AZRE Nov/Dec 2018

NOVEMBER-DECEMBER 2018

TEMPE RISING

INSIDE:

Healthcare p. 26

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AIA Awards p. 48

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AAED p. 57

Momentum will carry Arizona forward

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rizona commerical real estate has been on an upward trajectory for several years, so long, in fact, that the most common topic of discussion at industry events is, “when are we going to see some downward momentum?”

Industry experts don’t agree on when the growth will taper off and the market will slow down.

What most do agree on, however, is that the downward slide will be much less severe than what the industry went through late in the 2000’s.

I don’t count myself among the industry experts, but you can count me among those who think the market momentum is strong enough to carry Arizona forward for another five years. Just look at some of the topics that we talk about in this final edition of AZRE Magazine for 2018: The state is continuing to see companies expand or move their operations into Arizona. The Arizona Association for Economic Developers continue to rack up victories in the tug-of-war with other markets to lure companies. Arizona has drawn groundbreaking companies like Nikola Motors, Airobotics and Axiscades to the state. Those kinds of hightech companies tend to serve as magnets for associated industries, so look for this trend to continue.

Arizona State University’s plans for the Novus Innovation Corridor is another, long-term economic driver. In fact, the whole Tempe Town Lake corridor is one of the biggest draws in the Southwest. With Catellus leading the development process, the Novus corridor will likely be an area of growth for the next decade.

The recent uptick in construction of healthcare facilities, including Mayo Clinic’s announcement that the Phoenix campus would nearly double in size, is evidence that the Valley is becoming a place for industry-leading medical facilities.

Those are just three of the topics that are covered in this edition, but there will be plenty more where that came from in 2019. We can’t wait to see what’s next.

Steve Burks Associate editor, AZRE steve.burks@azbigmedia.com 2 | November-December 2018

President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Associate editors: Steve Burks | Alyssa Tufts Interns: Brooke Miller | Lurissa Carbajal Contributing writers: Alison Bailin Batz | Suzanne Kinney Joyce C. Grossman | Tim Lawless ART Art director: Mike Mertes Design director: Bruce Andersen MARKETING/EVENTS Marketing & events manager: Cristal Rodriguez Marketing specialist: Gloria Del Grosso Marketing designer: Patrick Griffin OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Amanda Bruno AZRE | ARIZONA COMMERCIAL REAL ESTATE Director of sales: Ann McSherry AZ BUSINESS MAGAZINE Senior account manager: David Harken Account managers: April Rice | Kim Bailey AZ BUSINESS ANGELS AZ BUSINESS LEADERS Director of sales: Sheri Brown HOME & DESIGN EXPERIENCE ARIZONA | PLAY BALL Director of sales: Donna Roberts RANKING ARIZONA Director of sales: Sheri King

AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602)277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2018 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.

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CONTENTS

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

22 Legislative Update

73

26 Healthcare

42 Education 46 Self-Storage

48 AIA Awards

14

57 Arizona Association for Economic Development

73 Land Development

48

On the cover:

100 Mill Avenue

4 | November-December 2018

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

26

TRENDSETTERS Disasters likely to impact insurance rates

$ billion

In its annual Emerging Trends in Real Estate survey, the need to watch in 2019.

Urban Land Institute highlighted several issues to watch in Arizona, fortunately, has remained relatively disaster 2019. Among those issues was insurance. free in recent years, but the nationwide trend will likely In 2017, the ULI report presented data showing the affect insurance for commercial real estate in all parts of increasing incidence of natural catastrophes, most due to the country. climate change, since 1980. After the devastation brought on by Hurricane Total Cost of Major National Disasters in the United States, 2007-2017 Michael in October, 2018 appears to show that trend is continuing. The $350 evidence of floods, wildfires, and $300 violent storms in 2018 indicates that $250 the risk has been intensifying. That $200 means that property/casualty insurers $150 and reinsurers are experiencing $100 massive payouts, and they will be $50 pricing this into premiums going $0 forward. Having adequate coverage 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 and budgeting for increased operating expenses should definitely be high on Source: NOAA National Centers for Environmental Information, the list of items that property owners “U.S. Billion-Dollar Weather and Climate Disasters.” 2018.

Founder’s Day brings out Kitchell’s service side

DP Electric moves to new corporate headquarters

Kitchell recently celebrated the spirit of its founder, Sam Kitchell, through a variety of community service projects.

255 of its employees from jobsites, offices, and project teams in Arizona, California, Texas and Washington volunteered during the inaugural Founder’s Day, which took place from Sept. 5-16.

Without any specific guidelines other than volunteerism, Kitchell employees organized groups to support low-income families, at-risk children, Veterans, cancer prevention, suicide prevention, kids’ mentoring programs, kindness outreach projects and school improvement projects, among other causes.

During the course of the Founder’s Day efforts, some pretty cool numbers transpired with 1,012 total volunteer hours and $17,500 donated by The Kitchell Foundation.

The family had grown out of its old space, so in order to bring the whole family under the same roof, Dan Puente had to go big. Puente’s family-run DP Electric Inc. recently moved into a new company headquarters, a 35,000 square foot space at 2210 S. Roosevelt St. in Tempe.

“We formerly operated DPE out of two separate offices as we had outgrown our initial space,” said Puente, founder & CEO. “Our new home brings the whole company together under one roof. The open concept of the new office allows for more interaction, to embrace our collaborative culture. Our employees spend a lot of time at the office and it is important they are in an environment that is cohesive and fun. That’s why we included a gym, breakroom and event space.”

The state-of-the-art office includes an open concept floor plan with offices flanking work stations, and several areas for meetings and collaboration. Each work station and office is equipped with desks that have the capability to be used sitting or standing for ease of work and

6 | November-December 2018

comfort. An employee gym, locker rooms and event space that opens to a large patio for entertaining have been designed for employees and guests to enjoy.

The new DPE headquarters incorporates many modern technology features such as skylights set up for daylight harvesting.

Other features include: a Lutron wireless lighting control system and white noise reduction modules for an office-wide sound masking system. This system is designed specifically for open concept spaces to allow for quiet and privacy in these types of configurations.

firstplace Phoenix opens its doors First Place AZ, a Phoenix nonprofit combining apartments, a residential training program and a global leadership institute, is ushering in a new era of housing options for special populations.

The 81,000-square-foot, $15.4 million First Place–Phoenix, designed for adults with autism and other different abilities, recently held its official opening ceremony with local dignitaries, business leaders and families attending. Residents began moving into the four-story property in July, drawn to First Place for its focus on innovation and community building.

First Place–Phoenix features three main components: First Place Apartments: 55 studio, one-, two- and four-bedroom units for lease that include a suite of independent living supports, a wide range of property amenities and a robust community life.

First Place Transition Academy: A two-year, tuition-based residential training program for participants that is focused

on independent living and developing interpersonal skills/career readiness.

First Place Global Leadership Institute: An international training center for professionals, direct service support providers and medical personnel, and a robust site for research and public-policy advancements.

The state-of-the-art building at Third St. and Catalina Ave. includes special security features, a 24/7 staff, sound barriers blocking out street sounds, nontoxic/low-VOC materials and special lighting to mitigate the sensory issues some people with autism experience.

Apartments also include convenient “grab and go” stations where residents can charge their phones and store keys and other important items in an easy-to-remember location.

Hardison/Downey construction of Phoenix was the general contractor and RSP Architects of Tempe was the architect. Financing is being provided by Clearinghouse CDFI, Dudley Ventures, DV Community Investment, First Place Financing Facility and US Bank.

DENISE RESNIK: First Place

BOLD MOVES: “The client allowed us the freedom to create a design fitting to their brand and culture,” says Lisa Bentley, principal at McCarthy Nordburg.

“And the client was not fearful of using bold and bright colors in the finish material selections.”

McCarthy Nordburg reinvents the break room If they were asked the experts at McCarthy Nordburg could reinvent the wheel. Since they weren’t asked, they reinvented the break room for ARM in Chandler.

“We focused on flexible planning and multipurpose spaces,” says Lisa Bentley, principal at McCarthy Nordburg. “For example, the ‘all-hands/break room’ accommodates two large functions and maximizes usage, while minimizing real estate costs.”

The “all-hands/break room?” “The all-hands meeting room is a primary staff meeting area,” Bentley says. “It also serves as the main break room, which is a full-service employee lounge for dining and playing ping pong.”

So does Bentley think McCarthy Nordburg established a trend with its work at ARM? “We definitely did with the all-hands/break room,” she says, “because to satisfy both functions, it had to include the appropriate acoustics, lighting and technology. It is about smart planning.”

7

TRENDSETTERS

Apartment builders stay on high end In 2012, just 52 percent of the apartments built in the United States were of the high-end category. Based on the high demand, developers shifted towards building more luxury rental buildings in the past six years. By 2015, 76 percent of large-scale rental developments were considered luxury or high-end properties. In 2018, that number has skyrocketed to 87 percent.

In RentCafe’s latest study, the Phoenix Metro market fell in line with what was happening across the country. Here are the main highlights: • Phoenix Metro was among the most active metros in the high-end apartment

Percent of large-scale high-end rental developments out of large-scale rental developments completed in 2017.

Source: Yardi Matrix

sector last year, as 87 percent of the of the apartments built in 2017 were luxury. Preliminary numbers from the first half of 2018 show that the trend continues in the Phoenix Metro, as 83 percent of the apartments built are high-end.

• When looking at a city level, Phoenix saw an even higher share of luxury apartments: in 2017, 91 percent of the new developments were luxury units.

• In terms of total stock, by mid-2018 only 26 percent of the city’s developments were high-end, just a bit over the national average (23percent).

Industrial market continues to hold steady Colliers International paints a fairly consistent picture of the Greater Phoenix Industrial market. The 3rd quarter saw a bit of a slowdown after a very active 2nd quarter. Net absorption was positive and the vacancy rate rose slightly, but is still at 7.4 percent, a significant improvement from double-digit vacancy rates in 2015. In other highlights of the Colliers International report: ■ New construction totaled more than 1.5 million square feet during the third quarter, and developers have completed more than 4.3 million square feet year to date.

■ Approximately 5 million square feet of industrial space is currently under construction, down from about 6 million square feet in the second quarter.

■ More than 1.3 million square feet came online in the Southwest Valley during the third quarter, after less than 350,000 square feet was completed in the first half of the year.

■ Forecast: Completions of industrial space will accelerate in the fourth quarter, bringing the total for all of 2018 to approximately 7.5 million square feet. Several of the projects delivering late in the year will be spec developments, which will push vacancy higher.

8 | November-December 2018

Retail outlook mixed in market report Marcus & Millichap’s Second Half 2018 Retail Research Market Report shows investors and developers have remained cautiously optimistic during the year. Construction fell slightly, from 1.8 million square feet each of the past two years down to 1.4 million square feet.

The vacancy rates pushed downward to 7.9 percent, a decrease of 140 basis points, and rents were elevated to $16.02 per square foot.

The report pointed out three investment trends in the market: Neighborhood centers along U.S. 60 in Gilbert and Mesa were popular investment options during the past year. Private investors were the primary suitors of these assets. Sales prices hovering around $5 million.

• Several investors with limited capital directed their attention to the West Valley, particularly the Arrowhead Ranch area, where community centers near the 101 Loop had relatively affordable price tags.

• Grocery-anchored centers near major freeways continue to attract many prospective buyers as these assets are desired by landlords seeking to optimize their tenant mix.

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EXECUTIVE PROFILE

Barry Chasse talks drive, determination and developing Arizona

By ALISON BAILIN BATZ

W

hile in high school in New Jersey, Barry Chasse took an elective drafting course.

“I was hooked on day one,” says Chasse, who would go so far as to intern for a real estate developer right after graduation. This led to the move across the country to Arizona in 1987 — site unseen — to take advantage of Arizona State University’s awardwinning construction program (now called the Del E. Webb School of Construction at ASU), not to mention the 300-plus days of sunshine in the Valley per year.

While just a college sophomore, Chasse pursued opportunity early yet again, taking on a contracting internship at 20-years-old.

“It was a small company, but it had just merged with one of the biggest contracting firms in the country right as I was graduating. They were in start-up mode in Arizona, and I was their first official employee,” says Chasse, who would go on to lead the company for 17 years, growing it to 150 employees and eventually into one of Arizona’s largest contractors.

10 | November-December 2018

But by 2007, Chasse was ready to chase a new dream: opening a company of his own.

“In church one Sunday, a pastor said that everyone was created to make a difference,” says Chasse.

“Inspired, I took that concept and built what would become Chasse Building Team’s purpose: Building to Make a Difference." Though small, Chasse earned a tenant improvement project for Vestar at Tempe Marketplace, and then a $4 million retail center project.

Opportunities in the education realm soon followed.

“School and community center projects became a niche for us, and still remain a passion of mine.

Everyone involved in the process is often doing it as a labor of love, and it shows,” says Chasse, whose team is known for partnering with schools, teaching students about STEM and the construction industry as they work on related projects in the students’ community. “There is nothing more rewarding than being a part of projects that benefit kids and the community.”

CBT would go on to do hundreds of school projects, including the recently completed $76 million Canyon View

High School in the Agua Fria Union High School District. In addition to schools, Chasse found similar success in multi-family, office, retail centers and nonprofit work. Today, a 125-member team averaging more than $200 million in client engagements each year, Chasse Building Team’s successes include Tucson Premium Outlets, Catholic Charities MANA House, Artspace Mesa Lofts, Bob and Renee Parsons Boys & Girls Club, Overture Kierland and Crescent Highland Apartment Complex.

“Nonprofit work is especially important to us, both on the construction side, where we make every effort to reduce costs and add value, and as a holistic part of our company culture,” says Chasse, a longtime Boys & Girls Clubs of Greater Scottsdale advocate who served as chairman of the board and headed the organization’s capital campaign. Today Chasse is a member of The Board of Governers and Board of Trustees.

In addition, since its inception, Chasse Building Team has not only donated $3 million to local non-profit organizations but its team members have volunteered, on average, more than 2,500 hours annually for the past several years.

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AFTER HOURS

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Tenacity serves Greenwood well in all phases of his life

By BROOKE MILLER

O

ur reactions to the experiences we endure illuminate our innate character and, for Andy Greenwood, he is the pinnacle of tenacity.

“My first experience (with leukemia) was at 14 years old; the second when I was 22,” said Greenwood, who is assistant vice president of development at Macerich.

Beyond being a two-time cancer survivor, Greenwood is also known within his community as a church leader, CrossFit coach, nutrition enthusiast and avid exerciser.

“I had a bone marrow transplant

12 | November-December 2018

in January of 1992 for the first one, and the second, at 22, was treated with what’s called a donor lymphocyte infusion,” said Greenwood. “And then, life’s been great.”

Greenwood leads church groups at the Church of Jesus Christ of Latter Day Saints, where he shares his past experiences with fighting leukemia as well as advocates for proper nutrition and exercise to improve health.

“You sit down and learn a lot about a lot of people, and that’s certainly been a component of my life that has been important to me,” said Greenwood.

Greenwood describes religion as a “turning point” in his life. He finds great value in discussions where he has the opportunity to disclose his personal journey, as well as learn about others’ experiences. He believes in learning and growing together.

Greenwood’s passion for exercise moved him to participate in CrossFit within the last four years, which ultimately led him to obtain a Level 1 certification and become a CrossFit coach.

“Now, I find myself sore, but that is connected to weight training, not general health,” said Greenwood.

“I’ve never felt better. I’ve never been stronger. I’ve never been fitter as I go into my 40s.”

Greenwood believes that deeming nutrition and exercise as “paramount” would be an understatement.

“For a period of time, I had been undergoing esophageal strictures, a tightening of the esophagus, and it caused me to lose a lot of weight,” said Greenwood. “For whatever reason, having started to exercise and focusing on nutrition … was really a lifestyle change that went from not doing well nutritionally, and subsequently physically, to changing that dynamic in my life.”

Greenwood explains that there was a period of time where his nutrition plan was “religious.” He followed a macro diet, measured food, ate at very specific times and focused on attaining a healthy weight.

“This experience really has a tendency to help you understand what’s important in life, so a lot of inspiration mainly comes from understanding that there was a period of life where you couldn’t do what you wanted to do,” said Greenwood. “Not many cancer patients get an opportunity at a second chance, so there’s a desire to not waste it.”

Between serving his community as a church group leader, CrossFit coach, diet and exercise believer and being a father, Greenwood has certainly not wasted his second chance.

“In high school, after my initial round of treatment, I had a friend once tell me: ‘Keep your chin up and your back straight,’” said Greenwood. “That’s been a mantra of sorts that has always been there.”

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NEW TO MARKET A

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E

MIXED USE A 100 MILL AVENUE DEVELOPERS: Hines and Cousins Properties GENERAL CONTRACTOR:Â Undecided ARCHITECT: Davis BROKERAGE: CBRE LOCATION: SW corner of Rio Salado Pkwy and Mill Ave., Tempe SIZE: 15 story office tower START/COMPLETE: 2Q 2019/4Q 2020

14 | November-December 2018

INDUSTRIAL B WASHINGTON 83 DEVELOPER: Lincoln Property Company GENERAL CONTRACTOR: Butler Design Group BROKERAGE: Cushman & Wakefield LOCATION: NW corner of Washington St. and 83rd Ave., Tolleson SIZE: 127,885 SF START/COMPLETE: 4Q 2018/3Q 2019

HOSPITALITY C CANOPY HOTEL BY HILTON DEVELOPER: Driftwood Acquisitions & Development GENERAL CONTRACTOR: Sundt Construction ARCHITECT: Allen + Philp Partners LOCATION: NE corner of University Dr. And Myrtle Ave., Tempe SIZE: 200 guest rooms VALUE: $60 million START/COMPLETE: October 2018/Q4 2019

B

C

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INDUSTRIAL D THE LANDING AT PMG DEVELOPER: Marwest Enterprises, LLC GENERAL CONTRACTOR: D.L. Withers ARCHITECT: Ware Malcomb BROKERAGE: CBRE LOCATION: 613 E. Ray Road, Mesa SIZE: 280,000 SF (6 buildings ranging from 5,000 SF to 100,000 SF) VALUE: $30 million START/COMPLETE: September 2018/1Q 2019

EDUCATION E WEST POINT HIGH SCHOOL DEVELOPER: Tolleson Union High School District GENERAL CONTRACTOR: Chasse Building Team ARCHITECT: ADM Group LOCATION: NW corner of Avondale and Encanto Blvds., Avondale SIZE: 310,000 SF VALUE: $108 million START/COMPLETE: September 2018/July 2019 (Phase One)

OFFICE F 777 TOWER AT NOVUS INNOVATION CORRIDOR DEVELOPER: Arizona State University, Catellus Development Corporation and Ryan Companies General Contractor: Ryan Companies ARCHITECT: Davis BROKERAGE; JLL and Phoenix Commercial Advisors LOCATION: NW corner of Rural and University, Tempe SIZE: 162,000 SF VALUE: WND START/COMPLETE: 1Q 2019/2Q 2020

15

BIG CHANGES at Park Central

By STEVE BURKS

W

hile technically not one, large real estate deal, the redevelopment plan for the Park Central Mall area is undoubtedly a big deal.

Slowly, but surely, bit by bit, the development duo of Plaza Companies and Holualoa Companies are unveiling their new vision for the Park Central Mall site along Central Ave. in Phoenix.

The first glimpse came midway through 2017 when Plaza and Holualoa

16 | November-December 2018

announced plans to reinvent the aging Park Central Mall. That $57 million purchase and renovation plan is now past the midway point, as DPR Construction is in the midst of major steel work on the site as crews transform the project into a chic, modern office and retail property.

At the time of the purchase, Holualoa chief operating officer Stan Shafer said, “The potential of this property to not only succeed, but to be

an economic engine for the community, is truly limitless.�

More of that potential was unlocked in September, when it was announced that Creighton University was going to build a new, $100 million health sciences campus at Park Central. The 200,000 square foot building, which will be located on the southeast corner of the property, is expected to house 800 health sciences students. The plan includes a four-year medical

CREIGHTON UNIVERSITY: $100 million health sciences campus at Park Central.

school, nursing school, occupational and physical therapy schools as well as pharmacy, physician assistant and emergency medical services programs.

“The new Park Central will have a focus not only on the creation of worldclass office, retail and public spaces, but also on a commitment to health

and innovation,” Plaza Companies CEO Sharon Harper said at the time of the announcement. “Creighton University’s commitment to innovating in health care education makes it a great partner, and we couldn’t be more pleased to have them join the Park Central family.”

Just when it seemed like all of the

chips were in play at Park Central, Plaza and Holualoa announced another move on October 12. The duo purchased 21 acres of property around Park Central Mall for $28 million and announced a Phase II for the property that would include a nine-story, multifamily residential development, a 2,000-space parking structure and a 193,000 square foot mixed-use building.

“With Phase II now included, the entire property is now put back together with a master vision for its future,” Harper said. “The synergies, benefits and impact are much more than they could have ever been if we were only able to do the first phase of the project. Between the impact of the new construction, the Creighton facility and the revitalized former mall space, Park Central will truly become an economic engine for Phoenix’s urban core.”

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MULTIFAMILY/SALES

$119.9M | 863,545 SF THE DISTRICT ON APACHE 977 E. Apache Blvd, Tempe BUYER: Blackstone REIT SELLER: Education Realty Trust, Inc. BROKER: N/A

$76M | 280,000 SF GREEN LEAF ARTS DISTRICT

222 E. McDowell Rd., Phoenix BUYER: Green Leaf Capital Partners SELLER: Alliance Residential Company BROKER: CBRE

$69.5M | 253,016 SF

MURIETTA AT ASU 1717 S. Dorsey Lane, Tempe BUYER: Priderock Capital Partners, LLC SELLER: IMT Capital BROKER: CBRE

$74M | 381,333 SF

COUNTRY BROOK 4909 W. Joshua Blvd., Chandler BUYER: MG Properties Group SELLER: Standard Portfolios Asset Management BROKER: Colliers International

$67.8M | 696,384 SF

THE RESIDENCES AT STADIUM VILLAGE 16485 N. Stadium Way, Surprise BUYER: Blackstone REIT SELLER: Milestone Investments BROKER: JLL

RETAIL/SALES

$17.3M | 43,371 SF QC DISTRICT 21227 S. Ellsworth Loop Rd., Queen Creek

BUYER: Sunbelt Investment Holdings SELLER: Thompson Thrift BROKER: Phoenix Commercial Advisors

$14.7M | 102,033 SF LAGUNA VILLAGE

5835 W. Ray Rd., Chandler BUYER: Tayseer Odeh SELLER: Tryerion Partners BROKER: Bernstein Murphy Co.

$10.5M | 103,294 SF

RAINTREE & LOOP 101 8688-8690 E Raintree Dr., Scottsdale BUYER: Jim Riggs SELLER: C-III Asset Management BROKER: NAI Horizon

18 | November-December 2018

$11.9M | 31,240 SF

QC DISTRICT 21323-21373 S. Ellsworth Loop Rd., Queen Creek BUYER: Sunbelt Investment Holdings, Inc. SELLER: Thompson Thrift BROKER: Phoenix Commercial Advisors

$10.5M | 88,408 SF KOHL’S

1497 E. Williams Field Rd., Gilbert BUYER: Spirit Realty Capital SELLER: Haleakala Ranch Company BROKER: Stan Johnson Company

It’s the big deals and the brokers who close them that make the market an interesting one to watch. Here are the top notabe sales for the months of August and September.

Sources: Daniel Zawisha at Cushman & Wakefield Research.

OFFICE/SALES

$48M | 149,208 SF PHASE 1 25700 N. Norterra Pkwy, Phoenix

BUYER: JDM Partners, LLC

SELLER: N/A BROKER: CBRE

$40.75M | 213,501 SF

THE SCOTTSDALE FORUM 6263 N. Scottsdale Road, Scottsdale BUYER: CapRidge Partners SELLER: Clarion Partners BROKER: Cushman & Wakefield

$39.25M | 163,607 SF

CONSUMER CELLULAR AT DEER VALLEY 17500 N. Black Canyon Hwy., Phoenix BUYER: BPM Real Estate Group SELLER: Walton Street Capital, LLC BROKER: CBRE

LAND/SALES

$39.75M | 132,240 SF

LPT-VANGUARD 8501 E. Raintree Dr., Scottsdale BUYER: Tryperion Partners SELLER: Liberty Property Trust BROKER: N/A

$25.3M | 178,792 SF

CAMELBACK ARBOLEDA 1661 E. Camelback Road, Phoenix BUYER: Fenway Properties SELLER: N/A BROKER: JLL

INDUSTRIAL/SALES

IMAGERY ©2018 GOOGLE

$83M | 5,734,426 SF

$98.325M | 1,009,351 SF BUCKEYE LOGISTICS CENTER

$48M | 11,260,260 SF

$83M | 715,000 SF

Tatum Blvd., N. of Loop 101 BUYER: Nationwide Life Insurance Co. SELLER/BROKER: Arizona State Land Department

SSWC Litchfield Road & Hwy 85, Goodyear BUYER: Microsoft Corp.

SELLER: Carefree Partners Investments BROKER: N/A

$21.3M | 3,356,298 SF

S. Val Vista Dr., Gilbert BUYER: Maracay 91, LLC SELLER: Hamstra Family Living Trust BROKER: N/A

$13.25M | 320,739 SF

2628 S. Voyager Dr., Gilbert BUYER: Maraca 91, LLC SELLER: Annecy Recovery Acquisition LI BROKER: N/A

$12.65M | 2,414,737 SF

S. Power Rd. & Ray Rd., Mesa BUYER: Exeter Property Group SELLER/ BROKER: Arizona Department of Transportation

- AMAZON 6845 W. Buckeye Rd., Phoenix BUYER: CrossHarbor Capital Parners, LLC SELLER: The Koll Company BROKER: N/A

400 S. 99th Ave., Tolleson BUYER: N/A SELLER: N/A BROKER: N/A

$48.5M | 684,420 SF

BUILDING 1 7775 W. Buckeye Road, Phoenix BUYER: CBRE Global Investors, Ltd. SELLER: N/A BROKER: JLL

$27.2M | 335,459 SF RIVERSIDE @ 51ST

2300 S. 51st Ave., Phoenix BUYER: N/A SELLER: N/A BROKER: N/A

$12.65M | 166,080 SF BUILDING 3

4445 E. Elwood St., Phoenix BUYER: Exeter Property Group SELLER/BROKER: Arizona Department of Transportation

19

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LEGISLATIVE UPDATE

Ready to get to work with new legislature

C

ongratulations to our newly elected Arizona state legislature.

The Arizona Association for Economic Development (AAED) looks forward to partnering with you in attracting and growing businesses with high quality jobs to Arizona. For us to do this, we will need your assistance in supporting programs and policies that will enhance our state’s competitive position. AAED’s top policy priorities for success in 2019:

ENSURE A QUALIFIED WORKFORCE AND WORKFORCE PIPELINE AAED supports sustainable policies 22 | November-December 2018

and funding for education programs that result in a thriving qualified Arizona workforce. In recent years, Arizona has made strides in increasing education funding. It is a positive start to a continuing legislative dialogue for high-quality educational systems that will provide Arizona with an additional asset when attracting companies and talent. Supporting not only a healthy innovation pipeline, but also a robust internship and craft training ecosystem have verifiable impacts on the overall economic health of our state. A qualified workforce with a balance of general education and career, technical,

Joyce C. Grossman

Executive Director Arizona Association for Economic Development

& workforce education and training will support Arizona’s competitiveness in the retention and attraction of high wage jobs.

RETAIN AND MODERNIZE EXISTING ECONOMIC DEVELOPMENT PROGRAMS AAED membership opposes any unnecessary changes that reduce or delay existing and proven economic development tools and programs. Many companies choose to relocate or expand in Arizona because of these programs. The need to remain consistent and competitive is critical to Arizona’s long-term economic development success. Creative programs that incentivize business creation and expansion enhance the state’s appeal both nationally and globally. AAED applauds the renewal of the Arizona Commerce Authority’s charter.

Continued legislative support is necessary to provide programmatic funding for its mission of job creation, capital investment and higher wages.

LOCAL TAX IMPACTS ON BUSINESSES In previous years, the Arizona Legislature pushed funding of state government mandates down to local jurisdictions to balance the State budget. Due to assessment ratio for business property

taxes, the net effect of this budgeting technique was an increased burden on Arizona businesses. AAED advocates for holistic and meaningful tax reform that benefits the entire state, while keeping vital funding intact. Recently, the taxation of digital goods and services has become a major issue that reflects changes in technology and increased access to digitally available content. AAED supports clarity in Arizona’s tax statutes relating to digital goods and services. However, lawmakers need to carefully consider the impact such taxation could have on local governments when reviewing potential legislation.

FUND TRANSPORTATION AND INFRASTRUCTURE AAED supports mechanisms that encourage the development, maintenance, and improvement of infrastructure that results in business development and job creation.

Technological advances must be included when considering transportation needs.

Autonomous transportation and “Smart City” technologies have tremendous economic development potential for Arizona and its businesses. In addition

to ongoing Highway User Revenue Fund appropriations AAED urges the Legislature to explore sustainable ways to meet future transportation needs and maximize Arizona’s economic competitiveness.

WATER RESOURCE MANAGEMENT Water is crucial for the attraction, retention, expansion and long-term viability of business in Arizona.

Recent reports from the U.S. Bureau of Reclamation have stated that the Colorado River Basin (CRB) has a 50/50 chance of moving into a shortage declaration in 2020. Therefore, AAED advocates for a statewide dialogue on and implementation of a Drought Contingency Plan (DCP). The DCP will allow Arizona to work collaboratively with other states dependent on the Lower CRB, so that when water levels in Lake Mead reach critically low levels, no single state feels the brunt of a water shortage. AAED asks the Legislature to allow the Arizona Department of Water Resources to participate in the planning and enactment of such a plan.

If you would like to partner in strengthening Arizona’s economy, consider joining AAED today at aaed.com.

BOMA office impact to national and state economies The commercial real estate industry is a key driver of the nation’s economy.

According to the latest numbers, the 10.5 billion square feet of commercial office space located within the markets served

by BOMA’s 91 local associations, which includes Greater Phoenix, supported 46.9 million office jobs that contributed nearly $235 billion to the national gross domestic product (GDP). As a result, commercial real estate is one of the leading employers in the country as this number of office jobs is about one-third of all U.S. workers.

For every dollar laid out in building operations expenditures, the U.S. economy gained a multiplier of $2.64.

These numbers demonstrate an impact

that is often not appreciated nor known even by the millions of Americans who work in the properties they occupy each work day.

Regarding the State of Arizona alone, office buildings in Greater Phoenix accounted for an astounding $2.19 billion contribution to the state economy in 2016 and an additional $329 million in Greater Tucson. This activity and impact supported 19,295 jobs in Greater Phoenix and 2,906 in Greater Tucson in 2016 which is the last year of known statistics.

With cranes dotting the landscape in multiple local municipalities with numerous mixed-use projects underway, we expect these numbers to continue

Tim Lawless BOMA

robust growth both nationally and in Arizona in the next few years. As far as support for vital government services such as our K-12 schools, the new taxable personal earnings annually are about $700 million in Greater Phoenix and $105 million in Greater Tucson.

Tim Lawless, Executive Director of BOMA of Greater Phoenix 23

LEGISLATIVE UPDATE ANDREW CHENEY: Chairman speaks at Best of NAIOP Awards.

always-popular golf tournament at Talking Stick Resort.

EDUCATION NAIOP members had access to monthly educational programs and CLE classes. This year’s topics included the impact of healthcare transformation on medical office space, 1031 exchanges, artificial intelligence, and the new tax laws. We also heard from Congressman David Schweikert and candidates for Phoenix mayor.

PUBLIC POLICY

NAIOP Arizona Year in Review

T

he Arizona Chapter of NAIOP had a banner year for events and educational programs as well as several important successes on the public policy front. We are 800 members strong with representation from all facets of the CRE industry. In 2018, 99 companies participated in our Corporate Sponsors program.

EVENTS Best of NAIOP, our annual awards event, had a new format this year.

We condensed the awards ceremony to maximize time for networking and celebration. We recognized industry leader Pete Bolton with the Award of Excellence for Lifetime Achievement. Other winners included ViaWest Group for Owner/Developer of the Year and Marina Heights for Transaction of the Year.

Night at the Fights witnessed a crowd of more than 900. Attendees at this sold-out event enjoyed an action-packed evening of professional sanctioned boxing, casino games, music, dinner, and networking.

The event video produced by Small Giants won national recognition as a 24 | November-December 2018

Suzanne Kinney

President, NAIOP-AZ Council Gold Winner from MarCom, one of the largest, most-respected creative competitions in the world.

NAIOP members also enjoyed networking events including the annual Merc Mixer in July and Oktoberfest at CBRE. It was a special treat to be part of a joint mixer with our friends at Urban Land Institute and Valley Partnership at the newly remodeled Sun Devil Stadium this fall. We rounded the year out with a night of comedy at Stand Up Live, a presentation on technology and culture from entrepreneur and award-winning author Randi Zuckerberg, and our

The biggest public policy issue NAIOP worked on during the 2018 legislative session was the effort to reform Government Property Lease Excise Taxes (GPLET). What began as a discussion of the definition of “slum and blighted” land evolved into a debate over the size and shape of Central Business Districts (CBDs).

The final bill protects existing GPLET projects while increasing the integrity of the program.

NAIOP played an instrumental role in legislation related to the allocation of liability for construction defects.

We helped stop a bill that would have limited indemnity agreements in construction contracts and prohibited contractors from requiring subcontractors to hold them harmless.

NAIOP also supported Gov. Doug Ducey’s 20x2020 plan to provide teachers with a pay raise. We continue to be involved in efforts to find sustainable funding sources for education that will not damage our state’s ability to attract new businesses.

LOOKING AHEAD As we enter 2019, we plan to build upon these successes. We will be offering more compelling content and networking opportunities for our members. We will build our influence in the public policy arena through targeted pursuit of legislation that will make Arizona a more competitive place to do business. And we will continue to grow our membership and be a leading voice for the CRE industry.

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HEALTHCARE

IN GOOD HEALTH Medical center construction and expansion hits a fever pitch

26 | November-December 2018

By STEVE BURKS

L

ike just about every other market segment in Arizona, medical center development is moving rapidly. Heading into 2018, Banner Health was fresh off the completion of a $179 million emergency department expansion at Banner University Medical Center in Phoenix and DPR Construction was already well on its way to completing the $239 million new patient tower at that campus.

The year ended with several projects either breaking ground or in the planning phases, including six major medical center projects that total $1.37 billion. Here’s a look at what healthcare projects are on their way as the calendar turns to 2019:

$648M

MAYO CLINIC EXPANSION

Location: 5777 E. Mayo Blvd., Phoenix Architect: Undetermined General Contractor: Undetermined Anticipated opening: First phase, Fall of 2020; final phase, April 2023

Details: This expansion plan will nearly double the size of the Mayo Clinic Phoenix campus over five years. The Arizona Forward Project will add 1.4 million square feet of building space (to the existing 1.7 million) with expanded clinical capacity, support services and infrastructure at the campus located near Loop 101 and 56th Street in North Phoenix.

The expansion plan increases the number of inpatient beds from 280 to 374 by 2023 and creates close to 2,000 new jobs, including nearly 200 physicians by 2029.

The highlights of the expansion include a new six-story patient tower; a three-floor addition to the existing fourstory Mayo Clinic Building; a new threestory building to house an expanded Emergency and other departments; expanded patient and infrastructure space; and additional parking.

27

HEALTHCARE $194.8M

CHANDLER REGIONAL MEDICAL CENTER EXPANSION Location: 1955 W. Frye Road, Chandler Architect: Devennney Group Architects General Contractor: McCarthy Building Co., Inc. Anticipated completion: 2020

INTERIOR RENDERING - CURRENT

28 | November-December 2018 CENTER - TOWER D CHANDLER REGIONAL MEDICAL CHANDLER, ARIZONA 09.28.18

Details: This Dignity Health project will involve constructing a new five-story patient-care tower and a new parking structure with additional surface parking to accommodate over 1100 vehicles. In addition to the new construction, renovations to existing space will also allow for eight new surgical suites, and expansions of key outpatient services and operational departments.

The new patient care structure called “Tower D” will create space for 132 additional patient beds. It will bring the hospital’s total bed count to 429, relieving current capacity constraints. Tower D will be built south of Chandler Regional’s main entrance in what is currently a parking area.

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HEALTHCARE $170M

HONORHEALTH SONORAN MEDICAL CENTER CAMPUS

Location: Just east of I-17, north of Deer Valley Rd. in Phoenix.

Architect: Devenney Group Architects General Contractor: McCarthy Building Co., Inc. Anticipated opening: September 2020

Details: The new hospital will form the centerpiece of the HonorHealth Sonoran Medical Center campus in north Phoenix. The hospital will open with 40 beds, with the ability to expand to nearly 80.

The 210,000 square foot facility will include: • 24-hour emergency care for patients of all ages.

• Comprehensive obstetrical and gynecological care, including prenatal and postpartum care, labor and delivery services, and a Level II neonatal intensive care unit.

• Clinical expertise and state-of-theart technology in joint replacement

$150M

BANNER HEALTH MEDICAL CENTER IN CHANDLER

Location: SE Corner of Alma School Road and Loop 202 in Chandler.

Architect: SmithGroup General contractor: Okland Construction Anticipated opening: Fall 2020 Details: This is a new, comprehensive medical center in the heart of the Southeast Valley and will be the first Chandler hospital for Banner Health.

The four-story, 240,000-square-foot hospital will be adjacent to the existing Banner Health Center in Chandler.

The hospital, which has not yet been named, will open with 120 beds, and offer imaging, surgery, labor and delivery, intensive care and an emergency room. The hospital will have room for expansion as the community needs require more services.

30 | November-December 2018

surgery, minimally invasive orthopedic and spine surgery, as well as a variety of general surgery procedures, treatments and therapies.

• A beautiful facility filled with natural light and colors that reflect the surrounding desert, designed to create a healing environment.

• An Ambulatory Surgery Center with physician office space immediately adjacent to the hospital.

• Other ambulatory services such as breast health and medical imaging located on campus.

HEALTHCARE $106 MILLION

BANNER BOSWELL MEDICAL CENTER EXPANSION

Location: 10401 W. Thunderbird Blvd., Sun City General Contractor; McCarthy Construction Co. Inc. Anticipated opening: Fall 2020 Details: This project actually became a two-phase expansion, beginning in March with the announcement that Banner Health and the Sun Health Foundation were teaming up to

32 | November-December 2018

construct a $60.4 million emergency room on the campus. In late September, Banner Health’s board of directors approved expanding the project to include construction of a new six-story patient tower shell. Banner Health and its construction partners determined that building the two projects at the same time would ultimately save on costs and be less disruptive to the medical center’s operations as well as the surrounding community.

The new patient tower, which will partially sit atop the new emergency

room, will become the new main entry point for the hospital when it’s completed in the fall of 2020.

In addition to a new emergency department (ED), the project will renovate and convert the current 17,000 square foot ED into a new unit for patients requiring short-term observation.

The new ED will increase the number of beds from 42 to 56, allowing the hospital to care for up to 60,000 ED patients annually. The current ED was built to handle up to 45,000 patients annually.

HEALTHCARE

$100 MILLION

MERCY GILBERT MEDICAL CENTER EXPANSION

Location: 3555 S. Val Vista Dr., Gilbert Anticipated opening: 2020

HONORABLE MENTION Abrazo Community Health Networks are building a micro-hospital in Mesa on Baseline Rd., one mile west of Power Rd. The 32,500 square foot, $15 million project will include a 12-bed emergency department, eight inpatient rooms and an operating room. Further south in Marana, a similar micro-hospital is currently being built by Carondelet Health Network. Both projects were designed

by E4H Architects and are being built

by Adolfson & Peterson Construction.

Both facilities are expected to open by spring of 2019.

34 | November-December 2018

Details: This project is a joint venture betweeen Dignity Health and Phoenix Children’s Hospital, Arizona’s only nationally recognized pediatric hospital, and is aimed at offering superior women and children services.

The five-story medical tower will include 24 labor and delivery rooms, including six that are dedicated to

high-risk patients and 48 post-partum beds, operated by Mercy Gilbert Medical Center, along with an emergency department dedicated to obstetrics.

Phoenix Children’s will operate 50 pediatric beds, a 12-bed pediatric emergency department, pediatric operating rooms and a new 60-bed Level 3 neonatal intensive care unit (NICU).

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HEALTHCARE

PROCESS

THAT DELIVERS

Healthcare construction seeing results from Integrated Project Delivery By STEVE BURKS

36 | November-December 2018

I

t’s not a new concept, but Integrated Project Delivery, or IPD, is finding new life in Valley construction projects.

Put simply, IPD is a type of contract used for construction projects that relies heavily on collaboration between all of the key parties involved. The architect, owner, contractor and any trade partners and engineers that play a key role in the process sign on to the same IPD contract. By doing so, they all share the risk and reward together, so it brings everyone together from the beginning of the project.

BANNER BOSWELL: One of three McCarthy healthcare projects utilizing Integrated Project Delivery (IPD).

37

HEALTHCARE

BIG ROOM: With all of the parties working out of one room, communication is more open and transparent and the individual companies feel more like one big team.

“The benefits of IPD is, everybody is working toward the same goal, sharing the same money and so all of the decisions are made as a group instead of the architect drawing something and then we build it,” said Sean Williams, senior project manager for McCarthy Building Companies. “For traditional construction contracts, when there are errors or something goes wrong, there is finger-pointing. While with IPD it’s ‘hey, we have an issue, how do we solve it?’ It’s the most cost efficient, valueadd to the owner at the end because we’re all working to save money and add more value.”

McCarthy is seeing great success with the IPD process on many of its healthcare projects, including at Banner Boswell. Williams said that 38 | November-December 2018

McCarthy has three healthcare projects in the works in the Valley and all three are using the IPD approach or aspects of it.

“It’s a beneficial method for any facility, but it’s just that the healthcare industry is known for being progressive with regard to construction delivery methods ,” Williams said.

“Not everyone can just go build a hospital because of its critical and technical nature. So you get more experienced and technically advanced subcontractors, clientele, contractors who work in the space and are willing to collaborate and talk to each other and figure things out. I think eventually, it will bleed into all of the industries because the value is evident, but healthcare is where its starting.”

One of the hallmarks of an IPD project is the early engagement between all of the companies working on the project. Typically, the owner selects an architect and a general contractor. Together, those three

entities then begin interviewing partners from vital trades like mechanical, electrical, plumbing, concrete and steel to find the right fit.

Selecting companies that fit into the IPD culture is more important than finding the lowest bidder.

“That’s a big change in the industry,” Williams said. “We look at trade partners as value and not just a cost.

Just get the right partner, that’s the focus of IPD.” After the key partners are selected, there is an on boarding process, much like when an employee joins a new company. All of the leaders from the major project entities are put in a room for a couple days of team building and getting to know one another. They also come up with a mission statement and core values to clearly summarize why they are building the project, what it means for the community, what are the project goals and conditions of satisfaction.

This is done to make sure all of the

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SPONSORS

THANK YOU TO OUR 2018 SPONSORS

Ace Building Maintenance Alliance Bank of Arizona AZRE Ballard Spahr LLP CBRE, Inc. Climatec Colliers International Corporate Interior Systems Cushman & Wakefield Eagle Commercial Realty Services Gallagher & Kennedy Harbro Jaburg Wilk NAI Horizon

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arizonacrew.org 39

HEALTHCARE Common aspects of IPD: Big Room where all members of the team co- locate for open communication and collaboration from day 1 ■ Constant, real time communication between team members in person and through communications tools, such as A3 ■

parties have committed to those goals and values and will then go into the field and act accordingly.

“So, we kind of look at it like we’re setting up a company with each project, not just a construction team to go build something,” Williams said.

All of the members of the team colocate to what they call the “Big Room” for the duration of the project. In the Big Room, the schedule is posted and updated as much as necessary. With all of the parties working out of one room, communication is more open and transparent and the individual companies feel more like one big team.

“This is all about everybody colocating, staying there, working together so you’re not missing anything and being highly-efficient and effective,” Williams said.

“The space is wide open, you see everything in the process. From the outside looking in, it almost looks dysfunctional because people are having conversations that you’re not used to hearing or seeing, but in the end, you get a much better product.”

This early engagement also allows the different trades to discuss problems that might arise and come up with solutions before any work is done.

Williams cites one example, where the architectural plans called for 40 | November-December 2018

Use of Pull Plan (Last Planner System) for scheduling ■ BIM coordination of all design and construction ■ Collaboration on challenges/issues ■ Lean and respectful behavior working together ■ Profit sharing when costs reduce/efficiencies are found (incentive-based way to do construction) ■

Improving Capital Projects Symposium Interested in learning more about IPD? Attend this 2-day IPD Symposium. The event features keynote speakers, workshops, breakouts, and hands-on learning focusing on leadership, teaming and self-exploration relating to IPD. When: November 29-30, 8 a.m. to 3 p.m. (Lunch is included) Where: Hilton Phoenix Airport, 2435 South 47th Street in Phoenix Cost: $595.00 Registration and additional information: rippleintent.org

renovating the central corridor that connected several operating rooms.

The initial plans called for work that would have taken two months. All of the parties on the project collectively discussed the plan and felt that was an area that didn’t need a full renovation since it was back of house space.

Collectively, they revised the plans and went with a simple 2-day renovation.

“We saved a ton of money and a bunch of headaches just because we

were able to have the conversation,” Williams said. “With traditional methods, we don’t have that discussion. The architects just make the plans in their silo and then we go and build it.”

Cutting off problems before work begins is just one of the ways that IPD can save time and money on a project. Another way IPD can save money is during the bidding process for materials. With a steel or drywall trade partner already involved in the process well ahead of when they will begin work, those contractors know how the market works and can get the best material/equipment pricing for the project.

With just about every builder in the Valley scraping by on manpower, the collaborative nature of IPD can help them maximize the workforce. With everyone working together to stay on the building, there are fewer instances where a contractor is held up by other work being done.

“We have all of our trade partners to work together to develop a schedule to meet our goals,” Williams said.

“Most of the time it becomes shorter in duration because they’re talking with each other, helping each other out and getting their manpower organized how they want it.”

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EDUCATION

NEW AGE for school construction Recent success of bond measures allowing districts to build again

By STEVE BURKS

N

othing will ever take Arizona back to the great school building boom of the early 2000’s. From 1999 to 2007, the Arizona Schools Facilities Board, the organization that distributes funds for school districts to build new schools or make improvements to existing facilities, provided funding for 219 new schools.

Then, as those in the commercial real estate world remember, the economy

42 | November-December 2018

faltered and very little new building occurred. In fact, from 2008 to 2016, the ASFB provided funds for just three new schools.

Part of the problem is that the funding formula that the ASFB uses to determine how much money a new project will receive remained the same, while the cost of construction went up, leaving districts with a funding gap that they would have to fill through

ballot measures. Up until the 2016 election, the vast majority of district bond measures that were on ballots across the state did not pass, meaning no new schools would be built. “If a district qualifies, the Arizona School Facilities Board can provide some funding for new educational CANYON VIEW HIGH SCHOOL: Canyon View cost just under $76 million to build.

CANYON VIEW HIGH SCHOOL: The design emphasizes spatial flexibility and sustainability.

spaces,” said Barry Chasse, owner of Chasse Building Team, a company that is active in education construction.

“However, their current funding formula is completely inadequate to build a new school...let alone a state-ofthe-art school.”

The view towards school districts asking for more funds through the bond process changed sometime after 2015, as more and more districts dealt with higher student enrollments and no increases in funding from the state.

In the 2016 election cycle, 43 out of 54 ballot measures that were put forth by districts seeking funding for facilities improvements or new schools passed.

That was followed by a perfect 22-for22 record in 2017 for districts seeking budget overrides or bond measures.

“Bond money is vital and completely necessary to build schools benefiting Arizona students,” added Chasse.

“Districts are competing with private and charter schools for students.

They have no choice but to ask their local communities to support bonds to allow the construction of new education facilities.”

The new way that districts like the Agua Fria Union High School District are building first-class educational facilities is to combine ASFB funding and bond funding. The result is a facility like the new Canyon View High School in Waddell, which opened in August.

QUEEN CREEK SCHOOL DISTRICT: Queen Creek's second High School.

43

EDUCATION

Saguaro Elementary: Casa Grande Middle School.

Canyon View features high-tech form and function, along with firstof-its kind features like the Teaching and Learning Accelerator, which is simply gathering and collaboration spaces that are flexible and can be used for a variety of educational purposes.

Canyon View cost just under $76 million to build, with $33 million coming from ASFB funding and the rest from bonds.

“Bond support is essential for construction or renovation of any school, not just ones with cutting edge design features,” said Carmen Wyckoff, AIA, LEED AP, architect with DLR Group, who designed Canyon View. “For state-funded new construction over the past few years, the state’s contribution only covered about 50 percent of the average cost to build. Bond support is also needed for technology in the classroom, like laptops, wireless access points, and displays and the curb appeal of modern, high-tech buildings also help both K-12 and higher ed schools compete for students.”

The Tolleson Unified School District has also combined bond funds with ASFB money to begin construction on West Point High School. The ASFB share of the funding for West Point is $47 million, while $53 million will 44 | November-December 2018

come from bonds and an additional $7 million from adjacent ways.

Chasse is the general contractor for West Point, with ADM Group as architect. The school broke ground in October and is expected to be ready for students by July of 2019 and is being built to accommodate 3,000 students when it is all completed.

The Queen Creek School District has been growing at a rapid rate and was in dire need of new schools at all levels.

The district’s bond measures failed in 2016 but they had better luck in 2017, getting $63 million in funding for a new elementary school and a new high school, both of which are currently under construction. Chasse and DLR are teaming up on the elementary school, while Orcutt | Winslow designed Eastmark High School, which is being built by Core Construction.

Another use for bond funds are

West Point High School: Tolleson Unified School District.

adding vital buildings to existing schools, like the Combs High School Performing Arts Center in San Tan Valley. The J.O. Combs district voters passed a bond measure in 2016 that provided funding for new facilities and improvements at Combs High School.

The PAC, designed by DLR Group and built by McCarthy Building Companies, is set to open in January.

“We had a broad group who we listed to when building the PAC, and found opportunities for the space to incorporate both new technology and traditional form and function, so that the students ultimately get the greatest benefit from the space,” said Andrea Ramos, project director for McCarthy.

“We truly wanted the Combs PAC to be a gem for the San Tan community.”

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SELF STORAGE

Not your father’s self-storage Industry has matured with improved aesthetics, remains a profitable investment

By STEVE BURKS

T

he image of a self-storage facility for most people is a row of low-slung metal buildings in an industrial area, fencing topped with razor wire and an office with an attached apartment for the live-in property manager.

While those old-school facilities are still around, and still turning profits, the new facilities closely resemble Class A structures like offices or condos.

46 | November-December 2018

Most new self-storage facilities in the Valley have multiple floors, are climate controlled and have modern technology, including round-the-clock video surveillance.

“There’s a nuts and bolts of this business that people and businesses need extra space to store their stuff,” said Tarik Williams, vice president of TLW Construction, whose company specializes in self-storage facility

construction. “A lot of these buildings are now having drive-thru bays, where they drive in and unload in airconditioned space. Elevator sizes keep getting bigger and bigger and more convenient. Same goes for hallways and hallway finishes.

“There are door lock systems that are 100 percent Blue Tooth.”

Williams said that his company recently completed a facility in Tucson that was just the 6th in the nation to feature full bluetooth access.

“People can just walk into the facility with their phone,” Williams said. “They’re not keying into any gate, they’re not keying into any sliding doors, they’re not keying into their unit because it knows they are there because of their bluetooth.”

The exteriors of the new selfstorage facilities are designed to blend into whatever neighborhood they are in. In residential areas, you’ll see stucco, pitched roofs with tile and color palettes that make the building fit its surroundings.

“We’re more like Class A office these days than ever before,” said David King, managing director of the self-storage market for Wentworth Property Company and president of the Arizona Self-Storage Association.

“We’re looked at more as an amenity for the neighborhood as long as the facility is built to fit the aesthetics of the neighborhood.”

King said his company recently got a self-storage facility approved in the DC Ranch neighborhood in Scottsdale.

Wentworth had to get approval from several groups — the Army Corps of Engineers, the DC Ranch HOA and the City of Scottsdale for starters — to get the final OK. “Only way we were able to get it done is it had to look like it belongs in DC Ranch,” King said. “They don’t want it to look like a storage facility, they want it to look like a Class A office building.”

Self-storage facilities are now popping up all over the Valley and each city has different requirements for how these facilities need to look. In all, there are 71 self-storage facilities under construction or planned in the Phoenix Metro area and Tucson.

“What I see is the cities are heavily involved and they dictate a lot of

how these look,” said Randy Klauss, director of preconstruction for W.E. O’Neil Construction, who’s company is building a new facility in Gilbert at Val Vista Drive and Queen Creek Rd. “In that design review board process, cities are taking it pretty seriously and want to make sure they dress these buildings up so that they blend in.”

The facility Klauss and W.E. O’Neil are building is the first Class A selfstorage facility in Gilbert. The developer, Hines, has plans for two more Class A facilities in place, one in Tempe and one in Litchfield Park, and is looking for other options around the Valley.

Self-storage facilities are great investments because they can utilize odd-size lots or existing buildings.

The construction timeline is relatively short (6 to 9 months) and so much space is generating revenue. Also, facility operators like US Storage, Life Storage, CubeSmart and Public Storage have well-established operations policies and the facilities are easy to manage, which means they require a small workforce to operate. Also, when one renter moves out, there is little to no cost to make the space ready for the next tenant.

“You just go sweep their unit out

and move in the next person, that’s pretty awesome,” said King. “Compare that to residential, office or industrial buildings where you have these really high re-tenanting costs for tenant David King improvements.”

King said that for Wentworth’s new facility at 19th Ave. and Glendale in Phoenix, which is operated by US Storage, roughly 73 percent of the nearly 100,000 square feet is revenuegenerating space.

But as more and more facilities are being built, more of that space could remain empty if the demand doesn’t rise along with supply.

“I would say that there are certainly areas where supply has certainly caught up with demand, and in those areas, I hope there aren’t any more built,” Williams said. “There are probably still pockets here and there where there is opportunity. Hopefully it stabilizes to keep up with the population status as opposed to the breakneck pace of the last 2 or 3 years.”

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AMERICAN INSTITUTE OF ARCHITECTS ARIZONA

The American Institute of Architects

Arizona Design Awards 2018 I  t’s awards season for the American Institute of Architects Arizona, both giving and receiving.

In August, AIA Arizona’s executive vice president Tina Litteral was honored with the 2018 AIA Council of Architectural Component Executives Distinguished Service Award. This award honored her leadership on a national level, with the committee noting, “although deservedly honored for her national leadership, she has applied herself with equal diligence

and commitment to elevate the reputation and welfare of Arizona chapters, inspiring the members and the community at large to be both advocates and beneficiaries of the power of design.”

AIA Arizona is also on the giving end of awards once again with its 2018 AIA Arizona Design Awards. These honors recognize excellence in design, leadership, practice, performance and education. The awards were presented at a ceremony on Nov. 9 at the Phoenix Art Museum.

SALT RIVER PROJECT 2018 SUSTAINABLE AWARD  Salt River Pima-Maricopa Indian

 Jones Studio Office Architect: Eddie and Neal Jones Owner: Eddie and Neal Jones Contractor: Build, Inc.

Community Justice Center Architect: Gould Evans, Inc. Owner: Salt River Pima-Maricopa Indian Community Contractor: Kitchell Corporation



48 | November-December 2018

2018 DISTINGUISHED BUILDING HONOR AWARD Little Art Studio

Architect: Chen + Suchart Studio, LLC Owner: Chad and Sophia Little Contractor: Verge Design:Build



2018 DISTINGUISHED BUILDING - HONOR AWARD The Oscar

Architect: Stark James Owner: MJFOscar, llc Contractor: Stark James

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AIA

2018 DISTINGUISHED BUILDING HONOR AWARD Salt River Pima-Maricopa Indian Community Justice Center Architect: Gould Evans PA Owner: Salt River Pima-Maricopa Indian Community Contractor: Kitchell Corporation

2018 DISTINGUISHED BUILDING HONOR AWARD Cruzen-Murray Library

Architect: Richärd+Bauer Owner: The College of Idaho Contractor/Construction Manager: Kreizenbeck Constructors

2018 COMPONENT DESIGN AWARD - MERIT AWARD Paton Center Humming Bird

Pavilion Architect: Dust Owner: Tucson Audubon Society Contractor: Dust 50 | November-December 2018

THANK YOU TO OUR FANTASTIC CLIENTS & INDUSTRY PARTNERS FOR COLLABORATING WITH US ON AWARD-WINNING DESIGNS!

www.gensler.com

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AIA

2018 INTERIOR ARCHITECTURE AWARD – MERIT AWARD Anello

Architect: Space Bureau Owner: Scott Girod Contractor: Space Bureau

2018 DISTINGUISHED BUILDING MERIT AWARD Dream City Church – Lobby +

Parasol Architect: Debartolo Architects Owner: Dream City Church Contractor: Robert E. Porter Construction

2018 DISTINGUISHED BUILDING MERIT AWARD

Casa Nita Architect: Weddle Gilmore black rock studio Owner: Kris Floor and Chris Brown Contractor: Stark James

2018 DISTINGUISHED BUILDING MERIT AWARD Cornell/Cookson Manufacturing

Facility Architect: Jones Studio Inc. Owner: Cornell / Cookson Contractor: Layton Construction

52 | November-December 2018

2018 DISTINGUISHED BUILDING MERIT AWARD Hidden Valley Desert House

Architect: Wendell Burnette Architects Owner: Kim & Keith Meredith Contractor: Verge Design Build

2018 INTERIOR ARCHITECTURE AWARD - CITATION AWARD Hamel Family Winery Architect: Gould Evans, Inc. Owner: Hamel Family Wines Contractor: Wright Contracting Inc.

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AIA

2018 DISTINGUISHED BUILDING CITATION AWARD

Mesa Community College Student Portal Architect: Marlene Imirzian & Associates Architects Contractor: CORE Construction

2018 DISTINGUISHED BUILDING CITATION AWARD

Central New Mexico Community College Westside | Building Architect: Gould Evans Inc. Architect of Record: Design Plus LLC Contractor: Jaynes Corporation

54 | November-December 2018

2018 DISTINGUISHED BUILDING CITATION AWARD

Renaissance Hotel Re-Imaging + Street Activation Architect: Gensler Owner: Renaissance Phoenix Downtown Hotel Contractor: Holder Construction

2018 DISTINGUISHED BUILDING CITATION AWARD

Staab Residence Architect: Chen + Suchart Studio, LLC Contractor: Verge Design:Build, Joby Dutton

LEADERSHIP AWARDS

PRACTICE AWARDS

2018 AIA10 AWARD

2018 GOODWIN AWARD

Oscar Lopez, Associate AIA

West-MEC Southwest Energy Campus Architect: DLR Group | Westlake Reed Leskosky Owner: West-MEC Contractor: McCarthy

2018 CLIENT AWARD

EDUCATION

Rachel Rasmussen, AIA Principal at Architekton

2018 ASSOCIATE AWARD

University of Arizona — Planning, Design & Construction

2018 ARIZONA ARCHITECTS MEDAL

2018 EDUCATOR AWARD Dan Hoffmann, AIA

Edward Jones, AIA

PERFORMANCE AWARDS

2018 ARIZONA FELLOWS CHAIRMAN’S AWARD

2018 RESEARCH DESIGN AWARD Symbiotic Matter

Craig Walling, AIA

Rachel Rasmussen, AIA Principal at Architekton

2018 COMMUNITY DESIGN Spaces of Opportunity Architect: Orcutt | Winslow Owner: Spaces of Opportunity Contractor: CORE Construction

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2018

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AAED

Winning!

Economic development victories add up to big gains for Arizona

By STEVE BURKS

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inning is a team effort, and Team Arizona has had a very productive 2018 when it comes to luring new companies to locate here or to expand their current operations.

Arizona’s team is led by a growing workforce, as the state climbed past the 7 million mark for population, Of those people, more than half are located in Maricopa and Pinal counties and companies have been drawn to those two counties. Other role players for Arizona is the solid, modern infrastructure that is in place, as well as a climate of collaboration among officials on the local, county and state level.

“What companies are citing as reasons to move to Arizona are the labor makeup and workforce availability, as well as infrastructure readiness and speed to market,” said Mitchel Allen, director of business development for the Greater Phoenix Economic Council. “Obviously being in a pro-business region or state certainly helps. We’re certainly winning a lot of deals because of that.”

Allen is just one of the economic development leaders that have been working diligently to win those deals.

Each of these wins are victories that the people of Arizona share in terms of quality jobs and economic growth that raises an already high quality of life in the state.

NIKOLA MOTORS While the Phoenix market garners the most attention for economic development, something special is 60 | November-December 2018

brewing just south of the Valley in Pinal County.

Pinal County grabbed plenty of attention in 2016 when startup electric car manufacturer Lucid Motors announced it planned to build a factory at the Central Arizona Commerce Park in Casa Grande.

That project was an enormous victory for Arizona and Pinal County, and in 2018, the county came through once again with what could be called a save, to use baseball terminology.

Nikola Motors, another startup hybrid vehicle manufacturer, had originally planned to build a factory in Buckeye to manufacture its groundbreaking hydrogen-powered semi trucks.

However, the company received a large order from the Anheuser-Busch company for up to 800 semis and that order changed the timeline.

“They told us at the time that the big contract that they got for 800 semi trucks, that they were going to have to expedite the timeline,” said Tim Kanavel, economic development manager for Pinal County. “The site that they were looking at in Buckeye wasn’t going to be ready in time.”

In stepped Pinal County, the City of Coolidge and Jackob Andersen of Saint Holdings, the owner and developer of both the Central Arizona Commerce Park and the Inland Port Arizona in Coolidge, the site where Nikola will I.D.E.A. TEMPE: a phased project of five, 5 to 8-story buildings totaling approximately 1 million square feet, along with two parking structures with about 2,500 spaces.

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build a 1 million square foot assembly plant. The Inland Port Arizona was ready to go with everything that Nikola Motors was looking for: Plenty of available land with access to freeways with Interstate 8 and Interstate 10, a rail line and a location situated within a 50-mile radius of 2.8 million people to provide ample workforce access.

“Everything follows infrastructure and the backbone for a lot of these companies is either rail or your interstate access for their transport,” said Rick Miller, city manager for Coolidge. “That was one of the real good things about this location with the I-8 and I-10, it’s not very far at all from where Nikola is looking.

“Arizona is a fantastic state to do this kind of business. The climate’s right.”

Saint Holdings is one of the largest owners of private land in Pinal County and has positioned itself as a leading economic driver for the county. Lucid Motors expects to employ 2,000 people at its plant, and Nikola Motors plans to have slightly less than 2,000 employees. Between the two projects, that’s nearly a $1 billion economic impact for the county.

Andersen envisions that when work begins on the Lucid and Nikola plants in early 2019, there will be a burst of activity as companies that support this new automotive technology move in.

“One of the requests of both 62 | November-December 2018

companies when they came to us, one of the reasons we were so high on the hit list, was do we have available land adjacent or in close proximity so that they are not on an island and not able to accommodate any supply chain support or auxiliary users that would be there to serve their needs,” said Andersen, who has been active in land acquisitions in Pinal County since 2006. “I think you’ll see a quick move for the region to become quite a hub for automotive manufacturing in the Southwest.

“These cars and trucks, from our understanding, they’re not just cars and trucks, they are collecting data all of the time, they are loaded with sensors and cameras. So, we’ll see a lot of businesses coming into the area that you wouldn’t think are automotive, but they really are related to that industry.”

Nikola has already begun hiring staff for its research & development facility that is located at 4141 E. Broadway Road in Phoenix. That facility will be the company’s Arizona headquarters until the manufacturing facility is completed.

AIROBOTICS Israeli automated industrial drone manufacturer Airobotics opened its new regional headquarters in Scottsdale. The company started with 15 employees locally, but plans to have 80 on its Arizona team by the

NIKOLA MOTORS: Groundbreaking hydrogenpowered semi trucks.

end of 2019. The company was ranked by the Wall Street Journal as one of the top tech companies to watch in 2018 and plans to move its global operations to the Scottsdale location in the Scottsdale Airpark area at 8340 E. Raintree Drive.

“Gov. Ducey recently implemented that AZ Sky Tech program which is for the advancement of unmanned, autonomous type of systems, or drones,” said Mark Paratore, Scottsdale economic development program manager. “They can test and deploy here in the state, so I think that the alignment that Scottsdale has with the forward-thinking innovation along with the state, the operating environment or the business-friendly climate, Scottsdale became a location of choice for them.”

Airobotics develops fully automated unmanned aerial vehicles (or UAV’s) to be used in industrial settings. One of its first customers in the U.S. was mining company BHP Billiton Plc. The move to Scottsdale was the company’s first venture in the United States, which created challenges for Airobotics and the City of Scottsdale as they worked together toward opening.

“We had to ensure that they know

AAED what types of licensing or permits that are going to be required in order to set up their operation,” said Paratore.

“So we really relied upon our key stakeholders or key influencers within the community that we know that can really help them in that process. So, anyone from the Commerce Authority to the GPEC and anyone in between, we made sure that we were checking all of the boxes so that we don’t land on the 23rd hour and realize that we didn’t take care of all of these things.”

ANDERSEN CORPORATION The West Valley was a hot spot of economic development in 2018, with a significant victory coming in September when Andersen Corporation, one of the largest window and door manufacturers in North America, announced plans to invest more than $105 million and build a new regional manufacturing and distribution facility to serve the western United States.

Work on the facility, located at Cotton Lane and Commerce Drive in Goodyear, will begin in early 2019 and will take a year to complete. In 2020, the company expects to hire 415 fulltime employees.

“Andersen Corporation’s expansion to Greater Phoenix showcases the region’s ability to meet the demands of

64 | November-December 2018

a major manufacturing and distribution operation,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council during the initial announcement for the project.

“The site in Goodyear allows them to scale by tapping into local resources and a dynamic talent pool that is ready and willing to support their current and future growth.”

The company already has initial plans in place to make a total investment of at least $200 million through additional future expansion of the campus, which will be owned and operated by Andersen Regional Manufacturing, Inc, a subsidiary of Andersen Corporation.

CONSUMER CELLULAR Consumer Cellular expanded its Arizona footprint when it moved into a new, 164,000 square foot facility at 7500 N. Black Canyon Highway, Phoenix. The company has assumed the entire space, developed by Everest Holdings, which has been completely renovated to include a “floating” second level. The building contains 24 private offices, 8 conference rooms and 5 training rooms.

The mobile service provider, which boasts nearly three million customers, currently employs 1,025 staff in two Phoenix-area locations. The new

facility, a former Sam’s Club, will allow for the addition of 1,600 employees over the next three years. The company hired 500 additional employees this year alone.

AXISCADES In 2017, Tucson enjoyed a major victory with Caterpillar picking downtown Tucson as its new location for surface mining and technology offices. As is often the case, that move created a domino effect and the first one to fall into place was Axiscades, a global provider of innovated engineering solutions for the mining, construction, aerospace, defense and other key industries.

Axiscades, which is based in Bangalore, India, is moving into new offices in downtown Tucson, drawn there by Caterpillar.

“We chose Tucson to be closer to Caterpillar, one of our key customers, as well as other clients in the mining industry,” said Mritunjay Singh, CEO of Axiscades, in a press release announcing the move. “The entire region is strong, not only in mining, but also other key Axiscades strategic growth areas.”

CONSUMER CELLULAR: The new call center is expected to create an estimated 850 new jobs.

SUPPORTING ECONOMIC GROWTH Fostering job creation helps drive a healthy economy. That’s why SRP joins forces with local businesses and community leaders. From attracting out-of-state companies to supporting nonprofits and connecting customers with our money- and energy-saving advice, we proudly support efforts that help our state grow and prosper. Find out more at PowerToGrowPHX.com.

AAED

BECTON DICKINSON: The Peripheral Intervention business of BD (Becton, Dickinson and Company) will be the first tenant in the IDEA Tempe development.

Axiscades plans on hiring 320 new employees for its Tucson operation, mostly high-level positions like mechanical and electrical engineers and research and development.

TUSIMPLE Like Lucid Motors and Nikola Motors, TuSimple is attempting to be a major disrupter in the automotive industry. TuSimple is a global developer of self-driving trucks and expanded its presence in Arizona this year.

TuSimple had been operating out of a 6,800 square foot testing facility in Tucson, but recently expanded to 50,000 square feet with plans for even more growth in 2019. All told, the company has designs on creating 500 new jobs in Arizona as it refines its autonomous trucks that have been testing in Arizona.

The expansion plans are expected to have a total economic impact of $1.1 billion over the next five years.

BECTON DICKINSON Becton, Dickinson and Company (BD), a global medical technology 66 | November-December 2018

company, acquired C.R. Bard, Inc., in 2017. Bard, a medical technology company in the fields of vascular, urology, oncology and surgical specialty products, had an office in Tempe, but moving was a strong possibility under new ownership.

Tempe, however, proved to be a worthy location for BD, and the company recently broke ground on a new headquarters in the IDEA Tempe development, at 700 W. Rio Salado Parkway.

“There was a chance that they would move, but fortunately, they decided to stay in Tempe,” said Maria Laughner, economic development program manager for Tempe. “It was a lengthy process to retain them. They were looking at several other locations around the country and we met with their leadership several times. At the end, they decided to stay in Tempe because of the success of the current BD team in tempe, the relationship they have with the city and the great opportunity to be the anchor tenant at our new IDEA campus.”

BD currently has 500 employees in Tempe and that number will grow when they move to a new facility in 2020.

The IDEA Tempe development is located next to the Tempe Center for the Arts and stands for Innovation, Discovery, Education and Arts. At full build-out, the development will have five commercial buildings totaling 1

million square feet as well as 40,000 square feet of arts rehearsal and classroom space.

MORE WINS In January, it was announced that the Phoenix-Mesa Gateway Airport would be home to the nation’s first international air cargo hub to house both Mexican and United States customs officials. SkyBridge Arizona is a first-of-its kind project that will speed up the process for goods traveling to and from Mexico and South America. At full buildout, the 360-acre project will create an estimated 17,000 direct and indirect jobs and more than 5 million square feet of commercial space.

In June, financial firm Deloitte announced a lease of 102,000 square feet in Gilbert, where it plans to eventually hire 2,500 employees as part of its expansion.

In September, India-based tech company Infosys announced plans to open a technology and innovation hub and create 1,000 jobs in Phoenix over the next five years. Infosys is still in the process of selecting a location for the new office.

In October, Wag!, the on-demand dog walking company, announced plans to open a customer care center in Phoenix that will bring 100 jobs by the end of the year.

And the year isn't over yet.

From its agricultural heritage, the Ak-Chin Indian Community became uniquely adaptable to changing climates and conditions. This resilience laid the groundwork for a 21st century business philosophy and entrepreneurial spirit that capitalizes on changing markets and commerce opportunities that encourage economic diversification and self-sufficiency.

DEVELOPMENT PROCESS 1. Call 520-568-3246 or email marketing@leaseakchin. com for basic information or to arrange a tour of the property 2. Download Development Request Submittal Requirements and email to leasing@leaseakchin.com 3. Review by Ak-Chin Industrial Park Board

As an Arizona Gold certified site, Santa Cruz Commerce Center offers approximately 45 acres of shovelready lots for owner-built or build-to-suit projects that can speed your project to market.

Lease Customization Low Land Lease Rates No Real Property Taxes Low Utility Rates Build-to-Suit Funding

Ak-Chin: A Great Place to Grow Your Business!

The Ak-Chin Industrial Park Board oversees the marketing, development and management of Ak-Chin’s industrial properties which include the Santa Cruz Commerce Center, Adobe Office Suites and the property surrounding the Ak-Chin Regional Airport. The Board acts as a location advocate both within and outside the Community to identify opportunities, streamline processes, and accelerate solutions to any issues that might arise.

4. Board advises applicant of approval process and facilitates progression 5. Applicant meets with Board and Ak-Chin Planning Dept 6. Board representative prepares a Preliminary Site Plan Application (PSPA) and submits to Planning 7. Planning holds Technical Assistance Committee (TAC) meeting for Board representative and applicant to present project and respond to questions 8. PSPA comments submitted to Planning; Planning forwards to Board representative 9. Planning submits Application to Ak-Chin Planning & Zoning Commission (P&Z) 10. P&Z meets to review and vote on PSPA 11. P&Z denies project as proposed to move forward or forwards to Ak-Chin Finance & Legal for review 12. If approved, it is forwarded to Ak-Chin Council who authorizes project to proceed or does not approve it to proceed as proposed 13. If approved, the same process is followed with a more detailed Site Development Plan Application

custom leasing solutions in a native environment

For leasing info: 520-568-3246 Pinal County, Greater Phoenix, Arizona

www.leaseakchin.com

Brokers Welcome

AAED

with AAED president Richard Wilkie

• Personal Property Tax information • Proximity to any utilities that might not currently be available.

Helpful would be time and cost for extending it.

• Proximity to and type of public transit • Proximity to restaurants if not immediately available • Shop Local program details/ information • Labor force analysis for commercial workforce positions • Training opportunities provided by the local community college • Recruitment and employer services provided by the AZ@Work office that supports the area • Keep information on available commercial sites up-to-date with any change in availability, terms, etc.

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WHAT’S AN IMPORTANT ECONOMIC DEVELOPMENT DIALOGUE THAT YOU WANT TO SEE HAPPEN IN 2019?

hen duty calls, Richard Wilkie has been there to answer.

Just this summer, Wilkie, an officer in the U.S. Navy Reserve, was summoned by his country to be deployed to Afghanistan for the second time in his career. Before he left, Wilkie, the 2018-19 AAED Arizona chapter president, was able to share his thoughts on economic development in Arizona.

WHAT ARE ECONOMIC DEVELOPERS SAYING ABOUT THE AZ ECONOMY? There is still a lot of interest in Arizona, and the potential economic impact of companies that are currently taking a hard look at our state represent tens of thousands of high paying jobs and billions of dollars in capital investment, so the outlook continues to be very good. Economists in our association continue to be bullish on our state.

HOW CAN THE COMMERCIAL REAL ESTATE (CRE) COMMUNITY COLLABORATE WITH ECONOMIC DEVELOPERS? Collaboration between the commercial real estate industry and economic developers is vital to our 68 | November-December 2018

ability to be able to quickly identify properties that can meet prospects’ requirements/needs, and better promote all the opportunities that Arizona has to offer to national and international businesses.

One way that Commercial Real Estate professionals can collaborate with economic developers is to work directly with the economic developer that represents the communities their properties are in to build out a very detailed property information document/description.

Commercial properties usually have a basic informational brochure, but I recommend going beyond the basics to include the following:

Over the past few years we have seen an increased dialogue between workforce organizations/entities and economic developers. This dialogue needs to not only continue but needs to be expanded to more aggressively engage other community partners such as our primary and secondary educational systems and our vocation training schools/entities. Being able to provide the high skilled/well educated workforce is obviously one of the top requirements for employers, but we are also facing a shortage of labor that is necessary to build all of the infrastructure and the actual facilities/ structures for the companies, and the additional homes, schools, and other buildings that will be necessary for the additional commercial and professional services that will be needed to support new industries.

Richard Wilkie, CEcD, AZED Pro, is AAED’s 2018-19 President.

He was recently activated with the Naval reserves and was deployed to Afghanistan. He will continue to stay active in his role as president through video/telephonic capabilities.

G E N E R A L C O N T R A C TO R /// C O N S T R U C T I O N M A N A G E R /// D E S I G N - B U I L D E R

PHX SKY TRAIN // 2011

THE TOMSCOT // 2014

SAGEWOOD // 2008 - 2018

SUMMIT AT COPPER SQUARE // 2006

FRIENDSHIP VILLAGE OF TEMPE // 1978

CITYSCAPE BLOCK 77 // 2009

RIVERWALK // 2008

BUILDING A BETTER WAY

FOR 40 YEARS IN ARIZONA. WEITZ.COM /// 602.225.0225 /// ROC165033 AZRE AAED supplement Nov 2018.pdf

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10/22/18

11:33 AM

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CM

MY

CY

CMY

Ranked #1 City in Arizona

by Money Magazine peoriaed.com/invest

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World Class • Sustainable • Future Ready 69

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QUESTION

employers makes a community healthy and vibrant. Our primary focus is now on job creation, particularly in high tech industries. As retailers are scaling down physical locations and high tech opportunities are ramping up, that shift in focus has laid the foundation for Prescott’s future.

— Wendy Bridges, AZED Pro Economic Development Coordinator and Film Commissioner, City of Prescott

Economic development leaders share their insight on how to keep the state moving in a positive direction “WHAT IS CHANGING IN ECONOMIC DEVELOPMENT IN ARIZONA AND WHAT ARE ECONOMIC DEVELOPERS DOING DIFFERENTLY?” In Prescott, we have expanded our area of focus for economic development efforts. At one time, retail was the primary focus of economic development efforts. However, we have learned that a diverse mix of

Wendy Bridges 70 | November-December 2018

Lori Collins

Policymakers and economic developers are working on not just the volume of jobs that are created, but also on quality. This will lift the economy and make it more stable. But, now we need the right tools including proper education investment and by focusing on ROI. — Jim Rounds President, Rounds Consulting Group, Inc., Tempe

Education and Economic Development are inextricably linked.

Now more than ever, this important relationship is taking center stage. Not only is talent a key location decision factor for companies, but many forecasts suggest that seven out of 10 jobs will require some type of higher education.

We continue to meet regularly with businesses in our communities and have industry-led discussions about their needs for their future workforce. We can better ensure resilient growth if we develop talent to practice at the forefront of a wide variety of dynamic industries.

— Lori Collins Deputy Economic Development Director, City of Phoenix

Jeanine Jerkovic

Rob Millar

Talent, talent, talent! In the “old days” of economic development (5 years ago), companies would make relocation or expansion decisions based on a decision maker’s desire on where to live, cost of commercial real estate, tax rates, and K-12 education, just to name a few. While access to talent was certainly evaluated, in this new era of explosive growth in technology, it can be argued almost all companies are racing to grow their technology components. This shift has created a tremendous demand for tech talent. No longer is it “if you will build it, they will come”. In order for Arizona to remain competitive, we must seek to be the state of choice for top talent.

— Rob Millar, CEcD Acting Director, Economic Development for City of Scottsdale

Arizona’s economic development community is working more cohesively than ever before to champion our cutting edge, high tech assets. Arizona is now emerging as a global innovation hub as well as a top place for Internet of Things technologies and FinTech industries. The economic development conversations that the City of Surprise has today with corporations are more about our high quality workforce, infrastructure, and ingenuity — rather than a primary focus on our low-cost proposition.

— Jeanine Jerkovic City of Surprise Economic Development Director

Jim Rounds

DEVELOPING ARIZONA’S FUTURE

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

602.240.2233

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LAND DEVELOPMENT2018

LAND DEVELOPMENT

Novus Innovation Corridor ASU breaks ground for visionary development

By ALYSSA TUFTS

U

shering in a new era for downtown Tempe, an exciting development for residents, businesses, and surrounding companies within close proximity to ASU, Novus Innovation Corridor broke ground for its next phase in September this year with big plans ahead.

ASU and Catellus are working with Aspen Heights to build a six-story, 262-unit luxury apartment community, and Ryan Companies will develop a Class A, six-story, 162,000-squarefoot multi-tenant office building at the corner of University Drive and Rural Road in the Novus Innovation Corridor.

Novus is currently going through site improvements, utility location, and new infrastructure installation. The first office building and residential community are slated for December/ January land closings, and are anticipating breaking ground in the first quarter 2019, says Charley Freericks, senior vice president of Catellus Development Corporation and master developer of Novus Innovation Corridor.

The Corridor will be on the newly-created Novus Place, a North-South street that will run from University up to Rio Salado, and will have an apartment community, an office building with retail space on the ground floor, and additional future developments including a hotel, which is going to be the center of the social aspect of Novus, says Morgan Olsen, executive vice president, treasurer and chief financial officer, Arizona State University.

74 | November-December 2018

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LAND DEVELOPMENT “This development means we’re going to be able to pay for the investments we’re making in our intercollegiate athletics facilities,” Olsen says. “We realized that wasn’t enough so we’re going to reinvent that end of the campus and downtown Tempe to a significant extent, bringing substantial economic development potential to the Valley.”

The Novus Innovation Corridor plans at the northwest corner of University and Rural are just the beginning of Phase 3. Phase 1 was Marina Heights, with 2.1 million square feet in five buildings, about 8,000 employees and one of the regional hubs for State Farm. Phase 2 is the reinvented Sun Devil Stadium.

After Phase 3, the development will then move north and east, taking over what is now ASU athletic facilities along the west side of Rural Road, as well as the ASU football practice facility and the Karsten Golf Course east of Rural. New tennis and track and field facilities will be built in the planned ASU Athletics Village, which will be located east of Farrington

G STREET: Pedestrian oriented with bike-friendly shops, cafes, resturants and residences

76 | November-December 2018

Stadium (ASU's softball complex) and ASU's soccer stadium. The football practice facilities will be moved to the northeast side of Sun Devil Stadium.

“We have a master development plan for Novus that reflects where we anticipate all of the assets to be created as part of this location. We have a lot of flexibility — we have over 300 acres of land in a relatively urban area, so it’s a very unusual opportunity,” Olsen says. “We’re going to relocate our intercollegiate athletic facilities as we move along ahead of developments in Novus because that’s our reason for being... we have a master development

plan for our athletic facilities that’s integrated with the master development plan for Novus.”

The development will stretch east along Rio Salado Parkway all the way to McClintock Dr. All told, the Novus Innovation Corridor will occupy 330 acres and be made up of five distinctive neighborhoods with approximately 3,700 residences as well as more than 4

6TH STREET: Dynamic architecture lining Novus Innovation Corridor’ thoroughfares will help bring to life the vision of this oneof-a-kind urban environment.

LAND DEVELOPMENT

million square feet of office and retail space. The plan is for a mix of low-, mid- and high-rise office buildings, along with residential, retail and hospitality buildings throughout.

Freericks is confident the development will have a positive economic impact given the significant influx of employment in Tempe over the next decade in various higher wage and cutting edge industries.

“We hope to attract a vibrant workforce that results in a thriving economy around it, whether that’s shopping, dining, or living," Freericks says. "I am expecting to see a robust economic impact from taking land that currently is basically fallow from the perspective of generating revenue — other than sporting events — and creating a sustainable, vibrant new economy in Tempe,” Novus Place will contribute to that thriving economy. Freericks envisions Novus Place as a more professional environment complementing Mill Avenue for lunch, dinner, after work and special events.

“What happens in these planned environments is thoughtful, highquality architecture and controls create value, and property owners in those environments — whether they’re 78 | November-December 2018

residential, office, or retail — tend to enjoy more stable values throughout economic cycles. So we’re creating a thriving location,” Freericks says.

Education and employment come together, which aligns with the focus of Novus Innovation Corridor to complete the cycle between commerce and industry and ASU, Freericks says.

“I’m most excited to see the types of tenants we are aiming for — companies which will benefit from a great relationship with ASU,” Freericks says.

For example, the tenants could be a small but rapidly-growing company that ASU can help to grow or train a workforce, Freericks says, or a company with many interns and keep their people engaged in the community.

“Or a tenant could be very research intensive, and you’ve got one of the largest research universities in the country at ASU," says Freericks. "We want to attract and celebrate all those kinds of relationships with ASU. We also know there will be interest from potential tenants that need to tap into the talent among the wealth of seasoned professionals that already live in the Valley.”

Olsen says downtown Tempe is becoming the 2nd urban center in the

CLASS A BUILD-TO-SUIT PROJECT: Weitz will serve as the general contractor for up to 400,000 square feet of office space. Smith Group JJR will be the project architect for the restaurants and residences.

Valley and the land people see from Mill Ave. to the east at one time was owned by ASU; some of which was sold and became Hayden Ferry Lakeside, and their current model is not selling land, but doing long-term projects.

“And that allows us to have more control over what happens and that’s important to us because that’s our own backyard, but also we think it will be positive for us economically,” Olsen says. “President Crow likes to talk about us being a knowledge enterprise and our knowledge assets are our faculty, staff and students with their brainpower and the opportunity to be next to that is what attracted State Farm and it’s going to attract other companies that want to locate in that type of intellectual environment.

"We’re in a global, knowledge-based economy today and it’s all about what you know and what you do with it. We think we’re providing the opportunity for that type of synergy at Novus.”

LAND DEVELOPMENT

Getting around

Tempe’s urban core Streetcar project will provide transportation solution to bustling downtown

By STEVE BURKS

A

s you round a curve on the eastbound Loop 202, a transformation comes into view.

Just over a decade ago, the Hayden Flour Mill and Silos and Hayden Butte were the most noticeable structures visible from west of downtown Tempe.

Sure, there were other buildings visible, but nothing that could be considered a skyline existed in Tempe.

Today, downtown Tempe is looking

80 | November-December 2018

more and more like an urban center, complete with tall buildings already standing and other large structures rising alongside them.

As an emerging population and commerce core, the downtown Tempe area, which includes the sprawling Arizona State University campus, is faced with transportation issues that just couldn’t be solved by bus service alone.

“It’s clear that downtown Tempe is becoming a dense urban core, the second one in the Valley, so being able to move around as an individual is going to be really important,” said Morgan Olsen, executive vice president, treasurer and chief financial officer for Arizona State University. “If I’m an employer, I want to make sure my employees can get here, I want to make sure they have access to assets that are part of the larger area.”

Tempe and Valley Metro are teaming up on the Tempe Streetcar project to provide a solution to some of the transportation issues in downtown Tempe. The project is a circulator train that runs from the Marina Heights development on Rio Salado Blvd., through downtown Tempe on Mill Ave. and Ash Ave. and then around the bend as Mill Ave. turns into Apache Blvd.

The Streetcar then stops at the Dorsey Lane light rail stop. There are two stops on the Streetcar line that provide access to the light rail line.

WORK IN PROGRESS Construction on the Tempe Streetcar project began in June 2017. The 3-mile route will serve downtown Tempe, Arizona State University, the Rio Salado corridor and many Tempe neighborhoods.

Streetcar vehicles are smaller than light rail cars and operate individually, not linked together like trains. The Streetcar operates on shared roadways with vehicle traffic stops, and there are 14 of them in the initial 3-miles of line, are similar to bus stops and occur more frequently.

Sunbelt Holdings, one of the developers of Marina Heights, was one of the business leaders supporting the Tempe Streetcar project from the beginning.

“It was really important to State Farm (which has room for 8,000 employees at Marina Heights) to have as robust of a transportation system as they could so that all of their employees did not

The design contains: • Off-wire operation through downtown on Mill Avenue and gateway intersections • Landscaping and public art • Primarily shared roadway with automobiles • Ability to detour for major Tempe events

have to be reliant on cars,” said Heidi Kimball, senior vice president at Sunbelt Holdings. “In good times, this is the time to do it. We all suffered through the 10-year recession, so now we’re enjoying some good times and it’s time to do these projects.”

The cost of the Streetcar project is an estimated $199 million. Much of that funding is coming from federal and regional sources, as well as city and state sources. There was, however, a shortfall of some $13 million. The development community in downtown Tempe stepped forward with a self-imposed tax of 10-cents per square foot for 20 years to

Source: ValleyMetro

close that funding gap.

“That’s a big tax,” Kimball said. “Like for Marina Heights, that’s $200,000 a year.”

Kimball said all of the major developers with projects in the area stepped up.

“It’s important that everybody participates so that no one is economically disadvantaged,” Kimball said. “We are constantly watching and vigilant to make sure that everyone plays.”

While the business community has been supportive of the project from the beginning, Arizona State University has also lent financial support, as

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LAND DEVELOPMENT

TEMPE STREETCAR STOP: Proposed Paseo del Saber/Apache stop

well as vocal support. The Streetcar will offer ASU students alternative transportation options as they move about the campus and the surrounding community.

Work on the project began in July of 2017 with utility relocation and street work. The next phase was originally 82 | November-December 2018

supposed to begin in 2019, but the installation of the track guideway was moved up to October when the Federal Transit Administration approved the project. The next phases, like the platforms, electrical systems will take place in 2019 and 2020, with the Streetcar scheduled to open in 2021.

Like the Valley Metro Light Rail system, the Streetcar will run along overhead electrical wires for most of the length of the route. However, in some areas, like through Mill Ave. and major intersections, there will be no overhead electrical wires to power the Streetcar.

“Tempe didn’t want those guide wires running down Mill Ave., so the trains will run on a hybrid system of battery power and then in some areas connect to the overhead wires to run the train and charge the batteries,” Kimball said.

“It’s truly a unique system.”

How well the initial phase of the Streetcar is received will play a key role on whether or not Valley Metro will expand on it. Expansion plans would likely include extending the line along Rio Salado Parkway to Tempe Marketplace, then perhaps further west into Mesa with access to the Chicago Cubs spring training facility as well as Mesa Riverview.

“There are all of these things that can be connected and I know the City of Mesa has some interest in that regard,” said Olsen. “Anything you can do to create one very connected area, the more the better.

“The jewel that everyone is aligning along is Tempe Town Lake. Everything around that Tempe Town Lake, Rio Salado corridor is a candidate to be connected. I think the modern streetcar is a big piece to that.”

LAND DEVELOPMENT

McCord Hall, W.P. Carey School of Business

ASU’S MRED PROGRAM develops successful real estate professionals

G

raduates of Arizona State University’s Master of Real Estate Development (MRED) program have a competitive advantage in the real estate industry, which immerses students in the curriculum with small class sizes, more instructor interaction, and networking opportunities with real estate professionals. The first class for ASU’s MRED program graduated in 2007.

“It is cohort, block class, full immersion, experiential education, which means everybody does the same thing the same way at the same time in the same place,” says Mark Stapp, executive director, MRED program, W.P. Carey School of Business at ASU. The program is purposefully structured since students obtain the degree after completing 41 credit hours in just nine months.

“We teach subject matter content, where students attend class Monday through Friday from 8a.m. to Noon... then there’s a component where we teach students how to apply what

84 | November-December 2018

they learn in those courses, and we do that through what we call synthesis projects.”

Students complete three synthesis projects throughout the program, the first focuses on residential, the second on income-producing, and the final capstone project: high-density mixed use and public-private partnership.

“We’re the only graduate program in the business school that has its own dedicated space, it’s the only place our students go to school,” Stapp says. “Faculty come to them, and that provides them a dynamic space they can make into whatever configuration is best for their learning. They can fully immerse themselves in the education since they have everything they need to complete the program.”

When the program begins, students are put in small teams, which Stapp says builds cohesion between the students. “It’s mid-career, professional education, so the average student is 30 years old and on average have five years of experience, so people are in

various stages of their life,” Stapp says.

“They not only have a study group, but a social support system, so if something happens, they have backup.”

The small teams lend themselves to more collaboration between students, in addition to more interactions with instructors since the program’s class sizes range from 18 to 42 students.

Stapp says the teams also build a peerlearning environment that brings people together from various professional, personal and educational backgrounds.

“This environment provides this rich dialogue around the bigger subject matter of real estate, community building, and community development in real estate, so we put students in these teams and give them their first synthesis project — we work with landowners, and the students are charged with solving a particular problem.”

The first synthesis project is structured around students determining how much they can afford to buy a piece of property, which Stapp says requires students learn foundational elements of real estate and

85

LAND DEVELOPMENT ASU MRED: Students give a presentation during an ASU MRED program event.

evaluation. Students are also competing to be the buyer of a piece of property, and work with the Arizona State Land Department or a jurisdiction that is interested in selling a parcel, which Stapp says don’t usually have a singular “correct” purpose.

“These properties have a number of complexities, which make figuring out what to do with them difficult, they’re conundrums,” Stapp says. “Because of that, valuing them becomes harder... so students have to decide what they want to do with this piece of property, then they analyze their ideas, evaluate the options, determine an amount they can afford to pay, make a presentation to the landowner, and submit a bid.”

The ASU MRED program also introduces students to real estate industry professionals. Students apply what they’ve learned in a presentation in October called First Pitch, where they have 10 minutes to present or "pitch" their projects to three different groups of professionals, and 10 minutes for feedback.

“A big part of what we do in this business is storytelling, so this helps them begin to refine those skills, and the feedback they receive helps them refine their ideas and presentation prior to submitting their projects in November.”

Stapp says First Pitch helps keep the program relevant because outside professionals see the students’ work and provide feedback, and the industry becomes aware of the students and vice versa. “I think it creates this important link between the education and the business itself.”

Leo Sanchez, head of national expansion for Zillow Offers, graduated from the ASU MRED program in 2017.

Sanchez says he enrolled in the program because he wanted to elevate his professional acumen for the next stage in his real estate career, which he had 13 years of experience in prior to enrolling.

“As I explored ways to do so, I sought counsel from mentors and friends in the industry who I highly 86 | November-December 2018

respected and all roads led me to the ASU MRED program," Sanchez says.

"After spending time interviewing Mark Stapp, I was convinced it was the right choice and timing for me.

Mark’s conviction and passion for the program was contagious and made it an easy decision for me to enroll in the full-time, very intensive commitment.”

As a student, Sanchez says he gained a new outlook and appreciation for how real estate development impacts communities on social, economic, environmental, and cultural perspectives. The program also applies a well-rounded view and understanding from multiple areas (finance, construction, design, and legal), which he says helped him learn the value of collaboration and understanding different points of view in the decisionmaking process.

“In addition, I now belong to a family of 300+ alumni in diverse disciplines around the globe that I can call upon anytime," Sanchez says.

"MRED alums are a tight-knit network of professionals that empower and celebrate each other, and I am honored and privileged to serve on our Alumni board as the Vice President.”

Sanchez says participating in First Pitch taught him the importance of being a concise communicator.

“We only had 10 minutes to capture our audience of real estate leaders’

Mark Stapp

Leo Sanchez

attention and educate them on the viability of our synthesis project. In my role day-to-day I communicate with company executives and key stakeholders and the ability to be concise while effectively communicating is a strong attribute that continues to pay dividends.”

Since graduating from the program in 2017, Sanchez says the program’s focus working in groups and sharing ideas to a larger audience helped position him for success in his career.

“In my role with Zillow I am responsible for working crossfunctionally with several different departments within our organization to launch New Markets across the country. The collaboration of different personalities and objectives is one I am familiar with and I am forever thankful to the MRED program for giving me this foundation.”

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AGENDA AT A GLANCE 7:00am

“REFRESH” Networking Breakfast and Registration

7:45am

Welcome

8:00am Economic Outlook 8:45am Quick Hit: Placemaking The Ins, Outs and Abouts 8:55am Placemaking: Create a Place, NOT a Design 9:40am Future of Housing: Finding the Right Fit for Changing Demographics 10:25am Quick Hit: In the Zone with Opportunity Zones 10:40am Capital Markets: Follow the Money 11:25am Construction Innovations: More with Less

14th Annual

by : D o

w n t ow

ULI Highlights

1:15pm

KEYNOTE: The Psychology of Illusion

JANUARY 25, 2019

JW MARRIOTT PHOENIX DESERT RIDGE 5350 EAST MARRIOTT DRIVE

Join ULI Arizona for the 14th Annual Real Estate Trends Day Conference! Trends Day is a one-day deep dive bringing together 25+ top industry experts to discuss the most current state and national real estate trends with a focus on what to expect in the future, where the best opportunities can be found, and how these components affect both public and private sector partners.

KEYNOTE:

ECONOMIC OUTLOOK:

Magician, Speaker, Entrepreneur

Professor, Freeman School of Business, Tulane University

Vinh Giang

Peter Ricchiuti

The Rise of the Smart City

3:00pm Quick Hit: Transportation Funding 3:15pm

Authentic Spaces – Re-imagining the Built Environment

3:45pm Reflect. Rethink. Respond…

Bringing it All Together 4:15pm

Closing Remarks

4:20pm “REHYDRATION” Networking - 5:30pm Reception

Inc.

RECEPTION TO FOLLOW

2:00pm Quick Hit: The New Commerce of Cities 2:15pm

enix

7:00am - 4:15pm

12:05pm “REFUEL” Networking Lunch 1:05pm

n Pho

REGISTER TODAY! arizona.uli.org Credits Available: 6 AZDRE / 6 AIA / 6 AICP

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