AZRE March/April 2017

MARCH-APRIL 2017

2017 RED AWARDS p.47

INSIDE: Construction Staffing p. 24 | West Valley Update p. 38 | CoreNet Global p. 82

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And the Oscar goes to…

W

ell, this isn’t the movie industry, but it’s that time of year and the 12th annual Real Estate and Development Awards are the Oscars of Arizona’s commercial real estate industry.

If you’re unfamiliar, the RED Awards are an annual celebration of the state’s top projects completed the year prior, recognizing the companies and people who made it happen.

Unlike previous years, you’ll notice the winning project for each category is not specified in this issue. Instead, winners will be announced at the RED Awards event on March 16 at Chateau Luxe.

Another change to this issue that you may notice is a new section being launched called “Trendsetters,” which highlights the companies, projects, people and trends shaping the way we think and view commercial real estate.

Also, inside this issue: - Read about how a successful master-planned community in Buckeye is spurring the development of a new 150-acre commercial development.

- Catch up on the Valley’s latest hospitality renovations and planned projects.

- Familiarize yourself with the benefits and challenges of developing on tribal lands.

- Learn about a local plumber who is championing efforts to improve the construction workforce development pipeline.

You can read full-length stories on our website at azbigmedia.com/azre.

One more note, if you missed the deadline to submit your company’s best projects for this year’s RED Awards, mark your calendars because nominations for next year’s RED Awards will be open from October through December.

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

President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editor: David McGlothlin Interns: Madison Arnold | Bayne Froney | Kennedy Scott Contributing writers: Tim Lawless | Cheryl Lombard Deb Sydenham | Rebecca Timmer ART Art director: Mike Mertes Graphic designer: Anita Richey DIGITAL MEDIA Digital editor: Jesse A. Millard MARKETING/EVENTS Marketing & events manager: Cristal Rodriguez Marketing coordinator: Kristina Venegas OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Cindy Johnson AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Ann McSherry AZ BUSINESS ANGELS Director of sales: Jared Gard AZ BUSINESS MAGAZINE Senior account manager: David Harken Account managers: Jennifer Heberlein | Brit Kezar | Bailey Young AZ BUSINESS LEADERS Director of sales: Sheri Brown EXPERIENCE ARIZONA | PLAY BALL Director of sales: Jayne Hayden HOME & DESIGN Director of sales: Joe Freedman 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. ©2017 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.

2 | March-April 2017

CONTENTS

FEATURES 2 Editor’s Letter 6 Trendsetters 10 Executive Profile 12 After Hours 14 New to Market 16 Big Deals 20 Legislative Update

47

24 Construction Staffing 28 Hospitality 32 Construction in Indian Country 38 West Valley Update

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47 RED: Real Estate and Development Awards 82 CoreNet Global

82

On the cover:

SkySong 4 at The ASU Scottsdale Innovation Center opened to the public last December.

4 | March-April 2017

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

32

TRENDSETTERS Phoenix sets multifamily sales record

T

The future of virtual reality in CRE T

he adoption of virtual reality in commercial real estate is changing the way buildings/units are designed, marketed, leased and sold.

International Data Corporation reports worldwide revenues for the augmented reality and virtual reality market will grow from $5.2 billion in 2016 to more than $162 billion in 2020.

Rami Kalla, founder of Point in Time Studios, a local video production studio with a focus on virtual reality, predicts the use of virtual reality will become more normalized and expected within the industry.

AZRE: When did virtual reality start to make its presence known in the CRE industry?

Rami Kalla: In 2015, the commercial

real estate industry took a leap forward and started using virtual reality to show off different projects. This year, the use of VR has become more widespread in commercial real estate as more companies have started to adopt VR into their practices.

AZRE: How is VR being used in CRE? RK: Virtual reality is a great tool that

lets the stakeholders experience what it would be like to occupy that real estate, especially if the building is still under construction. Another important tool of VR is its ability to transport a viewer

6 | March-April 2017

Rami Kalla

anywhere in the world. This is especially useful to parties who are out of state or overseas, expanding the buildings’ potential market.

AZRE: Why is VR worth keeping an eye on?

RK: The industry may see a shift in

their go-to marketing materials, from sketches and miniature 3-D models to complete VR experiences.

AZRE: Who are prominent VR users today?

RK: Two leading figures using VR for

commercial real estate are Sage Realty Corporation and developer Macerich.

They have primarily been using VR through virtual tours to enhance a building’s impact for stakeholders and to show off the early stages of their projects that are under construction.

AZRE: How much does a standard VR experience cost?

RK: The cost for having VR as a

commercial marketing tool can range from $20,000 to over hundreds of thousands of dollars. The scope of the work has the largest impact on the price.

he Valley’s multifamily market set a new record for yearover-year sales volume in 2016 that coincided with increased rent and occupancy rates compared to 2015.

According to an ABI Multifamily report for Greater Phoenix, the total sales volume for 10-plus unit multifamily properties increased 28 percent, year-over-year, to a market record, $4.97 billion across 376 total transactions with 47,233 total units sold. In November alone, Phoenix recorded more than $320 million in multifamily transactions.

In fact, Phoenix’s market velocity rate increased nearly 34 percent since 2013 due to substantial investor interest in value add sales.

Looking ahead, the 2017 multifamily forecast is uncertain.

Single-family home construction is rebounding in the Valley, but home builders are challenged with increasing competition from multifamily developers converting homebuyers through high-end finishes and amenity packages.

10+

SALES VOLUME

UNIT MULTIFAMILY PROPERTIES

increased

total sales volume

28% $4.97B 376 November 2016 $320M

across total transactions

multifamily transactions

market velocity rate

34% since 2013

47,233

total units sold

Cushman & Wakefield joins office trend Firm goes collaborative with new design

C

ushman & Wakefield typically brokers deals for a tenant’s relocation to a new office space, but this time, the shoe was on the other foot.

Following the $2 billion merger of Cushman & Wakefield and DTZ in September 2015, the firm’s Phoenix branch nearly doubled the size of its workforce and footprint in Arizona.

Until now, the firm occupied two offices in two different buildings on two opposite sides of 24th Street.

Thus, Andy Snedeker, vice president of project and development services at Cushman & Wakefield, was tasked with navigating the consolidation and construction of a new office space.

The new space reflects popular design trends like an open layout, collaborative workspaces, upgraded breakrooms and amenities for employees and visitors.

“We will be unlocking the power of

collaboration, as well as productivity,” says Snedeker. “The office has been designed to create a workplace where our employees are empowered each and every day.”

Cushman & Wakefield’s new offices, totaling 34,000 square feet, are located on the entire fifth and fourth floors as well as half of the third floor at Esplanade V, which was the old Cole Real Estate office.

AZRE: What motivated the move?

AS: After the Cushman & Wakefield and DTZ merger in 2015, we needed to get our people under one roof. When picking a new space, we wanted to have a more dynamic and energetic space to invite clients and to allow us to host industry events more frequently. We are creating a next level workplace for Cushman & Wakefield’s next phase of success.

AZRE: What’s your favorite part about the new office?

AS: My favorite part of the new office are the collaborative workspaces. We have nearly 30 conference and/or breakout

rooms at strategic locations that will allow teams/ individuals to use them accordingly.

We will also have wine, beer and iced coffee on tap, which is also a nice amenity – Andy Snedeker especially come 4 p.m. on a Friday afternoon.

AZRE: What was one challenge with the move?

AS: We have been in the same space for 15-20 years and the amount of files and clutter that we have accumulated over the years wasn’t able to be moved over. There’s not enough room. In the new office, we are moving more towards a simplistic and more paperless environment.

AZRE: Who had the most stuff to move?

AS: Brian Lee, one of our industrial senior managing directors, had his work cut out for him. He has been in the business for years and I think he has kept every piece of paper he has ever received. There are piles and piles of papers on his desk with no filing system. In the office, we call it ‘organized clutter’ but if you ask him where anything is, he can immediately dig it out – surprisingly!

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TRENDSETTERS SkySong opens for business

T

he fourth commercial office building at SkySong — the ASU Scottsdale Innovation Center — officially opened in December and is already 50 percent leased.

In October, Brightcove, a pioneering force in the world of online video, signed a lease to occupy 13,000 square feet of the first floor. Then MindBody, a leading provider of cloud-based business management software for the wellness services industry, signed a long-term lease to occupy 28,229 square feet in November.

“The construction of SkySong 4 has gone very smoothly,” says Sharon Harper,

The ‘urban cul-de-sac’ Tempe-based LVA Urban Design Studio broke ground in mid-December on a luxury, mid-rise condominium complex designed to feel like an urban cul-de-sac located in Downtown Scottsdale.

The concept originated from LVA President Steven Voss and his wife Wendy, who will be among the community’s first residents.

The direction given to architects, Allen + Philp Architects, Voss says, was to create a replica of the cul-de-sac sized living experience that he and his family currently enjoy, but in a vertical, urban, mixed-use setting with a “resort” feel.

Main Street Place’s 12 condos — averaging 2,400 square feet each — are located on the upper three floors, with 8 | March-April 2017

president and CEO of Plaza Companies.

“We are thankful for the work done by DPR Construction and its subcontractors – they have constructed a building that is unique in character and that will draw people in to its work environment.”

Construction on SkySong 5 is expect ed to begin in Spring 2017. Pre-leasing is underway, with Andrew Cheney and Craig Coppola of Lee & Associates serving as brokers for the project.

MAIN STREET PLACE: The condos are located on the northeast corner of Main and 75th Streets, just east of Scottsdale City Hall and the Civic Center Mall.

a smartly designed common area on the second floor featuring a hot and cold spa/plunge pool. Along with the shared deck on the second story, Main Street Place will offer mixed-use retail or offices on the ground floor and a parking garage for residents.

“These units definitely take the concept of indoor-outdoor Arizona living to the next level,” says Bob Nathan of Engels-Voelkers, the brokerage firm handling the project’s sales.

Priced from $800,000 to $1,975,000, fully finished, three units have already been sold, and the project is scheduled for completion November 2017.

SOLAR HEATING UP McCarthy completes APS’s largest solar project to date

E

nergy providers like Arizona Public Service continue to invest more attention and resources on the development of solar power plants to capitalize on the region’s annual 300plus days of sunlight.

McCarthy Building Company recently completed a large-scale Red Rock Solar Plant for APS located on 400 acres in Red Rock, Ariz., about 30 miles south of Casa Grande. The Red Rock Solar Plant represents APS’s largest solar plant to date with 2,286 single-axis trackers supporting 182,880 photovoltaic panels generating 40 megawatts of solar energy.

According to the Solar Engery Industries Association, an average of 164 homes can be powered by one megawatt of solar photovoltaic panels.

To date, McCarthy’s Renewable Energy team, strategically based in Arizona, has completed several largescale solar installations across the United States, representing a combined capacity of more than 800 MWac of energy production.

“Red Rock is the sixth solar project we have worked on for APS, which has rapidly expanded its solar portfolio and solar leadership in the state,” says Scott Canada, senior vice president of the Renewable Energy team at McCarthy Building Companies.

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9

EXECUTIVE PROFILE

Journey to the top Valley CRE expert went from college intern to president and co-founder of his own firm

By DAVID MCGLOTHLIN

B

efore he was 23 years old, Jon Rosenberg was actively leasing, selling and managing properties all over Arizona.

He earned his real estate license while still in school at the University of Arizona in Tucson, which was also when he began his commercial real estate career, training at both CBRE as well as Tucson Realty and Trust.

Rosenberg says learning all the different aspects of the industry at once was “like drinking water from a firehose.”

He learned quick though, and eventually ventured out on his own at the ripe age of 25, and co-founded LevRose Commercial Real Estate with Robert Levine.

10 | March-April 2017

“I had the entrepreneurial bug from an early age,” says Rosenberg, president and designated broker for LevRose Commercial Real Estate. “At LevRose, we pride ourselves on being a longtime local firm in a sea of national firms, yet we hold our own and continue to grow.”

From a single folding table in a one room office, LevRose has grown to include more than 40 employees and is currently handling over 200 listings in the Valley. Last year, the firm did more than $100 million in total transaction volume.

Today, Rosenberg has accumulated over 20 years of experience in asset management, receiverships, commercial leasing and sales,

consulting and training.

“I’ve been the player, owner, coach and general manager,” he says, reflecting back on his career in commercial real estate. “I’ve been a little bit of everything.”

Rosenberg’s expertise is often sought out by prominent industry leaders in the Valley like Bill Gray, the longtime owner of the Arizona School of Real Estate and Business, who hired Rosenberg to broker the sale of the school about a year and a half ago.

Others include Elliot Pollock, wellknown economist and real estate consultant, and Danielle Casey, the Scottsdale economic development director.

“I very much feel that relationships are everything,” says Rosenberg. “I found with this or any industry that there’s nothing stronger than staying in touch.”

Rosenberg stays in touch with the community in a variety of ways including as a member of several boards and entrepreneurial groups.

He was recently named to the Board of Directors for the Arizona Small Business Association. He serves as Membership Integration Chair on the Board of the Arizona Chapter of Entrepreneur’s Organization. He’s also an active member of the Scottsdale Chamber of Commerce, NAIOP and the Jewish Federation.

“I get a lot of satisfaction from helping,” he explains. “Satisfaction is not always so much the commission earned but the relationships built.”

At this point in his career, Rosenberg says, “I’m in the give back phase.”

He wants to pay it forward and give back what he’s learned to the next generation, which is why he’s currently mentoring a couple up-and-coming business professionals.

Looking into the future, he says, LevRose will continue to have a very strong focus in office and retail, but is starting to do more in the industrial, medical and investment markets.

AFTER HOURS

The art of an architect Sydnor creates, connects and inspires

By DAVID MCGLOTHLIN

E

ach weekend, Douglas Sydnor, FAIA, spends a few hours exploring his artistic roots, which progressed from doodling as a kid to featuring his art today in exhibitions across the Valley.

During the week, he’s a senior architect at Gensler and has a diverse portfolio of projects in Greater Phoenix such as the Sky Harbor International Airport Command Center and the McDowell Road Linear Park in Scottsdale.

After hours, Sydnor is an awardwinning artist, published author, mentor and longtime community volunteer.

His artwork has been featured in more than 20 exhibits and museums, including his most recent solo exhibition titled “Emotions II” at the American Institute of Architects’ Arizona Gallery in September. Sydnor has also served as the chairman of the Scottsdale Sister Cities Association’s “Young Artists and Authors Showcase”

12 | March-April 2017

for the last nine years, which aims to facilitate opportunities for aspiring high school artists and writers.

AZRE: What role has art had on your life?

Art was always a big part of my youth with classes and led to some regional art exhibitions, a few ribbons and selling a few pieces. At the university, I took a detour to earn a Bachelor in Architecture from ASU and then a Masters from Harvard University, followed by over 35 years of architectural practice in Arizona.

In recent years, I’ve thought a great deal about getting back to the art and finally sat down about 18-months ago to get it underway.

AZRE: Why did you decide to revisit your artistic roots?

This new focus on art is very therapeutic and energizing, as it gives me an entirely new perspective on the visual world. I have always loved the act of creating and the act of making, and the art is a wonderful outlet outside the office.

AZRE: When did you choose your preferred mediums and style?

There were experiments with different mediums on different

materials and of different sizes.

Ultimately it led to 12x12-inch collages on canvas boards, as it offered a wide range of unpredictable possibilities.

There was also an attraction to collage as I had never worked with it before and knew it would be uncomfortable. It motivated me as I believed that it would help me explore new compositions and relationships, thereby informing the architecture.

AZRE: Who or what do you draw inspiration from?

I read quite a bit. I’ve been through 20 art books in the last year. I focused on 20th century modern American art. Then I started gravitating towards specific artists to learn more about their stories. I find myself channeling Richard Diebenkorn or Francis Bacon or Fritz Scholder’s work, but now I’m focusing more on discovering my own voice in my work, which is still early in the process.

AZRE: What motivates your art?

I try to think about what matters.

I want to get to the root of an idea more than the technique and the aesthetics of it. How can the art highlight one of the disturbing trends in society, inform people and lead them down a better path?

Online galleries of Sydnor’s after hour creations and more information can be found at douglas-sydnor.squarespace.com.

Connect with

THE 12 th ANNUAL RED AWARDS The Real Estate and Development Awards (RED) Arizona’s most comprehensive annual commercial real estate awards

Join the celebration

March 16, 2017 Chateau Luxe 1175 E. Lone Cactus Dr., Phoenix, AZ 85024

5:00 – 6:00 p.m.

Cocktail Reception and Networking

6:00 - 8:00 p.m.

Dinner and Awards

Tickets available at azBIGmedia.com

ARIZONA’S AUTHORITATIVE MID-YEAR UPDATE & FORECAST Join us we host a panel of Arizona’s top commercial real estate experts. Highlights include market analysis, all-star broker panels, networking and a cocktail reception.

Save the Date!

August 3, 2017 Call to Sponsor

602.277.6045

NEW TO MARKET A

D

E

RETAIL A PROMENADE SCOTTSDALE DEVELOPER: ShopCore Properties GENERAL CONTRACTOR: Facilities Contracting Inc. ARCHITECT: SGPA Architecture & Planning; RKAA Architects Inc. LOCATION: 16203 N. Scottsdale Rd., Scottsdale SIZE: 22,131 SF VALUE: WND START: Q1 2017 COMPLETION: Q3 2017

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HOSPITALITY B RENAISSANCE PHOENIX DOWNTOWN HOTEL RENOVATION DEVELOPER: PHX Hotel GENERAL CONTRACTOR: Holder Construction ARCHITECTS: Gensler; Loewen Design Group LOCATION: 100 N. First St., Phoenix SIZE: 17,900 SF VALUE: WND START: June 2016 COMPLETION: March 2017

RETAIL C COLLECTIVE ON BASELINE DEVELOPER: Lake Country Retail Partners GENERAL CONTRACTOR: LGE Design Build ARCHITECT: Brick & West; LGE Design Group LOCATION: Baseline Road & Lake Country Village, Tempe SIZE: 48,500 SF VALUE: $12M START: April 2017 COMPLETION: December 2017

C

B

F

RETAIL D GROVE AT MCCORMICK DEVELOPER: McCormick Retail Partners GENERAL CONTRACTOR: LGE Design Build ARCHITECT: AV3 Design; Finn Architects LOCATION: Hayden Road & McCormick Parkway, Scottsdale SIZE: 27,500 SF VALUE: $7M START: June 2017 COMPLETION: Q1 2018

RETAIL E COURTESY VOLVO OF SCOTTSDALE DEVELOPER: Courtesy Automotive GENERAL CONTRACTOR: A.R. Mays Construction ARCHITECT: John Mahoney Architect LOCATION: Loop 101 & E. Indian School Road, Scottsdale SIZE: 21,566 SF VALUE: $4.1M START: January 2017 COMPLETION: July 2017

INDUSTRIAL F CHANDLER AIRPARK DEVELOPER: Silagi Development & Management GENERAL CONTRACTOR: LGE Design Build ARCHITECT: Cawley Architects LOCATION: 2100-2150 S. Douglas Dr., Chandler SIZE: 96,957 SF VALUE: $13.2M START: October 2016 COMPLETION: May 2017

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Investing in the future Renaissance Square’s new owners announce $50M renovation

By JESSE A. MILLARD

T

he Downtown Phoenix office market ended 2016 on a high note with the $151.25 million sale of an iconic office tower complex Renaissance Square.

The deal closed in late December, with a joint venture group buying Renaissance Square, and announcing plans for a $50 million renovation of the building’s two towers.

The renovations will renew the lobbies, plaza and indoor/outdoor tenant conference center at Renaissance Square, which is located at Central Avenue and Adams Street.

Oaktree Capital Management and Cypress Office Properties purchased the two-tower office center from Hines U.S. Core Office Fund.

Eastdil Secured represented Hines and Oaktree represented itself in the transaction.

“Hines is pleased that Oaktree and Cypress acquired Renaissance Square and have kept Hines involved in the day-to-day management of the project,” says Chris Anderson, managing director of Hines. “We believe the new owner’s vision and significant capital

Chris Anderson 16 | March-April 2017

Mark Jacobs

commitment will make Renaissance Square a premier office location.”

The new owners tapped RSP Architects and Wespac Construction to create a modern vision for the property, and selected Lee & Associates as exclusive leasing representatives for the property.

Renaissance Square is next to the light rail, and consists of One Renaissance Square, a 25-story, 494,004-square-foot office tower, and Two Renaissance Square, a 27-story, 474,786-square-foot office tower.

A skybridge connects both towers, which were designed by Emery, Roth & Sons Inc. and completed in 1987 and 1989.

Renaissance Square makes up a total of nearly one million square feet including six onsite resturants.

Christine Mackay

Tenants at Renaissance Square currently include major national and regional law firms such as Quarles & Brady, Jones, Skelton & Hochuli, Bryan Cave, Gammage & Burnham, the U.S. Attorney’s Office (District of Arizona), Ernst & Young, and Gabriel Partners, a new tenant to the Phoenix market.

“We are excited to be working with Lee, RSP and Wespac who have each successfully transformed other high-profile assets and share our commitment to making Renaissance Square Phoenix’s premier office property,” says Mark Jacobs, managing director of Oaktree.

Christine Mackay, economic development director for the City of Phoenix, says the renovations for this project are exciting, and the city is eager for the new tenants that Oaktree plans to bring to the development.

She adds, “The revitalization of this iconic project will bring new life into downtown, and the plans to renovate the buildings are absolutely amazing.”

It’s the big deals and the brokers who close them that make the market an interesting one to watch. Here are the Top 5 notable sales for the months of November, December and January.

Sources: Cushman & Wakefield and Costar.

INDUSTRIAL/SALES

OFFICE/SALES

SOUTHWEST INDUSTRIAL CENTER 7775 W. Buckeye Rd., Phoenix 684,420 SF; $41.75M BUYER: Hines SELLER: Hillwood

RENAISSANCE SQUARE 2 & 40 N. Central Ave., Phoenix 965,508 SF; $151.25M BUYER: Oaktree Capital Management SELLER: Hines REIT LISTING BROKERAGE: Eastdil Secured

SAFEWAY 1115 W. Alameda Dr., Tempe 780,320 SF; $40M BUYER: Harrison Properties SELLER: Safeway LISTING BROKERAGE: JLL SPECTRUM RIDGE 750, 800 & 850 E. Covey Ln., Phoenix 220,463 SF; $26.425M BUYER: Meritex Enterprises SELLER: Principal Real Estate Group LISTING BROKERAGE: CBRE

SAN TAN CORPORATE CENTER 3100 & 3200 W. Ray Rd., Chandler 266,531 SF; $58.5M BUYER: City Office REIT SELLER: Columbia Property Trust LISTING BROKERAGE: Eastdil Secured ICE GALLERY 15501 N. Dial Blvd., Scottsdale 129,689 SF; $29.75M BUYER: ARES Management SELLER: ICE Gallery

SANTA FE INDUSTRIAL CENTER 4450 N. 45th Ave., Phoenix 367,963 SF; $22.4M BUYER: Greco & Reggi Development SELLER: Tratt Properties

ARIZONA HEALTH & TECH PARK 5835-5855 E. Still Circle, Mesa 128,589 SF; $29,724,999 BUYER: AT Still University of Health Sciences SELLER: The Alter Group

T-MOBILE 2601 W. Broadway Rd., Tempe 44,244 SF; $16.4M BUYER: Carter Validus Mission Critical REIT II SELLER: El Dorado Holdings LISTING BROKERAGE: Colliers International

WARNER CROSSING 8260 & 8312 S. Hardy Dr. Tempe 138,180 SF; $18.48M BUYER: Younan Properties SELLER: LNR Partners LISTING BROKERAGE: CBRE

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LAND/SALES

MULTIFAMILY/SALES

RETAIL/SALES

3800 LUX 3800 N. El Mirage Rd., Avondale 1,062,924 SF; $87.5M BUYER: Priderock Capital Partners SELLER: Fowler Property Acquisitions LISTING BROKERAGE: CBRE

PIMA CROSSING 8624-8776 E. Shea Blvd., Scottsdale 217,673 SF; $46.15M BUYER: Karlin Real Estate SELLER: Regency Centers Corporation LISTING BROKERAGE: Cushman & Wakefield

CITYSCAPE RESIDENCES 11 S. Central Ave., Phoenix 220,720 SF; $75.25M BUYER: Invesco Advisors SELLER: RED Development LISTING BROKERAGE: CBRE

BETHANY TOWNE CENTER 6135 N. 35th Ave., Phoenix 274,255 SF; $41.335M BUYER: The Goldman Sachs Group SELLER: NorthStar Realty Finance Corp LISTING BROKERAGE: Cushman & Wakefield, Colliers

IMAGERY ©2017 GOOGLE

BLACK CANYON MOTOR PLEX Dove Valley Rd., Phoenix 4,399,560 SF; $30.6M BUYER: HonorHealth SELLER: Westcor/Black Canyon Motorplex NE PORTER ROAD & BOWLIN ROAD, MARICOPA 1,497,301 SF; $17.643M BUYER: Fulton Homes Corporation SELLER: Communities Southwest E. UNIVERSITY BLVD. & S. FOREST AVE., TEMPE 140,263 SF; $15.240M BUYER: Education Realty Trust SELLER: Sundt Companies LISTING BROKERAGE: Cushman & Wakefield 16207 N. 3RD AVE., PHOENIX 852,294 SF; $13.3M BUYER: Taylor Morrison SELLER: Woodside Group W. WILLIAMS ROAD & N. CITRUS ROAD, SURPRISE 14,330,804 SF; $12,820,380 BUYER: Courtland Homes SELLER: Austin Ranch

SCOTTSDALE HORIZON 9259 E. Raintree Dr., Scottsdale 291,391 SF; $51M BUYER: MG Properties Group SELLER: Rockwood Capital LLC LISTING BROKERAGE: JLL THE ISLE AT ARROWHEAD RANCH 20250 N. 67th Ave., Glendale 244,608 SF; $42M BUYER: Green Leaf Partners SELLER: Equity Residential LISTING BROKERAGE: Marcus & Millichap

PARK WEST 9712-9832 W. Northern Ave., Peoria 192,674 SF; $33.45M BUYER: Park West Retail I SELLER: The Howard Hughes Corporation ALAMEDA CROSSING 1717-1813 N. Dysart Rd., Avondale 131,942 SF; $24.675M BUYER: Phillips Edison Grocery Center REIT II SELLER: West Valley Properties BELL TOWER VILLAGE 4915-4965 W. Bell Rd., Glendale 93,925 SF; $14.75M BUYER: DPC Development Companies SELLER: Safco Capital Corporation LISTING BROKERAGE: Cushman & Wakefield

CITYSCAPE RESIDENCES: The 224-unit apartment complex, located above the Hotel Palomar in Downtown Phoenix, sold for nearly $336,000 per unit.

18 | March-April 2017

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LEGISLATIVE UPDATE creating a fairness contention where taxes are shifted causing higher taxes for other non-city jurisdictions including a fiscal impact to the state.

Because it appears that ATRA’s bill may move in an atmosphere where K-12 funding is paramount to policymakers, NAIOP-AZ has actively engaged and polled its members to get their views of this tool.

While there is a wide continuum of opinion, the consensus appears to be that our members want to retain the tool but also agree some measure of reform is prudent. In order to find that reasonable measure of reform without unduly impacting the utility of the tool, NAIOP-AZ has asked for a stakeholders’ process to be held by the legislative sponsors and below are the five principal points that will guide our negotiations as unanimously approved by our Board of Directors:

1) The commercial real estate industry

Property tax abatement incentive on front burner at Legislature

A

bill put forward by the Arizona Tax Research Association this session — HB 2213 — would significantly reform a key economic development incentive for cities and developers referred to as the Government Property Lease Excise Tax or GPLET. At its core, GPLET is designed to provide an eight-year property tax abatement for projects that generate needed economic activity for urban and blighted areas that otherwise may remain undeveloped.

HB 2213 takes away the portion of the abatement that would otherwise go to schools if projects were fully taxed during the eight years, which widely varies from tax jurisdiction to tax jurisdiction but is on average, roughly half the benefit of the abatement.

This bill is a reaction to a December 2015 State Auditor’s General Report that found problems with the application of the law as interpreted by cities and that the vast majority of GPLET projects were grandfathered

20 | March-April 2017

has a long history of supporting efforts to attract high wage jobs to our state.

2) GPLET is especially needed as an economic development tool so long as Arizona cities have among the highest commercial property tax burdens in the U.S. if we are to retain our competitiveness with neighboring states in job creation.

3) The CRE industry played a key role in the retention of the GPLET tool in 2010 when the State Legislature last made significant changes to the statute.

4) We are aware of a recent Auditor’s Tim Lawless NAIOP-AZ

development agreements pre-dating the newer and higher excise rates enacted under the last reform of the tool in 2010.

The key argument in favor of the program is that it is one of the few economic development tools the state has to bring greater economic activity and jobs to areas that are more blighted. Per ATRA, the key con is that it creates an uneven playing field where similar properties often in the same municipality are taxed differently

General Report that has recommended further changes to the GPLET statute. Our memberships are open to seriously studying and considering proposed measures to better assure accountability and the on-going responsible use of this tool by local units of government.

5) The CRE industry will continue to advocate for property tax reform measures like the lowering of the assessment ratio for all commercial properties to make our state more economically competitive.

Tim Lawless is the president of NAIOP-AZ.

Infrastructure connects

A

rizona’s infrastructure is the subject of significant debate this legislative session. While infrastructure can be defined in many ways, it is essential for the efficient movement of people, goods and elections.

Last fall, a citizen task force studied the issue of transportation funding.

Their efforts resulted in several pieces of legislation considered by the Legislature this year. One is a ballot measure raising the gas tax, currently at 18 cents per gallon for cars and light trucks to 28 cents per gallon. Yet another bill increases fees to generate revenue for Arizona’s roads and highways. The Highway User Revenue Fund will no doubt be an issue in budget negotiations.

Governor Doug Ducey in his State of the State address touted broadband infrastructure for rural Arizona schools.

The governor explained that schools need bandwidth to perform and grow.

A $5 million budget recommendation for broadband infrastructure will draw down one-time federal funding to help connect Arizona’s rural schools.

Rebecca Timmer AAED

In his executive budget, Gov. Ducey stated that developing a world-class higher education system requires ongoing investment in university research and development. New infrastructure investments will encourage innovation and expand economic opportunities for students by attracting high-quality faculty, who in turn will provide applied learning opportunities to students pursuing targeted career opportunities. The Arizona Biodesign Institute on the ASU

Main Campus is only one of the shining examples of how funding research infrastructure results in a significant return on the investment.

The governor’s budget recommends a permanent commitment to the three in-state universities to support approximately $1 billion in new research and development infrastructure, including deferred maintenance projects, by diverting transaction privilege tax revenues paid by the universities to enable a new 30-year bond program.

The recommendation calls for an investment of $110 million in the first three years alone.

Each of these infrastructure projects benefit Arizona and its economic development efforts. The Arizona Association of Economic Development is at the State Capitol each day talking with lawmakers about the benefits of economic development tools and infrastructure investment. As the leading voice for economic development, AAED will continue to advocate for its members.

Rebecca Timmer of Dibble Engineering is the AAED Governmental Affairs chair.

21

LEGISLATIVE UPDATE

Arizona’s economic development future

IMAGE COURTESY, ARIZONA DEPARTMENT OF TRANSPOTATION

A

t the close of 2016, I wrote about how there were rumblings over amending the Government Property Lease Excise Tax - aka GPLET law. Well that time is here and HB 2213, a GPLET reform bill sponsored

by Rep. Vince Leach R-Tucson, is real.

GPLET is the only economic development tool in the state of Arizona. Valley Partnership supports finding solutions to the concerns with GPLET as outlined in a December 2015 audit, but we are opposed to any effort that will chill investment in our state.

We need to instead get back to the purposes intended for this tool by the Legislature in 2010.

As a brief refresher, GPLET allows Arizona’s cities, towns, counties and county stadium districts to lease property that it owns to private parties for nongovernmental uses, and to develop unused or underutilized property to help revitalize communities.

Since this property is owned by the government, it is exempt from paying property taxes. Instead, GPLET is assessed and distributed to taxing jurisdictions.

22 | March-April 2017

Cheryl Lombard

Valley Partnership

In 2010, the Legislature amended the GPLET laws to increase the GPLET rates for new leases entered into on or after June 1, 2010, to limit lease terms, and to eliminate the ability to reduce payments over time. As development is starting to come back in Arizona, and especially the Valley, this tool is being utilized by cities – also resulting in discussion about potential GPLET overuse.

A December 2015 audit of GPLET by the Arizona Auditor General recommended that parties

administering GPLET should develop and implement policies and procedures to help ensure that GPLET revenues are accurately calculated, collected, distributed and reported.

Valley Partnership supports this recommendation and will work with key cities to refine policies and procedures to ensure proper and timely payments.

Another issue that will continue throughout the legislative session will be a permanent solution to fund the Highway User Revenue Fund (HURF), monies intended to be used for the construction and maintenance of Arizona’s streets and highways.

Last year’s one-year fix was a great step, but almost $2 billion HURF monies have been diverted in recent years to fund state programs other than the primary purpose of HURF. Valley Partnership supports the effort to identify and implement a sustainable solution to protect and expand our state’s roadways.

Cheryl Lombard is the president and CEO of Valley Partnership.

Creative alliances can stand the test of time T

en years ago, the Urban Land Institute published Ten Principles for Successful Public/Private Partnerships. That publication set forth core principles essential for successful accomplishment of joint development by the public and private sectors, benefiting both, that neither could achieve independently. Those ten principles remain as applicable today as they were then, but the challenges facing urban development have changed dramatically.

In 2005 and 2006, the real estate market in Arizona and throughout the country was booming and numerous examples of successful public/private partnerships (PPPs) were evident. The recession that began in 2008 brought most real estate development to a halt, caused capital markets to dry up, precipitated bankruptcies and left governments at all levels financially stressed.

Five years ago, 42 states had budget shortfalls totaling $103 billion and a National League of Cities survey noted 60 percent of the nation’s communities delayed or canceled capital projects due to fiscal conditions. Although economists say the recession technically ended in June 2009, the trough was so deep that even today recovery is not complete.

Markets in some regions across the country have recovered completely, while others are still struggling.

PPPs have become critical to enabling the transformations that are taking place in our urban environment in both primary and secondary markets.

No one said PPPs were easy. Globally, less than 15 percent of government expenditures are allocated towards PPPs. But as communities face the challenges of aging infrastructure, stimulating job creation, creating opportunities for affordable housing, improving

Deb Sydenham ULI Arizona

access to high-quality education and healthcare, and fostering economic competitiveness, the people and places focusing toward creative alliances and collaborative action are taking control of their destinies and effectively using the resources and skills of all sectors to shape development.

PPPs are a critical vehicle for accomplishing key community development objectives with regard to real estate development and redevelopment, infrastructure and public facilities, and monetization of existing public assets for public benefit. These partnerships tap the expertise, tolerance for risk and financial resources of the private sector to help achieve public goals. However, they are complex, and the public and private sectors approach such transactions with different skills, concerns and perspectives.

The vision guiding a PPP must be subscribed to by key stakeholders, including elected officials, the developer and neighbors, as well as civic, philanthropic and business leadership. The developer, “community� and government must have a common vision and compatible goals. A shared vision that is created and embraced by key stakeholders will stand the test of time and will persevere through implementation.

Successful PPPs fuse market potential, physical reality and community goals.

This success breeds confidence, and confidence breeds trust. Unlimited opportunities exist to be inspired by those who are passionate about improving the places where we live, work and play, and tapping into innovative and creative alliances that get it done.

Deb Sydenham, FAICP, is the executive director of ULI Arizona District Council.

Ten Principles for Successful Public/Private Partnerships

1 Prepare properly for public/private partnerships 2 Create a shared vision 3 Understand your partners and key players 4 Be clear on the risks and rewards for all parties 5 Establish a clear and rational decision-making process 6 Make sure all parties do their homework 7 Secure consistent and coordinated leadership 8 Communicate early and often 9 Negotiate a fair deal structure 10 Build trust as a core value SOURCE: Mary Beth Corrigan et al., Ten Principles for Successful Public/Private Partnerships (Washington, DC: ULI, 2005)

23

CONSTRUCTION STAFFING

The Brewer difference

Firm helps build workforce pipeline for Arizona's construction industry

By DAVID MCGLOTHLIN

A

t Brewer Companies, Arizona’s largest new construction residential plumbing company, the average salary for second-year plumbers surpasses $50,000 per year. Yet, the company is consistently looking for new team members to meet the demands of their current and growing customer base.

Mike Brewer, founder of Brewer Companies, has taken it upon himself to deliver new energy into the discussion focused beyond the traditional “workforce development” dialogue and towards something more specific, developing a labor force within the construction trades.

Nationally, 86 percent of construction firms report challenges in filling hourly craft positions that represent a bulk of the construction workforce, according to the Association of General Contractors.

For Brewer, it’s a journey that began out of necessity. “The Brewer difference is all about high-quality, on-time delivery and reducing call-backs, which requires great people,” Brewer says. “Developing our next generation of construction trades workforce is integral to making that happen for my company and the industry.”

Brewer’s efforts began with the development of a series of lunch tours featuring the Valley’s construction trade programs at prominent Joint Technical Education District schools (JTEDs) with the Arizona Subcontractor’s Association, policymakers and leaders from the homebuilding industry to learn about what training resources are currently available, and explore ways to strengthen the student pipeline in an effort to create a more robust and accessible labor force.

“We are hearing from the business community that they would like to pursue more projects, but they don’t

24 | March-April 2017

have the labor pool to complete all the work they would like,” says Phoenix Vice Mayor Kate Gallego.

DEFINING WORKFORCE DEVELOPMENT Ask a room full of people to close their eyes and picture “artwork” or “food” and you will get as many talents and flavors as you have people.

When people think about workforce development, it’s the same thing.

With specific focus on construction workforce development, Brewer says, “My goal is to bring together my industry peers, customers and

WELDING: A total of 207 high school students are currently enrolled in EVIT's welding program, which is home to Arizona's newest International Accredited Test Facility.

even competitors to learn about what resources are currently available to train people in the construction trades area and to drive a collective dialogue and propose solutions as to what we can do, as an industry, to generate more excitement around entering our career field.”

25

CONSTRUCTION STAFFING

HANDS-ON LEARNING: Currently, 677 students are enrolled in EVIT's construction-related programs, receiving hands-on training to prepare them for their desired careers.

WHAT’S CURRENTLY AVAILABLE With 14 JTEDs across the state, Arizona has the needed facilities and tools to train the next generation of workers in a diverse range of construction trades, but the facilities are being underutilized.

JTEDs like the East Valley Institute of Technology in Mesa offer construction technologies programs designed to develop hands-on skills in multiple disciplines including electrical wiring, plumbing, masonry, framing, roofing, drywall finish work and welding.

Dr. Sally Downey, superintendent at EVIT with 25 years of experience in the Career and Technical Education field, says, “students learn, work and think with their hands.”

Upon completing the industry-driven curriculum that lasts 2-4 semesters, students receive the needed certification to start working such as OSHA 10, which is required by all contractors for employment and NCCER, which is available in each trade.

26 | March-April 2017

From there students can enter a career in masonry, construction management and architecture or as a plumber, carpenter or electrician. All of which have average entry level salaries between $15-18 per hour.

Dr. Downey describes her work as “turning passions into paychecks.”

She says by helping students find something they are passionate about, like a trade, they constantly want to improve and that drives themselves toward success.

ASPIRING TO THE CONSTRUCTION TRADES Brewer thinks historical references to the importance of earning a college degree has caused many to overlook the construction trades as a career choice that provides the opportunity to support a nice lifestyle and family.

Ironically, at the same time that homebuilders are struggling to build a strong, consistent and robust workforce of skilled labor, large numbers of college graduates Mike Brewer struggle to find

work in their field of study and leave college with student loans amounting to thousands of dollars of debt.

The labor market is far from ideal for young graduates, according to the Economic Policy Institute, which reports 9.7 percent of young college graduates are neither currently enrolled or employed compared to 8.4 percent in 2007.

“College isn’t necessarily the answer for everyone but until our industry starts leading with the dollars, sense, and stability of a career in the construction trades, we are going to continue to come up short”, says Brewer.

He speaks from experience, having started work as a young plumber right after high school, before climbing his way up the company ladder and eventually purchasing the business.

“Going into debt to get a degree for many doesn’t make sense,” he explains, "but only if you understand that there is a great, viable and appealing alternative where you can also make good money.”

Brewer says the construction trades enable students to get paid to learn a trade at a starting salary of $30,000-50,000 per year with no student loan debt.

During his meetings, coffees and meals with homebuilder CEO’s, policymakers and colleagues, Brewer likes to sing a line from an old Willie Nelson song with a personal twist.

“Mommas don’t let your babies grow up to be plumbers,” he sings off-key, but with a starting salary of $40,000 and no student loan debt, many mommas might be changing their tune.

Dr. Sally Downey

Kate Gallego

HOSPITALITY

Operation renovation

28 | March-April 2017

Arizona’s hospitality properties get made over to appeal to a new generation of visitors

By DAVID MCGLOTHLIN

W

Moxy Hotel

ith an impressive collection of new construction, renovations and modernization, Arizona’s hospitality industry has undergone more makeovers in the last year than the “Real Housewives of Beverly Hills.”

Older hospitality assets experience major facelifts and overhauls to keep up with the changing standards of Arizona’s hospitality industry, which contributes $12.8 billion annually to Arizona’s Gross Domestic Product.

Meanwhile, trendy boutique hotels continue to pop-up across the Valley attracting guests with chic modern designs and technology.

Overall, Robert Rauch, founder and chief executive officer at RAR Hospitality as well as an internationally recognized hotelier who manages several hotels in the Valley, describes Arizona’s hospitality industry as rock solid with four consecutive years of growth.

While Rauch predicts the industry is headed for a great 2017, he notes all the renovations occurring across the state seem to have a nod to the Millennials, which now make up the largest generation in the United States.

Reflecting back on his 40-plus years of hospitality management experience, Rauch says, “20 years ago, big lobbies with fancy restaurants were a thing. 10 years ago it was light, bright and airy.

Now it is social, social and more social.”

Today’s travelers are less drawn to posh, super-luxury, all granite and marble lobbies of iconic hospitality properties from 20-years ago that had no economic return.

“Today, look at the trendy hotels,”

says Rauch. “They are classy but very contemporary, very socially inviting, not begging for you to say, ‘I wonder if I should sit on that super plush couch.’”

He described the former RitzCarlton at 24th Street and Camelback Road as the quintessential stuffy hotel and restaurant that was transformed into the Camby, which appeals to a fun-loving youthful crowd.

Instead, the new design trends that Rauch sees gaining the most momentum include removing standard check-in desks, creating more social public spaces and more minimalist designs.

“This will get people out of their rooms and into social spaces, spending both time and money at lobby bars and cafes,” he explains.

The idea is to create on-site amenities for visitors to enjoy along with more socially engaging common spaces for guests to connect through their shared interests.

This may translate into a lively rooftop pool and bar, state-of-the-art fitness centers and conference rooms or hotel elevators equipped with a photo booth to take selfies like at the new Moxy Hotel in Tempe, which opened last April.

Designed to be inclusive, connected and progressive, the 186-room boutique hotel boasts a fast Wi-Fi network and being the first Marriott brand hotel to use Bluetooth radio frequency identification (RFID) for keyless room entry.

“Technology is the big difference today,” says Rauch. “Without renovation, you are left behind.”

Embassy Suites by Hilton reports, 29

HOSPITALITY PROJECT TRACKER

Here’s a look at other renovations and planned additions to Arizona’s hospitality market.

Alan Klein

Robert Rauch

currently 45 percent of all its properties are undergoing renovations aimed at modernization and by 2019, more than 75 percent of Embassy Suites by Hilton properties will have an interior that is less than six years old.

That includes the yearlong, top-tobottom $25 million transformation of the former Chaparral Suites in Scottsdale into the Embassy Suites by Hilton Scottsdale Resort, which held its grand opening in October.

Managed by Crescent Hotels & Resorts, the property’s renovations consisted of upgrades to the entire 15-acre property, all 312 suites plus the 11,000-square-foot conference center, 60,000 square feet of flexible meeting space and all common areas.

“We’ve replaced every stick of furniture, updated every room, and refreshed every surface from the lobby to the landscaping to the terra-cotta roofing,” says Alan Klein, general manager of the Embassy Suites by Hilton Scottsdale Resort.

Today’s savvy travelers now prefer guest rooms that have multi-function “zones” with flexible design layouts.

By removing permanently built fixtures like the old room’s designated desk or wet bar and installing easily moveable furniture, guests can adapt the suite to the best way that suits them, explains Klein.

He is very excited about 2017 adding, “We have already seen a very nice increase in the number of bookings coming into the resort.”

Looking at 2017 and beyond, Rauch predicts four-percent rate growth and two-percent occupancy growth for the state’s hospitality industry.

30 | March-April 2017

Hotel Valley Ho AC Hotel Tucson

AC Hotel Tucson by Marriott will be the first hotel built in Downtown Tucson in more than 30 years. Construction began on the hotel in December 2015. Standing eight stories tall, the top three floors will contain the hotel’s 136-rooms designed for today’s business traveler. The hotel’s developer, Scott Stiteler, manager of Tucson Urban LLC, says that every single room of AC Hotel Tucson will have an unobstructed view of the city, while the sixth floor will have an open-air pool with a self-service bar. The hotel will open for business in summer 2017.

Hotel Valley Ho originally opened in 1956, and was the first hotel in Scottsdale to have central air conditioning, which made it the first to be open year-round. It was also the first to employ Southwestern architecture and to feature a European plan. It underwent a $4 million renovation in 2005 to keep the signature architectural elements intact, and reopened with new furniture and décor throughout the hotel’s lobby as well as its restaurant - ZuZu Lounge.

Mountain Shadows Resort Hilton Tucson El Conquistador Golf & Tennis Resort

In Southern Arizona, the longest-running AAA Four Diamond resort in the state, is slated to complete the largest renovation in the resort’s 34-year history by spring 2017.

After HSL Properties acquired the asset in 2015, it announced a $16 million renovation and capital improvement project, which includes new indoor/outdoor amenities, refreshed guestrooms, unique garden concepts and upgrades to the lobby and lobby bar. Located at the base of the Santa Catalina Mountains, the resort consists of 428 guestrooms, 139 village-style casitas and five pools offer a unique Southwest experience in a verdant oasis-like setting.

Westroc Hospitality and Woodbrine Development Corporation are partnering to develop the new Mountain Shadows Resort in Paradise Valley, which is the first new-build hotel to the area in the last seven years. It's replacing the former Marriott Mountain Shadows Resort, one of the first resorts in the area, which closed in 2004 and was demolished in 2014. “Woodbine has had its eye on this piece of property for years, knowing how much potential exists to restore Mountain Shadows to its former glory,” says President and CEO John Scovell.

Opening in early 2017, the boutique luxury hotel will feature 175-modern guest rooms in two buildings, an adjacent building with 31-hotel condominiums, a neighborhood restaurant and market, high-tech fitness facility and the rehabilitated Mountain Shadows Golf Course.

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31

CONSTRUCTION IN INDIAN COUNTRY

Developing on tribal land The benefits and challenges facing developers

By JESSE A. MILLARD

R

ecently, the Salt River Pima-Maricopa Indian Community has been garnering a lot of development buzz.

While developing on tribal lands can be a complex process, developers are taking on the challenges in order to take advantage of other perks associated with building on tribal lands like various tax benefits.

New projects in the Talking Stick area have helped transform the casino destination into an entertainment district, attracting people from across the Valley to enjoy its new amenities.

CONSTRUCTION UNDERWAY: The McKesson Corporation regional headquarters being developed on the Salt River Pima-Maricopa Indian Community provides ample land in a central location for the 271,000-square-foot offices. (Photo courtesy of SRPMIC) 32 | March-April 2017

Topgolf and Salt River Fields made the area more family friendly. The opening of OdySea Aquarium and Dolphinaris last year along with iFLY, an in-door skydiving facility, have cemented the area’s reputation for recreational fun.

Adding to the fun in the sun within the SRPMIC, a bird aviary and hotel are in the planning stages within OdySea’s 35 acres, according to a recent report by the Scottsdale Independent.

There was also talk of the Arizona Coyotes building a new arena on the community, which could spark up again now

that the plans for an arena in Tempe are dead in the water.

Pilar Thomas, of counsel at Lewis Roca Rothgerber Christie’s tribal lands practice group, says there are exceptional development opportunities on tribal lands, and developers should be patient, persistent, flexible, respectful and fair.

“Tribes that are looking for development are seeking to promote community and economic development – through job creation, revenue generation and other benefits (a) development may bring,” she says.

For instance, the construction of a 271,000-square-

foot office complex for McKesson Corporation that will accommodate 2,200 employees, which recently broke ground.

THE BENEFITS Tribes are in a unique position to incentivize development within their communities through tax advantages that are unavailable on state or city owned lands.

For example, Thomas says, some of the tribes do not collect sales or property taxes, or have a lesser tax rate than other cities. There are also tax benefits for employers and reduced

33

INDIAN COUNTRY million-dollar expansion of Harrah’s Ak-Chin Casino, which is estimated to cost $100 million.

ADDING NEW ATTRACTIONS: Topgolf (top) and iFLY (bottom) are two venues that have made the Talking Stick Entertainment District more family-friendly.

taxes on economic activities.

“Depending on the amount of potential taxes, this could be a considerable economic benefit for a project,” Thomas says.

Specifically, the SRPMIC has many benefits when it comes to attracting developers.

The community is centrally located, and has the Loop 101 running through it, says Quannah Dallas, manager of the economic development division at the SRPMIC. “If you’re looking for raw land, or a lot of acreage, it can be difficult to find in the East Valley,” Dallas says. “That 34 | March-April 2017

visibility and ease of transportation is something that’s really attractive to the developers.”

Much of the land around the Loop 101 that stretches through the Salt River Community is zoned C3 for general commercial use. Known as the Pima Commercial Corridor, the area has been a magnet for development.

“For us, it’s just brought so many economic opportunities,” Dallas says.

Of course, SRPMIC isn’t the only tribal community to be in build mode.

In Southern Arizona about 60 miles south of Phoenix, the AkChin Indian Community completed updates to its regional airport last May to help the community compete for aviation business.

Then in June, the Ak-Chin Indian Community Tribal Council broke ground on the first phase of its multi-

THE CHALLENGES Negotiating on tribal lands can be a complex process, Thomas says.

Federal law and regulations, likely involvement from the Bureau of Indian Affairs, coupled with waiting on the federal government, makes the negotiations complex, she adds.

First, the Bureau of Indian Affairs has to approve a lease or the Right of Way Act, and implementing regulations apply.

On top of that, federal environmental laws, such as the Clean Water Act and the Endangered Species Act, will be considered by the federal government when deciding whether to approve or deny a lease or Right of Way, Thomas adds.

Another tribal lands expert at Lewis Roca, Associate Frances R. Sjoberg, says the local and state governments may have to be consulted with too in order for development projects to move forward.

Then there’s allotted land, another complex component that developers must consider.

Many tribes have allotted land, which are land parcels that have been given in a family’s name in perpetuity, says Marcelino Flores, former council member of the Pascua Yaqui Tribe and leasing coordinator at Pima Leasing and Finance Corporation.

With allotments, developers have to work out a lease agreement for the development of the land, Flores says.

Sometimes there can be multiple owners of an allotted land, and sometimes negotiations have to involve the tribe or the office of the trustee, he adds.

One common misconception the Salt River Community encounters is developers think the tribe owns all of the land within the community, Dallas says.

Individual owners own allotted land, and developers have to work with them to get a land lease.

Dallas says, SRPMIC is very up front about the complexities of the process when developers approach the community.

Quannah Dallas

Marcelino Flores

Interested developers are shown the Salt River Community’s master lease process right from the start.

If the land that they want to develop is tribal land, then developers have to negotiate the lease with the government. If it’s allotted land, then they’ll negotiate with the allotment owners, Dallas says.

Allotments are generally 20-acre parcels, she says, and can have any number of owners who have to approve the lease.

When there’s allotted land, the tribe doesn’t negotiate with the developers, Dallas says, but the tribe does help facilitate negotiations.

Once the lease that conforms with community and federal law is negotiated, Dallas says, then there’s a public hearing process, a review by a land management board (which is similar to a planning and zoning board) and then the elected tribal council needs to approve the lease.

Blessing McAnlisVasquez

Frances R. Sjoberg

as just one example, which broke ground in 2009 to stimulate the local economy.

Blessing McAnlis-Vasquez, marketing project manager for the SRPMIC, says, the Talking Stick area is striving to accommodate all types of visitors. “Our focus is to make sure everyone is catered to in some way shape or form,” McAnlis-Vasquez adds.

In addition to new amenities near casinos, Flores says many of the casinos in Arizona are starting to hit its 15-20-year mark, spurring major renovations to attract the younger Millennial markets and create an environment of entertainment.

Moving forward, Flores believes

Pilar Thomas

tribes need to start shifting towards a more proactive stance to get areas zoned and designated for certain markets, rather than waiting for a developer to approach the community.

Flores describes the proactive approach as “nation building.”

“Some tribes are there,” adds Flores.

“I mean, they’ve got it down to, ‘Hey, if you’re going to do a development, you’re going to have the exterior paint fall within this pallet, no bright purple.’

But not all of the communities are there yet.”

Flores thinks the doors to development on tribal lands can still be opened further.

OPPORTUNITIES ABOUND Lately, tribes around the state have been shifting towards creating entertainment districts centered around its casinos as a means of diversifying tribal communities’ economies.

If a tribe wants a development to happen, Flores says, the community will get the ball rolling and it will get rolling easier there than anywhere else.

Flores points towards the Salt River Community developing Salt River Fields ODYSEA IN THE DESERT: The 35-acre development in the SRPMIC consists of the OdySea Aquarium, Butterfly Wonderland and Dolphinaris.

35

INDIAN COUNTRY

6

things to know when developing on tribal land

By JESSE A. MILLARD

D

eveloping on tribal land can be a complex process with many moving parts.

Developers will have to work with the federal government, its (slow) speed, regulations and the rules and laws of the tribe to make something happen.

Pilar Thomas, of counsel at Lewis Roca Rothgerber Christie’s tribal lands practice group, says there are exceptional development opportunities on tribal lands, and developers should be patient, persistent, flexible, respectful and fair.

So, what are some things you should know when developing on tribal lands?

To get to the bottom of that question, AZRE spoke with the tribal land use attorneys at Lewis Roca Rothgerber Christie, Pilar Thomas and Frances R. Sjoberg to see what developers should know when developing on tribal lands.

1

Understand the tribe’s internal laws and processes for land development Developers should understand how decisions are made at the tribe, what laws and procedures are in place for land development and if there are any taxes or regulations associated with the potential development. Federal and state law may be implicated for a development, depending on the 36 | March-April 2017

type and scale of the project, Thomas explains, and tribal laws will always be applicable.

2

Don’t be worried about sovereign immunity Developers who are new to working with tribes usually have an outsized fear of sovereign immunity, Sjoberg says. Or developers are concerned a tribe will use its sovereign immunity to shield itself from contractual obligations. Tribes are generally reasonable about requests for an appropriate waiver of sovereign immunity, Sjoberg adds. These waivers can be tailored to protect a developer’s interests without opening the door to a tribe’s treasury.

3

Patience is key Some tribes have limited resources, which can keep tribes from negotiating quickly. Tribal communities take a deliberate approach with developments and the use of land and natural resources. Thomas says this should not be interpreted as incompetence or lack of capability.

an understanding of the tribe’s values and goals, Thomas says. Tribes are sovereign nations with governments and government officials, so it’s important to build these relationships and be respectful.

Reach out to the leaders Engage with key tribal leaders within the tribe, and have them work to champion the project, Thomas says. Work with the chairman, president, governor, chief and other council members to ensure success.

5

Work together Projects generally require compliance with federal laws, Sjoberg says. So, it’s important to join forces with the tribe to resolve non-tribal requirements to move the development through the federal process.

6

4

Get to know the tribe In order to have a successful project, developers should get to know the tribe, research it and its history, the community and get Frances R. Sjoberg

Pilar Thomas

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37

WEST VALLEY UPDATE

The domino effect New Buckeye developments position West Valley for growth

By DAVID MCGLOTHLIN

38 | March-April 2017

P

hoenix’s West Valley is on the rise. In fact, 52-percent of the Phoenix area’s future growth is expected to occur in the West Valley, according to the Greater Phoenix Economic Council.

A taste of what that growth may look like can be seen today in the City of Buckeye where a successful masterplanned community is spurring the development of a nearby commercial district, creating tremendous growth potential for businesses and economic development opportunities.

Since its grand opening in 2004, Verrado — a master-planned community spanning 8,800 acres with plans for 14,000 homes in Buckeye — has made headlines for being one of the best-selling master-planned communities in the nation, and Buckeye has too for being one of the fastest growing cities in the country.

Consistent with the philosophy that “retail follows rooftops,” a 150acre commercial district, dubbed the Marketside District, has seen an increase in interest from site selectors and businesses.

The mixed-use hub is being built in phases based on user demand, but plans currently include robust retail, office, hospitality and medical uses on the commercial side and both single-family and multifamily on the residential side.

Developers DMB tapped Cushman & Wakefield to market and lease the site’s retail space, Lee & Associates for office space and JLL for multifamily.

Located on both the east and west sides of Verrado Way between McDowell Road and fronting Interstate 10, Michael Burke, senior vice president of commercial for DMB, says, “We see this as a regional site.”

Strong leasing activity at Verrado coupled with Marketside’s location creates the potential for the commercial district to become the region’s next mixed-use hub, similar to Westgate, but closer for residents in the far West Valley.

“Buckeye has a tidal wave of growth heading its direction.

It’s no longer seen as this sleepy ranching community.”

– T.A. Shover

Not every West Valley city needs or wants a Westgate, says Sintra Hoffman, CEO and president of the Western Maricopa Coalition, but Buckeye has the population to support a regional retail, employment and recreation hub.

Her role at WESTMARC is to provide the numbers and marketing strategies for West Valley cities, in this case specifically Buckeye, to show it has the demographics, household income levels and population size to warrant outside business interests.

Hoffman says, “These mixed-use projects showcase we [the West Valley] have the workforce, we have the housing and now we are getting the amenities.”

Buckeye’s population increased by more than 11,700 people in the last

five years, says Len Becker, economic development director for Buckeye.

With 1,400-home permits issued to Buckeye last year, the highest of all West Valley cities, Becker says, “that bodes well for the momentum moving forward for the city, which in turn drives a lot of the retail, professional services, employment and educational opportunities and really elevates the community into a full-service community rather than a veteran community.”

MARKETSIDE WEST: Located on the west side of Verrado Way, this half of the commercial district will be home to smaller users like the Corner Store, which opened early last year.

39

WEST VALLEY UPDATE

What’s needed next for Buckeye, Becker says, are base employers, professional services and users that can serve residents like accountants, attorneys, dry cleaners and restaurants.

He mentions “retail leakage,” as one of the reasons why the city is focusing on bolstering its retail offerings. Becker explains, “Within a 10-mile radius from I-10 and Verrado Way, we lose about $700 million in retail sales taxes to neighboring communities.”

Marketside aims to be a regional hub for Buckeye residents but also neighboring communities so West Valley residents don’t need to travel as far from home to shop, dine and spend their dollars.

“The Marketside District will serve as a regional hub for not only Verrado, but the larger Buckeye and

Len Becker 40 | March-April 2017

West Valley submarket,” says Brent Mallonee, senior director at Cushman & Wakefield.

On the western half of Marketside, T.A. Shover, director of commercial leasing and sales at DMB, says, “We’re currently picking off smaller users that could provide services to existing residents like corner stores, gas stations, fast food, dentists, doctors, other restaurateurs, hotels.”

On the east side of Verrado Way, Burke says, “Marketside will be the more regional in nature with theatres, entertainment venues and bigger boxes.”

But that those regional draws will come later down the road. “The future users of the Marketside District that we are targeting are regional, destination draws,” says Burke, but success of the smaller users will draw

Michael Burke

Sintra Hoffman

in more office opportunities and residential growth.

“The opportunities here are endless,” Becker explains. “The mayor, city council and all of us are looking at the big picture, 30-40 years down the road, to make sure the community isn’t like anywhere else in Greater Phoenix, and has its own identity and amenities to foster continued growth.”

Shover predicts the success of Marketside will have a domino effect for everything around it and adjacent to it. “Once you prove that a regional draw works,” he says, “it will draw more activity throughout Buckeye and the neighboring communities.”

Looking into the future, Shover adds, “Buckeye has a tidal wave of growth heading its direction. It’s no longer seen as this sleepy ranching community.”

Brent Mallonee

T.A. Shover

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WEST VALLEY UPDATE

What’s new in the West Valley?

By DAVID MCGLOTHLIN

BUCKEYE

Fry’s Marketplace

Located at the entrance of the Verrado master-planned community on the northwest corner of Indian School Road and Jackrabbit Trail, Village Grove at Verrado features 167,000 square feet of commercial retail space. Recently, construction began on a 123,000-square-foot Fry’s Marketplace that will anchor the center.

“With Main Street, Marketside and now Village Grove, there’s a lot more options for Verrado residents to meet their daily shopping, service and dining needs,” says Michael Burke, senior vice president of commercial for DMB.

Tavern+Bowl

42 | March-April 2017

GLENDALE Westgate has experienced unprecedented growth over the past few years, encompassing more than 30 restaurants, retailers and entertainment venues. Joining the mix at Westgate is Glendale’s first microbrewery with the addition of Tavern+Bowl and Good Bad Ugly (GBU) Brewing Co., which is slated to open in March. Located adjacent to Yard House and just steps away from the newly opened Bar Louie, the new 18,243 square-foot Tavern+Bowl will feature 12 state-of-the-art bowling lanes, an on-site microbrewery featuring their proprietary GBU beer, a full restaurant, billiards tables, shuffleboard, a large outdoor patio overlooking Fountain Park and an indoor/outdoor bar with roll-up garage doors.

WEST VALLEY UPDATE GOODYEAR

Goodyear, the wealthiest zip code in the West Valley, added 32 new businesses to its retail, dining, entertainment and lifestyle options in 2016. Michelle Lawrie, economic development director for Goodyear, says there’s a lot of interest around Estrella Falls, the Southwest Valley’s first super regional shopping center spanning more than 300 acres, which is starting to take shape. The entire two-phase project will include 2 million square feet of shopping, dining and entertainment once built out. The first phase included the opening of Harkins Estrella Falls 16.

The $14 million project totals 78,000 square feet and 16-movie sceens with reclining leather seating and Arizona’s largest movie screen, which is in excess of 80 feet. Lawrie says phase two at Estrella Falls will include a minimum of 300,000 square feet of retail space, which is due to be completed and open to the public by December 2021.

Harkins Estrella Falls 16

Huntington University

SURPRISE

Ottowa University, a Kansas-based, non-profit Christian university, is opening a 35-acre residential campus in Surprise next fall, and adding 19 varsity athletics teams. Located at 1590 N. Civic Center Plaza, the new school neighbors the Surprise City Hall and other nearby amenities at the same location as the Civic Center Complex.

Construction plans for Ottowa University’s Surprise campus feature student dorms, an indoor activity center, dining and conference space and a new stadium for its football and soccer teams.

44 | March-April 2017

PEORIA

In efforts to meet current demands, the City of Peoria is looking at ways for its residents to spend more time closer to home by creating mixed-use centers that enables a work, live, play lifestyle.

“Peoria is a city on the rise,” says Mayor Cathy Carlat.

“It’s an exciting time as we plan the development of the second half our city, preparing the future we envision for our children and future generations.”

Each year, the city hosts its annual Invest PeoriaAZ Forum to showcase its shovel-ready sites that are positioned favorably for the private market. Last year, Peoria welcomed several notable businesses to its ranks including HonorHealth, Cigna Medical Group, Huntington University, and new restaurants such as Giordano’s, Headquarters, Modern Round, Revolu and Slick’s Garage.

Ottowa University

COMING NEXT ISSUE • Top Ten CRE Law firms • Healthcare Building Trends • Phoenix: Special focus Downtown Phoenix • Senior/Assisted Care & Living Facilities • Master-planned Developments • Real Estate Financing/REITS • CCIM (Certified Commercial Investment Managers) • Valley Partnership

For additional information, call 602.277.6045 or visit,

azBIGmedia.com

45

PRESENTS THE 12TH ANNUAL

2017 The Real Estate and Development Awards (RED) are Arizona’s most comprehensive annual commercial real estate awards

Building a Concrete Future ®

Imagine the DESIGN POSSIBILITIES Of Precast Concrete

The Grand at Papago Office Building Tempe, Arizona

“Architectural precast concrete can be fabricated in a wide range of shapes, colors and textures. The Grand Office Building in Tempe incorporated white cement, white aggregate and a sandblast finish to provide a distinctly unique exterior look to the building.

Additional interest was achieved through the use of reveals and raised bands in the panel face.”

– Chris Padilla Estimator

Ocotillo Corporate Office 2003

Grand Canyon University Arena 2011

Fountainhead Office 2010

North Mountain IMS 2006

salesarizona@coreslab.com | 602.237.3875 | coreslab.com

2017 RED AWARDS

BUILDING THE BEST

I

t’s award season and for AZRE that means it’s again time to recognize the biggest, best and most notable commercial real estate projects completed in 2016 along with the people who made them happen.

This year for the 12th annual Real Estate and Development awards, more nomination forms were submitted than ever before, which is a great sign that commercial real estate development is moving forward in Arizona.

It also meant the selection committee and myself had a lot of homework to do.

Selecting only three finalists for each

Marina Heights PHOTO BY MIKE MERTES, AZ BIG MEDIA

50 | March-April 2017

category from such a talented pool of projects, and ultimately picking a winner, proved to be challenging because each project had dozens of things that made it remarkable and unique from state-of-the-art designs and innovative features to construction challenges and community impact.

The following section highlights each finalist project in its respective category with a taste of what makes the project standout, but the winners will not be announced until this year's RED Awards event at Chateau Luxe on Thursday, March 16.

51

EDUCATION ASU Beus Center for Law & Society The six-story facility, home to the Sandra Day O’Connor College of Law at Arizona State University, re-imagines the traditional law school as a public building. It’s designed to be open and engaging with a flexible layout to transform the space as needed for various private and civic events.

DEVELOPERS: Arizona Board of Regents; ASU Capital Programs Management Group GENERAL CONTRACTOR: DPR Construction ARCHITECT: Ennead Architects SUBCONTRACTORS: Buro Happold Consulting Engineers; Colwell Shelor Landscape Architecture; Dibble Engineering; JBA Consulting Engineers; Jones Studio SIZE: 280,000 SF LOCATION: 111 E. Taylor St., Phoenix COMPLETION DATE: June 2016 Grand Canyon University Masterplan GCU completed eight projects in 2016 including new STEM classrooms and labs, student dorms, apartments, a soccer stadium and student services center. Each building has abstracted references to the school’s Christian and educational values, while integrating informal learning and social spaces within the buildings and throughout campus, which has doubled in size since 2014 to more than 250 acres.

Gladden Farms Elementary School In Marana, a new school concept with an open floor plan allows students and teachers to use the school in nontraditional ways. Operable glass partitions provide flexible learning spaces and promote collaboration. Two large motorized roll-up cafeteria doors connect to the school’s covered basketball court and play area. Another unique feature is a concrete interior staircase that includes gathering space on the steps and reading nooks underneath for students.

DEVELOPER: Marana Unified School District GENERAL CONTRACTOR: Chasse Building Team ARCHITECT: BWS Architects SIZE: 83,032 SF LOCATION: 11745 W. Gladden Farms Dr., Marana COMPLETION DATE: July 2016 52 | March-April 2017

DEVELOPER: Grand Canyon University GENERAL CONTRACTOR: Pono Construction ARCHITECT: suoLL Architects SUBCONTRACTORS: Bell Steel; Central Supply Mechanical; Hilty’s Electrical Contracting; Marlin Mechanical; Suntec Concrete SIZE: 250-acres LOCATION: 3300 W. Camelback Rd., Phoenix COMPLETION DATE: Fall 2016

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HEALTHCARE Banner 755 This four-story, three-phase tenant improvement project consisted of a complete gut and remodel. Banner 755 is a multi-discipline building hosting a different department on each floor. This enables patients to visit multiple healthcare providers within the same building, which serves as a successful model for future facilities. Banner 755 now includes more than 100 exam rooms, 78 private offices, general radiology and nuclear medicine rooms.

Yuma Regional Medical Center Emergency Room Expansion Over 500 plans were used during the $115 million project, which was the city’s largest in recent history. The project involves a 147,000 SF Emergency Department expansion, spread over two levels with two upper shell floors, totaling 100,000 SF to accommodate future 54 | March-April 2017

DEVELOPER: Banner Health GENERAL CONTRACTOR: Wespac Construction ARCHITECT: SmithGroupJJR SUBCONTRACTORS: Aspen Construction; Cobb Mechanical; DP Electric; Gunsight Construction; Ryan Mechanical SIZE: 112,000 SF LOCATION: 755 E. McDowell Rd., Phoenix COMPLETION DATE: June 2016

Wickenburg Community Hospital Surgical & Diagnostic Center & Medical Office Building Before the new 10,500-square-foot surgical center and 10,700-square-foot medical office building, local residents traveled more than 40 minutes to the nearest hospital for a variety of healthcare services.

Besides financing, undergoing a major construction project adjacent to an operating hospital proved extremely challenging, but the project was finalized without major interruption to emergency and critical healthcare services of the hospital.

DEVELOPER: Wickenburg Community Hospital GENERAL CONTRACTOR: W.E. O’Neil ARCHITECT: Highton Company SUBCONTRACTORS: Holderness Supplies; Kerr Masonry; Saguaro Steel Industries; TDIndustries; Wilson Electric Services Corp SIZE: 21,200 SF LOCATION: 520 Rose Lane, Wickenburg COMPLETION DATE: August 2016

medical, surgical and/or ICU beds. The project also includes two new heliports, a three-level parking structure and a central plant expansion.

DEVELOPER: Yuma Regional Medical Center GENERAL CONTRACTOR: McCarthy Building Companies

ARCHITECT: ARCHSOL SUBCONTRACTORS: Delta Diversified; E&K Companies; Progressive Roofing; Schuff Steel; TDIndustries SIZE: 147,000 SF LOCATION: 2400 S. Avenue A, Yuma COMPLETION DATE: October 2016

HOSPITALITY

Fairmont Sunset Pools Suites The guestroom expansion project originally consisted of a new three-story masonry and precast concrete guestroom suite building, which added 102 new rooms totaling 89,000 square feet that connected to the existing guestroom buildings via skyway. The scope of the plans evolved to include a new event center, sunset pool and bar as well as a 45,000-square-foot Great Lawn.

FOUND:RE The adaptive reuse project transformed the shuttered Lexington Hotel into a remarkable boutique hotel, aiding in the revitalization of Downtown Phoenix’s urban landscape.

FOUND:RE supports local artists with a rotating display schedule throughout its lobby, rooms, pool area and adjacent restaurant. The hotel’s distinctively designed rooms match the industrial character of the building with floating wide flange bed frames, custom millwork and bathrooms.

DEVELOPER: Habitat Metro GENERAL CONTRACTOR: Sletten Companies ARCHITECTS: DAVIS; PROJX SUBCONTRACTORS: EF Charles; Gen3; Resolute Performance Contracting; Swisher HVAC; Tibbetts Glass & Aluminum SIZE: 86,645 SF LOCATION: 1100 N. Central Ave., Phoenix COMPLETION DATE: October 2016

DEVELOPER: Strategic Hotels & Resorts GENERAL CONTRACTOR: Balfour Beatty Construction ARCHITECT: Allen + Philp Architects SUBCONTRACTORS: AME Electric; Harder Mechanical; Stone Cold Masonry; Suntec Concrete; TPAC SIZE: 89,000 SF LOCATION: 7575 E. Princess Dr., Scottsdale COMPLETION DATE: May 2016 Farm & Craft Scottsdale Scottsdale-based hospitality management company, RIOT Hospitality Group developed Farm & Craft Scottsdale to target Old Town’s increasingly Millennial-driven crowds. The structure’s original framing was salvaged and a modern farmhouse design with mural-like fields of crops adorning the walls along with wooden and metal finishes were added to give the space its own fresh look and feel.

DEVELOPER: RIOT Hospitality Group GENERAL CONTRACTOR: LGE Design Build ARCHITECT: Hayes Inc. Architecture SUBCONTRACTORS: Deer Valley Plumbing; Desert Structures; Milam Glass Company; TriMega Mechanical; URI SIZE: 2,416 SF LOCATION: 4302 N. Scottsdale Rd., Scottsdale COMPLETION DATE: June 2016

56 | March-April 2017

INDUSTRIAL HomeGoods Distribution Center Located on 109 acres in Tucson is HomeGood’s three-in-one distribution center. Its western portion consists of three shipping wings with 216 truck docks. The center section has 77 docks with 32-foot clear heights. The eastern portion maintains 47-foot clear heights and contains the narrow-aisle racking with a super flat floor for inventory.

DEVELOPER: TJX Companies GENERAL CONTRACTOR: Layton Construction ARCHITECT: Ware Malcomb SUBCONTRACTORS: Beck Consulting Engineers; Bell Steel; Hardrock Concrete Placement; Peterson Associates Consulting Engineers; TLCP Structural PROJECT MANAGER: Cresa (Kelly Branch, Jason Wery) SIZE: 900,000 SF LOCATION: 6803 S. Palo Verde Rd., Tucson COMPLETION DATE: February 2016 IRIS USA Manufacturing Facility Located within Surprise’s Southwest Railplex Industrial District, the manufacturing and distribution center features 300,000 square feet of warehouse space with 40-foot clear heights, 21 docks as well as 52,200 square feet of office space. Close coordination between all parties enabled the project to meet an eight-month, fasttrack schedule and begin production the same day construction ended.

DEVELOPER: IRIS USA GENERAL CONTRACTOR: Balfour Beatty Construction ARCHITECT: Ware Malcomb SUBCONTRACTORS: Aero Automatic Sprinkler Company; Castle Steel; Delta Diversified; JD Sun Mechanical; Suntec Concrete SIZE: 447,000 SF LOCATION: 13423 W. Cactus Rd., Surprise COMPLETION DATE: May 2016

REI Distribution Center The first distribution center ever awarded both a LEED Platinum certification and Net Zero Energy rating. The project’s 2.2-megawatt solar system covers 280,000 square feet with 6,700 panels and produces more power than it consumes. It also utilizes the first true omni-channel automated fulfillment system, delivering products to customers and retail stores up to eight times faster than average.

DEVELOPER: Merit Partners GENERAL CONTRACTOR: Renaissance Companies ARCHITECT: Butler Design Group SUBCONTRACTORS: Allen & Pinckard Industrial Contractors; Comfort Systems; Milam Glass; RJM Construction; Suntec Concrete BROKERAGE: CBRE (Pat Feeney) SIZE: 440,000 SF LOCATION: 3825 S. 36th St., Phoenix COMPLETION DATE: July 2016 58 | March-April 2017

INFILL

Discovery Business Campus – Building 94 Originally built in 1981 as labs and offices for Motorola, the building was transformed into a sophisticated, hi-tech, modern Class A office accented by architectural frames, courtyards, profiled metal panels and a rich contrasting palette of colors. It’s currently occupied by DiTech Financial.

DEVELOPER: Wentworth Property Company GENERAL CONTRACTOR: Jokake Construction ARCHITECT: DAVIS SUBCONTRACTORS: Adobe Drywall; DP Electric; Gen3; J.J. Sprague of Arizona; Sun Tech Glass BROKERAGE: CBRE (Pat Feeney, Chuck Nixon); JLL (Mark Gustin, Karsten Peterson, Dave Seeger) SIZE: 171,000 SF LOCATION: 2100 E. Elliot Rd., Tempe COMPLETION DATE: October 2016

The Wedge Originally built in 1978 as a multi-tenant building, it underwent an early 90’s stucco cosmetic job and became a college store for books and supplies. Today, the building features an exterior clad in sheets of special metal called Cor-ten. The building’s new tenants are Z Pizza Tap Room, The Halal Guys, Even Steven Sandwiches, Kingdom Bike Shop and Ahipoki Bowl.

Opus Industrial Airport An assemblage of five parcels previously occupied by eight separate tenants resulted in the largest new build in over a decade within the Sky Harbor submarket. With flexibility for up to four tenants, the building features 36-foot clear heights, thickened concrete slabs and full truck courts.

60 | March-April 2017

DEVELOPER: Opus Development Company GENERAL CONTRACTOR: Opus Design Build ARCHITECT: Opus AE Group SUBCONTRACTORS: Alliance Fire Protection; JFK Electrical Contracting Enterprises; Phoenix Pipelines; Riggs Companies; Specialty Roofing BROKERAGE: CBRE (Cooper Fratt, John Werstler); JLL (Mark Detmer, Bo Mills) SIZE: 393,292 SF LOCATION: 3333 S. 7th St., Phoenix COMPLETION DATE: November 2016

DEVELOPER: Davis Enterprises GENERAL CONTRACTOR: Beal Derkenne Construction ARCHITECT: Tomecak Design SUBCONTRACTORS: ARC Steel; Western States Metal Roofing BROKERAGE: Davis Enterprises (Mark Davis, Jenifer Davis Lunt) SIZE: 11,800 SF LOCATION: 1015 S. Rural Rd., Tempe COMPLETION DATE: November 2016

MULTIFAMILY artHAUS A collection of 25 urban dwellings in Midtown Phoenix, the project was locally developed, designed, financed, marketed and built. Dwellings consist of seven threelevel townhomes, 15 two-level lofts and three single-level flats ranging from 560 to 1800 square feet. artHAUS delivers an attainable modern Midtown living experience without the expense of sometimes underutilized amenities like a fitness center or community pool that rarely get used.

DEVELOPER: artHAUS Projects GENERAL CONTRACTOR: Symmetry Construction ARCHITECT: artHAUS Projects SUBCONTRACTORS: Baker Concrete Construction; Clyde Hardware; Hawkeye Electric; KAY Construction; Wolff Mechanical SIZE: 54,110 SF LOCATION: 1717 N. 1st Ave., Phoenix COMPLETION DATE: October 2016 Equinox Apartments Equinox is said to be the first Net Zero Energy apartment building in Arizona. With a total of 1,100 solar panels on the roof and atop the property’s parking structures, Equinox’s annual energy savings is estimated at $46,500. Fully leased in five months, the project provides rental housing that costs less in rent and utilities when compared to most of the newer apartment buildings in the area.

Escape Appropriately named Escape, the ultra-urban, resort-style, luxury apartment community offers an escape from the mundane with luxurious amenities and convenient access to premium retail and dining options as well as downtown office space and sports facilities. Aesthetically, it’s unique design exudes a modern flair with electric splashes of color at every turn. Its amenity tower includes an elevated, outdoor lounge with views of Pinnacle Peak and Camelback Mountain as well as a premium fitness facility.

DEVELOPER: P.B. Bell GENERAL CONTRACTOR: MT Builders Companies ARCHITECT: Studio 15 Architecture SIZE: 248,824 SF LOCATION: 4700 N. 16th St., Phoenix COMPLETION DATE: April 2016 62 | March-April 2017

DEVELOPERS: MODUS Development; Viridis Group GENERAL CONTRACTOR: Ameris Construction ARCHITECT: Graham Downes Architecture SUBCONTRACTORS: REEIS SIZE: 42,000 SF LOCATION: 3130 N. Hayden Rd., Scottsdale COMPLETION DATE: June 2016

An innovative space inspires.

Thank you Scottsdale and RED for recognizing our new office as a vibrant and cutting-edge workspace. We look forward to a long and productive partnership.

+1 800.438.5301 | Visit jda.com

OFFICE-INTERIORS

Colliers International Tenant Improvement The new open design and flexible layout enables Colliers to utilize the space as needed. All the office’s public functions were moved to the front of the space for clients to use it as their mobile office, and a central gathering space was added to the middle of the office for eating, meeting and socializing called The Hub.

JDA Software Regional Headquarters The 100-percent open office layout focuses on flexibility and connection. It’s balanced by a variety of different sized meeting spaces and private phone rooms to accommodate multiple working styles, but no two-conference rooms have the same setup. JDA’s new space also includes a fitness area, locker rooms, work/café lounge, game room, beverage bars, large training room and a monumental stair connecting the office’s two color-coated floors with each department.

DEVELOPER: Washington Prime Group GENERAL CONTRACTOR: Jokake Construction ARCHITECT: Corgan BROKERAGE: Cushman & Wakefield (Andrew Snedeker) SIZE: 55,530 SF LOCATION: 15059 N. Scottsdale Rd., #400, Scottsdale COMPLETION DATE: March 2016

DEVELOPER: ViaWest Group GENERAL CONTRACTOR: Stevens Leinweber Construction ARCHITECT: SmithGroupJJR SUBCONTRACTORS: Airpark Signs & Graphics; Goodmans Interior Structures; Herman Miller; Maplewood Cabinetry; RC Lurie BROKERAGE: Colliers International (Phil Breidenbach, Kathy Foster) SIZE: 21,000 SF LOCATION: 2390 E. Camelback Rd., #100, Phoenix COMPLETION DATE: April 2016 Matson Money Imported Italian tile, two three-ton sections of the Berlin Wall, Statue of David replica and handpicked bricks from Chicago are a few of the design features strategically incorporated throughout the office. Matching the office’s high-end décor is state-of-the-art technology used in its TV studio, screening room, commercial kitchen and learning space.

DEVELOPER: 1st Premier Properties GENERAL CONTRACTOR: Wespac Construction ARCHITECT: Evolution Design SUBCONTRACTORS: Adobe Drywall; Desert Ridge Glass; Fine Line Cabinetry; ReSource Arizona; Wilson Electric BROKERAGE: Cresa (Brandon Clarke, Scott Maxwell); Cushman & Wakefield (Sean Spellman, Jeff Wentworth) SIZE: 47,482 SF LOCATION: 18940 N. Pima Rd., Scottsdale COMPLETION DATE: October 2016 66 | March-April 2017

OFFICE Marina Heights (Buildings 300, 400, 450) Building 300 consists of office space on eight floors and 19,640 square feet of first-floor retail, occupied by Starbucks and Mountainside Fitness. Building 400, the tallest tower, has 16 floors of office space and a Matt’s Big Breakfast at the bottom.

Building 450 boasts a uniquely designed lobby, color palette and architectural design with a first floor restaurant and HonorHealth Clinic.

DEVELOPERS: Ryan Companies; Sunbelt Holdings GENERAL CONTRACTOR: Ryan Companies ARCHITECT: DAVIS SUBCONTRACTORS: Barrett-Homes Contractors; E&K Companies; Suntec Concrete; Walters & Wolf; Wilson Electric BROKERAGE: JLL (John Pierson) SIZE: Building 300 - 389,610 SF; Building 400 - 625,795 SF; Building 450 - 301,626 SF LOCATION: 300, 400, 450 E. Rio Salado Pkwy., Tempe COMPLETION DATE: June 2016

SkySong 4 The building’s northwest corner boasts an upgraded version of SkySong 3’s metal lath wrap elements, attracting further attention to the ASU Scottsdale Innovation Center, which is home to more than 60 companies and 2,000 employees. Booker Software’s office, SkySong4’s first tenant, features a spacious kitchen and breakroom with a ping-pong table, arcade pop-a-shot basketball game and bar-top tables.

DEVELOPER: Plaza Companies GENERAL CONTRACTOR: DPR Construction ARCHITECT: Butler Design Group SUBCONTRACTORS: Comfort Systems USA; DP Electric; Jones Concrete; Kovach Building Enclosures; Saguaro Steel BROKERAGE: Lee & Associates (Andrew Cheney, Craig Coppola) SIZE: 145,000 SF LOCATION: 1355 N. Scottsdale Rd., Scottsdale COMPLETION DATE: November 2016

ViaSat Unlike trendier open-office designs, ViaSat’s office at the ASU Research and Technology Park offers a 95-percent closed-office environment. The design concept consists of three distinct volumes based on specific programmatic use: a two-story high performance office component, a lab and operations facility as well as common shared spaces, which fuse the three programs together.

DEVELOPER: Levine Investments GENERAL CONTRACTOR: PCG Construction ARCHITECT: Gensler SUBCONTRACTORS: Caruso Turley Scott; Energy Systems Design; TRUEFORM Landscape Architecture Studio; Vesecky Engineering & Surveying BROKERAGE: Levine Investments (Tony Feiter) SIZE: 151,000 SF LOCATION: 2040 E. Technology Cir., Tempe COMPLETION DATE: May 2016

68 | March-April 2017

RECREATION Arizona State University Sun Devil Stadium Improvements Phase 1 & 2 ASU’s $256 million renovation started in the south end zone by removing the metal bleachers, reconstructing the lower bowl and adding new amenities and elevators. Phase 2 construction included the lower stadium bowl, west upper deck, new student athletic facility, concessions, restrooms, amenities and luxury suite level on the west sidelines.

DEVELOPERS: Arizona Board of Regents; Arizona State University GENERAL CONTRACTORS: Hunt; Sundt ARCHITECTS: Gould Evans; HNTB Corporation SUBCONTRACTORS: Able Steel Fabricators; BCS Enterprises; Interstate Mechanical Corporation; Suntec Concrete; Sun Valley Masonry SIZE: 122,195 SF (Phase 1 & 2) LOCATION: 500 E. Veterans Way, Tempe COMPLETION DATE: September 2016 OdySea Aquarium OdySea Aquarium is the largest aquarium in the Southwest, spanning 200,000 square feet. The two-story facility holds more than two-million gallons of water, which is filtered through more than 300 pumps and 42,000 lineal feet of piping. The aquarium’s concrete tanks are combined with 5,455 square feet of acrylic viewing windows for visitors to enjoy the facility’s 50 exhibits and more than 30,000 animals.

Dolphinaris Arizona Said to be the first facility of its kind west of the Mississippi River, Dolphinaris makes the dream of swimming with dolphins a reality. The design includes a 925,000-gallon salt-water pool, which is also said to be the largest pool in Arizona. The $15 million project required close collaboration between all parties and took three years to complete.

DEVELOPERS: Ventura Entertainment Arizona; Ventura Capital Privado GENERAL CONTRACTOR: A.R. Mays Construction ARCHITECT: Deutsch Architecture Group SUBCONTRACTORS: Presidential Pools; Basic Metals; Specified Electrical Contractors SIZE: 36,369 SF LOCATION: 9500 E. Vía de Ventura, Scottsdale COMPLETION DATE: October 2016

70 | March-April 2017

DEVELOPER: OdySea in the Desert GENERAL CONTRACTOR: McCarthy Building Companies ARCHITECT: Deutsch Architecture Group SUBCONTRACTORS: K&F Electric; McCarthy Concrete; Schuff Steel SIZE: 200,000 SF LOCATION: 9500 E. Via de Ventura, Scottsdale COMPLETION DATE: August 2016

REDEVELOPMENT

Nexus The modifications to the nearly 30-year-old building transformed the plain, obsolete box into a highly attractive, modern office that’s fully occupied by Amazon. A bold two-story lobby was enclosed with a full-height, curtain-wall system with a metal-pane and cladded roof projection, yielding a "jewel box" element as the main focal accent.

Terminal 3 Modernization at Sky Harbor Airport Originally designed in 1978, the terminal opens up to spectacular atrium spaces, skylights with natural light and views of the city and desert landscapes following the completion of Phase 1. It’s also equipped with the most advanced, high-quality systems and innovative technologies like new passenger queue wait time tech throughout the terminal, which should achieve LEED Silver certification once later phases are completed by 2020.

DEVELOPER: Department of Aviation for City of Phoenix GENERAL CONTRACTOR: HuntAustin ARCHITECTS: DWL Architects + Planners; SmithGroupJJR; Corgan SUBCONTRACTORS: Affiliated Engineers; Dibble Engineering; Gannett Fleming; KPFF Consulting Engineers; LSW Engineers Arizona SIZE: 334,198 SF (Phase 1) LOCATION: 3400 Sky Harbor Blvd., Phoenix COMPLETION DATE: December 2016

DEVELOPER: ViaWest Group GENERAL CONTRACTOR: RJM Construction ARCHITECT: Stantec (formerly PHArchitecture) SUBCONTRACTORS: Erickson & Meeks Engineering; G.K. Flanagan Associates; Hawkins Design Group; Mechanical Designs; PK Associates BROKERAGE: JLL (Mark Gustin, Karsten Peterson, Dave Seeger) SIZE: 122,000 SF LOCATION: 8375 S. River Pkwy., Tempe COMPLETION DATE: February 2016

Comcast Aside from escalators that remain in the building, it’s hard to tell Comcast was once filled with mall shoppers. In less than eight months, crews transformed five former movie theaters into an open office and the old Galleria Mall into a single-tenant call center. Comcast’s new flagship call center and training facility in Tucson is the company’s largest in the Western U.S. DEVELOPER: Tanager Property Management GENERAL CONTRACTOR: Jokake Construction ARCHITECT: Acquilano Leslie SUBCONTRACTORS: Adobe Drywall; Central Alarm; Comfort Systems USA; Kazal Fire Protection; Wilson Electric BROKERAGE: JLL (Keith Lammersen, Jason Moore) SIZE: 160,018 SF LOCATION: 4690 N. Oracle Rd., Tucson COMPLETION DATE: March 2016

72 | March-April 2017

73

RETAIL

The Colony The latest entry into the emerging Midtown culinary scene is a multi-use project that’s part-new construction and part-adaptive reuse.

Phase 1 consisted of renovations to the original 1950s-era building and Phase 2 included new construction, which varied based on the tenants and use. When it opened, The Colony was fully leased with six tenants.

DEVELOPER: Western Vertical Holdings GENERAL CONTRACTOR: LGE Design Build ARCHITECT: LGE Design Group SUBCONTRACTORS: AF Steel Fabrication; Phoenix Commercial Electric; Sharp Creek Contracting; TCK; Vintage Plastering Company BROKERAGE: Phoenix Commercial Advisors (Teale Bloom, Taylor Laing) SIZE: 22,467 SF LOCATION: 5538 & 5600 N. 7th St., Phoenix COMPLETION DATE: June 2016

Town & Country The redevelopment of the historic shopping center that opened in 1960 included a refreshed look and new buildings for The Container Store, Hop Doddy, Orvis and Forever 21. Each building was designed with limestone, steel, glass, aluminum panels and composite wood to give the shopping center an updated look while blending the buildings in with the old.

DEVELOPERS: Camelback RE Development; RED Development GENERAL CONTRACTOR: Chasse Building Team ARCHITECTS: Reigle & Associates; Suite 6 Architecture SUBCONTRACTORS: Demers Glass; Desert Structures; Huff & Sons Construction; Kortman Electric; Southwest Earthworks BROKERAGE: CBRE (LeDonna Spongberg) SIZE: 54,246 SF LOCATION: 4949 N. 20th St., Phoenix COMPLETION DATE: May 2016 74 | March-April 2017

Uptown Plaza The retail landmark opened in 1955 as one of the Valley’s first shopping destinations.

Renovations modified the building's unique character to reflect its mid-century roots and enhance the surrounding community.

Familiar mid-century details include original steel canopies, metal scrim signage panels, light fixtures and reclaimed bricks from a demolished house built in 1953, which matched the ones used to originally build Uptown Plaza.

DEVELOPER: Vintage Partners GENERAL CONTRACTOR: Kitchell ARCHITECT: Nelsen Partners SUBCONTRACTORS: Dickens Quality Demolition; Floor Associates; Foursite; Pearson Engineering Associates; PK Associates BROKERAGE: CBRE (LeDonna Spongberg) SIZE: 116,787 SF LOCATION: 100 E. Camelback Rd., Phoenix COMPLETION DATE: June 2016

75

FINALISTS

Congratulations

to all 2017 RED Award finalists!

1st Premier Properties A.R. Mays Construction Able Steel Fabricators Acquilano Leslie Adobe Drywall Aero Automatic Sprinkler Company AF Steel Fabrication Affiliated Engineers Airpark Signs & Graphics Allen & Pinckard Industrial Contractors Allen + Philp Architects Alliance Fire Protection AME Electric Ameris Construction ARC Steel ARCHSOL Arizona Board of Regents Arizona State University Arizona State University Sun Devil Stadium Improvements artHAUS artHAUS Projects Aspen Construction ASU Beus Center for Law & Society ASU Capital Programs Management Group Baker Concrete Construction Balfour Beatty Construction Banner 755 Banner Health Barrett-Homes Contractors Basic Metals BCS Enterprises Beal Derkenne Construction Beck Consulting Engineers Bell Steel Buro Happold Consulting Engineers Butler Design Group BWS Architects Camelback RE Development Cannon & Wendt Electric Company Caruso Turley Scott Castle Steel Central Alarm Central Supply Mechanical Chasse Building Team Clyde Hardware Cobb Mechanical Colliers International Tenant Improvement Colwell Shelor Landscape Architecture Comcast Comfort Systems 78 | March-April 2017

Comfort Systems USA Corgan Cresa DAVIS Davis Enterprises Deer Valley Plumbing Delta Diversified Demers Glass Department of Aviation for City of Phoenix Desert Ridge Glass Desert Structures Deutsch Architecture Group Dibble Engineering Dickens Quality Demolition Discovery Business Campus – Building 94 Dolphinaris Arizona DP Electric DPR Construction DWL Architects + Planners E&K Companies EF Charles Energy Systems Design Ennead Architects Equinox Apartments Erickson & Meeks Engineering Escape Evolution Design Fairmont Sunset Pools Suites Farm & Craft Scottsdale Fine Line Cabinetry Floor Associates FOUND:RE Foursite G.K. Flanagan Associates Gannett Fleming Gen3 Gensler Gladden Farms Elementary School Goodmans Interior Structures Gould Evans Graham Downes Architecture Grand Canyon University Grand Canyon University Masterplan Gunsight Construction Habitat Metro Harder Mechanical Hardrock Concrete Placement Hawkeye Electric Hawkins Design Group Hayes, Inc. Architecture Herman Miller

Highton Company Hilty’s Electrical Contracting HNTB Corporation Holderness Supplies HomeGoods Distribution Center Huff & Sons Construction Hunt HuntAustin Interstate Mechanical Corporation IRIS USA IRIS USA Manufacturing Facility J.J. Sprague of Arizona JBA Consulting Engineers JD Sun Mechanical JDA Software Regional Headquarters JFK Electrical Contracting Enterprises Jokake Construction Jones Concrete Jones Studio K&F Electric KAY Construction Kazal Fire Protection Kerr Masonry Kitchell Kortman Electric Kovach Building Enclosures KPFF Consulting Engineers Layton Construction Levine Investments LGE Design Build LGE Design Group LSW Engineers Arizona Maplewood Cabinetry Marana Unified School District Marina Heights (Buildings 300, 400, 450) Marlin Mechanical Matson Money McCarthy Building Companies McCarthy Concrete Mechanical Designs Merit Partners Milam Glass Company MODUS Development MT Builders Companies Nelsen Partners Nexus OdySea Aquarium OdySea in the Desert Opus AE Group Opus Design Build Opus Development Company

79

BROKERS Opus Industrial Airport P.B. Bell PCG Construction Pearson Engineering Associates Peterson Associates Consulting Engineers PHArchitecture Phoenix Commercial Advisors Phoenix Commercial Electric Phoenix Pipelines PK Associates Plaza Companies Pono Construction Presidential Pools Progressive Roofing PROJX RC Lurie RED Development REEIS REI Distribution Center Reigle & Associates Renaissance Companies Resolute Performance Contracting ReSource Arizona Riggs Companies RIOT Hospitality Group RJM Construction Ryan Companies Ryan Mechanical Saguaro Steel Schuff Steel

Sharp Creek Contracting SkySong 4 Sletten Companies SmithGroupJJR Southwest Earthworks Specialty Roofing Specified Electrical Contractors Stantec Stevens Leinweber Construction Stone Cold Masonry Strategic Hotels & Resorts Studio 15 Architecture Suite 6 Architecture Sun Tech Glass Sun Valley Masonry Sunbelt Holdings Sundt Suntec Concrete suoLL Architects Swisher HVAC Symmetry Construction Tanager Property Management TCK TDIndustries Terminal 3 Modernization at Sky Harbor Airport The Colony The Wedge Tibbetts Glass & Aluminum TJX Companies

TLCP Structural Tomecak Design Town & Country Redevelopment TPAC Tri-Mega Mechanical TRUEFORM Landscape Architecture Studio Uptown Plaza URI Ventura Capital Privado Ventura Entertainment Arizona Vesecky Engineering & Surveying ViaSat ViaWest Group Vintage Partners Vintage Plastering Company Viridis Group W.E. O’Neil Walters & Wolf Ware Malcomb Washington Prime Group Wentworth Property Company Wespac Construction Western States Metal Roofing Western Vertical Holdings Wickenburg Community Hospital Wilson Electric Wolff Mechanical Yuma Regional Medical Center Yuma Regional Medical Center Emergency Department Expansion

Congratulations to all the brokers representing the 2017 RED Award finalists!

CBRE Pat Feeney Cooper Fratt Chuck Nixon LeDonna Spongberg John Werstler Colliers International Phil Breidenbach Kathy Foster Cresa Brandon Clarke Scott Maxwell

80 | March-April 2017

Cushman & Wakefield Andrew Snedeker Sean Spellman Jeff Wentworth

Karsten Peterson John Pierson Jason Moore Dave Seeger

Davis Enterprises Mark Davis Jenifer Davis Lunt

Lee & Associates Andrew Cheney Craig Coppola

JLL Mark Detmer Mark Gustin Keith Lammersen Bo Mills

Levine Investments Tony Feiter Phoenix Commercial Advisors Teale Bloom Taylor Laing

Gladden Farms Elementary M A R A N A , A R I ZO N A

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81

CORENET GLOBAL

82 | March-April 2017

Midtown finds its stride An overlooked submarket turns into development hotspot

By DAVID MCGLOTHLIN

T THE MIDTOWN MARKET SIZE (total): 13 million square feet BOUNDARIES: McDowell Road to Camelback Road and Seventh Avenue to 16th Street TOP INDUSTRIES: healthcare, advance business services, medical devices

he seeds for Midtown’s success were planted more than a decade ago. The downturn brought a drought to the real estate market, but with a slow and steady recovery acting as the rain, those seeds are now growing and spurring additional growth.

A culmination of factors led to the re-gentrification of Midtown, which is now home to new corporate headquarters, a bustling food and bar scene, revamped offices and new multifamily developments.

This wasn’t always the case though.

WHAT HAPPENED Michael Crystal, managing director at Newmark Grubb Knight Frank, started his brokerage career in the Midtown market 12 years ago, and has witnessed its re-gentrification first-hand.

“Back then, it wasn’t cool to be a Midtown broker,” he says.

It was around that time, in the early 2000s, when City of Phoenix Economic Development Director Christine Mackay says, the central city experienced a flight to the suburbs of both companies and residents.

“People had forgotten about Midtown,” she says. “It wasn’t really in the conversation anymore.”

Once overshadowed between Downtown Phoenix and the Camelback Corridor, Crystal explains, Midtown was seen as a second-tier market only offering slightly cheaper rents and decent parking ratios. He adds, back in the day, there also weren't many identifiable restaurants in Midtown other than Alexi’s at the base of the 3550 Tower on Central Avenue and a couple others.

Today, Midtown is very much part of the conversation, gaining more attention from companies, developers and residents. It was considered one of the emerging submarkets in Metro Phoenix last June at CoreNet Global Arizona’s Midyear Market Update: Brokers’ Perspective.

“The crux of the boom in Midtown is the urban movement,” says Mark Adams, principal at SmithGroupJJR. Contributing to that movement was the opening of the light rail in 2008, which added a much needed tool to Midtown’s arsenal. It created alternative access to the central city from other core markets and an opportunity to provide employees with new housing options closer to work in Midtown.

Since then numerous multifamily projects have joined the fray in Midtown and others are coming down the pike.

83

CORENET GLOBAL ceilings, open and flexible layouts in addition to first-floor retail space.

Adams says today’s office tenants want smaller floorplates and unique open incubator type spaces where people are work-sharing, which are popular with startup companies.

He worked on strategies for popular shared workspace projects in Midtown like MOD and Seed Spot — located within the 2828 E. Thomas building — that have proven to be viable and popular office concepts.

WHAT’S NEXT Edison Midtown

Two projects currently under construction along the light rail include Edison Midtown, a 110-unit luxury mid-rise condominium complex located on Central Avenue, and Parc Midtown, a 306-unit apartment complex at Third Avenue and Indian School Road.

On the retail side, Midtown also offers convenient access to numerous retail hubs with shops and places to eat like the newly renovated Uptown Plaza at Central Avenue and Camelback Road.

HOW IT CHANGED Similar to the Valley’s other core urban markets like Downtown Phoenix, Downtown Tempe or Old Town Scottsdale, Midtown now offers an urban environment with walkability, connectivity, a plethora of amenities and a true work-live-play setting.

While all the urban cores share similarities, each one also has a unique identity that it’s known for, except for Midtown, which changed after 2015, Crystal says.

Tempe has Arizona State University.

Old Town Scottsdale has a lively nightlife scene. Downtown Phoenix has sports and entertainment venues.

The main difference that Crystal sees between Midtown and other urban cores is the fact it’s home to flagship hospitals for the state’s two largest hospital systems - Banner Health and Dignity Health.

When Banner, the state’s largest private employer, moved its corporate headquarters to Central Avenue and Thomas Road in 2015, it solidified 84 | March-April 2017

Midtown as a contender and viable market option, Mackay says.

Kip Edwards, vice president of development and construction at Banner Health, describes the move as ideal for Banner’s employee base and operations because of its central location and connectivity to other markets.

“It’s a great place to be, to live and to play. It’s the benefits of downtown without the congestion,” Edwards explains. “You have the best of both worlds.”

Later, companies like Facility Source, an Ohio-based technology company, started to follow suit, relocating its corporate headquarters to the same area.

Mackay explains the growth of Midtown happened organically and quickly from there.

Office vacancies decreased from 38 percent in 2012 to less than 20 percent today, totaling approximately 3 million square feet of total absorption, she adds.

Building owners began retrofitting old office space to reflect popular market trends with more natural light, higher

Mark Adams

Michael Crystal

Park Central Mall, a thriving outdoor mall back in 1961, was originally thought to be what was holding back the Midtown market from competing with other urban core markets.

Located in the heart of Midtown, older redevelopment plans for Park Central revolved around it becoming the next CityScape or Kierland Commons in the sense that it could be a catalyst for driving a lot of change for the area.

“But guess what,” says Crystal. “The rest of the market looks different and Park Central still looks the same.”

The redevelopment of Park Central wasn’t needed to bring back Midtown’s viability, but Crystal says, “Now when the redevelopment does happen, it will be the cherry on top.”

Whether it’s Park Central or another development that will help drive activity in the area, Adams is cautiously optimistic something big is still in store for Midtown.

Mackay predicts more strategic opportunities arising to add new density into the market "between office, multifamily, hotels additional retail and restaurants.”

Kip Edwards

Christine Mackay

CORENET GLOBAL

Head of the class in commercial real estate ASU and CoreNet Global team up to build corporate real estate talent pipeline

By DAVID MCGLOTHLIN

D

espite the tremendous amount of cross over between skills needed for commercial real estate and corporate real estate, universities with real estate schools across the country do not typically deferentiate the two and do not have specific classes teaching corporate real estate.

As a result, there’s a growing void in the corporate real estate talent pipeline because students are unaware of corporate real estate practices and opportunities as a potential career.

That's changing now.

Recently, CoreNet Global and Arizona State University collaborated on a solution to address the void.

If approved, the newly proposed program will be presented through ASU’s W. P. Carey School of Business, Finance Department and its Real Estate Club, and taught over nine months starting next fall by CoreNet Global practitioners.

A total of six to nine class sessions will be held once a month in the evenings, lasting 90 minutes each.

Upon completion of the program, each student will receive a non-degree, noncredit certificate.

The program is designed to foster the dialogue between industry practitioners, academics and students to advance knowledge and scholarship specifically about corporate real estate.

86 | March-April 2017

HOW IT STARTED The CoreNet Global Arizona Chapter helped initiate the dialogue between ASU and CoreNet Global’s existing University Relations and Professional Development Program to develop the program’s curriculum, which will enable student access to CoreNet Global’s institutional knowledge,

THE DIFFERENCE: Corporate real estate vs.

Commercial real estate Corporate real estate Objective: Efficiently carry out corporate strategies to improve efficiency Example: State Farms’ decision to build its regional hub at Marina Heights Commercial real estate Objective: Make as much money as you possibly can from real estate Example: Buying an existing multifamily asset, renovating it and re-selling it at a profit

W. P. CAREY SCHOOL OF BUSINESS: Hundreds of ASU students attend classes here for the real estate minor, Masters of Real Estate Development program and meetings for the Real Estate Club.

ELIGIBLE STUDENTS FOR ENROLLMENT ASU undergraduate students with:  Real estate minor  Completed application for  Member of Real Estate Club PROGRAM  Completed REA 380 Real  And/or have paid a nominal Estate Fundamentals and REA enrollment fee of $25 to the 401 Real Estate Appraisal Real Estate Club

members and career opportunities.

Since 2014, CoreNet Global, a nonprofit association providing education and best practices for corporate real estate that represents nearly 10,000 executives and 47 local chapters globally, had been working to strengthen its academic relationships globally.

“We are looking for the next generation of ideas,” says Angela Cain, CEO of CoreNet Global. “At the same time, we want graduate and undergraduate students to understand that corporate real estate is a profession unto itself, and a valid career path.”

Four-year CoreNet Global Arizona Chapter board member Mark Singerman, vice president and regional director for the Rockefeller Group’s Arizona region, helped coordinate efforts between ASU, CoreNet Global, and its Arizona Chapter since the idea originated last May. While CoreNet Global has partnered with other university’s real estate schools, the program at ASU will be the first of its kind.

Mark Stapp, executive director

of ASU’s Masters of Real Estate Development and facility director of the undergraduate minor in real estate, says, “This marks the first time there’s an officially recognized program within a university that’s teaching corporate real estate with the CoreNet organization.”

“The timing was good,” Stapp adds, “because I was in the mode of trying to figure out what we can do for the minor in real estate to increase value proposition and education opportunities for our students that was directly related to students ability to use in seeking employment.”

WHY IT’S NEEDED “Corporate real estate has become a much more defined vocation,” says Singerman, “and universities around the country haven’t recognized it yet as a discipline.”

Overall, real estate is a big cost to companies from how it’s managed to how it can be used as a vital tool in hiring, employee retention and effective strategies to improving the company’s bottom line.

“Every single company — small,

 Graduate students enrolled in the Masters of Real Estate Development program

medium and large — deals with real estate in some regard whether that’s owning and designing a facility or renting space,” says Stapp. “Companies are constantly making decisions about real estate that helps them manage their operations as effectively as possible.”

For these reasons and others, Singerman thinks educational programs like this will catch on at other universities with real estate schools.

“We are really the guinea pig here,” he adds. “We are creating the wheel.”

A wheel that might be used by CoreNet Global in the future as a template for the implementation of programs with similar intentions.

Singerman and Stapp are both hopeful the new program will be a success at ASU and eventually added as a for-credit undergraduate course as part of the real estate minor, which could possibly be in the next two to three years.

“It’s about jobs,” says Singerman.

“It’s our members who need a pipeline for students interested in corporate real estate and for students it’s another potential career path that they didn’t otherwise know about.”

Roles of corporate real estate:  Increase productivity of real estate portfolio  Enhance the quality of the work environment  Develop efficent business solutions  Improve sustainability components  Create a platform for growth  Attract and retain talented employees

Angela Cain

Mark Singerman

Mark Stapp 87

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