AZRE January/February 2020 by AZ Big Media

JANUARY-FEBRUARY 2020

ANNUAL OUTLOOK

American Express Canyon Building at Desert Ridge

General Contractor: Layton Construction Architect: RSP Architects

INSIDE:

Companies to Watch p. 34 | NexGen p. 46 | BOMA p. 58

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All systems go in 2020

ith the way 2019 finished, there is a lot of work to be done if 2020 is going to measure up. The year closed with an opening. The $1.7 billion Congressman Ed Pastor Freeway (also known as the new Loop 202 South Mountain Freeway) was finished in December and the 22-mile stretch of freeway began bridging the divide between the Southeast Valley and the West Valley. The new freeway is already kick-starting new development in southwest Phoenix, and that development is expected to spread up and down the corridor. That project was the biggest one in state history and will do wonders to ease traffic congestion along the I-10 corridor through central Phoenix. It will also provide valuable arteries to the west and east for logistics companies moving goods into and out of the Phoenix market. The Valley also saw the completion of major projects like Block 23 in downtown Phoenix, the Grand 2 in Tempe and the new Northrop Grumman Launch Vehicles Division Headquarters in Chandler. The Valley also saw its first indoor water park and resort hotel open in 2019, with the arrival of the Great Wolf Lodge in Scottsdale. Major developments we’ll be tracking in 2020 include the continued transformation of Park Central, with the Creighton University Health Sciences facility, the 275-unit Millennium at Park Central multifamily project and the largest parking structure in Arizona all in the construction phase as the calendar turns to 2020. We’ll see the start of 4.5 million square feet of industrial building at the Park303 development along Loop 303 in Glendale, and along the new Ed Pastor Freeway, SM202 Commerce Park will open its first building, a 700,000 square foot spec industrial product. Also, we’ll watch in north Phoenix as the new American Express campus is completed and work on the Mayo Clinic expansion continues. Throw in all of the new developments surrounding Arizona State University in Tempe and Grand Canyon University in Phoenix, and 2020 is already well on its way to being another bright year for economic development.

Steve Burks Associate editor, AZRE steve.burks@azbigmedia.com

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President and CEO: Michael Atkinson Publisher: Josh Schimmels Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editors: Steve Burks | Alyssa Tufts Interns: Angelica Olivas Contributing writers: Michael Jansen | Tim Lawless Courtney LeVinus | Suzanne Kinney ART Art director: Mike Mertes Design director: Bruce Andersen MARKETING/EVENTS Digital strategy manager: Gloria Del Grosso Marketing designer: Michael Bodnar OFFICE Special projects manager: Sara Fregapane Executive assistant: Briana Villa Database solutions manager: Amanda Bruno AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Ann McSherry Director of business development: Carol Shepard AZ BUSINESS MAGAZINE Senior account manager: David Harken Account managers: April Rice AZ BUSINESS ANGELS AZ BUSINESS LEADERS Director of sales: Sheri Brown HOME & DESIGN EXPERIENCE ARIZONA | PLAY BALL Director of sales: Jennifer Swanton RANKING ARIZONA Director of sales: Sheri King

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. ©2020 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.

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CONTENTS

FEATURES 2 Editorâ&#x20AC;&#x2122;s Letter 6 Trendsetters 10 Executive Profile 12 After Hours 14 New to Market 16 Big Deals

20 Legislative Update

24 Annual Update

32 Zoning and Land Use Law 34 Companies to Watch

46 NexGen

52 East Valley Retail

56 West Valley Focus

58 BOMA

65 Build Your Future Workforce

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American Express Canyon Building at Desert Ridge 4 | January-February 2020

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TRENDSETTERS George Oliver to begin reshaping downtown Chandler in 2020

Phoenix-based developer George Oliver is investing more than $52 million in downtown Chandler. George Oliver completed a $38.8 million, two-building acquisition and will invest an additional $14 million in capital to bring a new creative office portfolio to the heart of Chandler. The two buildings will be Rebranded to The Alexander and The Johnathan, named after Chandler namesake Alexander Johnathan (A.J.) Chandler. “There is a tremendous energy in downtown Chandler right now – from new tech growth and new multifamily development to its collection of experiential, highly walkable amenities,” said Curt Kremer, George Oliver Founder and Managing Partner. “We are hopeful that our new concepts, The Alexander and The Johnathan, will thrive in this kind of environment, continuing our mission of delivering highly functional office spaces with a best-in-class amenity package.” “Downtown Chandler continues to expand and diversify and the news of this investment to modernize the largest office portfolio in our downtown couldn’t come at a better time,” said Chandler Mayor Kevin Hartke. “We’re grateful for George Oliver’s commitment to downtown Chandler’s future and their tribute to our city’s history.” The Alexander will commence a $5 million shell building transformation in the first quarter of 2020, creating a 112,000-square6 | January-February 2020

foot, five story modernized office building at 25 S. Arizona Pl. George Oliver purchased the 1987-built Plaza 25 from long-time owner and tenant First Credit Union for $16.3 million. Curt Kremer The renovations will improve the building from Class B to premier Class A modernized office space, enclosing a current ground floor plaza and adding shared spaces and a health-and-wellness-inspired amenity package. George Oliver has also purchased the adjacent, 107,510-square-foot, fully occupied Chandler City Center building for $22.5 million from Tryperion Partners and Griffin Partners. Located at 55 N. Arizona Pl., this building will be rebranded by George Oliver as The Johnathan with an almost $3 million initial capital investment plan. The design and architecture for The Alexander and The Johnathan are being led by George Oliver Design. RSG Builders is the general contractor. Western Alliance Bank is the project lender. Ryan Timpani and Todd Noel of Colliers are the exclusive leasing brokers for The Alexander. Andrew Cheney and Colton Trauter at Lee & Associates are the exclusive leasing brokers for The Johnathan.

Xero Studio

Studio Ma has always been a design innovator, so it’s no surprise that the awardwinning architecture and environmental design firm pushed the limits on their Phoenix headquarters. The company transformed an old dental clinic at 4035 E. Indian School Rd. in Phoenix into a zero-water, zero-energy facility that they dubbed, “Xero Studio.” Studio Ma founder Christiana Moss says, it’s “renegenerative, bioclimatic architecture” proving her company’s premise that any company can have an inspiring and eco-conscious headquarters. Newly unveiled, Studio Ma’s modern and stylish office building dubbed is drawing attention as much for its handsome wood slats and uniquely contemporary Phoenix image as for its impressive environmental performance. According to Moss, who was named one of four 2019 national jurors for the American Institute of Architects (AIA) prestigious green-building awards, their new office reuses existing materials, requires net-zero energy and water and encourages staff to walk or bike to work — unusual when everyone drives and hides from the sun half the year. A new black-water recycling system is being installed under the parking lot, taking them totally off the grid. “We believe in buildings that regenerate,” says Moss. “To prove it works, we decided to build our own office. And we held ourselves to the same high standards we ask of our clients.” The original structure was wrapped in a continuous layer of insulation and reclad with a scrim of sturdy cedar fins on three sides to reduce heat gain and glare from the sun. Large windows on the east and west sides, set a few feet behind the fin walls, reveal plantings by the main entrance. Studio Ma staff enjoy natural ventilation and daylight.

WESTWOOD’S IREM names leadership team

GREENHAGEN EARNS LEADERSHIP AWARD

Westwood Professional Services, Inc. President and CEO Paul Greenhagen, PS, was awarded the prestigious 2019 Jerry Allen Courage in Leadership (CIL) Award at Zweig Group’s national Elevate AEC Conference in October in Las Vegas, Nevada. The Jerry Allen Courage in Leadership Award is given annually to one individual working in the architecture, engineering, planning, or environmental industry who has made a tremendous impact on their firm through courageous leadership. Greenhagen, the principal-in-charge of Westwood’s Phoenix office, is a professional land surveyor and was appointed Westwood’s CEO and president in 2010. The multi-discipline surveying and engineering firm is headquartered in Minneapolis and has grown to operate 12 offices throughout the US under Greenhagen’s leadership. “One of the things I admire and appreciate about Paul is his humility as a leader,” said Bryan Powell, PE, Westwood’s senior vice president. “He acknowledges that he does not have all the answers to every question, challenge, or problem we face. But he has enough confidence as a leader that he will surround himself with other strong leaders.” Overseeing the firm’s Land Division, Powell leads Westwood’s national public infrastructure and private development businesses. At the Zweig Group event, Westwood also received high recognition in multiple categories including Hot Firms, Best Firm to Work For, Marketing Excellence, and Trifecta awards.

The Greater Phoenix Chapter of the Institute of Real Estate Management (IREM), an international community of real estate managers dedicated to ethical business practices, will charge into 2020 with new leadership and council members. Rosalinda Moehn, CPM, with NLR Management/Haan Development, will serve as president. The leadership team includes Tyrel Williams, CPM, MEB Commercial Management Group, president-elect; Brent Penrod, CPM, Eisenberg Company, treasurer/secretary; and Melissa Boyle, CPM, bkm Management Company, past president. The 2020 council comprises Tom Coughlin, CPM, Everest Commercial Services; Libby Ekre, CPM, MEB Commercial Management Group; Debra Hill-Fox, CPM, ARM, ASKDEBFOX.com; Kristin Gibbons, CPM, Lillibridge Healthcare Services; Genna Goldberg, CPM, The Muller Company, AMO; Lauren Lacasse, CPM, Lincoln Property Company; Donna Olcavage, CPM, NaPali Management Inc.; Karlene Politi, CPM, OPTIM

NKF duo earn coveted MCR designation Kathleen Morgan and Trisha Talbot have accomplished a great deal in their careers, much of it together. The two are both managing directors at Newmark Knight Frank and together have become the top Medical Office Brokerage firm according to AZ Big Media’s Ranking Arizona. Combined, Morgan and Talbot have more than 38 years of experience as leaders in Arizona medical and healthcare real estate investment solutions. Both have earned the Certified Commercial Investment Member (CCIM) designation during their careers, and now, both can add the MCR or Master

Property Solutions, Inc., AMO; Eduardo Ugaide, CPM, ARM, MEB; Ed Valerio, CPM, Knight Management, AMO; and Kelsie Whipple, CPM, ACoM Lillibridge Healthcare Services. “2020 should be an exciting yet challenging year for the real estate industry, which is just one reason why I am grateful and humbled to be the IREM Greater Phoenix Chapter President,” Moehn said. “With all of the unknowns looming ahead, I know that I am surrounded by an incredible executive team who are the best in the business.” of Corporate Real Estate, designation to their resume. Morgan and Talbot were both awarded the MCR designation, one of commercial real estate’s most prestigious, by CoreNet Global, the world’s leading association for CRE executives. The CoreNet Global MCR professional designation was established in 1982 and is part of a comprehensive career development program for the corporate real estate industry, which includes more than 100 hours of classroom training, two elective seminars and a Capstone experience, and a rigorous assessment, all within a five year period. The MCR, awarded to over 2,500 individuals since its inception, delivers essential skills focused on critical business issues, and reflects strategic competence and successful experience as a corporate real estate specialist.

TRENDSETTERS Sedona hotel the first of its kind in North America Ambiente, A Landscape Hotel, is currently under construction in Sedona. North America’s first “landscape hotel” is the work of developer Two Sister Bosses. “The focus of a landscape hotel from an architectural standpoint is to allow the natural surroundings to speak for themselves,” said Jennifer May, co-owner of Two Sister Bosses. “The challenge at hand is how we are going to do this in the most efficient way possible with as little development as possible.” The highly anticipated hotel features 40 cube-shaped, luxury guest Atriums elevated above the ground by steel piers and encased in bronze glass to give the appearance that the structures are floating. Ambiente is in line with the philosophy and

Phoenix among top targets for net-lease investments Phoenix found itself among the leading target markets for investors looking for net-lease opportunities in 2019, according to the latest research from CBRE. Phoenix was among the top-5 markets for net-lease investment in Q3 2019 with total volume of $863 million — up 39.2% yearover-year. For the year-ending Q3 2019, netlease investment in Phoenix totaled $1.77 billion — up 8.9% year-over-year.

8 | January-February 2020

3 design principles similar to the handful of landscape hotels that exist around the world, which are built with a deep respect for the environment, focusing on sustainable methods and organic, modern architecture that complement the surrounding topography. Ambiente will begin taking reservations in September 2020 for December 2020 stays. To register to be among the first to receive information about the hotel, visit AmbienteSedona.com.

“Investor demand for single-tenant net-lease assets in Arizona and nationally continues to grow exponentially,” said Joe Compagno, senior vice president of CBRE’s Net Lease Property Group Phoenix. “In an environment where yield is scarce among other asset classes, investors are competing for real estate properties with long-term leases to publicly traded companies that offer a more compelling risk-adjusted rate of return.” Total net-lease investment in the U.S. — comprising office, industrial and retail properties — increased by 30.2% yearover-year to $20.9 billion in Q3 2019, the third-highest quarterly total on record.

Golden Paddle rd awarded

Mother Nature did her best to derail the 3rd annual Great 8 Ping Pong Golden Paddle Grand Finale Tournament in November, but the event turned out to be the best one yet. The father-son duo of Brandon Stringfellow and Mike Stringfellow, both part of the Chasse Building Team, faced off in the finals, with son Brandon coming away with the Golden Paddle trophy. The event, held on a rainy afternoon at Angels Trumpet Alehouse — Arcadia, was a fitting close to the Great 8’s third year, with a large crowd in attendance. The Great 8 holds ping pong mixers throughout the year at individual general contractors. At these mixers, two players earn their way to the Grand Finale Tournament, which is a large networking event for the players and their fellow team members who come for support. This year, the 12 general contractors who took part in the ping pong mixers are: Whiting Turner, JE Dunn, Wespac, Weitz, Okland, Ryan Companies, Chasse Building Team, Sundt, Kitchell, Willmeng, Katerra and Hensel Phelps (Skytrain Jobsite Team). The Great 8 ping pong group formed in 2017 and was the brainchild of Hannah Sanders, who handles business development for AME Landscapes. Other members of the organizing group are, Kevin Somerville, V.P. of business development for Buesing Corp.; Brad Hoeder, business development manager for Climatec; Sarah Whitman, design consultant for Facings of America; Denise Allen, director of business development for Solutions AEC; Matt Clist, project consultant for Immedia Integrated Technologies; Rachel Reindl, business development with Restoration HQ; and Alan Erickson, PE, business development manager for TPAC.

Healthcare construction hotspot Healthcare construction is at an all-time high in Phoenix and the city is seeing activity that puts it among the nation’s leaders in healthcare facility construction. According to the Phoenix Community and Economic Development office, there is more than $3 billion in primary bioscience healthcare facilities in the pipeline for construction within the next two years in Phoenix. More than a third of that is already under construction. This boom will create 7,000 new jobs paying an average of $70,000 in wages. That’s a new $500 million payroll in the city of Phoenix alone. There are over 4.1 million square feet planned. That’s just in the City of Phoenix, and only includes primary bioscience healthcare facilities — hospitals, research facilities, medical schools, and surgical centers. It doesn’t count retail healthcare — medical office buildings, doctor offices, clinics and urgent care. According to a Globe St. report, in Texas, 4.4 million square feet of primary and retail healthcare facilities were developed in the

last year. Phoenix alone is nearly hitting those numbers. The Houston Chronicle reported that Houston (the top healthcare market in the U.S.) took over five years to bring $1.5 billion in primary and retail healthcare facilities online. In Phoenix alone, there is more than that under construction right now. The bioscience healthcare employment sector has not had a drop in employment since 2007. Bioscience healthcare employment topped 282,000 in its October 2019 workforce compared to 138,000 in construction. In July 2007, the highest employment month before the Great Recession, construction had 174,200 in its workforce; the bioscience healthcare workforce was 175,700. One of the most important bioscience healthcare developments under construction right now is the Wexford Science + Technology’s 850 North building in the

YOUNG TRADESPEOPLE MAKE MOST OF INTERNSHIPS

promotion, and now works on a high-profile healthcare project. According to the Association of General Contractors, 79 percent of companies want to hire more employees, but the industry expects to grow its workforce by just .5 percent. Those statistics – especially in a competitive market like Arizona – mean internship programs, recruitment and experiences play a critical role in finding and luring talent. And the competition for that talent is stiff. Companies like Kitchell recruit collegiately year-round from well-known construction management programs at Arizona’s three universities, as well as from Colorado State University, BYU-Idaho, Purdue Southern Utah, University of Nevada-Reno and many California schools. The program focuses on developing a future corps of building professionals who are dedicated to staying for the long term, because of the experiences they gain and the connections they make. The work usually encompasses being on a project, which may or may not include tasks that seem mundane, but present learning opportunities. Current intern Shandiin Yessilth is thrilled with the way she has been able to see her project – the Fort McDowell Casino – come to life. She has big plans to apply her learnings

Summer internships are turning into a fast track for many young people entering the construction industry. Kitchell Project Engineer Jacob Johnson was going down the academic path of a civil engineer at Northern Arizona Univeristy until he realized design work wasn’t really what he was looking for in a career. “When faced with a decision of sitting behind a desk for eight to 10 hours a day versus being with the builders in a hands-on and boots-on-the-ground experience, that made the difference,” Johnson said. After talking to his counselor, Johnson switched his major to construction management and landed an internship with Kitchell subsidiary hardison/downey, which was then building the NAU Honors College. His experience with that project, as well as the way the team felt like family, led him to a full-time position with Kitchell after graduation. He has already seen one

Wexford Science + Technology's Phoenix Biomedical Campus Phoenix Biomedical Campus. 850 North is the first 230,000 square feet of a 1 millionsquare-foot expansion at PBC with a focus on lab-ready facilities. The project is the first of its kind in the Western U.S. Phase I is nearly completely leased, and delivery is late 2020 or early 2021.

and experiences to the Navajo Nation and give back to her community by getting involved in building and development there in the future. “Seeing us engage with the tribal community was really cool – and getting to sign my name on the beam means I’m forever part of that project,” she said.

Kitchell intern Shandiin Yessilth signed her name to the final beam to be placed at the Fort McDowell Casino during her work on the project. (Photo courtesy of Kitchell) 9

EXECUTIVE PROFILE

The Right Stuff By STEVE BURKS

ne of the few regrets that Pat Edwards has as he reflects on his career is that he didn’t find his way to his current employer sooner. “When I was being recruited to this position, if I would have known how wonderful it was going to be, I probably would have fouled up the interview process with excitement,” said Edwards, who has been serving as vice president and general manager for the Arizona regional offices of Burns & McDonnell for eight years. “My only regret is that I didn’t land at this firm 20 years ago. Sometimes you have to sail through rough waters to get to where you want to be.” Edwards has definitely found just where he wants to be with Burns & McDonnell, a full-service engineering, architecture and construction firm based in Kansas City, Mo., with 11 regional offices managing 70 locations and more than 7,000 employees throughout the country and, increasingly, around the world. Edwards leads offices in a threestate region with a primary office in Phoenix, which is home to more than 120 employee-owners. Edwards had more than 25 years of engineering and architecture experience with three different firms

10 | January-February 2020

during his pre-Burns & McDonnell career. He began his career designing airports in the Pacific Rim, which gave him a chance to travel the world as a young professional. He and his wife lived and started their family in Hawaii before being asked to move to Phoenix when he was 30 years old. He climbed up the ranks but saw no window into company ownership, something he had always seen as an important aspect of what he wanted to accomplish. Eventually, he landed at Burns & McDonnell, an employee-owned firm, and has never looked back. “Being at Burns & McDonnell has given me a tremendous foundation for my leadership values and my belief in how people in this position should operate,” Edwards said. “It’s given me clarity that has guided the rest of my life. It’s changed my life and my family’s life for the best and we’re grateful to be here.” Edwards, who grew up in rural Nebraska and graduated from the University of Nebraska-Lincoln, sees himself as a simple-thinking person and attributes that trait to his longevity in the industry. “What we do is very, very complex. How we do it doesn’t need to be,” Edwards said. “I’ve found that the vast

majority of challenges really come down to just a few issues. Most of the time you can unwind a problem and focus on those root challenges. The rest is generally just noise.” The Phoenix office of Burns & McDonnell is a national leader in traditional and renewable energy engineering and construction, a field that has enjoyed tremendous growth here in the Southwest, as well as across the country. Solar, wind and hydro electrical generation, distribution and transmission have proven to be key facets of the Burns & McDonnell operations in the region. In recent years, he’s expanded services to become a leader in manufacturing, aerospace and microelectronics. Recently, the team celebrated an office expansion in Tucson, where the firm is focused on industrial mining, higher education and mission-critical facility projects. In the future, Edwards wants to add general contracting and project development to his regional offerings, something Burns & McDonnell does in other markets. “As an employee-owned company, growth is a byproduct of what we do. It is not an objective,” Edwards said. “If we are really, really great at making our clients successful, we’ll grow as a byproduct.” For Edwards, any growth means more opportunities for the company’s employee-owners. In his region, Edwards estimates that there are only a handful of employee-owners that he didn’t play a key role in hiring. He may spend 10 minutes or a couple hours with candidates during the hiring process, but he makes sure they have the attributes that will allow them to succeed at Burns & McDonnell. “I look for talented people who are good people,” Edwards said. “You do have to be talented, no question. That is the first checkpoint that you have to pass through “But the second checkpoint, which is far more difficult, is you have to be a good person. You have to be the type of person that if you’re driving down the highway and see someone pulled off the road with a flat tire, your first instinct is to help them. If that isn’t who you are, this isn’t the right spot.”

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AFTER HOURS

Gather and mingle By ALYSSA TUFTS

ather and mingle When it comes to networking, there are usually two attitudes: enthusiasm or uneasiness. But, some organizations strive to make networking a more relaxed experience without some of the regular parameters. One of those organizations is CRENAB (Commercial Real Estate Network and Beer), a casual networking group that has been around for 20 years. Joseph McGovern, managing principal of The McGovern Group, LLC, an environmental consulting firm, heads up the organization. “Two broker friends of mine formed CRENAB 20 years ago and were saying, ‘A lot of these associations are dominated by big companies and it’s really not geared for smaller companies. Why don’t we start a group that just gets together without the organization and administration part?’ So they formed CRENAB and a few years into it I took the reins to lead it,” McGovern said. “It’s a very fun, friendly and humble way to network,” he said. “There’s no cost, no RSVPs, no nametags, it’s very casual. About 150 people attend our monthly meetings.” CRENAB also hosts an annual Golf Gala, and will be hosting their 7th Ever CRENAB Golf Gala in April 2020 which will benefit Envision Therapeutic Horsemanship. McGovern and Sue Sylvester, vice president of business development for Caruso Construction, co-founded the Phoenix Chapter of the Business Development Guild (BDG), which was established in 2015. “It’s basically a trade group for the business development profession,” he said. As Business Development (BD) and Operations can find themselves at odds, McGovern said BDG aims to bridge the gap between BD and Operations teams through education, collaboration and training.

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The BDG holds bi-monthly meetings for its 70 members; its primary membership and audience are those who work in the architect, engineering and construction Joseph McGovern industries. “It’s an educational professional development group, so we have panel and roundtable discussions on best practices on unique topics for BD and operations that will help them understand and respect each other better and from there you can be a better team moving forward. BDG is an opportunity for continuous learning and interaction with other BD and operation professionals.” The organization also hosts an annual signature event in November called the Business Development and Strategy Symposium, he said, where they discuss high level topics that impact BD and operations.

BDG has a Certified Business Developer (CBD) curriculum in partnership with ASU’s Fulton Schools of Engineering which is taught by practicing industry professionals over a six month period, and earn the CBD designation upon completion, he said. “It enhances their business acumen, strategic planning, budgeting and identifying internal and external strengths. It’s an opportunity to get advanced training and gain knowledge to take back to an organization and the marketplace.” One of BDG’s goals is to add new chapters; BDG already has a Southern California Chapter. “We’ll be formalizing the Southern California chapter in 2020, we’re also looking at Denver as a new market in 2020. We also want to be the premier source for education, training and development. We’re looking into having business development incorporated into college curriculum, so it’s taught at the university level and have it be recognized by the federal government as a profession.” Visit businessdevelopmentguild.com and crenab.com to learn more.

NEW TO MARKET A

MIXED-USE A EPICENTER AT AGRITOPIA DEVELOPER: Johnston & Co. and Streetlights Residential ARCHITECT: LRK BROKERAGES: Newmark Knight Frank and Thompson Thrift LOCATION: 3000 E. Ray Road, Gilbert SIZE: 360 multifamily units/49,000 SF of retail VALUE: WND START/COMPLETE: September 2019/ September 2021

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INDUSTRIAL B PARK303, PHASE I DEVELOPERS: Lincoln Property Company and Ken Roth/Roth Development Company ARCHITECT: Butler Design Group LOCATION: Loop 303 and Glendale Avenue, Glendale SIZE: 1.25 million SF VALUE: $115 million START/COMPLETE: January 2020/ September 2020

INDUSTRIAL C PARK ALDEA DEVELOPER: Trammell Crow Company and CBRE Global Investors GENERAL CONTRACTOR: Haydon Contracting ARCHITECT: Butler Design Group BROKERAGE: CBRE LOCATION: 99th Ave. and Cardinals Way, Glendale SIZE: 356,000 SF VALUE: WND START/COMPLETE: September 2019/ Q2 2020

MULTIFAMILY D GRAMERCY SCOTTSDALE DEVELOPER: High Street Residential (a subsidiary of Trammell Crow Company) and Principal Real Estate Investors GENERAL CONTRACTOR: Wespac Construction ARCHITECT: ESG Architects LOCATION: Scottsdale Rd. and Camelback Rd., Scottsdale SIZE: 160 units VALUE: WND START/COMPLETE: October 2019/Q2 2021

MIXED-USE E SKYBRIDGE ARIZONA PHASE 1 DEVELOPER: Skybridge GENERAL CONTRACTOR: Graycor Construction Company ARCHITECT: ADM Group BROKERAGE: CBRE LOCATION: E. Velocity Way and S. Downwind Circle, Mesa (Phoenix Mesa Gateway Airport) SIZE: 142,500 SF VALUE: WND START/COMPLETE: Q4 2019/Q4 2020

MULTIFAMILY F SOLTRA AT SANTAN VILLAGE DEVELOPER: Leon Capital Group GENERAL CONTRACTOR: McShane Construction Company ARCHITECT: Todd & Associates LOCATION: Ray Rd. and Santan Village Parkway, Gilbert SIZE: 380 units VALUE: WND START/COMPLETE: October 2019/ September 2021

Park303 grows up fast Lincoln Property Company has plans for 4.5 million SF of industrial space in Glendale development By STEVE BURKS

n the fast-paced world of development here in the Valley of the Sun, it’s a huge advantage to be fast, and to be first. Lincoln Property Company, fresh off a year in 2018 where it was named NAIOP Arizona’s Owner and Developer of the Year, found itself as the first developer in the new Park303 development along the Loop 303 in Glendale. The company closed on a 71.5 acre parcel of land in Park303 for $11.7 million in September. LPC worked behind the scenes to secure the Planned Area Development (PAD) and help the City of Glendale with their annexation process. “It’s kind of like anything, we had an idea and came across that first parcel and thought it was a great location,” said LPC’s executive vice president David Krumwiede. Right as the pieces were falling into place to put more than 1 million square feet of industrial product on that initial 71.5 acres, another opportunity arose that would change just how big of an idea Park303 could be for LPC. “The property to the north became available during the process of getting our first parcel ready to go, and we really liked that site, and we got to know it,” said Krumwiede. “The things that have held properties back over time are infrastructure, and also the PAD and annexation. We had solved it for the first piece of property and said we had a clear path to get to the additional land, so we took it.” Forming a joint venture with Ken Roth and the Roth Development Corporation and Scottsdale Investment Management LLC, LPC purchased the 196 acres of land next to their original parcel in October, bringing their total to 265 acres.

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From right, Phoenix Mayor Kate Gallego, Tempe Mayor Mark Mitchell, Arizona Governor Doug Ducey and ADOT Director John Halikowski put their autographs on a commemorative sign during an event to open the new Congressman Ed Pastor Freeway (Loop 202 South Mountain). (Photo courtesy of Arizona Governor’s office)

With the additional land, the joint venture industrial park will span approximately one full mile along the Loop 303 between Bethany Home Road and Glendale Avenue, with the ability to support almost 4.5 million square feet of new industrial construction. “Our company is continually looking for great sites to acquire. The Loop 303 corridor rises to that level of excellence as one of the best investment opportunities in the region and an exceptional place for forward-looking businesses to locate and grow their brands,” said Tim Grant, partner with Scottsdale Investment Management. “Park303 will serve as a best-in-class business environment within that space. We look forward to working with Lincoln Property Company and Roth Development in developing this property to its highest and best use.” LPC and its partners, along with the City of Glendale, see tremendous economic potential in the Park303 site. The park sits within Glendale’s New Frontier District, an area along the Loop 303 designated by the City of Glendale for significant economic development. It is also one mile from the Northern Parkway, a new 12.5 mile, high-capacity roadway providing rapid connection between the Loop 303 and US 60/Grand Avenue. With this connection, users at Park303 can avoid common rush hour traffic delays on Interstate 10, helping them to meet critical morning and evening delivery requirements. “The way it’s laid out, there are actually four, 70 acre parcels that are very similar, and they run east and west, which is great for industrial, because with an industrial building what you don’t want to have, generally, is west facing docks,” said Krumwiede. “So having the buildings lay out east to west is fantastic and it has a mile of

freeway frontage. Users love to have freeway exposure, especially retail and e-commerce users. You see those buildings along the freeway and it’s basically free advertising.” Phase I of Park303 will be a $115 million, Class A industrial development that will feature two buildings, one at 705,531 square feet and the second at 488,995 square feet. Krumwiede said he expects to break ground on the first two buildings in January and deliver approximately nine months later. The plan for the first two buildings is for them to be speculative products. Butler Design Group is the project architect for the first two buildings at Park303 Industrial Park and Hunter Engineering is the civil engineer. Krumwiede said the LPC is actively talking to potential tenants, both for the initial spec buildings, but build-tosuit users for future phases. The unique nature of having four, nearly identical parcels of land gives LPC a lot of flexibility on the size of buildings they do on the site. They can do two buildings, like on the first parcel, on each piece of land, or go with one large, 1.25 million square foot building on that property. Krumwiede said he is actively seeking out potential users who are looking for new buildings in one of the hottest industrial areas in the western United States. “On our spec buildings, when we lease them, we’ll go with another one,” Krumwiede said. “And then we’ll move on to the build-to-suit. For build-to-suit users, that assurity of process, procedure and execution is incredibly important. The last thing a user wants is to focus on a site and then it’s non-deliverable, for whatever reason, whether it’s infrastructure, entitlements, ect., they need to know it’s deliverable.”

New Loop 202 ready to roll

t’s the biggest project in Arizona history and it could not have come at a better time. The $1.7 billion Loop 202 South Mountain Freeway project was opened with a celebration on December 18 (three years earlier than initial plans) with dignitaries like Governor Doug Ducey. This 22-mile segment of the Loop 202 freeway was recently designated the Congressman Ed Pastor Freeway, and family members of Congressman Pastor were in attendance for the opening. “Decades in the making, this opening marks a historic achievement for Arizona,” Governor Ducey said. “This new highway – the largest highway project in state history – represents Arizona’s continued commitment to 21st century infrastructure that will enable our state’s growth for generations to come.” The largest single freeway project in Arizona history, the South Mountain Freeway is the first freeway in Arizona built using a public-private partnership, or P3, that combines the design, construction and maintenance into a single contract. The unique approach allowed the freeway to be opened three years earlier than if it had been built using traditional bidding, with a cost savings of more than $100 million. The freeway will connect Interstate 10 from the Loop 202 Santan Freeway in the East Valley to I-10 at 59th Avenue in the West Valley, providing a direct route for drivers to avoid travel through downtown Phoenix. It is projected to carry about 117,000 vehicles per day in its first year. 17

MULTIFAMILY/SALES

$84M | 461,904 SF

ARCHES AT HIDDEN CREEK 1586 W. Maggio Way, Chandler BUYER: The Blackstone Group LP SELLER: Security Properties, Inc. BROKER: CBRE

$75M | 402,726 SF

$63.5M | 331,876 SF

$65.25M | 314,171 SF

$61.5M | 264,207 SF

OXFORD APARTMENTS 3777 E. McDowell Rd., Phoenix BUYER: Knightvest Management SELLER: Brunton Management Company BROKER: N/a

PEAK 165151 N. 16th St., Phoenix BUYER: Virtu Investments SELLER: VanTrust Real Estate LLC BROKER: Cushman & Wakefield

ZONE APARTMENTS 7455 N. 95th Ave., Glendale BUYER: Sunroad Holding Corporation SELLER: Pillar Communities BROKER: CBRE

SENITA ON CAVE CREEK 23555 N. Desert Peak Pky., Phoenix BUYER: Capital Real Estate SELLER: D.R. Horton, Inc. BROKER: N/A

RETAIL/SALES

$17.776M | 70,290 SF

THE SHOPS AT NORTERRA 2350-2370 W. Happy Valley Rd., Phoenix BUYER: YAM Properties SELLER: RED Development LLC BROKER: N/A

$16.755M | 86,895 SF

LAKEVIEW VILLAGE AT MORRISON RANCH 67-179 S. Higley Rd., Gilbert BUYER: JFRCO LLC SELLER: Bestar BROKER: Cushman & Wakefield

$15.705M | 63,663 SF

THE SHOPS AT NORTERRA 2550 W. Happy Valley Rd., Phoenix BUYER: YAM Properties SELLER: RED Development LLC BROKER: N/A 18 | January-February 2020

$14.125M | 64,071 SF

MACAYOâ&#x20AC;&#x2122;S PLAZA 15557-15609 W. Bell Rd., Phoenix BUYER: Rajan Rakheja & Hekmat Alphin SELLER: Boarder Capital BROKER: Cushman & Wakefield

$9.922M | 30,163 SF

THE SHOPS AT NORTERRA 2450 W. Happy Valley Rd., Phoenix BUYER: YAM Properties SELLER: RED Development LLC BROKER: N/A

Itâ&#x20AC;&#x2122;s the big deals and the brokers who close them that make the market an interesting one to watch. Here are the top notable sales for the months of October and November. (Sources: Daniel Zawisha at Cushman & Wakefield Research)

OFFICE/SALES

$54.5M | 177,520 SF

3900 CAMELBACK CENTER 3900 E. Camelback Rd., Phoenix BUYER: Wilshire Capital Partners SELLER: Ryan Companies US, Inc. BROKER: Newmark Knight Frank

$52.435M | 175,441 SF

KIERLAND ONE 16430 N. Scottsdale Rd., Scottsdale BUYER: Velocis SELLER: Hines, PCCP LLC BROKER: CBRE

$47.9M | 298,704 SF

THE HUB 2701 E. Ryan Rd., Chandler BUYER: Insight Enterprises, Inc. SELLER: Walton Street Capital LLC BROKER: N/A

LAND/SALES

$25.721M | 3,201,224 SF FORMER LA PAGLIA FARM 22615 S. Gilbert Rd., Chandler BUYER: Chandler Unified School District SELLER: Pamela Gummel BROKER: Keller Williams

$22.4M | 3,502,660 SF

7th Ave. and Rose Garden Ln., Phoenix BUYER: SIHI SELLER: State of Arizona BROKER: Arizona State Land Department

$19.140M | 3,484,800 SF

Belrose E. Chandler Heights & S. Greenfield Rd., Gilbert BUYER: Blandford Homes SELLER: Town of Gilbert BROKER: N/A

$45.133M | 222,118 SF

PHOENIX GATEWAY CENTER 410 N. 44th St., Phoenix BUYER: Bridge Investment Group SELLER: Lowe Enterprises Inc. BROKER: N/A

$30.750M | 323,607 SF

2600 TOWER 2600 N. Central Ave., Phoenix BUYER: Towline Homes Inc. SELLER: Adler Realty Investments BROKER: Colliers International

INDUSTRIAL/SALES

$136.041M | 1,207,021 SF

BLACKSTONE PORTFOLIO (18 PROPERTIES) 4750-5050 W. Mohave St., Phoenix BUYER: Nuveen Real Estate SELLER: The Blackstone Group BROKER: Eastdil Secured LLC

$67.002M | 800,000 SF

AIRPORT GATEWAY AT GOODYEAR 255 S. 143rd Ave., Goodyear BUYER: N/A SELLER: N/A BROKER: N/A

$38.750M | 393,484 SF

AIRPORT LOGISTICS CENTER 3333 S. 7th St., Phoenix BUYER: CBRE Global Investors Ltd. SELLER: Principal Financial Group, Inc. BROKER: JLL

$29.715M | 376,760 SF

$18.809M | 8,003,714 SF

BLACKSTONE PORTFOLIO 4747 W. Buckeye Rd., Phoenix BUYER: Nuveen Real Estate SELLER: The Blackstone Group LP BROKER: Eastdil Secured LLC

$14.2M | 856,825 SF

EASTBANK BUSINESS PARK 3908 E. Watkins St., Phoenix BUYER: Kohlberg Kravis Roberts & Co. SELLER: LBA Realty BROKER: CBRE

Loop 303 and Glendale Ave., Glendale Buyer: SCOTTSDALE INVESTMENT MANAGEMENT SELLER: Thomas G. Russell BROKER: Land Advisors Organization 2625 E. Cactus Rd., Phoenix BUYER: Treger Financial SELLER: Thunderbird School of Global Management BROKERS: Nathan & Associates, Inc.

$28.4M | 174,801 SF

LEGISLATIVE UPDATE

HOUSING SHORTAGE

a product of too many regulations

hat would happen if the state doubled its housing supply overnight? While we can all agree that such a scenario will never happen, it’s still worth asking the question to remind us of the basic principal that we learned in Economics 101 – Supply and Demand. Construction cranes are visible in many of the major markets around the state, so one would only assume that it’s a great indicator that the housing market is keeping up with demand. But the truth is, we aren’t. According to the National Apartment Association, Metro Phoenix alone would need to build nearly 11,000 units a year by 2030 to meet the rising demand. And in case you are wondering — no, we are nowhere near meeting that demand, and because of that, rents are on the rise. So why are we limited on supply? Or better yet, why can’t developers build enough to keep pace with demand? The answer is complicated, but one of the main contributors to the undersupply of housing units are local government restrictions that make building new units’ cost-prohibitive. In fact, one prominent national study found that on average 32 percent of multi-family development costs are attributable to the costs associated with complying with local, state and federal regulations. In a quarter of cases, that number can reach as high as 42 percent.

20 | January-February 2020

Courtney LeVinus

Arizona Multihousing Association

Examples of local government regulations include land use restrictions (i.e. zoning), onerous design guidelines similar to what were passed in the city of Avondale in August, discretionary review processes that allow citizen boards and local officials to add complex and expensive fits and finishes to the development, and so on. The result of the added regulation is more expensive housing that eventually trickles down to the end user — the renter — and ultimately leads to less overall investment in the community. For example, if a local official tells a developer that they no longer want projects in their community to be built out of a certain type of building material, let’s say wood construction, or that the building be reminiscent of the great Taj Mahal, well, that’s fine. But the

end result will likely be less investment and more expensive housing. What’s interesting is that these local regulations have added so much to the cost of housing that now even two separate, and very, very different, presidential administrations, have added to the conversation. In 2016, the Obama Administration released a Housing Development Toolkit describing many of the local barriers for housing development. The Toolkit notes that “over the past three decades, local barriers to housing development have intensified, particularly in the high-growth metropolitan areas increasingly fueling the national economy. The accumulation of such barriers has reduced the ability of many housing markets to respond the growing demand." More recently, President Donald Trump signed an Executive Order in June to establish a White House Council on eliminating regulatory barriers to affordable housing. President Trump once again points to local regulations as the cause of the housing shortage. Combine all of these added local regulations with the fact that material costs continue to escalate, finding enough skilled labor remains a tall order, and development fees and property taxes are rising year after year, and you are left with the perfect recipe for limited housing production. And if you dare add the “affordable” designation to the development, which seems to be the topic du jour, then you can add a NIMBYism (or Not-In-MyBack-Yard), or better yet, BANANAism (Build-Absolutely-Nothing-Around-orNear-Anyone) wrinkle to the project. So, while Arizona may not be at the brink just yet, we must look to the state for innovative solutions to prevent a new housing crisis. Whether it is policy aimed at reducing government-imposed cost burdens at the state or local level or enacting new policies designed to encourage new affordable housing developments, we are hopeful that the state will take action in 2020 in order to prevent a future housing shortage. Courtney LeVinus is the President/CEO of Arizona Multihousing Association

Infrastructure investment

ransportation infrastructure is an essential component of any state’s economic wellbeing, livelihood and competitiveness. Arizona lawmakers had the benefit of a large surplus in last year’s budget, and were keen on funneling these dollars towards several road projects (along with increasing the Rainy Day fund) such as I-17 expansion, I-10 studies and new I-40 interchanges. These funds will no doubt be put to good use, but they also beg the question of what would have happened with these important investments if there was not a surplus this year—and what does that mean about our current transportation funding structure? Everyone knows there are only so many dollars to go around, and that Arizona is still experiencing cuts and pains from the Great Recession. When you dig into the numbers, Statewide transportation funding (outside MAG, PAG, and airports, etc.) to ADOT in Fiscal Year 1997 was $335 million. The number budgeted for FY 2020 is $492 million. At face value this seems to have increased as well, but if you actually account for inflation, $550 million was spent in 1997 (in 2019 dollars). That means spending has actually decreased by $58 million — and that doesn’t even account for Arizona’s population increase which has steadily risen over that time. No doubt most people have also

Michael Jansen

Arizona Association for Economic Development heard about the lack of gas tax increase over the last 2+ decades, and how the dollars we are collecting now do less to build or maintain roads than in the 1990’s. Coupled with the fact that more fuel-efficient cars have been developed, and you can see that coffers for our transportation infrastructure are running very thin. Pima and Maricopa counties have both voted for increased sales taxes for their counties’ transportation budgets, but this same luxury has not been true of the remaining 13 counties. Voters there have clearly seen the importance of infrastructure investment, and are willing to pay some more in order to develop and maintain their infrastructure. AAED’s 2020 Policy Priorities include investing in our statewide

infrastructure because our economic development practitioners and private sector partners recognize that sound transportation investments help to preserve public assets, maintain public safety, enhance our wellbeing, support economic development, and increase property values. If Arizona’s wishes to continue and sustain its tremendous growth, it must look for new and innovative ways to invest in our transportation systems. Our state lies between California, Texas, and Mexico, and that means there is a lot of freight using our roadways. There are also a lot of people moving here, especially from California, and while this is a great way to increase our tax base, we must also sustain the very mechanism by which our economy grows and how those same people physically transport themselves into our state. Whenever the next economic recession (hopefully just a correction) hits, people will still need to drive the roads. Just as schools will continue, and now be supported by our increased Rainy Day fund, so also must our roads be funded. Michael Jansen, AZED Pro, is the chair of the Arizona Association for Economic Development Governmental Affairs Committee and an Economic Development Specialist with the Town of Sahuarita, Arizona. 21

LEGISLATIVE UPDATE

NAIOP pinpoints legislative priorities Tax policy, education funding, economic freedom are key issues in 2020

t the Arizona chapter of NAIOP, we’ve worked with our members to put together a thoughtful legislative agenda for 2020 that will advance our association’s core principles of economic freedom and competitiveness while tackling the state’s ongoing challenges with preparing the workforce of the future. With the 2020 election upon us, we expect election-year politics to shape many of the policy discussions at the Arizona Legislature. Many current legislators anticipate tough re-election campaigns this year and are, therefore, pushing for a quick legislative session so that they can hit the campaign trail in the spring. As the economy continues to grow, tax revenues have exceeded projections. As of October 2019, the state budget has a projected surplus of $170 million in ongoing monies and another $475 million in one-time, non-recurring funds. So, in addition to the usual debates over policy issues, legislators will be tasked with appropriating these surplus funds in a way that will meet real needs without creating ongoing spending obligations that would be difficult to keep in future years. NAIOP supports responsible budgeting that keeps taxes competitive while investing in muchneeded capital improvements, such as modernizing our transportation infrastructure to facilitate the

22 | January-February 2020

Suzanne Kinney NAIOP

movement of goods and people. Reducing the commercial property tax assessment ratio remains one of NAIOP’s top policy priorities. With surplus revenues, this is an excellent year to tackle structural problems with the property tax system that result in commercial properties being taxed at a much higher rate than any other asset class. According to the Arizona Tax Research Association’s property tax model, commercial property (Class 1) currently accounts for 21 percent of all property but pays 35.6 percent of all taxes leading to the highest effective tax rate at 1.91 percent. Conversely, residential property (Class 3) accounts for 49.6 percent of all property but only pays 38 percent of all taxes with an effective tax rate at 0.87 percent. High-quality schools and a skilled workforce are top priorities when it comes to our ability to continue to

attract new businesses to Arizona. NAIOP supports providing public education systems with the resources they need to improve academic outcomes and increase the number of skilled individuals. However, this must be done without damaging the competitive tax and economic environment Arizona has worked so hard to build. We will work to ensure that any proposed new revenue streams for education are equitably applied to all taxpayers and do not place a disproportionate burden on the commercial real estate industry. As always, NAIOP Arizona will oppose legislation that could increase taxes, fees and regulations for the commercial real estate industry. We also support protecting existing economic development tools for projects that create jobs and contribute to regional economic growth. We will oppose measures that unduly interfere with the right to contract in commercial construction or otherwise limit long-standing economic freedoms. This session we anticipate being involved in discussions around proportional indemnity for construction contracts. Read NAIOP Arizona’s full 2020 Legislative Agenda on our website at naiopaz.org/lp.html. Suzanne Kinney is the President & CEO, Arizona Chapter of NAIOP

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ANNUAL OUTLOOK

STILL RISING Phoenix market clicking on all cylinders By STEVE BURKS

onsistency may be boring, but when it comes to the Greater Phoenix commercial real estate industry, no change is good for business. “At this point in the market and cycle, Phoenix, literally, has everything,” said Roland Murphy, director of research at ABI Multifamily. “We’re still highly affordable, have massive success in economic development across a range of job levels/industries, and are consistently modernizing and adapting our quality of life for the better.” The United States is in what most economic experts feel are the latter stages of a growth cycle that is

24 | January-February 2020

stretching into its 11th year. Many are signaling a global economic slowdown and are warning that could trigger the start of a recession in the U.S. However, commercial real estate experts in the Greater Phoenix market still see significant room for growth in all of the market sectors. The strongest sectors heading into the next decade are the multifamily and industrial markets, as the influx of people coming to Arizona is expected to continue and the demand for logistics, manufacturing and distribution space will remain strong.

INDUSTRIAL OUTLOOK It looks like full steam ahead in 2020 for the industrial market. Deliveries and vacancies were steady heading into 2020 and asking rents were trending upward, so all signs point to a healthy marketplace for industrial products. “We are a very healthy and active

market,” said Steve Larson, executive vice president at JLL. “People are optimistic about the current state of the industry and what appears to be a lot of runway ahead. I expect we’ll see more manufacturing and logistics requirements landing here, which will continue to keep us well balanced.” The industrial market appears well balanced, with healthy activity in submarkets across the Valley. “I’m most optimistic about techrelated advanced manufacturing space, particularly around the Chandler and (Phoenix Mesa) Gateway airports,” said Pat Harlan, executive vice president at JLL. “We are seeing solid pre-leasing activity in both of these submarkets, and both have a finite amount of available land. “Right now the Southeast Valley has about 2.3 million square feet under construction, which is right where it should be when you look at the vacancy

rate of 6.9 percent and the 2 million square feet absorbed in the area through the third quarter of 2019.” “There is great vibrancy in the Loop 303/I-10 submarket and the Loop 202/ East Chandler submarkets,” added Isy Sonabend, senior vice president at NAI Horizon. “Both industrial markets are in strong build cycles while attracting a myriad of Fortune 500 companies with state-of-the-art construction. The West Valley submarkets are building with an eye towards e-commerce and manufacturing … big box warehouses and plants.” Another product type that the Valley should expect to see more of is data centers. Microsoft has purchased land in the West Valley with plans or data center campuses, and in the East Valley, the Elliot Road Technology Corridor in Mesa has attracted Google. The majority of new industrial growth in the Valley will come in the form of distribution and logistics centers to cater to the growing e-commerce market. While those will be large-scale products, there is also ample activity heading into 2020 for small and mid-size industrial tenants. “Everyone is hearing about the major data centers and e-commerce continues to be strong, as well as advanced

manufacturing,” said Will Strong, executive managing director, Cushman & Wakefield.. “There is a good balance, as the bid sheets for our investment sale offerings continue to be full and our leasing partners continue to lease space.”

MULTIFAMILY OUTLOOK

Solid economic fundamentals? Check. Huge influx of new residents? Check. Growing demand for rental housing? Check. The Greater Phoenix market checks all of the boxes that indicate a very healthy environment for multifamily owners, operators and developers. The strong momentum and the fact that the market is woefully short on supply makes Phoenix one of the top markets for multifamily investors for the next few years. “These strong fundamentals, coupled with meager levels of overall housing supply (single family and multifamily), are pushing vacancy rates to historically low levels which should keep Phoenix among the top rent growth markets nationally in 2020,” said Matt Pesch, executive vice president with CBRE Phoenix Multifamily Institutional Properties division. “Phoenix is still one of the most affordable major markets in

the Western United States.” New multifamily projects are being planned all over the Valley, but more is needed. According to Tom Brophy, the director of research at Colliers International in Arizona, there is a 20,000 to 30,000 unit deficit in multifamily based on the population growth Maricopa County is experiencing. “Our vacancy rates are the lowest they’ve been since the 1970s,” said Chris Roach, associate vice president, Colliers International in Arizona. “Some of the headwinds for developers have been rising construction costs and a shortage of skilled labor.” But those headwinds are no match for the shifting demographics and desires of people moving into the Valley. “We are living through a tectonic shift pushing us further and further into a more renter-centric society which started in earnest in 2011 and 2012,” according to Cindy Cooke, senior executive vice president at Colliers International in Arizona. “Renter household levels have increased nearly 7 percent since 2000. More locally, Maricopa County has witnessed a stunning 20-plus percent increase.” The rising number of residents in Maricopa County and their choice to

ANNUAL OUTLOOK MULTIFAMILY NEW CONSTRUCTION & ABSORPTION

AVERAGE ASKING RENT/UNIT & VACANCY RATE

12K

$1200

14%

10K

$1000

12%

$800

10%

$600

$400

$200

2009

2010

2011

New Construction (Units)

2012

2013

2014

2015

2016

NO. OF SALE TRANSACTIONS

rent instead of purchase has created 500 a housing shortfall, something that the Phoenix market may not be able to400remedy. “By our estimation, metro Phoenix is300building 10,000 to 15,000 too few housing units annually,” said Asher 200 Gunter, executive vice president with CBRE Phoenix Multifamily 100 Institutional Properties division. “Because of the current labor shortage, it’s not likely 2009 2010 that 2011developers 2012 2013 will 2014 be 2015 2016 able to# ofbuild fast enough to keep up.” Transactions One potential area for investors to cash in on the high demand for multifamily products is in the valueadd market. In the Phoenix market, the average multifamily development with 100 or more units was built in 1994, making the vast majority of those properties ripe for improvement. While key markets such as Central and Tempe and The Midtown informationPhoenix, in this report Scottsdale haveby already been targeted by was composed the Kidder Mathews Research Group. investors in value-add properties, there are ample other areas that could see JERRY HOLDNER investor activity in the next few years. Director of Research “Glendale has fantastic opportunity 949.557.5050 injerry.holdner@kidder.com value add, as do the more mature portions of Chandler and South Phoenix,” said Murphy. “Investors have MARK READ toRegional be better-informed and selective President, Brokerage than they did a couple years ago, Southwest 602.513.5200 but the opportunity is still there for mark.read@kidder.com careful shoppers.”

OFFICE OUTLOOK The Greater Phoenix office market isKIDDER.COM following a similar trajectory as the industrial and multifamily markets. The outlook for 2020 and beyond is strong 26 |

2017

2018

YTD

Absorption (Units)

2009

2010

Asking Rent/Unit

2011

2012

2013

2014

2015

2016

2017

2018

YTD

Vacancy Rate

(Source: CoStar/Kidder Mathews) AVERAGE SALES PRICE/UNIT & CAP RATES

based on a large influx of companies critical fields. 12% $200K moving into the market. Those “We have had record office absorption companies are either escaping higher in the last few years and it is coming in operational costs in $150K coastal markets or all sizes and in diversified industries, 10% expanding into the market, making the including financial services, healthcare demand for office space high. and technology. This is really the first $100K “New buyers coming in aren’t afraid growth cycle that we have had such8%a of high watermark pricing; they are degree of industry diversity.” looking for a flag in Phoenix and are Coworking giant WeWork is already 6% $50K looking for alternatives to pricing in leasing a large amount of space at West Coast gateway markets like San two office developments that will Francisco, Seattle and Los2009 Angeles,” begin2014 filling in 2020, BlockYTD 23 at 2010 2011 2012 2013 2015up2016 2017 2018 2017 2018 YTD Cap Rate Sale Price/Unit according to Newmark Knight Frank’s CityScape and The Watermark. Other executive managing directors Michael major office projects expected to be Garlick and CJ Osbrink. “Particularly delivered in 2020 are Wexford (227,000 in Tempe, Scottsdale and the SF), I.D.E.A. Tempe Phase I (185,833 Camelback Corridor, which are driving SF), 777 Tower at Novus Innovation highest rents and have the most Corridor (169,500 SF) and Rio2100 Kidder Mathews is the largest, independent commercial real estate firm on the West Coast, aggressive buyer pools.” SF).Oregon, California, with 800 real estate professionals and staff in 22Phase officesVin(169,000 Washington, The numbers the final All ofofthese products are hoping to Nevada, and leading Arizona. into We offer a complete range brokerage, appraisal, property management, consulting, project and construction management, and debt equity finance quarter of 2019 were unprecedented, attract large tenants to quickly fill this all property types. withservices record for absorption (over 3 million new, Class A space. square feet through Q3), record “If absorption velocity continues, COMMERCIAL BROKERAGE construction numbers and a healthy and all indicators are that it will, it is ANNUAL amount of pre-leasing activity by going to get moreNO. andOF more difficult SALES SF BROKERS coworking companies. Since 2010, for smaller tenants to find space,” said the market has seen ANNUAL the vacancy rate Laurel Lewis, senior vice president for ANNUAL drop 40 percent, from 19.7 percent in NAI Horizon. “Lease ratesSFare still on TRANSACTION LEASING VOLUME 2010 to the current record low rate of an upward trajectory and lease ready 11.7 percent. space is less abundant. Tenants will “Phoenix is extremely wellneed to start looking for space earlier VALUATION ADVISORY positioned to continue seeing corporate than they have in the past several APPRAISALS TOTAL NO. ready expansions and relocations,” said years. Competition for lease ANNUALLY APPRAISERS/MAI’S Steven Schwartz, managing director of space is heating up.” ViaWest Group. “This is due to a proRETAIL OUTLOOK business environment that includes a PROPERTY MANAGEMENT One market sector that could low cost of doing business, low cost of MANAGEMENT see a slowdown is the retail sector, living, proximity to California (without PORTFOLIO SF due to shifting consumer habits. In actually being in California), excellent Greater Phoenix, the retail industry quality of life, and our universities is healthy, with an overall vacancy pumping out qualified graduates in

20M

420+

$9B

40M

1,600+

39/24

70M+

This information supplied herein is from sources we deem reliable. It is provided without any representation, warranty or guarantee, expressed or implied as to its accuracy. Prospective Buyer or Tenant should conduct an independent investigation and verification of all matters deemed to be material, including, but not limited to, statements of income and expenses. CONSULT YOUR ATTORNEY, January-February 2020PROFESSIONAL ADVISOR. ACCOUNTANT, OR OTHER

DATA SOURCE: COSTAR

3Q 2019 | PHOENIX | MULTIFAMILY | KIDDER MATHEWS

ANNUAL OUTLOOK Trends to Watch The Halo Effect is a concept that considers how impressions in one sphere impact upon another. In retail it highlights the reciprocal influence of e-commerce on in-store traffic.

Bricks Drive Clicks A new store opening in a city drives web traffic up by 37% on average to the retailer's website according to a study by ICSC.

rate at 6.9 percent, which equals prerecession levels. “The residential growth, infrastructure, education and employment will drive the retail market in 2020,” said Rommie Mojahed, director of retail leasing and sales for SVN | Desert Commercial Advisors. “However, I am concerned with the rising construction costs and record high lease rates, but we are still much cheaper than California.” Scott Glenn, national retail director for Marcus & Millichap, said that the Phoenix retail market is viewed as a primary market as far as national investors are concerned, something that hasn’t always been the case. “Anytime you have population increasing, job growth, household formations; these are all good for retail,” Glenn said. “And, there hasn’t been a whole lot of brand new construction since the last big cycle, so that has helped keep vacancy rates down.” There is retail construction occurring in the suburbs and developers continue to bring new products to where the new housing developments are. In the more established parts of the Valley, there will likely be very little new construction as many big box stores have closed. “There is very limited new shopping center development due to so many big box tenants that are retooling themselves to be more competitive in the digital economy,” said Dave Cheatham, president of Velocity Retail Group. “I think in 2020 that the amount of new development will go down at least 30 percent. This will bring about a slowdown of new store development and cause the decline in ground up construction.” Cheatham said that the most active market category will be smaller buildings (under 10,000 square feet) 28 | January-February 2020

Physical Closures Hit Web Traffic Share of web traffic usually falls when a physical store shutters by as much as 16% depending on retail category.

with single tenant occupants or multi-tenants. Both Cheatham and Mojahed believe that the arrival of the new Fry’s Food Store in Downtown Phoenix will help boost the retail prospects in the Central Business District. “Roosevelt Row is a great example of restaurants and entertainment, and more is on the way,” said Mojahed. “Every new residential project that creates a larger, 24 hour population base drives demand for more retail,” added Cheatham. “This is a healthy and positive transition to the Phoenix downtown market, as Phoenix matures and catches up with other major metro areas.” One ongoing retail issue that will likely remain unsolved for at least a few years is what to do with former iconic malls like Fiesta Mall in Mesa and Metrocenter Mall. These formerly robust retail centers have outlived their usefulness as shopping malls, but with the right redevelopment, could become valuable community assets once again. “I believe there will be education and office or employment opportunities,” Mojahed said. “Both sites offer freeway access and an abundance of parking that accommodate these types of uses.” “(Redevelopment) can be complicated as multiple ownerships exist in many of the major tenants which can hamstring a mall owner,” said Cheatham. “The Covenants, Codes and Restrictions often inhibit the transformation of these projects into today’s real estate requirements, even though the real estate is well located.”

LAND OUTLOOK Land values will continue to rise as the Valley spreads ever wider. In the central business districts in the Valley, vacant lots are very scarce, as developers are cashing in on these infill

More Stores, Better Brand ID Retailers grow brand awareness significantly by opening physical locations in a new market. The higher the store count per million, the steeper the awareness cur ve.

development opportunities. One area that will likely see a sharp rise in land values is the area surrounding the new South Mountain Loop 202 freeway, which will be up and running in 2020. “I think this freeway will be a tremendous tool to connect the East Valley to the West Valley,” said Kuldip Verma, founder and president of Vermaland. “I think we will really start to see this area grow and develop. I predict many new projects coming to that area.” Vermaland owns a huge portfolio of land, primarily in the far West Valley, and he is confident that his investment in that part of the Valley will pay off. He cites all of the growth in Buckeye, which was the fastest growing city in the United States from July of 2017 to July of 2018. Also, some of the world’s most successful companies like Google and Amazon are buying up land in the West Valley, and even Bill Gates and a group he is a part of has acquired 30,000 acres of land for development. “I see a lot of the growth to come to Phoenix headed west,” Verma said. “It is one of the only areas where land prices are still relatively low. Certain parts of the West Valley are only a couple hours from parts of California.” Another area that could be ripe for development is Pinal County. Nikola Motors and Lucid Motors have begun work on their manufacturing facilities in Pinal County and those are predicted to bring in more than 5,000 jobs. Add in the expected arrival of support companies to these two automobile plants, and the number of new jobs could tick over 10,000. Developers have long taken a waitand-see approach to buying up land in Pinal County, but now that work is starting on these major employment drivers, 2020 could see a rash of land transactions in that submarket.

Whatever good things we build end up building us. Jim Rohn

PASSION COMMITMENT CREATIVITY

ANNUAL OUTLOOK

CAPITAL FLOW

evelopment doesn't happen without funding. New projects are built with investment capital, and that capital has been flowing freely into Arizona for projects that span the market spectrum. But will the capital keep flowing into the market, and if so, where will it be focused? AZRE Magazine posed these questions to investment capital experts Rodney Riley, director of acquisitions and development for Caliber Development and Adam Finkel, CCIM, principal and founder of Tower Capital.

AZRE: Reflect a little on how the views of the Arizona market have changed since 2010 for investors and lenders? ADAM FINKEL: Arizona was one of the hardest-hit states in the Great Recession, and it has always been known as a “boom and bust” town, which has kept many investors at bay. For many years following the recession, capital was afraid to come to Phoenix and we didn’t get much love. Fast forward to 2019 and it seems we are one of the most attractive markets in the country for capital investment, for the reasons I have listed above. Furthermore, we have greatly diversified our economy and remain undersupplied for housing, and it seems like the inventory in most

asset classes is in balance. About three years ago, I began noticing that private equity groups from the coasts started to become more interested in Phoenix as they learned more about the market dynamics and saw how we have strong fundamentals now. As folks become more exposed to the amazing opportunities our state has to offer, word has gotten out.

RODNEY RILEY: In every recession since 1980 Arizona presented the same common negative traits. What has changed since the great recession is that the fundamentals of supply and demand have remained equalized. Population growth has been outstanding and has ushered in a new era of “tech” jobs that are here to stay. Arizona State University has strengthened the appearance of the state on a worldwide platform because of great strides in innovation and the politicians in the State, starting with Governor Ducey, are pro positive business growth. The state's view has been changed much in the same way as ASU. For many years ASU was named as the No. 1 party school in the nation. Now ASU is the No. 1 school for innovation in the country. This sea change results in incredibly positive outcomes for people living, working and playing in Arizona.

Arizona remains an attractive market for investors AZRE: Will Arizona continue to see a healthy amount of capital flowing into developments in the state? RR: Yes, I believe that Arizona will

continue to see healthy and even increasing levels of capital flow seeking investments. It has been well publicized that Arizona has risen to the top of the rankings for commercial real estate investors over the last few years. The turnaround has happened as a result of several factors. Peak housing starts pre-recession were based widely on absentee ownership and speculation in an economy yielding mostly low wage back office operations, tourism and real estate centric employment. In the post-recession period, the real estate industry has taken a more tempered approach to speculation. As a result of the longer than normal climb out of recession, a positive in hindsight, and a subdued appetite for construction, the overall market has been viewed much more positively as a market with restraint. “California Flight” from over-regulation, upward housing and wage pressure has brought Arizona into clear focus for many from our neighboring state. Couple this with Arizona State University being named as a top school for innovation and the number of high paying “tech” jobs attracted to Arizona, the trajectory is clearly on the upswing for the state.

Adam Finkel

30 | January-February 2020

Rodney Riley

AF: With an attractive climate, lack

of natural disasters, pro-business environment and strong population growth, Arizona will continue to see a healthy amount of capital flowing in for developments. Arizona still has abundant land that is ripe for development, especially as the Valley continues to expand. The I-10 and Loop 303 interchange will remain a catalyst for growth in the West Valley for the foreseeable future. The Southeast Valley (Tempe, Chandler, Gilbert, Mesa) should also continue its momentum.

AZRE: What markets are Arizona’s main competitors for capital investment? AF: Texas is probably our biggest

competitor in trying to lure investors and business from primary coastal markets like California. Denver also has seen a lot of influx from outside investors. In addition, smaller markets like Salt Lake City and even Boise have been gaining some momentum.

RR: The spotlight on Phoenix and the

viability of its investment market has put it squarely in competition with the best markets in the country. Institutional investment is more common today than in the past and we know from experience that once the pattern has been established others will follow. As Arizona continues to be one of the top markets in the country for population and employment growth, investors have taken notice and these factors will continue to drive capital investment into the foreseeable future.

1 UESTION AZRE Magazine reached out to some of the top CRE investment professionals across the Valley to get their advice for clients as they look ahead to 2020 and beyond. “If you were speaking before an audience of your CRE clients, what changes/opportunities in the financing markets should they be aware of in the next 12-18 months?” I believe that the financing market will continue to be a competitive investment environment with more and more money chasing yield. However, there will be fewer good risk-adjusted opportunities to be done. While I don’t think there won’t be any material corrections, we might start to see more cracks at the margins and perhaps an increase in loan modifications due to properties not hitting their pro formas. Ted Van Brunt, Chief Investment Officer, RRA Capital Capital for commercial real estate loans is plentiful and competitive, and

interest rates are expected to stay near all-time lows for the foreseeable future. Agency financing for multifamily properties will be as active in 2020 as it has been in 2019, since both Fannie Mae and Freddie Mac were given $80 billion volume caps (approximately) for 2020 originations. Due to intense competition for loans, there will likely be a contraction in the number of debt funds, similar to the drop in the number of CMBS lenders in 2017. Ann McCartney, Vice President of Debt & Structured Finance, CBRE

Ted Van Brunt

Ann McCartney

ZONING & LAND USE LAW

IN THE ZONE After recent run, developers could face added zoning hurdles in 2020 By STEVE BURKS

he Greater Phoenix market has enjoyed a fairly unobstructed run of development in the last decade. Both state and local governments have, by and large, stayed out of the way of business and worked with developers to solve any zoning issues that arise. But should developers expect this to continue into the 2020’s? “There will be a heightening of community input on many entitlements as it affects development in surrounding communities,” said Larry Lazarus, Lazarus & Silvyn, P.C., partner, Phoenix office. “While cities and towns will want to take advantage of the economic opportunities in this cycle, there will be more pressure from the public to not affect what they perceive to be their existing lifestyle.” “Anticipate continued schizophrenia from the legislative bodies,” added Lazarus, “on one hand promoting jobs, increasing tax dollars and paying for new much-needed infrastructure and on the other hand succumbing to pressures of existing and future antidevelopment factions.” Taylor Earl, who along with his father Stephen Earl and Rodney Jarvis lead the Earl & Curley law firm, feels all of the recent development successes will prompt some to tackle even more challenging zoning issues. “We have had several years of positive development growth here in Arizona and as those positive years continue to stack up, and as real estate forecasts remain positive, developers will gain increasing confidence regarding development opportunities,” said Taylor Earl. “We expect that confidence to lead developers to take on projects that include the extra step of zoning entitlements, including challenging entitlement prospects.” Law firms that specialize in zoning

32 | January-February 2020

James Bond and land use law know that new challenges for development pop up all of the time. In this current growth cycle, communities have been very receptive to zoning changes to attract new development, a long as that Larry Lazarus development fits the community vision. “Legal issues we see in 2020 include balancing property owner rights with community needs such as sustainability and affordable housing,” said Darin Sender, founder of Sender Law. “Municipalities need to update infrastructure, implement sustainable strategies and provide affordable housing yet the burden to provide for those needs is often placed on private development. As a result, elected officials, city staff, and developers struggle to find the best path forward to achieving shared goals.” Most Valley cities are facing similar issues: A shortage of housing developments and a desire to build up their tax base with large office, industrial and retail developments. With finished residential lots becoming more scarce, cities are promoting denser developments. “Cities are trying to funnel hotels, office and multifamily developments into the core areas,” said James Bond, director at Fennemore Craig. “As land prices and construction costs continue to rise, developers will be looking to add additional height to their projects in order to make the projects financially viable. Some cities will feel pressure to push back on these increased heights, which will require

Taylor Earl

Darin Sender

Keri Silvyn

developers to become more creative as they plan their projects.” Developers can alleviate some of that community pressure on a project by making sure that they are getting accurate information out into the community. Anti-development factions have many more avenues to get their message out in today’s social media age. Developers can help themselves by also utilizing these avenues to provide accurate information to the community. “As various list-serves and other modes of communications for neighborhoods have increased, one of the biggest challenges will be educating the public on new projects with facts before inaccurate hyperbole frames the discussion,” said Keri Lazarus Silvyn, Lazarus & Silvyn, P.C., partner, Tucson office. “Elected officials, design review boards and government staff rely on the development community to ensure effective communication and appropriate framing of issues. NextDoor and similar apps do not lend themselves to people trying to understand all sides of an issue. The development community will need to anticipate inaccurate information and work to get the facts of a case into the public as part of the decision-making process.”

A New Name. A Steadfast Vision. Introducing Lazarus & Silvyn, P.C. Larry S. Lazarus Partner

Heather N. Dukes Attorney

Robin M. Large Senior Land Use Planner

Keri L. Silvyn Partner

Rory J. Juneman Attorney

Christine Bell Executive Assistant

Mary Keating Firm Administrator

Michelle Green Senior Land Use Planner

TaNisha Bryant Office Administrator

Lazarus & Silvyn, P.C., (formerly Lazarus, Silvyn & Bangs, P.C.), has a new name and a growing land use law, zoning and planning team, with Partners Larry Lazarus and Keri Silvyn at the helm in Phoenix and Tucson. While the name has changed, the firmâ&#x20AC;&#x2122;s vision to help communities and developers grow responsibly remains unchanged. Vist us at LSLawAZ.com.

Phoenix 206 E. Virginia Avenue Phoenix, AZ 85004-1110 602.340.0900

Tucson 5983 E. Grant Road, Suite 290 Tucson, AZ 85712-2365 520.207.4464

COMPANIES TO WATCH

Steady at the wheel

34 | January-February 2020

A look at the companies poised to lead the industry into 2020’s

he nation’s impressive, record run of economic growth is stretching into its 11th year, which has many believing that we’re past due for an economic downturn. In Arizona, the commercial real estate market is humming right along, with a diverse industry base, a growing population base and a probusiness environment. Here’s a look at some of the top commercial real estate companies in Arizona. These companies have seen tremendous growth in Arizona and they will be the ones driving the industry forward, through calm water or rough seas.

COMPANIES TO WATCH

ARCHSOL

Celebrating their 15th year anniversary, ARCHSOL remains focused on providing collaborative architectural solutions to a widerange of healthcare clients including Banner Health, Dignity Health, HonorHealth and others. Their growing team continues to enjoy supportive professional development and looks forward to the grand opening of their seven thousand square foot office expansion which includes a state-of-the-art virtual reality lab.

ASPIRANT DEVELOPMENT

With its first downtown Phoenix high-rise apartment (The Stewart) completed and over 50 percent leased, Aspirant has turned its focus to The Stewart’s baby brother – a 17-story, 254 unit apartment project at 3rd Avenue and Fillmore. Called “Aspire”, it broke ground in late 2019 so its vertical ascent should occur throughout 2020. The Aspirant team recently submitted plans to the City of Phoenix for a $350 million, two-tower, mixed use project to be located on the parking lot immediately west of the downtown YMCA between Fillmore and Van Buren.

BUTLER DESIGN GROUP

Butler Design Group was named the NAIOP Architectural Firm of the Year for the 14th time and recently surpassed the 19 million square foot mark of projects completed or under construction. BDG has designed several marquee projects like the SkySong Office 36 | January-February 2020

Campus, Cavasson mixed use development and the Creighton University Health Sciences Campus. Other notable industrial projects include the PV303, as well as build-to-suit projects like Project Ferraro and Daimler. At BDG, they take nothing for granted and feel fortunate to have the longstanding relationships that they’ve had, and the pipeline for 2020 looks strong.

CBRE

In 2019, CBRE continued to deliver on its promise to focus relentlessly on creating exceptional outcomes for its clients. In 2020, CBRE will leverage its involvement and influence in the community and its team of world-class professionals and resources to build advantage for its clients across all spectrums of commercial real estate.

CHASSE BUILDING TEAM

2019 Most Admired Company and Real Estate Development award winner CHASSE Building Team’s motto is “Building to make a difference…” They’ve put the concept into motion in a major way in recent years. For clients, they’ve enhanced their LEAN Construction and Virtual Technology processes. For the community, they offer Project Based Learning and STEM Programs for children. In 2020, CHASSE expects to oversee $250 million-plus in projects while focusing on providing an exceptional client experience in all aspects of construction.

BUTLER DESIGN GROUP: SkySong 6 will be the next building to be constructed at SkySong

COLLIERS INTERNATIONAL IN ARIZONA

Looking to 2020, Colliers expects to have another year of strong results. They assisted their clients in making over a billion dollars in commercial real estate decisions involving more than 700 separate transactions during 2019, and they expect to exceed those results in 2020. In 2019 Colliers continued to attract strong brokerage talent, adding the Healthcare team of Julie Johnson and Alexandra Loye, corporate solutions specialist Ross Peterson and others. The addition of Julie and Alexandra brought their total number of female brokers to 13, the highest number of any Arizona commercial brokerage firm.

CORGAN

Corgan’s 2019 growth was marked by banner projects in aviation, education, interiors and healthcare including Terminal 3 at Phoenix Sky Harbor, Dove Mountain C-STEM K-8 school in Marana and a new partnership with Cigna Medical Group. Winning the 2019 RED Awards for best office interiors and tenant improvement of the year for Best of NAIOP respectively, Indeed.com and JDA’s Customer Experience Center celebrate the firm’s commitment to inspiring, human-centric designs.

DRIVING GROWTH Collaboration Strategy

INNOVATION

Being the best on the course takes time, perseverance and the right skillset to accelerate your game. At Colliers International in Arizona, you can tee off with innovative pros that have strategies for business opportunities. Worldwide leadership and a full range of services keep successful players coming back for the perfect round. colliers.com/arizona Phoenix Scottsdale Flagstaff

+1 602 222 5000 +1 480 596 9000 +1 928 440 5450

COMPANIES TO WATCH CUNINGHAM GROUP

For more than 50 years, Cuningham Group has earned an outstanding reputation for delivering excellence in architecture, interior design, urban design, and landscape architecture for a diverse mix of clients and project types including healthcare, senior living and multifamily. Select work includes Valleywise Health’s Roosevelt Campus Replacement Hospital, Yavapai Regional Medical Center’s Outpatient Services Building, and Millennium Park Central, which will provide market-rate apartments as part of the redevelopment at Park Central.

CUSHMAN & WAKEFIELD

Cushman & Wakefield is a leading global real estate firm that delivers exceptional value for the world’s top occupiers and owners. Fueled by ideas, expertise and dedication across borders and beyond service lines, they create real estate solutions to prepare their clients for what’s next. CORGAN: Indeed.com, as a nod to the arid climate, warm earth tones and materials were used such as soft oak veneer, and rich tones of acoustical felt wallcoverings.

38 | January-February 2020

DAVIS

DAVIS goes into 2020 launching its new Creative Technology business unit. DAVIS has been designing inspired architecture for over 28 years. It is now taking those designs and creating new, exciting ways to display and interact with them. As the architect, DAVIS is uniquely positioned to create and support the marketing collateral for its clients’ projects. DAVIS produces everything from branding books, renderings and video animations to virtual and augmented reality. DAVIS packages all this engaging content into an information-rich and elegant website, keeping it updated with the latest design changes, ensuring the visual representation of the project remains exact.

DPR CONSTRUCTION

DPR Construction is proud to celebrate 25 years of building great things in Arizona! DPR thanks their clients and partners who have trusted them with $4.2 billion worth of projects through the years. In 2019, they saw many successes including: breaking ground on their first hospitality project built using a prefabricated, load-bearing structure; successfully delivering critical upgrades for

their aviation partners; and the grand opening of a new patient tower in Tucson. As they look to 2020, DPR will continue to innovate, using prefabrication and virtual design & construction services to deliver the greatest projects in Arizona.

GRAYCOR

Graycor is a 98-year old national construction company. In the Southwest it enjoys longstanding relationships focused on industrial, corporate office and hospitality projects. In the past five years they've constructed more than 20 million square feet of distribution center and warehouse space. With the best and brightest professionals, Graycor delivers a best-in-class experience every time. Their dedication to proactive pre-construction, design-build delivery, value engineering, constructability, quality and safety affirms their commitment to Building Something More.

HEALTHCARE TRUST OF AMERICA

HTA has now closed $221 million of investments and a land purchase of $7 million totaling approximately 559,000 square feet of GLA to close out 2019. In addition, HTA has

THE STATESMAN GROUP OF COMPANIES What a Beautiful Way to Live Family-owned and operated for over 40 years, The Statesman Group has been an active developer, builder, investor and manager of dynamic master-planned communities throughout North America, including single family, condominiums, multi-family, resort and senior living communities. TOSCANA AT DESERT RIDGE | THE LUXE AT DESERT RIDGE MONTREUX AT DESERT RIDGE | THE CAYS OF DOWNTOWN OCOTILLO THE MANOR VILLAGE SENIOR LIVING AT DESERT RIDGE With more than 15,000 homes, and growing, we measure our success not only by our list of accomplishments and uncompromising commitment to excellence, stylish designs, and quality workmanship but by our level of enthusiasm and attention to detail in ensuring each homeowner’s needs are completely satisfied.

TheLuxe at Desert Ridge

The Cays

US HEADQUARTERS

Montreux at Desert Ridge

9300 Raintree Drive, Suite 100 | Scottsdale, Arizona 85260 www.statesmanusa.com

Real Estate Consulting, Sales and Marketing by Statesman Sales & Marketing—a licensed Arizona Broker. STATESMAN SALES & MARKETING, LLC License Number: LC566897000. This literature is for “Information Purposes” only and no representations of any type are made by this marketing material.

Toscana at Desert Ridge

(480) 248-3300

COMPANIES TO WATCH KRAUSE: Rio ECO2 seeks to become a completely green infrastructure for the Rio Salado West corridor, harvesting wind, solar and algae.

an additional $199 million of investments that have closed or are under exclusive contract, which are subject to customary closing conditions. Looking ahead at 2020, HTA plans to re-develop two of its MOBs on its St. Joseph Health — Mission Viejo campus in Mission Viejo, CA. HTA will invest up to $12.5 million over the next 12-18 months to modernize the buildings.

HENDERSON ENGINEERS

In 2019, the Henderson Phoenix team earned three Engineering News-Record regional awards (one project of the year). The team also completed Arizona State’s Sun Devil Stadium and Great Wolf Lodge, began design of confidential projects that will change the Phoenix skyline, continued a 10-plus-year relationship with Sprouts, and closed the office for a day of community service at Ronald McDonald House. Looking ahead to 2020, Henderson celebrates its 50th anniversary, with 15 years in Phoenix focusing on people, end users and service.

HINES

Continuing on Hines’ success in planning, entitling and developing complicated mixeduse projects, Hines began construction in December 2019 on 100 Mill. In partnership with Cousins Properties, Hines secured one of downtown Tempe’s crown jewel sites overlooking Tempe Beach Park. 100 Mill will feature an 18-story Class AA office tower, 280,000 SF office space and a Class A luxury hotel. Also in 2019, Hines opened its Offices at Chandler Viridian, the Mixed-Use Project of the Year and Speculative Office of the Year at the 2019 Best of NAIOP Arizona Awards.

HOLUALOA COMPANIES

Holualoa Companies continues to be a part of some of the most distinctive real estate projects in Arizona and the western United States. Its signature projects at Park Central, Camelback Collective, and SkySong Scottsdale Innovation Center have both generated a significant amount of buzz in the real estate community over the past year, and are well positioned to have a positive impact on the local economy. The firm also continues to acquire and develop a strong portfolio of properties in the retail, office, hospitality, 40 | January-February 2020

multifamily and industrial sectors, and will continue to look for opportunities as they move into the new decade.

JLL

JLL is one of Phoenix’s leading full-service commercial real estate firms – and it continues to grow. Employing more than 590 of the region’s most recognized industry experts, JLL specializes in landlord and tenant brokerage, facility and investment management and investment and development services. Over the past year, JLL has also deepened its capital markets offerings by strengthening its team and integrating new technologies that help clients create rewarding opportunities and Achieve Ambitions.

JOKAKE

Catapulting into 2019 from a record $100 million year in 2018, Jokake continued its growth and expansion of services as a real estate solutions provider, seeing great success in the tech market with clients like Carvana, Zillow, Amazon and JDA Software. Construction in 2020 will focus on the industrial and manufacturing sectors with an intense focus on e-commerce. The firm also anticipates a surge of growth into new markets with the company’s portfolio to include development and corporate services reaching beyond the Southwest region.

KATERRA

Katerra is currently building two high-rise apartment projects in downtown Phoenix (X Phoenix and the Kenect PHX) and breaking ground on another two, high-rise, market-rate apartment projects and a high-end hotel in the same area in 2020. Also in the pipeline are multiple commercial offices in Phoenix and Old Town Scottsdale, self storage facilities, an adaptive reuse high-rise and scores of multifamily projects throughout metropolitan Phoenix.

KRAUSE

Building on 25 years of service, culture and award-winning designs, KRAUSE recently exploded into ground up Architecture the forward-thinking re-imagining of the Rio Salado, Rio ECO2 project honored with five awards this year alone. Exciting current projects include; Novel Coworking, eight floors within the 100-year-old historic Heard building, a $33 million Re-positioning of four medical office buildings on 12 acres at the Dobson Banner Campus and high-end Interiors for new offices of DMB Development.

LAYTON CONSTRUCTION

Spurred by significant growth in the office, industrial, and hospitality market sectors, Layton Construction experienced unparalleled results at both the local and national level in 2019. Building on several consecutive

REAL ESTATE INVESTMENT SALES • FINANCING • RESEARCH • ADVISORY SERVICES

CARRYING OUR SUCCESS INTO 2020 In 2019 Marcus & Millichap Phoenix enjoyed the best annual performance in its history. Record levels in gross revenue, total number of transactions, total sales volume and market share contributed to the success that will carry into 2020 as our company continues to expand. With a multitude of technological advancements and increased international exposure, our clients can expect another prosperous year.

RYAN SARBINOFF Vice President/Regional Manager - Phoenix, Tucson, New Mexico Ryan.Sarbinoff@marcusmillichap.com | 602.687.6700

2398 East Camelback Road, Suite 300, Phoenix, AZ 85016 • MarcusMillichap.com

COMPANIES TO WATCH LAYTON CONSTRUCTION: Rivulon is a premier 250-acre mixed-use development located in Gilbert. PROLOGIS: 10 West Logistics Center, a distribution park developed to meet record-high logistics and e-commerce demand in southwest Phoenix.

record-setting years, a substantial backlog of major projects, and a strong team of talented employees, this positive momentum is forecasted to propel Layton to another unprecedented year in 2020.

LGE DESIGN BUILD

Celebrating 25 years in business, LGE Design Build had a busy 2019 with its highest volume year to date. In addition to embarking on its largest-ever local build – the 80,000 squarefoot The HUB in Goodyear – LGE launched its residential division and broke ground on its first project in Paradise Valley. Internally, LGE employees made big moves. Longtime LGE Design Build employee Carrie Masters was promoted to Chief Operations Officer. Architect Ben McRae was promoted to Vice President of LGE Design Group. 2020 will be LGE Design Build’s biggest year to date as it opens its first Texas office and expands its reach beyond Arizona.

LINCOLN PROPERTY COMPANY

Named NAIOP Arizona’s 2018 Owner/ Developer of the Year, LPC is actively leading some of Phoenix’s most prominent projects. With Lincoln Logistics 40 and Waypoint it completed $177 million in dispositions, marking the Valley’s largest office and industrial sales of 2019. It is the exclusive office developer for The Grand and has embarked on the Class A Union office project and the Park303 industrial development. LPC’s management portfolio is equally significant, totaling 10 million square feet.

MARCUS & MILLICHAP

In 2019, Marcus & Millichap Phoenix enjoyed the best annual performance in its history. Record levels in gross revenue, total number of transactions, total volume and market share mark the best year since 2017. This success will carry into 2020 as the Phoenix branch and company as a whole continually expand and advance. Locally, the Phoenix office will have its third office expansion in three years as more investment professionals and Institutional Property Advisors (IPA) agents join the team. 42 | January-February 2020

MCCARTHY BUILDING COMPANIES

For McCarthy Building Companies, 2020 will be a year focused on critical infrastructure projects, meeting the needs of the state in terms of population growth and advancements in innovation for some of the state’s fastestgrowing industry sectors, including cuttingedge research and medical programs. They are poised for these as well as traditional infrastructure improvements where their long history of expertise will benefit water, solar and energy storage, schools, aviation and hospital projects. Serving their key clients in these areas will be a significant focus in 2020.

PROLOGIS

Prologis, publicly traded on the NYSE and a member of the S&P 500, is the global leader in logistics real estate with roughly 800 million square feet of modern logistics facilities in 19 countries. Locally, the Prologis Phoenix metro portfolio is comprised of 42 buildings totaling approximately 7 million square feet. With a couple large company acquisitions slated to close in Q1 2020 and planned development for 2020, the local portfolio is slated to grow to 70 plus buildings totaling over 11 million square feet and in excess of 150 customers.

COMPANIES TO WATCH

RYAN COMPANIES US, INC. In 2019, Ryan successfully leveraged their collective insights of development, construction, architecture + engineering, real estate management services, and capital markets, resulting in over a 20 percent increase to their bottom line. Given this success, they plan to expand and deepen their customer relationships, continuously finding ways to deliver a superior product in both value and cost, while emphasizing a customercentric focus. They expect to see continued growth in their senior living, multifamily, and industrial pipelines, as they continue to execute office and industrial build-to-suits.

THE STATESMAN GROUP The Statesman Group has launched nearly $200 million in luxury real estate within the master-planned community in Desert Ridge including luxury for-sale, for-rent and seniorliving residential units. These developments span 50 acres of land and include The Manor Village Senior Living Center, Montreux Luxury Apartments, The Luxe Condo Living and the existing Toscana of Desert Ridge. These projects are in addition to The Cays at Downtown Ocotillo, a $90 million luxury condominium community located within the sought-after neighborhood of Ocotillo in 44 | January-February 2020

Chandler, totaling more than $400 million in real estate around the Valley.

THE STATESMAN GROUP: The Cays, single-level condominium residence.

TOWER CAPITAL

commenced in 2019: Goodyear Crossing, Superior Logistics Center, Central Logistics Center and AZ202 Commerce Park. They are acquiring and renovating the 300,000 SF Canyon Corporate Center office complex, completing the renovations and leasing of 200 EVB and The Monroe both 250,000 SF office projects, and a number of other properties. They will continue to build their Southern California office and focus on the growth of their property management division, which now exceeds six million square feet.

The past year has been a tremendous year of growth for Tower Capital. In 2019, we saw origination volume more than double year over year. The company plans to continue that momentum into 2020 as it wins larger assignments and becomes increasingly active in the new construction and “single family for rent” space. Tower plans to hire additional capital advisors and support staff as it gains market share and a more regional presence.

TRANSWESTERN

2019 marked the highest volume year in Transwestern Phoenix office’s history. Brokerage emerged into new submarkets and product types gaining more market share Valley wide. The Phoenix team also moved to new office space designed by Gensler located at the former Mortenson Steak House at the Esplanade. 2020 will be a banner year for Transwestern with continued expansion of both brokerage and administrative teams and increased market exposure.

VIAWEST GROUP

ViaWest Group's plans for 2020 include completion of four new industrial developments

THE WEITZ COMPANY

With a 42-year history in Arizona and one of the nation’s oldest contractors, The Weitz Company is poised for a break out year in 2020 after a strong 2019. This past year they broke ground on their largest data center project, expanded their senior living presence, started projects in Yuma and Flagstaff, continued to build their public sector resume, and served our residential and healthcare clients. They continue to be a major player in the airport and senior living space and are excited about their future growth in data centers, office, industrial, and other key growth areas heading into 2020.

Elevate your career and maximize your opportunities with a Top 5 Global Brand. See what some of our agents say about being part of NAI Horizon:

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Call Today: We are Recruiting Qualified Commercial Agents. Terry Martin-Denning, CEO/Designated Broker +1 602 852 3438 Or email: terry.denning@naihorizon.com 45

NEXGEN

It’s their time Young CRE professionals making impact in industry

hile the old adage that experience is the best teacher may be true, it’s never a good idea to underestimate what energy, drive and youthful imagination can accomplish. The commercial real estate industry in the United States, and Arizona in particular, is thriving, thanks in large part to younger professionals who are quickly rising through the ranks of their respective fields. This rising generation is more open to change and innovation, not afraid of taking risks and more savvy in the ways of technology and how it helps work get accomplished faster and less expensive. Each generation plays a role in pushing industry forward, and this latest cohort is doing just that. These are just some of the young professionals poised to push the commercial real estate industry forward in Arizona and beyond.

Haley Daily

Lead Compliance Manager: Texas division, Earthworks Environmental A native of Arizona, Haley grew up spending most of her life outdoors and always knew she wanted to find a way to help preserve nature. She graduated Summa Cum Laude from Arizona State University in 3 1/2 years with a BA in sustainability. Her duties include consulting at client construction sites to ensure compliance is being met according to city, state and federal regulations. She manages EE divisions throughout West Texas, Austin, Houston and Corpus Christi. Haley enjoys traveling and has been to more than 10 countries. Haley believes that a person can never know enough; she actively strives to discover something new every day.

Katie Davison

Marketing Manager, Mortenson Katie works with the business development team, marketing coordinators and construction/development teams to create compelling responses to RFPs. Katie also leads all 46 | January-February 2020

public relations efforts and supports the firm’s marketing strategy. In 2019, she led and executed the grand opening, as well as supported all public relations efforts, for the Milwaukee Brewers’ American Family Fields of Phoenix. She has led Mortenson’s public relations strategy for large projects including The Beam on Farmer and Hyatt Place/Hyatt House, among others.

Dan Gauthier

Attorney, Rose Law Group Gauthier is a member of Rose Law Group’s Real Estate Transactions and Business and Corporate Transactions practice groups. His practice consists of a range of real estate and business matters, including commercial real estate transactions, syndication, financing, acquisition and development. Gauthier has extensive experience advising developers, fund principals and investors with respect to opportunity zones and the opportunity zone program, as well as forming and structuring qualified opportunity funds.

Ryan Haines

Virtual Construction Application Developer, Sundt Construction Ryan Haines develops technology solutions for the frontlines of Sundt Construction. He engages multiple business units to reimagine digital workflows and physical work product. Ryan holds a Mathematics degree from Arizona State University, and previously worked hands-on with construction tools and materials. He passionately combines his field experience and formal education to unlock business potential.

Jared Kredit

President, K2 Electric Jared Kredit guides a 135-employee firm with revenue exceeding $21 million in 2019. In this role he is responsible for leading the team at K2, managing the operation and direction of the company and spending time developing new and existing client relationships. From 2008 to today, Jared has worked in all aspects of Preconstruction, held various roles in back office Accounting and Administration and served both Project Engineer & Project Manager functions.

Jamison Manwaring

Co-Founder, Neighborhood Ventures After spending several years on Wall Street as a research analyst for Goldman Sachs, Jamison Manwaring relocated to the Valley to join LifeLock as the VP of Investor Relations. While living in New York, he purchased and rehabbed a ten-unit building and discovered a deep passion for real estate. Shortly after LifeLock was acquired in 2017, Manwaring co-founded Neighborhood Ventures, a crowdfunding real estate company that enables people of all income levels to invest in apartment buildings for as little as $1,000. Since it was founded, the company has successfully funded three projects with over 300 investors.

Donny Peper

Partner and Broker, Clear Commercial Advisors As partner and broker, Peper manages the overall direction of Clear Commercial Advisors and its portfolio, which currently includes 15 Metro Phoenix properties with a focus on Downtown Phoenix properties like The Summit at Copper Square. His firm also provides brokerage services (office and retail) for Tapestry on Central, Portland on the Park and the Ellis Building, among other notable projects. He has been in the commercial real estate industry for the past 15 years, including nearly a decade in his current role.

Katie Haydon Perry

Executive Vice President, Haydon Building Corp. Perry has over nine years of experience with Haydon Building Corp, but a lifetime of absorbing her fatherâ&#x20AC;&#x2122;s passion for the business. She began her career in the financial area of the business and has grown into a leadership role. Her father, Gary Haydon, has built a lasting legacy over the last 30 years, based on pure grit and determination that Perry will continue as Executive Vice President. Her new role will be focused on strategy to successfully position the company for sustainability and growth for the next 30 years.

Cody Phelan

Principal in Charge, Partner, Willmeng Construction Cody Phelan developed his career in construction on large scale office, industrial and retail projects in the Valley, starting as an intern and moving quickly through management positions over an eight-year span to ultimately lead a large, Fortune 500 general contracting firm as Division Manager. Through this experience, he participated in constructing large-scale projects such as Scottsdale Quarter, and Palms Resort Casino and Spa, a large-scale resort expansion in Las Vegas and multi-project sites in a campus-style environment.

Becky Santiago

Transit Planner, HDR Becky is a transit planning consultant for agencies around the nation, including Valley Metro. As a certified Envision Sustainability Professional and member of Arizona Forwardâ&#x20AC;&#x2122;s Emerging Sustainability Leader program, she applies a systemsthinking approach to her work and intimately understands the relationship between land use and transportation planning. One of her main roles as a planner involves assisting agencies with the Federal grant application process, a large component of which considers land use and economic development plans. 47

NEXGEN

Sean Slawson

Project Director, McCarthy Building Companies As a project director, Slawson handles complex healthcare projects for McCarthy and has a wealth of knowledge on Integrated Project Delivery (IPD). He also has been trusted with developing McCarthy’s internal talent and recruiting new talent to the company. He serves as the McCarthy Project Engineer Peer Group Training Champion where he coordinates eight quarterly training sessions each year for all project engineers in the Southwest division (trainings occur in Phoenix and Las Vegas). Slawson is also a participant in the Central Arizona Society for Healthcare Engineering (CASHE) and ABA seminars and events.

Nate Sonoskey

Development Manager/Architect, True North Studio Sonoskey has developed projects from acquisition to design to permitting/construction and lease up/occupancy. His primary focus is on mixed-use, urban infill projects, and he recently completed a 7-story high rise hotel in Downtown Phoenix. Sonoskey is a registered architect in Arizona and Illinois, a member of the Central City Village Planning Commission with the City of Phoenix, and a member of the Steering Committee for Downtown Voices Coalition. In his spare time, Sonoskey loves spending time with his family, traveling, playing and watching sports and listening to audiobooks. 48 | January-February 2020

Taylor Davis Sonoskey

Senior Designer, DAVIS Taylor’s creative expertise spans many markets, including hospitality, mixed-use, offices, restaurants, high-end retail, Chinese master planning, affordable housing, single family residential and education. Taylor earned her Bachelor of Architecture from the University of Notre Dame. Her industry career spans nine years. She is a registered architect in three states and is a LEED AP B+C. She leads design of projects in concert with the Project Architect and DAVIS’ Director of Design conceptualization. Notable projects: BIM Lead, Marina Heights; Team Member, Portland on the Park and Novus Phase I.

Michael Stafford

CFO, LGE Design Build Stafford embodies the LGE Design Build philosophy. He firmly believes in people over profit — a rare philosophy for a successful finance professional. After spending time in a large corporation, Stafford decided his talents were better served in the in the small business space. He saw an opportunity at LGE to drive a culture that prioritized people and relationships over the bottom line. It’s something that shows in the way he interacts with the internal team and how he delivers to clients.

Eric Sterner

Designer, Architekton As an alumnus of the University of Arizona College of Architecture, Eric practices under the taught pillars of arid-regionalism culminating in designed responses balancing both the history and future of materials and technology. Eric is currently involved in the design of the Helios Education Foundation Headquarters and Convening Center which will serve as a case study for appropriate desert vernacular architecture. Eric is an active participant in the American Institute of Architects and part of the 2019 Arizona Forward Emerging Sustainability Leaders class.

COMING NEXT ISSUE FEATURED TOPICS INCLUDE:  RED,

Real Estate & Development Awards  West Valley, Building Update  Hospitality/Tourism Construction  Building on Indian Country  Indian Country Law

For additional information call 602.277.6045 or visit azBIGmedia.com 49

NEXGEN

John Theis

Director of Virtual Construction, CHASSE Building Team John Theis is the Director of Virtual Construction at CHASSE Building Team, working on projects including Canyon View High School, West Point High School, Astor on Osborn and Frank Elementary School. He’s also a member of the Scottsdale Active 20-30 Club, a philanthropic group that has raised millions for local nonprofits. Recently, he helped the organization with its annual Nite Flite event, and in Spring he will take on a lead operations role in the annual Agents Benefitting Children and Brokers for Kids event. Theis is also a member of the Young Builders Council where he focuses on construction legislation.

Brett Thompson

Director, Cushman & Wakefield Brett Thompson is a director at Cushman & Wakefield and a member of Cushman & Wakefield’s Global Tenant Advisory Group. Brett assists office occupiers in planning and executing complex real estate in Phoenix as well as nationally. His primary focus is transaction management, financial analysis, business development and strategic planning. In the last two years, as part of the Downey Team, he has completed 95 tenant rep and multi-market lease transactions, totaling over two million square feet and $280 million in total consideration.

Charlie von Arentschildt

Senior Associate, CBRE Charlie von Arentschildt specializes in the large-scale leasing within high-profile office properties throughout metro Phoenix. With a focus on Class AA buildings, new developments, and creative asset repositionings, Charlie has been involved in the leasing of many of Phoenix’s most prominent office projects such as Hayden Ferry, Galleria, The Quad and Rio2100. Charlie is a member of NAOP Developing Leaders and serves on the planning and fundraising committee for both the Phoenix Children’s Hospital and NAIOP annual charity golf tournaments. 50 | January-February 2020

Dayna Wasley

Transportation Planner, AECOM Dayna Wasley is an urban planner who implements infrastructure projects that will support the growing commercial real estate market. Dayna specializes in infrastructure financing, emerging technology implementation, and transportation demand management. She has been recognized by the American Planning Association and Women in Transportation Seminar for her exemplary work in the field.

Dylan Whitwer

Office Associate, NAI Horizon Dylan has served as Committee Chair for the 2019 Valley Partnership Community Project supporting New Pathways for Youth, a position that traditionally goes to a seasoned professional. Besides Valley Partnership, Dylan participates in events hosted by NAIOP Arizona, ULI Arizona and the AZ Tech Council. Dylan has been at NAI Horizon for 2 years. Dylan assists buyers, sellers, tenants and landlords in commercial real estate acquisitions, dispositions and leasing of office properties. Notable deal: Dylan assisted in the disposition of more than 25,000 SF of shell condos in Troon North.

Vanessa Williams

Director of Business Development & Strategic Resources | Southwest Region, Colliers International in Arizona Vanessa Williams serves as business partner and advisor to the Southwest regional president, division leadership and local markets. She oversees Colliers’ talented team of marketing and research professionals across Arizona, Nevada, Greater Los Angeles, San Diego, Utah and Hawaii. In partnership with national and regional leaders, Vanessa is entrusted to develop a highly effective sales force that achieves organic growth and gains market share. She advances Colliers as a leader in the commercial real estate industry through creation of business development and marketing programs with innovative and measurable tactics.

BRINGING DECADES OF EXPERIENCE TO AN EXCITING NEW DECADE

17300 NORTH PERIMETER | Scottsdale ASCEND NORTHROP | Chandler

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EAST VALLEY RETAIL

In good company Gilbertâ&#x20AC;&#x2122;s booming mixed-use retail developments complement future residential projects By ALYSSA TUFTS

ilbert's booming retail developments signal a shift in the role retail plays in the addition of residential projects and economic impact from tourism. Gilbert is cultivating community through mixed-use developments where residents can live, work and play and visitors are invited to explore all the friendly town has to offer.

AGRITOPIA: Epicenter at Agritopia will bring retail along with multifamily housing to the Agritopia development. 52 | January-February 2020

EAST VALLEY RETAIL

GILBERT WARNER: Remington Nevada will transform the area just north of the Gilbert Civic Center.

Over a five-year period from fiscal 2015-2019, Gilbert has added 1.5 million square feet of retail, said Dan Henderson, economic development director for the Town of Gilbert. “A little less than 70 percent of that was added in what we call our Central Employment Area, which a lot of that seems to be in and around the SanTan Village Mall area as well as in Cooley Station and Agritopia, about 16 percent was outside of the town’s employment areas and 13 percent was in our Northwest Employment Area.” One of the major developments is Cooley Station, a 650-acre masterplanned community at the southwest corner of Williams Field and Recker Roads will include single-family housing, multifamily residential options, commercial space, and a transit station for a future commuter rail line, and Verde at Cooley Station, a nearly 150,000-square-foot commercial space that will include retail, restaurants and 450 multifamily 54 | January-February 2020

residential units; within a quarter mile of Verde, more than 2,000 apartments and 1,000 single-family homes are under development. Epicenter, a high-end, vertical mixed-use community and retail destination in the heart of Agritopia in Gilbert, will have about 49,000 square feet of retail space. Epicenter will be filled with retail options from premier health and wellness brands to top eateries and locally owned artisan shops. Gilbert Warner, an 11-acre 95,000-square-foot shopping center located at the intersection of Gilbert and Warner Roads, will join SanTan Village, the popular 1.1 million squarefoot outdoor shopping center along with Cooley Station and Epicenter as retail destinations in Gilbert. “Retail comprises about half of the Town’s taxbase and retail as a share of revenue has neared 60 percent in recent years,” Henderson said. “So as we look at these employment areas and the amount of sales tax revenue

coming from those areas, it is certainly largely retail and employment, and I think this shows the balance that is coming to Gilbert.” Henderson said due to the influx of residential developments (multifamily or single-family) showing up in areas including Cooley Station and SanTan Village area, retail will naturally follow. One of those housing communities in progress is Residences at SanTan Village, a new Class A 380-unit multifamily community north of SanTan Village Mall that will have its first units available in early Fall 2020. “I think one of the other positive aspects that these developments bring is folks in Gilbert now are no longer traveling to other communities to shop some of these unique destinations or eat at these great restaurants, we’re starting to be able to provide that type of place here,” said Kyle Mieras, Gilbert’s development services director. “These developments are very unique in the fact that they’re really

AGRITOPIA: Epicenter at Agritopia will include a variety of restaurants.

creating a sense of place and these also will start to draw people to different parts of our community from outside of the community,” Mieras said. “So not only on the economic side does it have a positive impact for us, but from a tourism standpoint, from people wanting to locate businesses here or travel to Gilbert, it really helps round out the services and amenities that can be provided.” The economic impact of these kinds of developments is evident: Gilbert had about $221 million in visitor spending in 2017 that supported almost 1700 jobs that saw about $20 million in local tax revenue for the Town of Gilbert, Henderson said. “Retail can function as an export when tourism occurs...when you take this momentum and you add tourism, visitors and other factors, spending trends lead to large increases, so we can’t stress enough how much retail and tourism complement each other,” Henderson said. “If you look at Gilbert’s demographics

and you look at psychographics (the median age is about 33; 67 percent of the population is under 45, and about 70 percent are younger, welleducated families that have a labor force participation rate of 70 percent), it’s a very nice complement to the visitors coming into the area and wanting to spend their money in the same ways that locals spend their money because the retail is not only complementary but in many cases it’s unique,” Henderson said. Gilbert’s residential efforts have complemented the retail developments. Mieras said Gilbert’s conscious effort to provide housing types for everyone include single-family, multifamily or estate lots. “We’ve balanced our housing options along with the different retail options because we want this to be a place for everybody where people can be born here, grow here and don’t have to leave the community to do anything.” In addition to the growing residential and retail projects in progress that attract potential residents and provide

Dan Henderson

Kyle Mieras

options for current Town of Gilbert residents, Henderson said another factor that impacts the resident mix is not only where people choose to live in a community, but their choice to commute. “As we look at the resident median commute time compared to neighboring communities, it suggests a need for more local employment,” Henderson said. “The visions of these massive planned areas that not only have residential options, they now have abundant retail options. Our work is focused on bringing in more local employment, so that people can live, work and play here.” 55

WEST VALLEY FOCUS

Rapid change ??????? ?????????? By ?????????????????

Glendale’s New EFrontier District is booming with development

quosantem voluptibusda cullestio cum escipid quibusandus doluptat. Bernatis ad et voluptate velenti nusandi officiendus, qui assecest, estiorerum quam qui site excearum quas aut occaepera volorios eatur? Qui utem. Et endiatis experiti nem remquam ex et ommos eturehendis et, ommolestis mi, omnienet adipsam que digenet, suntior erchil explias et By MARK NOTHAFT prehenis ipsa volupici soluptae del eate quo commoluptae molore molutem t’s been just over a year since quibus prae modi voluptur sandanis et Glendale City Council gave the nod iunt. to activate the Loop 303 corridor. Bor apera nectem sum quam quaecto Since then, much has changed. Red tatium fuga. Delibus resequi te cus Bull’s announcement to build their escil explautem voluptat. first manufacturing facility in North Bus pario. Sus eost, voloriberum, qui America at Reems and Peoria Roads ut molorest magnim voluptur as nem. with an investment of over $280 Fugiati isserum id quatibus as conest, million for the 750,000 square-foot sundem quas dus. building served as a catalyst for Por moluptae vendand igenden development in this dynamic area of tiumquis rem re dem con repudi omnis Glendale. mi, con ea volo et et archil et aut ent. Thanks to the all-important sewer tat voloresti culparum aut ut fugiam and water infrastructure investment quat quia eum, sanda volore volende the project is bringing to the area, its lab il imaximi, cullabo. Ique corum on- and off-ramp connectivity to I-10, volorectis nonempo reriaepudae and Northern Parkway construction et omnimet velicto occaers perio. Nemodio dis quis verupiet quunt ut quamendi ulparit lacerfe rrovidestia nus vellatem et idessit, siminctatur archit ut exped quuid ut vollupicita sunt, occaboribus volore nes voluptatiis aut plam sum quae ventiist doluptint as quodit adi ipitat. Adicidi net aligenem is magnis nis estiam rempor mo quidis ipsanima voluptatium est eum conecatur? Quiatiatur, sum eumquid et esecabo rehentu reriae autaturecto magnimusam et harciaepudam qui aut pedit, everepe re nit aut et quam que sanderum quam aut dolupta nobitaspiet ad et voluptam faceprae non pelessum quunt inullaut faccus aut ide qui sum conserum re conest a qui tecturem etur rerrovi dendit reprem fugitatin cullab ilicabo. Nem sunt

56 | January-February 2020

north of Luke Air Force base, the area is poised for additional projects and odigent res simint. continued growth. Voluptatur si re commodita cus re The corridor’s accessibility and rail quosantem voluptibusda cullestio cum connectivity make it a prime location escipid quibusandus doluptat. for businesses to call home. The Bernatis ad et voluptate velenti surrounding area’s housing and retail nusandi officiendus, qui assecest, boom will provide additional skilled estiorerum quam qui site excearum workforce with improving lifestyle quas aut occaepera volorios eatur? choices due to proximity to quality Qui utem. Et endiatis experiti nem employers and the ample amenities remquam ex et ommos eturehendis Glendale has to offer. et, ommolestis mi, omnienet adipsam Earlier this year, National que digenet, suntior erchil explias et Association of Industrial and Office prehenis ipsa volupici soluptae del eate Properties’ Developer/Owner of the quo commoluptae molore molutem Year Lincoln Property Company, quibus prae modi voluptur sandanis et announced the development of Park iunt. 303, a Class A industrial park with Bor apera nectem sum quam quaecto over 1.5 million square feet of spec tatium fuga. Delibus resequi te cus industrial which quickly expanded to escil explautem voluptat. 4.5 million which reflects the level of Bus pario. Sus eost, voloriberum, qui interest in the marketplace. ut molorest magnim voluptur as nem. There has been unprecedented Fugiati isserum id quatibus as conest, activity in the entire corridor that sundem quas dus. include land sales, annexations and Por moluptae vendand igenden planned area developments, with tiumquis rem re dem con repudi omnis applications filed on more than 20 mi, con ea volo et et archil et aut ent. properties along the Loop 303. Us eossus acessimus doluptaquae et The rise of the Loop 303, or as mi, elibus am hillanisit volores quam, Glendale dubs it “The New Frontier,” quam, tut ut fugiam quat quia eum, sanda voloe ea as voluptat voloresti culparum aut ut fugiam quat quia eum, sanda volore volende lab il imaximi, cullabo. Ique corum volorectis nonempo reriaepudae et omnimet velicto occaers perio. Nemodio dis quis verupiet quunt ut quamendi ulparit lacerfe rrovidestia nus vellatem et idessit, siminctatur archit ut exped quos etur? Olor mostio tem estores rerores exceseq uibus. Pudis vente dicipsum quiatem quoditaspis vitem volupta spernatem aspicid quam eum nobita sequaes sint quidelento etur, si ditisin pos re nit et quatius molor solupta tiusdaepero beriassitior sequisimo voluptur, nihictium, qui dolupiet re laut atio iusa estias untem ra sunt magnianda

did not happen overnight. The City of Goodyear spearheaded the development cum remporem et ullantint vent in the area immediately south and occuptibusda doluptatia evendus served as a case study to prove the area nonem facepuda vid et aut et occupta was primed for development. In 2011, tiusae. Nonsenducid mo consecatem Wisconsin-based luxury appliance idellat emquias eate min ratempo manufacturer Sub-Zero moved into rporibus, te prepratem nat reperspiet a building that had been vacant for quoditaquod earum endi veris three years after it was built. Subdolecest, omnihicipid modi optaquosa Zero opened a 500,000-square-foot peditiorum doluptatur? Cabo. Itatia fabrication manufacturing center. The volorest odi reribusci optam ducidem plant was the first to move into the nat quibus, consequis as eatquae cum Loop 303 corridor. ut et peliqui aeptiunt, nonsequos Dick’s Sporting Goods followed suit doluptaqui untiumet ipsunt preperum in 2013 when the company opened quidemp erferum ra conseque dus a mammoth 624,000-square-foot magnatur recabo. Rorupta speriatur? high-tech distribution center along Dus. the first leg of the recently completed Ebis ant. Otam erit, tem hicid quodi freeway. That bold move to 60 acres of ulparci maiossi nciate prepelest praes lightly populated farm land and cotton aturionecto es quam aspeles aut la fields has since paved the way for the volorem nusa dolores tendit, sinullut area to serve as a highly successful, eius estecatur? transportation artery for companies to Pa culpa int omnihil evendipsum conduct business across the Western expereic tecae comnimus nis as aut United States and beyond. atquat quassunt. Companies often cite the Loop 303 Erio. Nam, nos maximet, location and I-10 adjacency, proximity corehenestis dem de net as is to Southern California, an ample and maionestrum exceaquo vellorrovid quia quiat et aut quod ut que nonsequam eligend icataspedi comni ut officiliquas aut haritatur rem num eatur alitias pereped mi, sunt eseditat as estiatiaepre parchit, officit aut modit resciur sitem aturiosti ad et im faciet vendicimus necto tota ventiossitas vit dessite vent ipsam, ut aut et eaquiatias doluptas quis restistia quist, occum vere cusam. Adisqui scitate sequuntemos quamus repe consequiatur aut lam is dolluptium enimpos id eatqui duntessus sa inus aut hariae sum inveliae sitatium fugia cupta comnimet velit enderit atur sed molum fugit hillaut mossit etur maior repelit unte dicto tem quamus milibus doloriae lit rerferum que dolendae cusapidis doluptati con cusapientis elit repelit aecusapel in re aborept aturia nonse nam et

skilled workforce, select Foreign Trade Zone tax status, and cooperation and incentives by local cities as a winning combination for their bottom line. As Dick’s Sporting Goods’ investment proved successful, other businesses followed suit like, as did fellow sports outfitter Seattle-based REI with its 400,000-square-foot warehouse complex. In October of 2016, Sub-Zero completed a $34 million expansion which brought their facility to nearly 700,000 square-feet. Online pet products distributor Chewy, United Parcel Service, Bimbo Bakeries, online retail behemoth Amazon and food storage and aluminum can manufacturer Ball Corporation continued the 303 parade soon thereafter. Ball will now supply Glendale’s new Red Bull beverage distribution facility. “The Goodyear distribution center enables us to continue to focus on the needs of customers by moving our gear and apparel more quickly and efficiently, now and into the future,” said Rick Bingle, REI’s vice president of Supply

Chain, noting that from its new 303 location the company now reaches 20 percent more customers with two-day ground service. “At this point West Valley cities are doing a lot of things right and being as strategic and forward-thinking as possible,” says Glendale City Manager Kevin Phelps. “Not just in our city but our neighbors, state and county partners. We are investing in the necessary infrastructure to attract the types of businesses and entities that are positive for our citizens to create durable, lasting change that benefits the region for generations to come.” But more than that, are quality of life issues that draw companies to the West Valley and 303. Recent Arizona Republic analysis shows that Glendale enjoys some of the lowest commute times in the Valley of the Sun at just 26 minutes, followed by Avondale and Peoria at 29 minutes and Surprise at 34. The growth in the Western area of Glendale complement the current activity taking place in the Sports & Entertainment District, Downtown and Arrowhead.

The adage of location, location, location is holding true once again. With so much going for it, Glendale and its portions of the Loop-101 and 303 are in high demand and not expected to slow down any time soon. The expectation is that everyone will continue to hear about its successes as companies continue to choose and grow with Glendale. Mark Nothaft is a longtime local journalist, and along with Mi-Ai Parrish are co-founders of MAP Strategies Group of Phoenix, mapstrategiesgroup.com.

Mark Nothaft

BOMA

BOMA president ready for more tune-ups By STEVE BURKS

s a young man, fresh out of high school, Robert Vincent came to Arizona from Southern California seeking a career as a mechanic. Never did he envision that 22 years later, he’d be an asset manager for a company that manages over 1 million square feet of property. “I think those skill sets that I picked up, like electrical, power usage, problem solving and diagnostics and really being quick on your feet and come up with solutions, that has really empowered me,” said Vincent, who graduated from Universal Technical Institute in Phoenix with an AAS in Automotive and Diesel Technology. “It’s been more valuable than I ever thought.” Vincent is based in Phoenix and works as an asset manager for Cordia Capital Management, a small, familyowned firm based in Los Angeles. His career path has given him a unique perspective to property management and asset management, and he has already applied all of his unique skills during his first year as president of the Greater Phoenix chapter of the Building Owners and Managers Association (BOMA). “2019 was a year to run diagnostics and lead the way for overhauling under the hood,” Vincent said of his first year in that role with BOMA. “I can tell you that it wasn’t easy. I have learned that anything in life that is good, of value, and to be proud of takes a tremendous amount of effort to obtain.” Vincent is heading into year two as president after doing a lot of heavy lifting to help the organization run more efficiently. He overhauled the organization’s bylaws, which had

58 | January-February 2020

BOMA honors TOBY Awards winners Category: 100,000 to 249,999 SF Winner: The Grand Category: Industrial Winner: Southwest Industrial Category: 500,000 – 1,000,000 SF Winner: Biltmore Center Category: Medical Office Category Winner: Grayhawk Medical Category: Renovated Building Category Winner: Renaissance Square Category: Corporate Facility Category Winner: GSA Professional Office Building FBI Headquarters Category: Suburban Office (Low-Rise) Winner: Scottsdale Landing

not been touched in 10 years, as well as implementing new policies and procedures for the group. He also said an update of the group’s committee structures was implemented. “New processes take time for others to get involved and get accustomed to,” Vincent said. “The old cliché of ‘We’ve always done it this way, why are we changing now?’ held true for many. For 2020, I plan to take new ideas and processes in strides and be mindful that change doesn’t happen overnight for a large organization such as BOMA Phoenix.” Vincent said that the Phoenix chapter enjoyed its largest membership numbers in the past decade of 340 members. He also noted that the group netted the largest positive financial surplus in its history and was able to add a third full-

time employee to its staff. Vincent has been involved in BOMA for more than seven years and served as vice president under Darwyn Harp of Hines in 2018 before moving into the president’s role in 2019. He wants the changes that he’s working to implement to be of benefit to not only current BOMA members, but future members of the group. “I foresee 2020 a year of staying on track in the direction and destination I envisioned,” Vincent said. “I will continue to focus on membership growth, delivering quality events and ensuring that BOMA Phoenix will be a source of value to our industry professionals.” Vincent entered his new role as no stranger to rebuilding. He is currently in the middle of a complete restoration project of a 1967 Volkswagen Beetle, which he calls “The People’s Car.” “I’m restoring it from the ground up,” Vincent said. “Every nut and bolt has been turned on that and restored to almost showroom quality.” His hope is that his car, like BOMA, will look like new when the year is over.

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CRE policy priorities in an election year

By TIM LAWLESS

ith an election looming later this year, it is imperative we advance our long-time priority of making commercial property taxes more competitive in order to keep highpaying jobs growing and coming to our State before this calculus changes. In the next few months therefore, here are the top legislative priorities for BOMA: * Lower the commercial or business assessment ratio of 18 percent to 15 percent over a phased-in period of time; * Lower or phase-in a reduction of the state equalization property tax rate which is 42 cents per $100 of assessed valuation that raises over $300 million per year from all nine property classes; * Prevent the creation of a new statewide $1 billion property tax as being proposed by some interest groups; and * Stand ready to engage on a compromise on university leasing policies as a result of a critical statewide audit.

BACKGROUND ON UNCOMPETITIVE COMMERCIAL PROPERTY TAXES We already have among the highest commercial property tax burdens in the U.S. where many blue-ribbon committees like the Citizen’s Finance Review Commission (CFRC) from the early 2000s found it to be a major impediment to job creation. Our assessment ratio used to calculate property tax bills is 1.8 times the burden on residential properties (18 percent versus 10 percent). Put another way, while Class 1 (Commercial Property) has only 21 percent of taxable property in the state, we pay 36 percent of the roughly $8 billion levied annually where almost half goes to K-12 schools versus Class 3 (Residential) which has roughly 50 percent of taxable value yet only 60 | January-February 2020

contributes a small share more than us at 37 percent. While it is true that lowering the assessment ratio on Class 1 business properties is a de facto cost shift to Class 3 residential payers, this can be ameliorated by also lowering the state equalization property tax rate as all types of property would benefit from this. Both State Rep. Ben Toma (R-Peoria) and Senator JD Mesnard (R-Chandler) who both chair the tax-writing committees in their respective chamber, have publicly said they will introduce and support property tax reform to make our state more economically competitive. Considering that we have a massive state budget surplus that is growing, it is only fair that some of the largesse be returned to the people. Utilizing a tax reform cut for property also makes more sense than other sources given that a recent Arizona Chamber of Commerce poll suggested that raising property taxes was the most unpopular type of tax to raise and because California voters are going to the ballot to raise property taxes on commercial properties $11 billion per year through a “split roll” proposal to gut Prop 13. Should this proposal be passed, Arizona needs to stand ready to reap the fallout of more firms leaving California than ever.

PROBLEM WITH CREATION OF A NEW STATEWIDE PROPERTY TAX Recently, the Helios Foundation had a “confidential” written draft proposal to go to the November 2020 ballot for an historic $1.5 billion tax increase where $500 million would be an increase in the state TPT (sales) rate and $1 billion from a new statewide property tax. The revenue would be utilized for K-12 ($1 billion), Early Education ($100 million),

Community Colleges ($100 million) and Universities ($300 million). What is particularly troublesome is that the $1 billion proposed property tax increase involves a NEW special statewide taxing district which is the first in Arizona history. In particular, this would be an increase of $1.60 per $100 of assessed value of all properties in the entire State. Given recent polling, it is not likely this idea to tax property will gain traction. At the same time, the Arizona Education Association (AEA) is floating an idea to go to the ballot with a combined income tax and sales tax rate increase raising at least $1 billion per year, as well. While BOMA Greater Phoenix supports more funding for K-12 education and are open to a less egregious tax being raised (i.e., a tax that is less anti-economic development such as ONLY a more modest sales tax rate increase), it is important to know that these proposals contain NO accountability or academic performance standards. Hence, if we continue to pour more money into the education system, we need to make sure we spend more of each dollar in the classroom rather than administration overhead as a percentage than we did in 2000.

WHAT NEXT? The Governor’s State of the State address in January will largely “set the table” and it will take a few months for the State Legislature to respond and put their own imprint on the shape of his proposals especially in light of the upcoming election. The business community has a vital stake in tax policy to keep our State competitive. Tim Lawless is the Executive Director of BOMA of Greater Phoenix

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Being smart about building technology By STEVE BURKS

echnology is rapidly changing how building owners and managers operate and the latest and greatest technology is always around the corner. Companies like Convergint Technologies deliver bestin-class building security systems with video surveillance and artificial intelligence to monitor and protect a property. Other companies, like Climatec, are developing “smart building” technologies and analytics that allow building operators to track traffic and tenant patterns so the management team can better understand and serve clients. All of this technology can make a building owner’s head spin trying to determine what will be the best investment. “Introducing new technology to any industry will come with its share of opposition and growing pains, and property management is no exception,” said Rebecca Angle, property and asset manager for RW Partners. “But with the right guidance and education, practicing new technologies can be extremely beneficial to not only the client and the manager, but also to the tenants and the vendors. The obstacle to implementing these new technologies is getting everyone on board and excited as you are.” Of the new technology that is coming into the market, Ryan McCutchan, service manager for Flynn BEC LP, is most intrigued by remote maintenance management systems. This would be valuable to a large

62 | January-February 2020

building management company that has a fleet of service vehicles. “If you have 300 dump trucks, in various areas of the planet, a simple breakdown can cause quite a headache,” McCutchan said. “By installing sensors in the OBD, you can remotely monitor all of the vehicles’ operating parameters. When a vehicle starts operating outside of it’s allowable parameters, signifying a breakdown, this vehicle can be pulled out of service, have the parts ordered and a work order generated with limited human interaction.” Other new technologies help track lighting usage and heating and cooling of the building. This technology is popular due to the cost savings from lower electric bills. There are also smart bathrooms with motion sensors and traffic monitoring to signal when maintenance is due. “Smart bathrooms are a great idea, but not a high, in-demand technology,” said Don Chestnutwood, chief building engineer supervisor for CBRE. “That technology does allow the building to reduce or allocate housekeeping staff better.” Chestnutwood also cites WiFi or Bluetooth technology as intriguing for building operators. With this added connectivity, adjustments can be made for properties that are overstaffed and reports and services can be remotely accessible. Building managers are faced with meeting their objectives of keeping the building secure and reliable and

operating at peak efficiency. Using automated systems along with analytic solutions make all of those objectives easier to meet. But, there are drawbacks to smart building technology, like the added costs of monthly subscriptions for many platforms, as well as the difficulty in getting product support without additional costs. Also, Chestnutwood said that with older properties, owners are reluctant to upgrade cable or electrical infrastructure or install WiFi. In the next 10 years, both McCutchan and Chestnutwood see more automation in building operations, with less staff demands. “Artificial intelligence and process automation will change reactive and preventive maintenance model to a predictive maintenance model. Using monitors and sensors we will know when a roof drain is clogged and the surface of the roof is reaching a dangerous load level,” McCutchan said. “In this instance, a work order can be dispatched immediately to all parties so as to rectify the issue before a disaster occurs.” “Technology will make remote property management more effective while reducing common area maintenance charges to allow more aggressive leasing rates in tough markets,” Chestnutwood added. “It will allow for reducing overall site staffing while maintaining digital reporting and accountability to owners and investors.”

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BUILD YOUR FUTURE ARIZONA

Building their future These young professionals found their way into skilled trades and are reaping the rewards at a young age By STEVE BURKS

t’s hard to believe the numbers: $1.5 trillion in student loan debt spread across 45 million borrowers. A Forbes article from Feb. 25, 2019 titled, “Student Loan Debt Statistics: A $1.5 Trillion Crises” reported that 11.4 percent of student loan borrowers are 90 or more days delinquent on their payments and the graduating class of 2017 would leave college owing, on average, $28,650. These numbers haven’t affected enrollments, as students are pushed to go from high school to college to pursue a bachelor’s degree and then perhaps a masters or even a Ph.D. That path has been the most common one taken by young people for decades, but there are those who are taking a different path to a career. This path may include college, but without the debt waiting at the end. Instead, a well-paying, challenging-yet-satisfying career awaits, with plenty of opportunity for rapid advancement. Careers in the skilled trades, helping to build the new developments that are popping up all over Greater Phoenix, are becoming more attractive to young people, due to the high demand for skilled workers. The new Build Your Future Arizona program is designed to educate and inform young people about all of the opportunities that are available in this field. AZRE Magazine found four young professionals in the skilled trades and learned a little bit about their diverse paths into the industry. Here are their stories.

66 | January-February 2020

IRVYN REYES

Estimator for DP Electric Coming up through school, Irvyn Reyes had envisioned himself becoming an electrical engineer. He had originally thought his journey would take him through the standard route: Start at a community college and then finish up at a four-year university and then move into the field. But Reyes found out early on how quickly the construction industry works. “I applied to get into college to have some type of degree and I saw a brochure for the electrical apprenticeship program,” Reyes said. “I took a class that week and was hired on the spot. I loved it because I realized I would get my entire school paid for along with me working full-time, getting paid.” Reyes earned a paycheck while working through the electrical apprentice program with DP Electric, one of the biggest perks of a career in the skilled trades. Then, once the IRVYN REYES: Irvyn Reyes, right, is shown in a still frame from a promotional video for the Build Your Future Arizona campaign.

apprenticeship program is completed, a pay raise, promotions and more opportunities typically follow. For Reyes, he also learned quickly that his initial perception of working in the trades was far from accurate. “I thought it would be low pay and I would never move up or make more money,” he said. “But in reality, I moved up very quickly, taking my classes and being at work every day. The pay kept increasing every semester I took in school.” Reyes said his pay rose as his skills did, from apprentice to journeyman to lead and now to his current role as estimator. He has learned that in the skilled trades, there is no ceiling for those who put in the time and effort to learn all of the aspects of the industry. He has visions of being a preconstruction manager or even higher. One thing that will not limit what Reyes decides to do with his career, is student loan debt. “I have no debt with school and I had a career built right after high school,” Reyes said. “And I have had the opportunity to move up in the company. I do feel that I’ve found my niche.”

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Intern with McCarthy Building Companies Southwest Region Early on, Dave Hollenack’s career thoughts focused primarily on a career in medicine, similar to his parents who are pharmacists. But, like many young people, as he grew older and graduated from high school his thoughts changed and he did not have a clear vision or plan for his career. Hollenack attended college in Ohio and thought he would pursue a degree in business or engineering, but was still unsure. Following his fifth semester in college, as a junior, Hollenack decided to take a break from college and spend some time trying to figure out his career direction, which led him to an internship with the engineering consulting firm. This position brought him into the construction industry, albeit in a unique way where he was in a position of evaluating the work being done by veterans of the industry. This experience provided him with exposure to working in the lab and in the field, which he enjoyed and learned to hone his communications skills. By this time, he was looking to better define his career goals and find a path that DAVID “DAVE” HOLLENACK: McCarthy intern Dave Hollenack gained valuable experience working on the Casino del Sol project near Tucson.

would allow him to use the skills he was learning and grow professionally. He was soon offered a position with Stantec, initially as a residential project representative inspector, which expanded into the commercial and heavy civil areas and broadened to include water, storm and sanitation project inspections. As he was given more responsibility, Hollenack became interested in the role that project managers play on projects, which piqued his interest about what it would be like to work as a general contractor to gain new experience. With a new path in mind, Hollenack returned to college in pursuit of his Construction Management degree at Bowling Green State University. This is where he met the McCarthy team through the firm’s recruiting efforts on campus and learned about McCarthy’s Intern Advantage Program, which helps to train people seeking to enter the construction industry with training and job site experience. Hollenack spent a summer as well as six weeks during the winter in 2019 in the internship program at McCarthy Building Companies’ Southwest Region. He’ll return for another summer internship in 2020. In Summer of 2019, David began working on McCarthy’s Casino del Sol project near Tucson. Taking this step brought him new experiences that

further has inspired his career pursuit in the construction industry. During his term on the project, Hollenack was given opportunities to coordinate with the trades, learn about the importance of scheduling and how those efforts are best managed as well as experience in closing out projects, communication, design coordination, project management, job site safety and teamwork. Hollenack suggests that young people, who may not know exactly what they want to do for a career should jump into it and give it a try. Like himself, he was unaware of the opportunities available and that he would even be considered. He realized that there are extensive training programs, which companies are running now, to help new people to learn a trade and a skill. “Don’t hold back from trying or applying for a position if you are interested and have ambition,” Hollenack said. “Trades and general contractors like McCarthy have extensive training and mentoring programs that are designed to train people who have the desire to learn and who are willing to work hard.” Although Hollenack landed in an opportunity somewhat by chance, he is pleased that he pursued it and continued to seek out more opportunities and responsibility. “Don’t get stuck in your comfort zone,” he added. “Be willing to take on more and try new things and you’ll find so many more opportunities than you ever thought were available.”

ROBBY TARWATER

Office Engineer, Construction Group, Hensel Phelps Family gave Robby Tarwater his first taste of working in the skilled trades, but he had visions of another career when he was progressing through junior high and high school. “I always envisioned myself pursuing a degree in engineering,” Tarwater said. “I loved being hands on, building and turning my thoughts into reality.” Tarwater’s family owns a small HVAC company that services the East Valley. As one might expect, Tarwater went to work in the company business in high school to earn a little money. 68 | January-February 2020

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ROBBY TARWATER: Hensel Phelps’ Robby Tarwater has been part of the team working on the Sky Train Phase 2 Taxiway at Phoenix Sky Harbor Airport.

But surprisingly, Tarwater took to the job and progressed through the ranks. “Over the course of six years, I worked my way up to installer, journeyman, foreman and then lead technician,” Tarwater said. “During this time, I was able to support my new wife’s goal to be a nurse.” His work in the HVAC field made it possible to first put his wife through nursing school and then put himself through college where he earned an associate’s degree in civil engineering in just two years. That degree made it possible for Tarwater to land a position at Hensel Phelps, one of the top general contracting firms in the nation. “My initial perception of working in the skilled trades was that it was low-paying and that I would never be able to support my family on my own,” Tarwater said. “In reality, there are trade companies that will pay top dollar for people to get the job done right and efficiently. “I would strongly suggest considering a career in skilled trades. The knowledge you can learn from a skilled trade is irreversible and will put you on the top of your game while making a good living for you and your family.” 70 | January-February 2020

Business Solutions Manager, Corbins Electric Nate Unruh was on the typical path, majoring in computer science at Arizona State University when he stumbled into the skilled trades industry. His story is just one example of all of the opportunities that exist in the construction industry that don’t involve the physical building of a project. Unruh is one of the thousands of behind-the-scenes professionals that work in the industry. Unruh joined Corbins Electric when he was a sophomore at ASU. Corbins was in the middle of a companywide overhaul of their operations and processes and had discovered a platform that allows users to rapidly develop mobile applications. With those mobile applications, processes like material and equipment procurement, timesheets and other workflow items can be done on a smart phone or tablet. “I had a brother that worked in the tool department for Corbins,” said Unruh, who was working at In-n-Out at the time. “They had some issues with their tool tracking software application. My brother asked me to come in and see if I could help and they hired me.” NATHANIEL UNRUH: Corbins Electric business solutions manager Nate Unruh is shown in an informational video that the company produced about the application development team at Corbins Electric.

So Unruh recruited some of his roommates to join him at Corbins and they formed the initial application development team. Now, Unruh leads a team of more than a dozen developers who help Corbins operate more efficiently. He is part of the Corbins management team after just four years in the industry. “My initial perception was construction is slow moving and boring,” said Unruh. “It has a very early cap for career movement and it does not have many growth opportunities. I found that with the right company, it moves just as fast as any other industry. The trades have a way of identifying individuals with a positive and hardworking attitude and finding opportunities for them.” As a computer science major, Unruh is comfortable around complicated programming and coding. It would be easy to assume that working in construction would not provide Unruh with difficult problems to solve, but he’s found that to be far from reality. “Construction has a lot of math and engineering behind it and can really challenge you and keep providing exciting work,” said Unruh. “I have learned so much about not only the trades, but also the role of technology within them. It has given me the freedom to be able to have a consistent schedule when I work hard and get my work done. I have also made many close friends within the industry who have mentored me in my career path. Being so young, this has been extremely valuable in starting my career.”

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BUILD YOUR FUTURE ARIZONA

ONE FOR ALL Build Your Future Arizona campaign made possible by collaboration among competitors By STEVE BURKS

he numbers tell the story. In Arizona alone, there is estimated to be 155,000 unfilled positions for skilled trades professionals between now and September 2022.. The development is happening, but at a much slower rate due to a labor pool that isn’t growing fast enough. Nationwide, Arizona is near the middle of the pack in terms of demand for carpenters, masons, electricians and pipefitters; the men and women who build our offices, warehouses, roads and water treatment plants. There are companies that do what they can to attract, train and retain skilled trades professionals, but there’s only so much that one company can do

72 | January-February 2020

to put a dent in the problem. While one company may not be able to solve this large-scale problem, a growing team of companies in Arizona is banding together to help their industry thrive. The Build Your Future Arizona (BYFAZ) campaign was launched in 2019. It was created by the Greater Phoenix Chamber Foundation and is in conjunction with the national Build Your Future campaign. Build Your Future (BYF) is a national image enhancement and recruitment initiative for the construction industry. Its mission is to recruit the next generation of craft professionals by making career and technical education a priority in secondary schools, shifting negative public perception about careers in the construction industry and providing a path from ambition, to training, to job placement as a craft professional. BYF provides a number of resources to assist industry, education and military organizations in achieving these goals. But the BYFAZ campaign would have never gotten off the ground without

the strong financial and organizational support of construction companies in Arizona. BYFAZ is led by a group of 35 construction businesses who combined to invest more than $2 million into the program. Champion Level investors in the program are Corbins Electric, DP Electric, HACI Mechanical Contractors, Hensel Phelps Construction, McCarthy Building Companies, Sundt Construction and Suntec Concrete. The program, which launched with a kickoff event at Talking Stick Resort Arena in Phoenix on October 16, 2019, is designed for an initial 3-year run. “I was approached by Mike Bontrager and Jennifer Mellor of the Greater Phoenix Chamber to become an investor to support the campaign. To be honest I was on the fence for several months, because if I was going to participate I would have to come in at the champion level,” said Dan Puente, founder and CEO of DP Electric, one of the key investors and a member of the BYFAZ steering committee. “I wanted to be in a role that I could help shape the campaign and the only way to do

BUILD YOUR FUTURE ARIZONA

Pat Ahern

Justin Dent that is to write a check for $50,000 every year for three years. I finally came to terms with the fact that I do not hesitate to buy a $50,000 truck so why am I concerned about investing in my industry. “The fact is that for years we have complained as an industry that there is not enough skilled labor and we have failed to do something about it. BYFAZ is the organization that I felt had a chance of actually making a difference and did not want this opportunity to get lost and not happen, so I committed and am happy I did.” Puente is just one of the ten-person

74 | January-February 2020

Mike Bontrager

Tim King

Mike Brewer

Dan Puente

steering committee behind BYFAZ. He was joined on the committee by a who’s who of Arizona construction legends. The committee chair is Mike Brewer, founder and CEO of The Brewer Companies and the fundraising chair is Mike Bontrager, president for Southwest Region at Adolfson & Peterson Construction. Other members are JD Martin, vice president and partner at Corbins Electric; Bryan Amarel, operations manager at Hensel Phelps; Justin Dent, vice president of operations for McCarthy; Marcia Veidmark, president and CEO at SSC Underground; Pat Ahern, Head

Sean Ray of Human Resources and Talent Development at Suntec Concrete; Sean Ray, director of craft workforce development at Sundt and Tim King, president at HACI. At the GPCF, the BYFAZ efforts are led by project manager Josh Umar. The GPCF began the process that ultimately produced BYFAZ in 2016, forming four workforce collaboratives to bring employers and educators together to build strong talent pipelines in growing industries. One of those collaboratives was the Construction Workforce Collaborative. Led by Bontrager and Brewer, the Construction Workforce

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THE BYF ARIZONA TEAM: From left to right: Matt Clyde (Ideas Collide), Josh Umar (Chamber Foundation), Joel Eberhart (Ideas Collide), Jennifer Mellor (Chamber Foundation), Mike Brewer (BYFAZ Steering Committee Chair), Todd Sanders (CEO, Greater Phoenix Chamber). Steering Committee Members: Bryan Amarel (Hensel Phelps), Marcia Veidmark (SSC Underground), JD Martin (Corbins Electric), Justin Dent (McCarthy), Pat Ahern (Suntec), Mike Bontrager (Adolfson & Peterson, Chamber Foundation Chair), Sean Ray (Sundt), Dan Puente (DP Electric). Not pictured: Tim King (HACI Mechanical).

Collaborative came up with a threepronged approach to building up the workforce pipeline; an approach that formed the foundation of BYFAZ, which was supported by organizations like the Arizona Builders Alliance, the American Subcontractors Association of Arizona, Construction Financial Management Association’s Valley of the Sun Chapter and other community groups. Bontrager played a pivotal role in assembling the steering committee. He had been a board member for the Greater Phoenix Chamber for many years and was approached three years ago by GPCF president and CEO Todd Sanders and the chief innovation officer Jennifer Mellor, who pitched the formation of a craft professional workforce collaborative. “I reluctantly said yes, knowing this has been tried before and went down in flames,” Bontrager said. “We started three years ago, overcame several hurdles, landed on a plan then set out 76 | January-February 2020

to court investors.” Bontrager said there was good initial response, but the fundraising efforts stalled, putting the campaign in jeopardy before it had even started. “There were several times early on that it felt like we weren’t getting anywhere,” Bontrager said. “Once we settled on transforming the perception of what it means to be a craft professional as our main purpose, the campaign began to move forward. Courting investors turned out to be more of a challenge than originally anticipated. The entire campaign came within a day of coming to an end. We had a deadline to reach our funding target of $1.5 million and we barely made it.” What this campaign asks its members to do is work hand in hand with market competitors to do something that will benefit everyone in the long run. This spirit of collaboration shone through as the

campaign began forming a plan on how to attack the workforce shortage issues that everyone in the industry is facing. “After several meetings it was clear to me that as traditional competitors were partnering on this initiative for the good of the industry and to benefit our communities I was confident this would work,” said Ahern. “We don’t all have the same background and have differences in approaches in some areas, but we are all undoubtedly focused on our objective of making young people aware that construction careers offer fantastic pay and opportunities for growth and fulfillment. “It is fantastic to see this group collaborate on how to best help the future workforce achieve the successes that our steering committee members have attained.” “I’ve known all the people and companies that are involved for some time now, and they are all very good people that are servant leaders and not concerned about what’s in it for them,” added Puente about the companies and people involved in the BYFAZ campaign. “They all generally want to improve our industry. Most importantly, they want to share stories and the opportunities that are available within the construction

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BUILD YOUR FUTURE ARIZONA KICKOFF: Marcia Veidmark, president and CEO at SSC Underground, delivers remarks during the Build Your Future Arizona campaign kickoff event in October at Talking Stick Resort Arena in Phoenix.

industry. This process has reaffirmed my belief that we are all in this to improve our industry.” The BYFAZ mission is to create a sustainable and skilled craft workforce by creating awareness about high paying construction careers, training opportunities and mapping career paths to employment in these high demand occupations. The campaign has three major goals: 1. Connecting Dots — Increase awareness of craft professional occupations; 2. Perception — Improve education and training outcomes through business partnerships; and 3. Motivate — Increase the number and tenure of craft professionals. “Our industry has needed someone to lead this effort for sometime now,” Puente said. “Once I was exposed to the platform and the success it has had in other states, I knew with the right people we would be successful.” Education is a key pillar of the program, which promotes or participates in educational events and training programs with partners at the Arizona Masonry Council, Maricopa County Community College District, Central Arizona College, West-Mec and EVIT, among other interested groups. Also, campaign sponsors like Brewer, DP Electric and HACI Mechanical have training programs in their respective specialties. “This task is larger than any one contractor can tackle,” said JD Martin. “When I saw the concerted effort of many of us, combined with the passion for the construction industry, I knew that it could succeed. “The real problem is undoing the institutionalization of young people and their parents because in the education system due to decades of post-secondary education marketing campaigns.” To provide information for the young people the campaign is trying to reach, BYFAZ created an informative website at Arizona.BYF.org. While there, prospective trade professionals 78 | January-February 2020

can learn about the high demand for craft professionals throughout the country, the average salaries in the various craft fields and information on what education or training is available. Also, there are links to available positions at more than 40 construction companies. The BYFAZ website also has downloadable fliers, social media videos and images and informational graphics for use by campaign partners. “I always knew the campaign would be successful. We just needed the right plan,” said Bontrager. “When I saw the videos and the website, I knew for sure we had something special. There are many things I love

COMPETITION: Electricians take part in the Arizona Builder's Alliance Craft Competition. The competitors had to bring power to a disconnect, wire a sub panel, connect a GFI and an outlet and finally wire a 3-way switch to turn on a light bulb. (Photo courtesy of DP Electric)

about the construction industry. One is how competing companies come together to better the industry. The steering committee is made up of very passionate people who care deeply about the critical lack of a qualified workforce. The meetings generate different opinions that result in great decisions. It’s a fun bunch to hang with.”

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