movement in, is bringing young

Danielle Feroleto 52 | July-August 2016

professionals into the organization and encouraging them to take on leadership roles. AZRE: What made you excited about working on a new marketing and branding strategy for AZCREW? DF: AZCREW has a great foundation as a national network to connect, educate and support commercial real estate women. The AZCREW Arizona chapter leverages all of the national resources and brings local knowledge, the closeness of the Phoenix market and relationships together in one organization. With its solid history there is much to celebrate and add to. It’s exciting to be part of a vision and innovation that is being infused by a dedicated, energetic board and growing membership base — it’s an excellent story that’s easily transitioning into a strong brand. AZRE: What did you identify as one of the key elements of the rebranding process for AZCREW? DF: A few elements that make up the new AZCREW brand are elegance, simplicity and boldness. All three of these words define core strengths of the group and allow the story of the organization to be more fully expressed. AZRE: How do you feel these new changes will affect the success of AZCREW moving forward? DF: It is critical to remember that a brand is not just a great new logo or

a new color palette; a strong brand tells a story and reaffirms what those who come in contact with your brand experience. So, by rebranding AZCREW, the organization has made a firm commitment to sharing their message through a variety of outlets to members and prospective members. The response of a strong and consistent brand becomes “Something’s different about this organization, I keep hearing and seeing the same things and I’m interested, or I’m more committed.” AZRE: What has AZCREW meant to you personally? DF: AZCREW has simply been one of the best investments I have made in my career in the the industry. Some of my closest friends and clients have emerged out of getting involved in the association at a deeper level. I would definitely encourage everyone to get involved at a committee level to really reap the benefits of the investment in the organization.

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View from the top Local leaders lend experience and encouragement to other women in commercial real estate By ERIN DAVIS

hough the income differences between men and women in commercial real estate are shrinking, a significant income gap still exists along with a gender gap when it comes to opportunities and advancement. So what can women in the commercial real estate industry do to narrow that gap and create more opportunities? AZRE talks business, leadership and what it takes to thrive in the commercial market with local executives Karen Halpert, senior vice president, head of property management of VEREIT, Inc.; and Lisa Johnson, president and CEO at Corporate Interior Systems (CIS).

AZRE: Can you tell us a little about your role today as a successful executive of a local business? Karen Halpert: In the role of senior vice president and head of property management at VEREIT, Inc., I continuously add to a portfolio that includes 5,500 retail, restaurant, shopping centers, office and industrial properties and 145-million square feet throughout the continental U.S. and Puerto Rico. I also oversee a 55-person team responsible for management of this portfolio. Lisa Johnson: I started CIS in 1985 with one support person. Today, CIS has 34 team members with offices in Phoenix and Tucson. With a lot of hard work resulting in market share growth, in 1991 I was approached by Knoll, a major furniture manufacturer, to be their exclusive dealer in Arizona. We have also recently aligned with DIRTT, a technology-driven interior construction company. With our partners, we continue to assist our clients with workplace solutions to their workplace 54 | July-August 2016

AZRE: What is your involvement with AZCREW and how does it aid you in your business/professional pursuits? KH: I have been active in AZCREW for more than a decade participating on various committees and chairing, and was the AZCREW President in 2013. These positions require active participation, hours of volunteer time and a commitment to making a difference in the organization. In return, AZCREW has helped provide a forum to connect with other women in the industry, develop a professional network, fine-tune leadership skills and an opportunity to give back to the community. LJ: Two of our account managers are members and our Director of Business Development and Marketing Manager attend events on a regular basis. AZCREW is a great platform providing opportunities to make connections that can be cultivated into meaningful business relationships with other successful women. I also love to support other women in business whenever I can! AZRE: What were/are some of the challenges you face as a female business leader in the CRE realm? Benefits? KH: Most leadership positions are still dominated by men. I have been fortunate in my career to have wonderful mentors and sponsors who have recognized, appreciated and supported my growth. It’s important that we help other women achieve parity in opportunity in the commercial real estate industry, demonstrating how to add influence and power. We are all busy, but we need to take time from our hectic schedules to mentor the next generation of real estate leaders. LJ: Fortunately, some women are dismantling the male-dominated

Karen Halpert

Lisa Johnson

CRE world; however, in my 31 years in business, I have worked primarily with men. My challenges were those most women have faced – gender stereotyping, dual careerfamily pressures and lack of equal opportunities. The benefits are essentially a result of my choosing to face those challenges head on. I worked hard creating a strong network with other women entrepreneurs – sharing ideas and supporting each other. I took the steps to become a “certified” woman-owned business and I stayed up to date on current issues and involved in industry organizations. AZRE: In one sentence, what would you say to help empower another woman seeking to start a business in the CRE world? KH: There are many paths to success and none can be walked alone. Be sure to create a personal and professional support network to help weather difficult times, in addition to providing a trusted sounding board for resolving problems or providing a fresh perspective. LJ: Never give up — always move forward, no matter what the setback and always lead by example.

2016

ARIZONA BUILDERS ALLIANCE

MOMENTUM BUILDING ABA executive director says ‘yes’ to more construction training programs, but ‘no’ to marijuana initiative By MICHAEL GOSSIE

he last few years have been turbulent for the construction industry in Arizona. But helping to calm the seas has been Arizona Builders Alliance, which represents more than 270 member companies, including contractors and professional service firms, serving the needs of the commercial and industrial construction industry. And leading ABA through the industry’s roller-coaster ride has been Executive Director Mark Minter. AZRE sat down with Minter to talk about everything from the need for more apprentice programs to the need to defeat weed. AZRE: How’s business? MARK MINTER: Improving. We’ve survived the Great Recession. The construction industry in Arizona suffered about a 50 percent loss in volume and employment. We are starting to claw our way out of that. We’re trailing the rest of the country a little bit right now. The West Coast and Mid-Atlantic states and anyplace where there was oil coming out of the ground seemed to come out of the recession a lot faster than we did, but we’re starting to see new contracts come along and people are hiring again and we’re sucking up the college graduates in the construction management and engineering programs as fast as we can hire them. Starting at the trade level, we are

60 | July-August 2016

trying to find good people to get ready for the work that’s coming later this summer and in the next couple years. AZRE: What sectors are the strongest? MM: The biggest sector has been multifamily. We are building apartments and condos like crazy, perhaps creating another bubble in that market. I don’t know what rents are going to be like two or three years from now when those are all on the market competing with each other. The data center market has been very good and expanding and adding new facilities. AZRE: The state has made it very attractive for data centers to set up shop here with the Computer Data

Center Program. How has that helped your industry? MM: We have benefitted disproportionately from that in Arizona. A lot of data centers have been built here and we’ve seen the repurposing of other facilities like the Apple data center. They are very lowkey projects. Nobody quite knows what they are when they are being built, yet they create millions of dollars in construction activity. AZRE: Where is the construction industry still struggling? MM: Some of the traditional markets like public works continues to be weak. School districts that depend on property values to have a base to build

THE NEXT GENERATION: we are hoping to latch ourselves onto the supply pipe of young people and start working with students who are at a JTED (Joint Technological Education District) with an eye toward getting them directly into our industry instead of having to wait a decade to get them,” said Mark Minter, executive director of Arizona Builders Alliance. PHOTO BY MIKE MERTES, AZ BIG MEDIA

ABA Arizona has enjoyed tremendous growth and that has historically caused us to build a lot of regional shopping centers, but the regional shopping center as we know it may be a dinosaur and may not exist in 20 years as retail patterns shift. So we may not build any new ones, but we will repurpose the old ones. – Mark Minter

new schools are still scratching their heads and trying to figure out how to tear down old schools and build new ones. The Legislature has still been somewhat stingy in funding things like the school facilities board or new projects at the state universities. They are beginning to restore some money — restore is the wrong word; not taking money from transportation funding is more accurate — and seeing some projects coming along like the South Mountain Freeway. AZRE: What are the trends you’re seeing that are impacting the construction industry in Arizona? MM: We are seeing less public work, less retail. Arizona has enjoyed tremendous growth and that has historically caused us to build a lot of regional shopping centers, but the regional shopping center as we know it may be a dinosaur and may not exist in 20 years as retail patterns shift. So we may not build any new ones, but we will repurpose the old ones. AZRE: What are the biggest issues facing your industry in Arizona? MM: There is an absolute regulatory 62 | July-August 2016

tsunami coming at us from the federal level. There doesn’t seem to be any new regulation that isn’t a good idea — the environment, labor, safety. We are even seeing people in positions like mine possibly having to register with the Department of Labor as “labor persuaders,” under the theory that I might give advice to someone who thinks they may have a labor issue. So I might have to become a regulated labor persuader. I don’t even know what that is, but I might have to register as one with the federal government. AZRE: How does this “regulatory tsunami” impact your industry? MM: It drives up the administrative costs for everybody. Having to hire someone to help you understand the new labor laws and environmental issues causes your costs to go up. Even having to hire another clerk to fill out the added forms is a $50,000 or $60,000 commitment for a company. AZRE: Are there issues in the political arena that are of concern to your industry? MM: The possibility of having a marijuana initiative on the November

ballot is a very interesting conversation for people in our industry. We tend to be rather Libertarian in our views of people’s personal conduct, but the Regulation and Taxation of Marijuana Act (RTMA) includes changes in Arizona’s labor laws that prevent employers from taking action against people who may be using or are under the influence of marijuana. This affects public safety workers, public employees, utilities and this gives us serious concerns about our ability to run drug-free workplaces. It elevates marijuana to a status above alcohol. This might encourage people to use marijuana instead of having a drink. In addition, federal contractors are required to take steps to have a drugfree workplace as a condition of their contract. The procedures necessary to have a drug-free workplace would be illegal under the RTMA. Federal contractors would either be in violation of their contract terms or the RTMA. AZRE: What is ABA doing to voice its concerns over the marijuana initiative? MM: The Arizona Builders Alliance board of directors has approved a contribution of $5,000 to help defeat

ABA the RTMA. We strongly encourage ABA members to contribute to this effort. It’s going to be an interesting challenge. AZRE: How does educating your members fit into the mission of ABA? MM: Management education is one of the three principal things we do, along with craft training and government relations. Even people with college degrees in construction management, engineering or architecture are only prepared to go so far in their careers. To move beyond the operations side and to get into the management side, executive side or ownership requires a whole different skill set that they don’t get in college. There isn’t enough time in four years to learn about strategic thinking, the impact of the world economy and other issues. We try to help bring people to that next stage of leadership. We are seeing a resurgence in that right now. We’ve got classes in a variety of areas that are just packed as people prepare themselves to move up in the world. AZRE: What were some of the ABA’s legislative wins during the last session? MM: We got involved with the Sunset Review of the Industrial Commission of Arizona. There was actually a move afoot to get rid of the Industrial Commission, which is where all our workman’s comp claim processes are managed and where state OSHA is housed. We just fought a big battle a couple years ago to preserve state OSHA. So it was important to us to keep the Industrial Commission. We also had a bill that undid a court decision. We have a process in Arizona where people have public works bonds they can make claims against if they are not paid. The court kind of unraveled the notice process on that, so we went in and restored that and made it a simpler, more economic process. It didn't really change the claim process, it just made it easier to preserve their rights to claim. AZRE: What are some of the ABA’s legislative priorities that will be coming up in the next session? 64 | July-August 2016

WHAT IS ABA? Arizona Builders Alliance (ABA) is an alliance of the Arizona Chapters of the Associated Builders & Contractors (ABC) and the Associated General Contractors of America – Building Chapter (AGC). With offices in Phoenix and Tucson, ABA represents more than 270 member companies, including contractors and professional service firms, serving the needs of the commercial and industrial construction industry. ABA’s purpose is to lead its members and the construction industry to greater productivity and profitability through: • Education: Craft training to management education • Networking and business development opportunities • Legislative advocacy on behalf of the commercial construction industry Information: Visit azbuilders.org or call 602-274-8222

MM: We are going to be looking at the Transaction Privilege Tax. We are going to try to get that cleared up to get rid of prime contracting tax classification, which is the strange way we have of collecting sales tax on projects in Arizona and do what other states do, which is you pay the sales tax when you buy the material. That seems to work almost everywhere else in the country and we hope it will work here. It’s hard to differentiate between a contractor buying a two-by-four and you or I buying a two-by-four. Whether that’s done through economic modeling or

self-identification, we will figure it out. AZRE: What are your goals for ABA over the next five years? MM: We want to make sure the apprenticeship programs are advanced and doing well. We are looking at adding more instructors and expanding the number of programs we have. On a personal level, I’m hoping to be retired in a few years and we have started outlining a succession planning process. Hopefully, we will have everything arranged so there will be a smooth transition.

ABA

ISSUES SOLUTIONS and

What do ABA’s influential leaders think we should do about the shortage of skilled workers and legalizing marijuana? By ERIN DAVIS

he mission of the Arizona Builders Alliance is to lead its members and the construction industry to greater productivity and profitability. Sometimes, ABA’s members can provide that same leadership and offer insight and solutions into issues that will strengthen the industry. AZRE talked with some of ABA’s most influential members to get their take on the the questions facing the construction industry in Arizona and what they see as the economic outlook for construction.

66 | July-August 2016

David S. Crawford

Steve M. Grauer

AZRE: How is the health of the construction industry in Arizona? David S. Crawford, CEO, Sundt Construction, Inc.: The health of the construction industry is improving, but at a slower pace than we anticipated. We would like to see increased funding for infrastructure, transportation (highways, bridges, rail, airport, etc.), education, university and community college facilities, etc. As we continue to expand economic diversity within the state, we expect to see greater investment of private capital. Steve M. Grauer, vice president and Western District manager, Hensel Phelps: Overall, I would characterize the health of the Arizona construction industry as moderately healthy in a few sectors and anemic in many others. The busiest sectors currently seem to be multifamily, single family, healthcare facilities, hotel renovations and some selective office buildings and higher education projects. Manufacturing, public works, K-12 and new hospitality projects have not yet returned in any robust way. This is contrary to other markets that Hensel Phelps works in throughout the United States, where overall work volume has returned to pre-2009 levels. Terry Keenen, president, Climatec LLC: While we do see few larger projects that may give the impression of

Terry Keenen

Dan Puente

activity, a majority of the mechanical and electrical subcontractors are experiencing historically low backlogs of future secured work. In addition, we are seeing mixed activity levels in the engineering community, which is typically a predecessor to any future upswing. Ideally, we would like to see larger backlogs and busy engineers. Dan Puente, president, D.P. Electric, Inc.: As a whole, I think we are limping along, not because of lack of opportunity. Instead, this is mainly due to the fact that not all companies in our industry support education, training and awareness. The skinny dollar has been driving our industry instead of reinvesting in education and training for the workforce. This will catch up to us once demand exceeds supply. Ed White, executive vice president, TDIndustries: It seems like there is more work out there, but firms still haven’t filled up on work which is one of the factors that will help margins improve. Most of the larger work has been around the healthcare market and some higher education. The overall health of our industry will come as more private sector work follows. AZRE: What is the biggest issue facing the construction industry in Arizona? Grauer: The availability of adequate numbers of labor in many of

Ed White

the skilled trades is increasingly becoming an issue for some, but not all subcontractors. I believe this has not been a bigger issue before now as we have not had a dramatic uptick in the amount of work going on at the same time. In addition to an increased demand for labor, another issue that I see starting to raise its head is escalation related to construction materials. We are now receiving notices on a weekly basis from manufacturers and subcontractors regarding price increases for commodities. The challenges associated with escalation will once again start to challenge project teams delivering their projects. Keenen: There are a number of factors that impact our activity. While the healthcare and higher education segments are relatively strong, they typically only impact a handful of larger contractors. In the past, segments that have supported a more broad base of contractors are commercial office, retail and K-12 schools, however high vacancy rates and low population in-flow are keeping those markets soft. Puente: The lack of qualified people. Many skilled tradesmen have left the state or are retiring. As an industry we have done a poor job educating our youth about the opportunities and benefits of a career in the construction industry.

ABA The lack of skilled labor is the biggest issue facing the construction industry today, but it’s closely followed by lack of funding for needed projects in the public and private sectors. As the economy continues to improve, lack of skilled labor will be increasingly difficult to overcome until we raise wages enough to attract a younger workforce on a continuous basis. – David S. Crawford, CEO, Sundt Construction, Inc.

White: Most likely more failures of companies are on the horizon as the economy improves. Companies have used up cash resources to keep the businesses running in the slow times and won’t have the cash to fund new work that they will start. Crawford: The lack of skilled labor is the biggest issue facing the construction industry today, but it’s closely followed by lack of funding for needed projects in the public and private sectors. As the economy continues to improve, lack of skilled labor will be increasingly difficult to overcome until we raise wages enough to attract a younger workforce on a continuous basis. AZRE: What should Arizona do to address the shortage of skilled workers? Puente: We need to get out to the high schools and educate our youth that it is possible to build a career in construction that supports a family and improves quality of life. I believe sometimes the perception is that, if you are in construction, you are a laborer that digs ditches. That is so far from the truth. White: This issue has never improved in our state. We have too many fragmented groups or coalitions trying to attract a workforce to our industry. 68 | July-August 2016

We need to improve the wages in our industry. I think a lot of companies cut wages and benefits during the recession and have yet to get back to where they were at. Most high schools have cut out vocational training, this seems to be the place to start. Put our money back into the school systems and push for those curriculums that support our industry. Crawford: As thought leaders, Expect More Arizona and the Global Pathways Institute are working to revise the curriculum in our high schools to advance career and technical education and address career readiness. The community college system of Arizona is also effective in trying to address career and technical training. Within our industry, we need to be much more effective investing and implanting formalized apprenticeship programs for a variety of trades. Grauer: We need to continue to support and accelerate existing programs such as those offered by the AGC, ABA, ASA, Valley trade schools, etc. While the industry can rally behind, support and grow these programs, I believe we must start by aggressively attracting young talented youth to the industry. Today, construction has very low favorability by many Millennials. We must change that. Keenen: My observation is that as an industry, we are addressing the

need through craft training and apprenticeship programs. We have to continue to position the construction industry as an attractive career path and work to provide the strong benefit and compensation plans that attract younger workers. In general, it’s my sense we have an aging workforce and there is tremendous opportunity for younger workers to enjoy rewarding futures in construction. AZRE: How do you think the Regulation and Taxation of Marijuana Act could impact the construction industry? White: I’m sure there are lots of companies that have policies in place that will need to be changed. There will be companies that will adhere to federal regulations and not state which will create issues in our workforce again. If passed, educating employees on “drug free workplace act” as a federal contractor will be important. Regardless, there will be new workforce issues to deal with. Crawford: We do not think passage of this Act is good for our industry, especially by initiative. It is our understanding that the Act can only be revised by initiative if originally passed by this methodology; thereby, bypassing the legislature. Impairment for any reason is unacceptable in the construction industry. It is our goal to send every employee home safely every

ABA Although the signs of recovery are not immediately apparent, I remain optimistic the economic recovery other states are experiencing in construction spending will make their way to Arizona. – Terry Keenen, president, Climatec BTG

day and we do not understand how the passage of this Act can help achieve that goal. Grauer: In my opinion, the Regulation and Taxation of Marijuana Act, as currently written, is bad for Arizona business and horrible for the construction industry. If passed, the RTMA will limit an employer’s ability to prevent employees from working while impaired by marijuana. Construction project sites are very dynamic work places and jobsite management/supervision work tirelessly to identify, mitigate and eliminate potential safety dangers associated with construction work. Proponents are billing the RTMA as the same as Colorado and Washington legislation, when in fact, both of those states do not limit an employer’s rights to protect their employees and the public from individuals under the influence of marijuana. In addition, Hensel Phelps and many other businesses in Arizona rely upon work with the federal government as part of our annual volume. There is no “opt-out” provision for businesses that have federal contracts or are subject to federal workplace drug-free laws. Businesses must comply with both state and federal law. Keenen: For us, it boils down to safety. Keeping our people safe is our number one priority and as the act is drafted, it impacts our ability to provide a safe working environment and hinders the capacity to manage substance abuse during the work day. Construction sites 70 | July-August 2016

can be very dangerous environments, and it’s our greatest responsibility to send everyone home safe every day. We believe that if passed, the Act will significantly impact our ability to protect our people. Puente: I think this will just add to the shortages of skilled labor in the Valley. As an electrical contractor, our workers are in a safety-sensitive environment. We cannot tolerate the use of any substance that may impair their judgement, legal or not. AZRE: What is your outlook for the construction industry in Arizona? Crawford: We expect the construction industry to improve due to the creation of additional high paying jobs associated with some of the economic diversity being created today. We are optimistic that the copper industry will continue to invest in Arizona; thereby, expanding our tax base and our ability to fund public sector projects. We are in the heart of the sun belt, we have good education at the university level, Career and Technical Education are making great strides, we have a good hub airport and improving relations with Mexico – all of which all bodes well for our industry for the future. Grauer: I remain optimistic that work and opportunities for growth will continue to be out there over the next several years. Several national and regional contractors have completely left the market or significantly scaled down their operations here in the past

couple of years. Hensel Phelps remains committed to the communities in which our employee owners live, play and work. Keenen: Traditionally, construction lags into an economic downturn, and lags into an economic recovery. The fact that Arizona’s commercial construction market was among the hardest hit nationally in terms of spending and job loss, it’s going to take us longer to dig out. Although the signs of recovery are not immediately apparent, I remain optimistic the economic recovery other states are experiencing in construction spending will make their way to Arizona. Puente: Strong, although I think we are three to five years out from the peak. The next two years will be building years, no pun intended. I hope our industry rallies around the labor issue so that we can support the demand. White: Should have good projections as far as growth. Arizona is very desirable to companies and families. With the start of the Baby Boomers retiring, we should be poised for more projects that support those retirees such as assisted living and healthcare. Other markets like industrial and tech seem to be increasing as well. There’s always concern about another downturn and cycles suggest we could be in store for another, however, when recessions go as deep as we saw, that cycle should push out further than normal. I think we’d all love to see another six to eight years of good growth ahead of us.

ABA

Bridging the gap

74 | July-August 2016

Skilled-labor staffing companies and apprenticeship programs help address Arizona’s shortage of skilled workers

By ERIN DAVIS

f you ask Arizona Builders Alliance Executive Director Mark Minter if the crisis over the lack of skilled labor is getting any better, he answers before the question is even complete. “No,” he says authoritatively. But the concerns and potential solutions are much more complex than the two-letter answer.

ABA “We have some cyclical and structural issues,” Minter says. “The cyclical issues are we are starting to get busy, starting to see more work coming and contractors are trying to hire people. The structural issues are that the K-12 system doesn’t prepare people to do anything other than to go to college.” And for a construction industry that desperately needs more skilled laborers than it does college graduates, that’s a serious problem. Not only is it a problem for those construction companies who don’t have the workers necessary to take on new jobs, it’s a problem for the construction companies’ bottom lines. CBRE Research released a report examining the cause of rising construction costs across the U.S. and Phoenix was one of 13 metro areas the report examined. Key takeaways from the report that have significant impact on Phoenix include: • The size of the construction workforce remains well-below prerecession levels, which has led to labor shortages in several major markets. • Growth in multifamily construction activity is partially offsetting the decline of single-family homebuilding compared with the last cycle, driving up construction costs. • Supply-demand imbalances

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have contributed to strong growth in average construction wages, particularly in the Southwest. “There doesn’t seem to be a serious effort to understand that we need about 20 percent of our working population to have a college degree and the rest need training and further education,” Minter says. “Instead of luring 18- and 19-year-olds into our industry who can move on and up in our industry and have productive lives, we tend to be in a situation where we find 30-year-olds who have been wondering what to do with their lives and wander into our office and ask about apprenticeship programs.” According to the CBRE report, construction-related employment has declined by nearly 15.8 percent between 2005 and 2015 on a national scale. How do these declining statistics relate to Arizona’s continuing labor issues? When evaluated on a micro level, skilled-labor employment has decreased by more than double the national statistic — a whopping 40.3 percent. Recouping the national skilled-labor pool is one thing; repairing the local climate is an entirely different beast, but it’s one ABA is clearly not shying from. In fact, many in the Valley turn to ABA as an example of an aggressive adversary of the labor beast of burden. ABA is primed, poised and ready to help

by producing a rejuvenated and fresh labor market.

NEW BLOOD Experts agree that the most essential means of rebuilding a healthy skilled-labor construction market is new blood. According to Fred Ingersoll, director of apprenticeship and training for ABA, exposure to construction careers at earlier ages and in a more positive light is essential moving forward. “The construction industry, by most, is still looked at as a secondary career path,” Ingersoll says. “The perception is that construction is a low-class job with uneducated individuals that can’t succeed anywhere else.” Sadly, experts within the construction industry agree that this negative outlook has been perpetuated in both educational and societal outlets, to a detrimental degree. “We should be revising our K-12 education system to develop students that are career ready, thereby, reducing our dropout rate accordingly,” says David S. Crawford, CEO of Sundt Construction, Inc. “Career ready would recognize that approximately 70 percent of our students today are not going to graduate from college. Therefore, we should prepare them for economic independence with a career

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David S. Crawford that they will enjoy for their working adult life.”

APPRENTICESHIP AND JTEDS Arizona does have existing programs that allow for early exposure to the trades and skilled labor market. The Association of Construction Career Development (ACCD), for example, targets high school sophomores through seniors, introducing them to future employment options within the trades. Still, with a significant gap of Valley projects in need of completion, with new ones on the horizon and not enough labor to go around, more action will need to be taken to entreat a new demographic of skilled labor. Similar to ACCD, JTEDs (Joint Technological Education District) target high-school-age students, offering them a jumpstart to a handson labor approach. The problem with JTEDs, however, as with many educational hurdles: money. “A class of 30 kids studying drafting and carpentry is more expensive than a class of 30 studying math,” Minter says. “You need supplies and a higher instructor-to-student ratio.” Minter adds, that this is largely why many traditional high schools have eliminated vocational training curriculum. “It’s a tough sell for high schools whose budgets are very stressed,” Minter says. “It’s hard to go to them and say, ‘I think you should add an electrical program on campus.’ It’s more expensive than anything else they’re doing.” The hope is that as the economy recovers, the value of reinstating or adding JTEDs will, too. Until then, all 78 | July-August 2016

Wayne Larkin

Mark Minter

eyes turn to apprenticeship programs. ABA has solidified a relationship with the East Valley Institute of Technology (EVIT) that will undoubtedly catapult local apprenticeship into a promising source of talent to reestablish a thriving labor pool. The apprenticeship program is expected to acquire up to 4,500 high school students per semester, with plans to continuously expand in skilled-labor teaching avenues. Despite hope and new opportunity on the horizon, more is needed. “Apprenticeship is one of those things that exists in many different forms,” Minter says, “the union model, the non-union and informal system. All of them are important to getting a new generation of workers into the industry, however, we don’t do enough as an industry with formal apprenticeship programs.”

SKILLED-LABOR STAFFING AND APPRENTICESHIP While apprenticeship is clearly a more promising solution to the labor recovery process, what can be done in the meantime to help bridge the skilled-labor gap? The answer may point to staffing companies who specialize in skilled-labor staffing, such as Labor Ready. “There’s a growing deficit of skilled labor, so we frequently help steer students into apprenticeship programs,” says Wayne Larkin, president of TrueBlue Staffing Solutions. “We have workers coming into our offices every day looking for the opportunity to gain experience and build new careers.”

Stacey Rose “We also work closely with trade schools to identify Phoenix’s specific labor needs and how to train people to fill them,” adds Stacey Rose, Labor Ready sales representative and top first-quarter sales producer. According to Larkin, in addition to pointing potential candidates toward apprenticeship, staffing can further promote skilled labor by adding laborers who will have gained more and more skills from continuous job placement. “A big part of our job is recruiting laborers with a range of expertise and skill sets,” Rose says. “Baby boomers have moved away from trade jobs, so there is a tremendous need and opportunity.” Many of these workers are part of the staffing company’s skilledtrade division that includes certified plumbers, electricians and more. Above and beyond apprenticeship and shaping a new workforce, staffing has added value for both potential apprentices and contractors. “The great thing about staffing,” Rose says, “is that in an employee driven market, it gives the employee an opportunity to try different companies to find what works best for them and their families. And for contractors, it can save them money by assessing and financing labor from city to city.” According to Larkin and Rose, staffing skilled labor has remained steady, but will that continue as the economy and labor market struggle to realign? “Staffing will increase,” Larkin says. “National and local data say construction is growing. Projects that were put on hold are now pushing to be finished. Construction will always be here.”

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ABA

Students become the masters EVIT/ABA partnership propels apprenticeship throughout the Valley By ERIN DAVIS

enowned Scottish author Samuel Smile, who penned “Self-Help and Lives of the Engineers,” said, “The apprenticeship of difficulty is one which the greatest of men have had to serve.” It’s a rather apropos sentiment in connection with Arizona’s current deprived skilled-labor pool. Never has there been a more crucial time to establish and reinvigorate apprenticeship programs — and ABA is rising to the challenge. See how new programs, partnerships and the people creating them are drawing out the greatest of men and women who are ready to serve. Recently, ABA partnered with the East Valley Institute of Technology (EVIT) to offer a supersized apprenticeship program. ABA Director of Apprenticeship and Training Fred Ingersoll, describes the partnership as serendipitous. “EVIT really wanted to promote evening adult classes above and beyond their typical Monday through Thursday daytime program,” Ingersoll explains. “When I offered to bring over 200 apprentices, it wasn’t long after that we signed an MOU to solidify a partnership.” The EVIT/ABA partnership, for whom Ingersoll created the tagline “A one-

80 | July-August 2016

stop trade employment site run by the two biggest organizations in the Valley for construction craft development and trade employment," will offer an apprenticeship program that covers a multitude of trade skills, beginning with the EVIT/ABA partnership. The welding apprenticeship is projected to yield an influx of up to 4,500 high school students each semester — good news for both the future labor market and forthcoming apprentices. “Everyone talks about career pathways,” Ingersoll says, “Let’s cater to the 4,500 high school graduates and direct them into apprenticeship which is 100 percent guaranteed employment.” Why is this specific demographic so vital to proliferating a skilled workforce? According to Mark Minter, executive director of ABA, it has a lot to do with maximizing upward mobility. “Instead of luring 18- and 19-yearolds into our industry who can move on and up in our industry and have productive lives,” Minter says, “we tend to be in a situation where we find 30-year-olds who have been wondering what to do with their lives and wander into our office and ask about apprenticeship programs.” Minter is hopeful the EVIT

ABA

partnership will generate interest in this younger population to eventually perpetuate additional Joint Technological Education Districts (JTEDs). “Apprenticeships have historically been pigeonholed into an academic setting,” Ingersoll explains. “This program does include 144 hours per year of apprenticeship in the classroom, but the majority is completed in the field — 2,000 hours of on-the-job training.” The blueprint could lead to even more programs throughout Arizona, helping ease concerns over the shortage of skilled labor. “If that model works, we hope to expand it to other JTED campuses around the county and around the state,” Minter adds. With ABA’s 270-plus member organizations, which make up 95 percent of all contractors in the state 82 | July-August 2016

of Arizona, combined with EVIT’s cutting-edge training (which has captured national attention), the apprenticeship opportunities will not only become more lucrative for ABA’s members, but has also gained support from local sponsors. ABB & Thomas Betts, a leading power and automation technology group and North American leader in low voltage products, has donated an entire lab space. “All tools have been donated by IDEAL, a local 100-year-old tool company,” Ingersoll says. Several member sponsorships have allowed for new computers to further enhance the apprenticeship program — another goal and asset toward the apprenticeship’s aim of being a leader in educating with the latest technology. With overwhelming support by partners and sponsors, Ingersoll says the apprenticeship program will only

Fred Ingersoll

Mark Minter

grow from here. “We are launching a surveyassistance apprenticeship for the United Surveyors of Arizona (USOFAZ) this August.” Future additions to the program will include HVAC, carpentry and more. “Fall 2016 classes will be in full swing (and started at the) beginning of June,” Ingersoll says.

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ABA

ABA Apprenticeship Program Finding the right job can be tough, and the options can be confusing. But what if there were an option that enabled you to earn while you learn? An option that gave you qualifications that could lead to a lifelong career in the construction industry? Construction is one of the few industries where you can start at ground level and work your way to the top, where you get paid as you learn a skill and where you can get a good job just about anywhere you go.

WHY GO INTO CONSTRUCTION?

While growing up many of us are told by parents, teachers, and the media that the only way to make a good living is from behind a desk, which simply is not true. Many careers are built around hands-on work and the construction industry is huge; there are millions of employees in the field, and new projects are going up all over the valley every day. Almost half a million Americans around the country go into apprenticeships in construction every year.

WHAT IS APPRENTICESHIP?

Apprenticeship is a proven industry-based learning system that combines on-the-job experience with technical training to provide a certified journey person. An apprentice is a worker who learns a craft through planned, supervised On-the-Job-Learning

84 | July-August 2016

(OJL) in conjunction with receiving planned, related technical instruction in a classroom setting. They are taught the proper use, care and safe handling of tools and equipment used in their

WHY CHOOSE THE ARIZONA BUILDERS ALLIANCE (ABA) APPRENTICESHIP PROGRAM?

The ABA provides formal apprenticeship training in many programs that are registered and approved by: • The U.S. Department of Labor • State of Arizona Apprenticeship Advisory Committee • National Center for Construction, Education & Research (NCCER) In the ABA program, you earn while you learn. When you begin your apprenticeship, the starting wage is generally about 50 percent of the journeyman rate and increases about every six months as you satisfactorily progress in the program. Near the end of training, an apprentice is performing as a skilled craft worker and is earning about 95 percent of the journeyman wage. As you continue in your career, your rate of pay increases with your knowledge and abilities. The ABA’s members consist of about 95 percent of all general contractors in the state and look to our programs first when in need of motivated and skilled workers.

WHAT DOES THE ABA APPRENTICESHIP OFFER?

Upon successful completion, apprentices are recognized at the journey-level in their trade and are awarded their Journeyman certificates as well as other Nationally recognized and portable credentials. • USDOL – Certificate of Completion of Apprenticeship (jw card) • State of Arizona – Apprenticeship Completion Certification • NCCER – Certificate for each level of training completed • Improved skills, competency based college education with measurable objectives • Student benefits, including business discounts at stores, restaurants and online locations • Career advancement • Full-time employment with career placement built in

IS THERE ADVANCE PLACEMENT?

If you have participated in another program, ABA will place you where you left off or if you have been in the trade you are enrolled for more than years years testing is available. Many people who complete their apprenticeships move up after a time as journeymen into supervisory positions in the field. In addition, some go on to become managers or even business owners Information: (602) 274-8222

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ABA

RISING TO THE TOP ABAâ&#x20AC;&#x2122;s Leadership Development Forum is generating a new generation of leaders By ERIN DAVIS

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here is a reason why Arizona Builders Allianceâ&#x20AC;&#x2122;s Leadership Development Forum is competitive and widely esteemed by contractors across the Valley. Over the past 20-plus years, approximately 700 people have graduated from the program. These graduates are now leaders throughout Tucson, Phoenix and beyond.

ABA “Enter a major general contractor or subcontractor’s office in Arizona and I guarantee you among their top leadership, there will several if not many LDF graduates,” says ABA Assistant Executive Director Erica Lange. The program's list of graduates reads like a Who's Who of commercial real estate: Glenn Leier, principal of Wespac; Dan Puente, president and owner of D.P. Electric; Erica Lange Chris Watts, president at Sunstate Equipment; Dan Pierce, president of Kitchell; Randy Eskelson, president and COO of Schuff Steel Management Co.; Casey Cartier, president and CEO of Jokake Construction; and many others. The Leadership Development Forum is an intensive program that only accepts 36 nominated candidates (by their employers) and its duration spans an entire year. Those who graduate become part of a respected echelon within the local commercial real estate world. “Everyone I know in the industry who is in a position of leadership has been through the Leadership Development Forum,” explains Marty Hedlund, senior vice president and Southwest district manager of Sundt. In fact, for anyone who desires to be in a place of leadership in Sundt, the LDF, for all intent and purposes, is a prerequisite. “Once we identify high-performance candidates, we like to give them an opportunity to go through the LDF,” Hedlund says. Hedlund, who is on ABA's board of directors, has been involved with the organization for almost 20 years. Newer to the organization, but no less passionate about ABA’s forum, is Bryan Dunn, market sector executive for Kitchell, who has also taught for LDF and been selected as a judge for final LDF Case Study Presentations. 90 | July-August 2016

“Part of the reason I’ve given so much back to the ABA is that they’ve been so great to the industry,” Dunn says, “and it’s an invaluable opportunity to train emerging leaders. In terms of donating time, I couldn’t think of a better organization to give back to.” Hedlund too, recognizes the farreaching impact LDF imparts on students who are turned into emerging leaders. “The program is so broad and covers a full spectrum within construction, from business acumen to group presentations to the full breadth of development,” Hedlund says. “It’s perfectly designed for any individual who is at a level in their company where they’re ready to look up.” Beyond the personal respect that Hedlund and Dunn express for the Leadership Development Forum, is a mutual regard for the impact that the LDF has had upon the industry and community as a whole. One area in which Hedlund defines as a unique characteristic of ABA and the LDF is the relationship it provides between contractors

and subcontractors. In national organizations, the division between the two is clearly segregated. “The opportunity to get to know both sides — contractor and subcontractor, provides a cohesiveness that creates healthy business,” Hedlund says. As a takeaway, Dunn recognizes the importance of bringing in outside professional speakers and experts to impact an evolving leadership. The ABA routinely brings in professionals from within and outside of the commercial industry to speak on leadership and what it takes to run a company. "The most prevalent thing we hear is that the relationships and bonds that are formed in the program during the year between subs and generals is the most rewarding part of the program," Lange says. "These relationships are maintained for perpetuity in many cases ... Being part of this elite group creates an instant bond, so it offers opportunities to immediately have a way to connect with a leader with a general contractor or subcontractor that wouldn’t otherwise exist.”

ABA What is the Leadership Development Forum?

By ERIN DAVIS

The Arizona Builders Alliance’s Leadership Development Forum (LDF) is a year-long intensive management education program that requires significant commitment on behalf of each candidate and employer. The program is limited to 36 students. It has been sold out annually since being introduced in 1993. The one-year, in-depth course focuses on management skills, leadership and public speaking. Participants have been in the construction industry for a minimum of eight years and are in positions of increasing responsbility within their companies. The program has received both state and national awards and has graduated over 700 constructors over the past 20 years.

PURPOSE OF THE PROGRAM Develop construction professionals into informed, knowledgeable and active members of the industry while preparing them for future leadership roles within their companies, the industry and the Arizona Builders Alliance (ABA). CLASS TOPICS • The role of leaders • Personality inventory and leadership styles • Public speaking • Team building and managing people • Common pitfalls of construction • Construction finance • Leading and planning • Contract Negotiations

CLASS ACT: The Arizona Builders Alliance’s Leadership Development Forum (LDF) is a year-long intensive management education program that requires significant commitment on behalf of each candidate and employer.

PHOTO BY ANA RICHEY, AZ BIG MEDIA

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• Construction claims case study • Increasing the power of memory • Legislative and political process • Final case study presentation • Classes meet first Friday of every month for a year. QUALIFICATIONS • Qualified candidates should have a minimum of eight years in construction management • Applicants should be in positions of increasing responsibility • Applicants must be nominated by their company’s C-Level Management SELECTIONS • Limited to 36 qualified registrants • Maximum one candidate per firm, unless applicants are located in two different regions • Non-ABA members may be approved dependent upon space • Leadership Development Forum Task force will make selection of participants

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ABA

E D I T G N I S I R ABA members help drive increase in association membership By ERIN DAVIS

Arizona Builders Alliance’s membership is booming. Is it due to an action-packed strategic plan that includes a rapidly expanding Leadership Development Forum, Young Builders Council and other progressive membership-building pathways? Absolutely — but there’s more to the story. Behind these expertly cultivated groups and initiatives are the brains and brawn of three ABA standouts. How are ABA members Justin Martin, Eric Pach and Lorraine Bergman taking ABA’s membership to a whole new level?

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LORRAINE BERGMAN President and CEO Caliente Construction

Lorraine Bergman and strategy are synonymous. As president and CEO of Caliente Construction, strategy has no doubt had its place in Bergman’s professional success—in ABA it has helped metamorphose the organization into an educational, informative and resourceful powerhouse. “We Lorraine Bergman decided to go into greater depth by opting a firm to interview our members,” says Bergman. “We had experienced a reduction in membership and it was time to reach out—we wanted to make sure we were adding value.” As 2014 past ABA president and current board member, Bergman has continued to strive toward fulfilling the initiatives she helped establish as part of a long-term strategic plan. The plan outlines objectives to carry ABA through 2018, and includes measures such as recruiting and connecting existing, new and young members by way of the Leadership Development Forum Alumni Group and Young Builders Council; rebranding, ushering in new logos and marketing material; and implementing more educational components, including webinars. As a board member, Bergman and her ABA peers are active in legislative goals, ensuring positive support for construction-based initiatives. And, as a self-proclaimed ABA cheerleader, she is vigilant in her mission to bring in new ABA members and helps to maintain a healthy and strong overall membership.

JUSTIN MARTIN

Vice president Corbins Electric When ABA had a need to bridge the gap between continued and new leadership, Justin Martin, vice president of Corbins Electric, rose to the challenge. “I was invited to be a part of a strategicplanning group to bring about this goal; the Leadership Development Forum Alumni Group is part of the end result,” says Martin. As president of the ABA's LDF Alumni Advisory Board, Martin was instrumental in helping to coordinate a task force to help engage and motivate graduates of the Leadership Development Forum with ABA and industry leadership. Martin will serve as president of the LDF Alumni Group until the end of the year, while also serving on the ABA Board of Directors this year. The first forum meeting in March focusing Justin Martin on commercialrelated legislative updates was met with great success and served as a sounding board for future topics— such as the June mixer-meeting highlighting workforce development issues. Until the next meeting Martin continues to target and motivate past ABA graduates to become part of ABA’s progressive and informative Leadership Development Forum.

ERIC PACH

Partner and insurance broker specializing in construction Minard-Ames Insurance Services While ABA sought to keep members engaged and involved by way of the Leadership Development Forum Alumni Group, they had a concurrent mission to attract a new pool of young professionals to a growing membership. Enter Eric Pach, one of eight founders of the Young Builders Council. With close to a decade of involvement with ABA, and just now entering the “30’s” Eric Pach bracket, Pach’s experience and youth make him a prime candidate to lead the YBC’s 4-Pillar mission: improve ABA’s social component, educate young builders to be the best at what they do, increase personal development in knowing the latest trends in the field, and lastly, outreach centered on construction labor vitality. Pach believes in the importance of establishing solid relationships with contractors as part of YBC’s ongoing mission. It’s a goal he has invested in and has resulted in lasting mentorships. He is also involved with KWANAS and CFMA, among other organizations. Pach’s dedication to growing YBC is evidenced through his efforts to make the group a statewide entity, targeting Tucson as another recruiting point for young professionals. “It’s so exciting what we’ll be able to accomplish,” says Pach. “We have (more than 70) members. I expect this to grow closer to 150 in the next few years.” 95