AZRE November/December 2017 by AZ Big Media

NOVEMBER-DECEMBER 2017

HEALTHCARE CERTAIN UNCERTAINTY

INSIDE:

EDUCATION BUILDINGS p. 30 | AIA AWARDS p. 56

ULI p. 81

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This holiday season

s we gather with family and friends this holiday season, healthcare and education are a couple hot topics most likely to generate lively conversations and heated debates around the dinner table. Luckily, this issue of AZRE covers both so you can familiarize yourself and prepare talking points for your next holiday party, if needed. The education section features a breakdown of the nearly $1 billion worth of higher education projects that will be coming down the pike as part of Gov. Doug Ducey’s higher education investment plan. It includes a list of projects proposed by ASU, NAU and UA, which are currently under review by the Arizona Board of Regents. When it comes to healthcare, the only certainty is that the future of the Affordable Care Act is uncertain. In this section, healthcare experts review five trends to watch and actions to take. This issue of AZRE also features: ■ A special section for the Arizona Association for Economic Development (AAED), which looks at the latest economic development wins in Arizona and the selling points that are helping attract and retain new industries, companies and talent. ■ A recap of the winners from the American Institute of Architecture (AIA) Arizona Chapter’s annual Design Awards. ■ An analysis of the different programs used by the Urban Land Institute’s (ULI) Arizona Chapter to improve and enhance the organization’s impact on various communities, projects, careers and the industry overall.

President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editors: David McGlothlin | Jesse A. Millard Interns: Erica Apodaca | Lauren Marshall | Nikole Tower Contributing writers: Keyvan Ghahreman | Courtney Gilstrap LeVinus | Jake Hinman | Mignonne Hollis | Cheryl Hurd Tim Lawless | Cheryl Lombard | Erin Thorburn | Deb Sydenham ART Art director: Mike Mertes Graphic designer: Bruce Andersen MARKETING/EVENTS Marketing & events manager: Cristal Rodriguez Marketing designer: Jennifer Childres OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Amanda Bruno AZ BUSINESS MAGAZINE Senior account manager: David Harken Account managers: April Rice | Cindy Kurtze AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Ann McSherry AZ BUSINESS LEADERS Director of sales: Sheri Brown RANKING ARIZONA Director of sales: Sheri King EXPERIENCE ARIZONA | PLAY BALL Director of sales: Donna Roberts

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

CREATIVE DESIGNER Director of sales: Joe Freedman AZ BUSINESS ANGELS Director of sales: Brit Kezar

AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602)277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2017 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.

2 | November-December 2017

â&#x20AC;&#x153; LOVABLE.

GLORIOUS. ELITE.

â&#x20AC;&#x201C; Les Corieri, Owner of Evening Entertainment Group

LGE Design Build has been perfecting the conception and construction of the Valley's most iconic projects for more than 23 years. But don't take our word for it. Listen to how clients, influencers and officials define our work. And there's more to come as we plan out LGE's thrilling future. Look to our next defining moment this winter.

CONTENTS

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

20 Legislative Update

26 CRE Gives Back

30 Education 36 Healthcare Trends

56 American Institute of Architects-Arizona Awards

68 Arizona Association for Economic Development

81 Urban Land Institute

On the cover: Constructed by DPR Construction and Sundt Construction, The University of Arizona Biomedical Sciences Partnership Building is part of the UA College of Medicine – Phoenix and the latest $136 million addition to the Phoenix Biomedical Campus in downtown. The project was also a winner at this year’s AIA-AZ Design Awards (p. 60) for distinguished building. 4 | November-December 2017

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

TRENDSETTERS Phoenix Skyline What do Phoenix attracts creative renters want? office tenants

Village Green, one of the nation’s largest apartment property management companies, recently completed a nationwide survey of residents regarding their attitudes toward the rental market and uncovered a growing trend. It found renters are becoming more selective and amenity-driven, especially if those amenities resemble true homes. Throughout the index, only price and location were mentioned as moreimportant factors in housing decisions. With trends such as micro-units and co-living housing growing in popularity, 48 percent of Millennials stated interest in paying more for “highend property amenities.” The survey reports, a majority of Phoenix renters “are interested in a community with a homey or high-end feel.”

The national market for skyline spaces has experienced eight straight years of occupancy growth along with record rent rates and increased demand. Although Phoenix isn’t known for its skyline, the 24/7 environment of Downtown Phoenix is attracting creative and tech tenants in droves, even from prominent first-tier markets like San Francisco and Chicago, according to JLL’s 2017 Skyline Report. JLL Managing Director John Bonnell says, “The resurgence of downtown, with an abundance of new retail and multifamily development, is attracting a variety of companies including technology ones that had previously been focused on finding creative/ collaborative space in only Downtown Tempe or South Scottsdale.” The increased attention has spurred investors to modernize properties to attract creative users and secure higher returns.

Occupied

AMENITIES RENTERS ARE SEEKING

75 69 60 %

want a community with a homey look and feel

Direct vacant Future available

want great are more interested in facilities, like a community a fully equipped that fits their gym, pool, etc. lifestyle

Canadian firm finds success in Phoenix market The second largest multifamily owner in the Phoenix area by number of units has a singular focus; create wealth through well-selected real estate investment. Founded in 2011, Canadian-based Western Wealth Capital has only invested in the Phoenix market. It has acquired 32 multifamily buildings in the Greater Phoenix area, representing 5,370 units, with a combined purchasevalue of more than $390 million. “Using our proven operating strategy, we believe there is strong potential to significantly increase net operating income in a relatively short time frame,” says Janet LePage, chief executive officer of WWC. It acquires undervalued multifamily rental properties; allocates capital to accretive improvements; optimizes operations to increase its net cash flow and valuation; refinances to return equity to investors; and, when appropriate, divests. Most recently in September, WWC acquired Marble Creek, a 244-unit rental building in Phoenix, for approximately $69,000 per unit, which is well below comparable sales.

Sublease vacant Retail

Central Arts Plaza

2020 On Central

2600 Tower

2800 Tower

Tower I

Tower II

CBIZ Plaza

3200 Central

3300 Tower

Security Title Plaza

RBA (s.f.)

475,000

247,911

323,607

370,736

418,613

419,453

266,321

344,958

363,655

219,032

190,448 RBA (s

Percent leased

83.60%

73.00%

80.40%

59.70%

94.80%

95.10%

79.90%

85.70%

89.50%

55.90%

43.10%

Perce

Year built/ renovated

1991/2006

1985/2016

1982

1985

1989

1990

1980

1984

1978

1983

1964/1988

Year bu renova

6 | November-December 2017

3800 Tower

Arizona’s first multifamily crowdfunding company A group of Arizona-based apartment real estate veterans have created Arizona’s first, exclusively multifamily, crowdfunding platform and asset management firm called Neighborhood Ventures, which consists of Co-Founder John Kobierowski, Director of Research Thomas M. Brophy and tech industry veteran Jamison Manwaring. There has never been a better time to invest in local multifamily real estate, says Kobierowksi. “Crowdfunding legislation has enabled all Arizonans, not just qualified

Economic growth fuels multifamily market Propelled by strong employment numbers and a growing number of households across the Valley, demand for apartments in Metro Phoenix remains high, according to a Marcus & Millichap multifamily report.

CONSTRUCTION: Developers will deliver 6,550 rentals this year compared to 8,100 in 2016. The most new units will be in Gilbert with 1,226, but the largest project to open is the 399-unit Nexa in Tempe. VACANCY: Rates fell to 4.3 percent at year end, 850 basis points below the peak set in 2009. RENTS: Average rent growth surpassed 6.0 percent for the third consecutive year, reaching $996 per month.

investors, an opportunity to invest in the projects and neighborhoods they want and we intend to be the go-to company in which to make those investments.” Starting in November, those interested can begin investing with as little as $1,000. Brophy says, “Prospective investors will be able to tour the property and have access to our investor portal filled with all property/ project details, custom research and on-going project updates.”

INVESTMENT: Buyers are especially active in the North Mountain submarket where there’s a large inventory of turn-key multifamily properties that can yield higher than a 7.0-percent cap rate. OUTLOOK: Demand in the North Tempe/ University submarket where 2,335 units are underway will spike due to a 10 percent rent increase and a 410-basis-point drop in the vacancy rate year-over-year in June.

3838 Tower

4000 Tower

CenturyLink Tower

U.S. Bank Center

One North Central

One Renaissance Square

Two Renaissance Square

Chase Tower

One Arizona Center

CityScape

Collier Center I

s.f.)

236,324

297,615

586,403

373,013

410,053

492,116

473,392

723,922

329,602

561,592

567,163

ent

55.20%

64.00%

82.20%

72.40%

87.30%

57.60%

62.90%

100.00%

72.30%

96.90%

92.60%

uilt/ ated

1971/1995

1965/1985

1988

1976/2017

2001

1987

1989

1973

1990

2010

2001 7

TRENDSETTERS TUCSON’S HOSPITALITY

FRENZY After not building a new hotel in Downtown Tucson for more than 30 years, the area is making up for lost time. It started in September with the opening of a 136-room AC Hotel Tucson Downtown by Marriott, which marked the arrival of the first new hotel built in Downtown Tucson in more than 30 years. Now plans are moving forward to open three more hotels, which could add as many as 560 beds to the area. In August, the Rio Nuevo Board approved a plan to reopen the Hotel Arizona adjacent to the Tucson Convention Center while also advancing construction of two other hotel projects: The Moxy at the Depot Plaza and The Caliber Hotel at the Tucson Convention Center. According to the proposal by Hotel Arizona’s owner HSL Properties, HSL and its investors will finance $20 million to renovate the 300-plus room hotel, which has been closed since 2012. Rio Nuevo Board Member Edmund Marquez describes Tucson as the largest city with a convention center and no hotel and called the announcement “a defining moment for Tucson and downtown.” HSL plans to open as a Hilton-branded hotel by January 2019.

The Moxy

Hotel Arizona

DESIGN FIRM FOR ART

Local startup connects developers with local artists

Mural at RISE Tempe: Phoenix Mountains 8 | November-December 2017

Art is often a cultural focus point within a community that can offer insights into a place’s past, present and even future while enhancing an area’s sense of place. Curator Engine, an arts management and design firm founded in 2015, specializes in incorporating local art into local projects so that each can best reflect the neighborhoods and communities where it’s found while resonating with the intended target market. “We use art to tell a client’s story,” explains Founder Tim McElligott. “Curator Engine exists to improve the visual and social environments of cities by helping local artists achieve sustainable livelihoods. We do this by making art integration easy and painless for busy decision-makers with projects designed to stand out and above in a sea of standardization. When projects stand out, the community stands out, and everyone can benefit.” Incubated by the ASU School of Art as a way to match students and alumni with jobs, Curator Engine’s clients range from multifamily to healthcare to office developers and its work includes murals, parking garage facades, interesting interior sculptures and more.

THE 13th ANNUAL RED AWARDS The Real Estate and Development Awards (RED) Arizona’s most comprehensive annual commercial real estate awards

2018 NOMINATIONS ARE OPEN The RED Awards honor the Developers, General Contractors, Architects and Broker/Brokerage teams in Arizona commercial real estate.

Deadline for Nominations is December 31st, 2017 Nominations forms are available for download at azbigmedia.com

CATEGORIES • • • •

EDUCATION K-12/ HIGHER ED. HEALTHCARE HOSPITALITY INDUSTRIAL

• • • • •

INFILL LANDSCAPE ARCHITECTURE MIXED-USE MULTI-FAMILY OFFICE

• • • •

PUBLIC PUBLIC ART RECREATION REDEVELOPMENT

• RETAIL

SPONSORSHIPS AVAILABLE! 602.424.8853 | azBIGmedia.com

EXECUTIVE PROFILE

Healing through design Local architect discovers passion for complex projects, creative healthcare solutions By ERICA APODACA

eader. Entrepreneur. Honest. Genuine. Passionate. These are just some of the words used to describe Alex Laky, founder and principal of Architecture Solutions (ARCHSOL), an architectural firm active in masterplanning, new construction, tenant improvement and renovation projects for the healthcare industry. Before graduating from the University of Arizona with an architecture degree, Laky was a truck driver and his only experience with designing buildings were drawings on his notes during school as a child. After graduation, he started working for an architecture firm in Tucson but had bigger and better dreams for his career, wife and four children. However, it was during that time when

10 | November-December 2017

Laky discovered his love for working with clients in the healthcare industry. He was offered the chance to watch an open heart surgery to help him gain a better understanding of surgeons’ needs before Laky designed the hospital’s upgraded hybrid operating room. Astounded by the precision, cleanliness and synchronized actions of the surgeons to perform the task, Laky described the operation as “phenomenal.” He says, “It’s really a symphony when you watch [the surgery].” Since then, Laky’s passion for complex projects, technical challenges and creative healthcare solutions only grew, eventually leading him to start his own architectural firm — ARCHSOL — in 2005 to provide the best environments for the healthcare industry through its projects, which include overall campus planning, administrative office buildings, education centers, patient bed towers, cancer centers, parking garages, emergency departments, data centers and more. “The beauty of working in the healthcare system is we create those environments,” says Laky. “We have a hand in whether that environment is successful or not.”

Despite the daunting complexities and pressure to provide the best, most effective solutions to those in the healthcare industry, ARCHSOL continues to grow from coast to coast and its work continues to speak for itself. In fact, ARCHSOL’s rate of repeat work for its clients totals more than 85 percent, which reflects the quality of the firm’s work and its goal to be a “collaborative strategic partner” with all of its clients. Since the start, Laky has remained humble yet optimistic about the future of the firm, which reflects his selfless nature and team mentality. His dream is for the firm to expand further beyond just himself, which is why he picked the name Architecture Solutions rather than making himself the namesake of the company. “[The firm is] for those individuals who come after me, this is for them,” Laky explains, “for them to take and to run.” Laky compares his ARCHSOL team to a rowing team. He says, if we are not working in unison, then we are left in one spot or possibly even going in circles. But when the team is in sync, then things are similar to that of the surgeons in the operating room.

AFTER HOURS Clowning around: CBRE brokers Jim Trobaugh (left) and Jami SavageGray (right) went from desk to desk in the office to collect employee donations for the Phoenix Children's Hospital, raising approximately $10,000 in one hour.

Selfless service Jami Savage-Gray always puts the community, others first By ERICA APODACA

ami Savage-Gray is known in the commercial real estate industry for being a seasoned retail services broker at CBRE’s Phoenix office, primarily focusing on tenant representation at both regional and national levels. Since starting with CBRE in 2008, Savage-Gray has closed more than $400 million worth of deals, but she is more than a successful broker to thousands of others outside of the industry. After hours, outside of work,

12 | November-December 2017

Savage-Gray lives, breathes and bleeds community service, maintaining a high degree of involvement through various charitable and philanthropic organizations. She was the president for Valley of the Sun Active 20-30 Club, which is committed to supporting local children’s charities. Savage-Gray is currently the co-chair for the 2018 Phoenix Children’s Hospital Foundation Beach Ball Gala, which is the foundation’s largest annual

fundraiser to provide healthcare for children and their families. “I feel like it’s something I am supposed to do,” she says. “It’s a part of my everyday life. I don’t know how I would just not do it.” All of Savage-Gray’s charitable work reflects her kind, selfless nature and passion to improve the lives of children and their families across the state. For instance, this year’s Beach Ball Gala, dubbed “Noche en Havana,” will benefit the expansion of the Newborn Intensive Care Unit at Phoenix Children’s. She explains the renovations will transform the emergency center by creating private rooms for parents and their babies so they can spend the final moments with their sick babies in peace and solitude. Savage-Gray says she’s grateful for the health of herself and three brothers as well as their fortunate childhoods, which she always tries to pay forward through her charitable work. In addition to her fundraising efforts, she volunteers time to help mentor young women, which includes her current role as chapter advisor for Delta Gamma, a University of Arizona sorority in Tucson. Savage-Gray also participates in different women’s youth workshops that educate young women on how to apply, interview and dress for jobs. One workshop experience that still resonates with her is when she was partnered with a young woman about to turn 18-years-old and be released from the program. Both of the young women’s parents were in jail and her dream job, her goal was to work at McDonalds, says Savage-Gray. “I will never forget how humbling that was.” It reminded her about how simple life is. Your job title, paycheck, social status doesn’t matter, she explains. “It’s about what you want to do and I’ll never forget sitting there just in awe.”

NEW TO MARKET A

HOSPITALITY A ELEMENT HOTEL AT SKYSONG DEVELOPER: Jackson Shaw; Plaza Companies; University Realty, LLC; City of Scottsdale; Holualoa Companies GENERAL CONTRACTOR: Layton Construction Company ARCHITECT: Cooper Cary LOCATION: Scottsdale & McDowell roads, Scottsdale SIZE: 99,103 SF; 153 rooms VALUE: WND START/COMPLETION: Q4 2017-Q2 2019

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MIXED-USE B PARK CENTRAL MALL REVITALIZATION DEVELOPER: Plaza Companies; Holualoa Companies GENERAL CONTRACTOR: DPR Construction ARCHITECT: richärd+bauer LOCATION: Central Avenue & Earll Road, Phoenix SIZE: 337,000 SF BROKERAGE: Plaza Companies VALUE: $57M START/COMPLETION: Q4 2017–Fall 2018

MIXED-USE C EPICENTER DEVELOPER: Johnston Properties; IPA/ Liv Communities GENERAL CONTRACTOR: Ryan Companies U.S., Inc. ARCHITECT: Whitneybell Perry LOCATION: NWC of Ray & Higley roads, Gilbert SIZE: 55,000 SF (retail); 287 units (multifamily) BROKERAGE: Newmark Knight Frank VALUE: $75M START/COMPLETION: Fall 2017-2019

INDUSTRIAL D HUB 317 DEVELOPER: Confluent Development; DPC Companies GENERAL CONTRACTOR: Graycor Construction ARCHITECT: Ware Malcomb BROKERAGE: Lee & Associates LOCATION: 317 S. 48th St., Phoenix SIZE: 225,000 SF VALUE: WND START/COMPLETION: November 2017– Spring 2018

EDUCATION E GREAT HEARTS ACADEMIES NORTH PHOENIX CAMPUS DEVELOPER: Great Hearts Arizona GENERAL CONTRACTOR: Adolfson & Peterson Construction ARCHITECT: Studio Ma BROKERAGE: Keyser Co. LOCATION: 14100 N. 32nd St., Phoenix SIZE: 93,418 SF VALUE: $17M START/COMPLETION: October 2016-August 2017

MIXED-USE F PORTRAIT AT HANCE PARK DEVELOPER: Transwestern Development Company GENERAL CONTRACTOR: MT Builders ARCHITECT: Wilder Belshaw LOCATION: SWC of Third & Willetta streets, Phoenix SIZE: 300,000 SF with 341 units (multifamily); 6,000 SF (retail); 138,000 SF (office) VALUE: WND START/COMPLETION: June 2017–Q3 2019

Warren Buffett’s vote of confidence Local REIT’s success attracts $377M from Berkshire Hathaway By DAVID MCGLOTHLIN

arren Buffett, chief executive officer for Berkshire Hathaway, is often touted as the single most well-known value investor in the world with a proven track record of long-term investments that have earned billions of dollars. That’s why Berkshire Hathaway’s $377 million investment into STORE Capital, a Scottsdale-based real estate investment trust (REIT), is a big deal. In a sense, it is a bet on retail’s future success even as prominent retailers continue to file for bankruptcy, close stores and figure out how to compete with e-commerce. “Berkshire Hathaway’s investment solidly positions STORE for continued growth, while adding measurably to our already strong financial position,” says President and Chief Executive Officer of STORE Capital Christopher H. Volk. “An investment in our company from one of history’s most admired investors represents a vote of confidence in our experienced leadership team and an affirmation of our profit-center real estate investment and management approach.” Founded in 2011, STORE Capital acquires, invests and manages single tenant operational real estate, or S.T.O.R.E. properties, hence the name STORE Capital. The majority of the company’s portfolio consist of service sector retail spaces like fitness clubs, daycares, movie theatres and restaurants instead

16 | November-December 2017

Corporate Financial Performance June 30, 2014 - June 30, 2017 (Compound Annual)

Revenue Growth............................... 36.4% Net Income Per Share Growth......... 32.6%

Investment Performance

November 18, IPO to 2014 October 15, 2017 (Compound Annual)

Total Investment Return................... 17.3% Share Price Appreciation.................. 11.7% Dividend Per Share Growth................ 7.7% Dividend Yield as of October 15, 2017........... 4.9% Source: STORE Capital

of more traditional apparel driven retail. Thus, Berkshire’s investment, representing 9.8 percent of total shares outstanding, can really be considered more of a bet on service providers, together with experiential retail and manufacturing assets. In the transaction, STORE Capital issued 18.6 million shares of company stock in a private placement to a wholly owned subsidiary of Berkshire Hathaway at a price of $20.25 per share. “We have never done a private placement of equity into a public company that we run so this is a first for that,” Volk says. The investment wasn’t an overnight decision, he adds. Berkshire actually followed the company since it went public in 2014, patiently waiting for the right time to invest. As retail reports

Stephen Taddie

Christopher Volk

emerged earlier this year detailing the potential closure of 9,000 retail stores by the end of the year, STORE’s stock price dipped. “During the first half of the year, our stock price was harmed by concerns over retailers’ fortunes because people see us as being very retail centric, which we are not,” explains Volk. Again, most of STORE’s portfolio consists of service sector properties that are not facing the same competition from online retailers and e-commerce as apparel retailers because the service sector properties are experience driven and can’t be duplicated online. Volk says, “The market for what we do is nearly $2.5 trillion in terms of asset size,” which he describes as “full of opportunity.” Since 2014, STORE has raised its dividend and stock price by 24 percent, Volk says. Most recently, the dividends STORE paid out in October were up 6.9 percent from the previous quarter, to which Volk adds, “Hopefully we can grow our cash flow per share in a similar fashion going forward and continue to raise our dividends as we have.” Similar to Volk, Stephen Taddie, co-founder and managing principal at Stellar Capital Management, sees Berkshire’s investment into STORE as a vote of confidence in the company’s management team, business model and long-term business prospects. “But the trick will be maintaining margins, if and when, interest rates trend higher due to the leverage typically used to finance commercial real estate, as there’s certainly a correlation that exists between rising interest rates and the price of real estate investment trusts,” Taddie adds.

It’s the big deals and the brokers who close them that make the market an interesting one to watch. Here are the Top 5 notable sales for the months of July, August and September. Sources: Cushman & Wakefield and Costar.

INDUSTRIAL/SALES

1850 W. ELLIOT RD., TEMPE 364,042 SF; $43,532,325 BUYER: Swire Pacific Holdings, Inc. SELLER: BCI Coca Cola Bottling Co. of L.A. BROKERAGE: JLL COCA-COLA BOTTLING 101 N. 104th Ave., Tolleson 558,355 SF; $39M BUYER: Colony Northstar, Inc. SELLER: Overton Moore Properties BROKERAGE: JLL FOOTHILLS CORPORATE CENTER 14601-14605 S. 50th St., Phoenix 144,908 SF; $18.4M BUYER: AEW Capital Management SELLER: FORT Properties BROKERAGE: JLL 7822 S. 46TH ST., PHOENIX 188,142 SF; $16.1M BUYER: Bailard SELLER: Cohen Asset Management, Inc. BROKERAGE: Lee & Associates; Cushman & Wakefield PINNACLE COMMERCE CENTER (BLDG. A) 23751 N. 23rd Ave., Phoenix 93,725 SF; $14.175M BUYER: Nicola Crosby Real Estate Investments SELLER: Orsett Properties BROKERAGE: Kidder Mathews

OFFICE/SALES

MESA FINANCIAL PLAZA 1201 S. Alma School Rd., Mesa 306,571 SF; $23M BUYER: Barker Pacific Group SELLER: Wilson Property Services, Inc. BROKERAGE: Palmer Capital, Inc. SEVILLE PROFESSIONAL CENTER 7001 N. Scottsdale Rd., Scottsdale 91,942 SF; $22.4M BUYER: EverWest Real Estate Partners SELLER: JB Matteson BROKERAGE: Cushman & Wakefield PERIMETER PARKVIEW CORPORATE CENTER 8377 E. Hartford Dr., Scottsdale 106,000 SF; $20.65M BUYER: The Roxborough Group SELLER: Troon Management Co. 101 CORPORATE CENTER 19820 N. 7th St., Phoenix 78,098 SF; $11.8M BUYER: Globe Corporation SELLER: Cavan BROKERAGE: Lee & Associates SHEA MEDICAL PLAZA 7425 E. Shea Blvd., Scottsdale 42,439 SF; $11,653,110 BUYER: Woodside Health SELLER: Irgens Partners

LAND/SALES

MULTIFAMILY/SALES

N. PIMA RD., SCOTTSDALE 85262 4,066,593 SF; $24M BUYER: M3 Companies SELLER: Desert Mountain Club, Inc. SW 40TH ST. & MCDOWELL RD., PHOENIX 85008 3,669,059 SF; $23.9M BUYER: Phoenix Retail Co., LLC SELLER: Arizona State Land Department BROKERAGE: Arizona State Land Department S. MAYO BLVD., PHOENIX 4,114,242 SF; $14.5M BUYER: JLB Mayo, LLC SELLER: D.R. Horton, Inc. SE 99TH AVE. & WILLIAMS RD., PEORIA 1,560,328 SF; $12,011,977 BUYER: Brookfield BBP Holdings (Meadows) LLC SELLER: K. Hovanian at the Meadows LLC 3320 N. 7TH AVE., PHOENIX 267,894 SF; $11.55M BUYER: Trammell Crow Company SELLER: Bashas’ Supermarkets 2979 S. PRICE RD., CHANDLER 1,613,449; $11,262,415 BUYER: Kachina Industrial Park, LLC SELLER: Colleen Goodell Knecht BROKERAGE: Lee & Associates

Redstone at SanTan Village:

Built in 2013, the 340unit multifamily complex was sold for more than $210,000 per unit in a deal brokered by Cushman & Wakefield that closed on August 14.

18 | November-December 2017

RETAIL/SALES

THE LOFTS AT RIO SALADO 1033 N. Parkside Dr., Tempe 463,848 SF; 466 units; $75.54M BUYER: Weidner Property Management, LLC SELLER: JPMorgan Chase & Co. Investment BROKERAGE: Marcus & Millichap

1610-1660 E. CAMELBACK RD., PHOENIX 32,963 SF; $23.5M BUYER: William K. Perry Farms SELLER: Crow Holdings Capital BROKERAGE: Cushman & Wakefield

VISTARA AT SANTAN VILLAGE 1725 S. Coronado Rd., Gilbert 380,000 SF; 366 units; $73.2M BUYER: Olympus Property SELLER: Cisterra Partners, LLC BROKERAGE: Cushman & Wakefield

1240 E. BASELINE RD. & 1655, 1855 & 1859 S. STAPLEY DR., MESA 77,851 SF; $21,282,128 BUYER: DSW Mesa Grand/Spectrum LLC SELLER: Vestar

REDSTONE AT SANTAN VILLAGE 1925 S. Coronado Rd., Gilbert 504,894 SF; 340 units; $71.5M BUYER: Blackstone Real Estate Income Trust SELLER: Cisterra Partners, LLC BROKERAGE: Cushman & Wakefield THE STATION ON CENTRAL 4140 N. Central Ave., Phoenix 419,212 SF; 414 units; $63.5M BUYER: MAXX Properties SELLER: HSL Properties, Inc. BROKERAGE: ARA Newmark ARROWHEAD SUMMIT 18330 N. 79th Ave., Glendale 372,760 SF; 400 units; $60.545M BUYER: Cortland Partners SELLER: PrivatePortfolio Group, LLC BROKERAGE: CBRE

PASEO LINDO 3985 S. Arizona Ave., Chandler 54,200 SF; $14.75M BUYER: Paseo Lindo Shopping Center, LLC SELLER: Red Development, LLC BROKERAGE: CBRE LAVEEN VILLAGE MARKETPLACE 5130-5240 W. Baseline Rd., Laveen 56,747 SF; $14.2M BUYER: Litwin Management Company SELLER: PASSCO Companies, LLC BROKERAGE: REZA Investment Group, Inc. 1605-1705 S. STAPLEY DR., MESA 65,123 SF; $12.87M BUYER: DSW Mesa Grand/Spectrum, LLC; Indus MGS-WB, LLC SELLER: Vestar BROKERAGE: Cushman & Wakefield

LEGISLATIVE UPDATE

Advocating for responsible economic development AAED outlines priorities for upcoming legislative session

s 2018 approaches, the Arizona Association for Economic Development (AAED) Government Affairs Committee is developing its policy priorities for the upcoming legislative session. Economic development is a fastpaced field with changing needs for success. We have met with like-minded organizations from across the state, held rural roundtables and listened to our members on the front line of economic development. Our priorities for 2018 include: • Retaining and modernizing economic development programs • Ensuring a qualified workforce and workforce pipeline • Funding transportation and infrastructure • Opposing unreasonable budget sweeps and unfunded mandates to local governments • Enhancing access to capital We will be watching the “sunset review” of the Arizona Commerce Authority (ACA). Over the last five years, the ACA has helped diversify Arizona’s economy. AAED values the ACA for its economic development leadership. From FY2013–2017, the ACA has exceeded its goals for projected jobs and capital investment, and achieved 98 percent of its goal for projected wages. In light of such strong performance and with the support of

20 | November-December 2017

Keyvan Ghahreman AAED

our partner organizations, AAED will strongly advocate for renewal of the ACA’s charter. Development of a highly qualified workforce is top-of-mind for economic development stakeholders. From enhancing STEM-related craft training to supporting the Technology and Research Initiative Fund, which uses Proposition 301 revenue, broad support exists for continuing funding and programs that fuel innovation technologies and industries. To continue diversifying our state’s economy with high wage jobs in sectors such as information technology, aerospace and healthcare, AAED will support policies that boost Arizona’s education ecosystem. AAED continues to request that the Legislature addresses future transportation needs to maximize

Arizona’s economic competitiveness. We encourage infrastructure development, maintenance and improvement. We support the proper utilization of the Highway User Revenue Fund (HURF) by opposing the diversion of funds to other governmental programs. During the economic downturn, the Arizona Legislature made local jurisdictions responsible for funding state mandates, such as road maintenance and correctional facilities costs. With a now growing economy, we request that the Legislature revisits budget sweeps and unfunded mandates. Access to capital will aid economic developers in attracting and retaining high quality jobs, and will accelerate high-growth entrepreneurship. AAED will support initiatives in this area that will allow us to stay competitive, both nationally and globally. The 2018 legislative session will see many other economic development issues arise. If you would like to participate in strengthening Arizona’s economy and shaping its economic development policies, please join AAED today at aaed.com. Keyvan Ghahreman is the Arizona Association for Economic Development’s governmental affairs chair and director of client and preconstruction services at Willmeng Construction, Inc.

Apartments will play a vital role in Arizona’s economic growth

ith the 2018 legislative session right around the corner, the Arizona Multihousing Association (AMA) is finalizing its policy priorities for the year. Similar to years past, the industry will be focusing on protecting private property rights, preserving key economic development tools and supporting policies to reduce regulatory barriers for owners, operators and developers of apartment communities in Arizona. As Arizona continues its efforts to attract large employers into the state, it is critical to preserve key economic development tools used to attract new investment. While Arizona looks to compete with its neighbors, retaining or creating new tools to attract investment and job creators will be a priority for the apartment industry. As the demand for apartment homes continues to outpace the supply of new units, it is critical, now more than ever, to ensure that policies, whether enacted at the state or local level, do not not impede the positive economic growth taking place across the state. Economic development officials seem to agree that new apartment developments are the key to building strong communities and attracting businesses to the state. Large employers are increasingly demanding diverse housing options for

DEVELOPING SKILLED LABOR REMAINS KEY TO CONTINUED ECONOMIC GROWTH

Courtney LeVinus and Jake Hinman Capitol Consulting

their employees. Look no further than cities like Seattle, San Francisco, Boston and New York where high-tech companies are having difficulties hiring due to the housing shortages. New apartment developments not only add to Arizona’s attractiveness for recruiting businesses to the state, but they also support the state’s economy in a big way. The apartment industry supports over 130,000 jobs in Arizona and provides a $13 billion economic contribution to the state. This includes the many professionals within apartment communities who work in construction, leasing, property management and maintenance. It also includes jobs in local businesses that apartment residents support with their own spending.

Over the past several years as development has increased to near pre-recession levels, the apartment industry, similar to many other industries, has been dealing with a significant skilled labor shortage. While labor shortages in constructionrelated fields have been well documented, the apartment industry is beginning to see those shortages spill over to the operational side. For example, finding skilled maintenance technicians has become increasingly difficult in recent years, and the shortages don’t seem to be letting up anytime soon. In order to address these shortages, the AMA is actively working to find new ways to recruit and train new workers, whether that’s working with nonprofit organizations, the state’s community colleges, or partnering on a broader effort to recruit and train skilled labor in the state. Courtney Gilstrap LeVinus is the interim president and CEO of the Arizona Multihousing Association and Jake Hinman is the director of government relations for Capitol Consulting on behalf of AMA.

LEGISLATIVE UPDATE

Cleared for take off Great weather makes Arizona a hotspot for drones, aerospace

t’s no secret that Arizona has the best weather in the nation and our sunny skies play a large role in the success of our aerospace industry. Arizona boasts more than 300 days of “clear sky weather” a year, making our state an ideal location for larger aerospace and defense companies and has contributed to the success of our unmanned aerial vehicle (UAV) industry. UAVs, or drones, have historically been used for unmanned flight in military operations, but they have become increasingly useful for commercial applications. Drone payload (and the sensors and equipment attached) are revolutionizing the way that data is captured in commercial building inspections. They are a safer alternative to traditional inspection methods, providing a more comprehensive analysis. But, when hiring a drone pilot, verify that they are working under the Federal Aviation Administration (FAA) Section 333 Exemption and that they are insured. The FAA is the final word in all flight regulations, for both traditional pilots and UAVs. Following the 2016 Part 107 waiver ruling (14 C.F.R. Part 107) the use of drones both recreationally and commercially has increased rapidly. With increased usage, clear regulation is needed. State and local governments nationwide have struggled to keep up on the legislative aspects of the industry.

22 | November-December 2017

Mignonne Hollis AREDF

The FAA issued the first ruling in the U.S. addressing the rights of states and municipalities to regulate drones this September in Massachusetts. This landmark ruling states that the City of Newton, Mass. did not have the authority to impose its proposed ban on UAV flights below 400 feet, over public or private property without the landowner’s permission, or require local registration of drones. The City of Newton passed the law, but the FAA struck it down. In the absence of guidance from the FAA on specific legislation needed for this technology, states and municipalities have begun to create their own laws and ordinances, which can become confusing and difficult to navigate. For Arizonans, this is not the case. Governor Doug Ducey signed legislation in May of 2016, barring

cities and towns from making their own rules legislating drones. “The drone community, from manufacturers to hobbyists to large commercial users, banded together in late 2015 to combat a dizzying array of local government proposals to regulate the use of drones within their borders,” said Cheyenne Walsh, a lawyer who’s practice focuses on government affairs at the Arizona State Capitol. “The patchwork of proposed limitations would have stifled the fledgling industry in Arizona, and prevented any chance of Arizona maintaining its reputation as a place for innovation to flourish, particularly in the aerospace industry. It quickly became clear that a statewide solution was necessary, and the coalition was able to work with Senator John Kavanagh, R-Fountain Hills, to ensure minimal regulation of unmanned aircraft going forward in Arizona.” This November, experts in the field of unmanned aerial systems will present at Arizona’s UAS Summit & Expo., held at the Sheraton Wrigleyville in Mesa, which will feature a presentation on the national mood and trajectory of UAS from Brian Wynne, President of the Association of Unmanned Vehicles Systems International. Mignonne Hollis is the executive director of Arizona Regional Economic Development Foundation, which founded the Aerospace Arizona Association in 2015.

SPONSORS

THANK YOU TO OUR 2017 SPONSORS

Alliance Bank of Arizona AZRE Ballard Spahr LLP CBRE, Inc. Colliers International Cushman & Wakefield Digital Video Networks Dynamite Paving & Sealcoat Eagle Commercial Jaburg & Wilk, P.C. NAI Horizon Paradigm Tax Group R.O.I. Properties Roofing Southwest / Sprayfoam Southwest Ryan Companies US, Inc. Sigma Contracting Small Giants Sonoran Property Maintenance, LLC VEREIT, Inc. Wells Fargo Business Bank Wells Fargo Private Bank

arizonacrew.org

LEGISLATIVE UPDATE

New CRE group formed to push property tax reform

patch the holes that already exist to treat all taxpayers more equitably. Below is a more specific synopsis of CREED’s public policy goals at the State Capitol starting in January.

 SUPPORT AND RETAIN PROPERTY TAX REFORM TO MAKE OUR STATE MORE ECONOMICALLY COMPETATIVE • Support any measure to further cut the property tax burden on commercial property, especially if the measure is applied across all commercial properties such as lowering the assessment ratio from 18 to 15 percent or elimination/ suspension of the state equalization rate.

 OPPOSE MANDATED COMMERCIAL REAL ESTATE COST INCREASES

n late August, a new not-for-profit commercial real estate trade association was established to reform commercial property taxes in Arizona, which are among the highest in the United States and a key impediment to high wage job creation. The name of the group is Commercial Real-estate Executives for Economic Development or “CREED.” The group was organized to attract the largest property owners in as many key sectors as possible and therefore be the spearhead of a larger coalition to include numerous other trade associations. Presently, the group includes on its board, six of the top eight largest industrial warehouse owners in the state; a rep for the larger grocery store owners; a large retailer; a large shopping center owner; and reps from two of the larger utilities – APS and CenturyLink. In total, the group represents a minimum of 70-million square feet under management and more than 5,000 business tenants, most of whom are small businesses. The chair of the board is Fred Stiles of EJM Development who is a past chairman of NAIOP and presently on the Arizona Chamber of Commerce and Industry Board of Directors. Kevin McCarthy, the president of the Arizona Tax Research Association, is also an exofficio member.

24 | November-December 2017

Tim Lawless CREED

In a nutshell, the top advocacy priority is to lower the current property tax assessment ratio for most businesses from 18 to 15 percent and to also reduce or abolish the state equalization property tax rate. Defensively, the group will strongly oppose any movement to impose a new statewide property tax unless such a tax were to treat businesses more equitably with other property taxpayers by eliminating a split roll and also curbing future bond/override elections that generate disparities among local taxing jurisdictions. Finally, CREED will vigorously examine and potentially oppose efforts to further “swiss cheese” the property tax code by creating further fairness disparities with narrow property tax exemptions and unjustified abatements. CREED also will look for vehicles to

• Fight any measure that increases existing property tax costs to the commercial real estate industry. • Also of concern is the imposition of a new statewide property tax especially if it does not include a reduction in the assessment ratio or reductions in inequitable K-12 secondary taxes. • Oppose measures to shift valuation increases to commercial properties, to further rifle-shot a 5-percent assessment ratio to selected taxpayers, or to enact property tax increment financing (TIF) that all favor some taxpayers over others while shifting property taxes to the rest of the commercial real estate community.

 SUPPORT PROPERTY TAX SIMPLIFICATION AND TRANSPERENCY • Support any measure to bolster “Truth in Taxation,” which keeps public pressure on all taxing units to keep their levies in line by publicly disclosing the specific burden of each entity upon all taxpayers. • Support regulatory reform measures to streamline and create more accountability for bonding election processes and to further simplify the valuation or property tax appeal processes for the county assessors. Tim Lawless is the president of Commercial Real-estate Executives for Economic Development (CREED).

Who’s who? In the City of Phoenix, you may be a lobbyist and not even know it

hen you meet, call or text with the City of Phoenix director of planning and development or head of the Economic Development Department, are you doing so as a lobbyist who needs to register with the city clerk? The City of Phoenix says the answer is yes. As a result of an ordinance amendment effective July 1, 2017, a lobbyist includes anyone who is compensated — developer, architect, design professional — to meet with a head of a City of Phoenix department or with any person who serves on a City of Phoenix board, committee, commission or the city manager for the purpose of influencing official action, which could include support for a project. Compensation includes having an interest in a business or an investment. If this is you, you must register with the City of Phoenix clerk before you interact with these city officials and disclose yourself as a lobbyist each and every time you interact with them, including emails. You are also required to report, on a quarterly basis, any expenditures made for city officials or political contributions to city council members. Non-compliance carries penalties ranging from $1,000 per violation, a class one misdemeanor and potential suspension from lobbying; essentially a ban from interacting with the non-elected city officials with whom, for years, you likely have discussed your proposed and ongoing projects. One glaring problem with this ordinance is that, much of the time, developers are seeking information and guidance from department heads. Adding increased complexity and new reporting requirements to these interactions impedes the ability for responsible developers to easily ensure they are bringing the city the best projects.

Valley Partnership does support registration of true lobbyists – those who are hired specifically to influence elected officials. However, we believe that meeting with non-elected city leaders should be encouraged, not hindered. We will work with the city (after registering and reporting, of course) in an effort to eliminate these new barriers. Cheryl L. Lombard is the president and CEO of Valley Partnership.

Cheryl L. Lombard Valley Partnership

CRE GIVES BACK

LEADING BY EXAMPLE Michael Pollack built a career and legacy around giving back By ERICA APODACA

desire to build and instill pride back into run down communities has been a catalyst for many of Michael A. Pollack’s real estate ventures throughout his 44-plus year career. He is the founder and president of Michael A. Pollack Real Estate Investments, one of the largest independently owned and operated real estate companies in Arizona, specializing in refurbishing commercial and industrial properties in the Phoenix market for more than 25 years now. Pollack’s goal is to make Arizona’s neighborhoods better one project at a time; always leaving things better than the way he found it. His impressive work on more than 11 million square feet of commercial real estate projects represents a total value of more than $1 billion, but what he gives back to the communities that he lives and works in through various charities and nonprofit organizations is even more valuable and cannot be summarized by a dollar amount.

WORLD RECORD MUSEUM: Michael Pollack in his museum of advertising art, which holds the Guiness World Records title for the largest collection of advertising statues. PHOTO BY MIKE MERTES, AZ BIG MEDIA

26 | November-December 2017

CRE GIVES BACK "I can't change what was, but I'll do my very best to influence what will be and I hope that will be in a positive direction.” – Michael Pollack He actively works in different roles and capacities with hundreds of local and national charitable organizations ranging from the Hospice of the Valley, Goodwill, Salvation Army and Red Cross, to the arts and local high schools. As a result, he has received numerous commendations, resolutions and proclamations from senators, congressional representatives, governors, mayors, city councils, county supervisors and commercial industry leaders for his achievements in renovation and community revitalization. “I can’t change what was,” says Pollack, “but I’ll do my very best to influence what will be and I hope that will be in a positive direction.” His passion for giving back derives

from the struggles of his youth, in which he learned the value of hard work and to appreciate the smaller things in life, but also from the simple satisfaction of helping others. Pollack believes “generations learn by example” like how he did from his parents Robert and Wanda Pollack. That’s why he and his wife Cheryl strive to instill the same desire to give back to the community into each of their children. Pollack says, “I hope we have instilled in them that making a positive difference in the communities they live in helps to make this world a better place.” Each one of Pollack’s children have given back to the community

in some way through their own projects, including their late son Daniel Heath Pollack. Daniel, a 31-year-old described as a giving and loving person, tragically lost his life in a hit and run accident in 2011, which spurred his father to start the Daniel Heath Pollack Memorial Foundation. “I believe by giving to charities that he would have wanted to support if he was here, I am keeping his memory alive,” Pollack explains. Most recently, the Foundation donated $50,000 to build a playground for children in Daniel’s name. At the end of the day, Pollack’s goal is always to leave a place better than how he found it whether it’s a renovation of a dying retail center through his business or donating his personal time and energy to the long list of different charities and nonprofit organizations that he’s active within.

SHOUTOUTS Here are seven other commercial real estate companies making an impact outside of the office: • Brokers Alliance: Brokers Alliance started a new incentive to raise money for different nonprofit organizations. If employees raise a certain amount each month, they get to dress down for a week. Beneficiaries of “Casual for a Cause” have included Save the Family and Phoenix Children’s Hospital. • CBRE: PurSuit of Success, CBRE’s city-wide business clothing drive, took place in October. The two-week drive benefits women and men in job training programs with much-needed access to professional clothing. • Christopher Todd Communities: The company created a nonprofit 28 | November-December 2017

called A New Lease on Life. The first outreach is a partnership with The Veterans Directory. One veteran will receive three-year rent-assistance at each of the first two Christopher Todd Communities luxury singlefamily rental home communities. • Phoenix Manufacturing: The supplier of residential, commercial and industrial evaporative cooling products donated an industrial strength mobile evaporative cooler that was big enough to cool the USA Clydesdale Preservation Foundation’s largest barn. • Pioneer Title Agency: Pioneer donated more than $250,000 to organizations in need in 2016, and in 2017 launched its latest initiative, Old School. Through Old School, every single one of Pioneer’s 600-

plus employees is granted paid time off from work to help volunteer on school projects in their community. • Sundt: The Sundt Foundation was created in 1999 and focused on the needs of disadvantaged children and adults. Getting most of its funding through employeeowner contributions, the foundation has donated more than $7.2 million to community organizations and programs that benefit U.S. military members and their families. • Wilson Electric: Wilson Electric employees and their family members traveled to Houston after Hurricane Harvey and partnered with a local organization to help them with the cleanup efforts in the aftermath of the storm.

EDUCATION

THE BIG INVESTMENT

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By DAVID MCGLOTHLIN

Gov. Duceyâ&#x20AC;&#x2122;s university bonding bill opens the doors to nearly $1 billion worth of higher education projects

30 | November-December 2017

trategic investments by both the public and private sectors over the years has proven to be successful in creating new jobs and innovations, producing meaningful and lasting economic development impacts that will span generations. For instance, a $500 million strategic investment in 2003 by the state for university infrastructure

began an era of industry growth that has reportedly resulted in a 7:1 return on investment or $3.5 billion. In turn, Arizona’s Bioscience Industry increased its number of jobs in bioscience related fields by 49 percent, which is nearly four times the national average. Arizona Governor Doug Ducey aims to build on that success after signing a landmark $1 billion investment plan

in May to accommodate the growing long-term needs of Arizona’s higher education system in order to best serve future generations and provide the workforce of tomorrow. The goal is to make sure Arizona’s public universities — Arizona State University, Northern Arizona University and The University of Arizona — have research and education

ASU BIODESIGN INSTITUTE: Designed by ZGF Architects and BWS Architects, the architectural elements of the Biodesign Institute reinforce the idea that science brings illumination, discovery and connection to our future. The master-plan for the Institute consists of four-interconnnected buildings comprising nearly 800,000 square feet. McCarthy Building Companies was selected to build the third facility, Building C, which costs $120 million and totals 188,000 square feet.

EDUCATION

facilities that can launch new discovery, attract new investment and educate students in new ways with more modern technology, says Arizona Board of Regents President Eileen Klein Eileen Klein. She thinks it signals that Arizona is really investing in its public higher education system in ways that are going to reaffirm real benefits to Arizona and Arizona businesses, which opens the door for greater investment from the private sector moving forward. “Time and again, CEOs have selected Arizona for new business locations or expansions because they want to be close to places where new talents and discoveries are being developed,” Klein explains. “We see this as a real way to have our state’s universities be real attractants for further investment.” Gov. Ducey’s University Capital Investment Program doubles down on the $500 million investment for universities from 2003. As one of only six states that require public 32 | November-December 2017

UA BIOMEDICAL SCIENCES PARTNERSHIP BUILDING: Constructed by DPR Construction and Sundt Construction, the 10-story, 245,000-square-foot, $136 million building is the latest addition to the growing Phoenix Biomedical Campus in Downtown Phoenix. As part of the University of Arizona College of Medicine – Phoenix, it is adjacent to the college’s award-winning Health Sciences Education Building and vital in bringing scientists and researchers together to discover innovative solutions to today’s most pressing health issues.

universities to pay state sales tax, the program authorizes the universities to apply the state sales tax that each created for as much as $1 billion in bonding for research and development, infrastructure and deferred maintenance projects. The new $1 billion investment plan was largely modeled after the $500 million investment from 2003. That plan enabled ASU to build the Biodesign Institute in 2003, which is a series of award winning, LEEDcertified buildings that total 350,000 square feet in Tempe. In 2003, it represented Arizona’s single largest research infrastructure investment in the biosciences. In fact, the Biodesign Institute later won Arizona’s “Excellence in Economic Development Award” in 2009 for its innovative contributions to the state’s economic growth. Throughout its first decade of

operation, an ASU study reports, the Biodesign Institute delivered an economic impact of $1.5 billion. Since then, additional investments into Arizona’s Biosciences Industry and its three public universities can be seen across Downtown Phoenix, which is home to the Phoenix Biomedical Campus, a 30-acre, city-owned medical and bioscience campus for all three universities that’s planned for more than six-million square feet of biomedical-related research, academic and clinic facilities. Its overall economic impact in Downtown Phoenix for 2013 was nearly $1.3 billion, of which $961 million is attributed to the UA College of Medicine – Phoenix presence. Additionally, the academic medical center accounted for 9,355 direct and indirect jobs in 2013. “People are attracted to places where a lot of activity is going on and

UNIVERSITY BONDING BILL’S PROPOSED PROJECT LIST Arizona State University Project List - $440M (total)

Northern Arizona University Project List - $170M (total)

The University of Arizona Project List - $400M (total)

Interdisciplinary Science & Technology Building 7 (ISTB-7) - $150 Million The new, multi-functional complex will facilitate an interdisciplinary approach to knowledge generation and cutting-edge research among various university academic programs. The facility will provide space for research labs and ancillary areas that will support the aggressive research goals of the institution. Estimated Jobs: 958 Potential Annual Research & Development Expenditures: $50 million

North Campus Science Corridor - $138 million This 162,500-square-foot space will provide the university with greatly needed wet lab space for its biomedical and chemical science programs and research. Approximately 25 percent of this building will be dedicated to R&D with an emphasis on interdisciplinary research and partner initiatives. Examples of such efforts currently at NAU include Dr. Paul Keim’s research on infectious diseases in collaboration with Tgen and Dr. Kiisa Nishikawa’s work in biomechanics/prosthetics. Estimated Jobs: 70 Potential Annual Research & Development Expenditures: $5.9 million

Physical Sciences and Engineering Building (PSEB) - $100 Million Designed to attract new external revenues to Arizona and support regional economic development, this new 115,000-square-foot building expands interdisciplinary UA physical sciences/engineering research — UA is ranked No. 2 among 515 universities — focused on imaging, space systems, optics, sensors, cybersecurity, high performance materials and targeted for application in the defense and aerospace sectors. PSEB will include advanced facilities such as clean rooms, vacuum controlled chambers, and advanced fabrication, prototyping, testing and characterization facilities with high precision equipment to support this research and for use by industry. Estimated Jobs: 385 Potential Annual Research & Development Expenditures: $16.05 million

Health Solutions Innovation Building - $80 Million The building will partner with Mayo Clinic and the City of Phoenix to enhance the biomedical research capabilities by providing critical laboratory space on the Phoenix campus. Estimated Jobs: 575 Potential Annual Research & Development Expenditures: $25 million Biodesign Expansion - $130 million This new, multi-functional research facility will meet the university’s growing need for additional laboratory space to secure and perform highquality research. It will include state-of-the-art research support space designed specifically to promote and enable the creation of cutting-edge research clusters. The design will leverage the university’s investment to maximize the opportunities for research growth. Estimated Jobs: 710 Potential Annual Research & Development Expenditures: $50 million Downtown Phoenix Biomedical Building - $50 Million This project will support ABOR’s goal of increasing capabilities and avenues for state-ofthe-art research to enhance Arizona’s economy and competitiveness. Estimated Jobs: 383 Potential Annual Research & Development Expenditures: $16 million Critical Deferred Maintenance - $30 million This will address the highest-need projects in the following categories: chilled water distribution replacement, steam/hot water replacement and tunnel upgrades, roofs, building systems and building envelopes. Of the $670 million worth of tri-university deferred maintenance, ASU is responsible for $239 million.

Renovate Science Annex (Building 20) - $48 Million Estimated Jobs: 90 Potential Annual Research & Development Expenditures: $700,000 Renovate Physical Science (Building 19) - $33 Million Estimated Jobs: 70 Potential Annual Research & Development Expenditures: $400,000 Renovate Biological Sciences (Building 21) - $57 Million Each building as part of the “Renovate Science Building 19, 20 or 21” are in the red building category, and in some cases only part of the building is suitable for use. These buildings are connected to each other by hallways making it difficult to separate the need of one building from the other. While they formerly housed lab space, much of the space no longer meets current safety standards for ceiling height or ventilation and cannot be converted for large scale modern lab usage. However, the building exteriors hold aesthetic and historical value and NAU is in need of classroom/teaching and research space in the sciences and engineering. NAU proposes to renovate the building interiors to meet the growing needs of students and research faculty in the university’s science corridor. Estimated Jobs: 90 Potential Annual Research & Development Expenditures: $600,000 Critical Deferred Maintenance - $3.5 Million Fire life safety/ code compliance, utility infrastructure and roofing projects.

Biomedicine, Bioscience, and Bioengineering Building (B3) - $100 Million Guided by the Flinn Foundation’s Arizona Biosciences Roadmap, this new 115,000-square-foot building expands interdisciplinary UA research in the area of new diagnostics, therapeutics, drug discovery, medical technologies needed to detect, treat and prevent disease – such as Alzheimer’s and other neurodegenerative diseases, cancer, heart disease, asthma/pulmonary and obesity/ metabolic disorders. B3 will include “high throughput” robotic and/or high precision life science core facilities related to genomics, cell/ systems analysis, microscopy, device prototyping and advanced computing to support this research and for use by industry. Estimated Jobs: 340 Potential Annual Research & Development Expenditures: $16.85 million Critical Deferred Maintenance - $200 million Deferred maintenance projects for nine campus buildings and campus-wide electrical and plumbing needs. Footnotes: “Estimated Jobs” refers to estimates of jobs to be located at the facility based on methodology used for planning similar projects. “Potential Annual Research & Development Expenditures” refers to estimates based on annual research per square foot assumptions.

Source: Arizona Board of Regents

EDUCATION “The resulting development from this investment will enable us to continue offering students a premier education experience while advancing ASU’s status as a worldclass research university,” – ASU President Michael Crow

“This crucial investment will allow the UA to make repairs and renovations that have been deferred for years and avert millions of dollars in accumulating disrepair. It will also support the development of research infrastructure needed to secure Arizona’s competitive advantage in a global economy,” – then-UA President Ann Weaver Hart

“This landmark investment gives us the longterm ability to provide Arizona’s university students the necessary facilities and resources to pursue their degrees and enter Arizona’s workforce,” – NAU President Rita Cheng

NAU SCIENCE & HEALTH BUILDING: The five-story, 120,000-square-foot building located on NAU’s North Campus was completed in July 2015 by Mortenson Construction and includes research labs for all areas of chemistry. NAU plans to expand space for additional research, classrooms and labs through the proposed North Campus Science Corridor project. 34 | November-December 2017

you’re seeing a complete redevelopment of Downtown Phoenix because people want to be near the universities and the opportunities those provide,” says Klein. “It’s a great example of how bringing all of these forces together can create an opportunity for learning, research and discovery.”

CALCULATIONS OF POTENTIAL IMPACT In regards to the latest $1 billion investment plan, projections estimate the short-term return over the construction phase in the first three years would yield $2.7 billion in economic impact and a 5:1 return in the first five to seven years following construction. Adding it up, that’s $7.7 billion of economic impact the first 10 years. Plus, the long-term investment would enable the universities to achieve an increase in extramural research funding of an additional $1 billion dollars each year by 2020, which would include federal and private sector research investments. In addition to making needed building repairs, the Arizona Board of Regents has set an aggressive goal of increasing research funding for Arizona’s public universities from $1.1 billion a year to $1.6 billion a year by 2025. This funding comes into the universities from grant writing institutions, the federal government and industry, which won’t happen without continued investments into research buildings.

HOW IT WORKS House Bill 2547 appropriates $27 million in ongoing investments for universities that will enable approximately $1 billion in bonding - all without raising taxes. That allocation will enable universities to sell about $1 billion in bonds for infrastructure improvements, pending approval of the proposed projects by ABOR. Once approved, public-private partnerships will be used to plan, design and build the new facilities to accommodate expanding enrollments of the universities and provide research

ASU INTERDISCIPLINARY SCIENCE & TECHNOLOGY BUILDING: Studio Ma’s building concept for ASU’s ISTB-7 would bring together regenerative and bioclimactic technologies in a highly sustainable science and technology center for the ASU Tempe campus. The proposed transit-oriented solution would include a vase atrium biome full of plants and water as well as a light rail station. Studio Ma’s goal would be for ISTB-7 to produce enough carbon, energy, water and waste to achieve triple net-zero performance.

that contributes to our state’s economy and the well-being of citizens in Arizona and around the world. Also known as a PPP, 3P or P3, public-private partnerships are longterm, cooperative agreements between two or more public and private sectors, which have historically been used for megaprojects like President Dwight Eisenhower’s System of Interstate and Defense Highways, a massive roadbuilding project that began construction in the 1950s. “It’s exciting to think about how these partnerships come together for the benefit of the economy, but in a way that produces a real demonstrable return on

investment for taxpayers in Arizona,” says Klein. She predicts this model of publicprivate partnership will continue because the state cannot afford to independently underwrite all the needs of the universities. “So having these partnerships not only help us promote new infrastructure but it also helps us promote sponsored research projects or other ways in which we can more closely meet the needs of the Arizona community with specialized development projects that really help tackle some of the challenges that businesses have for R&D or developing new talent,” Klein explains. 35

HEALTHCARE

Trends to watch, actions to take The role of real estate and building trends shaping healthcare changes BY DAVID MCGLOTHLIN

YUMA REGIONAL MEDICAL CENTER: In February, McCarthy Building Companies completed a three-year, $115 million expansion and campus renovation of the YRMC, which included a 71,118 SF Emergency Department expansion, boosting bed capacity from 37 to 72. The 35-acre campus project was designed to fulfill community needs in the area for the next 30 to 50 years. 36 | November-December 2017

espite the uncertainty surrounding healthcare reform and the future of the Affordable Care Act, an increased focus on improving population health and affordability is here to stay. By making smart decisions about the right place to deliver the right care, hospitals and patients alike can benefit from reduced costs and increased convenience while also establishing new revenue sources for hospital systems. As new revenue sources and efficiencies are explored, real estate has an increasingly influential role in achieving financial stability and sustained success. To better explain, JLL Research recently released a healthcare outlook report that explores actions healthcare systems can take to

improve the quality of patient care while reducing costs. “Focusing on making the patient experience easier, more comfortable and convenient will pay enormous dividends over the long term, no matter the uncertainty,” explains Daniel Turley, executive vice president for JLL Capital Markets. “Continued consolidation of health systems will create winners and losers in the healthcare world, which in turn will provide ample long term opportunities for real estate expertise focused on healthcare solutions.” Overall, the healthcare systems of tomorrow will need to be flexible to adapt to future healthcare changes; strategic in where and what to build; more accessible throughout communities; and utilize any and all data available to make the most well informed decisions. Regardless of the type of space health systems pursue, one common thread never changes: the need for flexibility. A building that serves as a freestanding emergency department today may need to transform into an outpatient clinic five to 10 years down the line. That’s why Kip Edwards, vice president

of development and construction at Banner Health, the state’s largest private-sector employer, says, flexibility to meet future configuration and needs is the number one must-have feature at healthcare facilities. The right place for the right care not only offers convenience and better outcomes, but it also keeps costs down for everyone – patients, providers and the healthcare systems. Real estate portfolios have grown increasingly complex as healthcare systems have expanded their networks in recent years. Thus, managing a complex network of various types of medical facilities requires a thoughtful strategy informed by location analysis. Although it reflects a much different healthcare landscape than even a decade ago, healthcare experts from JLL expect the industry’s future to become even more distributed and regionalized. This can already be seen when driving through communities today. It’s hard to not notice more ambulatory facilities, urgent care centers, retail clinics, micro-hospitals and freestanding emergency departments. Capitalizing on these trends can reap big rewards too, like when a new urgent care center can attract new patients because

TOP 5 HEALTHCARE REAL ESTATE TRENDS TO WATCH BUILD IN ROOM FOR CHANGE. More outpatient facilities are popping up all over the country, but how will these facilities need to evolve over the next decade? OPTIMIZE EXISTING REAL ESTATE TO STRETCH DOLLARS. A healthcare system’s real estate assets represent one of the largest sources of value and capital investment for the organization. A data-driven analysis can help identify opportunities to create efficiencies and drive more value from each existing facility. PUT CONVENIENCE ON CENTER STAGE TO INCREASE PATIENT ACCESSIBILITY. Hospitals are learning from retailers, making it easy for patients to stop in. DEMOGRAPHICS MATTER MORE THAN EVER. Smart site selection requires predictive and deep analytics, considering age and income levels, competitors, traffic patterns, visibility and hundreds of other factors. MORE LOCATIONS CAN MEAN MORE RISK BUT THERE ARE WAYS TO REDUCE IT. As health systems manage more and more diverse locations, rising complexity means rising risks, but an advanced management can stem the tide. SOURCE: JLL Research, 2017 Healthcare Outlook Report Series 37

HEALTHCARE

Steve Brecker

Mike Brinkley

of its position as an anchor tenant in a highly-trafficked shopping center. SRS Phoenix reports, retail clinics within brand-name retailers cost $50,000 to $250,000 to build out, are usually 150 to 250 square feet and can generate revenues upwards of $500,000 per year. In a drive to meet consumer demands for more affordable, quick and convenient access to healthcare, Banner Health purchased 32 Urgent Care Extra facilities across Arizona in August 2016 with plans to open as many as 50 Banner Urgent Care Centers in the state by the end of 2017. Jason Wood, partner at Quarles & Brady, says, micro-hospitals are another emerging trend in healthcare that can offer emergency care, diagnostic imaging and lab services, which just recently started gaining traction in Arizona. Micro-hospitals are usually less than 20,000 square feet and may have 8-15 beds for short-term inpatient observation. The goal is to make healthcare more easily accessible in order to keep individuals healthy and reduce the need for long, costly hospital visits, stays or acute care treatments. So far it’s working to a degree.

Kip Edwards

Julie Johnson

MOB SALES HIT RECORD $5.5 BILLION BY MID-2017

The first half of 2017 accounted for nearly $5.5-billion worth of medical office building deals, according to research from JLL. The biggest contributor was Healthcare Trust of America’s $2.2 billion acquisition of the Duke Realty healthcare portfolio in June. The balance of first half acquisitions was $3.2 billion, which was consistent with first half volume in 2015 and 2016. JLL believes 2017 will shatter the 2015 record of $9 billion because the marketplace has been responsive in creating new supply, whether from developer-built portfolios or via providers or investors.

HARBOR VISTA MEDICAL COMMONS: Representing the first healthcare facility developed in the Northwest Valley in 10 years, Harbor Vista Medical Commons, was a 60,000-square-foot build-to-suit project for the CIGNA Medical Group, which needed to consolidate multiple clinics into one location so the provider could better align itself with the recent changes to healthcare delivery models. 38 | November-December 2017

Daniel Turley

Jason Wood

According to the American Hospital Association, the total number of hospital beds in the United States is steadily shrinking - down from about 1.73 million beds in 2012 to 1.68 million in 2015. While that difference may seem small, it’s a signal of larger trends that are in play. The mix of services provided at a main hospital campus is shifting, with emphasis being placed on more critical and specialty care. Historically, so much of healthcare delivery occurred on or near a hospital campus without a lot of significant thought to what is customer friendly, convenient and efficient service. For many reasons, Mike Brinkley, healthcare advisor at Land Advisors Organization, predicts the trend toward providing healthcare services out into neighborhoods and communities will continue. Thus, smaller, off-campus medical office buildings (MOBs) are the hot commodity today. In fact, during 2016, 447 new MOBs were developed off campus, averaging 63,585 square feet, while only 186 were on-campus, averaging 97,949 square feet, according to Revista.

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HEALTHCARE (LEFT): As a non-profit healthcare provider, Mountain Park Health Center’s Tempe Clinic builds on a mission to embrace, enrich and engage diverse communities through design that creatively enhances every user’s interaction. INTERIOR: From the expansive reception and waiting area that brings patient, family and staff together in a colorful and nature-connected environment, to the animated and textured staff-centric breakout spaces, this clinic breathes diversity and promotes both individuality and collaboration.

5 ACTIONS TO TAKE According to JLL Healthcare Research, these actions should ensure your real estate portfolio is positioned to withstand the challenges facing the healthcare industry in the years ahead.

1 Seek flexible space. Demand for various services will inevitably evolve over time and real estate needs to keep up with changing demands for space.

2 Analyze your current portfolio. It’s important for executives to ensure that they have the right tools and people to fully analyze the data and provide a comprehensive picture of where they are today.

SOURCE: JLL Research, 2017 Healthcare Outlook Report Series

40 | November-December 2017

3 Follow the patients. It’s important for executives to carefully weigh the risks and benefits of paying a little more to be closer to where patients already spend time.

4 Leverage digital tools. The latest analytic tools can help health systems to understand market specifics and benchmark what’s happening in different communities.

5 Allocate capital to facilities management. Applying common standards and processes for all facility managers in a health system can provide consistency and ensure quality service across the board.

Supporting Brinkley’s forecast, experts from JLL predict the demand for large parcels of land for new hospital developments to continue, but at a much slower pace. Brinkley describes this as the “retail-ization of healthcare,” which has healthcare providers following the retail playbook when choosing to open new care centers in locations where patients are already spending time. For some providers, this means partnering with retailers to open clinics within supermarkets and drug stores. Others choose locations in heavily trafficked shopping centers where its brand can receive more exposure. Both benefit from cost savings and increased visibility. Thus, retail clinic locations have increased 38 percent in the last five years, according to Kalorama Information, and are positioned for significant growth in

the future, as patients continue to seek out convenient, low-cost healthcare services. That’s one of the trends motivating Brinkley’s work as the real estate advisor to Maricopa Integrated Health Systems (MIHS) for its Proposition 480 “Care Reimagined” program. Proposition 480 is a nearly $1 billion bond measure approved by voters in 2014 to modernize, rebuild and revamp the MIHS hospital campus and its entire outpatient delivery system (health clinics) to become more efficient, more customer friendly and more accessible to patients. “Ultimately, the system provides more choices by which patients can enter the provider’s care continuum,” explains Steve Brecker, executive vice president of Layton Construction Company’s healthcare division. Layton recently completed suite remodels in a MOB for the Phoenix Children’s Hospital, which is in the

process of opening a surgery center in the hospital’s east campus building, and has plans to complete three more clinics at sites around the Valley in early 2018. For Julie Johnson, principal at Avison Young and co-leader of the company’s healthcare practice group, outpatient care has become the most prominent healthcare building trend because inpatient care has become so costly. “We are also seeing more extensive and higher acuity surgeries being done in an outpatient setting to lower total cost of care, as well as allowing the patient recover at home,” she explains. Like at the newly constructed Mahoney Building near the Loop 101 and 19th Avenue where a large pain management group recently signed a lease for 14,857 square feet, which will include an outpatient surgery center in addition to a clinic and lab to maximize efficiency and patient experience. 41

HEALTHCARE

MAHONEY BUILDING: Located at the Loop 101 and 19th Avenue, the newly constructed building features an outpatient surgery center in addition to a clinic and lab to maximize efficiency and patient experience, which reflects a continuing trend in healthcare delivery.

Just like traditional retailers, robust data and analytics can help healthcare executives better understand where patients are coming from, what they want and what their future needs may be. Organizations often invest significant time and energy on identifying the right submarkets, but then fall short when it comes to analyzing the best location inside that market. Population growth statistics and new housing starts can help identify areas where more primary care physicians may be needed in the future. Meanwhile, other demographics can point to where aging populations are creating new healthcare needs. Plus, traffic data, competitor locations and drive times can all help narrow the options. The right real estate strategy can help hospitals ensure that it has facilities in the right places for the right care, but ultimately, these trends aim to provide better care to more people by increasing healthcare access and decreasing the cost while simultaneously improving population health. 44 | November-December 2017

THE GUTS OF HEALTHCARE BUILDINGS

nce a healthcare facility is built, it must be filled with the needed equipment and supplies before it can begin operations. These companies represent cutting-edge methods and products used in the construction of healthcare facilities. Iconic Design Studio utilizes materials that stay germ-free; Forward Tilt furnishes healthcare facilities to reflect the look and feel of the local neighborhood; and triARC architecture & design (triARC) designs rooms that can be an emergency room one minute and a patient room the next. The seatback of a chair may seem unimportant when considering a healthcare project worth hundreds of millions of dollars, but for Kelli Berry, owner of Iconic Design Studio, new technology like the Medical Genie Copper Mesh is always noteworthy. She says, it’s the first copper antimicrobial mesh back specifically designed for clinical areas, which prevents the growth of micro-organisms and helps mitigate secondary hospital infections. Forward Tilt’s emphasis is on delivering fun, funky spaces like the HonorHealth Arcadia Clinic that creates a unique patient experience through different furniture, finishes and art. Another large component and current trend in healthcare construction is the development of the Ambulatory Surgery Center, in which rather than renting costly operating rooms, doctors are building and operating their own. Jill B. Hamblen, partner at triARC, says “Expeditious treatment in an outpatient, non-hospital setting is saving our healthcare system significant time and money” like for Dr. Daniel Liberman of Phoenix Spine in Goodyear.

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HEALTHCARE

CERTAIN

UNCERTAINTY How renewed healthcare reform debate is shaking things up for the medical market BY JESSE A. MILLARD 46 | November-December 2017

Ryan Abbott

Rob Gramhill

Julie Johnson

Greg Vigor

HYBRID OPERATING ROOMS: Designed by ARCHSOL, these hybrid operating rooms affect the function and interaction between medical departments by allowing medical professionals to perform more complex but less invasive interventions, while serving a higher risk patient population, requiring a multidisciplinary team approach and workflow.

ommercial real estate decision makers in the healthcare space have been facing the bitter pill of uncertainty after this year’s repeal and replace efforts of the Affordable Care Act in Washington D.C. Congress has tried, and failed, to repeal and replace the Affordable Care Act multiple times, the most recent bill being Graham-Cassidy. The most common theme among the bills involved a significant reduction in the amount of federally provided Medicaid dollars to states by switching to a block-grant system.

Under Graham-Cassidy, Arizona would have received $1.7 billion less in 2020 than it would have under the Affordable Care Act, according to the Arizona Legislature’s analysis estimates in September. When the Affordable Care Act, or Obamacare as it’s often called, was initially passed and implemented, many Arizonans who previously did not have health insurance received access to care through insurance outside of emergency rooms for the first time in their lives. Through the Medicaid expansion

that was part of the Affordable Care Act, about 400,000 Arizonans were insured, according to the latest numbers from AHCCCS, Arizona’s Medicaid agency. An additional 140,000 Arizonans were able to receive their insurance through the exchanges too, according to the Centers for Medicare & Medicaid Services. With this induced demand for healthcare services from the Affordable Care Act, Arizona hospitals began efforts to meet the demand by expanding through a variety of means, says Greg Vigdor, president

HEALTHCARE and CEO of the Arizona Hospital and Healthcare Association. Hospital systems became bigger, expanding vertically and horizontally, through urgent cares, doctor’s practices and more, Vigdor says. “And, of course, these hospitals and health systems had to find the space to do that,” he says. “And finding opportunities for space was a big part of that.” This year’s failed attempts at healthcare reform have left many, who committed to plans that are based around the Affordable Care Act being the law of the land, wondering what’s next and how they should react. Large hospitals and providers who may be in the midst of long-term plans that include large expansions of space can’t just steer the ship in a new direction, Vigdor explains. These providers are most likely proceeding with their plans, whatever the outcome might be, with some angst towards what might eventually happen, he says.

48 | November-December 2017

Patient Room

BANNER-UNIVERSITY MEDICAL CENTER PHOENIX: Part of the $418 million, 700,000 SF Emergency Department and Patient Tower project includes converting all of the semi-private, doubleoccupancy rooms in the old patient tower into single-occupancy private rooms, which will slightly increase the hospital’s total bed capacity.

HEALTHCARE

YUMA REGIONAL CANCER CENTER: Designed by ARCHSOL, the new three-story 41,110-square-foot cancer center features an abundance of natural light and large shade elements, representing a continued trend to connect the indoor/outdoor relationship for health and well-being.

Meanwhile, others have nixed plans for new spaces. “I can say this for a fact, across Arizona, that there’s been a certain chilling effect in terms of new projects,” Vigdor says. “A lot of our hospitals have shared to me they had some plans on the drawing board, and once the great uncertainty we’ve been living through the last nine months with Congress and the Administration, they’ve just said, ‘we’re not planning on doing anything until we have a better idea on what’s going to happen.’”

WILL THE BUILDING END? All of this renewed debate around healthcare reform comes at an interesting time. The U.S. population is aging at a fast rate with more and more Baby Boomers reaching the age of 65 by the day. And then, Arizona’s population has been quickly growing. Maricopa County, Arizona’s most populated county, was ranked as the fastest growing county in the country last year, according to the Census Bureau. It doesn’t take an economist to know that all of this means more demand for healthcare services. 50 | November-December 2017

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HEALTHCARE SPECTRUM MEDICAL COMMONS: Sitting adjacent to Dignity Health Mercy Gilbert Medical Center, the multi-tenant medical campus developed by Irgens was completed this fall. The building has been designed by Devenney Architects and construction was handled by A.R. Mays Construction.

When the Affordable Care Act was passed and implemented, a lot of conversations about how healthcare providers will transition from “sickcare” to “wellcare,” among other noms de guerre, started. Tucson-based construction firm Sundt saw this shift manifest after the ACA’s implementation in plans by health providers from massive campuses, that were needed for “sickcare,” to smaller clinics within neighborhoods, which were needed for “wellcare,” states Sundt Vice President Ryan Abbott. There never really has been enough stability in the industry to help bring the community-based “wellcare” models to term, Abbott states. Providers think that after they make an investment to that model, they’ll fail to recover the costs due to politics, limited participation in the health exchanges, among other things, he adds. “Until healthcare reform settles down, you’ll see systems waver between larger campus planning, with more sick care occurring through emergency services (costs recovered by paid for service procedures) on one end of the spectrum and regional clinics (outcome-based treatment) on the other (costs recovered by health insurance),” Abbott states. The debates in Washington don’t seem to be negatively affecting demand for future healthcare projects, even with 52 | November-December 2017

some groups putting plans on hold, as Vigdor mentioned. But it does seem to be having an effect on what kind of projects may be built in the future. Banks don’t appear to be shy from lending to healthcare providers for expansion efforts either. Still, the potential loss of federal funding for local health providers is a concern for lenders like Alliance Bank of Arizona when considering a healthcare provider looking to grow its business, says Rob Gramhill, regional manager of the fullservice bank. But the bank takes an individual approach to each business’ needs for each industry, Gramhill says. “A number of factors aside from government funding are considered when making the decision to provide financing for a healthcare company,” he explains. Whatever the government does, Alliance Bank plans to continue to look into “smart” opportunities to provide financing for healthcare companies, Gramhill says. This is true, even after President Donald Trump cut funding for Obamacare subsidies to insurers for low-income people, which could kill the insurance marketplaces, and the possibilities of wellcare coming into fruition anytime soon.

THE SPACES FOR CARE Julie Johnson, principal at Avison Young, remembers the times before the

ACA was passed when private practices were only signing leases on a year-toyear basis. The medical office broker for Avison Young recalls that the size for these spaces were much smaller. Investors didn’t see medical office buildings as a good source of cash flow either, due to the inconsistency of the year-to-year lease renewals. But before and after the ACA was passed, hospital systems were buying up doctor’s practices, developing large projects and needing larger spaces as providers pursued assets that would enable them to deliver one-stop-shop services to their patients, Johnson says. This type of shift of providers becoming larger through a variety of means, such as acquiring practices and mergers, was helped along by Obamacare, Vigdor says. “But it was also an independent thing. It’s this thing that ‘bigger is better.’ That’s the beginning of the response due to the Affordable Care Act,” where hospitals were integrating services both horizontally and vertically, Vigdor says. These larger entities helped along the overall market when it came to medical office buildings. Now, the value of medical office buildings is practically at an all-time high from an investor’s standpoint, Johnson says. “During the transition over the last six or eight years, hospitals, in addition

HEALTHCARE MEDICAL OFFICE BUILDINGS (+20,000 SF) BY THE NUMBERS

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BANNER 755: In addition to housing multiple specialties, Banner 755 includes a café, therapy gym, classrooms, breakrooms and rooms for radiology, nuclear medicine and exams.

SOURCE: Avison Young

to building and owning its own real estate, have been doing their own leases,” she adds. With these types of leases, risk to the property owners and investors are lowered due to the high credit rankings of these hospitals, Johnson explains. Hospitals have these high credit rankings part in thanks to the added services under one roof, literally and figuratively, she adds. With possible healthcare reform hanging in the air, Johnson says those who haven’t made leasing decisions might be waiting for calmer waters. But those who bought in the past few years are committed with long-term leases, typically about ten years. And the investors? They rest easy in knowing that the higher cost of tenant improvement projects behind a new lease for a provider means the providers will be more committed to their spaces

in the long-run, Johnson says. They’re not as nervous about delaying plans for future purchases, or about their current assets at the end of the day. This is due to the corporate guarantees that are backing up the providers’ leases, Johnson says. Providers are much larger now, more so than ever, as a result from the many mergers and acquisitions that resulted in the large size of providers. “Those guarantees [from providers] are definitely very important in today’s world, because the people investing in the owners or real estate, or the loan, or whoever, they know you need the financial strength to back up a

NORTHWEST EMERGENCY CENTER: In addition to the Northwest Medical Center’s main campus in Tucson, Layton Construction also built the Northwest Emergency Center in Vail, marking the city’s first freestanding ED, which provides faster access to emergency care for North Tucson's growing population. 54 | November-December 2017

large investment,” Johnson says. And investors are seeing this financial strength from both the high credit rankings of providers, and from expected future demand. Johnson says the flipside, that more and more folks are becoming seniors, is helping medical office buildings be seen as a great investment. “The amount of people who are continually turning 65, it’s just going to require more and more healthcare providers,” Johnson says. Even with the uncertainty as to who’s going to pay for healthcare, there is one certainty: Everyone needs healthcare.

COMING NEXT ISSUE Annual Outlook: Experts analyze the emerging trends impacting commercial real estate Companies to Watch: A list of companies worth keeping an eye on in 2018 East Valley Market Update: A look at new projects in Mesa, Tempe, Chandler and Gilbert

602.277.6045 â&#x20AC;˘ azBIGmedia.com

AMERICAN INSTITUTE OF ARCHITECTS ARIZONA The American Institute of Architects

Arizona Design Awards 2017

ome wasn’t built in one day and neither were the projects, concepts and designs recognized at this year’s AIA Arizona Design Awards for excellence in architectural projects and practices under five categories: design, leadership, practice, performance and education. The goal is to honor exceptional work, both built and unbuilt, established practices of excellence, and nurture new



56 | November-December 2017

values and activities that contribute to design and design appreciation. Each project entry is individually judged regardless of size or classification and awards are given based on three categories of distinction: honor, merit and citation (listed in order of importance). Awards for this year’s winners were presented on October 20 at the Phoenix Art Museum.

ARIZONA PUBLIC SERVICE 2017 ENERGY AWARD  West-MEC Southwest Energy

Campus Architect: DLR Group; Westlake Reed Leskosky Owner: West-MEC Contractor: McCarthy Building Companies

SALT RIVER PROJECT 2017 SUSTAINABLE AWARD

Liberty Wildlife Architect: Weddle Gilmore Black Rock Studio Contractor: Okland Construction



2017 DISTINGUISHED BUILDING - HONOR AWARD  Tucson Mountain Retreat

Architect: DUST Architects Contractor: DUST Architects

2017 DISTINGUISHED BUILDING - HONOR AWARD  Environment and Natural Resources

Building (ENR2) Architect: GLHN Architects and Engineers; Richärd+Bauer Architects Owner: University of Arizona Contractor: Hensel Phelps Construction Co.



AIA



2017 DISTINGUISHED BUILDING - HONOR AWARD

Arizona State University Beus Center for Law and Society Architect: Ennead Architects; Jones Studio Inc. Owner: Arizona State University Contractor/CMAR: DPR Construction



58 | November-December 2017

2017 DISTINGUISHED BUILDING - MERIT AWARD  Casa Caldera Architect: DUST Architects Contractor: DUST Architects

2017 DISTINGUISHED BUILDING - MERIT AWARD  Barnone – Project Q Architect: DeBartolo Architects Owner: Johnston Properties, LLC Contractor: Caliente Construction

AIA





2017 DISTINGUISHED BUILDING - MERIT AWARD

Biomedical Sciences Partnership Building Architect: CO Architects in Association with Ayers Saint Gross Owner: Arizona Board of Regents Contractor: DPR Construction + Sundt Construction (Joint Venture)

60 | November-December 2017

2017 DISTINGUISHED BUILDING - MERIT AWARD

 Hazel Hare Center for Plant Science Architect: CoLab Studio & 180 Degrees Owner: Desert Botanical Garden Contractor: 180 Degrees

2017 THEORY + DESIGN AWARD - CITATION AWARD  Beyond Borders Architect: Aaron Tsosie

AIA





2017 COMPONENT DESIGN AWARD - CITATION AWARD  Local Nomad Architect: spaceBUREAU Owner: Lauren Danuser Contractor: spaceBUREAU

2017 URBAN & REGIONAL PLANNING- CITATION AWARD  Arizona Canal Masterplan Architect: John Douglas Architects Owner: City of Scottsdale Contractor: Howard S. Wright

2017 URBAN & REGIONAL PLANNING AWARD - CITATION AWARD

Downtown Tucson 2050 Plan Architect: University of Arizona, School of Architecture

62 | November-December 2017

change the industry change the world ONE PROJECT AT A TIME advanced technology. higher education. life sciences. commercial. healthcare.

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The National Museum of Afghanistan Architect: Line and Space, LLC

2017 DISTINGUISHED BUILDING CITATION AWARD ï&#x201A;&#x2022; Kenneth Place Townhomes Architect: Chen + Suchart Studio, LLC Contractor: TLW Construction

2017 DISTINGUISHED BUILDING - CITATION AWARD

Dunlap Venue Architect: Matthew Salenger & Maria Salenger Owner: Valley Metro Phoenix

64 | November-December 2017

SHAPING ARIZONAâ&#x20AC;&#x2122;S FUTURE THROUGH THE POWER OF DESIGN

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AIA 2017 DISTINGUISHED BUILDING - CITATION AWARD

Mesa Community College Performing Arts Center Architect: Jones Studio Owner: Maricopa Community College District Contractor: Layton Construction Co., Inc.

2017 DISTINGUISHED BUILDING - CITATION AWARD

Ghost Wash House Architect: Architectureâ&#x20AC;&#x201C;InfrastructureResearch (AIR), Inc. Owner: Eric + Lauri Termansen Contractor: Build Inc.

LEADERSHIP AWARDS

PRACTICE AWARDS

2017 ARIZONA ARCHITECTS MEDAL

2017 GOODWIN AWARD

Rick McLain, AIA

Hazel Hare Center for Plant Science Architect: CoLab Studio & 180 Degrees Owner: Desert Botanical Garden Contractor: 180 Degrees

2017 CLIENT AWARD

EDUCATION

Neal Jones, AIA

2017 AIA10 AWARD

Agua Fria Union High School District

2017 FIRM OF THE YEAR Holly Street Studio

2017 EDUCATOR AWARD Mary Hardin, AIA

2017 DESIGN PEDAGOGY

University of Arizona ARC297m/397m | Material Fabrication I + II

2017 COMMUNITY EDUCATION Camp Architecture

Neal Jones, AIA

president of Jones Studio

PERFORMANCE AWARDS 2017 RESEARCH

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ARIZONA ASSOCIATION FOR ECONOMIC DEVELOPMENT

A WINNING COMBINATION Arizona’s economic developers continue to attract investment, create jobs through collaboration By DAVID MCGLOTHLIN

n September, e-commerce giant Amazon announced it was looking for a location to build its second North American Headquarters. Dubbed “HQ2,” the project would total eight-million square feet, employ 50,000 workers and cost $5 billion to build and operate.

Many are touting it as the economic development project of the decade, putting pressure on economic developers and city officials across the nation to submit Request for Proposals in hopes of landing HQ2. Although Arizona may be a longshot for the project, the state’s economic development groups and developers have plenty of other recent wins to be proud of, including the selling points that make the Arizona market so attractive for continued job creation and capital investment. According to the Arizona Commerce Authority, Arizona ranks first nationally for projected annual job growth, first nationally for entrepreneurial activity, first nationally for higher education degree opportunities and second nationally for workforce quality and availability.

REGIONAL HIGHLIGHTS

#3 #4 #6 #8 Metro Phoenix:

Phoenix:

Arizona:

Greater Phoenix:

hottest city for tech jobs (Money magazine)

best 2017 city for young professionals (Forbes magazine)

best state for business (Chief Executive magazine)

in startup activity (The Kauffman Index)

Source: Greater Phoenix Economic Council

68 | November-December 2017

FISCAL YEAR 2017 IN REVIEW

“That says to an employer that we are an attractive place to live and an attractive place to hire talent,” says Keith Watkins, senior vice president of economic rural development for the ACA. Since 2013, the ACA reports 200,029 direct, indirect and induced jobs were created in Arizona, generating an economic output of $118.73 billion and $3.03 billion in tax revenue. The ultimate goal of the ACA, the Greater Phoenix Economic Council and other economic development groups like the Arizona Association of Economic Development — a statewide advocacy group for economic development professionals in Arizona since 1974 — is to improve Arizona’s economy by facilitating job creation through business attraction, expansion and creation. But, “it takes a village,” says Watkins, an AAED member for 26 years and current board member, but he adds, that collaboration has greatly improved over the years. “No one person or one economic development group can do this on their own,” he explains. “We each bring our own refined set of talents and disciplines to the equation while working towards the same end goal.” Whether it’s international companies, technology startups or manufacturing and distribution firms, the common variable behind each successful economic development project, both urban and rural, is a team of professionals working towards that shared goal.

$1.47B CAPITAL INVESTMENTS

NUMBER OF HIGH WAGE JOBS

8,130

NUMBER

OF JOBS

AVERAGE HIGH-WAGE SALARY

$377.12M

PAYROLL GENERATED

HEADQUARTERS

✘

RELOCATED

Source: Greater Phoenix Economic Council

AAED As a result, Arizona became less reliant on the “Five C’s” — cattle, citrus, climate, copper and cotton — over the decades to drive the state’s economy. Instead, it has welcomed the arrival of new high wage industries like aerospace and defense, technology and innovation, advanced manufacturing, biosciences and healthcare. Technology companies are migrating to Greater Phoenix’s urban cores from more expensive markets like San Francisco to capitalize on the area’s top amenities and growing live-workplay synergy. Meanwhile, advanced manufacturing companies, third party logistic firms, processing and distribution centers are also relocating and expanding across Arizona. Watkins says, “The key for Arizona is maintaining our quality of life and maintaining our attractive operating environment.”

70 | November-December 2017

PHOENIX LANDS INTERNATIONAL CYBERSECURITY FIRM HQ It took a collaborative effort of local, state and federal resources to successfully woo the Swiss-based digital content distributor and security firm, Kudelski Group, into selecting Phoenix for the location of its second international headquarters. GPEC worked together with SelectUSA, a department under the U.S. Department of Commerce created to showcase the United States as the world’s premier business location and to provide easy access to federallevel programs and services related to business investment, the Arizona Commerce Authority and the City of Phoenix to attract the Kudelski Group to the region. Then it was Greater Phoenix’s business-friendly environment,

proximity to other technology hubs, developed infrastructure and access to highly skilled professionals that influenced the Group’s decision. The Group’s new Phoenix site occupies 30,000 square-feet at 40th Street and Camelback Road with future plans to expand. Over the long term, the Kudelski Group plans to hire 200 to 350 high wage positions in the region, with a focus on driving sustainable growth and developing corporate support functions. “The Kudelski Group’s investment in Arizona is further evidence that we are transforming and creating a

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AAED SIGNIFICANT PROJECT HIGHLIGHTS DURING GOV. DUCEY’S TENURE: APPLE: 150 JOBS in Mesa, January 2015

NORTHERN TRUST: 1,000 JOBS in Tempe, February 2015

COMCAST: 1,000 JOBS in Tucson, May 2015

CENLAR FSB: 750 JOBS in Tempe, November 2015

CARLISLE INDUSTRIES: (headquarters relocate) 130 JOBS

OSCAR HEALTH INSURANCE: 1,250 JOBS in Tempe, June 2016

ORBITAL ATK: 155 JOBS

KUDELSKI GROUP: (U.S. headquarters) z350 JOBS

ZIPRECRUITER: 238 JOBS

DOT FOODS: 125 JOBS

CATERPILLAR:

DEXCOM: 500 JOBS

in Phoenix, February 2016 in Gilbert, March 2016 in Tempe, April 2016

(division headquarters) 635 in Tucson, April 2016

JOBS

in Phoenix, June 2016

in Bullhead City, June 2016 in Mesa, June 2016

CENLAR FSB: Cenlar’s new site will be staffed primarily by customer service representatives and loan servicing agents. In addition, there will be a variety of operational, as well as administrative support staff.

OSCAR HEALTH INSURANCE: A New York-based health insurance company, is expanding its Oscar Concierge team into Tempe at The Circuit, an adaptive re-use development near the Loop 101 and Loop 202 freeways.

72 | November-December 2017

Source: Arizona Commerce Authority

SK FOOD GROUP: 550 JOBS in Tolleson, July 2016

ROGERS CORPORATION: (headquarters relocate) 190 JOBS in Chandler, August 2016

HUHTAMAKI NORTH AMERICA: 300 JOBS in Goodyear, September 2016 MCKESSON: 790 JOBS

in the Salt River Pima-Maricopa Indian Community, September 2016

VECTOR SPACE SYSTEMS: (corporate headquarters)

200 JOBS

in Tucson, October 2016

ADP: 1,500 JOBS

in Tempe, November 2016

RAYTHEON: 2,000 JOBS in Tucson, November 2016

LUCID MOTORS: 2,000 JOBS in Casa Grande, November 2016

ORBITAL ATK: 500 JOBS in Chandler, November 2016

BENCHMARK ELECTRONICS: (headquarters relocate) 629 JOBS in Tempe, April 2017

UPGRADE: 350 JOBS in Phoenix, May 2017

CONSTANT AVIATION: 200 JOBS

in Mesa, May 2017

WALGREENS: 426 JOBS in Chandler, July 2017

MCKESSON: The offices were designed with amenities like an on-campus cafeteria, gym facilities and outdoor space for staff enjoyment and well being.

ORBITAL ATK: The additional Orbital ATK facility will help support a projected growth of up to 500 full-time, highwage jobs over a five-year period.

AAED

CATERPILLAR DIVISION HEADQUARTERS: The new facility in Downtown Tucson will significantly expand the company’s presence in the state, bringing total Caterpillar employment in Southern Arizona to nearly 1,000 workers.

business environment in this state where companies want to move, expand and thrive,” Governor Doug Ducey said. “A decision like this – to create a headquarters location and hundreds of high wage jobs – signals to businesses everywhere that Arizona offers the perfect platform for growth and success.”

CATERPILLAR DIGS INTO SOUTHERN ARIZONA WITH EXPANDED PRESENCE

In an effort to get closer to its customers and boost collaboration across all aspects of the business, Illinois-based construction and mining equipment manufacturer Caterpillar Inc. selected Downtown Tucson as the new location for its surface mining and technology offices. David Welsh, chief operating office for Sun Corridor Inc., says Caterpillar picked Downtown Tucson because of its close proximity to the talent pool at the University of Arizona, and the

74 | November-December 2017

recent revitalization of downtown with the arrival of the streetcar, new amenities, restaurants and other livework-play components. Located in the Mercado District in Downtown Tucson, the new $43 million, 150,000 square-foot Tucson Mining Center facility is expected to create more than 600 new jobs over five-years, offering positions in management, engineering, product development and support positions. It is scheduled to open in early 2019 and estimated to have an economic impact of $600 million. “It’s hard to overstate what an infusion of that economic energy does to a place like downtown,” Welsh explains. “This garners a whole new level of interest that we just didn’t get before, which will play out across the whole downtown, region and state for decades to come.” For instance, since Caterpillar’s announcement, three of its clients have relocated to Downtown Tucson, which includes Hexagon Mining and two other contract engineering firms. There’s even a high-end movie theatre in talks for a Downtown Tucson location so it can tap into the area’s growing workforce. Eight years ago, Welsh says, he couldn’t give property away in downtown. Now he expects a lot

more build-to-suits in Downtown Tucson because most of the vacancies from the Great Recession have been occupied, “which is a good problem to have,” he adds.

AMERICA’S LARGEST FOOD REDISTRIBUTOR COMES TO ARIZONA In rural Arizona, Illinois-based Dot Foods, the nation’s first and largest food industry redistributor, picked Bullhead City as the location for its new Southwest distribution center, which will create 125 new Arizona jobs over a three-year period. Dot Foods plans to invest more than $45 million in infrastructure and various equipment for the new Mohave County distribution center, which opened late this year and totals over 162,980 square feet, including offices, dry, refrigerated and frozen warehouse space, a truck yard and garage to service Dot’s fleet. Dot Food’s selection of Arizona for a new distribution center speaks volumes about Arizona's strategic geographic location and excellent transportation infrastructure. In fact, Arizona is the only state in the nation within a day’s drive to three of the world’s largest economies – No. 8 California, No. 12 Texas and No. 15 Mexico, respectively.

AAED

Tim Kanavel Pinal County

Keith Watkins Arizona Commerce Authority

TEAMWORK DRIVES LUCID MOTORS’ ELECTRIC CAR MANUFACTURING PLANT TO ARIZONA California-based Lucid Motors picked Casa Grande as the site for its luxury electric car manufacturing facility that’s projected to bring more than 2,000 new jobs and more than $700 million in capital investment to the region by 2022. Following an extensive search across 13 states and 60 sites, Lucid Motors selected Arizona based on numerous positive factors including business climate, infrastructure, talent, geographic location and the automotive supply chain in the Arizona-Sonora Megaregion, explains Tim Kanavel, Pinal County economic development director. But the biggest factor, he says, was the highly collaborative relationship exhibited between Lucid Motors, Gov. Ducey’s office, Arizona Senators John McCain and Jeff Flake, the ACA, Pinal

76 | November-December 2017

County and the City of Casa Grande to help this deal come to fruition. “The notoriety and international publicity of landing such a high-end luxury electric car manufacturing plant has had a David Welsh ripple effect on Sun Corridor Inc. Pinal County,” Kanavel explains. “We have over $20 billion worth of potential projects that we are working on right now.” No, he doesn’t expect to win all of those projects, but he is proud of a few like the planned $1.1 billion, 2,360acre motorsports park called Attesa, the proposed $4 billion theme park to be known as Dreamport Villages as well as a $10 billion Resolution Copper Mining project in Superior. Despite Pinal County being historically known for its mining and agriculture industries, its racing to make a name for itself as an automotive hub.

manufactures an impressive variety of advanced technologies, supporting the aerospace, defense, medical, industrial, telecommunications and computing industries. Watkins says, the skilled talent pipeline, pro-business climate, and high quality of life made Arizona Benchmark’s location of choice. Additionally, Arizona ranks first in the nation for aerospace manufacturing jobs and attractiveness, according to the ACA, and one of the “top seven cities competing with Silicon Valley for tech entrepreneurship,” according to entrepreneur.com. The move helps position the future growth of Benchmark by allowing it to consolidate corporate headquarters staff in a single location, expand its engineering capability through a partnership with Arizona State University, position itself closer to Arizona's growing aerospace and defense customers, and serve as a foundation to expand its existing precision technology business. The relocation is anticipated to create more than 500 jobs over the next five years, which started in May 2017.

BENCHMARK ELECTRONICS CONSOLIDATE, RELOCATE CORPORATE HQ TO ARIZONA In April, Gov. Ducey and Benchmark Electronics, a global engineering, design and integrated electronics manufacturing company, announced it would relocate its corporate headquarters from Angleton, Texas to Tempe in Arizona. Benchmark designs and

BENCHMARK ELECTRONICS: Located at Rio 2100, a new 52-acre, Class A office park situated in Tempe, the new headquarters will add approximately 500 new jobs to the Greater Phoenix area over the next five years.

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602.277.6045

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DEVELOPING ARIZONA’S FUTURE

TOGETHER ARIZONA’S PREMIER ASSOCIATION FOR ECONOMIC DEVELOPMENT ADVOCACY, EDUCATION AND COLLABORATION. WWW.AAED.COM

602.240.2233 77

AAED

The unifed voice of economic development professionals

AZRE: What are impediments to doing business in our state?

with

CW: I think our potential is unlimited. However, we must always be analyzing our local and state legislative policies to ensure that we are business supportive and welcoming. Competing with multiple states for the same opportunities with modest deal closing incentives can be a significant challenge as well.

AAED President Curt Woody By DAVID MCGLOTHLIN

Curt Woody has spent nearly his entire professional career in the building and development industries. For the past 30 years, he’s worked in a variety of capacities within the commercial development industry from running his own company supplying the commercial building industry to working as a business development manager for Sundt Construction. Today, he’s the director of economic development and tourism for the Town of Marana and president of the Arizona Association for Economic Development (AAED). The mission of AAED is to serve as Arizona’s unified voice for its 470-plus members in advocating for responsible economic development through an effective program of professional education, public policy and collaboration. To Woody, economic development is a funnel that catches all of the strategies and aspects of a community and directs it into a unified plan, which starts with collaboration and a unified team approach. “Economic development is not simply just about business recruitment, retention, expansion and creation, but a comprehensive strategy that looks at education, public safety, infrastructure, 78 | November-December 2017

CW: The AAED membership and the CRE industry already work together through various relationships due to the synergies between the two. I have frequent communication with my contacts in the CRE community to discuss best fits for our clients, and vice versa. Planning, zoning and incentives can help with making an informed decision on where to place a customer.

tourism, quality of life and much more,” he explains. It takes insights, leadership and data from experts in all those areas to develop the most effective economic development policies and plans, which is where Woody’s role as president of AAED is vital. “The AAED membership and Board of Directors is full of leaders in their respected professions,” he explains, “and it is incumbent upon me to make sure that the organization is not managed by ‘I’, but by ‘we.”’

AZRE: What are economic developers saying about Arizona’s economy? CURT WOODY: That would depend

on where you reside. Certainly, Metro Phoenix is leading the postrecession recovery with a year-to-date 2.4-percent job growth rate, which accounts for 93 percent of all jobs created in the state. Tucson follows with a modest 0.4 percent increase, and even though rural Arizona may have pockets of success the overwhelming growth still remains in Phoenix.

AZRE: How can the CRE community benefit from working with AAED?

AZRE: What’s an important economic development dialogue that you want to see happen in 2018? CW: At least for Marana the good news is that I do not have any empty boxes. The bad news is that I do not have any empty boxes. Most of the requests from clients is for existing facilities only, with little interest in a build-to-suit opportunity. I certainly understand the limited appetite developers have for building a spec facility and hoping there will be a tenant sooner rather than later. However, future dialogue that could produce a better balance would be helpful for economic development success. AZRE: What are a couple nuances between the CRE and economic development industries? CW: We both are working towards the same goal of placing our clients in the appropriate product and in the appropriate places. There is always room for us to strengthen our relationships in the CRE industry such as better communication as it pertains to vision and planning from the economic development community.

2017

URBAN LAND INSTITUTE

Thinking big and thinking ahead ULI

looks beyond the impossible, beyond the obvious, beyond the challenges – it’s our legacy. From dawn to dusk, whether deliberate or accidental, everyone is framing and contributing to a personal and a collective legacy. The mission of the Urban Land Institute offers tangible opportunities for individual growth and the power of teamwork. “To provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide” demonstrates a philosophy steeped in 80 years of seeking knowledge, sharing best practices, and embracing varying perspectives to create better places. How can the development industry identify and embrace changing realities while simultaneously leveraging the resultant knowledge and successes - or failures - to strengthen the fabric of our communities?

Inform: “Can you inform me, gentlemen, where General Grant procures his whiskey? . . . Because if I can find out, I’ll send a barrel of it to every General in the field!” –Abraham Lincoln Would you invest in the stock market without being informed on the choices you were making? Probably not. Being well informed is important – it creates a foundation for asking intelligent questions, engaging in healthy debate, and arriving at the occasional “aha” moment. Community and industry thought leaders recognize that interesting discoveries can lead to entrepreneurialism, changing business models, and enhanced communities. Consider this: Stockholm, Sweden produces the second-highest number of billion-dollar tech companies per 82 | November-December 2017

– they’re sharing transportation and they’re shopping and ordering online, which translates to increased deliveries. Food delivery revenue is expected to grow from $13 billion to $39 billion in the next five years. Ford believes this need can be met by selfdriving vehicles. Color outside the lines.

Deb Sydenham ULI Arizona

capita, after Silicon Valley. How does Stockholm do it? Information is power.

Inspire: “The best and most beautiful things in the world cannot be seen or even touched – they must be felt with the heart.” -Helen Keller Thinking big and thinking ahead. This is a fundamental philosophy of the Urban Land Institute (ULI), one which positions the organization to explore the leading edge of issues critical to making cities more livable and sustainable, conducting research, analyzing studies, and bringing together leaders from the public and private sectors in creating blueprints for change. Recently, Sherif Marakby, vice president of autonomous vehicles and electrification for Ford, said, “We’re working to ensure that our application of self-driving technology enhances, rather than disrupts, what people most value about the services available to them today so we can ensure that our self-driving technology makes their lives better tomorrow.” In an unprecedented move, Ford is collaborating with Domino’s Pizza. Why? People’s behaviors are changing

Involve: “Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside in a cloud of smoke, thoroughly used up, totally worn out, and loudly proclaiming, ‘Wow, what a ride!’” – Hunter S. Thompson Since 1936, ULI has been defined by what our members contribute to their communities, each other, and the land use and real estate industry. The shared wisdom and experience of our members is what makes ULI unique. Patrick Phillips, ULI Global CEO, notes, “Being part of ULI means being a leader, not a follower.” This is an important responsibility, and an opportunity for positive impact in our communities. “Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them. About the only thing you can’t do is ignore them. Because they change things. They push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.” – Rob Siltanen Deb Sydenham, FAICP, is executive director of the ULI Arizona District Council.

ULI

84 | November-December 2017

When insight leads to investment ULI’s AzTAP program transforms community challenges by offering advice on complex land-use issues By CHERYL HURD

oncerned by blighted neighborhoods, vacant lots, lack of identity or complicated land use and real estate challenges, municipalities seek advice from experts at the Urban Land Institute and experience transformative and lasting results. The Urban Land Institute (ULI) is a nonprofit research and education organization that provides leadership in responsible land use and real estate development. The Arizona Technical Assistance Panel (AzTAP) program, fueled by members of ULI, was formed to give expert members an opportunity to help communities thrive. “The thought leadership and perspective provided by ULI members during an AzTAP endeavor helps strengthen the foundation of Arizona communities in their quest to create blueprints for change,” says Deb Sydenham, executive director of ULI Arizona, “ULI engagement guides cities and towns to not only think big, but to think ahead.” Based on recommendations from an AzTAP, a stretch of 32nd Street in Phoenix, once drained of its vitality by SR 51, is now an energized, identityrich community that continues to draw housing and businesses to the area. In Goodyear, a comprehensive strategic plan brought growth in education, recreation, aerospace and medical corridors.A branding campaign for the rural mining town of Bisbee transformed its image into its greatest asset, earning the community national accolades.

32 SHEA: 32nd Street and Shea Blvd PHOTO BY MIKE MERTES, AZ BIG MEDIA

ULI

Brian Dalke

ABOUT THE PANELS Experts on the panels are diverse, with a good cross section of people with deep experience from the land use and development world, office, industrial, retail and marketing, explains Charley Freericks, ULI Arizona District Council chair and principal of Freestone Holdings, LLC. “With more than 1,000 local members, we can almost always find somebody for every assignment just in our membership," he says. Among ULI members are developers, investors, land use attorneys, designers, planners, engineers, market and financial analysts and members of public and nonprofit sectors. “It is a great affordable resource for communities and nonprofits to use to solve complicated situations. Land use has gotten exceedingly complicated so public outreach - public education and processes in general to get people engaged constructively and move projects forward - is a common need. We have a lot of people who specialize in that public arena,” he says. Freericks says each municipality presents unique challenges. Therefore, each volunteer panelist is chosen based on talents best suited for the task. Common threads for most panels are providing necessary reality checks and unifying voices to those needing assistance. “Communities don’t always understand that they need to resolve specific issues before embarking on a new project," he says, “While viewpoints will be different, there needs to be a way to find common ground or nothing will get done.” 86 | November-December 2017

Charley Freericks

Bill Gates

“With more than 1,000 local members, we can almost always find somebody for every assignment just in our membership.”– Charley Freericks HOW IT WORKS Communities and nonprofits interested in leveraging the expertise brought forth in an AzTAP, complete an application where they identify a particular issue or set of issues and opportunities they would like the panel to explore. The ULI AzTAP Committee works with the community to assess and identify key issues and refine objectives. Freericks says it takes 90 to 120 days to organize a group, tackle a situation and establish a panel. Then the comprehensive report is presented with a summary of findings and recommendations for next steps. The sponsor organization is then responsible for its plan of execution. Freericks says the panel generally is not involved after the presentation, but may be called back to do an updated report, answer specific questions, assess progress or address areas of concern. Some sponsor agencies have large development improvements while others take smaller steps, such as image improvement that leads to slow, organic growth.

Deb Sydenham

TRANSFORMATIONS IN PROGRESS The city of Goodyear approached ULI with an abundance of challenges that focused on an area of the city south of Interstate 10 between Litchfield Road and Estrella Parkway. “In economic development you don’t just focus on retail or industrial,” says Goodyear City Manager Brian Dalke, “We had to be more specific to include aerospace, what about our infrastructure, transportation corridors... We threw a lot at them knowing that their input would help guide us in some of our recommendations to our city council.” “Eleven panelists coming from different backgrounds with different ideas came up with a game plan, priorities of what we should focus on and we built a lot of that into our economic development strategy,” Dalke says. After the panel’s recommendations, Goodyear started implementing change. There are plans to develop around the Goodyear Ballpark area. An aquatics center, recreation center and park are also in the works. “We started to look at changing some of our design guidelines to make it easier for development. That has been a major focus of ours and that came directly out of the plan to focus on Estrella Parkway,” Dalke says, “It is a combination of retail, high density housing, and commercial. “At city center area on Estrella Parkway, we recruited BASIS school. It is a K-12 charter school. Education was a key point from this group. It also recommended we go after higher

ULI

education and keep Franklin Pierce University here, which we have. They are looking at expanding as well. That has been a success." The Goodyear ULI AzTAP also suggested providing more infrastructure to make sites “shovel ready.” This assisted in landowner EJM Development Co. investing more than $6 million in infrastructure, which drew in The Michael Lewis Company. Still more advancements have been made in aerospace and medical corridors. Dalke says he would highly recommend the program to others. “It is absolutely a very valuable and excellent program for cities. The cities could not afford the talent they put on these panels and they are all experts in their related fields, sharing their observations and different viewpoints. It was just absolutely amazing to have a roomful of experts share their time and talents with us.” There is a cost recovery fee associated with the program that typically ranges from $5,000 to $15,000 depending on the complexity of the assignment, Freericks says. Typically, AzTAPs are underwritten by the government or agency involved and grants may be available. “If somebody can’t afford it, we’ll help them try to figure out how to underwrite it,” he says. Panelists are not paid for their technical expertise, but on occasion, additional experts are hired. 88 | November-December 2017

ADDRESSING ISSUES In Phoenix, ULI was approached to address issues along North 32nd Street between Shea Boulevard and Union Hills. The AzTAP Committee sought a technical panel member who understood street design, so they included a traffic engineer to assist in the early discussions, Freericks explains. “I commute by 32nd Street regularly and I remember driving by there after the freeway opened and watching businesses just shrivel up and die because traffic faded,” he says. Maricopa County Supervisor and former Phoenix Councilmember Bill Gates was involved in the North 32nd Street transformation. “North 32nd Street used to be one of the most vibrant areas in North Phoenix. Traffic supported a lot of the retail, but when the 51 came in, which a lot of people were excited about, it created a situation where people were bipassing 32nd and you didn’t have the traffic for the retail anymore. We started bringing folks together from the community to see what could be done and it was recommended to us fairly early on that it would be great to get ULI involved.” The panel recognized the differences in each intersection along the stretch of North 32nd being studied and suggested the group focus on one intersection at a time. “I thought that was a fantastic

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recommendation and it is one we acted upon,” Gates says. “Part of the reason that I identified this area as a focus area was the dynamics of the neighborhood. There is a lot of neighborhood pride. When they reached out to the community for feedback, Gates says about 250 people showed up for the first meeting. Based on the recommendations of the panel, changes began. “We needed to bring new energy into the neighborhood (at 32nd Street and Shea Boulevard). That translated into new residents. Now at that corner there is a project being built, a class A multifamily property by Watt Communities called View 32. More than 200 units are going up. Watt Communities is fully engaged and invested in the success of the corridor, which is really exciting. “Clearly, ULI’s AzTAP Program helped us by getting us to focus and not have this scattershot approach

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I-10 west, then south on Estrella Parkway 623.386.1000 • Brokers Welcome Newland Communities is the largest private developer of planned residential and urban mixed-use communities in the United States. We believe it is our responsibility to create enduring, healthier communities for people to live life in ways that matter most to them. www.newlandcommunities.com EQUAL HOUSING OPPORTUNITY • NNP III-Estrella Mountain Ranch, LLC and NNP III-EMR 4, LLC (collectively, “Fee Owner”) are the owners of various parcels of land comprising the Estrella Community (“Community”). Newland Communities is the development manager retained by the Fee Owner for the Community. Certain homebuilders unaffiliated with the Fee Owner or Newland Communities are building homes in the Community. Fee Owner and Newland Communities are not co-developing, co-building, or otherwise responsible for any of the obligations or representations of any of the Builders. See www.estrella.com for full terms of use.• Prices, specifications, details, and availability of a builder’s new homes are subject to change without notice. • Actual development may vary from developer’s vision. No guarantee can be made that development will proceed as described. Certain properties may be registered with HUD, or may have registered components in the future as required pursuant to the Interstate Land Sales Full Disclosure Act. If such registration occurs, obtain the HUD Property Report, or its equivalent, required by Federal law and read it before signing anything. No Federal agency has judged the merits or value, if any, of this property. 2017 © Estrella. All rights reserved. Estrella is a trademark of NNP III-Estrella Mountain Ranch, LLC, and may not be copied, imitated or used, in whole or in part, without prior written permission.

ULI About ULI

MISSION: The Urban Land Institute is a 501[c][3] nonprofit research and education organization supported by its 40,000 members. The Institute now has members in 95 countries worldwide, representing the entire spectrum of land use and real estate development disciplines working in private enterprise and public service. As the preeminent multidisciplinary real estate forum, ULI facilitates an open exchange of ideas, information, and experience among local, national, and international industry leaders and policy makers dedicated to creating better places. The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. IN ARIZONA: The ULI Arizona District Council was formed in the early 1980s, as a direct response to the need for educational forums and events at a local level. ULI Arizona has been a statewide convener for dialog among industry leaders, providing an unbiased and non-partisan exchange of ideas relevant to Arizona communities. ULI Arizona boasts more than 1,000 members, and has one of the highest member participation rates of any ULI District Council. INFORMATION: arizona.uli.org

of the whole corridor but instead to target our efforts. I have no doubt Watt Communities would not have invested in the area if it wasn’t for the energy generated by ULI and the AzTAP. I am sure of it. They could invest anywhere. They are an infill builder. Something in the energy of this and the ULI stamp of approval made them decide yes, this is where we want to invest the money,” Gates says. “Success begets success. That is what they are seeing right now. We need the new energy, which will then lead to new retail, the restaurants, the new amenities we want to have in the neighborhood," Gates says. Gates pointed to another successful area at 32nd Street and Greenway Road where Arizona Sunrays Gymnastics & Dance Center is building a new facility and Great Hearts Academies charter school just opened. The North 32nd neighborhood also was nominated for a Phoenix New Times Best of Phoenix Best Neighborhood award. AzTAP recommended improving infrastructure and bike lanes were installed along North 32nd Street. Near 32nd Street and Cactus, singlefamily homes are going in and BASIS Phoenix opened. “We are changing as a Valley. We are evolving, becoming more mature. Now it is less about building brand new neighborhoods and more about revitalizing existing neighborhoods,” Gates says. “ULI’s strength is they can come in with a wealth of experience from different projects that they have worked on. They are not so close to the situation so they have more of a perspective on how does this fit into the larger tapestry of the entire Valley.” 90 | November-December 2017

CONTINUING SUCCESSES Goodyear and Phoenix are just two of the communities influenced by ULI’s AzTAP program. Freericks offered some examples of AzTAP’s impact in other communities: GLENDALE: Glendale wanted to start planning for the incoming light rail and sought advice from AzTAP about capitalizing on its arrival. The expert panel agreed that the incoming light rail would impact the community but suggested that Glendale focus on resolving some issues before its arrival. It became a conversation that unified the group, allowed them to recognize the potential of the city, its authentic downtown area and its caring community. They decided to use the light rail as a catalyst for growth and to take steps in preparation of its arrival that resulted in cleanup, beautification and bolstered civic pride in the downtown area. APACHE JUNCTION: Apache Junction wanted to improve their downtown and get new businesses to come in and create a unique experience but the ULI AzTAP review indicated the city had bigger issues to focus on. Apache Junction was lax on code enforcement with properties in disrepair, dirty, vacant and run down. They had crime and failing schools. ULI stepped in as a neutral third party without a stakeholder position and identified the issues that needed to be addressed before the city could accomplish its goals. Apache Junction bought land, developed some infill parks to clean and beautify the city and

they increased code enforcement. They focused on improving the city’s image to outsiders and stakeholders. BISBEE: Bisbee, once a mining town that evolved into an artist and retirement community, has seen declining population and approached ULI AzTAP to look at its economic and housing potential. The AzTAP focused on a rebranding campaign that marketed Bisbee as a cool, eclectic place to visit throughout the year. The panel suggested rebuilding their visitor websites. After the shift in image, Bisbee was named Sunset magazine’s best small town to live in in the west. Bisbee also was selected for best small historic town in the United States by USA Today. AzTAP suggested working on image first, to brand Bisbee as a cool place. The town has made good progress and continues to work on its image as a destination town. “Phoenix is a diverse collection of cities and towns and as you broaden out, you have vastly diverse communities spread all over the state with a lot of them fairly isolated. Through the ULI AzTAP programs, small and large communities have been able to tap into great resources to refine their thinking and get started on something good,” Freericks says. “It’s a great way for convening, finding a common purpose, defining the big plan, reasonable objectives and getting started. It’s not free, but it is very affordable and for the talent you can tap into, it’s a great way for an agency or a municipality to tackle a big project quickly with a lot of expertise and access to ULI’s global talent.”

ULI

Global impact ULIâ&#x20AC;&#x2122;s AzTAP program helps First Place AZ create housing solutions for adults with autism

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By CHERYL HURD

irst Place AZ is changing the housing landscape for adults with autism with an innovative model that promotes independent living, continuing education and community integration. Assisted by a panel of experts from the Urban Land Institute Arizona District Council and an outpouring of support from the community, First Place AZ plans to open its first location in 2018 and use that property as a model worldwide. “Our bold vision is to ensure that housing and community options are as bountiful for people with autism and other neuro-diversities as they are for everyone else,” says Denise Resnik, the founder, president and CEO of First Place AZ, a nonprofit organization designed to advance residential options for adults with different abilities. “There is great demand,” Resnik says, “We get feedback from around the world from people who have searched and believe that First Place is the right place for them and their loved ones.” First Place Phoenix, a $15 million residential property that can house up to 80 residents, has received 550 expressions of interest. Resnik’s plan is to open First Place AZ and ensure its success then replicate First Place in communities across the country, while promoting the principles of public, private, charitable and nonprofit collaboration. “We’re looking at 10 First Place properties over the next 10 years,” Resnik says, “We have more than 30 markets around the world that have expressed interest and have come out to visit.” The property at Third Street and Catalina Drive in Phoenix will include 55 apartments supported by independent living services and amenities; a two-year, tuition-based

residential training program that focuses on independent living skills, career readiness and interpersonal relations; and a global leadership institute that will serve as a national training center for professionals, direct service support providers and medical personnel as well as a site for research and public-policy advancement. Nearby public transit will connect residents to the community through jobs, recreation, education and other opportunities. First Place AZ evolved from years of planning, research and collaboration with 100 local partners, including Urban Land Institute (ULI), Arizona State University (ASU), and Southwest Autism Research & Resource Center (SARRC), First Place AZ’s sister nonprofit co-founded by Resnik. Resnik participated in ULI’s Arizona Technical Assistance Panel (AzTAP) program, seeking advice from experts on two separate occasions. The panel

“Our bold vision is to ensure that housing and community options are as bountiful for people with autism and other neurodiversities as they are for everyone else,” – Denise Resnik looked at all dimensions of real estate from design and location to finance and helped Resnik map out a path to move forward. Joseph Blackbourn, president and CEO of Everest Holdings and ULI member, participated in one of the panel discussions. “The best ideas merged together, built from a real estate design, programming of services and capital market approach in order to catalyze the development of these communities

Joseph Blackbourn

Denise Resnik

not just in Arizona but anywhere they are needed," Blackbourn says. He says the work that has been done so far is “quite revolutionary” and that Resnik and SARRC are nationally thought of as pioneers trying to get the model perfected and expanded. “By tapping into ULI (Resnik) has found the right place,” he says. “For ULI and the real estate community in the Phoenix area, it is a labor of love.” In 2016, ULI Arizona earned the ULI National District Council Impact Award for its work with SARRC, First Place AZ and ASU in addressing the residential needs and options for adults with autism. First Place AZ received the 2016 HeroX Autism Speaks House to Home Prize for the work it is doing in housing and residential support. “We hope to set the bar high and be that standard in markets where we have a presence for what housing should look like in community integration,” Resnik says. She recognizes the impact the community has had in making this project a reality. “The reason we are dreaming bigger is because we can,” Resnik says, “because we have the Urban Land Institute and government officials and philanthropists and moms and dads and family members everywhere who believe in what we are doing. That is truly the best expression of community.” 93

ULI

Creating an inclusive culture ULI programs spearhead efforts to diversify the industry By ERIN THORBURN

t’s no secret that when it comes to encouraging professional growth and diversity within the land use and real estate development industry, the Urban Land Insitute is a worldwide champion. Locally, ULI Arizona leads the industry with an approach to mentorship — which benefits both mentor and mentee— that furthers the mission to diversify and strengthen future leaders with alacrity, intensity and dedication. In 2014, ULI Arizona formally launched the Women’s Leadership Initiative (WLI) to increase opportunities for women, and for more than a decade, has fostered mentorship for young professionals through the Young Leaders Group (YLG). Some of Arizona’s most dynamic and esteemed women, young leaders and veteran ULI members are affecting positive change to promote diversity both within ULI and throughout the entire industry.

ATTRACTION IS PROMOTION

If there’s one thing for which ULI members involved with WLI and YLG agree, it’s that it doesn’t take long before the bug of excitement, 94 | November-December 2017

opportunity and involvement bites. “I was hooked after attending my first meeting and being introduced to impressive women like Heidi Kimball and Jody Pokorski,” says Jennifer Ruby, WLI chair and manager of Walton Development and Management. “Finding an environment where I could have intelligent conversations about the challenges women face in our industry was like having a door opened that I didn’t even realize was there.” Jordan Rose, founder of Rose Law Group and a ULI Arizona Partnership Forum Mentor, and Jake Gray, co-chair of the ULI Partnership Forum and vice president of the Grossman Company, share similar experiences. “Despite several charitable organization commitments I had when approached by Joe Blackbourn about being a mentor for the Partnership Forum program, once he explained how the process worked, I was sold,” Rose says. “The idea that I could be directly and immediately helpful to younger professionals dealing with all the stress we all go through in life was beyond appealing to me.” “I’ve been a part of ULI for the

last 11 years or so, but became more extensively involved in leadership over the last six or seven years,” Gray adds. Gray, in addition to serving as co-chair of the ULI Partnership Forum, continues to pave the way for other future leaders by working with YLG. Gray illuminates the draw of participating in ULI mentorship opportunities by highlighting some of the heavy hitters involved with the program: Pete Bolton (owner of the Pete Bolton Company), Mark Stapp (executive director of the Master’s of Real Estate Development program at Arizona State University), Tyler Anderson (vice chairman at CBRE), Heidi Kimball (senior vice president at Sunbelt Holdings), Jordan Rose and many more notable figures in Arizona land development and commercial real estate.

OPPORTUNITY KNOCKS

In addition to powerful leadership and mentorship, the draw and purpose of diversification, as perhaps perfectly expressed by Ruby, is not only in “opening doors,” but ensuring they remain open and inviting to the next wave of local industry professionals.

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Learn more

YOUNG LEADERS GROUP: ULI Arizona’s Young Leaders Group aims to create opportunities for young professionals to develop skills and build relationships that will help advance their careers and foster an understanding of thoughtful development practices. WOMEN’S LEADERSHIP INITIATIVE: The mission of the ULI Women’s Leadership Initiative is to raise the visibility and number of women leaders in ULI and the real estate industry. INFORMATION: arizona.uli.org

WLI, for example, was created to increase the visibility and professional development opportunities for women in ULI and throughout Arizona’s land use and real estate development industry, and in doing so is accomplishing even more. “We provide a welcoming forum to feature women and their successes,” Ruby explains, “which elevates women’s visibility within the real estate industry. Learning about and educating our colleagues on the benefits of diversity, specifically the unique advantages that women leaders can offer, is a critical part of what WLI aims to achieve.” Similarly, YLG, which focuses on the mentorship of young professionals ages 35 and under, works in tandem with WLI in pursuit of promoting further diversification of women’s roles, not only within ULI Arizona, but also within the local real estate and land use community at large. “My goal is to push greater diversification of the male to female ratio in leadership,” Gray says. “When I first became involved in YLG and the Partnership Forum, we started with seven leaders, two of whom were female. This year, we have five females 96 | November-December 2017

and six males in leadership roles.” Fostering diversity, not simply within YLG and WLI but for ULI as a whole is deeply rooted in a dedication to educating ULI members and the local community. Jake Gray “We’ve developed three core areas of focus: education, training and networking,” Ruby says of WLI. “Our education-related events are an opportunity to talk about the benefits diversity brings to an organization and to share and learn from our experiences. Training events typically offer skills development, often in a hands-on workshop or seminar.”

ALL INCLUSIVE

Synchronicity in mission and mindfulness of the goals of WLI and YLG undoubtedly attract involvement, but what else are these formidable ULI forces doing to maintain and propagate success? “Once accepted into the Partnership Forum, groups meet monthly with a mentor for a year,” Gray explains.

Jordan Rose

Jennifer Ruby

Over the year, mentees who have been paired with one of the previously mentioned local leaders develop relationships with their mentors, are introduced to other powerful professionals (such as Gov. Doug Ducey) and have plenty of opportunities to volunteer and participate in a number of networking events throughout the year. WLI, too, has multiple platforms to encourage involvement for women, including a speaker program, social gatherings for professional women in real estate and leadership development programs designed specifically to encourage more women leaders in the land use and real estate development industry.

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The evolution of ULI NEXT By ERIN THORBURN

rizona has strong footing in mentorship of women and young professionals with its Women’s Leadership Initiative and Young Leaders Group, so it’s only natural to wonder, “what’s next?” It’s a question ULI found the answer to recognizing a demographic of the land use and development industry that was profoundly affected during the recession: mid-level professionals. Naturally, what came next is ULI NEXT. Not only is the ULI NEXT initiative unique in addressing this specific industry segment seeking to revive and reinvent, it’s one of the only programs in the industry to employ a peer-to-peer model of promoting professional industry relationships and helping to build personal brands and sharing knowledge.

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GOLD APS Fidelity National Title JRC Design Lewis Roca Rothgerber Christie Vestar

ANNUAL SPONSORS LEADERSHIP CIRCLE CBRE Cushman & Wakefield DMB Holualoa Companies Land Advisors Organization Macerich

Nathan & Associates Newland Communities Perkins Coie SRP | The Grand at Papago Park Sunbelt Holdings Walker & Dunlop

SILVER Alliance Bank of Arizona AV Homes DAVIS First American Title Insurance Co. First Bank Meritage Homes Meyers Research Phoenix Sky Harbor Airport Ryan Companies BRONZE Artemis Realty Capital BBVA Compass Brookfield Residential Properties El Dorado Holdings EY Everest Holdings Evergreen Devco

Fennemore Craig Gammage & Burnham Grayhawk Development Greenberg Traurig Harvard Investments HFF HILGARTWILSON Newmark Knight Frank PICOR | Cushman & Wakefield Rancho Sahuarita RED Development R.O.I. Properties SmithGroup JJR Snell & Wilmer Squire Patton Boggs Taylor Morrison TerraWest Communities Thomas Title VEREIT ViaWest Group Vintage Partners Walton WSP SUPPORTING 48 Development Co ESI Corporation The Athens Group

EXCLUSIVE Belfiore Real Estate Consulting Opus Foundation Perkins Coie RED Development Sam & Peggy Grossman Family Foundation Union Pacific Building America Foundation MEDIA Arizona Builderâ&#x20AC;&#x2122;s Exchange AZ Big Media Commercial Executive Magazine Green Living Magazine MadridMedia Phoenix Business Journal

arizona.uli.org 99

ULI

AZRE discussed the exciting progress of ULI NEXT as it enters its fifth year with 70 participants strong, with Erik Marsh, ULI NEXT Arizona committee chair and Newmark Knight Frank’s managing director. Erik Marsh AZRE: How did you become involved with ULI NEXT?

ERIK MARSH: I am the co-founder and chair of ULI NEXT in the Arizona District Council. About six years ago, David Kinney, another member of ULI, and I got together just before aging out of the ULI Young Leaders Partnership Forum to discuss creating a group that could meet monthly. The idea was to provide a forum for peerto-peer mentorship to exchange best practices and build relationships within the industry. Uniquely different from ULI’s Partnership Forum, this would be member driven, focusing on professionals with a minimum of eight years of industry experience. It took some time to get to this point and we worked with the local ULI leadership to bring them into the vision that this was more than just a book club. We started our pilot program four years ago with 10 members. Our monthly meetings began to take shape and after a couple group name changes, we became ULI NEXT. AZRE: How does ULI NEXT’s mission to foster professional growth extend beyond other similar industry professional development programs? EM: ULI NEXT is a national ULI initiative to retain and increase engagement around our mid-career members and is offered in at least 12 District Councils. Today, ULI NEXT Arizona is four years old with 72 members and has a waiting list for 100 | November-December 2017

What is NEXT?

WHAT IT IS: NEXT supports the ULI mission by identifying, connecting, and elevating the next generation of leaders for the built environment and ULI globally. NEXT engages and supports members aged 35-45 into all of ULI’s activities. BENEFITS: NEXT provides a range of benefits to participants as they develop their leadership skills and build lasting relationships amongst peers, with ULI leadership, and throughout the ULI network. The program gives members: • Valuable networking opportunities, information, and connections to move careers forward. • A relevant voice in the organization and its program(s). • Leadership opportunities to meet individual goals. INFORMATION: arizona.uli.org

next year’s open enrollment. Unique in our industry, NEXT doesn’t have senior industry professionals running the program, but rather consists of emerging leaders and is peer-to-peer driven. Content ranges from deepdive discussions and professional development activities to conversations with industry icons, project tours and networking. It is up to the NEXT members to take on leadership roles and decide on the content and get involved to make the most of the meetings throughout the year. We identify members for each team to ensure a diversity of professional sectors and interests stressing active participation. It’s rewarding to see emerging leaders get involved instead of taking a back seat to senior industry professionals. AZRE: How does ULI NEXT add value to the industry and Arizona as a whole?

EM: NEXT provides an opportunity to exchange ideas and best practices both professionally and personally and our members take these idea exchanges and use them to better serve our clients, employees/employers and families. This strengthens the relationships within ULI, which promotes the responsible use of land in creating and sustaining thriving communities.

AZRE: Are there other benefits that come with being a part of ULI NEXT Arizona? EM: Not only does NEXT provide a peer-to-peer platform to exchange best practices and case studies, additionally NEXT provides opportunities to take on leadership positions and grow one’s personal brand. Through NEXT, we create strong industry relationships beyond just our member meetings, to include additional events like mixers, where significant others and kids are invited as well AZRE: Why is this particular mentoring program so important to mid-level professionals who have sought to reinvent themselves? EM: The term "mid-level professional" is misleading. NEXT consists of emerging leaders within our industry who are looking to grow professionally and personally. No matter our discipline, we share interests, value personal and professional growth and want to get to know each other beyond reading a short bio. No matter the industry, business is based on relationships, trust and being able to easily pick up the phone and get advice from another peer. NEXT provides the platform to do just that.

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Creating informed citizens UrbanPlan challenges students to consider how economics and urban planning shape our communities By JESSE A. MILLARD

earning the economics and intricacies of land development can be a dry topic for high school students, but the UrbanPlan curriculum at Tempe’s Desert Vista High School is engaging students by having them design their very own mixed-use development. Teams of students are tasked with submitting a site plan for a request for proposal from a faux city council. These students have to consider the RFP, neighborhood demands, financial objectives, the site’s layout and economic winds of the time while they simulate a development team. The UrbanPlan curriculum is the result of a partnership between the Urban Land Institute Arizona District Council and Desert Vista High School. For nearly 13 years, students have been working through complex problems that arise from development to create a project that meets the many, sometimes conflicting, needs of the community and project expectations. “Once students get into UrbanPlan, it’s the coolest thing to see how much they light up,” says Shannon Corcoran, the Desert Vista teacher who has been leading this project in partnership with ULI Arizona. “Every day, they come in and they’re working — and they’re working hard.” Each student is assigned a role on the project, such as site planner, marketing director, financial analyst, city liaison and neighborhood liaison. The groups have to think on their feet as they must extensively review the RFP, letters from the neighborhood and finances of the project. Then,

102 | November-December 2017

students must create a development plan based off of the needs of the site, Corcoran says. Each student team has the chance to show their project to ULI members twice for feedback. For the final round of feedback, Corcoran and ULI members pretend to be a city council and they pick winning teams. The winning teams then get to go on a field trip to CityScape and UL2 in Downtown Phoenix. There, leaders from both RED Development and Native American Connections explain how developing mixed use in CityScape and affordable housing at UL2 was much like the project the students just completed in their UrbanPlan case study. “ULI has always been about nurturing tomorrow’s leaders, the emerging leaders, the future leaders of the industry, the future leaders of our communities,” says Deb Sydenham, executive director of ULI Arizona. “And starting with the high schools, with the UrbanPlan curriculum, is an amazing foundational component of that.” UrbanPlan has inspired many of the students who have participated over the years. Nicholas Henderson, an ASU student who is focused on sustainability studies, experienced UrbanPlan when

EXPERTISE: Jim Belfiore, owner and president of Belfiore Real Estate Consulting, is one of the ULI Arizona members who lends his time to give UrbanPlan students feedback on their projects.

he was a student at Desert Vista. He had never taken a course similar to UrbanPlan, one that made him realize just how the real world works and how development projects are done. “I think UrbanPlan has led to my success with sustainability,” Henderson says. Max Jackanow is another former Desert Vista student who participated in UrbanPlan. Jackanow says UrbanPlan allowed him to dive into a project acting as a financial analyst, looking at data and making decisions. When it was time for him to go to ASU, Jackanow knew what type of career he wanted to pursue due to his time in UrbanPlan. He has since graduated from ASU and now works as an accountant. “Having done this for so long, I have so many kids who have gotten so much out of this project that it has become something they can do in their future careers,” says Corcoran.