AZRE Magazine November/December 2015 by AZ Big Media

NOVEMBER-DECEMBER 2015

The Design Issue Healthier hospitals p. 36 Commercial art p. 26 AIA awards p. 52

Lucy in the Skyscraper with Diamonds “We shape our buildings and afterwards our buildings shape us.”— Winston Churchill, May 10, 1941

don’t like to use quotes in my editor letters, but this one is so perfect for my final one to AZRE’s dedicated readers. For the last two years, I have told enough stories to top the Willis Tower two times over. The commercial real estate industry is ever-fascinating, and I will miss being a part of this community through all the various organizations. I will miss pretending to understand golf. And, finally, most importantly, I’ll miss telling your tales and triumphs. In this issue, you’ll hear from the Arizona Association for Economic Development about the effect of water and education on Arizona’s growth. The Building Owners and Managers Association is weighing in on how to make your buildings smarter — which tech to invest in and which tech to unplug — as well as celebrating the leading properties in its TOBY Awards (pg. 62). The amazing projects don’t stop there. AZRE also profiled the winners of American Institute of Architects’ Arizona Excellence in Design winners (pg. 52). AZRE is also giving readers a sneak peek into AIA Arizona’s conference about contagious ideas in architecture. When it comes to trend talk, there’s no organization more well-known than Urban Land Institute and its Arizona District Council. In addition to reminiscing about what has happened over the last decade of Trends Days, the ULI-AZ supplement also features an exclusive q-and-a with Executive Director Deb Sydenham. You’ll also find out where your favorite ULI-AZ “Shark Tank” competitors are these days and how the organization is working to build healthier places. I truly hope you enjoy my last issue! I’ll see you around Hillstone!

Amanda Ventura Editor, AZRE amanda.ventura@azbigmedia.com 2 | November-December 2015

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

AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602) 277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2015 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 AZRE Source 12 New to Market

14 Big Deals 20 After Hours

22 Legislative Update

26 Public Art

36 Healthcare 52 American Institute of Architects

58 Building Owners and Managers Association 66 Arizona Association for Economic Development

73 Urban Land Institute

On the Cover: Hashen Kehk Community Center

Corrections and clarifications: In “10 Offices We Wished We Work In,” Brad Krause was incorrectly referred to as Ben Krause.

4 | November-December 2015

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

30 YEARS OF EXCELLENCE

AZRE SOURCE

THE LIGHT AT THE END OF THE BALLOT By MERYL FISHLER

here is no right or wrong side of the tracks when it comes to the light rail — as long as you are by the tracks. Proposition 104 is a $31.5 billion transportation plan that triples the number of light rail miles in the city, funds buses as well as street improvements, and is changing the future of Phoenix development. In what Phoenix Mayor Greg Stanton calls a “huge win for the city,” Proposition 104 passed in August and expands the light rail 42 miles to South Mountain, west on Interstate 10 and links the state capitol, Grand Canyon University, Arizona State University’s West Campus and Paradise Valley Mall. “Phoenix is very supportive of maxing out the economic activity associated with the light rail,” Stanton says. Along the new and updated transit corridors, there has been an increase in urban infill development and surge in project requests, says City of Phoenix Planning and Development Department Director Alan Stephenson. The mass transit opportunities established in Prop 104 allow a new style of development in Phoenix. The city is expanding out, rather than up — a different urban pattern than other metropolitan cities. These new development plans include mixed-used projects with multifamily residential components. Urban lifestyles and a vibrant downtown is more appealing to Millennials and beneficial to economic

6 | November-December 2015

growth, Stephenson says. “People want to have a more urban lifestyle,” Stephenson says. Having an urban option with a reasonable and viable public transit option is attracting business to open offices along the light rail line, Stanton says. Banner Health plans to relocate its headquarters to midtown Phoenix, a move Santon says would not have happened without the light rail. The City of Phoenix Planning and Development Department has created transit district plans to govern the areas surround the light rail stations and are working on changing zoning on the parcels along the light rail line to reinvent Phoenix and create a more urban environment, says Stephenson. These plans are designed to be replicated as the light rail expands through the city, he adds. “We will see more development as we see the light rail project come to fruition down the line,” says Matthew Hail, City of Phoenix spokesman. The next step is to appoint a committee to determine how elements will get prioritized and which light rail corridors will develop first. “We are seeing a lot of activity from neighborhoods the new light rail plans to pass through advocating the light rail line passing through their community to be developed first, which is a good problem to have,” Stanton says.

PLANNING AND ZONING CITY OF CHANDLER, TOWN OF GILBERT

Approximately 275 Chandler and Gilbert property owners will be required to purchase flood insurance beginning in November, when their homes are added to a high-risk flood zone. A 10-year study by the two municipalities, along with the Maricopa County Flood Control District and the Federal Emergency Management Agency, used new technology to better determine which areas are at risk of flooding. Coverage purchased before November 4 will range from $137 to $405 per year for a singlefamily home. After November 4, newly impacted property owners will have a one-year period to secure flood insurance at a discounted rate, between $165 and $445. Residents who choose not to purchase insurance until after November 2016 will see a steep price hike, from about $1,300 to $2,500.

CITY OF COOLIDGE, CITY OF ELOY

The Arizona Department of Transportation (ADOT) released a draft environmental impact statement that recommends routing passenger trains generally along existing Union Pacific (UP) tracks north of the City of Eloy through the City of Coolidge in Pinal County and along UP tracks and Interstate 10 between Eloy and Tucson. ADOT planners made the recommendation because this particular option had cost and performance advantages, and after studying multiple optional routes for the proposed passenger train service between Phoenix and Tucson. The proposed rail system would serve both Sky Harbor International Airport in Phoenix and downtown Tucson, with possible future extensions to Tucson International Airport and from central Phoenix to locations west and northwest of downtown.

AZRE SOURCE

PROJECT

NEWS ASU NOBLE LIBRARY RENOVATIONS

Arizona State University commissioned McCarthy Building Companies to renovate its Noble Library. The $3 million renovation was completed in two months and included new interior finishes, mechanical and electrical systems.

STITCH FIX

Stitch Fix, an online personal styling service for the women, announced plans to open its fourth distribution center in Phoenix. Located on West Lower Buckeye Road, it will open in November. Stitch Fix will hire up to 600 employees for the 365,000-square-foot facility.

CASTING A SHADOW

Meet the commercial real estate innovators who laid the foundation for how we work, live, shop and travel By AMANDA VENTURA

henever experts get together and talk about the “best of all time,” whether it’s in sports, politics or business, there is sure to be a debate. But few could discount the impact these innovators have had on Arizona’s commercial real estate landscape.

HERMAN CHANEN

MILLING AROUND

Mill Avenue is bustling with activity. Kimpton Hotels & Restaurants announced it will break ground on a boutique hotel at One | Hundred | Mill, a mixed-use development on Mill Avenue and Rio Salado Parkway. Riot Hospitality Group and Grammy Award-winning country music superstar Dierks Bentley debuted a new Dierks Bentley’s Whiskey Row in Tempe’s Mill Avenue District on Sept. 16. Also new to Mill Avenue is Pedal Haus gastropub. 8 | November-December 2015

In 1955, Herman Chanen borrowed $1,000 to start Chanen Construction Company in Phoenix and its first project was building the Money Oldsmobile automobile dealership. Within years, the company was building airport terminals and developing and building Arizona’s first high-rise office building, The Arizona Title Building. Chanen’s projects include Terminal 2 at Phoenix Sky Harbor International Airport (1961), the McDonald Douglas/Boeing Helicopter Plant in Mesa (1985), Terminal IV at Sky Harbor (1994) International Airport and the $450 million Talking Stick Resort for the Salt River Pima-Maricopa Indian Community (2010).

CARL HAYDEN You can thank Carl Hayden for that tall glass of water and green lawns in your life. Hayden most notably ushered the Central Arizona Project through Congress, which continues to be the largest water resource for Arizona. He is also the namesake of Tempe — home to a large man-made lake — when it was known as Hayden’s Ferry. Hayden consistently backed legislation concerned with public lands, mining, reclamation and other Western projects. Even former President John F. Kennedy had a few words about Hayden: “Every federal program which has contributed to the development of the West — irrigation, power, reclamation — bears his mark, and the great federal highway program which binds this country, together, which permits this state to be competitive east and west, north and south, this in large measure is his creation.”

JOHN F. LONG John F. Long was a towering figure among

PROJECT

NEWS AUXIER ELEMENTARY SCHOOL

PAVING THE WAY: (From left) Herman Chanen, Carl Hayden, John F. Long, Rusty Lyon, M.M. Sundt, Del E. Webb and Frank Lloyd Wright.

the giants who built Phoenix from a small farm town into the nation's fifth largest city. With Maryvale, he created the nation’s first master planned community. In the process, he not only brought affordable, pleasant suburbia to post-war Phoenix, he paved the way for thousands of exGIs to own their homes. It also set the template for Phoenix's distinctive urban form: square miles of cul-de-sac residential streets, separated by wide avenues and with shopping strips at major intersections.

RUSTY LYON During his more than 40 years as CEO of Westcor, Rusty Lyon led the way in retail development and continues to contribute to the public's shopping needs. Retailers have turned Westcor into the largest owner of commercial real estate properties, with projects such as Scottsdale Fashion Square, Chandler Fashion Center, San Tan Village, Flagstaff Mall & The Marketplace, Prescott Gateway Mall, Biltmore Fashion Park and The Boulders Resort.

M.M. SUNDT Sundt Construction is one of the oldest construction companies in the country and the oldest in Arizona. In 2015, it celebrated its 125th anniversary. Sundt constructed many of the first University of Arizona buildings and moved the London Bridge to

Developer is Chandler Unified School District No. 80, general contractor is McCarthy Building Companies, Inc., and architect is HDA Architects have completed a $16.6 million, 91,000-square-foot elementary school on 13 acres at Power and Brooks Farm Road in Queen Creek.

Arizona. It has also handled “top secret” government projects in Arizona and New Mexico and continues to leave an ever widening mark on the commercial real estate industry.

DEL E. WEBB Among many legacies, Del E. Webb founded and developed Sun City in 1960. The opening weekend drew 100,000 people to the city and landed it a spot on the cover of Time magazine. Webb is also the namesake of ASU construction school. He also built Uptown Plaza, one of the oldest shopping centers in Phoenix, in 1955. It’s currently being remodeled by Vintage Partners with intent of returning the center to its bustling heyday.

FRANK LLOYD WRIGHT Decades after his death, Frank Lloyd Wright’s architecture continues to stand unparalleled in Arizona. The most visited may be Taliesin West, Wright’s winter home and studio complex in Scottsdale, where he worked between 1937 and his death in 1959. It currently is a home for an architecture school. Though Wright’s design plans for the Capitol, meant to inspire Arizonans to loftier heights was never realized, the City of Scottsdale erected one of his spire designs for that purpose.

SPACE BETWEEN

Balfour Beatty Construction, with the help of $75,000 in donations, completed Space Between, a new community gathering space and temporary park designed to bring activity and vitality to a vacant lot in downtown Phoenix. A pro bono project built in collaboration with Downtown Phoenix Inc. and design partner Logan Simpson Design, the Space Between park brings shade, grass, tables, benches and other sustainable landscaping features to a parcel of land spanning First and Second streets, nestled between the Valley Youth Theatre and Taylor Place. The city-owned lot is slated for future development, so the park features materials that can be later moved to different spaces, including salvaged trees, recycled materials, desert-friendly plants and passive rainwater harvesting. 9

AZRE SOURCE

Red Robin

Macayo’s Meixcan Grill & Cantina

PHOTO BY LAURA BURNETT, AZ BIG MEDIA

PHOTO/COURTESY MACAYO'S

Chain Reaction S

everal chain restaurants within the Valley have new sights on their horizons, including updated menus, logos and décor. Among those restaurants are Scottsdale’s Macayo’s Meixcan Grill & Cantina and Tempe’s Red Robin. Red Robin is going through a rebranding campaign, changing its look at its restaurants nationwide. Tempe Marketplace’s Red Robin is the first in Arizona to get the new look. Still a family-friendly restaurant, it has adjusted the seating charts. With different sections of the restaurant dedicated to families than diners without kids, it aims to provide a more comfortable experience. If you didn’t come with screaming kids, you won’t have to sit next to them. Still a place to go for a burger and a beer, Red Robin’s also updated its menu. With a focus on local beers in the bar and creative burgers, it’s an updated version of the Red Robin faithful customers know. As one of the restaurant’s staples, the plethora of artwork that usually adorns the walls has now been consolidated, creating a more modern and sleek look for the dining rooms. Instead, the art

10 | November-December 2015

adorns a strip of the ceiling, collected in an unexpected ceiling art exhibit. Macayo’s Mexican Grill and Cantina introduced a new look and menu, while keeping the neighborhood feel it has had since the family-owned restaurant opened almost 70 years ago. In an attempt to show the partnership between the new and older branding, both logos are on the building. Almost all of the previous menu items are available, but with the new menu, so are some new modern and innovative ways to experience Mexican food. Behind this innovation is Sharisse Johnson, daughter of the restaurant’s founder, Woody. She followed in her father’s footsteps, traveling to Mexico to find inspiration for new menu items, like the jicama tacos and chili pork stew. A cleaned-up interior and a re-done outdoor space invites diners to come for a new experience, but still one recognizable as Macayo’s. Jason Rusk, vice president of brand transformation at Red Robin, has been in charge of the company’s rebranding strategy. Rusk is in charge of updating restaurants around the country, all while making sure they maintain their

By LAURA BURNETT

individualism. At each Red Robin, a restaurant gets to vote on which art to keep and display. When a remodel of a particular restaurant comes into question, it’s often worth weighing the options: remodel or relocate? For Red Robin and Rusk that has to do with a few variables. Before deciding, they’ll look at the shortest lease term without renewals, at ownership and at the level of investment. With a longer lease on the books and not near the end of it, it makes sense to remodel, an investment that will pay off. But when a lease is coming to an end, Rusk says the restaurant will look into relocating. With a known location, a restaurant won’t have to work to get the public to know they’ve moved, but with an update, it can bring back loyal customers while attracting new diners. That’s just what both Macayo’s and Red Robin have chosen to do. A new menu, a new look and a new feel will invite new customers, while still staying close enough to their brand that loyal customers will want to come back too.”

NEW TO MARKET

EDUCATION MADISON SIMIS ELEMENTARY SCHOOL

INDUSTRIAL AZ|60

DEVELOPER: Madison Elementary School District GENERAL CONTRACTOR: McCarthy Building Companies ARCHITECT: Orcutt | Winslow LOCATION: 7302 N. 10th St., Phoenix SIZE: 72,000 square feet VALUE: $16 million START: June 2015 COMPLETION: August 2016 SUBCONTRACTORS: Urban Electric, Midstate Mechanical, Pueblo Mechanical, Schuff Steel, Stonecold, Progressive Roofing, Pete King

DEVELOPER: Conor Commercial Real Estate and Globe Corporation joint venture GENERAL CONTRACTOR: McShane Construction Company ARCHITECT: Ware Malcomb LOCATION: 1343 N. Colorado St., Gilbert SIZE: 225,600 square feet BROKERAGE FIRM: JLL of Phoenix Value (land sale): $3.7 million START: October 2015 COMPLETION: April 2016

12 | November-December 2015

MULTIFAMILY EASY STREET, A DISTINGUISHED CAREFREE LIFESTYLE DEVELOPER: Butte Companies GENERAL CONTRACTOR: Wespac Construction ARCHITECT: Kendle Design Collaborative and Whitneybell Perry LOCATION: Easy Street and Carefree Drive, Carefree SIZE: 152,675 square feet BROKERAGE FIRM: Butte Realty VALUE: $45 million START: May 2016

BREAKING GROUND: (Top to bottom, left to right): IS28, Utility Trailer, Easy Street, Verde Dimora Apartment Homes, Madison Simis Elementary School and AZ|60.

MULTIFAMILY VERDE DIMORA APARTMENT HOMES

OFFICE UTILITY TRAILER

RETAIL IS28

DEVELOPER: Kauffman Real Estate and Development GENERAL CONTRACTOR: DECCA MultiFamily Builders, Inc. ARCHITECT: Dohrmann Architects, Inc. LOCATION: 2217 N. Power Rd., Mesa SIZE: 5.34 acres (site) PROPERTY MANAGEMENT: AllisonShelton Real Estate Services, AMO VALUE: $12 million START: Q1 2015 COMPLETION: Q2 2016

DEVELOPER: LGE Design Build GENERAL CONTRACTOR: LGE Design Build ARCHITECT: Cawley Architects LOCATION: SEC of I-10 and 91st Avenue, Tolleson SIZE: 60,000 square feet BROKERAGE FIRM: Matt Hobaica, Lee & Associates VALUE: WND START: 9/2015 COMPLETION: Q1 2016

DEVELOPER: Wetta Ventures GENERAL CONTRACTOR: TBD ARCHITECT: Brick & West Design LOCATION: Indian School Road and 28th Street, Phoenix SIZE: 11,000 square fee BROKERAGE FIRM: DTZ VALUE: WND START: February 2016 COMPLETION: October 2016

PHOTO BY ROBIN SENDELE, AZ BIG MEDIA

LEASING NOBILITY By MERYL FISHLER

erry Noble, senior director for Cushman & Wakefield, is a market leader and managing broker recognized for his success in office properties brokerage. Even though Noble and his team have completed between 75 to 100 a year for the last 10 years, he remains grounded with

14 | November-December 2015

the help of business advice Joe Porter, senior vice president with CBRE, gave him earlier in his career: “You are a 15year overnight success.” With more than 17 years experience in the Phoenix market, Noble has experience with sales, leasing, valuation and buyer representation. He previously served as first vice

president at CBRE and vice president at Trammel Crow Company. In 2013, he joined Cushman & Wakefield where he currently manages the brokerage divisions of Arizona. “We have had the opportunity to work on several big lease transactions, and any that exceeded $40 million to $50 million are big deals,” Noble said. Noble’s current leasing assignments include some very significant deals around the Valley. He will be handling is the office leasing at One | Hundred | Mill, a $190 million mixed-use creative office, retail and lifestyle-hotel development located on the 2.51-acre parcel at the southwest corner of Mill Avenue and Rio Salado Parkway. One | Hundred | Mill is across the street from Tempe Beach Park and Tempe Town Lake. In addition to the 15-story, 260,000-square-foot, Class-A office building, the project consists of a 15-story Kimpton boutique hotel tower, and 20,000 square feet of restaurant and retail space. Construction is expected to begin in November with a targeted opening date of late 2017. “It takes a long time for a market to recognize you as an expert in your field,” Noble said, “this grounded me to be patient and strive to be known for doing something.” He also attributes a lot of his success to his team. He has worked with one of his partners for 16 years and the other for 12. And he hopes for anyone starting out as a broker is afforded the opportunity and ability to work with others on a team before being thrown into the deep end. In terms of leasing, there has been very good demand in the Southeast Valley, Noble said. “Looking toward the future, and with turbulence in the stock market, we always have to wait and see how the federal government handles interest rates,” he said. Noble is excited about some notable projects of significance Cushman & Wakefield has under new contract in the Phoenix market.

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

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

INDUSTRIAL/SALES

OFFICE/SALES

1. VALLEY WEST DISTRIBUTION CENTER II, PHOENIX 323,346 SF; $17,123,976 BUYER: Lion Industrial Trust SELLER: Myron Zimmerman Investments

1. BILTMORE FINANCIAL CENTER, PHOENIX 635,002 SF; $163.1M BUYER: ViaWest Properties, LLC; Alliance Bernstein SELLER: Invesco Real Estate LISTING BROKERAGE: Jim Fijan and Will Mast, CBRE

2. VALLEY WEST DISTRIBUTION CENTER I, PHOENIX 323,345 SF; $17,123,923 BUYER: Lion Industrial Trust SELLER: Myron Zimmerman Investments 3. 5125 E. MADISON ST., PHOENIX 352,415 SF; $14.7M BUYER: Inteplast Group, Ltd. SELLER: SunChase Holdings, Inc. LISTING BROKERAGE: Lee & Associates 4. PAPAGO DISTRIBUTION CENTER, PHOENIX 226,436 SF; $13,096,964 BUYER: Lion Industrial Trust SELLER: Myron Zimmerman Investments 5. DIABLO TECHNOLOGY CENTER, BLDG. A, TEMPE 137,500 SF; $12,566,784 BUYER: The Muller Company; Harbert Management Corporation SELLER: Walton Street Capital, LLC; The Muller Company LISTING BROKERAGE: Colliers International

BIG DEALS IS SPONSORED BY

2. RAINTREE CORPORATE CENTER, SCOTTSDALE 334,889 SF; $69.04M BUYER: Equus Capital Partners, Ltd. SELLER: iStar Financial Inc. LISTING BROKERAGE: CBRE 3. NORTH MOUNTAIN INTEGRATED MEDICAL SERVICES, PHOENIX 121,976 SF; $51,740,000 BUYER: Physicians Realty Trust SELLER: Integrated Medical Services LISTING BROKERAGE: Newmark Grubb Knight Frank

Jim Fijan

Will Mast

4. SQUAW PEAK CORPORATE CENTER, PHOENIX 287,394 SF; $51.3M BUYER: Regent Properties, Inc. SELLER: Parkway Properties, Inc. LISTING BROKERAGE: Cushman & Wakefield 5. THISTLE LANDING OFFICE PARK, PHOENIX 284,503 SF; $51.25M BUYER: Menlo Equities SELLER: Torchlight Investors LISTING BROKERAGE: Cushman & Wakefield

The Enclave at Borgata

Firm: JEN Partners and TerraWest Communities Build: WesPac – Three, four-story buildings, 86 high-end units Loan: Construction Loan financed by Alliance Bank of Arizona 15

LAND/SALES

MULTIFAMILY/SALES

RETAIL/SALES

1. 15440 N. SCOTTSDALE RD., SCOTTSDALE 9.31 acres; $17.085M BUYER: Optima Inc. SELLER: Ladlow’s

1. IMT DEER VALLEY, PHOENIX 723,896 SF; 832 units; $100.5M BUYER: IMT Capital SELLER: Sterling Equities LISTING BROKERAGE: Sean Cunningham, Tyler Anderson, Asher Gunter and Matt Pesch, CBRE

1. THE PROMENADE, PHASE I, SCOTTSDALE 276,189 SF; $69,225,813 BUYER: The Blackstone Group LP SELLER: Excel Trust, Inc.

2. NE CRIMSON AND RAY ROADS, MESA 38.44 acres; $14,719,384 BUYER: Maracay Homes SELLER: TerraWest Communities 3. 4600-4602 N. 24TH ST., PHOENIX 3.75 acres; $13.25M BUYER: Kaplan Management Company, Inc. SELLER: Grand Chapter of Arizona Order of Eastern Star LISTING BROKERAGE: Colliers International 4. NEC BULLARD AVENUE AND SWEETWATER BOULEVARD, SURPRISE 12 acres; $8,254,850 BUYER: JEN Arizona 21 LLC SELLER: Hawkins Companies; The Charter School Fund, LLC 5. 7113 E. ANGUS DR., SCOTTSDALE 3.25 acres; $7,248,802 BUYER: JLB Partners, LP SELLER: Gebran Family Trust LISTING BROKERAGE: Michael A. Lieb Ltd.

2. THE POINTE AT THE FOOTHILLS, PHOENIX 472,152 SF; 528 units; $52,275,000 BUYER: BH Equities, LLC SELLER: The Bascom Group, LLC LISTING BROKERAGE: Colliers International

Sean Cunningham

Tyler Anderson

3. ELEVATE AT DESERT Asher Gunter RIDGE, PHOENIX 400,418 SF; 342 units; $52M BUYER: The Ergas Group SELLER: LaSalle Investment Management LISTING BROKERAGE: CBRE Matt Pesch 4. VILLAS AT CAVE CREEK, PHOENIX 572,764 SF; 696 units; $43.15M BUYER: Weidner Apartment Homes SELLER: Milestone Apartments REIT LISTING BROKERAGE: Marcus & Millichap

2. 24720-24790 LAKE PLEASANT RD., PEORIA 78,091 SF; $20,148,358 BUYER: The Blackstone Group LP SELLER: Excel Trust, Inc. 3. 15440 N. SCOTTSDALE RD., SCOTTSDALE 113,071 SF; $17.085M BUYER: Optima, Inc. SELLER: Ladlow’s 4. THE PROMENADE, PHASE II, SCOTTSDALE 58,804 SF; $14,739,018 BUYER: The Blackstone Group LP SELLER: Excel Trust, Inc. 5. 24650 N. LAKE PLEASANT RD., PEORIA 53,930 SF; $13,914,547 BUYER: The Blackstone Group LP SELLER: ?????????? LISTING BROKERS: Excel Trust, Inc.

5. ESTATES ON MARYLAND, PHOENIX 422,310 SF; 330 units; $41.2M BUYER: BH Equities LLC SELLER: The Bascom Group, LLC LISTING BROKERAGE: Colliers International

Where Experience Meets Opportunity

BIG DEALS IS SPONSORED BY

John Eldean

16 | November-December 2015

When JEN Partners and TerraWest Communities wanted to get into the condominium business, they called on a strategic partner who shares their passion for performance. They called on Alliance Bank and their Senior Vice President John Eldean, a 18 year real estate veteran.

INDUSTRIAL/LEASES

1. CAPITAL COMMERCE CENTER, PHOENIX 552,330 SF LANDLORD: Lincoln Property Company TENANT: Menlo Logistics LANDLORD BROKERAGE: Anthony Lydon and Mark Hertzberg, JLL TENANT BROKERAGE: Lee & Associates

Anthony Lydon

2. PROLOGIS PARK RIVERSIDE, PHOENIX Mark Hertzberg 365,110 SF LANDLORD: Exeter Property Group TENANT: Stitch Fix LANDLORD BROKERS: Colliers International TENANT BROKERAGE: JLL 3. TEMPE COMMERCE PARK, BLDG. G, TEMPE 75,068 SF LANDLORD: Everest Holdings TENANT: Consumer Cellular LANDLORD BROKERAGE: Lee & Associates TENANT BROKERAGE: Capacity Commercial Group 4. ELIXIR INDUSTRIES, MESA 58,900 SF LANDLORD: Sahm Properties Arizona, LLC TENANT: Industrial Door Company Inc. LANDLORD BROKERAGE: Brokerage: Lee & Associates TENANT BROKERAGE: Cushman & Wakefield (then DTZ) 5. BASELINE INTERSTATE, PHOENIX 46,940 SF LANDLORD: Dalfen America Corp. TENANT: Independent Electric Supply LANDLORD BROKERAGE: CBRE

BIG DEALS IS SPONSORED BY

18 | November-December 2015

OFFICE/LEASES 1. 827 W. GROVE STREET, MESA 69,561SF LANDLORD: RRS & Company TENANT: QBE America, Inc. LANDLORD BROKERS: Dave Seeger, Karsten Peterson and Mark Gustin, JLL TENANT BROKERS: Dave Seeger, Karsten Peterson, Mark Gustin, John Pierson and Trevor Pratt, JLL 2. THE CORPORATE CENTER, PHOENIX 55,501 SF LANDLORD: Crown West Realty TENANT: Avesis LANDLORD BROKERAGE: Cushman & Wakefield TENANT BROKERAGE: Colliers International 3. BROADWAY BUSINESS CENTER, BLDG. B, PHOENIX 37,574 SF LANDLORD: US Bank National Association TENANT: State of Arizona LANDLORD BROKERAGE: Colliers International

RETAIL/LEASES

Dave Seeger

Karsten Peterson

Mark Gustin

John Pierson

4. DESERT RIDGE CORPORATE CENTER, Trevor Pratt PHASE II 35,034 SF LANDLORD: Regent Properties TENANT: Republic Services LANDLORD BROKERAGE: Lee & Associates TENANT BROKERAGE: Cresa 5. 1305 S. GILBERT RD., GILBERT 33,265 SF LANDLORD: Fenway Properties TENANT: Lauren’s Institute for Education TENANT BROKERAGE: GPE Commercial Advisors

1. MOON VALLEY SHOPPING CENTER, PHOENIX 38,740 SF LANDLORD: Triumph Property Group TENANT: Safeway LANDLORD BROKERAGE: Ed Beeh and Scott Ellsworth, SRS Real Estate Partners 2. GLENDALE GALLERIA, GLENDALE 36,864 SF LANDLORD: Brixmor Property Group TENANT: LA Fitness LANDLORD BROKERAGE: CBRE 3. WESTPORTE VILLAGE PLAZA, GLENDALE 23,600 SF LANDLORD: PDG America Shopping Centers TENANT: Bealls Outlet LANDLORD BROKERAGE: Velocity Retail Group TENANT BROKERAGE: Newmark Grubb Knight Frank 4. VILLAGE SQUARE II, PHOENIX 15,926 SF LANDLORD: Lynn Morrison Property Management TENANT: Tuesday Morning LANDLORD BROKERAGE: Colliers International TENANT BROKERAGE: Velocity Retail Group 5. WESTGATE CITY CENTER, GLENDALE 14,429 SF LANDLORD: iStar Financial, Inc. TENANT: Salt Tacos e Tequila LANDLORD BROKERAGE: Salt Tacos e Tequila TENANT BROKERAGE: CBRE

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AFTER HOURS

Playing the right track Kimber Lanning thinks big for small businesses By MERYL FISHLER

t takes one to know one. When it comes to small business in Arizona, Kimber Lanning is and knows everyone. Lanning, champion of local businesses as the founder and executive director of nonprofit Local First Arizona, dropped out of Arizona State University at the age of 19 to open Stinkweeds, an independently owned and operated music store and website with a slant toward independent labels and bands. Twentyseven years later, the local record store near Central Avenue and Camelback Road in midtown Phoenix still stands. “It was really a matter of working all day everyday for pennies and trying to reinvest the money as quick as I could. And customer service,” Lanning said. To anyone starting his or her own business, Lanning says give it a 110 percent. “I have talked to a lot of businesses

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that think, ‘I’m just gonna keep my job and do this on the side.’ I really don’t advise that.” She says people need to be willing to and jump in with both feet and make sacrifices to survive. In the early ‘90s, Stinkweeds hosted small shows and sold records. Then, in 1999, Lanning opened a second business, a venue called Modified Arts. “It was a hub for sharing and the creative community,” Lanning said. Modified Arts provided a stepping stone for a young creative community to develop into professionals. Lanning developed Modified Arts into a respected gallery and prominently recognized venue for live music and performance. When Modified Arts opened in the ‘90s on Roosevelt Row in downtown Phoenix there were only two stores on the street, a hub cap shop and a liquor store. “I opened up Modified Arts ... when

PHOTO BY ROBIN SENDELE, AZ BIG MEDIA

(Roosevelt Row) was largely abandoned and a forgotten neighborhood, and (I) was able to fortunately be involved in the transformation of this neighborhood,” she says. While operating in the business world, Lanning discovered that a lot of bright young people were leaving Arizona and she wanted to explore the economic impact of people leaving and explore ways to keep them in the state. Additionally, she wanted to create a level playing field for local young businesses. “Too often we give government subsidizes to national chain retailers, and I just wanted to make sure the local business have a fair opportunity to compete,” Lanning said. Lanning has also been active for the better half of the last decade in working with the City of Phoenix to make adaptive reuse more attractive to developers and small businesses. Most notably, Local First was involved with The Newton, which took a unique approach to development. The mixeduse adaptive reuse project was funded by multiple stakeholders — the incoming tenants.

LEGISLATIVE UPDATE

REWARDING POLICIES Arizona’s water policies won’t run dry

estern drought, water resources management, conservation and sustainability are focal points of national attention and Arizona is in the center of it. How we deal with these issues in Arizona will determine the economic vitality of our state long into the future.

Cheryl L. Lombard For the past several months, the most common question I get at Valley Partnership events is whether Arizona is in the same boat as California in terms of water. The answer is no. Arizona is where California could have been, if California had taken Arizona’s path decades ago. From 1957 to 2013, Arizona reduced its water consumption by 100,000 acre feet. That is with a six-fold increase in population and a 19-fold increase in gross domestic income. Today, Arizona has approximately 9 million acre feet of water stored. This is important because good water policy is directly linked to robust economic growth and we must continue to look toward the future and address the challenges that remain. The Arizona Department of Water 22 | November-December 2015

Resources has developed a road map for the state’s future that lays out a framework of strategic priorities for maintaining Arizona’s water innovation. The business industry needs to join the discussion about Arizona’s water security. One key factor in our water future will be continuing innovative partnerships. Later this year, I am going to present examples of such partnerships at a forum on Colorado River Water. All have the same key elements for success: trust, non-traditional partners, cost-effective because of multiple benefits and credit to those involved in the partnerships. One recent example of such a water partnership is between the Gila River Indian Community and the Salt River Project. The Gila River Water Storage (GWS) enables more than 5 million acre-feet of additional dependable, renewable water supplies to be available for landowners and development interests in the Valley. It is only through Arizona continuing to lead in planning, management and innovative partnerships that the state will be ahead of future water challenges. Groups such as Valley Partnership are proud to join with all the business industry to ensure Arizona exceeds once again. Cheryl Lombard is the president and CEO of Valley Partnership.

BOMA

Greater Phoenix announced the recipient of its first Legislator of the Year Award, developed to highlight the importance of policies that impact commercial properties in Arizona. It also recognizes an elected official who consistently pursued business-friendly positions on those policies throughout the legislative session.

Mark Covington Rep. Warren Petersen (R-Gilbert) was selected by the BOMA Advocacy Committee for his strong leadership for positive change in Arizona. Since he began his legislative service in 2012, Petersen has had an open-door policy to BOMA members and actively sought input on how to reduce unnecessary regulation to make Arizona more business-friendly. This year, BOMA especially appreciated his leadership on Senate Bill 1241, a measure that prevented government oversight on energy and environmental policies that greatly concerned property managers across Arizona. Petersen has demonstrated his willingness to open highly-controversial issues of importance, such as tax policy and local government mandates, helping businesses and property managers communicate their concerns and priorities. His leadership is appreciated and BOMA looks forward to continuing to work with him for many years to come. Mark Covington, executive director, BOMA of Greater Phoenix

Idealizing infrastructure THE POWER OF ‘SEE’ STUDENTS

ince 1936, the Urban Land Institute has explored complex issues fundamental to creating and sustaining thriving communities. One such issue has evolved into the global ULI Infrastructure Initiative to promote sustainable infrastructure investment choices and the links between

hile not a fan of business management books as they tend to be preachy, I was recently struck by “Think Like A Freak,” from the authors of “Freakonomics” fame. The authors stipulate that one in four school children have subpar eyesight and that an astounding 60 percent of “problem learners” have trouble seeing. In China, a study was undertaken in which half of the 2,500 school children who had vision issues were given $15 glasses free of charge while the other half were not. The three researchers found the test scores for children who received glasses were 25 to 50 percent better than students whose sight were uncorrected. While not a panacea, the improvement in performance for “problem learners” seems remarkable for such an inexpensive outlay. I recently called the Arizona Department of Education (ADE) and asked if there was any coordinated or systematic vision screening in schools across the state and was informed there was not. In fact, Arizona is one of only eight states that does not require a vision screening test. Arizona merely recommends that school districts conduct such tests at various times but the extent and frequency of these tests is unknown. The American Optometric Association states that a child learns as much as 80 percent through their eyes and the National PTA estimates that 10 million children up to age 10

Deb Sydenham

suffer from undetected vision problems that may cause them to fail in school. Numerous studies outline a link between undetected vision problems and a misdiagnosis of other behavioral issues such as ADHD. Per the ADE, there were 1,116,143 children enrolled in Arizona schools in 2014; about 30 percent of them only approached or failed the standards of the reading portion of the AIMS test in the eighth grade. If the stat cited in “Think Like A Freak” is accurate, about 25 percent of these 1.12 million school kids would no longer have undetected vision problems and their relative test scores might be higher. That is a fairly significant bangfor-the buck improvement in student performance when a scan can be done for as low as $2 per student. Why can’t we require vision screening in our schools?.

infrastructure and land use. Infrastructure is the foundation for metropolitan prosperity. Because it provides the physical framework for real estate investment, the ULI Arizona District Council has identified infrastructure as a key priority. How to fund and finance the infrastructure is a key challenge. Questions about finance, economic development and public-private perceptions were critical to the ULI and EY Infrastructure 2014 endeavor and are being discussed in a collaborative effort involving ULI Arizona, Valley Partnership and other organizations. In a 2014 survey of nearly 500 top real estate leaders and public officials, infrastructure quality emerged as the top factor driving where real estate development happens. The survey also identified that cooperation between developers and local government is the most significant funding approach for new infrastructure over the next decade. As conversations continue in the coming months an ability to see past the rhetoric and focus on feasibility will bring Arizona closer to growing its infrastructure funding and financing toolbox and strengthening communities for future generations.

Tim Lawless is the president and CEO of NAIOP Arizona.

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

Tim Lawless

LEGISLATIVE UPDATE

Legislative session back to the drawing board

ARIZONA’S ARMS RACE

hat do you want Arizona’s economy to look like in 2020? Vibrant? Diverse? A leader in high-wage jobs with a global reputation for innovation and excellence? There are ways we all can help create a vibrant economy by educating leaders about policies that have the greatest return on investment for Arizona’s future. Arizona needs sound

Rebecca Timmer

he American Institute of Architects (AIA) Arizona Government Affairs Committee, staff and lobbyists are working on our strategy for the 2016 session and election cycle.

John Glenn Within both chambers, there is interest in calling a special session to address school funding. Over time, it will become more clear if the intent of a possible special session is to address the inflation funding requirements, the $266 million budget surplus from last FY or to take up the Governors State Trust land ballot proposal – all of the above. The AIA is acutely tuned into this because it strongly believes in investing in education and infrastructure. It also feels the state can do substantially better in this area. We have members with extensive portfolios in K-12 construction and hear over-and-over 24 | November-December 2015

how the funding of school facilities is falling short. We hope that whatever proposals surfaces that some part of it is dedicated to restoring funding to the Arizona Schools Facilities Board. The AIA is also working with the Board of Technical Registration (BTR), the state agency that regulates architects. BTR has its sunset review coming up, and it’s important that the BTR continues. In concert with BTR, we’re supporting efforts to incorporate a continuing education component to licensure for architects. The last piece of legislation the AIA is every excited about and supported last session is the development of a historic preservation tax credit program for commercial structures. While Arizona have some tools that support the preservation of residential structures, it’s lacking competitive tools in the commercial realm. Last session, Rep. Karen Fann (R-Prescott) sponsored House Bill 2337, which ended up being held in committee. We have started to engage in some stakeholder meetings to see a course of action for something like that bill down the line. John Glenn is an associate of the American Institute of Architects in Arizona.

economic development policy on a statewide level to remain competitive. Other states are continually evaluating and creating new tools to attract and retain companies. Arizona can’t fall behind. The Arizona Association for Economic Development (AAED) advocates for tools that enhance Arizona’s competitiveness. It is one of the organizations the Legislature looks to when it needs economic development information. For years, AAED has been heavily involved in policy changes — including the state’s tax system and other incentives for major industries. These policies help keep Arizona competitive. An example is the funding and support for the Arizona Commerce Authority (ACA). The ACA, whose mission is to strengthen Arizona’s economy by facilitating quality job creation, plays a critical role in coordinating statewide efforts to support our economy. I hope the extension of Sandra Watson’s president/CEO contract into a fourth term is an indication that lawmakers will reauthorize the ACA this coming session. As the session gears up, AAED will continue to collaborate with like-minded organizations to help with the development of strong legislation for issues such as funding education and infrastructure. The latter is what brought us out of the Great Depression and key to Arizona’s economic vibrancy. Help us to help you become an advocate for Arizona’s economic success. Rebecca Timmer is chair of AAED’s Governmental Affairs Committee.

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VISIONS UNVEILED The untold stories of commercial art

t’s about being able to look down from your office and see something interesting, something pretty, something that will make you want to work there. Sometimes public art comes to life through an agreement with citizens, in the form of taxes, or it could be part of the development, the brainchild of architects’ and planners’ desire to have an inviting environment. Whether it be a sculpture in a park, a mural on the side of a city building or a statue on the side of the road, public art decorates the Valley, creating a more interesting place to live. From Scottsdale, a city that has spent the last 30 years committing itself to growing its public art collection, to

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By LAURA BURNETT

PHOTOS BY LAURA BURNETT, AZ BIG MEDIA

commissioned works near commercial office parks and public transportation stops, it’s the things we would want to stop and take a picture of that are worth a second look. With one of the country’s more mature public arts programs, Scottsdale sees the collecting of art as a commitment to the citizens, a way to provide them with a different way to look at life. Public art not only brings value to the city, but thoroughly changes its complexion, says Donna Isaac, director of Scottsdale Public Art. Around the Valley you’ll see pieces that reflect Arizona’s southwestern way of life, but you can also see pieces that were gifts, and are now recognizable all

around the country and world, like the LOVE sculpture in Scottsdale’s Civic Center Mall. Homage is paid to Frank Lloyd Wright with the construction of the Spire at the corner of Frank Lloyd Wright Boulevard and Scottsdale Road in Scottsdale. At the entrance to WestWorld in Scottsdale, a statue of three horses highlights what’s become a world-renowned facility. Downtown has its share of art too – with murals covering several walls in the area.

ONE WITH THE EAGLE One With the Eagle serves as a welcoming statue at the entrance of the Scottsdale Airpark. It’s been at the intersection of Scottsdale and

Thunderbird roads for years, and was relocated from a median to the corner after construction was done on and around the intersection a few years ago. Designed by Pat Mathiesen, it was completed in 1986. The sculpture was donated to Scottsdale Public Art collection by the Scottsdale Western Art Association and dedicated in 1989, at a ceremony with Barry Goldwater in attendance. Goldwater had been active in the group, as his son is now. With a backdrop visible through the hollow parts of the sculpture, Arizona’s nature and environment are highlighted, and the desert nature surrounding the sculpture itself only intensifies the relationship between art and how it fits in within its environment.

SPACE BETWEEN With many of the installations at public transportation stop becoming local landmarks, it’s important to understand the goal and aim of the piece, both behind the why it was created, and why it was installed. Art appears at many of the stations along the Light Rail’s route, but Valley Metro decided to do something a little differently at the station at Dorsey Lane and Apache Bouvelvard in Tempe. Where normally each station features the work of only one artist, the design of this station was split among four artists,

sharing responsibilities. Lighting, paving and sculpture work were shared, making this collaboration a broad representation of a common theme: The Space Between. New York-based Suikand Zhao created the bronze sculpture title Hands. Standing 21 feet high, it represents the coming together, and suggests conversations in different languages. Art like this at public transportation stations creates a sense of community, encouraging conversation, pride in a neighborhood and in the best of circumstances, encourages the public to try their own hand at art. 27

AZRE SOURCE LIBERTY CENTER AT RIO SALADO On a summer night in 2010, the a dam on the west end of Tempe Town Lake burst, sending nearly 750,000 gallons of water into the Salt River bed. This was the catalyst for Liberty Property Trust’s first ground-up project — a 1MSF office and industrial park on one of the last large parcels of land Tempe owned. The land had been in Tempe’s ownership for years. It was first owned by Mexico, then the U.S. government, Tempe and now Liberty Property Trust. To celebrate the land’s history (and to meet City of Tempe’s art requirement for new commercial buildings), local artist Kevin F. Berry designed upto-17-foot tall torch sculptures that represent its namesake (Liberty) as well as an agave-looking flame, a Hohokam indian basket, saguaro cactus and blue and green glass reminiscent of the Salt River near the property.

LOVE By far the most popular piece within the Scottsdale Public Art’s permanent collection, the LOVE sculpture in the Civic Center Mall has become an icon in and of itself. Though this sculpture can be seen at various places around the world, Scottsdale’s is one of the five original castings by sculptor Robert Indiana. It was purchased and given to Scottsdale by the de Sarthes of Scottsdale and the Salama-Caros of New York. The design was featured on Christmas cards, and those cards became the most popular Christmas cards issued by the Metropolitan Museum of Art. Stamps with the design also went on to be the most popular stamp that the US Postal Service ever sold. The piece is repainted annually, which is helpful for the number of wedding, prom and engagement photos it’s featured in. Completed in 1999, it’s the most wellloved piece within the collection, and a well-known landmark for locals and tourists alike.

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AZRE SOURCE MELROSE GATEWAY MONUMENT They say success doesn’t happen over night, but the Melrose Gateway Monument certainly went up overnight. Installation of this half-million-dollar project took two hours, and the operation was completed in a single night. The Melrose Gateway Monument is located at the threshold of the Melrose Neighborhood District in central Phoenix. The monument is what designer Gensler calls an “urban portal.” It embodies the character of an authentic mid-century modern aesthetic prevalent throughout the Melrose District community. The architecture of the place inspired the pattern of the monument’s skin; an abstract organic floral pattern harkening to local flora. It’s plasma cut into steel plate and fused together to form the larger gradient image.

SOLERI PEDESTRIAN BRIDGE AND PLAZA Scottsdale is a mecca for many things, but Southwestern and contemporary art are certainly two of them. The Soleri Pedestrian Bridge and Plaza is both. The artist-designed public space consists of a 100-footlong pedestrian bridge connecting the Scottsdale Waterfront to the south bank of the Arizona Canal. The $3.2 million bridge was completed in December 2010. It is anchored by two 64-foot pylons, is 20-feet wide on the south side and narrows to 15 feet on the north. Artist Paolo Soleri, a student of Frank Lloyd Wright and the man behind the experimental community Arcosanti, designed the bridge and plaza. Its purpose is to encourage awareness of humans’ connection to the sun and to provide a destination attraction for passive recreation, such as walking and jogging. The project provides a park-like setting on the canal and accommodates the historic Sun Circle Trail. This is the only bridge in the world designed by Soleri.

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AZRE SOURCE SPIRE Standing 125 tall on the southeast corner of Frank Lloyd Wright Boulevard and Scottsdale Road, the Spire has become one of Scottsdale’s most recognizable shapes since it was built in 2004. Designed by Frank Lloyd Wright originally for the state capitol building, the Spire instead stands on his namesake road in Scottsdale. The turquoise and tan design fit in with the desert landscape, but the futuristic obelisk certainly stands out at night when the lights from inside illuminate the blue glass. Wright focused on “organic architecture”, an idea that buildings should fit into their surroundings, fitting into the nature around them. Scottsdale was home to Wright’s winter residence, Taliesin West in Scottsdale.

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AZRE SOURCE

ROOSEVELT ROW MURALS Known for its hipster culture, artsy scene and First Friday events, Roosevelt Row is the place in downtown Phoenix to see art. Record stores, local restaurants and cafés line the streets of the adjacent streets, and what lines the walls of those buildings are murals. Most of the murals are works of local artists, and many are in conjunction with the businesses whose walls they line. On Roosevelt Street, birds fly up the façade of the MonOrchid, the monochromatic birds on the front turning into red and blue birds flying across the side of the building. Next to the MonOrchid is a small urban park, with benches and the former popular locale for food trucks, and the surrounding walls all feature larger-thanlife artwork. Opposite MonOrchid, on the southeast corner of Roosevelt and Second streets is the DWF Wholesale Florist, with a monochromatic sketch of a boy on a bike, which could be as seen promoting downtown Phoenix’s push to become a more walkable city. With renovations just finished earlier this year, a central stretch of Roosevelt is now deemed more pedestrian and cyclist friendly, making it even easier to see the art the city has to offer.

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HEALTHCARE

HEALTHY OPTIONS Hospital building and construction just got healthier By AMANDA VENTURA

he year is 1979. Architect Mo Stein, who spent a lot of time in St. Joe’s with his grandmother, was working as an architect on the renovation of that same hospital. “(Hospitals) smelled of ether and anesthetic,” Stein recalls. “It scared me to death.” It wasn’t until he was putting together his thesis about healthcare architecture that he realized there was a different side of healthcare. “When you spend time with physicians and nurses, you see there is a technical and personal side,” he says. “I remember learning those things early on, walking through the halls of St. Joe’s. You think technically, then you see a sick kid and understand we’re not immune to the understanding that it really is personal. It’s you and me, and that’s really important.” When it comes to daily life, what makes a healthy choice? A green smoothie instead of a bagel? Trading Netflix for an hour on your yoga mat?

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An evening jog after work? Opting for the chicken instead of a burger during a team lunch? There is a healthy choice in every decision you make. As proof, about 90 percent of health is determined by factors outside of medicine. However, that hasn’t stopped commercial real estate professionals from looking at smarter, healthier ways to construct and rehabilitate hospitals. “We spend mounds and mounds of money on a sick care system, not a system of care for disease prevention,” says Suzanne Pfister, president and CEO of St. Luke’s Health Initiatives (SLHI). ULI launched a national initiative in 2014 that “branded” the idea of building healthy places (BHP). The following year, ULI Arizona brought that challenge a bit closer to home. “ULI Arizona has really taken ahold of this initiative and has really put it into application and what it means to our unique communities,” says Adrienne Udarbe, director of Pinnacle Prevention.

Udarbe works on ULI-AZ’s Community Plan initiative and adding the health spoke to the existing program. “It just seems natural we’d have health,” Udarbe says. “It had never been represented there before. What we were able to do is leverage an existing program. It’s not something new per se. I think what’s great is we’ve had developers and planners aware of how community design affects health and well-being. I don’t think we’ve branded it before.”

Banner-University Medical Center Tucson COURTESY SHEPLEY BULFINCH

The key is collaboration between the community, healthcare, developers and municipal and county participants. “We’re not just building buildings because they’re places where people are sick,” says Stein, principal of HKS Architects and former president of American Institute of Architects’ Academy of Architecture for Health. “We are building places that deal with health and wellness. Design is a big influence on the way people work, heal and are connected to our community.”

Hospitals have been open-minded to change, Stein says, adding that workflow efficiency is on the forefront of changes being made. About 65 percent of maintenance expenses for hospitals are related to labor, according to Whole Building Design Guide, a program of the National Institute of Building Sciences. “Architects must understand we can’t just say, ‘Isn’t this building beautiful?’ We must be able to say ‘This is a wonderful, efficient

building,’” Stein says. Tim Adams, director of leadership development for the American Society for Healthcare Engineering of the American Hospital Association, works with a recently formed program called Energy to Care. It focuses on large and small changes hospitals can make that benefit the environment while reducing cost to the bottom line. Sometimes it’s just as simple as looking at simultaneous heating and cooling, Adams explains. 37

HEALTHCARE

“We are building places that deal with health and wellness. Design is a big influence on the way people work, heal and are connected to our community.” –Mo Stein, HKS Architects

“Very often, we end up heating and cooling at the same time,” he says. “That’s how older systems work. When energy was cheap that was an easy way to do it.” Regardless of the challenge of building a new hospital that will contain a piece of equipment that doesn’t even exist at the time of planning and development, Adams says building healthy environments must always come back to the patient experience. “When I got into this (30 years ago), there were still pieces of equipment that uses vacuum tubes,” Adams says. “Things have changed so dramatically with an increased interest in energy efficiency. That has a multitude of benefits to the environment, the bottom line, and, if you can reduce that use of energy, then you can take those dollars and use them for other things.” Other things includes patient experience, satisfaction and, long term, more reimbursements for hospitals. With clients’ help, HKS Architects has been able to show up to a 40 percent reduction in cost, Stein says. This is achieved through collaborative work, which his team is bringing to the largest healthcare project under construction in Arizona right now — 40 | November-December 2015

the $160 million Banner University Medical Center. “We share our digital base with our contractors,” Stein says. “We don’t have anything that’s so proprietary (that we can’t do that). That’s saving us huge amounts of time to coordinate everything before the construction time.” Healthcare architecture is just a little different that other forms of the

10 PRINCIPLES OF HEALTHY PLACES ✚ Put people first ✚ Recognize the economic value ✚ Empower champions for health ✚ Energize shared spaces ✚ Make healthy choices easy ✚ Ensure equitable access ✚ Mix it up ✚ Embrace unique character ✚ Promote access to healthy food ✚ Make it active Source: Urban Land Institute

practice, which is why the ACHA was formed about two decades ago. “Contractors are better builders when they have architects on their side,” Stein says. “It’s not surprising that they’re a little hesitant. Traditional barriers have not been broken yet. This is about how design impacts performance and resulting healthcare. People’s lives depend on this.” Getting the community involved is where Udarbe specializes. Her company collects data on incidence of disease and assesses healthy options available to residents. “We do community sessions, and we ask what (residents) would prioritize,” she says. “These efforts affect how we design and build healthy places. They’re only successful if they’re accepted and driven by the community themselves.” While Udarbe also works with city planners and economic developers, the municipalities are another key member in this pyramid of healthy living. Pfister, of SLHI, says the foundation has been focused on relationships with municipalities. “You don’t have cities with health departments, but more cities are incorporating health into their policies,” Pfsiter says. “The City of

HEALTHCARE “You don’t have cities with health departments, but more cities are incorporating health into their policies. The City of Phoenix’s General Plan … had as one of its three benefits as health. Five or eight years ago that never would have been there.” –Suzanne Pfister, president and CEO of St. Luke’s Health Initiatives

Phoenix’s General Plan … had as one of its three benefits as health. Five or eight years ago that never would have been there.” Leslie Dornfeld, owner of PLANet: A multi-disciplinary land use and community planning business, was brought into the project due to her nature of planning work for parks and recreation departments. “Health is where we live, work, pray and play,” Pfister says. To that point, Dornfeld adds that she attended state-hosted workshops to educate people on healthy communities. “It was beginning to seep into parks and recreation planning,” Dornfeld says. “It’s important to city revenues, but people are now more interested in ways to walk and get out with their kids. It’s connected to child obesity issues and needed for mental health. “I knew some people at the Department of Health,” she adds. “They know the health framework but not the design framework. I help them bridge that.” The bridge is something Dornfeld says needs to happen between all parties in building healthy places. The concept of “complete streets,” adopted by Prescott and 600 other U.S. cities, brings vibrancy and different modes of transportation to the streets. SLHI serves as a consultant for municipalities about the best ways to make a town healthier. It hosted a panel for Maricopa County, featured 150 participants, that brought together all stakeholders in food policy, from growth to compost, to find gaps in regulation. “I think we’ve made some very good steps,” Pfister says. “Some cities have 42 | November-December 2015

Leslie Dornfeld

Suzanne Pfister

been more entrepreneurial, such as Avondale and Tolleson.” There’s very little going on at the state level, Pfister says. “The cities are working with chambers, nonprofits, hospitals — it can’t just be government or the business sector (working on healthy initiatives),” Pfister says. “What we’ve helped develop is serving as a convener in these diverse interests coming together for a broader conversation. My hope is that the state will see this as an economic development driver.” “Businesses wouldn’t have said, ‘I’m in the health business,’ (a few years ago), but you talk to them now and they want bike paths and access to healthcare centers,” Pfsiter says of the changing role of developers. “It’s a civic-minded approach to development,” Dornfeld says. “Building better communities is important. Building places where people have choices and providing that choice is the most important thing to do. People are saying if I have a choice, I want to live and die healthy. ULI is providing places for people to have that choice. It builds

Mo Stein

Adrienne Udarbe

a better society.” “The two things we want people to look at is food access and active living,” says Udarbe. “It’s also not just making sure things are available but that it’s done in a way that’s culturally relevant and accepting amongst.” It’s not good enough to just show people where to buy healthy food, Pfister agrees. “It’s about taking that next step and showing them how to prepare the food,” she says. “Ask what foods are in the area and what the costs of those foods are? How easy is it to maneuver around that area? Small or large design, those two things are what everyone should keep an eye out for.” An example of healthy places in action is the recently relaunched Good Food Finder website. “I think that’s a fantastic example of something that’s already being done,” says Udarbe. “What’s great about that is not just the local foods, but they’re cognizant of the different income levels. They indicate if they accept nutrition assistance. It really transcends all income levels.”

HEALTHCARE

OPEN FOR BUSINESS Medical offices take notes from retail sector By AMANDA VENTURA

Desert Ridge Medical Campus

ospitals, for better or worse, are known for miserable Jell-O cups, ugly cafeteria trays, blah color schemes, aggressively sanitized-scented air and uncomfortable vinyl chairs. Today that is a death sentence for healthcare facilities. Networks are increasingly focused on putting the “hospital” in “hospitality” via strong branding campaigns. When the Affordable Care Act brought 32 million new patients to the healthcare market, networks needed to set up shop to bring in the customers.

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“(Hospitals asked, ‘Do we have to start thinking more retail,’” says Randy McGrane, CEO of Ensemble Real Estate Solutions. “‘How do we enhance our value?’ I’m thinking of healthcare as a continuous move toward a more consumer-driven model.” Loosely, that means a proprietary look, smell, nicer cafeteria trays and more comfortable chairs. “Having a brand and identity — an image — that brings people back to the core value is important in business, restaurants, education and healthcare,”

says Sharon Harper, CEO and cofounder of Plaza Companies. “There has been a stronger interest and focus on the branding and what that branding really means to an organization — a reminder of location, core values, consistency, quality.” The market is changing, from consolidations, to new development of hospital campuses or the recent HonorHealth merger comprised of Scottsdale Healthcare and John C. Lincoln. About five years ago, off-campus

HEALTHCARE “There has been a stronger interest and focus on the branding and what that branding really means to an organization — a reminder of location, core values, consistency, quality. – Sharon Harper, CEO and co-founder of Plaza Companies development among neighborhoods by larger hospital networks wasn’t a common commodity. Now, they’re popping up rather aggressively by HonorHealth, Dignity Health and Banner Health. This, GPE Commercial Advisors Executive Vice President Julie Johnson says, is because hospitals had undesignated “boundaries.” Now, the competition is heating up between networks and boundaries are more suggestive than years prior. Ensemble’s McGrane

says the company completed 10 such projects over the last year and has 30 more lined up over the next five years. “Market share is the name of the game,” Johnson says. “The margins on these hospitals are 2 percent or less.” A portion of success is due to taking a note from the retail sector. “We are seeing a number of healthcare practices at spaces traditionally focused on retail-only tenants,” Harper says. “Physician practices are interested in more

accessibility, better signage and lots of parking. That’s very much more retail orientated than hospital-oriented. You’ll see many medical uses in older or vacant retail spaces in our community.” Johnson adds that clinic tenants, like retailers, are looking for hard corners, high-density areas with ease of parking. “Almost all of the things on retailers’ checklists are now on health center checklists,” Johnson says. Healthcare practitioners are popping

Estrella Medical Center 46 | November-December 2015

HEALTHCARE

Rancho Santa Fe Center

up in neighborhoods where people need the services and can easily go after work. Therefore, another page healthcare is copying and pasting from the retail handbook concerns parking ratios and extended hours. Instead of spending an hour at the doctor’s office, Johnson says, patients are spending 15 minutes. That increases a need for parking. Leasing activity off-campus has been very significant, Harper says, citing the Rancho Santa Fe Center. The 80,000-square-foot property in Avondale is a mile from the West Valley Hospital and three miles from Banner Estrella, typical for off-campus facilities. Plaza Companies had created a three-year leasing plan that ended up realizing in six months, Harper says. Johnson adds that tenants are also looking for the connectivity and tech capabilities of a building, which, similar to office obsolescence, is making it difficult to move into older buildings. Additionally, tenants are looking to lease with potential build-out or expansion. For example, 48 | November-December 2015

a clinic that starts has a 1,500-squarefoot lease could eventually need 5,000-square feet. Leasing agents need to be aware of how their space designated and how quickly expansions can be Sharon Harper accommodated. “Building owners need to be proactive,” Johnson says, adding that Healthcare Trust of America is another company that has been proactive about this theory. The future of healthcare leasing is changing. Johnson says that more than half of her business for one-to-threedoctor practices that she completed a decade ago has disappeared. Now, a lot of clinics and health centers are completing land transactions. She predicts more build-to-suits and practices owning their real estate. To fill the void, Johnson has moved about 25 percent of her business

Julie Johnson

Randy McGrane

to senior housing. “People are developing senior housing instead of medical office buildings,” she says. Harper takes a broader view of healthcare’s outlook. “I think there will be more consolidations, more collaborations and more public-private university partnerships,” Harper says. “It’s an exciting and innovative field. It’s getting less expensive, yet there are more credible ways to do things.”

HEALTHCARE

Trends in Phoenix medical office buildings I

t has been over five years since the passage of the Affordable Care Act and its impact on healthcare and medical real estate is starting to be felt. After several years of uncertainty, health systems and physicians are changing the way they practice medicine to meet the increasing demand for efficient, integrated, and accessible healthcare delivery. This is steadily increasing demand for clinical outpatient space and attracting significant investor interest for medical office buildings (or MOBs). At Scottsdale-headquartered Healthcare Trust of America, we have a very broad view of trends in MOBs, owning and operating over 15 million square feet in 15 to 20 key markets across the U.S. We have been investing in Arizona for over 7 years and currently own and operate approximately 1.2 million square feet across the state. While we have seen performance in our Phoenix area properties lag behind the rest of the nation over the last several years, we are very encouraged by recent improvements. In fact, we have had our best leasing performance in this local market over the last 2 quarters than we have had at any point over the last 5 years. From our perspective, this is being driven by several key trends:

HEALTHCARE PROVIDERS ARE MOVING FORWARD Healthcare systems and physician practices have developed their strategies to compete under the ACA and the new Accountable Care Organizations (ACO’s). They have identified their key 50 | November-December 2015

RACHAEL THOMPSON Healthcare

healthcare partners and are looking for key locations to execute their plans. As a result, our tenants are now signing longer term leases for larger spaces.

PHYSICIAN GROUP CONSOLIDATION To remain cost effective in the new environment, physician practices are consolidating in order to leverage the significant investments required for new technology, electronic health records, and integrated services. Doctors are utilizing physician assistants and nurse practitioners to handle the additional patients they are seeing. Consequently we are seeing larger space requirements for new leases and expansion requirements for current Tenants. As a landlord, this gives us higher levels of credit and greater retention as physicians integrate within these locations.

COMMUNITY MEDICAL DESTINATIONS Healthcare providers are increasingly

focused on locations that are located in communities, closer and more convenient to patients. Things that previously required a hospital stay can now be completed in outpatient locations. While many physicians (primarily higher acuity specialists) still benefit from close proximity to a hospital infrastructure, we are witnessing an increasing amount of quality physician groups moving their practices out into the community. Generally these locations are hightrafficked, multi-tenanted buildings that are strategically located and include a mix of tenants and services that allow patients to receive healthcare closer to home.

QUALITY CONSCIOUS ACQUISITIONS These favorable healthcare trends and today’s low interest rate environment have increased investor interest in corecritical real estate like MOBs. This has resulted in new buyers willing to pay premium pricing – even for properties that have a questionable long-term strategic location and properties that may require landlords to sustain above market rents from tenants to meet their initial underwriting requirements. At HTA, we look for investments that complement our existing portfolio of institutional quality medical office buildings. It’s a great market, but discipline still counts over the long term. Rachael Thompson is a senior leasing associate for Healthcare Trust of America.

AMERICAN INSTITUTE OF ARCHITECTS ARIZONA

The American Institute of Architects Arizona Design Awards 2015 T

he American Institute of Architects Arizona Design Awards recognize excellence in design, planning and construction of projects located anywhere in the world that are designed by AIA Arizona architects registered and licensed in Arizona. The awards honor the highest standards of design in response to user requirements, site, context, climate and

environment. Each entry, regardless of size or classification, is judged individually on the basis of total design merit. Awards are given the categories of honor, merit and citation (in order of importance). The following awards, medals and certificates were presented to AIA Arizona members at the 2015 AIA Arizona Design Awards Gala held Oct. 3 at the Phoenix Art Museum.



2015 URBAN & REGIONAL PLANNING - HONOR AWARD  Mesa City Center

Design Team: Colwell Shelor; West 8; WEDDLE GILMORE black rock studio Owner: City of Mesa

52 | November-December 2015

2015 URBAN & REGIONAL PLANNING - CITATION AWARD

Hance Park Master Plan Design Team: WEDDLE GILMORE black rock studio; !melk Landscape Architecture: Floor Associates Owner: City of Phoenix

2015 DISTINGUISHED BUILDING CITATION AWARD

Sun Devil Fitness Complex Architect: Studio Ma, Inc. Associate Architect: Sasaki Associates Owner: Arizona State University; The Arizona Board of Regents Contractor: Gilbane Building Company

2015 UNBUILT AWARD MERIT AWARDS  Desert Bridge Residence

Architect: Chen + Suchart Studio Owner: Scott and Irene McMurray Contractor: David Mikes Portal Spas Architect: WORKSBUREAU Owner: Al Ra’ldah Investment Company



RCCA Gridshell Architect: Christopher D. Trumble Owner: Ross Creek Centre for the Arts

2015 INTERIOR ARCHITECTURE CITATION AWARDS  3256 Interior Renovation



Architect: Chen + Suchart Studio Owner: Scott Mancuso and Rie Takahata Contractor: Verge Design:Build

Falora Architect: repp + mclain design and construction Owner: Ari Shapiro Contractor: repp + mclain design and construction Reforma Cocina y Cantina Architect: repp + mclain design and construction Owner: Grant Krueger & Steve Stratigouleas Reforma LLC Contractor: repp + mclain design and construction

2015 INTERIOR ARCHITECTURE HONOR AWARD  VCSO Architect: debartolo architects Owner: visual supply company Contractor: flory construction



AIA ARIZONA PUBLIC SERVICE & SALT RIVER PROJECT 2015 ENERGY/SUSTAINABLE AWARD  Integrated Education Building at



GateWay Community College Architect: SmithGroupJJR Owner: Maricopa County Community College District Contractor: CORE Construction

2015 DISTINGUISHED BUILDING CITATION AWARDS  AzCA Playground



Architect: Christopher D. Trumble Owner: Arizona’s Children Association Contractor: Drachman Design-Build Coalition, Inc. Farmer Studios II Architect: Architekton Owner: Architekton Contractor: Bistany Architecture & Construction Yerger Residence Architect: Chen + Suchart Studio Owner: Fred & Michelle Yerger Contractor: Creative Concrete and Masonry

2015 DISTINGUISHED BUILDING MERIT AWARDS  College Avenue Commons Architect: Gensler | Architekton Owner: Arizona State University Contractor: Okland Construction bicycle haüs Architect: debartolo architects Owner: bicycle haüs Contractor: r. j. gurley Hashen Kehk Community Center Architect: Orcutt | Winslow Owner: Gila River Indian Community District 2 Contractor: Arviso Okland Construction 54 | November-December 2015

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AIA 2015 DISTINGUISHED BUILDING HONOR AWARDS  Manzanita Hall Renovation

Architect: Studio Ma, Inc. Associate Architect: Solomon Cordwell Buenz Owner: Arizona State University; The Arizona Board of Regents; American Campus Communities Contractor: Hardison/Downey Construction Inc.



Scottsdale Museum of the West Architect: Studio Ma, Inc. Associate Architect: Cawley Architects Owner: City of Scottsdale Contractor: CORE Construction; LGE Design Build Mariposa Land Port of Entry Expansion and Modernization Architect: Jones Studio, Inc. Owner: U. S. General Services Administration Contractor: Hensel Phelps White Stone Studios Design Architect: Benjamin Hall Design Record Architect: 180 degrees inc. Owner: ABT Properties LLC Contractor: 180 degrees inc.; Benjamin Hall Design

2015 GOODWIN AWARDS

Lew Wolff Training Complex at Fitch Park Addition + Renovation Architect: Gensler Owner: City of Mesa Contractor: W E O’Neil Construction Arizona State University College Avenue Commons Architect: Gensler | Architekton Owner: Arizona State University CMAR: Okland Construction

2015 TWENTY-FIVE YEAR AWARD ARROYO HOUSE Architect: Line and Space, LLC

Doug Nielsen

Dan Clevenger

Patrick Panetta

2015 ASSOCIATE AWARD

2015 EDUCATOR AWARD

2015 AIA10 AWARD

2015 AIA ARIZONA COLLEGE OF FELLOWS CHAIRMAN’S AWARD

Doug Nielsen, Associate AIA Dan Clevenger, AIA

56 | November-December 2015

John Meunier John Meunier, AIA

Patrick Panetta, AIA

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BUILDING OWNERS AND MANAGERS ASSOCIATION

58 | November-December 2015

Tech Support Property managers turn to tech for assistance By AMANDA VENTURA

Don Chestnutwood, chief building engineer for Phoenix Corporate Tower PHOTO BY MIKE MERTES, AZ BIG MEDIA

here was a time when printing was such a big deal that it was outsourced to a data input company. There was a time when typewriters were used to make manual spreadsheets. Not all tech is created equal. “What used to take weeks, can be done in hours or days,” says Karen Piper, regional operations manager for LBA Realty. Piper has been in the property management business for nearly 35 years. “The computer used to be my head,” she jokes. “I still have data and phone numbers in my head from projects 30 years ago.” Now, she and other property managers and engineers can work from home with remote access to their buildings’ systems just a touch or swipe away. “The basics of property management and what do has not changed, but how we do it has changed,” she says. “We worked just as hard today. A lot of us are working with less staff but still accomplishing the same amount of work that needs to be done for different properties.” LBA Realty’s portfolio is 4.5 million square feet and growing. Meanwhile,

the number of employees it takes to get through what is now a more automated and immediate system of management has dropped drastically over the decades. “We’re at a point that there’s an instantaneous response (expected),” Piper explains. “(We went from having) a few days to respond on a request, and now it’s down to minutes.” Tawnya Peirce, associate director at CBRE, has a team of 30 members who work on 4.5 million square feet and 20 properties stretched between Tucson and Phoenix. “Our portfolio is very fluid, as clients acquire and dispose of buildings,” Peirce says. “Last year, I brought on 2 million square feet. We added 17 team members with that. Many of those projects right now are being traded to other owners and the team will change, too.” This is where the importance of tech comes in, she says. CBRE has proprietary software that allows her to hop on any computer and access information about her portfolio. More buildings are up for sale, which has also turned the direction in 59

BOMA “There’s is a wealth of technology out there and vendors who are willing to support newer building systems, but the real issue I see is the new generation of service report technicians are not up to working on older systems. The quality, older techs are slowly retiring and putting a lot of buildings at a disadvantage." – Don Chestnut, Phoenix Corporate Tower

property management. It’s a good and bad thing, says Don Chestnutwood, chief building engineer for Phoenix Corporate Tower. The good, he says, is an active market. “I hope that it means new owners are willing to put more money into their properties to gain the efficiencies needed,” he says, adding that owners who don’t upgrade their building systems and then sell them for less than their worth aren’t making the most of the market. “My role is spend the money like you’re the owner,” Peirce says. “It empowers our people to think purposefully. It could be anything from working with a wonderful ad agency to come up with a new, energized campaign. That challenges the team and the brokers.” The recession has had a larger influence on property managers and engineers than technology, Chestnutwood says. “I find many buildings and my counterparts are stuck with what they have,” he says. “There’s is a wealth of technology out there and vendors who are willing to support newer building systems, but the real issue I see is the new generation of service report technicians are not up to working on older systems. The quality, older techs are slowly retiring and putting a lot of buildings at a disadvantage. I hear that many owners are unwilling to 60 | November-December 2015

spend money even though there are large rebates out there from service providers like SRP and APS, which in turn allow large efficiency gains in buildings lowering operational cost which lowers everyone’s bottom cost and adds value to the property. I have been very lucky to have ownership’s ear when looking to improve my building.” There are two kinds of engineers, Chestnutwood declares — proactive and reactive. “The latter seem more common nowadays,” he says, adding that proactive engineers are responsible for forecasting, maintaining and responding to the larger picture of operating buildings with changing technology. “It’s simpler than the industry markets it,” says Chestnutwood of adopting technology. The obstacle is usually the bottom line. “Not all property management companies can afford to use the software LBA or others use,” Piper says. “It’s expensive, so most companies have to be diligent in research of what they need to be using.” LBA Realty works with real estate investment trusts, or REITs, which have multiple investors and require more in-depth tracking software. “One thing is for sure every engineer needs to be connected to their building and using apps like TeamViewer or

Microsoft Direct Connect, which allow older systems to be closer to newer counterparts,” says Chestnutwood. “The big sell now is using your phone and web access for fast connection.” This is true for property managers who need to understand the cultures and tempos of different markets, if they have geographically spread portfolios or layered sectors within their portfolios. “At the rate our clients ask for information, we have to have constant touches with all of our data,” Peirce says. “Without instant access to files or budgets or financial analytics, you’re asking people to create reports. In our world, making quick decisions, means satisfied clients.” “I would just say with the technology that’s being developed, there really is a tremendous focus on new software to make it easier for companies to manage their data,” Piper says. “They’re going into all areas of what we do. Everybody now is focused on sustainability and saving our environment. The other benefit of using technology today is cut down fewer trees and less paper.” Though Peirce also uses Dropbox and Microsoft Office on her phone, she says to not underestimate a good notepad. “It’s far better when you’re meeting with a client,” she says. “When you’re sitting with someone, you want to make sure they believe they have your undivided attention.”

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BOMA he Outstanding Building of the Year, or TOBY, Awards are held annually by BOMA of Greater Phoenix. This year saw a record 13 submissions, including one in the first industrial category opened to property managers in the competition. The following finalists, if selected as winners on Friday, Nov. 13, at Renaissance Hotel Downtown, have a chance to compete at a regional, national and international level.

a. 100,000 TO 249,000 SQUARE FEET a. 3131 E. Camelback Rd., Phoenix Managed by: Lincoln Property Company b. Esplanade III 2415 E. Camelback Rd., Phoenix Managed by: CBRE, Inc. c. Northsight Financial Center 14500 N. Northsight Blvd., Scottsdale Managed by: CBRE, Inc. d. Portales Corporate Center II 4800 N. Scottsdale Rd., Scottsdale Managed by: Forum Property Services LC

62 | November-December 2015

e. 250,000 TO 499,999 SQUARE FEET e. Anchor Centre 2201 & 2231 E. Camelback Rd., Phoenix Managed by: CBRE, Inc. f. Biltmore Commerce Center 3200 E. Camelback Rd., Phoenix Managed by: Lincoln Property Company g. Max @ Kierland 16220 N. Scottsdale Rd., Scottsdale Managed by: CBRE, Inc. h. Portales Corporate Center I 4800 N. Scottsdale Rd., Scottsdale Managed by: Forum Property Services LC

BOMA MEDICAL OFFICE BUILDING i. McDowell Mountain Medical Center 9377 E. Bell Rd., Scottsdale Managed by: CBRE, Inc.

SUBURBAN OFFICE PARK (LOW-RISE) j. San Tan Corporate Center I & II 3100 & 3200 W. Ray Rd., Chandler Managed by: CBRE, Inc.

64 | November-December 2015

INDUSTRIAL OFFICE PARK k. Roosevelt Commons 2625, 2611, 2631 S. Roosevelt St. and 530 W. Alameda Dr., Tempe Managed by: LBA Realty

GOVERNMENT BUILDING l. ADEQ 1110 W. Washington St., Phoenix Managed by: Lincoln Property Company

ARIZONA ASSOCIATION FOR ECONOMIC DEVELOPMENT

The new view AAED makes a good impression By AMANDA VENTURA

oyce C. Grossman, AZED Pro and executive director of Arizona Association for Economic Development (AAED), is a life-long learner. It’s something she shares with many fellow AAED members, who are urged to educate themselves as a means to better educate businesses and others who can influence Arizona’s image. Heading into 2016, here is what Grossman thinks are the most important lessons.

WHAT CAN YOU TELL ME ABOUT THE NEXT GENERATION OF ECONOMIC DEVELOPERS? AAED is strengthening its relationship with academe. We are entering into dialogue to build curriculum that brings more graduates to the field of economic development.

HOW MANY PEOPLE ARE TRAINING THEMSELVES TO BE IN ECONOMIC DEVELOPMENT THROUGH AAED? Since 2012, the Economic Development Academy of Arizona has provided education opportunities for Arizona’s economic development professionals. In the past three years, 700 people 66 | November-December 2015

PHOTO BY MIKE MERTES, AZ BIG MEDIA

were trained in 17 classes. The academy has graduated 12 who can proudly put AZED Pro (Arizona Economic Development Professional) behind their names. Recently, more service providers have enrolled to better understand the industry or become economic development practitioners. Alongside the Academy, AAED provides a week-long basic economic development course in January. This is one of three courses brought

annually in partnership with the International Economic Development Council. The other two are held in March and November and lead to the internationally recognized title of a Certified Economic Developer (CEcD).

WHAT IS ARIZONA’S REPUTATION FROM A NATIONAL OR INTERNATIONAL PERSPECTIVE? We struggle with the perception that is painted of Arizona as having poor

AAED Membership

480

Metro Members

(Phoenix & Tucson Metro Areas Combined)

Rural

educational opportunities and state policies of “intolerance.” While efforts are underway at the capitol, led by the governor to address state funding for K-12 schools, economic developers are touting the bright spots Arizona offers, including three of the top 10 high schools in the country and two state universities internationally ranked in the top 88. In 2010, Senate Bill 1070 had a chilling effect on businesses looking at Arizona. Senate Bill 1062 followed, which if enacted would have sealed the state’s fate as a non-business friendly. Economic developers have distanced themselves from these bills. I am pleased to note that the City of Tucson and Sun Corridor, Inc. are forging a bi-national economic development program with Mexico. The Yuma County mayors, supervisors and Greater Yuma EDC have embarked on a bi-national program that encompasses Yuma County, San Luis Sonora and parts of the eastern 68 | November-December 2015

Out of State

Baja State of Mexico. The 4FRONTED initiative is further enhancing the seamless border region for international business opportunities. Several successes have already occurred due to AAED’s ongoing business relationships.

WHAT IS AN IMPORTANT ISSUE AAED PLANS TO PURSUE IN THE NEXT 12 MONTHS? Education, water and policies that impact our state reputation are on our watch list and will be addressed at our spring conference (May 4 through 6, 2016).

WHAT'S THE INTENT OF AAED'S REBRANDING? All companies/associations should take time to revisit their mission, analyze their market and see if what they are doing is relevant. Keeping things fresh and cutting edge will keep you in the game.

Men

Women

Tell me more about AAED’s reach into the rural markets. What does the organization do for them? Rural Arizona benefits from the direct access and voice AAED gives them at the legislature and the governor’s office. The organization is the clearing house for best practices being implemented at the state and national level. Attending an AAED conference places you shoulder-to-shoulder with practitioners and providers who have accomplished projects that are similar to a need in your own community. It creates networks that will help you achieve your goals. — Julie Engel, CEcD, president, Arizona Association for Economic Development; president and CEO, Greater Yuma Economic Development Corporation

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AAED

AAED REGIONAL SPOTLIGHT Member Profiles

Victor Gonzalez Economic development manager, Town of Sahuarita AAED member: 10+ years Role: AAED board member for Tucson Metro

WHAT IS THE BIGGEST ISSUE FACING YOUR REGION? In February of 2015, the Town of Sahuarita completed its ‘Blueprint for Economic Growth and Prosperity’ strategic plan. The goal of the strategy is to create a diverse, sustainable economy that supports Sahuarita’s economic growth and prosperity and outstanding quality of life ... A lack of cohesive vision and identity was a determining weakness along with lack of business park developments, perceived image of a bedroom/ retirement community and a limited economic base.

HOW IS YOUR REGION ADDRESSING THESE ISSUES? The Town of Sahuarita has taken the following measures; ● The Town of Sahuarita received a $96,000 grant from the Freeport McMoran Community Foundation for the development of a Branding and Marketing and Communication Plan. Development of the plan will provide the necessary strategy and the elements to establish a Sahuarita brand for business attraction and industry. The plan will illustrate how to best leverage notable designations, such as Safest City in AZ 2014 from Safe Choice Security News, and One of the Best Places to Live by Money Magazine. ● The Town of Sahuarita was awarded a $250,000 Rural Economic Development Grant (REDG) in April from the Arizona Commerce Authority for a sewer extension line to the Town Center Commerce Park, the first 70 | November-December 2015

planned business park in Sahuarita. Completion of the sewer extension line to Commerce Park will provide a shovel-ready site. ● The Town of Sahuarita is placing emphasis on a grow-your-own approach to diversify and strengthen the local economy by assisting small businesses with sustainability and growth strategies. The Freeport McMoran Foundation has also provided funding for small business development initiatives and the creation of the BizHUB@Town Hall, Sahuarita’s small business workspace. Larry Lucero Senior director, government relations and economic development, UNS Energy Corporation (Tucson Electric Power/UniSource Energy Services) AAED member: 25+ years Role: Elected to board to represent Southern Arizona; member of Government Affairs committee

WHAT IS THE BIGGEST ISSUE FACING YOUR REGION? With (UNS') expansive service territory, we have a statewide focus in helping to improve the quality of life for our customers. In that regard, we recognize that Arizona is uniquely positioned geographically, and along transportation corridors, as a commerce, industrial and logistics center serving markets in the Southwest, the Rocky Mountain region and Mexico ... The issue at hand is how to leverage Arizona’s regional and international strategic advantages with respect to economic development opportunities.

HOW IS YOUR REGION ADDRESSING THESE ISSUES? Our company is actively supporting the

efforts of not only AAED, but also of Arizona’s federal and state government officials, the Arizona Commerce Authority, the Arizona-Mexico Commission, the Transportation and Trade Corridor Alliance, the Canada Arizona Business Council and the many jurisdictions and economic development organizations working to expand Arizona’s economic relationships with other states, Mexico and Canada. A company such as ours can be valuable in these initiatives ... as a collaborative participant that works to minimize duplication of effort among the many involved entities. Caryn Sanchez Economicdevelopment project manager, Salt River Project AAED member: 5 years Role: Board of directors; previously served on several committees

WHAT IS THE BIGGEST ISSUE FACING YOUR REGION? Arizona’s image is a challenge that faces economic development leaders in private and public (sectors). With bills, such as SB1070 (immigration) and HB1062 (religious freedom), Arizona received national media attention that tarnished its image and subsequently affected the business climate, labeling Arizona an intolerant state. Additionally, Arizona has a bad reputation for not making education a priority.

HOW IS YOUR REGION ADDRESSING THESE ISSUES? Branding the state and region is critical to attracting capital, keeping talent in state and communicating our value proposition to prospects. Arizona needs to focus messaging on what we do well as a state, such as low tax rates, access to top talent and affordable living.

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30 YEARS OF EXCELLENCE

URBAN LAND INSTITUTE

POSITIVELY NEUTRAL ULI Arizona sparks discussions free of bias

By AMANDA VENTURA

he Urban Land Institute is a nonprofit research and education organization supported by its members, dispersed throughout 95 countries. In Arizona, Deb Sydenham, FAICP, is executive director of an awardwinning ULI District Council that approaches the industry with problemsolving programs throughout the year. No program is more well-known, though, than the intensive Trends Day — a full schedule of discussions between industry leaders on the latest hot-button issues. Sydenham weighs in on what’s coming for the organization in the next 12 months.

INFRASTRUCTURE IS ONE OF THE MOST IMPORTANT CHALLENGES TO ARIZONA’S GROWTH. WHAT ROLE IS ULI ARIZONA TAKING TO SOLVE THIS ISSUE? As a neutral convener – emphasis on neutral – ULI provides a safe forum for fundamental discussion amongst public and private sector thoughtleaders regarding Arizona’s future. Infrastructure, specifically the financing of infrastructure to support growth and redevelopment throughout the state, is at the forefront of discussions occurring throughout coffee houses, city council chambers, boardrooms and legislative offices. As noted in Emerging Trends in Real Estate©, released this year by ULI and PWC, as a nation, “the U.S. is not investing in the physical facilities needed to compete into the future. The trend here is not good.” The 76 | November-December 2015

chief investment officer of a public retirement fund wants to invest in growth markets, but he expects “less growth in areas not investing in infrastructure.” A private equity firm comments that, “Infill is the key to opportunity in strong markets, but it is a challenge when transportation and utility infrastructure is old and seriously underfunded.” The quality of infrastructure systems – including transportation, utilities, and telecommunications – is a top factor influencing real estate investment and development decisions in cities around the world, sharing a high ranking with consumer demand in terms of importance, according to a 2014 survey of public- and privatesector leaders conducted by the Urban Land Institute and EY. Arizona’s infrastructure finance toolbox is vast and varied, but is it complete? Is there broad understanding and support for the most effective tools for particular project types in today’s new economy? The questions are endless. There are no quick fixes or onesize-fits-all solutions to issues of this magnitude. ULI Arizona is working closely with organizations including Valley Partnership, NAIOP and others to facilitate collaborative conversations in the coming months that will result in teamwork and strategic action locally and at the state level. Together, we’ll lay the groundwork enabling business, community and political leaders to craft and adopt insightful and future oriented infrastructure finance strategies to forge better places. This is a cornerstone of ULI Arizona

and one of the spaces in which we continue to be most effective.

WHAT IS AN IMPORTANT DIALOGUE IN WHICH THE COMMERCIAL REAL ESTATE INDUSTRY SHOULD ENGAGE? In concert with elected leaders, the industry must help formulate sound infrastructure tools and policies that support communities and catalyze private investment in community building. This requires a new level of leadership and an ability to laserfocus on the goal and not distracted by the surrounding white noise that will continue to escalate throughout the campaign season. Our ability and capacity to forge better communities, and ultimately better returns on investment, depends on developing a shared vision and shared metrics to measure progress. What worked in the past, or even last year, may not work tomorrow. No matter the perspective or expertise, each of us has a role to play and a unique skill set to bring to the table in the development of fundamental tools and strategies that strengthen community building and resiliency. The country wasn’t built by armchair quarterbacks. It was built by people with passion, dedication and commitment to creating a better future. Arizona communities should expect no less; let’s do this.

A DECADE OF TRENDS DAYS HAS PASSED. IN ADDITION TO ATTENDANCE, WHAT MAKES THE EVENT A SUCCESS FOR YOU?

The success of Trends Day is demonstrated on a variety of levels. This one-day deep-dive explores the most current state and national land use and real estate trends, with a focus on what to expect in the future, where the best opportunities can be found and how these components affect both public- and private-sector partners. By the numbers, Trends Day maintains the distinction of being the highest attended program in the ULI District Council system, and has held that honor for the past three years. I have no doubt that we are about to make it four. An incredibly talented ULI member committee develops the curriculum each year and identifies at least one tangible aspect of the day that can be added or enhanced to raise the bar on excellence. Success is the camaraderie and bond created amongst the committee members, working tirelessly throughout the year. Success is the increasing number of women speakers â&#x20AC;&#x201C; no small feat in a historically male-dominated industry. Success is a 33 percent feedback survey response rate, when 10 percent is usually considered optimum. Success is hearing Trends Day speakers and information cited in conversations and meetings months later. Success is providing an audience the opportunity to look through a holistic lens at an issue and gain new perspective. Most importantly, Trends Day is successful when people leave with that one compelling take-away, that wow factor, that aha moment that represents the value gained by being in the room at Trends Day. 77

ULI

A PERFECT 10:

Behind a decade of ULI Arizona Trends Days By AMANDA VENTURA

rends Day is exactly as it sounds — and nothing as it sounds. It’s a day when thought-leaders congregate around panels, keynotes and between coffee cups to talk about the latest trends in development. However, it’s much more than that. It’s one day a year when every decision-maker steps out of the C-suite and shares eight valuable hours of their day with peers and up-and-comers, sharing best practices and industry insight in a neutral environment. There are no competitors at Trends Day. Everyone is on the same team, one that cares about responsible development and giving Arizona a competitive edge.

Trends Day celebrated its 10th anniversary in 2015. Over that decade, the Trends Day committee has been chaired by some of the biggest influencers in the industry. “I have been on the committee a few years, and we always try to keep it fresh and relevant,” says Dave Roderique, Trends Day chairman in 2011 and director and executive vice president of Downtown Phoenix Inc. “It is a must-attend event for real estate professionals, as we are

MEMORIES FROM A DECADE OF TRENDS DAYS: ELECTRIC LADYLAND

In 2014, Trends Day had 14 female presenters. At 33 percent, it was the highest percentage of female speakers in Trends Day history. — Tom Johnston, managing director, Savills-Studley

DEBATE CLUB

I was a big proponent of shaking up the one-dimensional delivery of information. For example, I ushered in the era of ‘Dueling Economists,’ where different points of view would be 78 | November-December 2015

presented and debated. My view was that this type of presentation would lead to a more memorable and perhaps more educational program. Shaking things up has led to other innovations, such as ‘quick hits’ and other nontraditional presentations. — Steve La Terra, managing director, Meyers Research LLC

STAGE DRIVE

Being chairman of Trends Day was a significant job and role in my career. You stand up there in front of 800 people — a very

full room — it’s all the brightest and best people in the real estate community and it’s intimidating to some extent to stand at a podium in front of a group like that. To do that, host the event and get a program that was wellreceived … was just a terrific experience. It’s one of the few organizationss dedicated to just making everybody better through education. It’s refreshing to have an organization like that. Trends Days have all been successful. — Mark Winkleman, founder, MSG Realty Partners

YOUNG BLOOD

(My favorite memory) was when the young people came to Trends (from ASU or ULI’s Young Leaders Group). They came, participated and learned. To be in the same room as real estate leaders in the industry, what a cool opportunity for them ... The leaders also had the opportunity to give back to these young leaders and they really enjoyed it, too. — Greg Bielli, president and CEO, Tejon Ranch

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Dave Roderique

Steve La Terra

Heidi Kimball

always addressing what is important at the time. We take the attendee surveys very seriously and deliver a program the following year based on those survey responses. The survey does not fall on deaf ears or go into the round file.” Through the downturn, Trends Day aimed to stay optimistic yet balanced. “The lack of a housing market recovery was surprising and uncomfortable,” says Steve La Terra, chair of the 2012 Trends Day, managing director at Meyers Research LLC and current ULI Arizona District Council chair. However, 2010 Trends Day Chair Greg Bielli, president and CEO of Tejon Ranch, shares that his biggest surprise was just how positive people were about the future of Arizona despite the times. “The intent of Trends Day is to provide a balanced outlook,” Roderique seconds. “That was probably the biggest thing. We were all up there trying to be optimistic about the future, yet it wasn’t happening.” “It’s a well-oiled machine,” adds Heidi Kimball, 2015 Trends Day chair and senior vice president of Sunbelt Holdings. From business in the sports industry

to national leaders in commercial real estate, ULI has made a name for thinking outside the box and consistently updating the format of the event. “Some of the things that we’re gravitating away from is traditional panels on industry segments,” says Mark Winkleman, 2013 Trends Day chair.

MEMBER SPOTLIGHT

Leaders Steering Committee (four years); former ULI Trends Day Committee (2 years)

Erin A. McInerney Vice president, acquisitions & development, RED Development ULI member: 7 years Role with ULI: Current chair of the Young Leaders Group, Partnership Forum (three years), Young 80 | November-December 2015

2016 TRENDS DAY

WHEN: JANUARY 20, 2016 WHERE: J.W. MARRIOTT

PHOENIX DESERT RIDGE RESORT & SPA There are dozens of other programs for outlooks and time-sensitive market updates throughout the year for Phoenix professionals, so ULI Arizona took Trends Day in a much broader direction.

WHY ARE YOU A MEMBER OF ULI? I am a member because it is the best way to learn and grow in my industry and develop one-of-a-kind relationships that are invaluable to my career. HOW HAS BEING A MEMBER AFFECTED YOUR PROFESSIONAL CAREER? I started with ULI when I was still at the early part of my career (I was in my mid-20s). I

Mark Winkleman

“We decided people didn’t want to hear the state of the market … because they can find the info in other places,” says Kimball. “They want to hear interesting things about challenging opportunities … over the next 10 years.” The woman behind the scenes of it all is ULI Arizona Executive Director Deb Sydenham. “There’s a tremendous amount of work, but the bulk of that is Deb and her staff,” Winkleman says. “I’ve been a member of a lot of organizations ... and, frankly, there isn’t anybody better than Deb at organizing events.” In terms of stacking the deck with a solid committee, members really need to be forward-thinking. “Having to set a debate topic six months before the event requires forward-thinking,” Kimball says. Note: This story omits last-minute speaker swaps, that time the committee couldn’t find Concord Eastridge founder Susan Eastridge in the crowd before her panel, that one time a keynote speaker dropped the f-bomb and other behind-the-scenes stories former chairs wouldn’t part with.

have had multiple mentors through the ULI YLG Partnership Forum program that continue to push me forward in my career. Now, I am doing deals with guys that I view as mentors, and that great “full circle” experience. At the end of the day, it’s really about the relationships. WHAT IS ONE UPCOMING TREND THAT YOU WANT TO HEAR MORE ABOUT IN THE NEXT 12 MONTHS? Evolution of antiquated real estate and how it can be revitalized to serve today’s market.

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84 | November-December 2015

Imparting Impact ULI Arizona’s AzTAP changes cityscapes

By AMANDA VENTURA

hen Arizona State Route 51 was built, traffic along the 32nd Street Corridor in Phoenix dropped from 50,000 cars a day to 18,000. While most cities could spend years and years trying to find consensus between the community, businesses, developers and city officials during such stark shifts, programs such as ULI Arizona’s Technical Assistance Panel (AzTAP) are meant to bring unbiased viewpoints to cities that may need some tough love and guidance. “I find the process thorough and unbiased,” says Mike Hammond, president and managing shareholder of Cushman & Wakefield | PICOR, who participated in an AzTAP in Bisbee. “It’s difficult to get that information when you’re trying to build consensus in a community.” Returning to the 32nd Street Corridor, when Councilman Bill Gates was elected, commercial buildings along that stretch had some of the highest vacancies in the city. “We came to a point where we said, ’It’d be great to reach some experts,’” Gates says. After securing the AzTAP panel, the corridor received a $5,000 grant from the Phoenix Industrial Development Authority. The corridor is

now shifting from an area of emptied retail to one attractive to people. Gates says he recently met with a developer working on single-family and multifamily builds. More than 100 people attended meetings about the corridor’s growth. North 32nd event has a Facebook page with 1,200 followers. In January 2014, a panel of development experts — volunteers who came at their own expense — descended upon the Town of Carefree to strategize and encourage the town to grow responsibly. Melissa Price, then a vice mayor for Carefree and now a councilwoman, was involved in ULI’s Carefree AzTAP. “The Town (of Carefree) was cautious and town council divided about spending money on any capital investment projects,” says Price. “The mayor would only entertain capital investment if it was a donation or sponsorship.” Kirsten Brown, owner and broker for Butte Realty and development entity Butte Companies, has been on both sides of an AzTAP. She participated in a panel for Fountain Hills five years before observing an AzTAP in Carefree as a prospective developer. “Carefree is a small town, so they don’t have a ton of development going

on, so some of their codes, if you will, just weren’t as current as other cities may be,” Brown explains. Brown’s company was trying to develop a luxury condo site in Carefree but needed parking codes to be updated in order to accommodate the building’s mixed-use purposes. “That had a big impact on the project’s financial feasibility,” she says. “I feel like that panel had a very significant impact on influencing the town to put some focus on economic development in their town core, what they’re now calling a village. “I just think the AzTAP panel gave them the extra confidence,” Brown adds. In Goodyear, a panel of 11 industry experts, ranging from finance to commercial industries, recommended a 40-point action strategy. Of those suggestions, Goodyear is implementing the expansion of Loop 303, south of Interstate 10, establishing a medical innovation corridor, improving arterial roads along employment corridors, recruiting and expanding employers near Phoenix-Goodyear Airport and seeking private investment for public infrastructure of shovel-ready sites. Goodyear City Manager Brian Dalke is an advisory board member of ULI Arizona as well as the recipient of 85

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Kirsten Brown

Evelyn Casuga

Brian Dalke

Bill Gates

an AzTAP. “The greatest surprise was the very specific, direct feedback from all of the participants on the panel,” says Dalke. “They did not pull punches or communicate in a way that was tailored to a specific audience. Their professional expertise is reflected in each of their comments, which are unabashedly blunt. There wasn’t a minute of their time that we can look back and say, ‘We didn’t need that information.’ Everything had value to our mission to develop Goodyear moving forward.” It’s not just the large cities within the Phoenix Metro getting AzTAP attention. “While 90 percent of ULI’s programming and engagement takes place in the Phoenix Metropolitan region, there is significant involvement by seasoned ULI thought-leaders throughout Arizona

via the ULI AzTAP,” says ULI Arizona Executive Director Deb Sydenham. “AzTAP provides communities access to high-level land use and real estate professionals, bringing their vast expertise to bear on local land use planning, development and redevelopment challenges.” Evelyn Casuga, of Central Arizona College and formerly APS, has seen two cities undergo AzTAP programs. “It brings expertise there’s no way the smaller communities can afford to have in their backyard,” Casuga says. “The rural communities in Arizona are the diamonds in the rough.” Eloy and Bisbee are among the Pinal and Cochise counties’ cities getting “tapped” by ULI Arizona. “In Eloy, revitalizing and positioning the downtown drove the discussion; In Cochise County, the focus centered around rural

MEMBER SPOTLIGHT

to continue to learn and build relationships with my peers in the industry who are working to have a positive impact on the economic development of our community.

Jeff Mongan Partner, The Athens Group ULI member: More than 20 years Role with ULI: Chair, UrbanPlan Committee and mentor in ULI Partnership Forum WHY ARE YOU A MEMBER OF ULI? ULI provides a forum for learning and sharing best practices with the leaders of the real estate industry. I want 86 | September-October 2015

HOW HAS BEING A MEMBER AFFECTED YOUR PROFESSIONAL CAREER? ULI has positively affected my career in many ways. Over 10 years ago, I became a member of the Recreational Development Council, one of ULI’s national product councils, which gave me an opportunity to build relationships with other executives who specialize in resort and recreational development. I was fortunate to be part of the council leadership team which dramatically accelerated the relationship building with my peers in the industry. At the

Mike Hammond

Melissa Price

open spaces impacted by changing development patterns and economic conditions; And in Bisbee, the ULI panel analyzed strengths to leverage in attracting new development, offered insight relative to market potential and identified redevelopment opportunities,” Sydenham says. “I would encourage all towns and cities to take advantage of the opportunity to exchange ideas, information and experiences from these industry leaders and policy makers who are dedicated to creating and sustaining vibrant and thriving communities,” Price says. “The more we can shine a light on the resources we already have from historical or geographic aspects, I think rural Arizona can certainly and has always been an enhancement to Arizona, the brand,” Casuga concludes.

District Council level, getting involved with Urban Plan has been a great opportunity to utilize my professional experience to work with high school students learning about economics, many of whom will be the future leaders of our community. WHAT IS ONE UPCOMING TREND THAT YOU WANT TO HEAR MORE ABOUT IN THE NEXT 12 MONTHS? I’m interested in learning more about how demographic shifts and wealth transition will impact the recreational and resort development industry. For most of my career, the Baby Boomers were the driving consumer force in our industry and over the next 10 to 15 years that will continue to change.

ULI

ULI Arizona’s ‘Shark Tank’ participants get real By MERYL FISHLER

he Urban Land institute’s Arizona District Council is bringing together real deals and expert money in an event tailored after popular investment reality show “Shark Tank.” Entrepreneurs present real estate development proposals to a panel of “sharks” (read: veteran real estate investors) and an audience of real estate professionals with hope of being awarded investment capital. ULI Arizona’s “Shark Tank” event features three diverse investment proposals. Candidates are chosen based on their experience, the interest value of their deal and an ability to make a concise and captivating presentation. The top proposals are then selected as the feature presentations at the annual Shark Tank program. When

88 | September-October 2015

looking at applications, the council seeks proposals that appear to have a viable strategy and an applicant who has the ability to analyze a project and present it in a concise way, says Joe Blackbourn, Shark Tank moderator and president and CEO of Everest Holdings. “It is really about education more than anything else,” Blackbourn says. “The ‘Shark Tank’ is really intended for the audience and the applicants to learn how the financial markets react to real estate opportunities.” This year’s event — the third annual — took place Nov. 5, and the panel of expert ‘sharks’ are Meritage Homes Chairman and CEO Steve Hilton; founder and CEO of Pivotal Group, Francis Najafi; and Robert Sarver, chairman and CEO of Western

Alliance Bancorporation. “It allows people who have development ideas and unique propositions to see how an investor, someone in the business, would perceive their proposal and to help them improve their proposals where they are weak or not sound,” Hilton says. “It is more about the people in the audience potentially investing and the different opportunities.” Presenters gain exposure to more than 200 industry professionals, including an array of lenders, private investors, developers and architects who can provide capital and expertise to help bring applicants’ projects to fruition. As the program enters its third year, AZRE looked at where past tankinvested projects are now.

JASON BOYER, ARTHAUS In 2013, when architect Jason Boyer’s condominium project artHAUS was still in concept, he was selected to participate in the first Shark Tank. Boyer had 20-plus years of experience as an architect, but this was his first real development project. “What I was there to do was to really raise awareness about my project and try to generate interest in getting the financing for the project completed, which is not traditionally where my skillset lies as an architect,” Boyer says. artHAUS is a 25-unit residential urban infill development, adjacent to the Midtown Phoenix Arts and Entertainment District. The Shark Tank was an exposure point for Boyer to connect with people of influence in the Arizona real estate and development world and gave him credibility in the community. Shark Tank also provided Boyer with feedback. Everything the sharks said has ultimately come true in one form or another, Boyer says. Boyer didn’t get a deal right out of the gate, but what he did get was a group of people interested in him and his project, as well as people willing to answer the phone when he called. Boyer says he believes what the sharks liked about his proposal was the the project’s temporal relevancy. He says his pitch was well conceived, but the sharks questioned his background as developer due to his lack of depth in that area up to that point. This was something he was very aware of as a hurdle, but things weren’t over for artHAUS.

Jason Boyer at artHAUS. PHOTO BY LAURA BURNETT, AZ BIG MEDIA “In the end, the way I got my project funded was through a combination of relationships and just tenacity (by) sticking to it and believing in the project and the merits of the project,” he says. Construction began on artHAUS in May and is expected to be completed in May 2016. “(Shark Tank) is a voice for up-andcoming entrepreneurial developers in town to get out there,” Boyer says. “It raises awareness for young professionals who have great ideas and are looking for a venue to voice them.”

MEMBER SPOTLIGHT Silvia Urrutia Director of housing and healthcare, Raza Development Fund ULI member: 1 year

WHY ARE YOU A MEMBER OF ULI? Public private partnership HOW HAS BEING A MEMBER AFFECTED YOUR PROFESSIONAL CAREER? Exposure to other professionals has been a great experience. There are wonderful people involved who are very committed to sharing their time and knowledge.

NICK ANDREWS, FAMILY FUN CENTERS OF AMERICA Nick Andrews is a developer, real estate broker and president and CEO of Fun Centers of America. Andrews pitched Fun Centers of America at Talking Stick Resort to the Shark Tank in 2014. The center would be one of the largest and most technologically advanced family entertainment center of its kind. “The difference between our project and the other projects is that the other projects were straight real estate and ours is real estate with operations,” Andrews says. The entertainment facility is just fewer than 67,000 square feet, based on the architectural renderings, and is on approximately six acres of land. The center will specialize in family fun and cater to K-12 students with rock climbing, go-karts and themed birthday party rooms, among the attractions. “It is like Dave & Buster’s meets Crackerjaxs, but with all the new games and attractions that recently came out,” Andrews says. For his presentation, Andrews says 89

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Nick Andrews of Family Fun Center of America. PHOTO BY ROBIN SENDELE, AZ BIG MEDIA the beauty of the project was that his team already had the ball rolling with its lease at Salt River Fields — a shared services agreement, business plan, private placement documentation, subscription agreements prepared by Family Fun Centers of America’s legal team and had everything it needed to begin raising capital. The key for the presentation was to take the main points of the business plan and lay it out in a way that people clearly understand in a short amount of time, Andrews says. “There is nothing like (the Shark Tank),” he says. “How cool is that, guys like me and my partner who are 92 | November-December 2015

visionaries doing amazing family fun type projects here in town have the opportunity to pitch our case to some of the brightest minds in the real estate industry in front of 200 plus Urban Land Institute members, which are notably some of the brightest people in town?” For Andrews, Shark Tank provided exposure and a learning experience. At the end of it, he says, he came away with more confidence about the project.

JANET LEPAGE, DOLCE VILLAGIO Janet LePage has been actively investing in Phoenix since 2008 and is the founder of Western Wealth Capital

Ltd., which provides investment properties in high-growth markets. LePage pitched for equity in the amount $2.4 million for a 37-townhome development. She purchased Dolce Villagio via short sale because the property was going to go into foreclosure. Her business plan was to put in management, normalize rents because they were below market value, improve curb appeal and to draw in the right tenant base. Two weeks before the event, the presenters undergo a pre-Shark Tank interview to prepare and tweak their proposals. “I thought I knew my stuff,” she says.

“I knew this deal very well, but in a matter of 15 minutes, it became very clear that there were a lot of things I didn’t know.” When she was onstage two weeks later, she was ready for all the sharks’ questions that ranged from how the rent per square foot compared with neighboring developments to larger macroeconomic questions. She was able to go head-to-head with three wellrespected people in the industry. “Sometimes, when people are really tough on you, it is absolutely the best experience because there was huge growth to the depth of knowledge that

I really needed to make sure I could get investors and continue to secure (funding),” she says. LePage says she believes what the sharks liked about her proposal was that she knew the microeconomics of the deal, had a tactical business plan and clearly walked them through how they were going to make money. LePage ended up receiving a deal from an audience member. “From that point forward, I have a lot more name recognition and so it added to the overall credibility of what I have been doing,” LePage says. Eight months after making a deal,

Dolce Villagio has been painted, installed new landscaping, rents have increased and everything is going exactly to plan, LePage says. When LePage purchased the property, it was making $550,000 a year and now it makes $720,000 a year. Investors have seen a return on their equity of 120 percent and LePage has done three additional deals beyond Dolce Villagio with the partner she received from Shark Tank. “It is a really fun event that puts like-minded people in a room, and great things happen when you put like mindedpeople in a room,” LePage says.

Janet LePage discusses her project, Dolce Villagio. PHOTO BY LAURA BURNETT, AZ BIG MEDIA

ULI

Evolution of a ULI Arizona member URBANPLAN

By AMANDA VENTURA

ULI

Arizona membership is united by levels of education and involvement. It begins with UrbanPlan, a partnership between the organization and select high schools that introduces students to downtown development before they head to college. At the university level, ULI Arizona works with Arizona State University’s Masters in Real Estate Development program at the W. P. Carey School of Business. ULI Arizona members mentor students before they begin their careers. From here, members can join the Young Leaders Group Partnership Forum Program — a concentrated mentorship program that hosts discussions and guest appearances by high-level executives for small groups of members under the age of 35. The next stage of membership is the associate level, at which members can join the newly formed ULI NEXT Arizona — a peerto-peer mentorship, where ULI Arizona members over the age of 35 can confidentially express their professional goals, case studies and work-life balance among competitors (and peers) in a safe environment. The final stage of membership is “full” membership, a title held by industry vets who support ULI Arizona through committee involvement and volunteering time to programs such as AzTAP.

94 | November-December 2015

Steve Hopper McKinsey & Co. UrbanPlan is a point of entry for high school students to learn about city planning, community revitalization and development. The program was part of Hopper’s senior economics class, which he took in 2006. Even though he took the class nearly a decade ago, he remembers learning how to make difficult choices that he then had to persuade a mock city council to approve. “UrbanPlan was a competition and I wanted to win,” he says. “Each team presented its recommendation on how to redevelop the neighborhood and at the end of the day, the city council (composed of Steve Hopper leaders in the real estate industry in Phoenix) selected a winner.” Hopper’s team placed second, but his positive experience with the program, he says, played a role in his decision to major in economics in college. As a business consultant, Hopper says he uses lessons taken from UrbanPlan every day. “UrbanPlan was the foundation for teaching me how to effectively approach challenging problems and present recommendations,” he says.

COLLEGE-LEVEL/MRED MEMBER

Denise Christensen Habitat Metro “I fell in love with ULI at Trends Day,” Christensen says. “I’m a life-long learner, so it spoke to me.” When Christensen got involved with ULI, she was working in a support role at Land Advisors Organization. During the economic downturn, she joined the Young Leaders Group and Partnership Forum. It’s through this mentorship program that Christensen met ASU professor Andy Conlin. A year after he first broached the idea of Christensen returning to school for her Denise Christensen master’s, she enrolled. The MRED program is a two-semester, 42-credit-hour program that works closely with organizations such as Urban Land Institute to expose students to the next steps in their careers. From Trends Day in Phoenix to ULI’s Fall Meeting in New York, ULI played an important role in Christensen’s education and career move into development. As a direct result of ULI membership, Christensen received three job offers at the end of the MRED program. “I see my ULI involvement as something that’s very much for the duration of my career,” she says.

FULL MEMBER ASSOCIATE, ULI NEXT ARIZONA MEMBER YOUNG LEADERS GROUP/ PARTNERSHIP FORUM MEMBER

Byron Sarhangian, attorney Snell & Wilmer The commercial real estate industry may get a bad rap for all its gray hair, but ULI Arizona has a robust group of 250 indivuduals under the age of 35 who are actively advancing their careers and knowledge of the industry via its Young Leaders Group. For Sarhangian, this would lead to jetsetting in the U.S. and Canada with industry leaders from DMB, Everest Holdings and The Athens Group for product council meetings. “It can be an intimidating Bryon Sarhangian experience, as someone who is young or new to the industry, to show up to events and not know anybody and then have these conversations (where you need to) get to know people as well as your industry,” he says. “ULI does a good job of educating people, new and senior, on the industry and its nuances.” Relationships are formed with an emphasis on trust and confidentiality, he says. This means members are more likely to discuss business practices than try to seek competitive edges and compete against one another at events. “As I look back on involvements I’ve had for the last six years, there has been no organization that has more significantly affected the way I practice and my relationships in the industry,” he says.

Erik Marsh, managing director Newmark Grubb Knight Frank There is a lot of buzz for the under-35 crowd. However, as Marsh will attest, there is still a lot of learning to do at the mid-career level. When ULI members graduate from the Young Leaders Group and Partnership Forum, they can now move to the next phase, co-founded by Marsh, managing director, Newmark Grubb Knight Frank. The group, called ULI NEXT Arizona, has about 30 members at press time. Its focus is on peer-to-peer mentorship instead of senior Erik Marsh members in the industry, Marsh says. The majority of members, he says, have at least six years of experience and are focused on the middle years of their careers. “ULI NEXT Arizona fills this gap between young leaders and senior members,” he says. Topics that are covered include balancing personal and professional responsibilities, as well as improving visibility and stature in the industry. Akin to the Young Leaders Group, ULI NEXT Arizona is confidential. “We’re really able to open up,” he says. “I can always pick up the phone and call someone in my group. It’s not just about calling and asking for business; it’s about asking for thoughts and structure.” While full membership isn’t always the next step for ULI associate members, Marsh says he sees it happening in the future for himself.

Bob Sharpe, president Sharpe & Associates “Over the last 20 years, the Urban Land Institute and its culture of sharing have played an important role in my personal growth as a large scale, residential developer and Rancho Sahuarita’s evolution into one of the most successful master planned communities in the country,” says Sharpe, president of Sharpe & Associates. In 1993, Sharpe acquired 3,000 acres of vacant desert destined to become the Town of Sahuarita. “I had no experience or knowledge that would help me realize my Bob Sharpe life-long vision of building a great place to live,” he says. “Since I was starting from scratch as an inexperienced 30-year-old, I quickly realized that it was important to learn from the experts everything that I possibly could about development.” Sharpe became a member in 1994, a year after he acquired the land. “I immediately sought advice from someone much smarter than me, Tucson’s most respected real estate entrepreneur, Roy Drachman, who had started out as one of the original members of ULI in the 1940s. Roy offered to get me involved with ULI and even to recommend me to be a full member on one of its prestigious development councils if I would promise to do one thing in exchange. He asked me to always give back to ULI and its members as much as I received from them. Although Roy’s request seemed liked an easy one to fulfill, I have spent the last 20 years of my life in various volunteer roles at ULI trying to repay the enormous benefits that I have derived from my membership.” 95