AZRE May/June 2021 by AZ Big Media

MAY-JUNE 2021

DATA CENTER DESTINATION

Here's why Apple, Amazon and Microsoft are all setting up shop in Metro Phoenix

Iron Mountain's AZP-2 Data Center in Phoenix

INSIDE:

Pinal County p. 62

Valley Partnership p. 73

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Opportunity and Innovation

echnology is changing the way we live, and this past year has only amplified its effects. Society’s shift to online services, from work and schooling to telehealth and streaming entertainment and shopping, has created more and more data that needs to be process and stored. 2020 was an extraordinary year for the data center industry, with record leasing and a boom in the construction of new facilities throughout Greater Phoenix. In fact, a report by JLL found that Phoenix almost doubled its data center absorption over the past 12 months, increasing from 26 megawatts in 2019 to 51 megawatts in 2020. That puts the city in the Top 3, behind North Virginia, with 323 megawatts absorbed, and Chicago, with 59 megawatts. An increase in use of online services was an obvious outcome of the country’s stay-at-home mandates, but a surprising twist in pandemic consumption was the increased demand for electric vehicles (EVs). While overall passenger car sales were down 10% last year compared with 2019, sales of EVs surged by 40% in 2020. That’s good news for Lucid Motors, which stands ready to begin production on its luxury EV sedan, Lucid Air. The company recently completed construction on its manufacturing facility in Casa Grande. Nikola also is on schedule to begin trial production of its Tre battery electric trucks in third quarter 2021 in its plant in Coolidge. Between these two major manufacturers and the support businesses that are moving nearby, Pinal County is poised to become a hotbed of EV production in the U.S. Our report takes a look at this growing industry and examines why this often-overlooked segment of land is positioning itself for future industrial growth. While many of us may have felt as though life came to standstill for the last year, it’s good to know that exciting changes and developments are still happening.

President and CEO: Michael Atkinson Publisher: Amy Lindsey Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Senior editor: Rebecca L. Rhoades Intern: Kyle Backer Contributing writers: Alicia “Ali” Bull | Courtney Gilstrap LeVinus Suzanne Kinney | Alyssa Tufts ART Art director: Mike Mertes Design director: Bruce Andersen MARKETING/EVENTS Marketing and events specialist: Lynette Carrington Digital marketing specialist: Paul Schaum Marketing designer: Heather Barnhill OFFICE Special projects manager: Sara Fregapane Executive assistant: Stephanie Rivera Database solutions manager: Amanda Bruno AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Ann McSherry AZ BUSINESS MAGAZINE Senior account executives: David Harken | April Rice Account executive: Manessa Ochoa AZ BUSINESS ANGELS AZ BUSINESS LEADERS Director of sales: Sheri Brown EXPERIENCE ARIZONA | PLAY BALL Director of sales: David Ealy RANKING ARIZONA Director of sales: Sheri King

Rebecca L. Rhoades Senior editor, AZRE rebecca.rhoades@azbigmedia.com

2 | May-June 2021

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. ©2021 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.

CONTENTS

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

20 Legislative Update

26 Land Use & Zoning

24 AZCREW 28 Healthcare Building

42 Data Centers

52 Top Producers

62 Pinal County

73 Valley Partnership

On the cover:

Iron Mountain's AZP-2 Data Center in Phoenix 4 | May-June 2021

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TRENDSETTERS

SAY WHAT? Some of Arizona’s most prominent commercial real estate leaders harbor little known facts about themselves that would surprise most people. Here, they share some fun details that would be great conversation starters in any situation.

ANDREA DAVIS

owner and designated broker, Andrea Davis CRE: “Coca-Cola hired me to dance-skate in Fukuoka, Japan, for three months. Four American girls performed roller-skating dance shows, eight times a day, with four Japanese girls to demonstrate that the East and the West were united. It was a smash hit for the Japanese tourists.”

MIKE GREENAWALT

DAVID KRUMWIEDE

CEO, Resendin: “I don’t golf. I’m a total motorhead — cars, boats, bikes. I can drive the heck out of a golf cart, but don’t ask me to swing a club.”

JONATHAN KEYSER founder, Keyser: “I am the son of Christian missionary parents and spent my childhood in Papua New Guinea.”

GRETCHEN KINSELLA

KARL OBERGH

KATIE HAYDON PERRY

executive vice president, Haydon Building Corp: “I’m a tree farmer. I own 1,800 acres of loblolly pines in East Texas and West Arkansas, on land that has been in my family since the Civil War. Every chance I can, I’m in the woods, running around on a ranger, checking on my trees.”

6 | May-June 2021

Arizona business unit leader, DPR Construction: “I have not voluntarily watched a movie in more than 10 years. It drives my husband crazy, but I can’t sit still for that long.”

principal and CEO, Ritoch-Powell & Associates: “I am very involved with Central Arizona Shelter Services, assisting with homelessness. I grew up living in cars, tents, motels, church basements and low-income housing projects, and I attended 24 schools (K-12) throughout Arizona, which provided me a skill of survival and quick problem solving.”

MARK TISCORNIA

healthcare market leader and principal, Cuningham Group Architecture: “I’m a diehard Iron Maiden fan.”

executive vice president, Lincoln Property Company: “Early in my career, I interviewed with CBRE (then CB Commercial) for a brokerage job, but I didn’t get it. I think they thought I would take their few years of training and move over to the development side. It’s funny how they could see my future before I could.”

MICHAEL T. YOUNG principal and CEO, WOODPATEL: “I’m a descendent of Brigham Young. He is my great-great-greatgrandfather.”

PHOENIX INDUSTRIAL MARKET CONTINUES TO SURGE The COVID-19 pandemic has accelerated e-commerce trends that have fueled demand for warehouse and distribution space in the Phoenix market, according to a report from Kidder Mathews. Amazon has been aggressively expanding in Phoenix, signing 11 leases last year alone that range from smaller last-mile fulfillment centers to largescale distribution facilities. Here are some things to watch:

• After a record-breaking level of supply last year — approximately 18 million square feet — the construction pipeline is still booming with more than 16 million square feet of space underway at the end of the first quarter. Much of the new supply is in the Southwest Valley, where the region’s proximity to California and relative affordability has fueled demand for manufacturing and distribution space. • Average asking rental rates soared to a record high of $0.65 per square foot on a

triple-net basis. Rent growth in Phoenix recently outpaced the national average, but despite the steady increase, the market maintains its affordable position when compared with nearby major regions in California. • Investors remain bullish on the Phoenix industrial market, and buyer competition has put an upward pressure on pricing as sales prices averaged an all-time high of $139 per square foot in the first quarter.

SkySong 5 earns coveted LEED Gold certifcation SkySong, The ASU Scottsdale Innovation Center’s fifth office building has earned the prestigious LEED Gold certification for its sustainability and environmentally friendly construction. The six-story, 151,000-square-foot office and research building in the heart of the SkySong complex is the first building in the project to receive LEED Gold certification from the U.S. Green Building Council. The other four office buildings are LEED Silver certified. All have been developed with a commitment to healthy, environmentally friendly design — part of SkySong’s “Culture of Health and Innovation.” Leadership in Energy and Environmental Design (LEED) is a certification program that sets the standard for environmentally responsible construction in the U.S. Buildings are measured based on the number of points they earn across such green-building categories as energy, water, indoor environment, location and materials.

“This certification means that the newest building at SkySong is also one of the greenest buildings in the entire Phoenix metro area,” says Sharon Harper, chairman and CEO of Plaza Companies.

Plaza Companies is the master developer of SkySong, in partnership with ASU University Realty, City of Scottsdale and Holualoa Companies.

TRENDSETTERS

PARK CENTRAL

ADDS to project’s

Visitors to Park Central in Phoenix may see a new member of the property’s security team — one that looks straight out of a science-fiction movie. But ‘Parker’ — the new security robot at the retail and office development — is no fictional character. He provides Transcend Security Solutions with one more set of “eyes” cruising around the grounds. Parker is one of the few security robots in the Valley. His presence at a project where the past is meeting the future further enhances the commitment to innovation and technology that Park Central is becoming known for. The bullet-shaped, wheeled robot is a Knightscope K5 autonomous outdoor security robot that runs 24/7 on its own, including autonomously recharging itself without any human intervention. The

SDB Contracting makes major impact on PCH

AMONG MOST POPULAR RELOCATION DESTINATIONS Phoenix ranked fourth among last year’s most popular relocation destinations for renters in the U.S., according to a report from STORAGECafé. Many of these new Phoenicians are from Arizona. Here are the Top 10 originating cities interested in Phoenix:

8 | May-June 2021

security team

398-pound, 5-foot-2.5-inch tall machine boasts a maximum speed of 3 miles per hour, but unlike its more famous movie counterpart, this RoboCop is designed for surveillance — not action. It uses a variety of sensors, such cameras, radar and thermal imaging, to detect crime. Sharon Harper, chairman and CEO of Plaza Companies, one of the co-developers of Park Central, says the eye-catching robot is ready to hit the development’s sidewalks. “Parker is a fun addition to Park Central but with a serious purpose,” Harper says. “We are always looking for ways to innovate at our properties, and that includes making sure guests are as safe and secure as possible. Parker will help us achieve that goal by providing a modern, automated resource to augment our security team.”

Phoenix ranks No.  Glendale  Tempe  Scottsdale  Peoria  Mesa  Tucson  Avondale

ROBOT

 Chandler  Surprise  Tolleson

SDB Contracting Services has reached the $100,000 in lifetime giving amount to Phoenix Children’s Hospital. SDB, which has been committed to Phoenix Children’s for more than 20 years, has a long history of corporate philanthropy with hospital. It made its first impact nearly 30 years ago with an initial donation of $1,800.

WHAT’S

COMING IN 2021?

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THE CLAYTON HOUSE

AUGUST 5 2021 3:00-6:00 PM

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EXECUTIVE PROFILE

People first, properties second Collaboration fosters lasting connections for real estate executive By ALYSSA TUFTS

ibby Ekre, principal and certified public manager for MEB Management Services, found her footing early on in her career. Her dedication and skills earned her leadership positions, and she became a director in her mid-20s. “I started my career in multifamily real estate. As a young person trying to figure out what I wanted to do when I grew up, I accepted a position as a leasing consultant on a newly constructed community that included a free apartment,” Ekre says. “After many trials and errors, I found

10 | May-June 2021

myself infatuated with the incredible opportunity to run a multimilliondollar business and actually change outcomes for residents and clients. I managed my first new build at the age of 21 and worked my way up to an asset director by age 25, overseeing six communities for multiple clients. Eventually this opened up opportunities with my clients to manage their commercial sites.” MEB manages more than 23,000 multifamily units and 3 million square feet of commercial properties throughout the Southwest and

Midwest. The company’s 600-plus team members aim to enrich client lives by providing management, consulting, receivership and rehab services for all types and asset classes of rental housing, including luxury apartment and rental home communities, workforce apartments, studentoriented communities, affordable communities and active senior housing. Over the years, Ekre had opportunities to work with incredible regional and national companies, but after three acquisitions in three years, she and her clients were exhausted

In April, we launched the MEB Cares Team that reached out and assisted residents who were in immediate need of rent, utilities and food supplies. We were able to touch more than 2,000 residents. We have gained a lot in all of this and are very hopeful for what this has allowed for our future.— Libby Ekre

with the frequent changes. It was at that point Erke knew she wanted to start a company that, first and foremost, focused on the people. “I said to Jodi Sheahan, my long-term colleague and friend, ‘We need to start our own company, and you will need to get your broker’s license — and I am pregnant.’ She commented that if asked Melanie Morrison, another industry professional who we knew well, if she was interested in joining, then it all would fall together. Long story short, Melanie said, ‘Yes.’ The timing was perfect,” Ekre recalls. As MEB grew, Ekre’s role evolved as they began the company working fulltime in an operations capacity running properties and the business with Ekre managing new business and oversight of operations, and has now moved into overseeing human resources and benefits, learning and development, and marketing/branding. “Throughout our 22 years, we have grown mostly by word of mouth,” Ekre says. “This developed organically through our focus on integrity and culture, which undoubtedly speaks of our strategies focused on our people. We have been honored to be recognized as the first- or second-largest firm in the state. This was not our goal but instead the result of our culture. “Some big changes MEB has seen recently include being in breakout mode in managing class A and A+ properties. We

have emerged rapidly in the Sunbelt with expansion to our portfolio in Tennessee, Texas and New Mexico,” Erke continues. “Due to our innovation with technology, more owners/developers are drawn to us with an emphasis on green housing, smart home technologies and sustainable living. We also have dozens of newly developed communities across Arizona as a result of growth within our state.” Although growth has propelled MEB as a leader in multifamily properties, Ekre says that persevering through economic downturns in 2016-2017 and 2020 required collaboration and responsiveness. “Our planning, foresight and clients got us through 2016-2017. During that time, we were fortunate to have a business partner who had the foresight to build relationships with lenders and special servicers; the three of us became receivers for many struggling multifamily and commercial assets. This strategy allowed us to continue to be strong in an extremely volatile market.” In 2020, Ekre said the urgency for technology to be launched at an exponential velocity, combined with prior planning and agility, allowed MEB to pivot quickly and match pace with the need for touchless viewing, leasing and rental payments. “In April, we launched the MEB Cares Team that reached out and assisted residents who were in immediate need of rent, utilities and food supplies. We were able to touch more than 2,000 residents. We have gained a lot in all of

this and are very hopeful for what this has allowed for our future.” In addition to her role at MEB, Ekre is involved with the Institute of Real Estate Management (IREM), an international organization that provides education and resources to property managers worldwide. Ekre was elected to the national position of secretary and treasurer for 2022 and will be inducted at IREM’s annual meeting in October 2021. Throughout this year, she will continue as senior vice president on IREM’s executive committee while beginning to transition into her new role. Ekre has served on the IREM Phoenix Chapter Executive Council since 2005 and held the title of president in 2008 and 2017. “It is an honor and a privilege for me to be elected to this position,” she says. “This organization means a great deal to me personally and professionally. It has the highest and best education offered in the real estate industry.” According to Erke, property operations and people management are two skills that have contributed to her successful career. “Understanding the intricacies of managing a wide array of assets and participating in the continuing education program through IREM to keep current with changes, updates and nuances in our industry are very important,” she notes. “It’s gratifying when team members are able to work together, find solutions and provide a service that they can be proud of and feel a sense of accomplishment,” she adds. “That is very rewarding.” 11

AFTER HOURS

Away from work Here’s how Arizona’s most influential real estate leaders spend time away from the office By MICHAEL GOSSIE

ith the commercial real estate sector barely missing a beat throughout the pandemic, it’s never been more important for business leaders to find a way or a place to help them recharge. Here's a look and how and where a few of Arizona’s most influential leaders in real estate spend their time away from the office.

ED BEEH, executive vice president and managing principal, SRS Real Estate Partners: “I have an eclectic taste in music and love attending live music events of almost any genre. Some of the more recent concerts I have attended are the Bruno Mars, Dierks Bentley, Eagles, David Gray, Ray LaMontagne, Pink, Kid Rock and Justin Timberlake.” LEROY BREINHOLT, president and

designated broker, Commercial Properties Inc.: “My most prized possession is probably my cabin in the White Mountains. I love the pine trees, and to me, the mountains are ‘God’s Country.’”

LARRY DOWNEY, vice chairman; Cushman & Wakefield: “I have an advanced scuba ‘deep dive’ certification and have been fortunate to dive some amazing locations, including the largest ocean sinkhole — Great Blue Hole — off the coast of Belize at a depth of 138 feet. On my bucket list is Devil’s Throat, a 60-foot-long, 129-footdeep coral tunnel in Cozumel.” PATRICK EDWARDS, vice president and Phoenix regional manager, Burns & McDonnell: “For the past 20 years, I have played with the same group of guys in a home poker game. We 12 | May-June 2021

Ed Beeh get together every Tuesday, 50 weeks a year, from 7 p.m. to midnight. Besides my family, these men have been the only constant in my life. It has nothing to do with money and everything to do camaraderie … and it’s cheaper than Patrick Edwards therapy.”

PAT FEENEY, senior vice president, CBRE: “My wife and I travel internationally once or twice a year, and many times our destination choice is inspired by places I read about in international spy Terry Martinnovels. One of our Denning favorite getaways is a small town called Oai on the island of Santorini in Greece. It’s a relaxing and beautiful place to visit.” K. MICHELLE LIND, CEO, Arizona

Association of Realtors: “My prized possession is my home in Prescott because it is a place where I can relax and enjoy spending time with my family and friends.”

TERRY MARTIN-DENNING, CEO,

NAI Horizon: “Our family cabin in Montana is very important to me. I have so many wonderful memories of my childhood, surrounded by family, that include our cabin. I also grew up hunting and fishing and am an avid outdoorswoman. While I no

Leroy Breinholt

Larry Downey

Pat Feeney

K. Michelle Lind

John L. Strittmatter

Matt Widdows

longer hunt, I still enjoy fishing in the mountain lakes of Montana.”

JOHN L. STRITTMATTER, Southwest

chairman, Ryan Companies US: “My prized possession is our family’s vacation home in Coronado, California. It is where our entire family from various parts of the country connect.”

MATT WIDDOWS, CEO and founder, HomeSmart International: “I have loved aviation and space since I was a kid. I have been flying privately for about 25 years, and I am currently type-rated to fly jets. It was my dream to work my way up to the certification, so I’m very proud to have accomplished that goal. Next step, helicopters.”

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NEW TO MARKET A

MULTIFAMILY A MILHAUS NORTH TEMPE DEVELOPERS: Milhaus and Banyan Residential ARCHITECT: Todd & Associates GENERAL CONTRACTOR: McShane Construction ENGINEER: Rick Engineering SIZE: 621 units when the project is complete LOCATION: 1245 E. Curry Road in Tempe VALUE: $177 million START DATE: March 2021

14 | May-June 2021

EDUCATION B RIDGEVIEW COLLEGE PREPARATORY HIGH SCHOOL DEVELOPER: The Leona Group GENERAL CONTRACTOR: Adolfson & Peterson Construction ARCHITECT: Carhuff & Cueva Architects SIZE: 37,000 SF LOCATION: 1645 W. Skyline Drive, San Tan Valley START DATE: March 2021

MULTIFAMILY C SOLACE AT BALLPARK VILLAGE DEVELOPERS: Jackson Dearborn Partners and Sub4 Development ARCHITECT: LCM Architects SIZE: 211 unit LOCATION: 2571 Estrella Pkwy., Goodyear VALUE: $44 million START/COMPLETE: March 2021/ August 2022

INDUSTRIAL D THE CUBES DEVELOPERS: CRG and Bird Dog Industrial BROKER: JLL GENERAL CONTRACTOR: Clayco ARCHITECT: Lamar Johnson Collaborative SIZE: 5.5M SF LOCATION: Reems Road and Northern Avenue, Glendale START DATE: March 2021

MULTIFAMILY E TOWN DEER VALLEY DEVELOPER: The Related Group GENERAL CONTRACTOR: GCON ARCHITECT: Todd Architects SIZE: 388 units LOCATION: 24032 N. 19th Ave., Phoenix START/COMPLETE: March 2021/Q2/2022

INDUSTRIAL F BUCKEYE85 DEVELOPER: LPC Desert West ARCHITECT: Butler Design Group CIVIL ENGINEER: Hunter Engineering SIZE: 321,873 SF LOCATION: 103rd Avenue and Buckeye Road, Phoenix START/COMPLETE: April 2021/Q4 2021

AN EPICENTER OF TECHNOLOGY

Intel’s $20B investment will add thousands of new jobs

By ALYSSA TUFTS

rizona’s reputation as a technology industry leader continues to grow. In March, Intel announced a substantial expansion of its Arizona-based manufacturing capacity with a $20 billion investment, which includes two new semiconductor fabrication facilities and the creation of 3,000 new high-tech, high-wage jobs and 3,000 construction positions; it will also support about 15,000 additional indirect jobs in the community. According to Sandra Watson, president and CEO of the Arizona Commerce Authority, Intel’s decision to open two new semiconductor factories is transformational in adding new jobs. “These workers will live in our communities, shop at local small businesses and pay Arizona taxes," she says. "This expansion will also support thousands of jobs in construction and through suppliers and other industries.” In addition, Watson notes that Intel’s development represents the largest private sector investment in state history. She explains, “To put that into perspective, this expansion nearly equals what Intel has invested in the state since 1980. Long-term ventures like this have a ripple effect throughout our economy and will have a positive impact on areas such as K-12 education, infrastructure and public safety for generations to come." The investment is significant and will add to Intel’s existing operations with about 12,000 employees between two Chandler campuses, and add value to Chandler’s Price Road Corridor, which includes Northrop Grumman and Microchip. “With this investment, Intel is significantly expanding its footprint in Chandler,” Watson says.

16 | May-June 2021

“When completed, Intel will employ nearly 16,000 Arizonans and will have invested more than $50 billion in our state. Intel will also grow the number of semiconductor fabs they operate in the state from four to six.” Micah Miranda, economic development director for the City of Chandler, says the expansion represents a huge opportunity for both the city and the state. “It’s a long-term project within an industry that’s producing something locally and shipping those goods around the world. The deal is also important due to the economic multiplier it has; so for every one Intel job created through this project, it will create three additional jobs, and a number of other businesses are supported by the activity taking place.” In addition, the large number of construction workers who will build the new facilities also will add to the economic activity in Chandler during that time. “The tradespeople will stay at our hotels, dine at our restaurants and shop at our shopping centers, so those individuals and their spending will help support the businesses most troubled right now due to COVID-19,” Miranda remarks. Intel is more than just Chandler’s largest employer. It also prioritizes community through charitable giving. Since 2015, the company and it’s philanthropic arm, the Intel Foundation, have given more than $35 million to support Arizona schools and nonprofits, and thousands of local employees have contributed more than 750,000 volunteer hours. “Intel has not only been a tremendous economic partner, it has been an exemplary corporate citizen as

Micah Miranda

Sandra Watson

well,” Watson says. “Over the years, the company and its employees have been leaders in supporting local schools and students, promoting healthy forests and rivers, providing pandemic relief, volunteering and more.” Miranda adds that Intel is also a major advocate of citywide initiatives with the municipal government and the city’s nonprofit partners. “Intel’s support is not just measured in dollars, it’s also measured in time. The company is an active participant in our Science and Technology Festival, and its employees serve on community boards. Part of the corporate culture is community involvement.” The Arizona Commerce Authority (ACA) is the state’s leading economic development organization and is focused on key industries, including technology and innovation, to grow Arizona’s existing businesses and create new ones. “Over the last 10 years, the ACA has been laser-focused on making Arizona the leading state for technology and innovation,” Watson says. “As chair of the ACA, Gov. Doug Ducey has been our state’s chief spokesperson and promoter in creating an environment that allows innovation to thrive. We see the results in the exciting new businesses relocating to Arizona; in

FAB 42: Intel’s newest leading-edge manufacturing facility is Fab 42 in Chandler. Fab 42 connects to three other Intel fabrication plants, making the site the company’s first megafactory network. It manufactures the latest generation of groundbreaking products that will power hundreds of millions of computing devices worldwide.

the companies, such as Intel, that are expanding here; and in the boom of our start-up community, which is attracting worldwide attention for its success. There’s more work to do, and we remain as focused as ever on making Arizona an international center of excellence for nextgeneration technologies.” Intel is one of the world’s biggest semiconductor companies, with six wafer fabrication sites worldwide, including its facilities in Chandler. “Across the world, we’re seeing unprecedented demand for high-tech products that are powered by semiconductors. Intel is uniquely positioned to meet that demand, and a big part of its strategy is centered in Arizona,” Watson notes. “Just last year, Intel’s Fab 42 became operational in Arizona, making it the company’s largest chip-making factory

in the U.S.; it also is said to be the most advanced in the world. These assets, as well as Intel’s expansion, put Arizona at the epicenter of the technology innovations happening globally.” Miranda says that with a major capital investment, companies have a lot of location choices, so for Intel to continue to choose Chandler is an honor. “The relationship that the city and Intel have is very intertwined — everything from roadways to utility infrastructure. We collaborated during the design and construction processes of the current facility to ensure that we are wellpositioned on the Intel roadmap for future capital investments.” He adds, “The recent announcement signifies to the private sector that Chandler is not only capable of supporting

our largest employer, but because of that support, Intel is comfortable continuing to invest in our area, which the City of Chandler is really proud of.” The new facilities speak to Arizona’s strength as a technology industry leader. “As a multinational company, Intel could have chosen any place in the world to build its new advanced factories,” Watson points out. “It chose Arizona because of our robust innovation ecosystem, world-class university research enterprise, and highly-skilled and growing workforce. Not only does Intel’s announcement add to Arizona’s already booming tech scene, it sends a signal around the world that our state is the place to be for advanced manufacturing and emerging technologies.” Another benefit to the city and state is the employees who relocate to Chandler, creating a diverse workforce. “This multifacted community is attractive to other businesses we’re working with, so it adds to the economic success and the cultural dynamism of Chandler,” Miranda says. Watson comments, “Major investments like this attract additional talent and innovators to the state who add to Arizona’s high-tech ecosystem. As technology companies look to expand or relocate, they want to go where there is already a skilled workforce and robust supply chain that can meet their needs, now and in the future. “Last year, Arizona was a Top 10 state for tech employment gain, and it is expected to have the third-fastest tech occupation growth over the next decade,” she continues. “Which means more technology companies will be looking at Arizona for their next big investment, and we remain focused on continuing to promote Arizona’s unbeatable value proposition for nextgeneration technologies.” 17

MULTIFAMILY/SALES

$178.5M | DEER VALLEY VILLAGE APARTMENTS 3010 W. Yorkshire Dr. and 19645 N. 31st Ave., Phoenix BUYER: Millburn and Company SELLER: Priderock Capital Partners BROKER: NA

$129.5M |

$84.5M | RESIDENCES AT UNIVERSITY CENTER

$117M | MONTREUX APARTMENTS

$65.8M | TIERRA DEL SOL APARTMENTS

ALMERIA AT OCOTILLO 2470 W. Edgewater Way, Chandler BUYER: Sentinel Real Estate Corp. SELLER: Passco Companies BROKER: NA

5550 E. Deer Valley Drive, Phoenix BUYER: Pacific Development Partners SELLER: Statesman Group of Companies BROKER: NA

1260 E. University Drive, Tempe BUYER: Ideal Capital Group SELLER: DiNapoli Capital Partners BROKER: NA

1711 S. Extension Road, Mesa BUYER: Aukum Management SELLER: Bridge Investment Group Partners BROKER: NA

RETAIL/SALES

$126.5M | 1,646,821 SF PARADISE VALLEY MALL

12820 N. Tatum Blvd., Paradise Valley BUYER: RED Development SELLER: Macerich BROKER: NA

$34M | 127,100 SF

LIFE TIME FITNESS CENTER 24700 N. 67th Ave., Peoria BUYER: Spirit Realty Capital SELLER: Life Time Fitness BROKER: NA

$27.75M | 168,178 SF

SCOTTSDALE TOWNE CENTER 15454-15784 N. Frank Lloyd Wright Blvd., Scottsdale BUYER: Mega Furniture SELLER: Vestar BROKER: NA

18 | May-June 2021

$27.5M | 100,379 SF

COLLEGE PARK CENTER Camelback Road, Phoenix BUYER: Tierra Partners SELLER: 35 College Park LLC BROKER: NA

$26.15M | 107,508 SF

HAYDEN STATION 390 N. Mill Ave., Tempe BUYER: 390 N. Mill Ave., Tempe SELLER: YAM Properties BROKER: Cushman & Wakefield

It’s the big deals and the brokers who close them that make the market an interesting one to watch. Here are the top notable sales for the months of March and April. Source: Vizzda

OFFICE/SALES

$110M | 364,521 SF

PETSMART HEADQUARTERS 19601 N. 27th Ave., Phoenix BUYER: BPM Real Estate Group SELLER: VEREIT BROKER: CBRE

$39.5M | 306,571 SF

MESA FINANCIAL PLAZA 1201 S. Alma School Rd., Mesa BUYER: CAMCO Investment Group SELLER: Barker Pacific Group BROKER: CBRE

$34M | 151,943 SF

RAINTREE CORPORATE CENTER I 15333 N. Pima Rd., Scottsdale BUYER: Held Properties SELLER: ViaWest Group BROKER: NA

LAND/SALES

$25.6M | 163.72 AC

SYCAMORE FARMS PARCELS 1 & 2 SR 303 and West Cactus Road, Surprise BUYER: Taylor Morrison SELLER: Moore Ranches BROKER: Nathan & Associates

$21.7M | 709 AC

Arizona Farms and Felix roads, Florence BUYER: Langley Properties SELLER: Sunbelt Holdings BROKER: Nathan & Associates

$23.7M | 50,513 SF

1675 E. Melrose St., Gilbert BUYER: Flagler Investment Property Group SELLER: OrthoArizona BROKER: NA

$18.8M | 36,846 SF

RETINAL CONSULTANTS OF ARIZONA 15401 N. 29th Ave., Phoenix BUYER: Artemis Real Estate Partners SELLER: Montecito Medical Real Estate BROKER: NA

INDUSTRIAL/SALES

$91M | 470,400 SF

LOTUS PROJECT 6511, 6565, 6615 and 6677 W. Frye Rd., Chandler BUYER: LaSalle Investment Management SELLER: Conor Commercial Real Estate BROKER: Cushman & Wakefield

$85.35M | 528,789 SF

7340 S. Kyrene Rd., Tempe BUYER: Investcorp SELLER: BKM Capital Partners BROKER: NA

$20M | 16.54 AC

$35.5M | 417,600 SF

$19.5M | 74.43 AC

KOLL COTTON CENTER 4050 E. Cotton Center Blvd., Phoenix BUYER: TerraCap SELLER: BKM Capital Partners BROKER: NA

$17.7M | 74.05 AC

SEVENTY5 BUSINESS PARK 7150 W. Roosevelt Ave., Phoenix BUYER: Baron Properties SELLER: Rialto Capital BROKER: Cushman & Wakefield

BANYAN NORTH TEMPE North Miller and East Curry roads, Tempe BUYER: Milhaus SELLER: Rush Auto Recyclers BROKER: NA THE CUBES AT GLENDALE Reems Road and Northern Avenue, Litchfield Park BUYER: Claycorp/CRG SELLER: Claycorp/CRG BROKER: NA E202 (PROPOSED) SR 202 and Elliot Road, Mesa BUYER: Marwest Capital SELLER: EdgeConnex BROKER: NA

670 S. 91st Ave., Tolleson BUYER: Nearon SELLER: CTR Investors BROKER: NA

$30.88M | 224,986 SF $27.5M | 223,190 SF

LEGISLATIVE UPDATE

COVID-19 and the Arizona rental housing industry

ore than a year into the COVID-19 pandemic, the rental housing industry is still reeling from the aftereffects of both extreme economic duress and unprecedented government overreach. The industry remains under the grips of a federal eviction moratorium with no indication from the government as to when rental property owners’ rights will be restored. While the federal executive branch has been unrelenting, we are starting to witness the judiciary push back with federal judges in Texas, Tennessee and Ohio declaring the federal eviction moratorium as unconstitutional. Those cases are now under appeal. The 2021 Arizona Legislative Session has been in full swing since January,

20 | May-June 2021

Courtney Gilstrap LeVinus AMA

and lawmakers have been considering a record-breaking 1,829 bills and resolutions. While most of them — almost 1,500 bills — died throughout the process, the Arizona Multihousing Association (AMA) was successful in moving key legislation forward.

VIRTUAL COURT MADE PERMANENT The AMA was focused on making one COVID-related policy permanent. Nearly a year ago, in response to the

pandemic, Arizona courts ended in-person appearances for eviction matters and moved all the hearings to a video or telephonic court system. Though the initial rollout had some technical challenges, it soon became clear that remote or “virtual” court appearances could be beneficial to renters who no longer needed to take time away from their daily responsibilities to appear in person at the actual courthouse. While some opponents initially expressed concern over access for lowincome renters, the data quickly proved that the digital divide is not nearly as large as some perceived thanks to the ubiquitous use of smartphones. According to the National Center for State Courts, going virtual has enabled greater participation in the justice system, with New Jersey seeing its 20% Failure to Appear rate drop to zero, and Michigan seeing its 89% appearance rate increase to 100% after the adoption of online court appearances.

Just about every economic marker indicates that we need to build more housing and find ways to incentivize housing construction, from creating new financing mechanisms to removing regulatory barriers, such as antiquated zoning laws … Here in Arizona, the Failure to Appear rate in eviction action proceedings dropped 31% in the Maricopa County Justice Courts. As stated by Michigan Chief Justice Bridget Mary McCormack, going online can make courts not only safer but “more transparent, more accessible and more convenient.” Seeing the clear benefits to renters normally burdened with taking public transportation to court, taking time off from work or finding childcare, Sen. Warren Petersen (LD-12) introduced SB1322 to make virtual court permanent. The bill has already been signed, and once it takes effect, any party, including an attorney or witness upon written notice to the court, will be permitted to participate at the initial appearance remotely by using a telephone or video conference connection.

AFFORDABLE HOUSING CENTER STAGE Over the past few years, and especially during the pandemic, the rhetoric around housing affordability has increased dramatically. We have seen a new level of scrutiny and a bevy of unconstitutional ideas to address the issue. Unfortunately, there has been little, by way of proactive policy interventions, to address the true root cause of the issue — supply. A recent National Apartment Association study shows that Arizona needs to build at least 17,000 units per year just to keep up with demand — the vast majority of which need to be attainable. Just about every economic marker indicates that we need to build more housing and find ways to incentivize housing construction, from creating new financing mechanisms to removing

regulatory barriers, such as antiquated zoning laws, rather than creating new regulatory schemes as some policymakers and academics have suggested. One such policy intervention is a statelevel Low Income Housing Tax Credit (LIHTC) program, and it is a policy idea that the AMA and other housing stakeholders have been working on in partnership for several years. This year, Rep. Regina Cobb (LD-5) and Sen. David Gowan (LD-14) have been spearheading the efforts to establish a state program and create $480 million in new financing for the state of Arizona. State LIHTC is modeled after the federal program signed into law by President Ronald Reagan as part of his Tax Reform Act of 1986. Made permanent in 1993, federal LIHTC has since been sustained by both Democratic and Republican presidents as well as continued by President Donald Trump in his Tax Cuts and Jobs Act of 2017. Federal LIHTC has helped finance approximately 47,000 affordable housing units in Arizona since 1987. If state LIHTC is approved this year, it is estimated that nearly 1,000 new affordable units will be created annually under the program.

NEW GUIDANCE FOR DEALING WITH ANIMALS A resident’s animals, whether they are pets, service animals or emotional support animals, can present unique challenges for rental property owners. It can be especially challenging when the resident dies and an animal is left behind in the unit. Animals in these unfortunate situations have historically been treated like personal property, no different than

a couch or a television. Because of this, property owners are left in the untenable position of having to choose between the welfare of the animal or potentially violating state law to enter the unit to provide care to the animal. To rectify this gray area of the law, and in response to the legal conundrum, Rep. Shawnna Bolick (LD-20) introduced HB2507 to provide clear guidance to rental property owners in the event the resident dies and an animal is left behind. Under the new law, which was signed by Gov. Doug Ducey in March, a rental owner may release an animal after one day to a relative if the owner cannot contact a named authorized person on the lease or if the owner was not provided with the contact information of an authorized person. The bill also allows the same remedy in the event the renter is “incapacitated,” which in light of the COVID-19 pandemic, is especially important for residents who may be hospitalized for long periods.

HARMFUL BILLS DEAD FOR THE YEAR While the AMA was successful in passing key legislation in 2021, it was equally successful in defeating legislation that would have been detrimental to the rental housing industry. In fact, the 2021 legislation saw a historic level of anti-rental housing bills introduced by lawmakers with more than 25 bills introduced that took direct aim at the industry. Courtney Gilstrap LeVinus is the executive director of the Arizona Multihousing Association. 21

LEGISLATIVE UPDATE

TIME FOR CHANGE? New economic analysis shows that Arizona can win big with property tax reform

oming out of the COVID-19 pandemic, Arizona has a special opportunity to position itself as a premier choice for corporate relocations and new business attraction. Recently, we’ve celebrated several big wins with company expansions that will bring many new jobs to our state. Specialized tax treatment, such as Foreign Trade Zones, which dramatically lower property taxes for businesses within the designated area, helped make these major investments possible. However, these benefits are not available to all businesses. They are constricted to specific geographic areas. Opportunities exist for many more job creators, both large and small businesses, to make our state home if we can address an area of our tax system where Arizona is currently not competitive with other markets — commercial property taxes. NAIOP members include real estate developers and brokers who scour the U.S. and beyond to find tenants for their office buildings and industrial facilities. Time and time again, we hear that high commercial property taxes factor negatively into site selection decisions. To better understand the full scope of this problem, NAIOP commissioned Rounds Consulting Group to conduct an economic impact

22 | May-June 2021

Suzanne Kinney NAIOP

analysis. That report revealed several important insights. Arizona’s commercial property taxes currently are not competitive, despite progress being made over the past 15 years. Property in Arizona is valued by the Department of Revenue and county assessors. Currently, commercial properties are taxed based on 18% of their assessed value. This is often referred to as the assessment ratio. By comparison, residential properties are taxed using a 10% assessment ratio. Effective tax rates are the actual amount owed based on the assessment ratio and the relevant jurisdictions’ tax rates. When we look at the effective tax rates on a national basis, Arizona ranks the 20th highest for office

properties and the 10th highest for industrial properties. When we dig deeper, the situation becomes more dire. Our key competitors are regional markets such as Houston, Denver, Salt Lake City, Boise, Los Angeles and Las Vegas, which that site selectors evaluate for companies looking to expand in the Western U.S. When analyzing these key competitors, Phoenix has the third highest effective tax rate for office properties and the second highest for industrial properties. Although Houston tops the list, it is important to note that Texas has no income tax and offers bountiful incentives to companies looking to relocate to the Lone Star State. Job growth is particularly important following a recession. The world has fundamentally changed, and some markets will come out ahead while others will fall behind. Getting the economic fundamentals right will position Arizona to be among those markets poised for growth. Arizona’s strong revenue position makes it possible to take decisive action this year that will improve our ability to compete for new jobs. Lawmakers are currently debating a tax package to aid in Arizona’s continued economic recovery from the COVID-19 pandemic and to position our state for increased growth. One proposal would bring the assessment ratio down from 18% to 17%, which would move Arizona’s national ranking on office property from the 20th highest to the 27th, and on industrial property from the 10th highest to the 19th. This proposal is structured in a way that it would not shift the tax burden to other types of taxpayers, nor would it decrease funding for public schools. Other proposals would go farther, by bringing the assessment ratio down to 15% over a longer time horizon. Either approach would meaningfully enhance our ability to attract private investment and job creators to our state. Suzanne Kinney is the president and CEO of NAIOP, a leading organization for developers, owners and related professionals in office, industrial, retail, and mixed-use real estate.

LAND USE & ZONING

Shaping the future Thoughtful zoning and design is at the heart of modern growth and development

ith 300 days of sunshine every year, professional and college sports teams, more than 50 museums, 200-plus miles of hiking trails and no shortage of entertainment options, including restaurants, concert venues, movie theaters and shopping, Greater Phoenix provides residents and visitors with a wonderful place to live, work and play. With its abundance of activities and great quality of life, it’s no surprise that our region also has become known for its rapid growth and development opportunities. While many older residents, often proudly referring to themselves as “Valley natives,” fondly remember the early days of Phoenix and its surrounding cities, thoughtful growth has provided the jobs, housing and entertainment options that make this area a unique and an enjoyable place to live for natives and newcomers alike. The incredible growth that’s come to the Valley of the Sun — including housing developments, medical and office complexes, entertainment centers and mixed-use developments — often has taken advantage of an area’s need for infill development by putting vacant or underused properties to use. For example, in 2019, home developer D.R. Horton purchased 120 acres of vacant

Alicia “Ali” Bull

Burch & Cracchiolo land for a large single- and multifamily community called Arabella. Plans for the development call for 420 single-family homes and 286 duplex/town homes, along with numerous amenities. This community model that includes singleand multifamily dwellings is popular around the Valley and offers residents comfortable housing options close to jobs and entertainment. Also increasing in popularity are mixed-use developments that incorporate housing as well as office and commercial space. These types of multifunctional complexes allow owners to develop creative designs that benefit residents, workers and surrounding communities alike. For example, RED Development and Macerich’s Paradise

Valley Mall redevelopment plans include an exciting mix of office, multifamily, grocery store, retail shops and other uses. This modern approach to design creates inviting spaces for community members to gather and enjoy life in sunny Arizona. The Valley has also seen tremendous growth in the bioscience and tech sectors. Phoenix is home to industry leaders such as Honeywell, Intel, JDA Software and Insight. Further growth is on the horizon, with plans for a new semiconductor factory in the works. The Taiwan Semiconductor Manufacturing Co. purchased 1,129 acres of undeveloped land for $89 million in December 2020. While it is undeniable that the Valley has amazing things to offer its residents and workforce, our growth and development isn’t a free-for-all where big developers or landowners can build whatever they please, wherever they please. Instead, there are systems in place to protect and enhance the character of each area of the Valley by ensuring our expansion is thoughtful and appropriate. Local governments enforce city codes and zoning ordinances — rules that describe various use categories, where such uses are appropriate, as well as the standards developments must meet and the processes companies must follow when they wish to develop or redevelop a particular property. Despite a developer’s best efforts to present thoughtful plans for a site, large-scale projects or major use changes often are met with controversy. While many Valley residents acknowledge the need for progress and growth, there are those who disagree and would prefer to see the growth occur elsewhere or with a different design. Common concerns are traffic and building height. Land use and zoning professionals can help developers and landowners of all sizes navigate the development process, ensuring we continue the trend of thoughtful and appropriate design enhancing the character of the Valley and the quality of life of its residents for generations to come. Alicia “Ali” Bull is an associate attorney at Burch & Cracchiolo. Her practice focuses on land use and zoning law and commercial litigation. 23

AZCREW

More women, more opportunities AZCREW’s new president discusses what’s ahead for the organization By ALYSSA TUFTS

omen haven’t always had a seat at the table in commercial real estate, but thanks to organizations such as AZCREW (Arizona Commercial Real Estate Women), more women are entering and staying in the industry, and many even have become senior executives at companies around the state. Lindsey Carlson, the 2021 president of AZCREW, is a senior vice president for Colliers International. She has been with the company for 18 years as a commercial real estate broker specializing in office space, and has been part of AZCREW for 15 years. AZCREW is an organization that focuses on the advancement and success of women in the commercial real estate industry through leadership, relationships, education and excellence. AZRE spoke with Carlson about how AZCREW is keeping members connected, what’s ahead for 2021 and how the organization is helping women advance and succeed in the commercial real estate industry. AZRE: Why is AZCREW beneficial for women in the commercial real estate industry?

Lindsey Carlson: Our mission really explains everything — it’s basically to transform the commercial real estate industry by advancing 24 | May-June 2021

women globally. What that means to our members is that by being part of this organization, you’re also part of something much bigger than just yourself, and you’re banding together to make sure the tide rises for everyone. Seventy-five percent of our members are senior members. This is especially helpful to people are just getting into the industry or are early in their career. They’re getting exposed to all these senior-level executives who can help further their career and give them guidance and mentoring. Everyone is always willing to give advice and help each other out. I’ve never once had anyone come up to me or make a call and say, ‘That person never got back to me,’ or ‘That person who couldn’t help me.’ Everyone goes above and beyond to make those connections and referrals and do deals with each other because we have such a high level of trust with each other.

We’re also part of the larger CREW Network, which has about 12,000 members globally. So not only do you have access to all your AZCREW members, but you have access to global members as well. So there’s no question you could ask that someone wouldn’t be able to provide an answer for, find resources or have some expertise on. Our members have so many tools and resources at their fingertips. AZCREW is not just for the big companies either. Some members who work at smaller organizations that don’t have a broad reach are able to leverage our network and act like a big global company, when they’re really just a regional player. AZRE: How has AZCREW engaged with it members during the pandemic? LC: We’ve really been intentional in trying to create value for our members and figuring out what it is

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AZCREW that they want this year. What do they want to see from us? We’ve also been hearing over and over again that they want connection — everyone is missing each other and missing that in-person connection. It’s also a whole new world right now, in the industry it’s like, ‘what are people doing, what are best practices, how is this industry segment different now?’ I feel as though we were on pause a little bit last year, and now we’re getting a chance to get caught up and get excited again about what going on in the industry and new innovations. Our members were really quick to embrace Zoom programming and virtual events, so we had good success with it last year and will continue to host them for the first part of this year. AZRE: AZCREW is well-known for the numerous networking events it offers to its members. What do you have planned for 2021? LC: AZCREW is focusing on more in-person programming for the rest of the year. We’re going to have our industrial panel in May, so it will be our first opportunity to bring people together and allow networking. We also have our GolFiesta in May, which helps raise money for New Pathways for Youth, which is the charity that we’ve partnered with this year. That will be a good chance for everyone to get out and enjoy the weather; it also gives people another way to connect and share business and give referrals. AZRE: What is AZCREW doing to identify the next generation of commercial real estate professionals and encourage their participation in the community? LC: We have numerous opportunities for people to get exposed to the commercial real estate industry. We are working with CREW Network on doing a UCREW event, which is exposing mostly college-age women to the commercial real estate industry. There’s also CREW Careers, which is at the high school level; we hope to reschedule 2020 event for 26 | May-June 2021

either this year or 2022. We also do a lot of professional development and leadership programs. For example, we host a larger in-person professional development event twice a year, and we bring in a speaker who talks about subjects such steps for furthering your career, understanding the different dynamics with what’s going on in the market or with your team, or how to become a leader. An event such as that is easier for members to attend, but we also

Our mission really explains everything — it’s basically transforming the commercial real estate industry by advancing women globally. What that means to our members is that by being part of this organization, you’re also part of something much bigger than just yourself, and you’re banding together to make sure the tide rises for everyone. encourage nonmembers to take part as well so that everyone is exposed to different opportunities and can meet a variety of people. We also have an intentional Board of Directors that ensures that, on the committee levels, new members have a voice in where the organization is going and what they want to see. Finally, we also set up different mentoring opportunities and, while they may not be formal

mentoring, we’re encourage that conversation to happen from a senior level to a more junior level. AZRE: Given the increased focus on Diversity, Equity and Inclusion (DEI), how is AZCREW contributing to those efforts? LC: “This has been part of CREW Network’s global focus for a long time. They’re a leading provider in research on gender and diversity in commercial real estate. Having access to that research is a huge benefit to our member. The 2020 CREW Network Benchmark Study: Gender and Diversity in Commercial Real Estate has easy, actionable recommendations that people can apply to both themselves and their organizations to create a more diverse community. We also have all sorts of tools that people can use to have the conversations within their own organizations so they can make sure that DEI is on the forefront of their discussions; and we have been invited to participate on panels and discussions because of our expertise level on this topic. AZRE: As a long-time member and now president of the organization, what would you like AZCREW’s legacy to be in the community and in the industry? LC: I would say the legacy in general is to elevate the industry as a whole as it relates to diversity — and especially gender diversity — and to accomplish our mission of advancing women in real estate. That’s really what we’re all working for at all times. Whether that’s helping create more opportunities for women to grow and succeed in their own organization, or start their own business if they’re entrepreneurial, our goal is to make commercial real estate a career option for young women coming into the industry. We want them to say, ‘I can see myself in that career because there are other people who have been there and done that and have made it a rewarding option for the younger generation.’

HEALTHCARE BUILDING

ADVANCED TREATMENT Here’s how health care facilities are preparing for tomorrow’s pandemic, today By KYLE BACKER

28 | May-June 2021

t’s been more than a year since the World Health Organization declared the COVID-19 outbreak a pandemic and the first related deaths were reported in the U.S. During the height of the pandemic, hospital systems were stressed as available beds ran dangerously low in cities across the country and health care workers grappled with treating patients and finding a

way to control transmission of the highly contagious virus. “The pandemic did something unique to the health care system — it pushed it to the max,” says Lee O’Connell, vice president of operations for McCarthy Building Companies Southwestern Region’s health care services group. “We’re able to look in the rearview mirror now and see it was the system and the people that pushed through.”

The urgency of the COVID-19 pandemic may soon fade, but the lessons hospitals learned last year won’t be forgotten as new health care facilities continue to be designed, developed and opened to the public. We take a look at four projects in the Valley that are already preparing for the possibility of future outbreaks, along with construction trends that are guiding development.

CHANDLER REGIONAL MEDICAL CENTER 29

HEALTHCARE BUILDING

VALLEYWISE HEALTH MEDICAL CENTER

CHANDLER REGIONAL MEDICAL CENTER Part of the Dignity Health system, the Chandler Regional Medical Center tower addition and expansion is slated to open in June 2021. The expansion is a design-build contract, meaning the owner, designer and construction partners collaborated on the project from the start. “We deliver full-service contractor services where we’re planning the medical equipment, the furniture, the artwork and signage in the facility,” says Nicholas Pearce, project director for McCarthy Building Companies. “Being involved from the beginning means doctors and nurses will be able to provide care right away when we hand over the keys to the owner.” 30 | May-June 2021

The 225,000-square-foot patient tower, known as Tower D, will bring the facility’s total bed count to 429, with space on the first and fifth floors for future growth. McCarthy Building Companies is also renovating an additional 55,000 square feet in Tower C, which opened in 2014 and houses a Level 1 trauma center and intensive care unit. The project will create eight new surgical suites and the expansion of outpatient services. Tower C renovations will be complete in 2022.

VALLEYWISE HEALTH MEDICAL CENTER In 2014, Maricopa County voters approved a $935 million bond in part to replace Valleywise Health

Medical Center, its Level 1 trauma center and the Arizona Burn Center. The original hospital was designed during the 1960s under a different care model that subscribed to lengthy patient stays. “Hospitals are moving towards performing elective surgeries in outpatient ambulatory centers and allowing the acute-care facilities to focus on the more critical cases,” says Mark Tiscornia, principal for Cuningham Group Architecture, which partnered with design group EYP on the project. Part of the expansion includes creating a designated floor for the Arizona Burn Center with its own entrance, lobby and signage. Previously, the center’s resources were spread throughout the hospital.

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HEALTHCARE BUILDING An additional support building will meet the needs of a major hospital. “The program is about 675,000 square feet of new hospital and 100,000 square feet of the support service building which is connected by a breezeway. It is 10 stories with 233 licensed beds and a shell floor at the very top to give the system an opportunity for potential expansion in the future,” Tiscornia says. The expansion is projected to be completed in 2023.

BANNER DESERT

BANNER GATEWAY

32 | May-June 2021

BANNER HEALTH Nonprofit Banner Health is investing nearly $400 million in expansion projects in the East Valley, including Banner Desert Medical Center in Mesa and Banner Gateway Medical Center in Gilbert. Even before the pandemic, the region’s growing population warranted an expansion of services. The Mesa project, slated for completion in 2023, includes 148,800 square feet of new space and 102,500

square feet of renovated space; it also adds 152 adult acute care beds. “We are building a women’s tower that will include state-of-the-art services for women and infants, a new women’s surgical services unit, and other medical and surgical units to support the growth of this campus,” says Laura Robertson, CEO of Banner Desert and Banner Children’s at Desert. “With this tower next to our pediatric tower, we will create a focused women’s and children’s

HEALTHCARE BUILDING

Claire Agnew

Lee O’Connell

strategy to serve as a leader for those services in the East Valley.” A portion of the remodel, designed by Cuningham, seeks to synergize the campus’s women and children’s programs. “The existing lobby for Cardon’s Children’s Hospital had a lot of pediatric-focused elements and, as the women’s program was brought into the building, Banner tried to create a joint feeling that was more sophisticated but still pediatricfriendly,” Tiscornia says. In mid-March, McCarthy broke ground on a 350,000-square-foot expansion of Banner Gateway Medical Center that will nearly double the size of the campus and address growing needs for women’s and infant services and cancer care. “We are in a high-growth area, and our capacity has been stretched,” says Lamont Yoder, CEO of Banner Gateway. “Increasing our capacity for expectant moms is a top priority as is ensuring capacity for expected future growth of this community in years to come.” A five-story 208,500-square-foot patient tower will bring 109 new patient beds to the facility, for a total of 286, with an ability to add 72 extra beds once the shelled space is built out. Also included are an 85,000-squarefoot expansion of campus’s west side diagnostics and treatment building and a two-level addition to the existing diagnostics and treatment building on the east side of campus. Completion is planned for 2023.

TRENDS IN DEVELOPMENT During the height of the pandemic, hospital systems were stressed as available beds ran dangerously low. For many facilities, that meant halting 34 | May-June 2021

Nicholas Pearce

Laura Robertson

elective surgeries and adapting spaces into patient quarters. “We started off by converting our pediatric emergency room into an incident decision unit, which is dedicated to caring for COVID-19 patients,” says Claire Agnew, chief financial officer for Valleywise Health. If the past year has shown us anything, it is that the COVID-19 pandemic revealed the precarious nature of day-to-day life. Planning for adaptability, O’Connell suggests, is one solution to future emergency situations. “Infrastructure can be done differently,” he says. “Medical gas can be run into conference rooms where, in an emergency situation, beds can be moved in to. We are already looking into developing rooms that have the ability to transform into a negative pressure, or isolation, environment.” Having multipurpose spaces also caters to another growing trend: TELEHEALTH: The demand for telehealth grew rapidly during the pandemic.

Mark Tiscornia

Lamont Yoder

telehealth. Valleywise Health conducted more than 100,000 telehealth visits since rolling out its service, Doxy.me, in March 2020. “We are seeing a lot of multipurpose collaboration rooms at Chandler Regional Medical Center with audiovisual setups for providing telehealth care in a private scenario. Multipurpose spaces are useful because they’re not locked into one thing as care adjusts over time,” Pearce explains. While no one can predict the future, it can be planned for. And health care facility administrators, designers and builders are doing just that, according to Tiscornia. He notes, “There’s a continued urgency to plan and design facilities that will allow them to be prepared for anything that comes their way, whether it’s lack of water or power — or a future pandemic.”

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HEALTHCARE BUILDING

Getting Better With Age Senior housing developments are evolving to meet the future needs of discriminating residents By REBECCA L. RHOADES

merica is aging. According to the U.S. Census Bureau’s National Population Projections, in the next few decades, 1 in every 5 residents will be older than age 65, a number that’s projected to outpace those younger than 18 for the first time in history. “There are 10,000 people turning 65 every day in our country,” notes Sharon Harper, chairman, CEO and co-founder of Plaza Companies, which develops and manages three retirement communities in Arizona: Vi at Grayhawk and Vi at Silverstone, both in Scottsdale, and Splendido at Rancho Vistoso in Tucson. “By 2050, the senior population will have doubled to 90 million.” More specifically, the number of adults ages 85 and older will nearly quadruple. And as people age, their needs — from housing to wellness — change. To keep up with these ever-shifting lifestyles, senior living communities are also evolving, offering innovative care models, an abundance of amenities and levels of luxury previously unheard of in both independent- and assisted-living environments.

FOCUS ON LOCATION Traditionally, age-restricted communities were located outside of urban centers, but members of the baby boomer generation — now ages 57-75 — don’t wish to give up all of the conveniences and activities of everyday life. When Mirabella at ASU welcomed its first residents in December 2020, it signaled an exciting new category of senior living. Developed in partnership with the ASU Foundation, the 630,000-square-foot 20-story high-rise complex sits on university land and caters to adults ages 62 and older who wish to maintain an active and intellectually stimulating lifestyle. “There’s a 36 | May-June 2021

MIRABELLA AT ASU

“

When building a project, your jobsite becomes your home. I enjoyed building relationships with people that I hadn’t been close with before. Together, we were able to overcome some tough circumstances brought on by COVID-19 and we still finished the project on time. It’s rewarding to bring a new team together at the beginning of a project and end up developing a stronger bond in the end. The team camaraderie we had while delivering a great project to Banner Health and NexCore is why I love to do what I do. At the end of the project, we really felt like a family and that’s what Haydon is all about.” Jason Wallace, Project Manager

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HEALTHCARE BUILDING certain energy that comes with living on a university campus,” says Paul Riepma, senior vice president of sales and marketing for Pacific Retirement Services. “Arizona State University’s vision was to serve a broader community, not just 18-to-22-yearolds. Each person who lives here has a Mirabella at ASU student ID card that provides them access to about 200 different classes, passes to the school’s library and museums, and preferred seating to entertainment and sporting events.” In 2014, LivGenerations opened its first Valley community in the heart of Agritopia in Gilbert. The desirable garden neighborhood is not only popular with young families but also provides easy access to numerous restaurants, golf, shopping and transportation. The company is currently completing construction on its fourth Arizona development. Located on Mayo Boulevard, it’s minutes away from Mayo Clinic and near an active corner of North Scottsdale Road. “We really thought methodically about where we’re going to place our communities,” says Sonya Paterno, regional director of sales for LivGenerations. “The traditional model of senior living isn’t what people want these days. We still cater to a mature population in a communaltype setting, but the residents want to have fun and have access to all of the amenities they’re used to.”

property, which included 101 independent living apartments, a new restaurant, conference and game rooms, an art studio and an 18-hole putting course. Residents in the addition could upgrade everything from countertops to flooring, if they desired. “Some of the homes are very customized,” says Ellen Devine, director of marketing for Sagewood. While independent living quarters offer fully equipped kitchens, today’s senior facilities also feature multiple on-site restaurants, ranging from 24-hour delis to fine dining. Many are also open to the public. Fullservice spas, beauty salons, indoor and outdoor swimming pools, game rooms, wine cellars, hallways lined with rotating exhibits of original art, high-end furnishings in public spaces, dog parks and electric vehicle charging stations are just a few of the many other high-end amenities developers

are incorporating to attract discerning residents in a competitive market.

A LIFETIME OF CARE According to a study by the National Investment Center for Seniors Housing & Care, as the population ages, 8% will have cognitive impairments, 60% will have mobility limitations and 20% will have high needs, defined as three or more chronic conditions and one or more limitations of daily living. Developers of senior housing are anticipating those needs and incorporating advanced treatment centers into their projects. At Mirabella, Vi at Grayhawk and Vi at Silverstone, and LivGenerations, for example, the first step of occupancy is independent living. As acuity decreases, residents can then move into assisted living apartments, memory care or skilled nursing rooms, or even hospice, all with 24-hour on-site

RESORT-STYLE LIVING Along with location, seniors expect to maintain the same high level of comfort they experienced in their family homes. They seek boutique offerings that focus on unique experiences rather than one-size-fitsall decor and dining. At Mirabella at ASU, living quarters are on par with the Valley’s poshest apartment complexes, with high ceilings, walls of windows and top-notch appointments. Founding residents were able to suggest structural changes to their homes, such as the removal of walls, and select lighting, cabinetry and finishes. Sagewood, a Life Plan Community recently completed a 3.5-acre expansion at its northeast Phoenix 38 | May-June 2021

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HEALTHCARE BUILDING

Luke Bourlon

Ellen Devine

medical professionals. “It’s not the most pleasant subject to talk about, but if you don’t have all the different levels of health and home care, then you run the risk that residents are going to have a medical problem that can’t be addressed,” says Riepma. This combination of care also eliminates concerns of finding last-minute treatment facilities and allows spouses and partners to remain near their loved ones, offering a greater peace of mind for family members.

POST-PANDEMIC PROTECTION “One of the things we’re cognizant of going forward is that a lot of the services that our residents would go to to receive are now coming to them,” says Luke Bourlon, president of development for Sparrow Partners, which will be delivering its first senior living units in Arizona this summer in MERA CITY CENTER: Sparrow Partner's first senior living community in Arizona

40 | May-June 2021

Sharon Harper

Sonya Paterno

Surprise. The company also has three other projects under construction in Goodyear, Glendale and Mesa. “Take telemedicine, for example. The pandemic has really accelerated the use of technology to provide on-demand physician services without needing to leave home.” During the past year, as senior living facilities struggled to contain the spread of the coronavirus, Wi-Fi programs kept residents connected to staff; provided in-home access to daily exercise and educational classes; and allowed them to select menu options, with the meals then delivered to their apartments. As part of its expansion, Sagewood launched its EverSafe 360° program, which incorporates state-of-the-art indoor air-quality systems. “It’s not anything visible to the residents, but it’s a nice feeling, especially during the time of a pandemic when they’re

Paul Riepma

still living in their home and getting ready to make a move to our Phase II addition,” says Devine “Because, let’s face it, people have been scared.” Outdoor spaces also played a vital role in mental health maintenance. Sagewood offered concerts and bingo nights that residents could enjoy from their balconies, while one of Sparrow’s design mandates is to include enough private outdoor spaces for each unit. Ground floor apartments have private yards, and each development includes a large 6-to-10-acre courtyard with multiple covered patios. Harper notes that the $50 million renovation and expansion of Splendido at Rancho Vistoso was about threequarters complete when the pandemic struck. “In the case of the villas, we were right on track adding separate heating and cooling systems, sterile hard-surface countertops and infrared lighting,” she explains “Other elements that were helpful in our communities — and this will certainly be enhanced as we go forward — are indoor-outdoor spaces. We always develop our buildings with a sense of wellness factor. During the height of the pandemic, we did ask our residents to stay in their homes, but we also had a lot of private outdoor spaces where they could get fresh air.” Touchless fixtures, automatic doors and sanitizing stations are also becoming commonplace in senior living facilities. “People are living longer, and they’re much more active between the ages of 75 and 100 than they were 40 years ago,” Reipma says. “They want to remain relevant instead of cocooning in a walled-off retirement community. Seniors today expect more out of their later years.”

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DATA CENTERS

KEEPING US CONNECTED Why Greater Phoenix is a data center darling By KYLE BACKER

Data centers in the Greater Phoenix area saw absorption rates up 38% compared with 2019, with supply struggling to keep up with demand. This surge is due in part to technology’s centrality in modern life that was exacerbated by COVID-19. “With the growth of the internet, practically everything you do runs through a data center somewhere in the world. Every time you check your phone, that request is processed by a data center,” says Mark Krison, senior vice president at real estate services firm CBRE. While the pandemic may be waning, data center construction throughout the Valley is not, thanks to a favorable business environment, lack of natural disasters and the ubiquity of online services.

EASE OF ACCESS Like many states, the Arizona legislature has crafted programs to incentivize companies to invest here, primarily in the form of tax relief. The Computer Data Center Program, administered by the Arizona Commerce Authority, encourages data center expansion in the state by providing a 20-year tax exemption at state, county and local levels on certain equipment purchases. “It’s the biggest hook we have,” explains Mark Bauer, senior managing director of the JLL Data Center Solutions Group. “A company refreshes its servers every three to five years. Let’s say an average rack of servers costs $1 million, and the company is going to refresh 20 racks. That $20 million investment isn’t subject to an 8.6% sales tax.” The Valley also has something that can’t be legislated: affordable land. “In the last 36 months, data center developers have taken advantage of the availability of reasonably priced land in the region to expand their operations. All these co-locating companies, such as Compass Datacenters, Stream Data Centers and Vantage Data 42 | May-June 2021

DATA CENTERS

Mark Bauer

Carl Beardsley

Centers, have decided to buy land parcels and build. That is a result of customers saying they’re satisfied with their decision to come to Greater Phoenix,” Krison notes. Since a data center can provide services to states beyond the one in which it located, it makes sense to choose a site where land is more affordable. “Many companies from California and the Pacific Northwest have found it easier to grow here in Phoenix. The total cost to acquire land, build facilities and actually do business is anywhere from 30% to 50% less [than other Western states], on average,” Bauer says. Beyond comparatively cheap land prices, the process to acquire zoning

44 | May-June 2021

Kevin Connor

Mark Krison

permits is quicker than in other markets. This means data centers can go from concept to completion quickly, an important factor for meeting demand. “Phoenix has very little risk in terms of your ability to get zoning permits, provide power to the property and actually have a facility up and running. There are several examples of large projects here in the Valley, such as Compass and Stream, that were built in 12 to 18 months. You can flat out double that time frame in certain parts of the country,” Bauer says.

MISSION CRITICAL CONDUCIVE In February, Texas experienced extreme weather that caused rolling

Brad Smidt

blackouts throughout the state. Not only did the storms cause human suffering, but they also disrupted business operations that cost millions in lost productivity. For data centers, reliable power is crucial to keep mission critical operations functioning. “Some of these data centers are running emergency communication, hospital and banking systems. Those are all mission critical operations that you don’t want to go down in any scenario,” says Brad Smidt, senior vice president of business EDGECORE: Skanska built the 180,000-square-foot building in Mesa’s Elliot Road Technology Center.

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development at the Greater Phoenix Economic Council. The Valley has a long track record of favorable climate conditions. The lack of hurricanes, snowstorms and earthquakes reduces the possibility of situations where power might go down. The upfront cost of construction rises when facilities must build in protections against adverse weather. Arizona’s dry air and cool winters also are an asset for data centers. The racks of servers housed in these facilities generate heat that can damage the equipment if not properly managed. Technology has improved so servers don’t require frigid environments, but cooling systems are still necessary to prevent malfunctions. “When I started building data centers, the operators said the colder, the better. Over the years, the temperature tolerance of the servers has improved. Greater Phoenix’s cool, dry winters allows operators to utilize free cooling, which saves on operational costs and lowers the environmental impact,” says Kevin Connor, vice president and project executive at construction and development firm Skanska. Bauer adds, “Phoenix has hot summers, but these are well-insulated buildings. We’re more focused on pushing heat out of the building and maintaining a steady temperature.” The energy mix and low outage rates in the Valley also makes the area attractive for mission critical operations. “Our primary power providers are SRP and APS. If you look at their generation mix, it’s a combination of natural gas, nuclear, coal and renewables. It’s a more diversified portfolio than you have in places such as Texas, where they’re more dependent on natural gas,” Smidt notes.

THE POST-PANDEMIC PICTURE For many, the COVID-19 pandemic has meant living life through a computer. Schools closed and shifted online, workers set up home offices, and entertainment options narrowed to what’s available on a screen. 46 | May-June 2021

“This pandemic accelerated everyone’s need to work remotely and utilize technology for services that they typically would’ve driven to the store for. I look at my kids as an example. They’re ordering six packs of cola, and Amazon delivers it in a couple hours. That is a shift in one’s way of living,” Bauer explains. This increased reliance on technology for work and play was already in motion before the pandemic accelerated it. Advances such as 5G will only escalate users’ ability to

access more data, which will require additional centers to meet demand. The result will be an even greater investment in the Valley of the Sun. “The data center sector outperformed every other property sector in 2020. This did not go unnoticed by institutional capital,” says Carl Beardsley, director of capital markets at JLL. “From both an investor and lender standpoint, there’s been a big shift in willingness to lend toward the data center space as it’s become a darling of the real estate property sector.”

Net-Zero Carbon Emissions by 2045 At Skanska, we build for a better society, which includes delivering sustainable data centers through innovations such as our Embodied Carbon Calculator (EC3) Tool. For decades, we have been pioneering sustainable building techniques, and EC3 is one way we are driving our industry toward a low carbon future.

Contact: Kevin Connor 646.773.0097 Kevin.Connor@skanska.com usa.skanska.com

DATA CENTERS

Data center developments to watch By MICHAEL GOSSIE

STREAM DATA CENTERS

ata center development continues to surge in the West Valley, particularly in Goodyear, which is quickly becoming a technology hot spot. And the growth doesn’t appear to be slowing. Last year, Amazon bought 91 acres of land in Goodyear for $19.85 million, with talk of building a data center to help with its exploding Arizona presence. But the massive online retailer isn’t the only big-name player with enterprises in Metro Phoenix. Here are recent projects that are strengthening the region’s reputation as to go-to place for data center development.

COMPASS DATACENTERS Compass Datacenters is bringing eight data centers to Goodyear that at full build-out will be more than 1.8 million square feet — equivalent to 31 football fields — and 350 megawatts of capacity. Compass is building its campus on 225 acres of land at the northwest corner of Bullard Avenue and Yuma Road. 48 | May-June 2021

COMPASS DATACENTERS

GOOGLE Google is building a $1 billion data center on 187 acres at the northwest corner of Sossaman and Elliot roads in Mesa. The three-phase project is expected to be operational this year. Mesa’s economic development office estimates the total tax revenue will be $156.57 million over 25 years.

IRON MOUNTAIN Iron Mountain is building a 550,000-square-foot, 48-megawatt data center on the northeast corner of 48th and Van Buren streets. The new facility is an expansion of Iron Mountain’s Phoenix Data Center Campus and represents the beginnings of a $430 million investment into the campus over the next five years.

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DATA CENTERS MICROSOFT In 2019, Microsoft made a big splash when it bought 576.5 acres across three sites in Goodyear and El Mirage to develop into data centers, which are expected to be functional this year. The company said it chose the two cities for their availability of labor and energy supplies, as well as the cost of land.

NTT DATA NTT Data broke ground this year on 102 acres in the Elliot Road Technology Corridor in Mesa. The co-locate data center campus will consist of five buildings initially, with the ability to add two more buildings in the future. The complex will total 1.5 million square feet when fully built out.

STACK INFRASTRUCTURE Stack Infrastructure is building a data center in Avondale, which will IRON MOUNTAIN

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50 | May-June 2021

add 1 million square feet of data center space. The data center will be on the southeast corner of Litchfield and Lower Buckeye roads. The company cited Metro Phoenix’s rapid growth as a key factor in coming to the southwest Valley.

STREAM DATA CENTERS Stream Data Centers’ recently completed Phoenix I data center in Goodyear is part of the growing Cox Business fiber network. In Goodyear, Stream and Cox Business combine the Phoenix West Valley’s largest data center campus and VANTAGE DATA CENTERS

the region’s most diverse network service offerings to better serve large enterprises and cloud providers.

VANTAGE DATA CENTERS Vantage Data Centers, a leading provider of wholesale data centers in North America, is building a mega-scale campus in Goodyear. The 50-acre project will be located at the southeast corner of Van Buren Street and Bullard Avenue and will encompass three data center buildings and office space. It will be the largest of Vantage’s current and planned campuses once fully developed.

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TOP PRODUCERS

Spotlighting the commercial real estate brokers from Arizona who closed the most business in 2020

TOP PRODUCERS of 2020

Here are the top commercial real estate brokers who kept making big deals in the midst of a global pandemic By MICHAEL GOSSIE

The Greater Phoenix industrial market posted its largest amount of net absorption in history during 2020, according to a report from Colliers International, while a second report found that Phoenix is the sixth-hottest U.S. market for multifamily sales over the last decade. As we head further into 2021, the National Association of Realtors identified both Phoenix and Tucson as Top 10 commercial real estate markets for the year. Driving all of that positive news for Arizona are the talented commercial real estate brokers who, despite a global pandemic that brought many industries to a halt, continued to make blockbuster deals in 2020. To honor the women and men who are helping drive Arizona’s economy, we spotlight the top commercial real estate producers who overcame numerous challenges to help make 2020 another banner year.

52 | May-June 2021

COLLIERS

ABI MULTIFAMILY About the brokerage: ABI Multifamily is a brokerage and advisory services firm that focuses exclusively on apartment investment transactions. The experienced advisors at ABI Multifamily have completed billions of dollars in sales and thousands of individual multifamily transactions. TOP 10 PRODUCERS OF 2020 Alon Shnitzer Carson Griesemer Dallin Hammond Doug Lazovick

Eddie Chang John Klocek Mitchell Drake Patrick Burch

TOP 10 PRODUCERS OF 2020 Royce Munroe Rue Bax

Note: Published in alphabetical order by first name

CBRE About the brokerage: CBRE’s Tyler Anderson, Sean Cunningham, Asher Gunter, Matt Pesch and Mark McFate represented the sellers of The Angela, a 253-unit Class A multifamily community in Phoenix, that sold for $117 million in October 2020. TOP 10 PRODUCERS OF 2020 Tyler Anderson Dan Calihan Sean Cunningham Pat Feeney Asher Gunter Rusty Kennedy Rocco Mandala Matt Pesch Jeff Seaman Brian Smuckler

About the brokerage: Colliers in Arizona is recognized as one of the leading full-service commercial real estate organizations in the state, providing integrated services to real estate occupiers, owners and investors, and business owners.

1. Todd Noel

2. Don MacWilliam

2. Payson MacWilliam

3. Cindy Cooke

4. Rob Martensen

5. Jim Keeley

6. Brad Cooke

7. Mindy Korth 8. Alexandra Loye

9. Tim Dulany

10. Greg Hopley

Note: Published in alphabetical order

THE ANGELA

TOP PRODUCERS COMMERCIAL PROPERTIES INC.

CRESA

About the brokerage: CPI is a full-service brokerage and property management firm for all product types. CPI’s listings include over 22 million square feet for sale/lease, with more than 195 properties and associations under management.

About the brokerage: Cresa is the world’s largest occupier-only commercial real estate firm. Cresa thinks of real estate as a business tool — one that goes beyond operational need to help drive profitability, enhance your image and attract top talent. TOP 10 PRODUCERS OF 2020

2. Tyson Breinholt

3. Matt Zaccardi

4. Eric Jones

5. John G. Soldo

6. Jeff Hays

5. Brandon Clarke 6. Chad Neppl 7. Ryan Orton 8. Rod Beach

1. Gary Gregg 2. Scott Maxwell 3. Theodore Liles 4. Ashley Snyder

TOP 10 PRODUCERS OF 2020

1. Leroy Breinholt

Spotlighting the commercial real estate brokers from Arizona who closed the most business in 2020

9. Ryan Burkett 10. Jason Malcolm

CUSHMAN & WAKEFIELD 6. Tate Gunning Team

7. Toby Campbell

8. Langdon Bridges

About the brokerage: Cushman & Wakefield is a global commercial real estate services firm. The company’s headquarters is located in Chicago. Cushman & Wakefield is among the world’s largest commercial real estate services firms, with revenues of $8.8 billion in 2019. TOP 10 PRODUCERS OF 2020

9. Ron Schooler

10. Darin Edwards 1. Will Strong

5. Andy Cloud

54 | May-June 2021

2. Mike Haenel

6. Chris Hollenbeck

2. Andy Markham

7. Phil Haenel

8. Larry Downey

3. Eric Wichterman

4. Dev Gupta

9. Ryan Schubert

4. Peter Menna

9. Michael Hackett

10. Will French

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TOP PRODUCERS

Spotlighting the commercial real estate brokers from Arizona who closed the most business in 2020

CUSHMAN & WAKEFIELD | PICOR About the brokerage: Cushman & Wakefield | PICOR is the market leader for Tucson commercial real estate. Employee owned and founded in 1985, it offers commercial real estate sales, leasing and property management for office, medical, retail, industrial, land and investment properties. TOP 10 PRODUCERS OF 2020

JLL About the brokerage: JLL is a world leader in real estate services, powered by an entrepreneurial spirit. JLL buys, builds, occupies and invests in a variety of assets including industrial, commercial, retail, residential and hotel real estate. TOP 10 PRODUCERS OF 2020

1. Stephen Cohen

2. Jose Dabdoub

3. Greg Furrier 4. Rob Glaser

5. Dave Hammack 1. Tony Lydon

6. Paul Hooker 7. Rick Kleiner 8. Allan Mendelsberg

9. Tom Nieman

2. Marc Hertzberg

10. Ron Zimmerman 3. Pat Williams 4. Riley Gilbert

DIVERSIFIED PARTNERS About the brokerage: Diversified Partners is a real estate brokerage and development company based in Scottsdale that offers a complete range of commercial and residential real estate services for tenants, property owners, investors and developers in all facets of real estate.

6. Steve Larsen

5. Mark Bauer

7. John Lydon

8. Pat Harlan

9. Andrew Medley

10. Steve Sayre

TOP 10 PRODUCERS OF 2020

1. Walt Brown Jr

6. Jeff Alba

56 | May-June 2021

2. Larry Brown

7. Matt Pergola

3. Michelle Cheverie

8. Michelle Gatti

4. Jennifer Hill 5. Julie Harris

9. Ryan Keeney

10. Spencer Fletcher

TOP PRODUCERS

Spotlighting the commercial real estate brokers from Arizona who closed the most business in 2020

NAI HORIZON LAND ADVISORS ORGANIZATION About the brokerage: Land Advisors is a team of respected and connected land professionals that provide brokerage and advisory services to those that need a data-driven roadmap for acquiring, selling, financing or developing land and land-related assets.

About the brokerage: As members of the largest worldwide network of owner-operated, local market-leading commercial real estate brokers, NAI Horizon is a respected local-market role model, passionate about the commercial real estate business. TOP 10 PRODUCERS OF 2020

TOP 10 PRODUCERS OF 2020

1. Lane Neville 2. Denise Nunez 1. Ryan Semro 2. Bret Rinehart

3. Ben Heglie

4. Greg Vogel

5. Mike Schwab

3. Isy Sonabend 6. Will White (Tucson)

7. Kirk 8. Dave Lords McCarville (Casa Grande)

9. Wes Campbell

4. Mark Wilcke

10. Chad Russell

MARCUS & MILLICHAP About the brokerage: The Phoenix office of Marcus & Millichap helps clients buy and sell property, including apartments, retail, office, single-tenant net-lease, industrial, healthcare, self-storage, senior housing, hospitality, land, manufactured homes and special assets.

5. Matt Harper 6. Andrew Warner

TOP 10 PRODUCERS OF 2020

1. Mark Ruble

6. Chris Lind

2. Steve Gebing

7. Jamie Medress

58 | May-June 2021

3. Cliff David

8. Hamid Panahi

4. Paul Bay

9. Rich Butler

7. Laurel Lewis

8. Mike Kumelski

9. Troy Giammarco

10. Rick Foss

5. Peter Katz

10. Darrell Moffitt

NEWMARK

SRS

About the brokerage: Newmark offers a comprehensive suite of investor/owner and occupier services and products. Its services are tailored to every type of client, from owners to occupiers, investors to founders, growing startups to leading companies.

About the brokerage: Headquartered in Dallas, with more than 25 offices across North America and in select global markets, SRS is the largest commercial real estate firm in North America exclusively dedicated to retail services. TOP 10 PRODUCERS OF 2020

TOP 10 PRODUCERS OF 2020

1. Ryan Ash

2. Brad Goff

2. Brett Polachek

3. Kathleen Morgan

4. Jesse Goldsmith

4. Steve Julius

5. Trisha Talbot

6. Rob Stephens

7. Joe Doucett

1. Ed Beeh 2. Alan Houston 3. Sean Lieb 4. Chuck Gibson

5. Mike Polachek 6. Robbie Petty 7. Brian Polachek 8. Scott Ellsworth

9. Sean Thomas 10. Brad Balbo

TAYLOR STREET About the brokerage: Taylor Street is a dynamic group of real estate-focused companies that work collectively to provide strategic advisory services in commercial, residential, finance, investments and property management. PHOENIX MULTIFAMILY

8. Chris Canter

9. Mike Garlick

RETAIL

9. Chris Krewson 1. Brian Tranetzki

2. Anton Laakso

3. Thomas Beniamen

1. Jake Baratz

2. Boston Chauthani

TUCSON MULTIFAMILY

9. Mike McQuaid

10. Mike Woodrick

1. Jon Ibrahim

2. Andy Burnett

3. Austin Oakley

4. Evan Plonis 59

TOP PRODUCERS

Spotlighting the commercial real estate brokers from Arizona who closed the most business in 2020

CITYWIDE COMMERCIAL

THE LAND AGENCY

About the brokerage: Citywide Commercial Real Estate is an experienced brokerage firm specializing in industrial properties within the greater Phoenix market. It helps implement the investment, leasing and property management strategies that amplify the value of their industrial assets.

About the brokerage: The Land Agency is a full service land brokerage firm exclusively representing landowners, homebuilders, developers, investors, farmers and lenders. Over the last 25 years, its principals have brokered thousands of lots and acres.

TOP 3 OF 2020

TOP 3 OF 2020 1. Howard Weinstein 2. Patty Lafferty 3. Brad Kuiper

1. Todd Hamilton

2. Chad Kirkorsky

3. Bo Sederstrom

COBE REAL ESTATE About the brokerage: COBE Real Estate is a full-service commercial brokerage firm specializing in all property types: office, medical and dental, industrial and flex, retail, land, investment and multifamily.

MENLO GROUP COMMERCIAL REAL ESTATE About the brokerage: Menlo Group is a full-service commercial real estate brokerage headquartered in Tempe that specializes in tenant/ buyer representation, landlord/seller representation, investment services, real estate consulting, property management and project management.

TOP 7 OF 2020

1. Rich Andrus 2. Tanner Milne

3. Steve Berghoff

5. Stuart Milne

7. Jason Triano

TOP 7 OF 2020

1. Steve Beck

2. TJ Zaharis

4. Grafton Milne

3. Dave Collins

6. Tom Ellixson

VELOCITY RETAIL GROUP About the brokerage: Velocity Retail Group is a company of experienced retail professionals dedicated to accelerating the success of its clients through its use of personal relationships, regional market knowledge, and state-of-the-art technology and resources. 4. Linda Miskho

5. Josh Brimhall

7. Zach Collins 60 | May-June 2021

6. Russ Rodgers

TOP 5 OF 2020 1. Dave Cheatham and Darren Pitts 3. Brian Gast 4. Brian Harper 5. Eli Castronova

PTK spotlights the most influential commercial real estate professionals and noteworthy projects that define Arizona’s landscape. Do you know a project or person within Arizona’s commercial real estate industry that has had an incredible impact on the market recently or will in the near future? Nominate today for PTK 2022!

NOMINATIONS DEADLINE

June 30, 2021

Nominate at azbigmedia.com/awards-events

NOMINATE TODAY 61

PINAL COUNTY

A GROWING HORIZON With acres of undeveloped land and access to major modes of transportation, Pinal County is poised for major economic growth By REBECCA L. RHOADES

ituated midway between Arizona’s two largest cities, Phoenix and Tucson, Pinal County has long lived in the shadows of its more wellknown neighbors — a drive-through county in which travelers only stop when they need to get gas. But recent

62 | May-June 2021

growth in infrastructure and the commitment by major electric vehicle manufacturers have set the groundwork for an impending boom in commercial and residential development. “Pinal County sits at the epicenter of two big cities and is the point of

intersection where all infrastructure in the state comes through,” says Jackob Andersen, president and CEO of Saint Holdings, the developer behind some of the county’s largest land deals, including two massive industrial parks.

EASY ACCESS When it comes to transportation, Pinal County is ideally suited for road, rail and air travel. Located about 55 minutes from Phoenix and 35 minutes from Tucson, the county is at the confluence of two major highways: Interstate 10, the fourth-longest interstate in the U.S., which stretches from Santa Monica, California, to Jacksonville, Florida; and Interstate 8, which branches off of I-10 just southeast of Casa Grande and runs to San Diego. “Ever since I-10 came into being, Eloy has reaped the benefits through truck stops,” says Jeff Fairman, economic development manager for the City of Eloy. “There must be nine different truck stops along the interstate in our city alone. They all have restaurants and some even have services such as barbershops.” January saw the opening of an Xpress Fuel travel center, which added about 50 jobs to the community and is expected to contribute $2.24 million annually in state and local tax revenues. The main line of the Union Pacific Railroad connects Casa Grande to

Jackob Andersen

Jeff Fairman

Elan Vallender

Richard Wilkie

major ports and transfer points in Los Angeles and El Paso, Texas. It links 23 states, connects with Canada’s rail systems and is the only railroad serving six major destinations in Mexico. “Part of the reason Lucid Motors chose the develop in Casa Grande is that there’s already an existing automotive base in Sonora, Mexico, that can supply parts,” Andersen notes. Finally, the county offers easy access to three major international airports. Phoenix Sky Harbor, Phoenix-Mesa Gateway and Tucson International are all within an hour’s drive from just about any location in the county. Phoenix-Mesa Gateway is also home to SkyBridge Arizona, the nation’s only joint U.S.-Mexico customs inspection facility, which streamlines shipments to and from Mexico. As the county continues to grow, the number of vehicles coming in and out of, and passing through, the region is expected to increase dramatically. Gov. Doug Ducey approved new infrastructure investments, including $33 million to rebuild the Gila River Bridge on I-10 between Phoenix and Casa Grande. The project will widen the bridge to

three lanes in each direction, paving the way for a full expansion of the highway. “The only section of I-10 that hasn’t been widened is between Chandler and Casa Grande,” says Richard Wilkie, economic development director for the City of Casa Grande. “The additional lanes are going to make commerce so much easier.” Construction on the bridge is set to begin this year, with completion of all improvements expected by 2023.

THE PRICE IS RIGHT The intense competition for land in Maricopa County has resulted in escalating building costs. “Prices in the

PINAL COUNTY MANUFACTURING GROWTH: Gov. Doug Ducey joined elected officials and automotive manufacturing leaders in March to officially launch Drive48, an advanced training center in Coolidge that will bolster Arizona’s training efforts for high-tech jobs.

Valley are increasing exponentially right now,” says Elan Vallender, economic development director for the Town of Florence. “Land is definitely less expensive out here, and that’s a great draw.” Andersen notes that land prices in Pinal County are about 50% to 60% cheaper than in Metro Phoenix. With thousands of acres of undeveloped land that is zoned for industrial use or can be quickly zoned heavy industrial, multiple shovelready industrial parks and robust infrastructure, including water, power, sewer and fiber, the region is primed for large-scale development. “Most of the undeveloped land in Casa Grande is ready to go,” Wilkie says. “You come in here, and it’s either plug-and-play or it’s a short distance to connect to the utilities of your need.” A large portion of Pima County, including almost 10,000 acres in Casa Grande, the entire town of Superior and areas along I-10 in Eloy, have also been federally designated as opportunity zones, meaning that private investments may be eligible for capital gain tax incentives. “Eloy is 113 square miles that stretch from State Route 87 to the northeast and almost to the reservation to the south, and our planning area is even larger than that, so we’re set with available land, quite frankly, for forever,” Fairman explains. “Because we’re a city, we also have a 100-year assured water supply for both residential and commercial development. That’s something a lot of places can’t offer anymore.”

HOUSING BOOM The low cost of land also translates to lower housing prices. “There are a lot of people who are still interested in owning a little bit of land with their house and 64 | May-June 2021

having a yard where their kids can play, but they’ve been priced out of Phoenix and Tucson,” Fairman says. Investments by large-scale employers, such as electric vehicle manufacturers Lucid Motors and Nikola, have also added to the area’s appeal, bringing in workers and their families who wish to live near their job sites. Saint Holdings is currently developing a 4,000-home masterplanned community in Casa Grande, while other lots that have remained vacant for years are being snapped up by builders, including Shea Homes, Lennar, Richmond American and more. “We did more than 1,100 new single-family residence permits last year, and this year we’re on pace to beat

that,” Wilkie says. “Lucid Motors has definitely been the beacon.” Fairman adds that in Eloy, 90 vacant lots that had never been fully developed were recently picked up. “They’re building homes on all of those lots, three, four, five at a time,” he says, adding that Robson Ranch, a 55+ community in Eloy, has been adding 100 new homes a year. “When companies are making site selections, they’re looking for the location, the land, the affordability of the land, the infrastructure, the workforce, connectivity to transportation systems and quality of life,” Wilkie says. Once overlooked, Pinal County is prepared to meet those demands.

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INDUSTRIAL PARKS fuel growth in Pinal County

ith thousands of acres of flat open land ideally situated midway between Phoenix and Tucson, and with easy access to major highway, rail and air transportation, it’s no wonder that Pinal County hosts an abundance of industrial parks. Ranging from built-out to shovelready to undeveloped, with lot sizes as compact as 1 acre for small business use to more than 50 acres for large manufacturing facilities, the region’s parks are primed to welcome an array of businesses, including distribution centers, industrial production, data centers, warehouses and even retail and hospitality. Here are some of Pinal County’s top industrial parks that are expanding the region’s economic development opportunities. Central AZ Commerce Park (CAZCP) This 740-acre rail-served industrial park in Casa Grande is home to Lucid Motors and Tractor Supply Company. Strategically located near the confluence of interstates 10 and 8 and served by the Union Pacific Railroad, it is zoned for heavy industrial use. Lots are divisible from ±54 acres down to ±1 acre. Developer: Saint Holdings

66 | May-June 2021

Crossroads Industrial Center Also known as the B2B Business Park, this 13-acre light industrial property in Casa Grande is shovel-ready with sewer and water. It is home to Canadian firm Jomi Engineering. Broker: Land Advisors Donovan Kramer Sr. Airport Industrial Park Approximately 40 acres, divided into 2- and 3-acre lots and zoned for heavy and light industrial use, are available at this Casa Grande park. All sites have thru-the-fence access to the Casa Grande Municipal Airport and are directly served by water, power and sewer lines. Developer: City of Casa Grande Eloy Industrial Park With 345 available acres divisible to ±4 acres in Eloy, at the intersection of Battaglia Road and Interstate 10, this park is home to Schuff Steel, Otto Industries, Republic Plastics and San Juan Pools. Brokers: Lee & Associates; Petersen Properties & Management Inland Port Arizona (IPAZ) Home to Nikola Motor Company, IPAZ is a 2,738-acre mega site on State Route 87 and the Union Pacific rail line in Coolidge. Twenty-one development-ready lots, ranging from 35 acres to ±900 acres are available. Developer: Saint Holdings

Interstate 10-8 Business Park Zoned for industrial, commercial, hospitality, distribution and manufacturing, this 1,173-acre Class A business park in Eloy is bordered by Interstate 10 and the Union Pacific rail line. It is part of an Opportunity Zone and Foreign Trade Zone No. 75. Broker: Petersen Properties & Management Pinal County Technology Park One thousand shovel-ready acres in Casa Grande can be divided into 20-acre sites. Adjacent to the Union Pacific rail line, the land is zoned heavy industrial and is highly desirable for supply chain manufacturers. Broker: Land Advisors Sunshine Industrial Park Situated between Interstate 10 and State Route 84, just south of Sunshine Boulevard in Eloy, this 277-acre park is zoned for commercial and light industrial use. Twenty lots, ranging from 4 acres to 38.5 acres are available. Developer: Walton International Group Santa Cruz Commerce Center Located between the cities of Maricopa and Casa Grande, this Arizona Gold Certified site offers a mix of existing office/warehouse space, 45 acres of shovel-ready land-lease opportunities and built-to-suit projects. Developer: Ak-Chin Indian Community

PINAL COUNTY

Electric dreams Pinal County is on the road to becoming the electric vehicle capital of America By REBECCA L. RHOADES

TEST DRIVE: The Nikola Tre FCEV cabover is targeted for distances up to 500 miles and is expected to address the majority of the North American regional market, especially use cases where additional freight hauling capacity and quick fueling are required by fleet operators.

n December 2020, just about a year after it broke ground, electric vehicle (EV) manufacturer Lucid Motors announced that it had completed the first phase of its 590-acre manufacturing plant in Casa Grande and that it’s on schedule to start mass production of its luxury Lucid Air sedan by the second half of 2021. The well-equipped vehicle features 406 miles of projected range and varies in price from $87,500 to $161,500. In nearby Coolidge, Nikola, an upstart heavy-duty truck maker, is proceeding with construction of its greenfield facility with the goal of making battery electric (BEV) and fuel-cell (FCEV) semis by 2022, followed by hydrogen fuel-cell (HBEV) behemoths in 2023. The first phase of the $600 million, 1 million-square-foot factory on 430 acres will produce the BEV and FCEV Nikola Tre cabover trucks designed for hauls

68 | May-June 2021

of less than 300 miles and 500 miles, respectively. The Nikola Two HBEV semi, will handle long hauls. Further north, in Maricopa County, ElectraMeccanica announced in March that it would be building an assembly facility and engineering technology center in Mesa. The company produces the Solo, a three-wheeled car/ motorcycle hybrid, or electric autocycle, that starts at $17,499. The announcement prompted the following statement by Gov. Doug Ducey: “Arizona has fast become the electric vehicle center of America thanks to our robust and growing workforce, vibrant innovation ecosystem and ideal business environment."

EV CLUSTER With Lucid and Nikola leading the charge, and ElectraMeccanica forming the vertex of an industrial

triangle, Pinal County finds itself at the epicenter of an EV cluster that is expected to rapidly change the landscape of this otherwise quiet low-desert region. “Nobody wants to be the first in an unknown market — the risks are too high. But now we’ve proven ourselves,” says Richard Wilkie, economic development director for the City of Casa Grande. “Lucid was a startup company that could have gone anywhere — the company looked at 60 sites in 13 states — but it chose Casa Grande because we have the workforce and the infrastructure, and land is a lot more affordable here than in the Phoenix metro area.” While Casa Grande and Pinal County in general have been in a holding pattern since 2016, when Lucid first announced its factory site at the Central Arizona Commerce Park, waiting for these manufacturing

PINAL COUNTY facilities to be completed and start bringing money and workers into the area, the region is now beginning to see the results of this development. Lucid plans to invest more than $700 million by 2028, expanding its plant to more than 5 million square feet and generating 4,800 jobs over the next decade. The company currently has approximately 750 employees, many of whom are already being trained at Drive48, a new instructional facility at Central Arizona College in Coolidge. Lucid also is expected to produce $32 billion in revenue for the city and county over 20 years.

Nikola, which anchors the Inland Port Arizona (IPAZ) improvement project, is expected to create more than 1,800 full-time jobs in the area. Once commercial production nears onset, other automotive offshoots, such as suppliers and parts manufacturers, are expected to set up shop nearby. Jomi Engineering Group of Canada has already purchased a building in Casa Grande, where it will build roof components for Lucid.

MORE TO COME? “I anticipate that more EV manufacturing and assembly and

LUCID AIR

READY FOR MANUFACTURING: Lucid Motors finished construction on AMP-1 in Casa Grande in December. It is the first greenfield, dedicated electric vehicle factory in North America. The company starts production of its Lucid Air this year.

70 | May-June 2021

supply chain will start landing in our region,” says Elan Vallender, economic development director for the Town of Florence, which is located northeast of Coolidge. Each new job brings new families to the area, which in turn attracts housing, retail and entertainment to the cities in which the companies are located as well as to the surrounding region. “The Nikola plant is directly on our city border,” says Jeff Fairman, economic development manager for the City of Eloy. “Everyone is always talking about boundaries and city limits, but most people don’t really care where the city limits are. They simply care about the resources, and we’ve got them, so we feel pretty good about it. We’re already working with some of Nikola’s suppliers and businesses that want to be close to them to kind of piggyback on their success, and from a residential standpoint, we’re selling homes in Eloy to people who will be working for both Nikola and Lucid, so that’s a direct impact to us.” “People with big dreams and big projects are coming to Pinal County, and that’s exciting,” Fairman adds. “There’s never been a better time or a better opportunity — and I’ve never seen us more prepared to take advantage of that.”

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2021

VALLEY PARTNERSHIP

UNTAPPED POTENTIAL In an era of extreme growth and drought, Valley utilities take major steps to protect and preserve the desert’s most precious resource By REBECCA L. RHOADES

rizona is one of the fastestgrowing states in the nation, gaining about 150,000 new residents annually. Along with the rise in population comes an increase in home, business and entertainment development that draws on local utilities. Despite this, the state uses less water than it did more than 60 years ago, when the population was one-seventh the size. According to

the Arizona Department of Water Resources (ADWR), the state used about 7.1 million acre-feet of fresh water in 1957; in 2017, that figure had decreased to 7 million acre-feet. An acre-foot is almost 326,000 gallons, or enough to cover a football field in 1 foot of water. “When it comes to water management, the policy has always been to have long-term planning,”

says Dave Roberts, associate general manager of water resources for Salt River Project (SRP). “We stand on the shoulders of some visionary planners who saw the value of harnessing the Salt River and also making sure that we got our fair share of the Colorado River supply.” More than half the Valley’s water comes from the Salt and Verde river watersheds, which are managed by SRP. Thirty-six percent of the state’s supply comes from the Colorado River. In April 2021, the ADWR announced that Lake Mead, the biggest reservoir on the Colorado River, stands at just 40% of its full capacity. Currently, the river is operating at a “Tier Zero” status, meaning the state is required to contribute 192,000 acre-feet of

ROOSEVELT LAKE 74 | May-June 2021

Arizona’s 2.8 million acre-foot annual entitlement. This contribution will come entirely from the 336-mile Central Arizona Project (CAP) canal system. Based on its 24-month study, it’s likely that the U.S. Bureau of Reclamation will elevate the shortage to “Tier 1” in 2022. This would require Arizona to reduce usage by 512,000 acre-feet, again, almost entirely from the CAP system. As unrelenting drought and rising temperatures threaten the state’s watersheds, Valley water leaders are looking at ways to ensure a continued reserve of this natural resource to support development into the next century.

A HEALTHY SUPPLY “One of the things that is key for SRP is ensuring that the watersheds that produce our water are healthy,” Roberts says. SRP receives water from the Salt River, which is formed by the confluence of the White and Black rivers in the White Mountains to the east of Phoenix, and the Verde River, which flows from Yavapai County to the north. “Because the Colorado River watershed gets most of its runoff in the late spring and summer, it’s more susceptible to warming temperatures,” Roberts explains. “Runoff in the Salt and Verde systems occurs much earlier, when the sun angles are lower. That makes us more resilient.” While below-average snowpack this past winter, combined with drought conditions, has reduced runoff — SRP’s total reservoir system is at 75%, down slightly from 98% one year ago — the company’s main concern is the health of forests along the watersheds and the risk of catastrophic wildfires. “We’ve had lot of fires over the past 30 years, and they’ve gotten increasingly larger. They affect the water quality because our supply runs through those lands,” Roberts says. “Water comes through the burned and scarred areas and picks up all kinds of debris and contaminants, making it difficult to treat and deliver.” Preventative thinning of dense brush and small overcrowded trees reduces

the fuel that leads to larger, more devastating fires. On the Verde River side of the system, the uppermost reservoir, Horseshoe Dam, which is shared by SRP and the City of Phoenix, also has its share of difficulties. “The reservoir has been filling in with sediment over the years,” Roberts notes. As of April 2021, the Verde system is operating at just 32%, with Horseshoe Lake at 5% full and Bartlett Lake at 49%. “SRP is working with the Bureau of Reclamation to assess what options we have to mitigate that impact of sediment because we’ve lost more than a third of the capacity,” he adds. “We hope to make a plan to modify Bartlett Dam, expanding its capacity and creating additional supplies for others here in the Valley, outside of SRP. And then we would turn Horseshoe Dam into a facility that would capture sediment and use it to restore the riparian habitat for endangered species in the area.”

WEST VALLEY EXPANSION One of the fastest-growing regions in Greater Phoenix is the West Valley along State Route 303. Epcor, a privately owned utility company, provides water and wastewater services to thousands of homes and businesses from northern Peoria along the Agua Fria River to Buckeye, as well as areas around Paradise Valley, Fountain Hills, Rio Verde and Queen Creek. In 2019, Epcor completed a $33 million expansion of its White Tanks Regional Water Treatment Plant in Surprise, which increased the facility’s output from 20 million gallons per day (MGD) to 33 MGD. The site treats surface water delivered by the CAP canal system. “Surface water is considered a renewable resource, and we have allocations from CAP and the Maricopa Water District, and any of the water that is used by our customers comes back to our wastewater collection and treatment systems. It’s a

TOP: Epcor’s Luke 303 Regional Water Reclamation Facility was finished in 2020. BOTTOM: Wastewater is recycled at Global Resources’ reclamation facility in the City of Maricopa. 75

VALLEY PARTNERSHIP long cycle of sustainability,” says Joe Gysel, president of Epcor USA. Last year, the company finished construction on Phase 1 of the Luke 303 Regional Water Reclamation Facility in Litchfield Park, which can recharge and reuse up to 8 million gallons of treated effluent daily. Phase 2 of the $95 million project is scheduled for completion in the first quarter of 2022. “It will connect to a new trunk line that we put in last year that runs from north Glendale down to our plant, which is in the shadow of Luke Air Force Base “That side of the Valley is a very large growth area for us,” Gysel adds. “And all of the wastewater that we collect is recharged 100%. We have large recharge basins, and we treat it to A+ quality standards, and then it all goes back into the aquifer.” A recent concern in the West Valley is the presence of polyfluoroalkyl substances (PFAS) in the water supply coming from Luke Air Force Base. These chemicals, which were designed to repel oil, water and grease, are found in a firefighting foam that the military began using in the 1970s. A study released by the Air Force in February showed that high levels of HORSESHOE LAKE: The reservoir that was formed by the Horseshoe Dam on the Verde River. The lake and dam are located upstream and north of Bartlett Lake. The dam is managed by the Salt River Project.

76 | May-June 2021

PFAS had affected drinking water for about 1,600 homes and businesses, none of which are serviced by Epcor. “PFAS are emerging contaminants that have a lot of people very concerned,” Gysel says. “They Ron Fleming pollute the groundwater, and they’re forever chemicals, which means they never dissipate. The main issue is that there’s no minimum contaminant level adjudicated by the Environmental Protection Agency.”

AN INTEGRATED APPROACH High-growth areas, such as San Tan Valley, Buckeye and Pinal County, face the biggest struggles because of low supplies of surface water, which is renewable, and limited groundwater, which is finite. In most water systems, drinking, waste and recycled water are managed separately. Global Water Resources, a private, investor-owned utility that services communities around Metro Phoenix, offers its Total Waste Management approach, which manages the entire water cycle within the same geographical area. “We look at it from a more holistic standpoint, where it’s best if the water provider is also the wastewater and recycled water provider,” explains Ron Fleming, president

Joe Gysel

Dave Roberts

and CEO of Global Water Resources. “Instead of building giant wastewater treatment plants outside of town, where you’re limited with what you can do with the effluent once you’ve treated it, we build smaller scale reclamation facilities inside the communities that take the wastewater and convert it into a usable, renewable resource.” Wastewater is recycled and delivered back for use as nonpotable irrigation for common areas, landscaping and golf courses. Biosolids, the organic masses that are separated from the wastewater, are treated and used for nonconsumption agricultural purposes. If the Bureau of Reclamation initiates Tier 1 shortages, agriculture will be the hardest-hit sector. “What people don’t often realize is that residential and commercial buildings don’t use half the amount of water that agriculture does,” Gysel explains. The individual customer also plays a role in conservation. Global Water offers an innovative seven-tier rate structure. The less water you use, the less you pay. And if usage is 90% less than the community average, the customer receives a rebate by way of a reduction on their bill. “We’re sending the right price signals for a precious resource and, beyond that, we’re giving people the information they need to be able to act,” Fleming explains. “If they play it right, if they maximize recycled water and recharge any excess to the supply, then they are making meaningful changes.” For many years, reclaimed water was not regarded as a resource, but in the last 25 to 30 years, policy has been to make use of every drop. Notes Roberts, “Water that has a second or third or fourth life is going to be the key for long-term stability.”

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VALLEY PARTNERSHIP

THE HOUSING GAP Innovative programs and projects help the Valley’s workforce withstand skyrocketing home costs By REBECCA L. RHOADES

ecent studies have underscored what Arizona homebuyers and renters have known for some time: The state, and particularly Metro Phoenix, has a shortage of attainable and affordable housing. The recent population explosion, combined with rising construction costs, a surge in house flipping and the public’s desire for top-of-the-line amenities and finishes, a phenomenon known as the “HGTV effect,” has resulted in a dearth of homes with price tags that are within reach for the average worker. Much has been said recently about the need for homes for families at or below the poverty guideline. A report by the National Low Income Housing Coalition found that Arizona has the country’s fourth-worst affordable housing shortage; Phoenix also ranked fourth among major cities. Low-income housing is defined as “housing that is affordable to households earning

78 | May-June 2021

30 percent of the area median income (AMI).” The AMI is the income for the median, or middle, household in a region. It is used by the U.S. Department of Housing and Urban Development to determine eligibility for federal housing programs. The AMI for a single person in Maricopa County is $33,000; for a family of four, it’s about $73,000. Workforce housing requires earnings of 60 percent to 120 percent of the AMI. Sally Schwenn, market president for Gorman & Company, says, “Workforce is your nurses, your firemen, your teachers, your service providers.” These are typically people who make too much money to receive government-subsidized housing yet are often priced out of the current market. According to HUD’s Fair Market Rents report, the statewide average cost of a two-bedroom apartment is $1,097; prices are much higher in Maricopa

THE RIVER AT EASTLINE VILLAGE: Completed in 2019, this Tempe community offers 56 affordable housing units.

County. To afford this level of rent (30 percent or less of gross income), as well as utilities, a household would need to earn $43,892 annually, or an hourly wage of $21.10. Arizona’s minimum wage is $12 per hour. Unfortunately, wages have not kept pace with rising rents and home prices. According to Zillow’s latest market report, released in March, metro Phoenix recorded the highest annual growth in home values in 2020 — 17.1 percent over the last year, with the average price being $248,000. “For the workforce, trying to rent a two-bedroom apartment for a few thousand dollars a month or purchase a $300,000 house is a luxury that’s hard to attain,” Schwenn notes. In July 2020, Phoenix Mayor Kate Gallego announced a plan to address the city’s housing shortage. Known as the Housing Phoenix Plan, its goal is to develop 50,000 affordable, workforce and market-rate housing units by 2030 by prioritizing opportunities for new housing areas, amending current zoning ordinances and redeveloping city-owned land, among other initiatives. In Tempe, where demand outstrips inventory and luxury multifamily developments are popping up on just about every corner, Mayor Corey

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Newland is the largest private developer of planned residential and urban mixed-use communities in the United States. We believe it is our responsibility to create enduring, healthier communities for people to live life in ways that matter most to them. newlandco.com NNP III – EMR 3, LLC and NNP III-EMR 4, LLC (“Fee Owner”) is the owner and developer of Estrella Community (“Community”). Fee Owner has retained Newland Real Estate Group, LLC (“Newland”) solely as the property manager for the Community. Homebuilders, unaffiliated with Fee Owner, Newland, or their affiliates (together, the “Released Parties”) are building homes at the Community. The Released Parties are not co-developing, co-building, guarantors of, or otherwise responsible for, nor shall they incur any liability as a result of, any of the obligations or representations made to buyers by any Builder or other third-party. Fee Owner’s responsibility with respect to the Community is limited to the development of certain infrastructure improvements (e.g., roads, sewer, etc.) and such obligations run solely to persons buying real property directly from Fee Owner. Buyers of homes and Builders waive, to the fullest extent allowed under the law, any and all rights, claims, causes of action and other rights whatsoever against the Released Parties arising out of their purchase of a home or services, respectively, in the Community from Builders or any other third-party. Fee Owner may seek to qualify real property located in the Community for offering and sale in those states where prior qualification is required before such interests in out-of-state real property may be offered for sale or lease to its residents. Fee Owner has notified Builders of such qualification requirements and it is the obligation of such Builders to comply with any and all federal or state land sales laws as mandated by their contractual relationships with Fee Owner and to distribute all required disclosures, including but not limited to, disclaimers and reports to prospective purchasers prior to or at execution of a contract of sale for real estate. Any prices, sketches, renderings, and specifications contained herein are proposed only and subject, without notice, to change or withdrawal at any time. All, or a portion, of CantaMia in Estrella is designed for Housing for Older Persons pursuant to the Housing for Older Persons Act. The community has established policies and procedures which demonstrate intent to provide housing for persons 55 years of age or older. EQUAL HOUSING OPPORTUNITY.

VALLEY PARTNERSHIP Woods has prioritized the development of attainable housing. In January, the Tempe City Council approved the Home Town for All initiative, which aims to create more affordable and workforce housing opportunities through developing, acquiring and rehabilitating city properties. For every project built in Tempe, 50 percent of certain permitting fees paid to the city will be directed to the Tempe Coalition for Affordable Housing. The money will be used to buy and renovate properties, or purchase land and request offers from developers to build affordable and workplace units. “We’re also asking for additional voluntary contributions,” Woods notes. “If you’re building a market-rate complex, that amount would be 20 percent of the total permit and developing fees, while a commercial or office structure would be 10 percent. Between the fees and the voluntary contributions, we will raise between $2 million and $4 million per year.” To kick off expansion plans, the council in April provided a $1.2 million transfer from the municipal general fund to the program.

Will Markel

Sally Schwenn

Woods points to best practices used by other states to counter rising home prices, including tax increment financing, whereby cities divert future property tax revenue increases toward economic development; rent control; and inclusionary zoning. All are prohibited in Arizona. “Another challenge is that we have a lot of older multifamily apartments in our community,” he says. “Some people will say, ‘Well, that’s attainable housing right there.’ But these places don’t have the comforts and amenities that are suitable for 2021. We need to make sure that we have housing in this day and age that people want to live in.”

VALOR ON EIGHTH: This 50-unit development serves veterans and their families.

80 | May-June 2021

Corey Woods

Real estate developer and manager JES Holdings often collaborates with cities to address workforce housing needs. “Municipalities are often hyperfocused on workforce development, but they have to have the housing available or these large companies aren’t going to relocate,” explains Will Markel, executive vice president for JES Holdings. “You need a smorgasbord of housing,” he continues. “If a city has private developers who focus only on high-end living, it’s not addressing an important societal issue. It needs to incentivize the development community to build homes of the same quality but target them to people in a different economic stratosphere.” Markel points to a project his company developed in South Phoenix, in the shadow of South Mountain Park and Preserve. South Summit Estates is a 98-unit 55+ housing development with rents ranging from $450 for a 600-square-foot studio to $800 for a 900-square-foot two-bedroom unit. “Many retirees can’t afford luxury senior living, but they want a Class A-type apartment,” Markel says. The complex was fully rented in three months, and the waiting list is more than 100 people long. Looking forward, Arizona’s growth shows no signs of slowing down “We realized that we’re going to need more than 11,000 more units of housing in Tempe alone by the year 2040, just to keep pace with demand,” Woods says. Getting municipalities and developers to invest in this drastic need for housing comes down to getting these projects financed. Adds Wood, “Every family should have the opportunity to achieve the American dream.”

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GIFT CLAUSE CLARITY Will the Supreme Court decision on indirect benefits hinder economic development? By REBECCA L. RHOADES

t’s a question that cities have struggled with for years: Do the economic incentives that are offered to draw in companies benefit the entire community? According to a recent court ruling, that answer may be “no.” It’s a decision that could have sweeping implications on future development. On February 8, the Arizona Supreme Court unanimously ruled in Schires v. Carlat that the City of Peoria violated the State Constitution’s Gift Clause when it promised to pay a private university and its property owner in exchange for opening a campus in the city. The Gift Clause, adopted in 1912, requires public expenditures to satisfy a two-pronged test: first, whether the challenged expenditure serves a public purpose and, second, whether the value received by the public exceeds the consideration. A contract law term, “consideration” refers to something of value given to someone in return for goods, services or some other promise. “It just means value,” says attorney Cameron Artigue, partner at Gammage & Burnham. “Is there enough value coming out of this contract?” Adds Grady Gammage Jr, founder of Gammage & Burnham, “The intent of the Gift Clause was to stop public corruption.

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You can’t give away public property for free, and you can’t take public money and loan it to a friend of yours.” The five-years-long legal fight hinged on Peoria granting $2.6 million in incentives to Indiana-based Huntington University and the school’s landlord to establish a satellite campus in the city. Of that amount, $1.89 million would be paid over a three-year period as the university hit performance thresholds. The remainder, slightly more than $700,000, would go to the landlord for tenant improvements. A comprehensive analysis of the impacts of the deal, commissioned by the city, determined that the university would provide jobs for area residents as well as quality educational opportunities and would enhance the vitality of its surroundings. The court reconfirmed the long agreed body of law that economic development is a public purpose — meeting the requirements of the first test prong. However, in Schires, it ruled that the payments to the university and the landlord did not meet the adequacy of consideration prong because the benefits provided by the university were “indirect” and not “bargained for” as part of the promised performance, and therefore not of objective value

when it came to determining adequacy of consideration. “Indirect benefits” are results that cannot be immediately measured, such as anticipated tax revenue and employment opportunities, and are not an enforceable promise to the public by the other party. On the other hand, “direct benefits” include goods and services provided by the business to the city, as well as the improvement of public property. “Indirect benefits are the entire reason cities do these deals — to increase their tax base, to make their city more vital, to incentivize development in a particular part of town,” Gammage notes. “They are investments, not gifts.” The seeds for this litigation date back decades to 1984’s Wistuber v. Paradise Valley Unified School District — in which consideration for a public payment was certain duties performed by a teacher’s association president in lieu of teaching — that set forth the two-prong test for Gift Clause compliance. “Wistuber was the seminal case. It was very deferential to city councils and was the law of the state until 2010,” says attorney Jay Kramer, partner at Fennemore Craig. That all changed in 2010, with the decision in the Turken v. Gordon case,

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Cameron Artigue also known as the “CityNorth” case, in which the Supreme Court took a more narrow position as to what consideration is appropriate for Gift Clause purposes. The case involved the development of a 144-acre mixed-use complex in Desert Ridge. To entice CityNorth to build, the City of Phoenix entered into an agreement whereby the developer would provide more than 3,000 parking spaces, including 200 park-and-ride spaces, that would be free to the public for 45 years. In return, it would pay CityNorth up to $97.4 million in sales tax over a period of 11 years. Fennemore Craig and Gammage & Burnham, among others, represented the city and developer in the case. While the Supreme Court found in favor of their clients, it held that, for the purpose of the Gift Clause, an amount paid to a developer cannot be grossly disproportionate to the consideration received by the city. “We won that case, and the developer was entitled to receive the tax incentives as agreed, but we lost the war, because Turken was the first time that the court held that indirect benefits would no longer be ‘consideration,’” Kramer says. Schires takes that a step further by holding that economic impacts, such as construction sales tax, retail sales tax, and other municipal tax revenue arising directly from the planned project, are anticipated indirect benefits that are valueless under the consideration prong. The court also held that it would no longer defer to public officials on the actual value of the transaction. “It has always been part of Arizona law that courts will give legislative bodies the benefit of the doubt,” Artigue says. “In Schires, the Supreme Court said no more abuse of discretion, no more deference. Judges should now 84 | May-June 2021

Tom Belsche

Grady Gammage

determine, in the first instance, whether adequate consideration exists.” So what happens next? Tom Belsche, executive director of the Arizona League of Cities and Towns, notes, “Economic development happens in all cities and towns, and it plays a huge role in attracting new businesses. It’s extremely important that we get some clarity on this area, or we risk falling behind to other states. We’re in a very competitive market. We not only compete with our fellow states in the Intermountain Region, but we also compete globally for businesses. In order for Arizona’s economy to remain strong, we have to find ways to do this that meets this new requirement.” Because the ruling is so new, cities and their legal teams are still struggling to understand all of the implications, but incentive agreements will always remain a viable economic development tool to attract and retain businesses. The Gift Clause is part of the Constitution, and the legislature would need to refer any change to be voted on by the public, something Gammage does not believe will happen. In addition, it is important to note that the Schires case does not involve GPLETs, or government property lease excise taxes. Under the GPLET program, property owners deed over their land to the city for a period of no more than 25 years, during which time they pay no property tax. Schires is about general revenue or sales tax-based incentives. “In the future, cities are going to have to be very explicit about the types of benefits they receive,” Gammage explains. “For example, if they want to give $2 million to a college, they’re going to have to get $2 million worth of tuition credits for their residents. The trickier question is what happens when

Jay Kramer you’re dealing with a large factory? What are your benefits when jobs and tax revenue don’t count?” Artigue recalls a 20-year-old case in which the Supreme Court held that declining to collect tax revenue cannot violate the Gift Clause because the money is flowing in the opposite direction. “If you never collect the revenue, you steer clear of the gift,” he says. “Whereas collecting the money and then paying it out is a problem.” Artigue and his colleagues have been advising clients to guarantee that indirect benefits are made direct by incorporating them into the terms and conditions of the contract. “Don’t just say, ‘Hey, look at all the jobs that are being created. Isn’t that great?’ It should be brought into the contract as a performance threshold so that an incentive is earned by the private party hitting that criterion.” Kramer says that he has been talking to his clients about agreeing, when they contract with a municipality, to guarantee over a period of time a certain amount of tax revenue to the municipality even though that is an anathema to developers. “Under Turken, Schires and other Supreme Court cases, there is an argument that if the developer makes an enforceable promise to provide certain economic impacts, those impacts go from anticipated indirect benefits that are valueless to direct benefits that constitute consideration for Gift Clause purposes,” he explains. Artigue offers this advice: “Schires is the second real estate-oriented agreement to be litigated in the last 10 years, so it’s a miniscule proportion of deals that wind up in court. There is, to use a topical phrase, a sort of herd immunity — a safety in the pack. If you can avoid making yourself an attractive target, you should be safe.”

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Overcoming crisis Valley Partnership’s rapid pandemic response helped champion Phoenix’s economic resiliency By REBECCA L. RHOADES

he first case of COVID-19 was confirmed in Arizona in late January 2020, but it wasn’t until Gov. Doug Ducey issued a stay-at-home order two months later that most businesses closed down and employees began working remotely. “We all thought, ‘Hey, let’s go home for two weeks and then come back to work,’” recalls Tim Brislin, vice president of Harvard Investments and 2020 Chair of the Valley Partnership Board of Directors. The order was only supposed to last through the end of April but, one year later, a number of businesses still are not up and running 100%. “Everyone had completely different plans for the year than what came to be,” Brislin adds. While some sectors, particularly the restaurant, hospitality and smallbusiness industries, saw devastating losses, with many operations closing permanently and unemployment rates spiking more than 50% over the previous year, development in the Greater Phoenix region continued to thrive, thanks in part to the efforts of Valley Partnership. But there were still plenty of challenges to face. “Everyone was living not just day by day but literally moment by moment,” says Cheryl Lombard, president and CEO of Valley Partnership.

MAKING ADJUSTMENTS Non-essential businesses that were forced to close their doors during the shutdown voiced concerns about their economic future. “If you’re not that well-capitalized, ceasing operations for two weeks can be a death knell,” Brislin notes. On the construction side, keeping the work and money flowing was vital. “There were big concerns 86 | May-June 2021

it came to defining who and what are essential. Landlords were also confronted with commercial tenants who were unable to pay rent because they were closed or operating at limited capacity. Companies that were financially hurting were seeking programs that would keep retail and residential tenants in place. While the federal housing moratorium was recently extended until June 30, 2021, the commercial freeze was lifted in May 2020. “Our members were generally able to structure deals that tacked what couldn’t be paid at that time onto the end of their leases. On the commercial side, it really saved a lot of businesses from closing,” Lombard says.

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about the ability to do transactions. What happens if title companies shut down, if you can’t record documents or you can’t send wires? Most disaster plans spell out backups in case a city’s banking system closes, but what do you do when the entire country isn’t open?” To address these and other concerns and brainstorm solutions, the team at Valley Partnership held weekly Monday morning calls with executives of its developers. “We represent all facets of development: industrial, retail, office, commercial, master plan. People wanted to know what the governor’s emergency order meant to them, their properties and their tenants,” Lombard says. The issues raised were then addressed in calls to Ducey, Phoenix Mayor Kate Gallego and federal legislators. As a result, construction and real estate were deemed essential services, and inspections could progress virtually, allowing projects to continue moving forward. “Our No. 1 concern was having consistency,” Lombard explains. “Hypothetically, one city could do something completely different from another city or the state.” Valley Partnership worked closely with the governor’s office to ensure statewide uniformity when

On the federal level, Valley Partnership reached out to Sen. Martha McSally and Rep. Andy Biggs to initiate discussions about restructuring loan payments and extending deadlines on facets such as 1031 exchanges and opportunity zones. “Those have very tight deadlines that obviously couldn’t be met,” Lombard points out. “We specifically worked with Sen. McSally and the Treasury Department to extend the limits, because otherwise a bunch of deals would have blown up.” Even in the pandemic’s earliest days, members of Valley Partnership never had to worry about a lack of information. The popular monthly Friday Morning Breakfasts pivoted from paid in-person events to free Zoom meetings that frequently include presentations by city and state officials. These virtual gatherings are scheduled to continue through the end of 2021. Weekly e-blasts also provide updates about any topic that might affect businesses on a federal, state or city level. The quick implementation of all of these actions enabled development in the Valley to proceed with limited setbacks, even as much of the country came to a standstill. “It was really quite fascinating to see how we have adapted over a year,” Lombard says. “This is something nobody’s ever faced before. We didn’t know what was going to happen or how this virus was going to affect people. Everything was so uncertain.”

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