AZRE Magazine January/Febraury 2016 by AZ Big Media

JANUARY-FEBRUARY 2016

2016 OUTLOOK

• Will CRE keep rising? • 40 companies to watch • Shopping malls make a comeback

A CRE force awakens

f someone told me I’d be writing about commercial real estate even six months ago, I would have laughed. Probably because a) I knew very little about it; b) I had just published my first children’s book; and c) seriously? Yes, seriously. With three kids all in school full time (can I get an amen?), I was ready to not only re-enter the go-to-a-real-office environment after nearly a decade of freelance writing, I was also ready for a challenge. Challenge I have embraced (sound like Yoda speak? You’ll understand why when you read the Outlook). In a short time, I’ve embraced the many acronyms (AAED, NAIOP, VP, oh my!), commercial lingo: REITs, cap rates, the often-used “robust,” and the people — all of you readers. Then there’s my first issue. What better place to start than with a fresh view of 2016? I’ve packed a tremendous amount of new-fangled CRE knowledge — and more — into this issue, and have refrained from overusing “Star Wars” analogies (a fete for those of you who’ve already witnessed my obsession). Before bidding you adieu, I thank you all for your warm welcomes and encouragement and wish you a happy 2016. May the CRE Force be with you!

President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editor: Erin Davis Contributing writer: Meryl Fishler Intern: Laura Burnett AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Jeff Craig ART Art director: Mike Mertes Graphic designer: Anita Richey DIGITAL MEDIA Director of digital sales: Kerri Blumsack Web developer: Eric Shepperd Digital coordinator: Robin Sendele MARKETING/EVENTS Marketing & event manager: Heidi Maxwell Marketing coordinator: Lorin Parkhurst OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Cindy Johnson AZ BUSINESS MAGAZINE Senior account manager: David Harken Account manager: Ann McSherry | Bailey Young AZ BUSINESS LEADERS Director of sales: Sheri Brown RANKING ARIZONA Director of sales: Sheri King EXPERIENCE ARIZONA | PLAY BALL Director of sales: Joe Freedman

Erin Davis Associate editor, AZRE erin.davis@azbigmedia.com

CREATIVE DESIGNER Director of sales: David Silver

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.

2 | January-February 2016

CONTENTS

FEATURES 2 Editorâ&#x20AC;&#x2122;s Letter 6 AZRE Source 10 New to Market 14 Big Deals 18 After Hours

20 Legislative Update

24 Influential Millennials

28 International Council of Shopping Centers 34 2016 Outlook

50 40 Companies to watch in 2016

In memoriam: This issue of AZRE is dedicated to Mark Covington, the longtime executive director of BOMA of Greater Phoenix, who died in December. On the Cover:

Marina Heights, Tempe PHOTO BY MIKE MERTES, AZ BIG MEDIA

Clarification:

Healthcare Trust of America, Inc. owns the medical facilities whose photographs accompanied the story headlined "Open for business" in the November/ December issue of AZRE.

4 | January-February 2016

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

REVISED

AZRE SOURCE

PROJECT

NEWS SENDING A SIGNAL McGough Construction broke ground on a new, two-story, 28,000-square-feet Hubbard Radio Phoenix Headquarters Facility, which will be the new home for all five of Hubbard Radio’s stations – 98 KUPD, 93.3 FM, KSLX 100.7 FM, NBC Sports 1060 AM and 440 AM. The new facility includes an outdoor deck and performance promenade for visiting artists and will also house video studios. McGough Construction is partnering with RSP Architects under a design-build relationship to deliver this facility. The new facility will be completed in the spring of 2016.

CHANDLER PLAN The city of Chandler gave a unanimous green light for future development of a nearly four-acre land parcel on Gila Springs Place, west of Kyrene Road for future industrial development. The property lies within the Paloma Kyrene Business Community. Plans by LGE Design Build for the prime site range from a single, 82,854-square-feet building or two smaller, approximately 40,000-square-feet buildings that feature truck well and grade level loading, 24-feet to 32-feet clear heights and large concrete paved fenced yards and modern architecture. 6 | January-February 2016

A NEW LEASE ON LIFE

Developers turn historic Welnick Marketplace into adaptive reuse project By AMY EDELEN

he historic Welnick Bros. Marketplace building in downtown Phoenix has sat vacant for the past decade. But now, developers plan to restore it as an adaptive reuse project with restaurant, retail and entertainment space. Brothers Leo and Ed Welnick built Welnick Bros. Marketplace near Van Buren Street and Fourth Avenue in 1927. They operated a grocery store in a portion of the building, which was an open-air “arcade” style marketplace containing several vendors under one roof – a unique model in the 1920s for metro Phoenix that preceded supermarkets, according to a the city of Phoenix. The market included tenants such as Capital Pie Shop — operated by Allan Bragg, who later opened Bragg’s Pies on Grand Avenue — and Hubbell’s Peerless Grocery, which sold fresh produce, meats and cheeses. After the marketplace closed in 1951, the building housed an automotive repair shop, functioned as a warehouse and contained Dave Reiff Printing Co. before developers Pat Cantelme and James Kuykendall purchased it last year for $930,000.

Welnick Marketplace and the adjacent Liefgreen Seed Company building will be the first adaptive reuse project for Cantelme, a former CEO of PMT Ambulance, and Kuykendall, a former Bar-S Foods chief financial officer. They plan to restore the 11,000-square-feet building to its original Spanish Colonial Revival style. Both developers spent considerable time in the downtown area, which fueled their interest in the project, Kuykendall said. “When I saw the building and saw the potential, I thought it sounded like a great project for the city,” Kuykendall said. Kuykendall said the building was nearly razed twice after remaining vacant for a decade. “Other prospective buyers of that building all wanted to tear it down,” he said. “We’re the first ones that have come along and said, ‘No, we aren’t going to tear it down, we are going to restore it.’” The first phase of construction wrapped up in June and included painting, removing materials deemed hazardous or of little historic value and demolishing an exterior building. Reconstruction of the roof, outer

PROJECT

NEWS CREATIVE TOUCH RENDERING PROVIDED BY CBRE

PIECE OF HISTORY: Developers plan to restore Welnick Marketplace as an

adaptive reuse project with restaurant retail and entertainment space.

walls and truss structure is underway. Motley Design Group, the architecture firm behind the DeSoto Central Market, is designing and restoring the Welnick building. The exterior will feature roll-up garage doors once incorporated into the original design. Workers covered them up when the print shop took over the building. The developers plan patio space, a mezzanine and more than 100 parking spaces. The exterior will look like a finished building by January, said Robert Graham, principal architect at Motley Design Group. “This is the kind of work we love to do,” he said. “I like being embedded in downtown projects.” Interior design of the building won’t begin until developers select the tenants. Kuykendall estimated the project will cost about $5 million, depending on tenant improvements and customization. “When we get a tenant that fits, it will start dictating how we will divide up the space,” said Christopher Ackel, commercial real estate broker for the project and senior associate at CBRE. “We’ve talked to tenants that would take 900 square feet to tenants that would take 7,000 square feet.” They have received a significant amount of interest from tenants – from major national companies to local companies, Kuykendall said. “We expect the interest to pick up significantly in January after the shell

rehabilitation is completed,” he said. Architects Fitzhugh & Byron designed the original building. The firm also designed the First Baptist Church – another redevelopment project on the same block that could potentially include restaurant and entertainment space. Welnick Marketplace is within downtown Phoenix’s “entertainment district,” a one-square-mile area designated to spur economic development by attracting more businesses to the area and allowing restaurants, microbreweries and bars within 300 feet of a church to apply for a liquor license, which was previously prohibited. Cantelme and Kuykendall have applied for city, state and federal historic designations, grants and tax credits for the project. The building is listed on the Arizona State Historic Property Inventory. Sherry Rampy, a real estate agent and historic preservation consultant on the project, said the city and downtown community has been cooperative with Welnick’s development process. “Everybody really wants to see wonderful development downtown, so it has been nice,” she said. “I think it’s good to have an appreciation for the good architecture we have. And that’s really what (adaptive reuse) is. It’s about keeping what is good about the past and incorporating it into the present and the future.”

In the heart of Midtown Phoenix, artHAUS, a unique concept in modern urban living is taking shape. The urban in-fill project, under construction at 1st Avenue and McDowell Road, is reviving a 25,751-square-feet lot that has been vacant for more than 10 years. Created by artHAUS projects, formed by local architect and developer Jason Boyer, artHAUS features 25 modern and smartly designed dwellings, from three-story townhomes to single story flats. artHAUS providies all the benefits of a progressive urban lifestyle that harmonizes with the neighboring Willow Historic District.

RISING IN THE WEST Evergreen Development recently purchased and broke ground on Litchfield Marketplace, a 20.9-acre retail development at the northeast corner of Camelback and Litchfield Roads in Litchfield Park. “The West Valley is full of new growth and development, and we’re pleased to be part of it,” said Laura Ortiz, Evergreen’s managing principal in the Phoenix office. “Litchfield Marketplace will offer West Valley residents even more close-tohome conveniences.” Scottsdalebased FITCH is the architect for Litchfield Marketplace, and Mesabased Chasse Building Team is the local contractor. 7

AZRE SOURCE

SCHOOL HAZE Will Governor’s plan to boost education funding also boost development? By MERYL FISHLER

he $3.5 billion plan to tap into the State Land Trust could be the answer to settling a longrunning lawsuit and put more money into classrooms without raising taxes, but what impact will the plan have on commercial real estate? A voter-approved referendum in Arizona has required lawmakers to provide annual inflation-based increases to K-12 education. The lawsuit stems from the state’s decision to halt school spending during the recession, an economic downturn that severely crippled the housing and construction industries. Schools sued over the loss of the inflation funding. To settle the lawsuit and to improve education, Gov. Doug Ducey recently approved an initiative intended to pump $3.5 billion into K-12 education over the next decade. About $2 billion of the funding going to schools will come from the sale of trust land, by increasing the payout to 6.9 percent from 2.5 percent of total value. “That speaks to our commitment to our kids,” Ducey says. “We are able to increase funding to education without raising taxes and we are going to be able to show that we are getting results. That’s what is most important — the results we get in the classrooms from this money.” But will the initiative end up with more

8 | January-February 2016

delevopable land becoming available to the commercial real estate industry? “As far I understand, there is no impact to the commercial real estate industry,” says Kuldip Verma, CEO of Vermaland, a Phoenix-based land banking and land development company. “The distribution of the trust will be different. However, there will be no increase in the amount of land sold or changes to the prices of the land being sold.” The Arizona State Land Department manages approximately 9.2 million acres of State Trust lands. This land is held in trust and managed for the sole purpose of generating revenues for the 13 State Land Trust beneficiaries, one of which is Arizona’s K-12 education system. “We should have the best school systems in the country with what we have at our fingertips,” says Nate Nathan, president and designated broker with Nathan & Associates. Nathan and other experts agree that the land owned by the State Land Trust is some of the most valuable in the state and maybe in the country. But, changing where the money goes from the sale of trust land doesn’t mean the commercial real estate industry will be impacted by the initiative. Experts says it all depends on how much land is released and at what price,

IMAGE COURTESY, ARIZONA STATE LAND DEPARTMENT

but Verma predicts that the same quality and quantity of land already being sold will continue. He says where the funds from the sale are directed will be the only thing to change. The real estate market as a whole is showing signs of life, and trust land sales could pick up. “The overall land market and volume should be very robust in the next seven years compared with the previous seven years,” says Greg Vogel, founder and CEO of Land Advisors Organization. In 1985, Maricopa County voters approved the passage of a proposition that allowed for a one-half cent sales tax increase to fund freeway construction with a portion designated as seed money for regional transit service expansion. In 2006, the State Land Trust began to bring out the parcels along the new transit corridors, Nathan says. But because the economy was bad, many of these parcels never sold. Now that the market has recovered, experts predict the next wave of Metro Phoenix development will come from transit corridors and where city boundaries run up against trust land. Because much of that land is owned by the state trust, schools could be cashing in, experts say. “The demand is there,” Nathan said. In these high-growth areas, the State Land Trust parcels could help Ducey’s initiative create a lot of value on which to capitalize, funneling much of that money into Arizona schools. The deal still requires voter approval in a May 17 special election.

I N

C O M M E R C I A L

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PROJECTS TO KNOW CATEGORIES

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Architects Engineers Attorneys Brokers Developers Financiers/Accountants General Contractors Property managers Subcontractors

AZRE: ARIZONA COMMERCIAL REAL ESTATE

PEOPLE TO KNOW CATEGORIES

THE DEFINITIVE SOURCE OF TOP PEOPLE, PROJECTS AND DE ALS

2015

30 YEARS OF EXCELLENCE

Adaptable Re-use/Redevelopment Projects Arts & Entertainment Educational Facilities (Higher-Ed & K-12) Government/Public Healthcare Facilities Hospitality Industrial Development Mixed-Use Development Multi-family Residential Office Development Retail Tenant Improvement/Commercial Interiors

COMING JULY 2016

In commercial real estate itâ&#x20AC;&#x2122;s all about who you know! AZRE magazine combines the top people to know with the top projects to know. Let PTK introduce you to the best commercial real estate projects that define the industry with the people who make the happen.

REVISED

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NEW TO MARKET BREAKING GROUND: (Clockwise from top left) Sterling Collection at Silverleaf, Phoenix Children's Hospital, 1917 OS Stapley Buildings and SkySong 4.

MULTIFAMILY STERLING COLLECTION AT SILVERLEAF

OFFICE 515 E. GRANT ST.

OFFICE SKYSONG 4

DEVELOPER: Cypress Development Group GENERAL CONTRACTOR: Cypress Development Group ARCHITECT: Bing Hu LOCATION: DC Ranch, Scottsdale SIZE: 12 acres, 170 condos VALUE: $350 million START: November 2015 COMPLETION: First move-in during second half of 2016

DEVELOPER: Cowley Companies GENERAL CONTRACTOR: Predio Construction ARCHITECT: ODA Phoenix LOCATION: 515 E. Grant Street, Phoenix SIZE: 120,000 square feet START: December 2015 COMPLETION: September 2016

DEVELOPER: Plaza Companies in partnership with ASU Foundation, City of Scottsdale and Holualoa Companies GENERAL CONTRACTOR: Plaza del Rio Management Corporation ARCHITECT: Pei Cobb Fried and Partners, Butler Design Group and Kendle Design Collaborative LOCATION: Scottsdale Road & McDowell Road, Scottsdale SIZE: 145,000 square feet BROKERAGE FIRM: Lee and Associates START: September 2015 COMPLETION: Fall 2016

10 | January-February 2016

MEDICAL PHOENIX CHILDREN’S HOSPITAL EMERGENCY DEPARTMENT AND LEVEL 1 PEDIATRIC TRAUMA CENTER DEVELOPER: Phoenix Children’s Hospital GENERAL CONTRACTOR: Kitchell LOCATION: Thomas Road and State Route 51, adjacent to Phoenix Children’s Hospital SIZE: 42,302 square feet VALUE: $40 million START: December 2015 COMPLETION: Late 2017

RETAIL 1917 OS STAPLEY BUILDINGS DEVELOPERS: Simon CRE GENERAL CONTRACTOR: Abromovitz Grand Avenue Partners, LLC LOCATION: 723-747 N. Grand Ave., Phoenix SIZE: 36,000 square feet BROKERAGE FIRM: Trenton McCullough, Greg Vanlerberghe and Peter McQuaid of Levrose represented SimonCRE. Steve Farrell of Lee & Associates represented the seller, Abromovitz Grand Avenue Partners, LLC. VALUE: $3.16 million purchase

RETAIL QUEEN CREEN SHOPPING CENTER PROJECT DEVELOPERS: Wadsworth Acquisitions, LLC and Accelerated Development Services, a division of Velocity Retail Group LOCATION: Heritage Square development district in Queen Creek SIZE: 110,000 square feet BROKERAGE FIRM: Velocity Retail Group START: TBA

AZRE SOURCE

PLANNING AND ZONING CITY OF MESA The City of Mesa has enacted an amendment to section 503.1.1 of the Fire Code. Section 503.1.1 of the Fire Code requires an approved fire apparatus access road to be provided and to extend to within 150 feet of all portions of the home. The Section allows the distance to be extended up to 300 feet if the home is equipped with fire sprinklers. This amendment states that fire apparatus access roads are not required for homes that: (1) do not exceed 5,000 sq. ft. of conditioned space; (2) have a minimum lot frontage of 50 feet; and (3) are not located in a development which has utilized section 508.3.3 for reduced fire flow (e.g., expanding the distances between fire hydrants). If you have any questions, please contact Steve Hether, Development Services Deputy Director at 480-644-2039 or steve.hether@mesaaz.gov or Jackson D. Moll: Vice President of Municipal Affairs Home Builders Association of Central Arizona at 602-274-6545.

CITY OF GOODYEAR The City of Goodyear has updated to the 2012 International Residential Code and International Energy Conservation Code. Builders are required to update existing standard plans no later than January 1, 2016. If you haven’t already 12 | January-February 2016

updated your existing standard plans, you may want to so as to avoid any delays in production. If you have any questions, please contact Ed Kulik at 623-882–7114.

CITY OF SCOTTSDALE The City of Scottsdale has received a request for a Zoning Ordinance Text Amendment to the Planned Block Development Overlay district to allow rooftop appurtenances that have a maximum height up to six feet to be excluded from the maximum building height allowed, provided that the appurtenance does not exceed 20 percent of the roof area of the building, and are set back 15 feet from the building elevations. For updates on the request status and additional information about this application, please contact Current Planning at 480-312-7000 or Staff Coordinator Dan Symer, at 480-312-4218. Please mention the specific case number, Case #5-TA-2015, when calling or e-mailing. The complete file is available to view at the Planning office located at 7447 E. Indian School Road, Scottsdale, AZ 85251.

PINAL COUNTY Tentative plat extensions have been a topic of recent discussion in Pinal County. According to the existing

Development Services Code, tentative plats go to the Planning and Zoning Commission for approvals which are valid for one year. However, one year extensions may be granted by the County Planning Director if you are actively processing the final plat and if there have been no change in conditions within, or adjacent the tentative plat that would require a revision to that tentative plat. Typically, time extensions of one year, and sometimes two or three years, have been granted by the Planning and Zoning Commission. The planning department has indicated that the current code requires an administrative review of these extension requests. So while the Planning Commission will still approve or deny initial tentative plat applications, the Planning Director will now review, approve or deny any time extension requests. A Planning Director’s decision on extensions would then be appealable to the Board of Supervisors. Staff emphasized that only a single one year extension may be granted by the Planning Director, but if an applicant required additional extensions they would be required by code to submit a new tentative plat. The P&Z column is compiled by Dave Coble, Curt Johnson and George Cannataro with Coe & Van Loo Consultants, cvlci.com

COMING NEXT ISSUE • Construction in Indian country • West Valley building update • CoreNet Global Arizona • RED Awards • Commercial Properties Inc. — special section • IREM/Institute of Real Estate Management NOVEMB

ER-DECEM

BER 2015

sue sign Is The HDeealthier horcspiaital alsrt

JANUARY-FEBRUARY 2016

p. 36 p. 26

e Comm awards p. 52 AIA

6 201 OUTLOOK

• Will CRE keep rising? • 40 companies to watch • Shopping malls make a comeback

For additional information, call 602.277.6045 or visit,

azBIGmedia.com

It’s the big deals, and the brokers who make them, that make the market an interesting one to watch. In every issue, AZRE publishes the top five notable sales and leases that have occurred one month out from publication based on research compiled by Cushman & Wakefield and Colliers International with CoStar.

INDUSTRIAL/SALES

OFFICE/SALES

1. KOLL COTTON CENTER, PHOENIX 226,608 SF; $25,960,000 BUYER: BKM Captial Parnters, LP SELLER: Clarion Partners LISTING BROKERAGE: JLL

1. AAA, GLENDALE 206,155 SF; $44,350,000 BUYER: GI Partners SELLER: California State Automobile Association LISTING BROKERAGE: JLL

2. 1150 N. FIESTA BLVD., GILBERT 88,065 SF; $19,000,000 BUYER: Silver Way Real Estate Partners SELLER: LBA Realty LISTING BROKERAGE: CBRE

2. PARADISE VALLEY CORPORATION CENTER, PHOENIX 198,534 SF; $37,400,000 BUYER: Buchanan Street Parnters SELLER: Presson Corporation LISTING BROKERAGE: Cushman & Wakefield

3. PARKSKYWAY BUSINESS PARK, SURPRISE 418,651 SF; $18,912,927 BUYER: Northstar Commercial Partners SELLER: Silagi Development & Management LISTING BROKERAGE: Lee & Associates

3. US DEPT. OF VETERAN AFFAIRS (OUTPATIENT CLINIC), GILBERT 71,259 SF; $33,892,000 BUYER: Hill Development Company SELLER: Fairway Equities LISTING BROKERAGE: Stan Johnson Company

4. 2105 W. 5TH PL. & 2214 W. 7TH ST., TEMPE 112,574 SF; $11,500,000 BUYER: Development Services of America, Inc. SELLER: Greenwood & McKenzie Real Estate Investments LISTING BROKERAGE: Lee & Associates

4. BLACKHAWK CORPORATE CENTER & NORTHGATE BUSINESS CENTER, PHOENIX 252,350 SF; $27,457,500 BUYER: Cohen Equities SELLER: LNR Parnters LLC LISTING BROKERAGE: Cushman & Wakefield 5. CROWN CASTLE 70,000 SF; $16,038,341 BUYER: Crown Castle International Corp. SELLER: MJA Investments, Inc. LISTING BROKERAGE: Colliers International

14 | January-February 2016

Top 5 notable leases and sales (October 1 to November 30, 2015) Source: Cushman & Wakefield research department, Colliers International and Costar

LAND/SALES

MULTIFAMILY/SALES

RETAIL/SALES

1. NORTHEAST CORNER N. 97TH AVE. & W. CALLE LEJOS, PEORIA 865,441 SF; $16,000,000 BUYER: TerraWest Communities SELLER: Rialto Capital Management LLC

1. PILLAR AT SCOTTSDALE, SCOTTSDALE 548,324 SF; $95,750,000 BUYER: Security Properties, Inc/ Intercontinental Real Estate Corp. SELLER: PrivatePortfolio Group, LLC LISTING BROKERAGE: CBRE

1. TEMPE MARKETPLACE, TEMPE 1,300,000 SF; $367,000,000 BUYER: Vestar/AEW Capital Management SELLER: Vestar/Rockwood Capital, LLC

2. NE. 3RD & ROOSEVELT & 339 E. PORTLAND ST., PHOENIX 155,073 SF; $11,200,000 BUYER: Alliance Residential Company SELLER: Southwest Investment Funds of Arizona/Pappas Properties LISTING BROKERAGE: Cushman & Wakefield 3. W. WOODRUFF RD. & MAC RAE RD., COOLIDGE 35,800,222 SF; $10,124,355 BUYER: Curtis Christensen SELLER: David A Wuertz 4. BASELINE RD. PROPERTY, PHOENIX 187,308 SF; $8,600,000 BUYER: Paldeia Academics Inc SELLER: Schoolhouse Phoenix 5. 7725 DOVE VALLEY RD., SCOTTSDALE 579,827 SF; $8,260,000 BUYER: Michael A Lieb Ltd SELLER: Mastro Properties LLC LISTING BROKERAGE: Cushman & Wakefield

2. SKYWATER AT TOWN LAKE, TEMPE 370,000 SF; $94,200,000 BUYER: Heitman LLC SELLER: Lennar Multifamily Investors LLC LISTING BROKERAGE: CBRE 3. JEFFERSON AT ONE SCOTTSDALE, SCOTTSDALE 300,000 SF; $88,000,000 BUYER: Olen Commercial Reality Corp. SELLER: JPI/TDI LISTING BROKERAGE: CBRE 4. AVION ON LEGACY, SCOTTSDALE 280,000 SF; $74,060,000 BUYER: Simpson Housing SELLER: JPI/TDI 5. BOULEVARD 1900, TEMPE 453,380 SF; $58,995,457 BUYER: The Scion Group LLC SELLER: Harrison Street Real Estate Capital LISTING BROKERAGE: Marcus & Millichap

2. CHRISTOWN SPECTRUM MALL, PHOENIX 851,000 SF; $115,250,000 BUYER: Kimco Realty Corporation SELLER: Coventry Real Estate Advisors LISTING BROKERAGE: Eastdil Secured, LLC 3. CHANDLER FESTIVAL, CHANDLER VILLAGE CENTER & CHANDLER GATEWAY, CHANDLER 772,608 SF; $77,500,000 BUYER: RED Development/Big Shopping Centers USA SELLER: RED Development/VEREIT, Inc 4. VILLAGE CENTER, PHOENIX 171,129 SF; $24,800,000 BUYER: YAM Properties SELLER: NewQuest Investment Company 5. GREENWAY PARK PLAZA, PHOENIX 203,396 SF; $23,100,000 BUYER: AP Captial REIT SELLER: Hirani OIl Arizona, LLC LISTING BROKERAGE: Phoenix Commercial Advisors

INDUSTRIAL/LEASES

OFFICE/LEASES

RETAIL/LEASES

1. DURANGO COMMERCE CENTER BLDG E, PHOENIX 93,489 SF LANDLORD: Clarion Partners TENANT: Benson Industries LANDLORD BROKERAGE: JLL TENANT BROKERAGE: NAI Horizon

1. 5353 W BELL RD., GLENDALE 206,333 SF LANDLORD: CalSTRS/GI Partners TENANT: AAA Arizona

1. CSL PLASMA, SAN LUIS 9,020 SF LANDLORD: Michael Zaczek & Candy Cermejo TENANT: CSL Plasma Inc. TENANT BROKERAGE: Cushman & Wakefield

2. PAPAGO DISTRIBUTION CENTER, PHOENIX 63,180 SF LANDLORD: Prologis LANDLORD BROKERAGE: Colliers 3. PLUMWOOD A, TEMPE 65,580 SF LANDLORD: Plumwood Corporation TENANT: Cenlar FSB LANDLORD BROKERAGE: JLL TENANT BROKERAGE: Newmark Grubb Knight Frank 4. ASU RESEARCH PARK, TEMPE 58,972 SF LANDLORD: ViaWest Properties LLC TENANT: Amazon Corporate, LLC LANDLORD BROKERAGE: JLL TENANT BROKERAGE: Cushman & Wakefield 5. 4940 W LOWER BUCKEYE RD., PHOENIX 57,000 SF LANDLORD: SunCap Property Group TENANT: Daikin Applied LANDLORD BROKERAGE: CBRE TENANT BROKERAGE: JLL

16 | January-February 2016

2. 2118 E ELLIOT RD., TEMPE 166,127 SF LANDLORD: Northwood Investors TENANT: Green Tree Servicing LANDLORD BROKERAGE: JLL 3. CENTRICA, MESA 116,982 SF LANDLORD: Phoenix Rising Invenstments, LLC TENANT: Santander Consumer USA Holdings LANDLORD BROKERAGE: Savills Studley 4. TWO RENAISSANCE SQUARE, PHOENIX 72,980 SF LANDLORD: Hines TENANT: U.S. Attorney’s Office, District of Arizona LANDLORD: Cushman & Wakefield / FD Stonewater TENANT BROKERAGE: Carpenter Robbins Commercial Real Estate 5. BLDG III LIBERTY CENTER, TEMPE 69,774 SF LANDLORD: Liberty Property Trust TENANT: Prosper Market Place Inc. LANDLORD BROKERAGE: CBRE TENANT BROKERAGE: Cushman & Wakefield

2. SHEA VILLAGE, PHOENIX 25,807 SF LANDLORD: Alan Bramoweth TENANT: VIP Airsoft LANDLORD BROKERAGE: Middlefork Commercial 3. PIMA CROSSING BLDG A-C, SCOTTSDALE 17,140 SF LANDLORD: Regency Centers Corporation TENANT: Discount Patio LANDLORD BROKERAGE: Eisenberg Company TENANT BROKERAGE: Southwest Retail Group 4. THE OFFICES ON HIGH STREET A3, PHOENIX 14,300 SF LANDLORD: SKB Companies/Wayzata Investment Partners TENANT: Cowboys Saloon LANDLORD BROKERAGE: Velocity 5. FOX & HOUND BAR & GRILLE, PEORIA 11,638 SF LANDLORD: Monaghan Farms Inc TENANT: Modern Round LANDLORD BROKERAGE: CBRE

AFTER HOURS

BORN TO RUN Commercial real estate will be well represented at the Rock ‘n’ Roll Arizona Marathon and Half Marathon By MERYL FISHLER

hen Ramey Peru isn’t representing buyers and sellers of developable land in the Phoenix metropolitan area, he is probably training to qualify for the Boston Marathon. Peru, the associate vice president with The LandSource Team for Colliers International in Phoenix, is not a stranger to vigorous sports training. He was the punter for the University of Arizona’s football team from 19992002. As a collegiate athlete, the threeyear starter learned valuable skills that have helped him in his current athletic endeavor: training for marathons. “In general, the coaching I had helped with goal setting, setting a minimum goal and ‘stretch’ goal that is a little beyond, but not totally out of reach,” Peru said. For the Rock ‘n’ Roll Arizona Marathon on Jan. 17, Peru’s minimum goal is 3 hours and 15 minutes and his stretch is 3 hours and 10 minutes. His

PHOTOS BY MIKE MERTES, AZ BIG MEDIA

training involves running two to three times a week, which encompasses a mixture of interval running, tempo running and longer runs. Additionally, Peru works out at Orangetheory, taking an interval training class where students wear a heart monitor to aim for 75 percent of your maximum heart rate. Students work out on either a rowing machine or treadmill. This is Peru’s second time competing in the full Rock ‘n’ Roll Arizona Marathon. For anyone thinking about running competitively, Peru advises to start off slow and don’t do too much too soon because you can end up getting hurt.

READY TO RUN: (From left) Christine Nagle, Greg Hopley, Jenn Thomas and Peter Bauman 18 | January-February 2016

Peru said the lessons he learned from athletics carry over to business. “It keeps you disciplined,” he said. “In sports, everyone has a job and they have to do that job for the team to be successful.” Through athletics, Peru said he learned how to set goals that dictate day-to-day work and ultimately help achieve an end goal. With everything Peru does — from athletics and work — he wants to be most proud of how he got there. Peru said his father used to ask him, “At the end of the day, if they put your days work on the cover of the Wall Street Journal, would you be proud of it?”

amey Peru isn’t the only staff member from Colliers International who will be competing in the Rock ‘n’ Roll Arizona Marathon and Half Marathon. Here’s what motivated some other Colliers employees to sign up: Christine Nagle, marketing coordinator, industrial properties: Running a 5K was on Nagle’s bucket list and six years later, driven by her competitive spirit and wanting to raise money for charity, a 5K turned into a marathon. Peter Bauman, associate vice president, Greater Phoenix, and co-chair, Net Lease Group: Bauman began running marathons to train with his father. Now, running helps him relieve stress. “It provides mental clarity and running requires a different level of focus,” he said. Jenn Thomas, account manager, integrated client services: Running helps Thomas find a balance between work and her personal life. “It is a good way to clear my mind and calm myself down after a long day,” she said. Greg Hopley, executive vice president, Greater Phoenix: Running has always been part of Hopley’s life. He has participated in multiple triathlons and he is excited to participate in his first half marathon.

LEGISLATIVE UPDATE

READY TO RUN: Valley Partnership supports Proposition 123, Gov. Doug Ducey’s $3.5 billion educationfunding package that Arizonans will vote on in a special May election. PHOTO BY MIKE MERTES, AZ BIG MEDIA

What to expect in 2016 from Valley Partnership

s we begin 2016, Valley Partnership is finalizing its three-year strategic plan to define how we will move forward to advocate for responsible development in the Valley and beyond to benefit our members and the business of real estate development. One of the founding reasons for Valley Partnership is public policy advocacy. Now more than ever, Valley Partnership needs to go back to our roots to advocate for policies that advance the development industry at all levels of government by working collaboratively with public partners — especially our cities — to create solutions, strategic alliances and cooperation within the industry. As part of this advocacy, we will work to establish the real estate development industry as a business industry and not just several individual projects.

20 | January-February 2016

We will show how the industry of real estate development is an integral part of our economy: specifically how it needs and supports our economic vitality tools such as secure water supplies, a well-educated workforce and infrastructure investment, especially for transportation. A key to our future that will be discussed now — and the next couple of years — in the Valley, is the prudent administration of underutilized lands owned by cities and other public entities. These public/private partnerships are how we will attract, fund and provide for our economic development. This includes our Arizona State Trust Lands. That is why Valley Partnership is proud to support Proposition 123 on the Arizona ballot in May 2016, that will add $3.5 billion to Arizona schools in the next 10 years. It is a key for our economic growth to

Cheryl L. Lombard Valley Partnership

have a well-educated workforce. Finally, as business and industry begin to invest and grow, government has a tendency to want to do the same by increased regulations and taxes. Consistency across jurisdictions with taxes and regulations will be an area for Valley Partnership and its collaboration with all levels of government to focus and develop models as we did last year in cities of Tempe and Phoenix. It is an exciting time for Arizona — the business of development and our economy. Cheryl Lombard is the president and CEO of Valley Partnership.

NAIOP supports State Land Trust plan

n May 17, 2016 voters will go to the polls for a special statewide election dealing with increased K-12 school funding from State Land Trust distribution formula modifications (Proposition 123). As the largest commercial real estate trade association in the state, our members are on the front line of attracting and expanding firms that provide highwage jobs to our state. Therefore, we are vitally interested in giving our schools the resources they need to educate our future workforce, while not harming

Tim Lawless

NAIOP Arizona our competitive tax structure and improving our regional and national image as a good place to do business. We believe this integrated funding package does all these things. While this overall plan increases base funding per student and injects $3.5 billion more into schools over 10 years, we appreciate that the proposal provides prudent safeguards to protect our state budget in times of economic downturn and does not raise taxes. Since funding from the General Fund and the increase in distributions from the State Land Trust are conditionally enacted with voter approval, NAIOP Arizona strongly encourages a â&#x20AC;&#x153;YESâ&#x20AC;? vote for Proposition 123. Tim Lawless is the president and CEO of NAIOP Arizona. 21

LEGISLATIVE UPDATE

A look at AAED’s 2016 policy priorities

he Arizona Association for Economic Development (AAED) supports programs and policies that encourage businesses to expand and locate in Arizona. AAED urges the Legislature to support legislation that enhances Arizona’s competitive position in attracting and retaining high wage jobs. Expand educational funding to ensure a qualified workforce: AAED supports educational programs, policies and appropriate funding that result in a college or career bound Arizona workforce. A qualified workforce will support Arizona’s competitiveness in the retention and attraction of quality high wage jobs.

Joyce Grossman AAED

Reauthorize the Arizona Commerce Authority: AAED supports the reauthorization of the Arizona Commerce Authority and the Arizona Competes Fund. The ACA, whose mission is to strengthen Arizona’s economy by facilitating quality job creation, plays a critical role in coordinating statewide efforts to support our economy. Retain existing economic development programs: AAED membership opposes any unnecessary 22 | January-February 2016

changes that reduce or delay program or tax reductions which benefits economic development. Many companies chose to relocate or expand in Arizona in part because of these programs. The need to remain consistent and competitive is more critical than ever. Enhance the access to capital: AAED recognizes that access to capital is one of the major impediments to the formation and growth of new companies. Venture capital drives job creation and economic growth by helping entrepreneurs turn innovative ideas and scientific advances into products and services. Extension and funding of the Angel Investment Tax Credit beyond 2016 is necessary to encourage more venture capital investments within Arizona. The need to fund the research and development tax credit is also necessary to encourage the retention and attraction of the companies and high wage jobs associated with these activities. AAED encourages the Legislature to allow companies that have earned tax credits through their investment and job creation activities to be able to apply those credits to other Arizona tax liabilities.

Fund infrastructure: AAED supports funding and appropriate taxing mechanisms that encourage the development, maintenance, and improvement of infrastructure that results in business development and job creation. Sweeps of Highway User Revenue Funds (HURF) must stop. HURF, which is the sum of several taxes and fees including the state’s gas tax and the vehicle license tax, is allotted for the purposes of maintaining roads and bridges and other transportation needs in the State. Since 2001, over $1.8 billion has been diverted from HURF to pay for other government programs. Infrastructure investment leads to economic expansion in addition to impacting safety, the environment, cost of living and quality of life. AAED urges the Legislature to convene a group of state leaders to start the dialogue on how we can meet our future transportation needs and maximize Arizona’s economic competitiveness. Joyce Grossman is executive director at Arizona Association for Economic Development.

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MILLENNIALS

INFLUENTIAL MILLENNIALS

24 | January-February 2016

Meet 10 young leaders who are reshaping Arizona’s commercial real estate industry By MICHAEL GOSSIE

hey are called lazy, narcissistic, entitled. Nevertheless, Millennials are the largest and most educated generation in the United States today and they are impacting and driving every sector of Arizona’s business community. Here are 10 Millennials who are not just the leaders of tomorrow, they are the movers and shakers in today’s commercial real estate industry.

Michelle Alarid Associate Fennemore Craig Age: 33 Alarid practices in the area of real estate transactions, including the acquisition and sale of property, leasing of retail and office space and negotiating easements and other land use agreements. She is a member of Valley Partnership’s Advocates Class of 2015, a program created exclusively for a select number of Valley Partnership members under the age of 35. She is also an executive committee member of Gabriel ’s Angels Board of Young Professionals. Value of youth: “It’s given me the fresh perspective to quickly identify issues and analyze courses of action to create positive outcomes for my clients—and the energy to put in some good oldfashioned hard work.” Impact of Millennials: “Every new generation brings a new perspective to the business arena. Millennials, who are based in technological innovation, will continue to implement innovations.”

Tina Bark-Roy Director of client development Johnson-Carlier Age: 35 Bark-Roy has a B.A. from American University of Paris in France and is fluent in English, Spanish and French. As a former small business owner, she was responsible for customer sales and management, branding and client retention activities. Value of youth: “I am in a unique place because I am an older Millennial. I believe this gives me an advantage when it comes to instigating change in my company and industry because I am old enough that people (sometimes) listen to me, but still young enough to speak with the voice of a generation that has been completely revolutionized by technology and has experienced the change in social and work environment norms.” Impact of Millennials: “We won’t even have to wait a decade to see the changes brought on by the surge of Millennials into the work force in Arizona. It’s already happening. Just look at SkySong if you want a taste of what the future business landscape will look like.”

Dan Clevenger Associate Principal Westlake Reed Leskosky Age: 36 Clevenger is an associate principal at the award-winning design firm Westlake Reed Leskosky. Clevenger serves on the Phoenix Metro Advisory Council, state board of directors for the American Institute of Architects and serves on the board of directors for Artlink, Inc. In recognition of his professional achievements and service to the profession of architecture, Clevenger was recognized with the AIA Arizona AIA10 award in 2015. Value of youth: “I am driven by a desire and passion to be involved in decisions that shape our city. I believe our generation will have far more impact collaboratively than individually. My involvement and leadership professionally at Westlake Reed Leskosky and through organizations such as the AIA and Artlink, Inc. supports this collective mindset.” Impact of Millennials: “Millennials, many of whom entered the workforce during the recession, have had to define their own career path and, in many cases, start their own businesses and have done so collaboratively in support of one another. As local entrepreneurs continue to build their businesses, there will be more focus on a locally based economy – people and businesses that are invested in Arizona.”

MILLENNIALS Krystal Dill Brokerage services CBRE Age: 29 Dill partners with Bryan Taute and Charlie von Arentschildt at CBRE to provide leasing and investment sale services to agency clients. Prior to CBRE, Dill assisted in marketing and leasing Lincoln Property Company’s entire 8 million-square-feet portfolio across Arizona. An active industry member, she serves on the board of AZCREW and is chair of its PR/ Outreach Committee. She is also a member of NAIOP and is a part of its Education Committee. Value of youth: “The Arizona business community has seen an influx of companies led by young, innovative executives. As a professional of the same generation, I can relate to the Millennial C-suite in a different way than the previous generation.” Impact of Millennials: “The entrepreneurial and start-up communities are driving business trends. TAMI (technology, advertising, media and information) companies are becoming a critical component of our business landscape. I think my generation is going to be credited with the diversification and strengthening of the Arizona economy. Also, looking

Krystal Dill 26 | January-February 2016

further ahead, consider Gen-Z, they have never known a world without screen time. We are going to be responsible for the full integration of technology into how business is done.” Brent Mallonee Vice president, Retail Services Group Cushman & Wakefield Age: 34 Mallonee is a top producer with Cushman & Wakefield’s Retail Group, completing more than 6.17 million square feet of transactions with a total consideration of more than $232.6 million. Mallonee is part of a threeperson team that brings a broader prospective and knowledge to all facets of retail real estate having worked on project leasing and tenant representation assignments, specializing in ground up development and redevelopment projects. Value of youth: “Embracing the positive impact that collaboration and technology have on the real estate industry has helped me quickly increase productivity and bring value to clients.” Impact of Millennials: “The expectation for thorough analysis, supported by factual data communicated in a very rapid fashion, will be the standard for our industry. Connectivity on all levels will continue to be a dominant trend across successful business landscapes from the most local to increasingly global levels.” Cameron Miller Development manager Evergreen Development Age: 26 Miller has been a development manager with Evergreen, a national retail and multifamily developer, since 2012. He specializes in site due-diligence, entitlements, design, permitting and construction management for single-tenant and retail centers. Miller is an active member of the Valley Partnership Advocates Program, ICSC Phoenix

NextGen Committee and ULI.

Value of youth:

“My youth has allowed me to approach the municipal staffs and industry leaders I’ve worked with as mentors, which has helped me to learn best practices in completing developments.” Impact of Millennials: “We’re early adopters of disruptive technologies, which will continue to produce new companies, new industries and the associated urban landscapes that cater to a live/work/play lifestyle.” Dan Noma, Jr. Designated broker Venture Real Estate & Investment Age: 34 Noma is the designated broker of Venture REI, a full-service real estate brokerage firm that specializes in commercial and residential investment properties. The son of a builder and developer, real estate runs in Noma’s blood and he is recognized as one of the state’s leading real estate brokers. Value of youth: “For me, it’s been about having the time to dedicate to my business. My wife and I don’t have any children yet, so I have been able to be nimble with time and able to focus my efforts on growth without any constraints. We are expecting triplets in January, so things may change then.” Impact of Millennials:

“We are so accustomed to having access to instant information and making information readily available that we can speed up just about any business process. I anticipate things will only speed up over time and business transactions like the due diligence in evaluating a project will be completed in a matter of days instead of months.”

Jennifer Schrader Co-founder and chief operating officer Caliber Companies Age: 34 Schrader sets the asset investment standard for Caliber’s Wealth Development acquisition strategy. She ensures the $150 million worth of commercial office buildings, hotels, single-family and multi-family properties are performing with a maximum positive outcome. She

oversees management of the company’s day-to-day operations, critical to generating revenue and accomplishing business goals. Her thought leadership in architecture and design assists Caliber with award-winning projects that provide great returns to its wealth development clients. Value of youth: “When starting Caliber, my partners and I (all three Millenials) started Caliber amidst the chaos and collapse of Arizona’s real estate market. Forging ahead with no playbook or backing from financial institutions, we made a conscious effort to stand out from the crowd and do things differently. While others chose the short-term approach and focused on one area of the market, we didn’t get caught in the hype. We chose to diversify, offering a single-sourced, integrated approach (and) infusing technology in brokerage, construction, property management and wealth development — all in-house. Impact of Millennials: “I believe a shift will occur with business owners collaborating together on programs and initiatives, currently not in place, that target and help those less fortunate. Close to my heart are those less fortunate including people in our community, animals and veterans around the U.S.”

Josh Simon

Josh Simon President SimonCRE Age: 30 Simon has developed more than 2 million square feet during his career and will develop more than $140 million in retail projects across 10 states in 2016 for SimonCRE, which specializes in retail ground up development, redevelopment, single tenant build-to-suits and multitenant retail projects throughout the country in primary, secondary and tertiary markets. Value of youth: “Being a Millennial and business owner, I thrive on the use of new technology and being adaptive to change, which has allowed us to challenge the status quo.” Impact of Millennials: “Millennials, with the help of our state leadership, will attract a new diverse economy not so dependent on tourism and construction to keep Arizona strong for decades ahead.” Hayley Smith Banking officer – Phoenix Metro FirstBank Age: 25 Smith joined FirstBank after graduating from Colorado State University in 2013, and soon transferred to Arizona. She is now a banking officer in the Phoenix Metro office. Smith is active with several professional groups including Valley Partnership, AZCrew and GET Phoenix Young Professionals. Value of youth: “With the advances in today’s technology and the amount of resources available, Millennials are generating innovative ideas while being adaptable to the ever-changing business environment.” Impact of Millennials: “Millennials are building a strong foundation of leaders across Arizona. We can inspire everyone to share their successes with future generations, creating a better tomorrow.” 27

INTERNATIONAL COUNCIL OF SHOPPING CENTERS

MOTHER OF REINVENTION Shopping malls are using creativity to spur a retail-renaissance comeback By ERIN DAVIS

28 | January-February 2016

f “slow and steady” is the general theme for the 2016 commercial real estate outlook, shopping centers may have a quasi-theme of “rocket boost.” With a lagging economic recovery and what most agree is an overbuilt retail sector, where exactly will this push occur? The answer may lie in the place most worshipped by iconic “Clueless” protagonist Cher and most of the cast of “Fast Times at Ridgemont High” (if you’re a product of the 1980s). If you haven’t guessed — it’s the mall. No longer a dying relic, its glory days peaking in the 80s and 90s, the mall is making a comeback— or at least making a solid attempt. With major department store players like Macy’s and Barnes and Noble literally “leaving the building,” filling space can be a challenge, but not necessarily a bad one. “Property managers are becoming creative,” says Scott Nelson, vice president of development at Macerich, adding, “or will need to be creative in ways to utilize vacant space.” Creativity, according to Nelson, will come in the form of reinvention of legacy retail properties, as well as revitalization and repurposing of existing space. Locally, Metrocenter Mall serves as a prime example.

REVITALIZATION Once a Valley hotspot in the late 70s and early 80s, Metrocenter has experienced a slow decline — one that began prior to the economic downturn. With the abandonment of reputable businesses, an increase in crime and several changes in ownership, Metrocenter has been in longtime need of rescue. After $30 million in interior renovation and a sharp market tank in 2007, the question was not so much who would rescue Metrocenter, but why? Warren Fink, chief operating officer of the Carlyle Development Group, can answer both. “It’s a strong positive that we saw in Metrocenter what it can become,” Fink says, “as an infill-version site with mixed-use potential that should be taking advantage of prime location and transportation.” After securing Walmart as part of Metro’s revitalization, it was time to incorporate the creative reinvention Nelson describes. “Selling the Broadway space to Walmart was important,” Fink says. “We needed a catalyst to get something going in the way of retail, but we also needed to think about how we could turn this into more

than a 1.3-million-square-feet retail center plugged into a Walmart.”

TRANSFORMATION The next step was rezoning as well as planning and development to transform Metrocenter into a mixed-use project. This step, currently being reviewed by the city of Phoenix (and should be approved this month), will allow creative reinvention to take flight. Establishment of mixed-use zoning will allow Metrocenter to support not only retail, but office, medical, educational and multifamily as well. Then there’s the expansion of the light rail. Approved by the city, the extension will be nestled in between Peoria and Dunlap, allowing access above and beyond the current surrounding population of 500,000 near Metrocenter. Of course, Metro isn’t the lone shopping center taking advantage of mixed use. Village Square at Dana Park in Mesa, preparing for expansion, contains a variety of reputable, powerhouse retailers. Ann Taylor, Kirkland’s and Bath & Body Works sit alongside eateries like Pita Jungle, Chipolte and Rumbi Island Grill and are topped with second-story office buildings.

Like Nelson, Gerardo agrees that creative thinking and development is key in capturing Phoenix Valley commerce. “It’s all about keeping people on the property longer,” Gerrardo says. “We’re looking to add entertaining experiences and are talking to a number of theaters right now.” Gerrado refers to models like the amenity-packed Cinepolis Luxury Cinema in Delmar’s shopping complex — voted best theatre in the country two years running.

TAKING A BITE “Restaurants have completely evolved consumer expectations, compared with clothing retail,” Gerardo said. “They’ve trained the consumer that it’s more than simply the acquisition of the commodity — it’s the experience.” On a micro level, restaurants will be the main source of fuel for the shopping center rocket boost. According to Maricopa County Supervisor Steve Chucri, chairman of the Arizona Restaurant Association, Arizona boasted $11.5 billion sales in restaurants in 2015. “The restaurant market in the Metrocenter area is phenomenal,” Fink

ICSC

METROCENTER: New mall entrance design.

adds. “The number of restaurants that have come in along the I-17 and Peoria is unbelievable.” One | Hundred | Mill, developed by Douglas Wilson Companies and leased by Cushman and Wakefield, is already receiving interest from iconic restaurant operators. Set to break ground in late January 2016, Tempe’s One Hundred Mill will be another mixed-use project worthy of watching. “We quickly and proactively acquired this site that screamed for a highquality boutique hotel and creative office building space, with adequate parking,” said Doulas Wilson, Chairman and CEO of Douglas Wilson Companies. “Our intention is to be sensitive about the preservation and architectural importance of the Hayden House as the front door to the city.” To ensure One Hundred Mill’s inventive concept, Douglas Wilson 32 | January-February 2016

Companies have secured a historical preservationist and Kimpton, one of the largest operators of boutique hotels. “For our office Warren Fink buildings, we want to do something that’s never been done before in the Phoenix area,” Wilson says. "We are thinking of adapting the lobby to resemble something like union station in Boulder — filled with vendors, embodying a very enlightened space.”

WHAT’S NEXT? Will we see more mall mixeduse development in 2016? Many in the Valley turn their eyes toward the much-anticipated Estrella Falls Regional Mall, with entrances off McDowell Road and Pebble Creek.

Chris Gerardo

Scott Nelson

With plans for a 78,000-square-feet Harkins multiplex and plenty of incoming retail, development will be a reverse “Field of Dreams” scenario. Rather than “if you build it they will come,” Macerich is following the queue of market conditions, waiting for Goodyear to continue to build its infrastructure and population first. “It’s not a matter of if the project will happen — it’s a matter of when,” Nelson says. In the meantime, there is no loss of creative reinvention for Phoenix retail.

2016 OUTLOOK

2016 OUTLOOK Can we expect a slow and steady improvement in the coming year? By ERIN DAVIS

34 | January-February 2016

hen Luke Skywalker first cast eyes upon the Millennium Falcon, he was less than impressed. To him it was a “piece of junk.” Although perhaps not viewed as trash, the Phoenix economic and commercial outlook has admittedly taken a beating for some time. Much like Han Solo, however, experts see something in the slow, yet steadily rising Phoenix market — “She may not look like much, but she’s got it where it counts, kid.” Phoenix’s 2016 commercial real estate industry is getting ready for another smooth-inclined ride, and with any luck a few positive bursts in certain markets.

PHOTO BY MIKE MERTES, AZ BIG MEDIA

2016 OUTLOOK Since workforce and human capital is of the top concern with businesses across the board, we must be able to prepare and invest in our ability to attract, retain and retrain our workforce to be relevant to those business sectors we are trying to grow – Jackie Meck, mayor, City of Buckeye

SO, WHAT CAN WE EXPECT FROM EACH SECTOR IN 2016? HEALTHCARE AND MEDICAL: According to ZipRecruiter, Phoenix is the best city in the nation for healthcare jobs. This is reflected locally within our commercial real estate world — all arrows pointed toward healthy bioscience and medical sectors in 2016. Projects like the North Phoenix KUD Biomedical corridor in conjunction with Mayo Clinic, Sundt Construction’s work on Banner Health’s 11-story tower at University Medical in Tucson, Phoenix Children’s Hospital’s new Emergency Department and Level 1 Pediatric Trauma Center

and ASU’s 193,000-square-feet Biodesign Institute expansion are all promising commercial prospects either underway or slated for 2016. Experts believe these developments will serve as the catalyst for not only future advancement in Biodesign construction, but will undoubtedly stimulate job and economic growth exponentially once completed. INDUSTRIAL: Over the last year, this market remained status quo within each submarket and should remain as such in the oncoming year. In the West Valley, particularly along the 303 corridor, dramatic growth has and will be seen, as will the surrounding

area of Mesa Gateway Airport in the East Valley. Industrial vacancy rates continue to decline, but the market is both bifurcated and fickle. Big box has done well, but the small entrepreneurial or construction-related user has been slow to return to the market en masse. Thus, the multi-tenant market has yet to recover. MULTIFAMILY: Multifamily vacancy rates are their lowest since 1999 and the demographics for those seeking apartments — fueled by Millennials who will stay in apartments longer — have never been stronger. Elliott D. Pollack, chief executive officer of Scottsdale-based economic consulting

COMMERCIAL REAL ESTATE EXPERTS’ OUTLOOK Bo Calbert

President McCarthy Building Companies “If we can raise economic development in our region, it’s going to rise the tide, adding good paying jobs, and will increase the middle class and lead to more real estate development.”

36 | January-February 2016

Cathy Cartlat

Mayor City of Peoria “I believe businesses are looking for communities with a well thought-out plan for the future. In Peoria, we have a strategic plan to offer that is attractive to businesses, along with unique amenities.”

Charley Freericks

President DMB “Building permits are below norms by almost half compared with averages within the last 30 years. Commercial development typically follows residential growth, and presently the Southwest Valley is lagging behind the rest of the Valley in all categories.”

2016 OUTLOOK COMING TO THE WEST VALLEY:

10 West Logistics Center is an 80-acre planned bulk distribution business park that will consist of more than 1.3 million square feet. The project is being developed by Wentworth Property Company.

firm Elliott D. Pollack and Company, says the multifamily market is one of the strongest sectors in Arizona. Want proof? More than 20 apartment and condominium developments — which will bring 2,000 new housing units to downtown Phoenix — are currently under construction; they range from high-end projects like Portland on the Park and Deco Communities’ Edison Midtown, to Lennar Multifamily Communities’ 367-unit The Muse, to Metrowest Development’s Union @ Roosevelt (a mixed use residential and retail development). All these projects are strategically placed on the light-rail line. OFFICE: Currently, office vacancy rates are 20.1 percent. However, this is deceiving with certain markets within Greater Phoenix, including downtown Scottsdale and downtown Tempe, short of space. Rents in these markets are rising rapidly. There is also a problem in terms of certain types of space such as collaborative space with high parking requirements. Nationally, office net absorption totaled 14.6 million square feet in the third quarter of

2015 alone, according to the National Realtors Association. The Phoenix market will continue to tread on the nation’s heals with areas like Tempe, Mesa and Chandler experiencing a surge in office development.

new businesses and residents continue migrating into Arizona,” says Chris Loeffler, CEO of Caliber Companies. Shopping centers are accommodating the population boom — and through innovative and unique means.

RETAIL: The population growth rate of the Phoenix Metro area has been nearly 4 percent per year for the past 40 years and the demand for retail will keep increasing, too. Vacancy is at a pleasant low across the region. Restaurants are partially to thank for filling space and igniting economic stimulation, particularly in Downtown and Midtown Phoenix. “Recordbreaking sales occur as marketplace confidence continues upward and as

ARE WEST VALLEY’S BEST DAYS JUST AHEAD? Will West Valley commercial real estate skyrocket in 2016? Perhaps not, but experts hint we may see a slow burn. “In my opinion, we’re going to have some pockets of accelerated growth,” Buckeye Mayor Jackie Meck says, “especially in well-positioned infill developments as well as rapidly growing housing communities.” With close to an 11 percent increase

COMMERCIAL REAL ESTATE EXPERTS’ OUTLOOK John Graham

President and CEO Sunbelt Holdings “I think the West Valley is still getting through its adolescent stage. I think its best days are coming soon.”

38 | January-February 2016

Mike Haenel

Executive managing director Cushman & Wakefield “The industrial market continues to remain relatively steady in terms of net absorption. Compared to previous recoveries, the total amount of tenant velocity is slower due to a weakly recovering housing market.”

Beth HarmonVaughn

Managing director and principal Gensler “There is increased confidence in our local market, and we anticipate a robust year to come in 2016.”

2016 OUTLOOK COMING TO TEMPE:

10 West Logistics Center is an 80-acre planned bulk distribution business park that will consist of more than 1.3 million square feet. The project is being developed by Wentworth Property Company.

since 2014 in year-over-year residential sales, retail and office sectors have noted improvement, specifically in the Southeast and Northeast markets. Although having experienced a taste of this increase, the West Valley still has catching up to do. “Building permits are below norms by almost half compared with averages within the last 30 years,” explains DMB President Charley Freericks. He elaborates that single-family home building permits, averaging more than 25,000 for decades, have been well below 15,000 over the past 7 years. “Commercial development typically follows residential growth and presently the Southwest Valley is lagging behind the rest of the Valley in all categories,” Freericks says. Not only lagging, according to Freericks, but also dragging from sustaining a harder hit during the economic and employment downturn, especially related to construction job losses. Meck stresses the importance of rectifying the struggling job market. “Since workforce and human capital is of the top concern with businesses across the board, we must be able to prepare and invest in our ability

to attract, retain and retrain our workforce to be relevant to those business sectors we are trying to grow” he says. Job recovery, it appears, may continue to be the West Valley’s Achilles heel, thus halting drastic commercial growth — at least for a while. Sunbelt Holdings President and CEO John Graham suspects it may be the latter part of 2016 and into 2017 before we realize noticeable improvement.

NEED FOR INFRASTRUCTURE Another impediment to commercial advancement: lack of infrastructure. “We’re slower in growth in the West Valley because we’re just filling our infrastructure,” Meck says, “whereas other submarkets have it

already in place.” Despite the uncertainty surrounding residential and employment prosperity combined with needed infrastructure improvement, there are beacons of light along the West Valley commercial landscape. Experts agree that medical and industrial submarkets currently reflect a positive future. Most existing industrial/distribution buildings have been absorbed and Meck predicts the potential of attracting additional large industrial users. Buckeye alone plans to capture up to 1 million square feet of industrial space within the next 12 to 18 months. Along the I-10 and Loop 101, the medical market has taken over with

COMMERCIAL REAL ESTATE EXPERTS’ OUTLOOK Cole Johnson

President Paul Johnson Drywall “We’re going to see double-digit spending in office and retail. What will be interesting to watch will be labor supply constraints. The problem for all construction companies is difficulty in filling demand; it’s not finding work — it’s getting work done.” 42 | January-February 2016

Chris Loeffler

CEO Caliber Companies “Record-breaking sales occur as marketplace confidence continues upward and as new businesses and residents continue migrating to Arizona.”

Micah Miranda

Economic development director City of Chandler “I think we will continue to see strong demand for space in Chandler, driven by access to freeway corridors, a strong labor pool, highperforming school districts and a clear vision for economic growth.”

2016 OUTLOOK COMING TO PHOENIX:

Lennar Multifamily Communities is constructing The Muse, a 367-unit luxury apartment community located on the northwest corner of Central Avenue and McDowell Road next to Arizona Opera and across from the Phoenix Art Museum. The 5.7-acre, high-profile corner had long been vacant. Tenant move-in is expected to begin in March 2017 with final completion slated for later that year.

TECH, HEALTHCARE WILL FUEL EAST VALLEY Cancer Treatment Centers of America, Abrazo West Campus (formerly West Valley Hospital) and Banner Estrella Medical Center. Healthcare is a bright spot, according to Freericks, who believes this can only boost the residential and employment economic outlook. “These medical facilities attract higher education levels and better wage earners who attract people who want to live in close proximity,” Freericks says. “We’ve already seen strong impacts in areas of Litchfield Park and Verrado in becoming home for some of the people from these employers.” Even brighter to the West Valley’s commercial prosperity is the progression of Loop 303. In between Luke Air Force Base and Palo Verde,

the 303 is increasing the West Valley’s viability as an attractive commercial base. As is Sunbelt Holdings’ PV303. With 1,600 acres primed for 20 million square feet of office, retail and industrial space, PV303 is already host to heavy-hitter distribution centers like Dick’s Sporting Goods and REI. As Loop 303 and the employment market become more solidified, so will retail, office, multifamily and other areas that have thus far remained subpar. For now, however, the overall pace of commercial expansion appears to be stable at a slow burn. “I think the West Valley is still getting through its adolescent stage,” Graham says, adding, “I think its best days are coming soon.”

“The landscape is changing and you can’t tell when you leave one city and go into another because it is so built up,” said Roc Arnett, president and CEO of East Valley partnership With a current population of 1.4 million and predicted to be home to more than 1.9 million residents by 2024, the East Valley is a prime location for companies looking to relocate and expand. The interest in the area is causing a drop in vacancy rates and an increase in industrial speculative office development, experts say. This is largely because the Greater Phoenix area is one of the top job-growth markets, said Chris Camacho, CEO of the Greater Phoenix Economic Council. Because of that, private-sector investment will continue the fuel the East Valley through 2016 as product moves and is

COMMERCIAL REAL ESTATE EXPERTS’ OUTLOOK Scott D. Peters

Founder, chairman and CEO Healthcare Trust of America, Inc. “Arizona healthcare systems and physician practices are in the early stages of developing their strategies to compete in the transition to this consolidation and integration of care.”

44 | January-February 2016

Elliott D. Pollack

CEO Elliott D. Pollack and Company “Make no mistake about it, this has been a mediocre recovery nationally, in the state and in the Greater Phoenix area relative to history. That being said, we are having a dramatic recovery ... and the outlook for 2016 is more positive.”

Tiffany Winne

Senior vice president and branch manager Savills Studley Phoenix office “Savills Studley’s outlook on the Phoenix market for 2016 is bullish. The Valley continues to enjoy steady hiring activity and robust demand for office space from a wide array of industries.”

2016 OUTLOOK TUCSON

“Tucson hasn’t recovered as well as other areas of the state,” says Ike Isaacson, managing director of CBRE, Tucson. Despite a slower recovery, 2016 looks promising in that similar to Phoenix and larger markets, Tucson will experience a slow and steady comeback. The University of Arizona, military installations and resorts continue to promote a healthy overall commercial environment, as is a growing appetite for investment sales, according Isaacson. A high influx of foreign capital coupled with strong retail and multifamily sectors indicate that recovery will continue. “2016 is going to have its ups and downs,” explains Chip Kloppenburg, CCIM, CEA | Investment Advisor of SVN, Desert Commercial Advisors, “but ultimately Tucson will be a great place to be.”

absorbed, Camacho added. For 2016, experts predict the principal property type in the East Valley will be office space. Class A office buildings are in high demand, Camacho said. He expects to see a lot of Class A, low- to mid-rise, threeto four-story, campus-style office buildings continue as a trend in 2016.

TEMPE LEADS THE WAY Tempe is seeing a lot of activity when it comes to commercial real estate and experts attribute Tempe’s high demand to its central location. According to Arnett, there are 20 million square feet of new development going up in the next four to five years on Rio Salado Parkway between McClintock Road and Priest Drive. The largest office project in the state’s history is underway in Tempe, State Farm’s $600 million regional headquarters in Marina Heights is a 20-acre, 2 million-square-foot mixeduse project that will house up to 10,000 employees. “Tempe is on fire,” Arnett said. Mesa is another hot spot in the East Valley. “Mesa got a lot of infill and office space with the light rail coming downtown and more is beginning to 46 | January-February 2016

percolate,” Arnett said. Along the light rail corridor, Mesa is pushing for vertical integration of mixed-use development that will encompass residential, office and retail development, said Mesa Economic Director William Jabjiniak. Also, as some of the submarkets become built out, they become land-locked, making Mesa an affordable alternative, Jabjiniak added. The Phoenix–Mesa Gateway Airport area is seeing a lot of industrial interest and there is interest in the transit corridors along Loops 202 and 101 for office space development, Camacho said. Along those high traffic areas into Chandler, there are a number of high-quality projects in the works, said Micah Miranda, the economic development director for Chandler. “Companies are excited for the labor pool in Chandler because they are able to acquire high-quality talented people to fill positions,” Miranda said. There is major corporate interest in Chandler, especially for tech centers, Camacho added, while Gilbert is seeing interest in healthcare and financial service property types. But because of the region’s attractive qualities, experts predict that the

growing technology and financial sectors will continue to move their assets to the East Valley. However, even with much of the East Valley being built up, Apache Junction and Queen Creek have not seen an increase in demand like the rest of the region, Arnett said.

WILL WE SEE PHOENIX RISING THIS YEAR? The commercial outlook for Phoenix in 2016 brings to mind the wise and well known words of poet Robert Llyod: “Slow and steady wins the race.” Although sluggish, the fruit of a steadily laboring, but growing Arizona economy is beginning to blossom. Unlike other areas where commercial growth is rapidly sprouting — industrial in the West Valley and office and retail in the East — Metro Phoenix will continue to see stability across all sectors. “Diversified and balanced growth from technology, financial services and healthcare are positioning the region for a steady, sustainable recovery,” says Savills Studley Senior Vice President Tiffany Winne. “Many of our clients are intrigued by the Phoenix market for its highly favorable business rates and deep labor pool; the perfect breeding

Our Clients… their motivation is our motivation.

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2016 OUTLOOK ground for business growth.” Proof of business attraction to the Phoenix market is clearly visible in declining vacancy rates. According to a Cushman & Wakefield report, the Metro Phoenix retail market realized its 16th consecutive quarter of declining vacancy, experiencing 552,000 square feet of growth in the third quarter of 2015. Similarly, office vacancy retention is on a slow, albeit upward trend, lingering at 22.6 percent, according to a Savills Studley Report. “In the industrial sector, vacancy rates in all product categories remained nearly unchanged from 2014 to 2015,” says Curtis Hornaday, research analyst for Cushman & Wakefield, “but we saw the supply of new space rise just over 2 percent from the historical.”

HUNGRY FOR GROWTH According to Hornaday, Metro Phoenix will continue to prevail in its “small but mighty” attitude toward vacancy absorption, maintaining a Top 10 ranking. “We ranked fifth for industrial and 10th in overall office absorption in 2014 and are on track to be Top 10 again for 2015.” Like fellow sectors, multifamily will continue a steady climb, with vacancy dropping and new construction offering up to 4,000 apartment units to the Greater Phoenix market in 2015, according to a third-quarter Colliers Multifamily Report. Phoenix is hungry to keep rising in commercial prosperity. We can literally thank the stomachs of Phoenicians for the growth, who, because of more padding to their pocket books, have more income to divvy toward downtown dining. “For retailers, we expect continued growth from restaurants and food

users,” Hornaday says. “These users are currently 50 percent of the planned retail growth in the U.S.” While foodies with innovative and unique restaurant concepts will continue to capture infill opportunities in Downtown and Midtown Phoenix, there is still plenty more to offer. According to the Savills Studley

Roc Arnett

Curtis Hornaday

48 | January-February 2016

Chris Camacho

FLAGSTAFF

The wheels of commercial industry are turning in Northern Arizona. Vintage Partners has embarked on two sizeable commercial projects in Flagstaff: construction of a new Harkins multiplex and conversion of the old theater on Woodlands Village Boulevard. “Harkins is under construction and we’re in the early stages of a retail project near Country Club and the I-40,” says Michael Treadwell, partner at Village Partners, who adds that while commercial is predicted to do well in 2016, the areas biggest demand will be in residential. “Flagstaff wasn’t overbuilt like Maricopa County, and available land is limited. In turn, we’ll continue to see a need for affordable housing projects.”

William Jabjiniak

Report, Phoenix Metro has 165 buildings comprised of 25,000 square feet plus, and even more blocks under construction, many of which are grouped along Central Avenue. “We see Phoenix becoming an even more compelling place to do business,” Winne says, “and we look forward to being a part of it.”

Jackie Meck

Will Strong

40 COMPANIES TO WATCH

40 companies to watch in 2016

By ERIN DAVIS

xperts say Arizona has said goodbye to the recession and the commercial real estate industry can expect slow, steady growth in 2016. But it takes innovative companies with creative leaders to be catalysts to that growth. AZRE magazine casts a spotlight on 40 leadingedge companies â&#x20AC;&#x201D; in alphabetical order â&#x20AC;&#x201D; who will likely leave their marks on the commercial real estate industry in 2016.

50 | January-February 2016

PARTNERSHIP: Hayden House Tempe,

LLC, is a partnership between San Diego-based Douglas Wilson Companies and Hensel Phelps Development LLC, a subsidiary of Hensel Phelps. The team will develop One | Hundred | Mill on the corner of Mill Avenue and Rio Salado Parkway.

40 COMPANIES TO WATCH

FINANCING GROWTH: Enclave at the Borgata is just one of the projects financed by Alliance Bank.

ALLIANCE BANK OF ARIZONA: Alliance Bank has financed approximately $700 million in commercial real estate loans from 2013 to 2015. Enclave at the Borgata, SkySong IV and PRIII TCC, totaling $86.5 million, will all be noteworthy projects to watch. BANKERS TRUST: Last year was a record year for the Bankers Trust’s Phoenix Commercial Real Estate Division. Construction and mini-perm financing will be part of the focus for 2016, along with a few light industrial or office speculative projects. CATELLUS: As the ASU Athletic Facilities District’s master developer, Catellus is making a splash in Arizona with this 330-acre property by Sun Devil Stadium in Tempe.

52 | January-February 2016

CARDON DEVELOPMENT GROUP: Cardon is currently developing the $152 million Aspera, presently the largest development in the West Valley. Aspera will include Banner Health medical offices, Mountainside Fitness, a 120-unit senior housing complex, a specialized assisted living complex, retail, restaurants and luxury multifamily housing by P.B. Bell.

COTTONWOOD PROPERTIES: Cottonwood has several exciting projects in 2016, including the expansion of the Dove Mountain community to the West with new roads and new neighborhoods, building The Ritz-Carlton Residences at Dove Mountain and continuation of industrial development at Tangerine Commerce Park.

CBRE: At the end of 2015, CBRE rolled out its new “Build on Advantage” campaign, upping the ante in what it means to be a world-class real estate and business services firm. CBRE believes real estate sits at the heart of how people work, live and thrive. Metro Phoenix is poised to capitalize on an ever-diversifying economy in 2016 and CBRE understands its role in effecting positive, sustainable change for the Valley’s business communities through real estate.

COMMERCIAL PROPERTIES INC. As CPI celebrates 35 years of business in the Valley, it shows no signs of slowing down. With the addition of several hundred thousand square feet to their management portfolio, the management, development, construction and maintenance teams will soon be expanding into their own building. In 2016, CPI will actively recruit select brokers, property managers and professional maintenance personnel to keep up with market demand and growth.

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40 COMPANIES TO WATCH CUSHMAN & WAKEFIELD: Since DTZ purchased Cushman & Wakefield in a $2 billion transaction that created a real estate services giant, this powerhouse firm now offers a wider variety of services from a larger group of professionals. The two firms have shown they have complementary strengths across their service platforms that will likely create market share gains, analysts say.

DECO COMMUNITIES: One of the most anticipated Downtown Phoenix development projects of the year, the $40 million Edison Midtown, an urban contemporary midrise by Deco Communities, is expected to welcome its first residents by summer 2016 and the project is slated for completion by fall 2016. DE RITO PARTNERS: De Rito is currently developing 1.2 million square feet at The Pavilions at Talking Stick and has developed 20 first-class retail and auto properties totaling more than 5 million square feet throughout the Greater Phoenix area.

$40 MILLION PROJECT: â&#x20AC;&#x153;The Edison Midtown project taps into the

soul of the city, utilizing the unique identity of the neighborhood to create an authentically local living space that caters to the tech-savvy, community-oriented urban buyer that lives and breathes the city lifestyle,â&#x20AC;? said Rob Lyles, partner for Deco Communities.

54 | January-February 2016

MAJOR DEVELOPMENT: Douglas Allred company is working on Park Place II, part of a 150-acre mixed-use development in the Price Road corridor in Chandler.

DMB: Eastmark, DMB’s newest masterplanned community, recorded more than 500 homes sales in 2015, bringing the community’s total sales to more than 900 in just over two years. The community was recently ranked as one of the Top 10 fastest-selling master-planned communities in the nation by RCLCO. DOUGLAS ALLRED COMPANY: If building 650,000 square feet that is 100 percent leased in Chandler’s Price Road Corridor wasn’t enough, the Douglas Allred Company hopes to begin construction in the second quarter of 2016 on Park Place II, a 2 million-square-feet business campus, flanking both sides of Price Road with high-value employers.

EVERGREEN DEVELOPMENT: Evergreen Development recently broke ground on Litchfield Marketplace, a 20.9-acre retail development that developers expect will be complete by the third quarter of 2016. “Evergreen is not only investing in our community, but it’s investing in our people by creating jobs and opportunities,” said Thomas L. Schoaf, mayor of Litchfield Park. GENSLER: Going into 2016, Gensler’s studio is revving up in developer-led projects and new mixed-use opportunities with private sector clients. The company’s near completion of the ViaSat Office at the ASU Research Park in Tempe speaks to the continued growth in the science and technology markets. Gensler also is tied to several downtown and midtown projects within the City of Phoenix. 55

40 COMPANIES TO WATCH HABITAT METRO: Habitat Metro, the developers of the Portland Place condominiums and the adjacent Portland on the Park condominiums, is helping transform the former Lexington Hotel, located on the northwest corner of West Portland Street and North Central Avenue, into the FOUND:RE Phoenix, a one-of-akind lifestyle hotel experience with details, designs, public spaces and amenities inspired by contemporary art, culture, fashion and music. HARVARD INVESTMENTS: The company just completed an office building at Mesa Riverview that is the new headquarters for ATS (American Traffic Solutions). A master-planned community called Cadence will break ground in January 2016.

HAYDEN HOUSE TEMPE: In partnership with Douglas Wilson Companies and Hensel Phelps Development, Hayden House company signed a deal with Kimpton Hotel & Restaurants to manage a new, luxury boutique hotel at One | Hundred | Mill in Tempe. With a targeted opening date of late 2017, the Tempe Kimpton will feature 237 guest rooms and 12,000 square feet of indoor meeting space.

KIDDER MATHEWS: Kidder Mathews made a splash when it opened its Phoenix office in 2015 and hired 11 brokers plus marketing support staff, all with extensive careers and experience in the Phoenix market. Kidder has built its success on commission splits that are 20 percent more favorable to its brokers and the opportunity for every employee to become a shareholder.

HEALTHCARE TRUST OF AMERICA: HTA’s Arizona portfolio consists of primarily on-campus, multi-tenanted medical office buildings totaling more than 1.2 million rentable square feet from Sun City to Tucson and several other areas in the Valley.

KITCHELL DEVELOPMENT: Kitchell is one of the partners on “The Row” in Chandler, which is scheduled for construction this year. Sprawling across four acres on the southwest corner of Arizona Avenue and Chandler Boulevard, the pedestrian-friendly, 60,000-square-feet, two-story project will offer a variety of local and national dining and retail storefronts.

BUSY YEAR: In addition to being one of the partners on “The

Row” in Chandler, Kitchell is the general contractor on Phoenix Children’s Hospital’s latest project, which will include a $40 million emergency department and a Level 1 pediatric trauma center.

56 | January-February 2016

LAWRENCE & GEYSER DEVELOPMENT: Developer Jeff Geyser recently purchased a major retail center on the verge of redevelopment. Metro Marketplace features approximately 210,000 square feet of retail space on more than 15 acres of land and its new owner has big plans for redevelopment.

40 COMPANIES TO WATCH

AQUATIC UNDERTAKING: McCarthy

broke ground on the state-of-the art OdySea Aquariam in Scottsdale in March 2015.

LENNAR: July will mark the beginning of three new apartment developments in downtown Phoenix, Chandler and Tempe near Arizona State University. Perhaps the most anticipated of the three, The Muse, will include a 367-unit complex on the high-profile northwest corner of Central Avenue and McDowell Road. LGE DESIGN BUILD: LGE has an exciting lineup for 2016. Since bringing architecture in house less than two years ago, LGE has continued to try and perfect the design/build experience for its clients. The company’s current backlog is more than 50 projects totaling more than 2.5 million square feet and range from hospitality projects to large industrial projects. 58 | January-February 2016

MARK-TAYLOR: The first Mark-Taylor-developed rental community in Mesa in almost two decades, San Posada, is underway and the apartment homes are more than 25 percent larger than the average being built today. When completed, San Posada will have generated approximately $1.7 million in construction sales tax for the city, county and state. MCCARTHY BUILDING COMPANIES: Set to accommodate up to 15,000 visitors daily starting in July, the OdySea Aquarium in Scottsdale is a 14-acre attraction that spans more than 200,000 square feet and was built with no right angles. Also in 2016, McCarthy is launching an initiative in response to the decade-long decline of workers in construction. The apprenticeship program is designed to help students and workers with an interest in a career in construction gain real-life experience.

MCGOUGH CONSTRUCTION: In 2016, McGough Construction celebrates 60 years in business. In its Southwest Regional Office, located in Phoenix, McGough’s revenue more than doubled from 2014 to 2015. Growth in the Southwest Region has fueled key additions to McGough’s executive, administrative and field operations staff in 2015 and the company is expected to continue this trend into 2016. NEXMETRO COMMUNITIES: NexMetro, an innovator in creating non-traditional leased-living neighborhoods, is working on two Valley “hybrid” developments that incorporate the best of single-family and multi-family residential projects. NexMetro’s business model was prompted by studies that indicated that consumers — from Millennials to Baby Boomers — are increasingly searching for upscale living choices that don’t require a mortgage.

40 COMPANIES TO WATCH OLIVER MCMILLAN: In March, Oliver McMillan is opening SALT, a 265-unit Class-A multifamily project right next to Marina Heights along Tempe Town Lake. SALT is not only huge, but the concept is luxurious and the brand itself is bringing high fashion to Tempe real estate. OPUS GROUP: With the approval of its mixed-use project in Tempe in 2015 and other great projects coming out of the ground, the Opus re-entry into the market will be a fascinating story of resurgence and something to definitely look out for in 2016. PAPAGO PARK CENTER, INC.: Already in place for 2016 for Papago, is the canal relocation, with multi-use paths along the canal, which is set to be completed by mid-2016. Additionally, the company is set to be the master developer with deals done with Lincoln Property Company and Goldman Sachs for the upcoming year.

60 | January-February 2016

P.B. BELL: P.B. Bell, a leader in multifamily housing and real estate development, management and acquisitions, was awarded for its outstanding participation in Project Safe, an interactive and family-friendly safety awareness program supported by the Arizona Multihousing Association. PLAZA COMPANIES: Plaza Companies, which has worked with the Scottsdale ASU Innovation Center to grow the Valley’s tech economy, is expected to complete construction on SkySong 4 in 2016. The building was a necessity to keep up with market demand. The other three SkySong office buildings are now almost full with some of the Valley’s most exciting businesses.

RED DEVELOPMENT: RED Development and BIG Shopping Centers USA added five retail assets totaling nearly 1.5 million square feet — including three in Chandler — to their recently launched joint venture, BIG RED Portfolio, LLC. The partnership seeks to maximize market presence and performance of select U.S. retail properties in the Midwest and West. RYAN COMPANIES: 2016 is looking good for Ryan as it completes and occupies four of five office buildings at Marina Heights. Ryan is also looking to diversify its product mix moving forward and is excited to start construction on its first multifamily development in the Central Avenue corridor. Ryan is also breaking ground on new office build-tosuit in north Phoenix.

MIXED-USE DEVELOPMENT: The Grand at Papago Park will feature 3.187

million square feet of mixed-use development with access to two light-rail stations and additional convenient transportation options.

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40 COMPANIES TO WATCH

SAVILLS STUDLEY: Within six months of opening its doors in Phoenix in 2015, Savills Studley tripled its headcount and closed more than 30 deals totaling more than 500,000 square feet for clients including Santandar Consumer USA and Liberty Mutual. SIMONCRE: SimonCRE currently has more than 50 projects in the pipeline valued at more than $100 million, creating thousands of jobs across the country with seven projects currently under construction in three states. The projected total transactional volume will surpass $140 million in 2016. SMITHGROUPJJR: It will be a busy year for SmithGroup as the designated architects/designers for Northern Trust in Tempe (off the 101 and Elliott), as well as ongoing adaptive reuse projects with Mountain Park Health Center and collaborative work on Phoenix Sky Harbor Terminal 3 with Corgan, DWL and Hunt/Austin. 62 | January-February 2016

ONE OF MANY PROJECTS: Northern Trust will be one of many projects that Smithgroup JJR will be working on in 2016.

SUNBELT HOLDINGS: Sunbelt is a powerhouse with three major projects spread throughout the Valley: The PV 303, with its 1,600-acre master-planned business park and industrial space; La Estancia residential community in Tucson; and the 14-story condominium tower, Portland on the Park, in downtown Phoenix. SUNDT CONSTRUCTION: Sundt has some major ambitions moving into 2016, with projects to keep Arizona hydrated, powered up and moving. Sundt will launch construction of three major water treatment projects and at least one major power upgrade project. Sundt will also be working on several transportation infrastructure projects, ranging from continued light-rail expansion to strategic upgrades to roads and bridges.

THE WEITZ COMPANY: Weitz is entering the new year with the appointment of Chris Harrison as executive vice president and general manager of its Phoenix office. With more than 28 years of Weitz experience, Harrison has a proven record of developing high-performing construction teams and has a focus on customer advocacy. VIAWEST GROUP: ViaWest has a number of potential industrial development opportunities on the horizon for 2016, including the AZ 202 Commerce Park. Additionally, ViaWest will be repositioning and enhancing signature Class A office projects recently purchased, including the Biltmore Financial Center, Nexus at ASU Research Park and Raintree Corporate Center.

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