AZRE Magazine September/October 2012 by AZ Big Media

SEPTEMBER-OCTOBER 2012

BUILDING THRIVING CITIES Urban Land Institute:

A change agent for Arizona's communities Big Deals:

The best and the brightest in Arizona brokerage p. 30

Adolfson & Peterson: Building a reputation of excellence p. 42

More face time for people in the industry

President & CeO: MICHAEl AtkINSON Publisher: CHERYl GREEN ViCe President Of OPeratiOns: AuDREY WEBB aZre: ariZOna COMMerCial real estate editOrial editOr in Chief: MICHAEl GOSSIE editOr: PEtER MADRID assOCiate editOr: kRIStINE CANNON interns: AlExA BOWMAN • kEllY CHuRCH JOEl MIllER • REMI OMODARA art seniOr GraPhiC desiGner: MIkE MERtES seniOr GraPhiC desiGner: CHRIStIN GANGI COntributinG PhOtOGraPhers: CORY BERGQuISt DuANE DARlING • GlORY SHIM intern: lINDSAY HANSON diGital Media Web deVelOPer: ERIC SHEPPERD Web & GraPhiC desiGner: MElISSA GERkE

pectacular structures and beautiful buildings dominate the images that grace the pages of AZRE magazine. However, we can never forget that the real superstars are the people behind all those projects. That’s why you will see more (familiar) faces in this issue, with a twist on two of our regular features.  I am finding that many of you commercial real estate professionals do some pretty cool things when you’re off the clock. With that in mind, we will now feature two people in After Hours. Check out page 28.  With business picking up, firms are promoting from within and hiring more people. Those announcements, which filled the Newsmakers page, are now being posted on azremagazine.com. In its place is a new feature, Executive Q&A. Each issue will offer a glimpse of four top decision makers in the various industry sectors. On page 26. Starting with this issue and beginning on page 30, AZRE magazine unveils its inaugural Big Deals awards. We recognize the top brokers and brokerage-related firms in 20 categories. Helping make the selections were our staff, votes cast on our website, managing directors from the top brokerage firms and a handful of Arizona’s commercial developers. Our three supplements also include member profiles and a Q&A with the respective “head honchos.” You will find a lot of smiling faces in this issue — present company included.

MarketinG/eVents ManaGer: WHItNEY flEtCHER OffiCe sPeCial PrOjeCts ManaGer: SARA fREGAPANE exeCutiVe assistant: kAtHY MutSCHlER database sOlutiOns ManaGer: CINDY JOHNSON ariZOna business MaGaZine seniOr aCCOunt ManaGer: DAvID HARkEN aCCOunt ManaGers: MIkE HARt • SHANNON SPIGElMAN ariZOna COMMerCial real estate aCCOunt ManaGer: StEvE kOSlOWSkI • MICHEllE MCBAY rankinG ariZOna ViCe President / sales & MarketinG: lENORE GROBStEIN direCtOr Of sales : SHERI kING exPerienCe ariZOna/PlaY ball direCtOr Of sales and MarketinG: SCOtt fIRlE sCOttsdale liVinG aCCOunt ManaGers: SuSAN HARkEN • DAvID SIlvER aZ biG Media exPOs SCOttSDAlE SuPER ExPO WOMEN’S SuPER ExPO HOME & lIfE SuPER ExPO exhibit direCtOrs: kERRI BluMSACk • tINA ROBINSON • SHERI kING hOMe & desiGn idea Center shOWrOOM ManaGer: JOANNE StANlEY aCCOunt ManaGer: MARIANNE AvIlA eVent COOrdinatOr: SARA fREGAPANE

Editor (602) 424-8844 peter.madrid@azbigmedia.com 2 | September-October 2012

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. ©2012 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 6 14 BUILDING THRIVING CITIES

September/October

FEATURES

6 10

New to Market Projects in the pipeline

Project News Phoenix College campus makeover; PCH Scottsdale construction

Brokers Outlook Sizing up the ofﬁce and industrial markets

Executive Q&A Four faces of company leadership

Development New ofﬁce and industrial products fuel optimism

Ofﬁce The market gains momentum with new construction on the way

Industrial From zero to Sub Zero: the evolution of a manufacturing plant

After Hours A state debate champion; a thoroughbred horse owner Big Deals The biggest and brightest brokerage all-stars

Adolfson & Peterson Innovate, collaborate and outperform: Value beyond building

On The Cover: In 2008, ULI sponsored AZ One, a Reality Check for Central Arizona. More than 1,100 Arizonans were nominated to participate. Thirty teams of 10 each placed Legos on regional maps to indicate where they thought the next 6 million Arizona residents will live and work. Stakeholders included representatives of state and municipal governments, business and the development community and community-based organizations and nonprofits.

COMING NEXT ISSUE

» » » »

Arizona Association for Economic Development American Institute of Architects: Arizona Building Owners and Managers Assoc. Foreign Trade Zones

4 | September-October 2012

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SPECIAL SECTIONS

AMA The Arizona Multihousing Association represents ethical rental housing providers in legislative, legal and regulatory matters.

ULI The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities.

3101 N. Central Avenue Suite 1070 Phoenix, Arizona 85012

NEW TO MARKET

PUBLIC

1 1 RIVERVIEW PARK Owner: City of Mesa General Contractor: Hunt Construction Group Architect: Populous (along with DWl ArchitectsPlanners) Location: Dobson Rd. and loop 202, Mesa Size: 15,000-seat main stadium; 4 practice fields

The $99M Riverview Park will serve as the new Western training facility for the Chicago Cubs. Amenities will include multiple entrances to the park; heavily landscaped grounds; a large, open concourse; a seating bowl with 70% of the seats in the shade; and features that will capture the intimacy of Wrigley field in Chicago. Construction is scheduled to be completed before the 2014 spring training season.

2 PIMA COUNTY/CITY OF TUCSON JOINT COURTS COMPLEX Developer: Pima County General Contractor: Sundt Construction Architect: AECOM Location: 300 N. Stone Ave., tucson Size: 290,000 Sf The new, $48.2M Joint Courts Complex will be a criminal justice facility shared by the county and the city. It will feature 30 courtrooms and 14 holding cells. Subcontractors include Wilson Electric, Cascade Electric, Sun Mechanical, Brothers Masonry, Able Steel, Walters and Wolf Glazing, Coreslab Precast, kovach, Blount Excavating and Arizona Partitions. Estimated completion is 3Q 2013.

3 AMERICAN INDIAN VETERANS NATIONAL MEMORIAL Developer: The Heard Museum General Contractor: kitchell Architect: John Douglas Architects Location: 2301 N. Central Ave., Phoenix Size: 91 feet wide; 49 feet deep triWest Healthcare Alliance is funding the first known memorial dedicated to Native American veterans who served in any u.S. war. The project spans more than 30 yards and will feature the last monumental sculpture created by Allan Houser. Estimated completion is 4Q 2012.

4 4 YUMA POLICE SUBSTATION General Contractor: Yuma valley Contractors Architect: Michael Wilson kelly-Architects, ltd. Location: 3690 E. 26th St., Yuma Size: 4,155 Sf The $1.1M police substation will feature a 50-person community room and freestanding ramada overlooking a 4,000 Sf sunken turf area that will host a variety of community events and residential programs. Estimated completion is 3Q 2012. 6 | September-October 2012

NEW TO MARKET

EDUCATION 5

5 GRAND CANYON UNIVERSITY RESIDENCE LIFE HALL Developer: Grand Canyon university General Contractor: Pono Construction Architect: Orcutt | Winslow Location: 3300 W. Camelback Rd., Phoenix Size: 350,000 Sf (1,150-Bed Residence Hall) The $40M residence hall is designed to meet on-ground campus growth at GCu. When complete it will be the largest live/learn facility on campus. The project also includes the design of a 30,000 Sf dining/recreation facility. Subcontractor include NP Engineering, NP Mechanical, Pk Associates and RlGA technical. Estimated completion is 3Q 2013.

6 6 GRAND CANYON UNIVERSITY COLLEGE OF ARTS AND SCIENCES Developer: GCu General Contractor: Pono Construction Architect: Orcutt | Winslow Location: 3300 W. Camelback Rd., Phoenix Size: 70,000 Sf The $12.5M College of Arts and Sciences project will be a 4-story structure designed to blend into the modern campus fabric while embracing the school’s Christian values and heritage. Subcontractors include MSA Engineering Consultants, Pk Associates and Rolf Jensen Associates. Estimated completion is 3Q 2012.

HOSPITALITY 7

7 VEE QUIVA CASINO & HOTEL Developer: Casino expansion owners team on behalf of the Gila River Indian community General Contractor: tutor Perini Building Corp. (las vegas, Nev.) Architect: friedmutter Group (las vegas) Location: 6443 N. komatke ln., laveen Size: 70,000 Sf casino The new, $135M vee Quiva Casino & Hotel will feature a 750-seat bingo hall, and 3-story hotel with 90 rooms and more than 3,000 Sf of banquet space. The project will include 2,800 parking spaces, a 1,000-space covered parking garage, fitness center, pool, seven restaurants and two bars. Estimated completion is 3Q 2013.

INDUSTRIAL 8 SOUTHWEST PRODUCTS HEADQUARTERS, ASSEMBLY AND DISTRIBUTION CENTER General Contractor: lGE Design Build Architect: Cawley Architects Broker: lee & Associates Location: Skyway Business Park II, Peoria Size: 166,985 Sf (121,285 building; 45,700 Sf canopy) Southwest Products’ new $10M facility will serve as the headquarters and key assembly and distribution point. The building is a tilt concrete, light industrial structure. Estimated completion is 3Q 2013. 8 | September-October 2012

CONSTRUCTION: PROJECT NEWS

Phoenix Children’s Hospital Scottsdale Specialty and Urgent Care center in Scottsdale

 CONSTRUCTION PROJECT TRANSFORMS PHOENIX COLLEGE

 RENOVATIONS COMPLETED AT SCOTTSDALE EXECUTIVE OFFICE PARK

D.l. Withers Construction and RNl Design are helping transform Phoenix College into a more modern campus with greater amenities for students and employees — even as it retains its historical look. Phase II of the campus renovation project is in progress and is scheduled to be done in December. first to be completed will be the West Parking lot. Next will be Sophomore Square, which makes up the central campus thoroughfare and has served as a major area for school and club functions. The original fountain was dismantled to make way for a more open, pedestrian friendly square. A zero-edge fountain, which incorporates some of the original bricks from the old fountain, will be built on the northern part of the square. The centerpiece of Phase II will be a new cafeteria, and a glass atrium connecting the old Hannelly Center with the new Enrollment Center, which was completed in January.

Scottsdale Executive Office Park (SEOP) recently underwent about $500,000 in renovations to upgrade and revitalize the property, a 15-acre Class A office project consisting of two 3-story office buildings totaling 251,000 Sf at 7975 N. Hayden Rd. and 8655 E. via De ventura Blvd., in Scottsdale. Built in 1983, SEOP was acquired by Grunberg Realty in 2007. Grunberg invested approximately $500,000 in interior and exterior renovations that began in November 2011 and were completed in April 2012. General contractor was Stevens-leinweber Construction of Phoenix; the architectural firm was Cox James Architects of tempe. AZ Shade provided the shade sails for the parking structure and interiors. Improvements and upgrades include three new move-in ready spec suites; north and west entries widened; new monument walls at both entrances; enhanced landscaping at the entrances and throughout the property; architecturallydesigned covered parking structure using shade sails; removal of block wall on Sub Zero’s newly remodeled lobby at its the west side of the property; courtyard Goodyear facility. improvements that include landscaping and new tenant directory signage that allows all tenants to be listed.

 O | W TEAMS UP WITH PAIR OF BUILDERS Orcutt | Winslow and Mortenson Construction completed the $1.47M, 6,000 Sf Phoenix Children’s Hospital Scottsdale Specialty and urgent Care center in Scottsdale. It includes 10 exam rooms, an x-ray room and support spaces. Subs included CtS Inc., Dalton Interiors and taylor Rymar. O | W and Okland Construction teamed up on the 35,000 Sf Gila River Healthcare Corporation (GRHCC) Administration Building in Sacaton. The building will consolidate services for GRHCC into one location on the Huhukam Hospital site. Subs included CtS; CCRD Partners; Cottrell, Sparkman Design Specialists and Site Design. 10 | September-October 2012

 BRYCON, SWAN ARCHITECTS COMPLETE SUB ZERO LOBBY PROJECT Brycon Construction and Swan Architects completed a $600,000 lobby remodel/addition at the Sub Zero manufacturing facility in Goodyear. Work on the $600,000, 3,000 Sf project was performed with Sub Zero in operation. All construction materials incorporated into the project were high-end or custom and designed by Scottsdale interior design

CONSTRUCTION firm Est Est, Inc., in coordination with Sub Zero. Subcontractors included Pete king, SGSI Glass and Glazing, Stradlings fine Cabinetry and Modern Group. Brycon is also general contractor for the 460,000 Sf Sub Zero plant, which opened in July 2011.

 LINCOLN CENTRAL PLANT REPLACEMENT ALMOST COMPLETED John C. lincoln Health Network, Orcutt | Winslow and Gilbane Building Company achieved substantial completion ahead of schedule on the John C. lincoln North Mountain Central Plant Replacement Project, Phase II in Phoenix. The anticipated final completion is scheduled for 3Q 2012. The new central utility plant encompasses 15,500 Sf with a 7,900 Sf enclosed building and includes chillers, necessary pumps, boilers, cooling towers, emergency generators, electrical distribution, and necessary support components to expand capacity for future campus expansion.

 SUNDT WRAPS UP MESA WATER TREATMENT PLANT Sundt Construction completed installation of a post-fi lter granular activated carbon (GAC) system at the val vista Water treatment Plant in Mesa. It will help the facility improve water quality and keep pace with increasingly stringent federal standards. Sundt served as CMAR on the project and worked with joint venture partner Black & veatch to install a 220 milliongallon-per-day GAC contactor, pump station, two backwash equalization basins, chemical feed systems, three miles of pipeline and a control building. The 38-year-old plant is owned by the City of Phoenix and provides water to homes and businesses in Phoenix, Mesa and tempe.

 CHASSE, BCA TEAM UP WITH ICAN FOR YOUTH CENTER Chasse Building team and Bollinger Consulting Architects (BAC) teamed up with ICAN (Improving Chandler Area Neighborhoods) to complete the $1.3M, 22,000 Sf lon E. Hoeye Youth Center, 650 E. Morelos St., Chandler. The facility is comprised of multiple outdoor and indoor areas and serves more than 200 youth daily in after-school programs and activities. Amenities include an expanded library, computer and tech center, kitchen, classrooms, teen centers, gymnasium and meeting rooms. A grassy courtyard, youth playground and basketball court surround the building. Chasse superintendents explained the construction process to the children through site walks and handson presentations.

 DPR COMPLETES HYBRID OR AT ARIZONA HEART HOSPITAL DPR Construction projects in Phoenix include a lab, a loading dock and a hybrid operating room renovation. DPR and architect Building Possibilities completed an 1,800 Sf hybrid operating room renovation at Arizona Heart Hospital. The project consisted of renovating two existing operating rooms to house new hybrid equipment. Subs were Cannon and Wendt, Mercury Air, Styles Brothers, Wholesale flooring Advanced terrazzo, JHM Innovations, RCI Systems and DH Pace. DPR is teaming with CO Architects and Ayers/Saint/Gross on a $14.2M, 34,300 Sf Phase One project at the Phoenix Biomedical Campus university of Arizona Biomedical laboratory. That project consists of a 8,050 Sf loading dock and 26,250 Sf biomedical lab. Subs include university Mechanical, Western States fire Protection, Brothers Masonry, Bell Steel and ISEC. Expected completion of this project is 2Q 2013.

CONSTRUCTION: P&Z  CITY OF SCOTTSDALE The City recently hosted two open house meetings in which the public was invited to provide input on the proposal to provide a zoning ordinance text amendment. The proposal involved amendments to the Central Business District (C-2), Highway Commercial District (C-3), and Regional Shopping Center District (C-S). Revisions are proposed for all the elements of these districts such as development standards, conditional use criteria, signs, parking, landscaping, etc. visit eservices.scottsdaleaz.gov/cases/ for more information.

 MARICOPA COUNTY Maricopa County recently proposed creating a “fee Estimator” for subdivisions. This proposal comes as a result of concerns expressed by developers and contractors that planning fees were being calculated late in the process. A draft of this “Estimator” will be available on the county’s website for review and feedback by the public. fees such as grading permit fees and other residential project permit fees can be estimated at anytime during the planning or construction phases of a project. for more information, contact valerie Beckett, ombudsman, Planning and Development Department, (602) 506-3702.

 TOWN OF BUCKEYE The town of Buckeye staff recently recommended that the Planning and Zoning Commission and the town Council recommend approval of a proposal regarding a zoning map and development standards for a 1,500-acre + area defined as the “Downtown Overlay.” These standards and allowances are intended to address existing and infi ll development in the town’s historic town site. The “Overlay” is also intended to promote the downtown as an economically viable part of the town by encouraging revitalization with new commercial and residential infi ll development. for additional information, contact Sean Banda, associate planner at sbanda@buckeyeaz.gov or (623) 349-6215.

 CITY OF PHOENIX The City of Phoenix’s Development Services task force recommended the City amplify its “Self-Certification” program to include new construction as well as amendments to civil on-site grading and drainage plans for new residential single family home subdivisions up to 160 acres. The program eliminates plan review by allowing a registered professional to take responsibility for and certify a project’s compliance with the building code and City ordinances and standards. for more information, contact Deborah larkins at deborah.larkins@phoenix.gov or (602) 495-0265.

 CITY OF CHANDLER The Chandler City Council unanimously approved the adoption of an ordinance to repeal Chapter 43 of the City Code and add a new Chapter 43 for the purpose of merging the Dept. of Public Works and the Dept. of Planning and Development into a single department, the transportation and Development Dept. The P&Z column is compiled by Dave Coble and George Cannataro with Coe & van loo Consultants, cvlc.com. 11

BROKERAGE: DEVELOPERS BY PETER MADRID

A MATTER OF TIMING The outlook is optimistic for ofﬁce and industrial as developers set their sights on new product

rom a developer’s standpoint, Arizona’s office and industrial scene could be getting a little crowded entering 2013 — which isn’t a bad thing at all. On the industrial side, The Alter Group is ready and prepared to move forward with a large, speculative distribution warehouse in Buckeye. “The fact that a handful of developers are also planning to move forward immediately with similar product has caused a waiting period,” says kurt Rosene, senior vice president for The Alter Group. “At this time, we remain optimistic that the market can support new distribution product and we are moving forward.” As the economy improves, industry experts say, timing will be the question. Rosene says Southwest Phoenix will see new speculative industrial development in 2013. The question, Kurt Rosene he adds, will be how deep is the distribution Senior Vice President The Alter Group market and how many buildings will actually be able to break ground. “The industrial market continues to experience a high level of optimism and confidence,” says Mike Haenel, executive vice president for Cassidy turley BRE Commercial’s Industrial Division. “Current tenant activity is strong; we have experienced nine consecutive quarters of positive net absorption, there are five to six speculative development projects under construction and developers are Mike Haenel purchasing land for development and or buildExecutive Vice President Cassidy Turley BRE Commercial to-suit. “Rental rates have stabilized and are increasing in some submarkets based on product type,” Haenel adds. “The Phoenix industrial market clearly is a target area for regional/national companies that are looking to expand and relocate. We have great real estate and need to continue to close deals with companies that are bringing jobs to our state.” In tucson, the tenor of the market remains tentative, according to PICOR Commercial Real Estate. Year-to-date absorption at midyear was a positive 54,632 Sf, after a three-year combined period with negative absorption of 1.12 MSf. Industries contributing to recent positive absorption include mining-related uses and telemarketing firms. According to Rosene, office will lag behind and although there might be some build-to-suits over the next two years, the amount

12 | September-October 2012

of speculative office development will be limited by the amount of vacant space currently existing in the office market. “The office market varies from submarket to submarket in condition of health,” says todd Holzer, vice president of development for Ryan Companies uS. “It seems like closein core areas are getting most activity.” Holzer says the Discovery triangle (Downtown Phoenix to tempe) is strong now due to proximity to transportation and its central location within the metro area. Todd Holzel Rents are still compressed to the point Vice President of Development Ryan Companies US that new construction is difficult, Holzer adds. He says he predicts there will be a couple of new buildings built in the next two years, but they will be in the best submarkets and will require 50% + preleasing. “Ryan Companies is very active pursuing requirements in both sectors throughout the valley,” Holzer says. “We are seeing an equal amount of user owned and leased build-to-suit requirements coming to us. like most developers, our main source of competition are existing buildings with low cost basis that can rent below current replacement cost economics. “My sense is that the immediate health of the local industrial market is healthier than that of the local office market.” In tucson, overall vacancy remained fairly stable, ending 2Q 2012 at 12.2% with little variation in the past 10 quarters (since early 2010). Year-to-date absorption is a somewhat anemic, yet positive, 69,493 Sf vs. 252,653 Sf of positive absorption for the full year 2011, which recovered from a negative 161,230 Sf in 2010. “While many brokers were busy last year moving tenants from lesser to better digs given opportunistic lease rates and while many contractors were busy with tenant improvements as a result, not much was happening with office and industrial developers last year except the occasional build-to-suit or government contract,” says tim lawless, president of NAIOP Arizona. “That is now changing as there are a number of plans to build fairly large spec industrial facilities on the west side and even some spec office buildings in downtown Phoenix. “In short, the green shoots of optimism Tim Lawless last year are now being replaced with President NAIOP Arizona tangible concrete and steel and it looks like metro Phoenix is stating to be on the move again ... which is good for everyone.”

BROKERAGE: OFFICE Allred I-10 and University in Phoenix will encompass more than 80,000 SF when it opens in early 2013.

Open for Business Ofﬁce market gaining momentum with several new buildings in various stages of development

here’s nothing like a little momentum for the Metro Phoenix office market heading into 2013. That sector made progress after a downfall in 1Q 2012, as 2Q absorption numbers were positive overall and vacancy percentages declined, according to NAI Horizon. Absorption figures through 2Q increased from 74,492 Sf to 881,772 Sf. The vacancy rate had a slight improvement; standing at 20.4% compared with the previous quarter’s 21.6%. On the construction side, the valley’s new supply of space dwindled slightly. levels since 3Q 2011 have been relatively low. Second quarter space under construction was at 285,638 Sf with just 46,326 Sf delivered, according to NAI Horizon. There were no construction starts in 2Q. However, the final phase of Hayden ferry lakeside, a Class A office tower in tempe, will commence construction during 4Q 2012. And in Chandler and Phoenix, Willmeng Construction is busy with two office buildings for San Diego-based Douglas Allred Company.  Allred Park Place, a new 86,000 Sf office building in Chandler’s Price Corridor, is already 90% leased. Infusionsoft, a maker of sales and marketing software for small businesses, is relocating from Gilbert at the end of this year.  Allred I-10 and university broke ground in 1Q 2012 and is scheduled for completion in 1Q 2013. The 80,252 Sf building is at 4025 S. 32nd St. In January, Chandler Mayor Jay tibshraeny commented about Allred Park Place: “It’s been a while since we’ve seen speculative construction in the valley, but it is no surprise that the first office project coming out of the ground in several years will be in the Price Corridor.” While that project is important to the Southeast valley, it is also marked the first ground up office building in Metro Phoenix

14 | September-October 2012

coming out of the Great Recession. “As a company, we have seen ‘the cycle’ in the valley since 1977,” says Willmeng COO Mike Mongelli. “Each cycle ends via savvy business that seizes the opportunity of being first in. In this case, the Douglas Allred Company built themselves out of inventory, even through the Recession. “The new shell construction that we began in November/ December of last year is exciting given that it is visible evidence of new inventory underway. That being said, Allred never stopped building. It was just concealed in their existing inventory.” The Douglas Allred Company and other high performing, financially strong developers were key to the stability that remained in the market through the difficult economy, according to Willmeng President James Murphy. The overall market still has a long way to go as it relates to true stability. “When the dust has settled, the employment rate is back up from coast to coast, and companies across the board are performing ‘like the good old days,’ we all owe a big ‘thank you’ to those who stayed true to their model and continued to forge ahead,” Murphy says. While the office market appears to be the slowest recovering property type, a need likely will exist for additional Class A office space. “We see a trend of increased activity across the board,” Murphy adds. “We have no reason to expect that the office market, in particular, will lose momentum.” future plans for Allred Park Place include construction of several additional office buildings, which will eventually exceed 1 MSf. “Douglas Allred Company is excited about its plans to development the valley’s first, Class A speculative office building in more than two years,” says David Allred, the firm’s executive vice president. “The time is right and there is demand for this product type.”

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FEATURES & AMENITIES

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• 116,858 square foot, two-story, class “A” office building • Located near numerous retail amenities, hotels, & restaurants • Raised floor throughout • On site cafeteria • Abundant parking

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Cotton_Center_AZRE_Sept_2012_D1.indd 1

8/6/2012 1:20:26 PM

BROKERAGE: INDUSTRIAL BY PETER MADRID

Massive Makeover

Sub Zero’s plant is responsible for bringing more than 300 manufacturing and professional jobs to the West Valley.

Collaboration the key as Brycon Construction and Sub Zero work hard and quickly to transform a 440,000 SF industrial space into a modern manufacturing facility

he City of Goodyear had big plans for the huge spec warehouse being built in the Palm valley development. The grand opening was scheduled for March 3, 2008: the date, 3/03, signified the 440,000 Sf industrial building’s location off the loop 303 in the West valley. Then, the economy collapsed. two years later, as the space sat idle, Brycon Construction was awarded a building activation contract from Wisconsin-based Sub Zero Inc., a manufacturer of high-end refrigeration, freezer and wine-storage appliances. today, the plant totals 460,000 Sf and is a world class manufacturing site; a testament to successful collaboration between an owner/developer, general contractor, architect and municipality. “The motivation for us was to move,” recalls Ron Jones, Sub Zero’s plant manager at the facility, 4295 N. Cotton lane. “We had a 165,000 Sf building in Phoenix and were leasing additional space. We were out of room. We were getting ready to put in a new product line and we needed additional floor space. There was nowhere else. Between Madison (Wisc.) and Phoenix, it was our best venture.” Brycon assembled manufacturing, electrical and design teams and developed the necessary changes that encompassed a multimillion dollar infrastructure improvement, including significant structural improvement to the foundation and roofing, HvAC implementation, electrical and mechanical infrastructure, office build up, lighting implementation and operational improvements. Deutsch Architecture Group, which has design experience with large industrial projects, was the architect. “The biggest challenge for us was the magnitude of the job,” says kevin freis, Brycon project manager. “They came to us with an aggressive schedule; they had some time constraints. They wanted to be up and running. They had some stock to sell while they were down, but they wanted to make sure they were back up on time.” Goodyear’s approval of the tenant improvements was received in January 2011 and Brycon began work immediately. The goal was for the site to be partially activated by June 2011. Beyond the rapid timeline, Brycon allowed Sub Zero to begin transferring operations

16 | September-October 2012

to the site while construction continued. from June through September, Brycon worked around refrigerator manufacturing without affecting any of Sub Zero’s products. The impact of the facility was immediate to the community. It is responsible for bringing more than 300 manufacturing and professional jobs to the West valley and an estimated financial impact of $214M over the next five years. Sub Zero also benefitted:  Brycon implemented energy savings that totaled an estimated $168,000 a year and a one-time energy rebate of $330,000 through the APS Solutions for Business program;  The project qualified for newly developed foreign trade zone (ftZ) status, which allows equipment and property tax breaks for new or expanding companies. In the end, though, collaboration was the key. “Our team, Deutsch, and the Sub Zero team all really pulled together,” freis says. “Everyone was pulling their weight. And it was a true team effort. When a challenge was brought up we all worked toward the best solution. Every issue that popped up here and there, we would find a way to deal with them. “A lot of people in the industry don’t see industrial (projects) as that glamorous or difficult,” freis says. “But there’s a lot going on. And I’m not just talking about (electrical) production lines. I’m talking about the entire workings of a 460,000 Sf building.” Dustin Chisum, senior project manager for Deutsch, agrees. “The schedule was a crucial item from a construction standpoint,” he says. “The physical elements posed a problem to work with for our design. But it’s always good to have a challenge. “Industrial is my stuff,” Chisum says, “As a team – with us and Brycon – we worked well and we kept the owner within its needs.” Sub Zero rolled out its first cabinet on July 5, 2011, completed the move in August 2011, and added another product line from Wisconsin in November 2011. Brycon completed a new lobby at the facility and renovated Sub Zero’s Phoenix warehouse. “It’s like we’ve developed a true partnership and look forward to future opportunities to help Sub Zero continue to be successful in the years to come,” freis says.

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BROKERAGE: OUTLOOK BY PETER MADRID

SIZING UP

the office and industrial markets

he Metro Phoenix office market has gradually been making progress. Absorption numbers in 2Q 2012 were positive overall, and vacancy percentages declined as well. Arizona is poised for growth as larger macroeconomic factors strengthen, yet the process will be gradual. The industrial market showed modest

JB: Jodi Bailey Vice President Transwestern

JD: John DiVall

Principal Liberty Property Trust

improvement over the previous quarterâ&#x20AC;&#x2122;s relatively weak progress. The figures pointing to positive momentum evolve around the large amount of space that was absorbed. Those figures through the second quarter marked a significant turnaround. Nearly 2.3 MSf was absorbed compared to approximately 280,000 Sf absorbed in 1Q 2012. AZRE magazine turned to six industry experts for their outlook on the office and industrial markets. 18 | September-October 2012

Q: What is different in July 2012 in our local commercial real estate industry than a year ago? JB: The greater volume of building sales to users. Through mid-year, 57 user sales averaged $43.63 per Sf compared to the $64.78 per Sf averaged across 54 investment sales. Significant 2011 leasing activity translated into positive absorption

TJ: Tom Johnston Senior Managing Director Cushman & WakeďŹ eld

through the first six months of 2012 with the market on pace to exceed 5 MSf for the year. Notable is the lack of available big-box space on the market with only one speculative development to break ground. Additional speculative developments are expected to be announced in the coming months. Phoenix experienced growth in the construction sector of 3,000 jobs for the month of May and added 7,400 jobs year-to-date, the second highest of all sectors in Phoenix. The seasonally adjusted

unemployment rate for May was 7.2%, 100 basis points lower than a year ago and 100 basis points below the national rate. JD: In the industrial and office markets, all four quarters since this time last year have had positive net absorption with essentially no new construction. Additionally, our local economy has continued to gradually improve on the job creation and housing industry sectors. So the big picture has been largely positive over the last 12 months. TJ: In general, there is optimism that the market is heading in the right direction. Positive job growth and higher housing prices fuel an optimistic attitude for our future. The increased leasing activity in all sectors is helping owners and brokers feels better. fewer concessions are needed to finalize deals and longer lease terms are being signed. Capital investment in multi-housing returned to the market with pricing

KM: Keaton Merrell Principal Legacy Capital Advisors

LS: Laurie Sandau

in commercial foreclosures and loan modifications. REItS and other entities are activity pursuing and closing on quality assets. We have also seen an increase of transactions in commercial refinances, hospitality, retail, and the industrial market. KR: Office is pretty much unchanged.Â Although activity is up, the overall net absorption is still lagging in an effort to stabilize the office sector. The industrial market is headed in a positive direction. The only concern is that many developers are planning large scale speculative distribution buildings.Â If all of these projects move forward, Phoenix could quickly become over supplied. The investment market has seen some renewed interest in 2012. Many of the Class A buildings are trading near pre-recession values. Part of this has to do with the overall quality of the assets and part is a sign that capital is once again interested in Phoenix.

National Commercial Account Manager Lawyers Title

up 20% over a year ago. Institutional investors returned, representing approximately 40% of the transactions through the first six months of 2012. KM: There is more capital in the market both on the debt and equity side.Â for awhile, we were only financing multi-family. Now we are seeing all product types get financed. LS: from the title and escrow perspective, we have seen a decrease

KR: Kurt Rosene Senior Vice President The Alter Group

Q: What is the current state of our Metro Phoenix office market? JB: Mid-year 2012 finds Phoenix starting to make strides in filling the glut of vacant space left over from the recession. The economy is showing signs of improvement, providing confidence for businesses to expand. tenants who signed leases during the second half of 2011 and the first quarter of 2012 are 19

BROKERAGE: OUTLOOK

Phoenix experienced growth in the construction sector of 3,000 jobs for the month of May and added 7,400 jobs year-to-date, the second highest of all sectors in Phoenix.

Jodi Bailey Vice President Transwestern

... our local economy has continued to gradually improve on the job creation and housing industry sectors. So the big picture has been largely positive over the last 12 months.

John DiVall

Principal Liberty Property Trust

20 | September-October 2012

starting to occupy their space, which has led to positive absorption levels not seen since 2006. vacancy experienced a healthy decline and all indications point to continued downward trends. vacancy remains over 20%, however, and average lease rates continue to fall, so we may have not completely turned the corner toward full-steam recovery. Still, as vacancy declines in 2012, landlords should start to firm up rents. We expect to see higher asking rates in stronger submarkets within the next few quarters. JD: Office has gradually improved for the past six quarters. However, the emphasis is on the word “gradual.” Th is sector was hit hardest in the downturn, along with retail, and we really need service sector job growth to accelerate so that we can experience more significant net absorption of space. That said, large blocks of space of 100,000 Sf or more have been significantly reduced. We need more business confidence and job growth in the local and regional type employers so that the smaller and medium sized blocks of space can be absorbed. TJ: In recovery. Year-to-date net absorption is three times the level of a year ago. leasing activity is 21% higher than the second quarter 2011 figure. We anticipate year-end absorption will surpass the 1.0 MSf in 2011 and approach the historical averages of approximately 1.5 MSf. With speculative development at a standstill, vacancy rates will plummet on high absorption levels. Rental rates have rebounded in a handful of submarkets but are generally down. This is due to the high level of leasing activity in Class A buildings, so tenants’ fl ight to quality caused weighted average rates of the remaining available space to decline as well as owners reducing their asking rates to better align with market realities. KM: Office is the toughest product type to get financed due to the high vacancy rates. LS: REItS are the most active buyers of office complexes. We have seen several sales of office condos and lenders appear to be making more loans helping to drive this market. KR: vacancy is still at a high level of approximately 24% across all classes. The

problem is that Class A vacancy is as high as other classes. leasing activity is up, but not overall absorption. We are still experiencing a move to Class A office as rents continue to fall. Rates are still down and there is no evidence that they will be trending up soon. Incentives are still also very active to get deals done. Q: What is the current state of the Metro Phoenix industrial market? JB: leasing activity jumped in 2Q 2012. The industrial markets rebounded in second quarter with a stellar amount of leasing activity and three times the absorption than reported in first quarter boosting year-to-date activity to 5.2 MSf. Overall vacancy declined by 50 basis points, which ended second quarter at 12.2%, returning to levels not seen in four years. Direct average asking market rents inched upward by $0.01 per Sf per month. two submarkets have dramatically improved compared to a year ago. Overall vacancy in Southwest Phoenix dropped to 13.3%, down 5.2 percentage points since second quarter 2011, while Chandler vacancy dropped 4.6 percentage points to 10.3% over the same time period. JD: I would call the industrial market today strong. There are very few blocks of space over 300,000 Sf left in the overall market and there will be speculative construction commencing in the second half of this year, specifically in the Southwest valley. We have similar issues in the office sector with small and medium sized spaces being absorbed. However, in the last two quarters this user activity has picked up which is very encouraging. Additionally, there continues to be strong demand on the capital market side for Class A warehouse product in Metro Phoenix, with relatively little product available. TJ: In recovery. The industrial market rebounded in 2Q 2012 with a hefty amount of leasing activity and three times the absorption than reported in first quarter. There was 5.2 MSf of leasing activity in second quarter and 1.8 MSf of absorption. Overall vacancy declined by 50 BPS, which ended second quarter at 12.2%, returning to levels not seen in four

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BROKERAGE: OUTLOOK

With speculative development at a standstill, vacancy rates will plummet on high absorption levels. Rental rates have rebounded in a handful of submarkets but are generally down.

Tom Johnston

Senior Managing Director Cushman & Wakeﬁeld

There is more capital in the market both on the debt and equity side. For awhile, we were only ﬁnancing multi-family. Now we are seeing all product types get ﬁnanced.

years. Direct average asking market rents inched upward but it will be another year before significant increases are seen. two submarkets have dramatically improved compared to a year ago. Overall vacancy in Southwest Phoenix dropped to 13.3%, down 5.2 percentage points since second quarter 2011, while Chandler vacancy dropped 4.6 percentage points to 10.3% over the same time period. KM: The industrial market is definitely getting stronger; particularly in the Southwest valley. LS: We have seen an increase in activity in manufacturing and warehouse distribution centers and we expect new development in both of these product types in the near term. KR: A much better picture is starting to occur in the industrial market. vacancy is still at 12% across the entire market, but absorption is on pace with last year (2011 was much better than the previous couple years) and rents have started to stabilize. large blocks of space (over 300,000 Sf) are disappearing and this is causing a renewed interest in speculative development of larger distribution buildings on the southwest side of Phoenix. Continued interest from both distribution and manufacturing users has the market tracking potential requirements of millions of square feet. The Internet retail sector is one of the main factors that is fueling the large distribution market. Q: Are values in Metro Phoenix commercial real estate starting to move upward yet?

Keaton Merrell Principal Legacy Capital Advisors

22 | September-October 2012

JB: The office market rebounded in the second quarter with more than 600,000 Sf of net absorption. Although sale velocity has increased for two consecutive quarters, distressed property sales and the lack of many major investment sales have lowered prices during the second quarter. twenty-one properties totaling 1.4 MSf changed hands in the Phoenix market during quarter. Th is compares to 18 sales totaling 7.8 MSf during the first quarter. Distressed sales combined with sales of smaller size and quality has dropped

average prices 37.7% from last quarter to $111.03 per Sf. Despite the decrease, current pricing is still above averages between 2009-2011. In terms of quantity, the Phoenix investment market is headed in the right direction. But until the distressed component is resolved and fewer troubled assets come to the market, pricing will remain low in the near term. Most indicators point to a slow, yet steady recovery for the Phoenix market. Gains in economic fundamentals have infused some confidence in businesses. Some concern remains as money markets continue to ebb and flow on economic news and the Euro crisis. Despite these headwinds, Phoenix has been able to move near the top in terms of u.S. metro economics. Barring an economic shock, we expect the markets in Phoenix to continue to improve. JD: I think it is a tale of two markets. What would be considered core, or Class A, relatively highly-leased product has had very strong investor interest which are helped by very low interest rates. Capitalization rates have definitely decreased in this sector and investor demand has been very strong. I see this trend continuing over at least the next 18 months. Non-core, non-leased or distressed assets have not experienced increases in valuation. It is difficult for investors to obtain financing for these types of assets and many are still held by lenders or special servicers. These “zombie assets” are really sort of dead in the water with these types of owners having difficulty fi lling their vacancies and not willing to sell at today’s valuations. I believe there are still significantly potential opportunities with these types of assets once sellers get realistic about selling them. TJ: Yes. In transactions greater than $5M, the median price per square foot has moved upward in industrial buildings and the average price per unit for apartments jumped more than 20% over year-end 2011 and 43.7% increase over year-end 2010. Office properties in Scottsdale and North tempe stole the headlines with signature sales of MAx at kierland, which surpassed the $300 per square foot mark at $305 per square foot, the highest PSf paid for a non-

COMING NEXT ISSUE NOVEMBER/DECEMBER 2012 - Arizona’s sports venues, including US Airways Center, Arizona Stadium in Tucson and the Peoria Sports Complex, are undergoing major facelifts. New in 2014: the Chicago Cubs Riverview Park in Mesa. - A look back at a quarter century of Valley Partnership community projects. - Phoenix/Mesa Gateway, Chandler Airpark, Scottsdale Airpark, Prescott Regional Airpark and Commerce Center, Pinal Airpark: All are vital to economic development of their respective region.

- Find out who the winners are of the 2012 TOBY Awards, plus a Q&A with Executive Director Mark Covington. - AIA Arizona members are designing buildings to keep up with the state’s fastgrowing technology industry and also academic research and healthcare projects. - An overview of the state’s top economic development groups, including GPEC, TREO, Greater Yuma EDC, NACOG and the Arizona Commerce Authority.

AZRE magazine.com • 602.277.6045

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BROKERAGE: OUTLOOK

REITS are the most active buyers of ofﬁce complexes. We have seen several sales of ofﬁce condos and lenders appear to be making more loans helping to drive this market.

build-to-suit property in nearly four years, and Hayden ferry II which traded at $287 PSf, indicating that trophy assets still command the highest pricing. KM: Multi-family values and industrial values have definitely been moving up while office and retail seem to be staying on and even keel or in some cases still dropping. KR: for the most part, not yet. Office is still seeking the bottom. Industrial is stabilizing and in some specific examples on the rise. The investment market is also mixed as some institutional capital is starting to pay much higher values for Class A buildings. Q: What trends are coming to the industry?

Laurie Sandau

National Commercial Account Manager Lawyers Title

Continued interest from both distribution and manufacturing users has the market tracking potential requirements of millions of square feet.

Kurt Rosene Senior Vice President The Alter Group

24 | September-October 2012

JB: The ratio of square feet to employees keeps getting smaller. Mobile and efficient technology has created more flexibility. Companies are offering alternative work strategies such as home offices, shared workspaces; and mobile work (consistently using multiple places to work virtually). It is anticipated that more companies will implement an alternative work strategy. But despite the trend toward increasing mobility, nearly half of all organizations reported that they have 10% or fewer of their employees regularly working remotely. The office is the best place to interact and collaborate with colleagues and provides access to much needed tools and technology. So the office is not disappearing; the basic human need to feel a sense of belonging and connection to an organization’s culture is still strong. JD: On the office side I believe that we will start to see significant build-to-suit transactions as large Class A blocks of space available diminish. large corporate users realize that this is a good time to be locking down large chunks of space in buildings that are very efficient. A very recent example is the 140,000 Sf buildto-suit that we are breaking ground on in August for Aetna life Insurance Company in the Cotton Center, which will be a lEED certified building. I do believe that office users will continue to be attracted to high efficiency energy efficient buildings.

On the industrial side we will see some speculative building in addition to buildto-suits, particularly in the Southwest Phoenix market. I believe that in the not so distant future we will begin to see construction that is at 36-foot ceiling height so that large users can utilize their space even more efficiently. Investor appetites in both of these product types will continue to be strong with more capital demand than assets available. TJ: Consolidation, as evident by the recent acquisitions. Repositioning of big box retail spaces to back-office, school or fitness users to remove the glut of available space in shopping centers. Demand for multi-family has prompted the teardown of infi ll obsolete properties in favor of new construction in Phoenix and Scottsdale. Auctions handled through the Internet for investment properties are becoming increasingly common. Social media is playing a bigger role in delivering information to the market in real time. KM: I think debt and equity will continue to come back into the market. Industrial vacancies should continue to fall while office has a ways to go. LS: We continue to see commercial refinances and debt restructuring, transactions involving renewable energy, manufacturing and warehouse distribution centers and redevelopment of neighborhood shopping centers. Discount retailers are providing development and investments opportunities. KR: Job growth is increasing, which is good news for the entire area. There are a combination of factors that are assisting in job attraction. The market being down is making Phoenix affordable (both on the commercial and residential sides), the vacancy rate provides product that is move-in ready, and the state, through the Arizona Commerce Authority, GPEC and local municipalities for the fi rst time in our history have economic incentives that assist in competing with surrounding states. Internet retail is continuing to fuel interest and growth in our distribution product. unfortunately for office, the trend for space utilization is shrinking , which has the negative affect of employers needing less space for the same amount of business.

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EXECUTIVE Q&A BY PETER MADRID

Mike Bontrager

Christina Heide

Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: My father worked for Weitz for 30 years. I grew up going to job sites, attending the company picnics, and hanging around fred Weitz, the last Weitz family member to lead the company. My father and fred’s passion for building and the pride of serving clients with integrity rubbed off, and I knew that’s what I wanted to do. I still love it and am proud to be a part of The Weitz Company.

Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: Prior to banking I was national sales manager in the medical equipment industry. I have a passion for helping people and am fortunate to have the opportunity to continue to do so by assisting companies with their business growth without using their own monies, increase their day-to-day cash flow and being a part of their prosperous futures.

PRESIDENT SOUTHWEST THE WEITZ COMPANY, LLC Years in commercial real estate: 29; Years at company: 26

Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: When I started we had no computers, cell phones, or CAD fi les. Drawings had that awful ammonia smell and estimators and accountants used green ledger paper. We rarely paid attention to a contract and a handshake was as good as gold. technology has changed the industry for the better: BIM, lean Construction, modularization, and a renewed emphasis on collaboration are speeding up the design-build cycle. We are at the beginning of a new era. It’s exciting to see the industry changing after many years of nothing new. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: When I became president in 2003, we set out to improve the Weitz culture. The management team was committed to becoming more client-focused and adding value. We made the client’s experience with Weitz better by approaching our work with these key attitudes: a positive outlook; a belief that every challenge can be overcome in a manner that benefits all parties; and teamwork inside and outside, across all departments; with designers and subcontractors. Weitz experienced 200% growth in 5 years and customer loyalty carried us well through the economic downturn.

Curt Johnson

SENIOR VICE PRESIDENT COE & VAN LOO CONSULTANTS, INC. Years in commercial real estate: 28; Years at company: 19 Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: The opportunity to contribute to community design and to create and build projects that can blend with their surroundings and provide a desired destination where people would want to live and work. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: The use of technology in the design, development and management of our projects. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: The projects that I have worked on, the professional associations that I have been involved with, and the relationships that I have built. 26 | September-October 2012

VICE PRESIDENT WELLS FARGO BUSINESS BANK Years in commercial real estate: 7; Years at company: 5 1/2

Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: The ever-changing economic challenges of the past two years have made me a sharper and solution-oriented banker; always looking for various loan structuring options and staying continually educated to identify areas I can add value as a financial partner. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: Being a viable financial partner assisting two engineers that had been released from their executive positions to start their own environmental company. It still makes me proud to see them giving back to Metro Phoenix by enhancing transportation, energy and infrastructure projects, as well as providing employment opportunities for fellow engineers.

Michael J. Curley

ZONING ATTORNEY EARL, CURLEY AND LAGARDE, P.C. Years in commercial real estate: 30; Years at company: 25 Q: WHAT WAS IT ABOUT THE INDUSTRY THAT ATTRACTED YOU? A: The pace of the real estate industry keeps it exciting. I also enjoy the people. My clients are very creative, and many of those in planning departments I’ve had the privilege of working with at cities throughout the valley for more than two decades. We’ve been through a lot together. They are like family. finally, it is very rewarding to be part of a process that results in the development of our community, adding new amenities and improving the local landscape. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: today, the zoning process is a much more intimate and neighborhood-focused process. It demands responding to the needs and demands of the neighbors, while also taking the time to engage them in communications about the vision and value of projects. We really work together to get to the end product these days. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: No one case stands out. I’ve been involved in urban in-fi ll projects, regional malls, master planned communities, and highrise developments. But, I guess the most satisfying cases involve helping small businesses to navigate through the process, which can be time consuming and confusing, so they are able to see their dreams realized.

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AFTER HOURS

Knowing more about the people we work with is the fun side of the business. It helps start conversations and strengthens business relationships. To nominate a colleague, request an After Hours form from Peter Madrid, peter.madrid@azbigmedia.com. PHOTOGRAPHY GLORY SHIM

Jerry Foster

John Amory

Founder and principal, Resolute Commercial Services Born in Brooklyn, N.Y. Obtained engineering degree from University of Arizona Married to wife Lisa; 3 children, Jude, Pierce and Lela

Senior vice president, CBRE With CBRE for 52 years Born in Boston, Mass., studied sociology at Harvard University Married to wife Marcelle for 48 years; 3 children

Responsibilities:

Working with clients such as lenders, bankruptcy counsel, developers, investors and operators to resolve real estate/ financial issues.

Representing a wide variety of clients such as real estate owners, investors and occupiers, to buy, sell or lease oﬃce properties in the Phoenix area.

Favorites

Sports Teams: University of Arizona basketball and football. Music: Adult album rock such as Keane, Dave Matthews, OAR, Big Head Todd and the Monsters.

Sports/teams: Arizona Cardinals, Boston Red Sox and horse racing, as a spectator and thoroughbred owner at Turf Paradise. Activities: Boating and horseback riding.

Destinations: Favorites include and Argentina and Chile. Destinations: Favorites include Europe and San Diego. Activities: Going to the park for T-ball or soccer with the kids, swimming, photography and learning more about architecture.

What did you think you’d be when you were growing up?: I had always thought I’d be a doctor.

What accomplishment are you especially proud of?:

What did you think you’d be when you were growing up?: A farmer or a cattle rancher.

What accomplishment are you especially proud of?: Professionally, I am proud of my tenure at CBRE. Personally, I take pride in my work as president of the Wickenburg Conservation Foundation.

Personally, I’m proud of being a great son, brother, husband and dad. Professionally I am proud of being a successful business owner several times over.

What would people be surprised to know about you?:

Advice

To Share: Work hard, be proactive and strategize ways to find new clients.

I was a Florida state champion in extemporaneous debate in high school and I will be the chairman of the board of directors for Junior Achievement in Arizona in the fall.

Received: Opportunity never passes you by, it just goes to the person next to you. To Share: Calls + knowledge = sales. Become an expert in something, then learn about the owners and introduce yourself to potential buyers through phone calls. 28 | September-October 2012

I drive nearly 100 miles, round trip, to work each day.

Received: Never give up. Keep cold calling and look for new ways to expand your business.

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BIG

DEALS

As with any business, it starts with people at the top. They are visionaries. They possess great business savvy. AZRE magazine is proud to honor the best brokers and brokerage-related firms in Arizona with the inaugural Big Deals Awards. Winners and finalists in 20 categories appear on the following pages.

LARGEST DEALS (Between Sept. 2011 and Sept. 2012)

Sales

Property name: Fountainhead Office Plaza • City: tempe Sale price: $137M • Tenant: university of Phoenix Listing brokerage company: CBRE (Source: Cassidy Turley BRE Commercial)

Leasing

Property name: Fowler Distribution Center • City: Phoenix Size: 1.267 MSF • Tenant: Amazon Tenant brokerage company: Cushman & Wakefield Landlord brokerage company: Buzz Oates (Source: Colliers International)

BIG DEAL BROKERS

Nominations were derived from our editorial staff along with votes cast on our website, azremagazine.com. We also sent the list and asked managing directors of Ranking Arizona magazine’s top brokerage houses and Arizona’s leading commercial developers to help us determine – who’s a Big Deal!

BIG

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Ofﬁce Leasing — Broker Craig Coppola Founding Principal Lee & Associates  Years in CRE: 28  Years at L&A: 22  In the past 12 months, biggest deal in size: 133,225 SF Piedmont Realty Trust & US Foods

 In the past 12 months, biggest deal in dollar amount: $35M US Food lease  When closing the “big deal,” what is your best advice? All transactions (big and small) are based upon

relationships. Developing strong relationships with owners, tenants, brokers and service providers (architects, lenders, attorneys, etc.) This is paramount to any transaction and has been the foundation for my career.

Finalists Tom Adelson, CBRE; Dave Carder, CBRE; Jim Fijan, CBRE; Keith Lambeth, Colliers International

Managing Director/ President or Principal Bob Mulhern

Managing Director Colliers International

 Years in CRE: 29  Years at Colliers: 3  In the past 12 months, Colliers’ biggest deal in size: 639,882 SF industrial building sale  In the past 12 months, Colliers’ biggest deal in dollar amount: $68.75M multi-family sale  When closing the “big deal,” what is your best advice? Larger deals usually equate to greater risk

for the parties involved. Because of this, trustworthy professionals are required to close big deals. Trust necessitates both honesty and competency. So follow the Golden Rule; bring the right experience to bear and you will see that big deals are not so hard to complete after all.

Finalists Bryon Carney, Cassidy Turley BRE Commercial; Craig Henig, CBRE; Tom Johnston, Cushman & Wakeﬁeld; Greg Vogel, Land Advisors Organization

Ofﬁce Sales — Broker Mindy Korth

Executive Vice President CBRE

 Years in CRE: 28  Years at CBRE: 28  In the past 12 months, biggest deal in size: 365,672 SF PetSmart Corporate HQ

Campus

 In the past 12 months, biggest deal in dollar amount: $102.5M, same deal  When closing the “big deal,” what is your best advice? Prepare at the start of

the transaction so that everything is set up to assure a smooth and successful outcome; and then keep adjusting along the way to respond to the dynamic nature of market condition.

Finalists Barry Gable, CBRE; Steve Gonzalez, Marcus & Millichap; Chris Toci, Cushman & Wakeﬁeld; Eric Wichterman, Cassidy Turley BRE Commercial

Healthcare/Medical — Broker Julie Johnson

Executive Vice President GPE Commercial Advisors

 Years in CRE: 23  Years at GPE: 4  In the past 12 months, biggest deal in size: 70,789 SF  In the past 12 months, biggest deal in dollar amount: $5M sale of

assisted living facility (partnered with Trisha Talbot and Kathleen Morgan)  When closing the “big deal,” what is your best advice? Be patient, be persistent, be creative, help both parties in the transaction achieve their goals in order to ﬁ nalize the transaction and never give up.

Finalists Kelley Ahrens, CBRE; Marina Hammersmith, Ensemble Real Estate Solutions; Aaron Kuhl, Medical Ofﬁce Brokers; Kathleen Morgan, GPE 31

BIG DEAL BROKERS

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Industrial — Broker Mike Haenel

Executive Vice President Cassidy Turley BRE Commercial

 Years in CRE: 28  Years at Cassidy Turley: 23  In the past 12 months, biggest deal in size: 13.5 MSF

308-acre land sale

 In the past 12 months, biggest deal in dollar amount: $9.1M, same deal  When closing the “big deal,” what is your best advice? Closing is the result of expertise, experience and

understanding how both parties beneﬁt. Your reputation and relationship with all parties involved in the transaction also plays a critical role in the closing process.

Finalists Bo Mills, Cushman & Wakeﬁeld; Pat Feeney, CBRE; Joe Ihrke, Carlson Real Estate Company; Anthony Lydon, Jones Lange LaSalle

Multi-family Investments — Broker Cindy Cooke

Land — Broker Randolph Titzck

Commercial Land Specialist Land Advisors Organization

 Years in CRE: 25  Years at LAO: 4  In the past 12 months, biggest deal in size: 18.4 acres, Walmart Stores Inc., Tucson Marketplace at the Bridges

 In the past 12 months, biggest deal in dollar amount: $4.4M, same deal  When closing the “big deal,” what is your best advice? Stay in tune with both sides of the transaction. Don’t assume the deal will close on its own. Those days are past us.

Finalists Courtney Buck, Nathan & Associates; Donn Kinzle, Commercial Properties Inc.; Brent Moser, Cassidy Turley BRE Commercial; Bret Rinehart, LAO

Executive Vice President Colliers International

 Years in CRE: 30  Years at Colliers: 14  In the past 12 months, biggest deal in size: 488,104 SF with 488 apartment units

 In the past 12 months, biggest deal in dollar amount: $68.75M multi-family sale  When closing the “big deal,” what is your best advice? All transactions require focus, diligence and

a team approach. Our success begins with aligning our team with the buyer’s and seller’s teams. We leave nothing to chance and attend every inspection whether with the buyer’s due diligence team, a lender or appraiser, allowing us to resolve potential issues immediately. Our team thoroughly understands the buyer’s and seller’s needs and communicates effectively and promptly. We never take our eye off the ball until we cross the ﬁ nish line.

Finalists Tyler Anderson, CRE; Sean Cunningham, CBRE; Chris Toci, Cushman & Wakeﬁeld; Mark Forrester, Hendricks & Partners

Retail — Broker Ed Beeh

Executive Vice President, Market Leader SRS Real Estate Partners

 Years in CRE: 24  Years at SRS: 7  In the past 12 months, biggest deal in size: 78 acres (3.4 MSF)  In the past 12 months, biggest deal in dollar amount: $5.096M, same

deal

 When closing the “big deal,” what is your best advice?

My philosophy is to treat every deal the same. The goal is to maximize the results for your client while protecting their interests, as you would protect your own. With every successful transaction comes a commission ... some may just be larger than others.

Finalists Andy Kroot, Velocity Retail Group; Greg Lang, Phoenix Commercial Advisors; Mike Polachek, SRS; Tom Woods, Colliers International 32 | September-October 2012

Any firm can claim to be the best. We let the facts speak for themselves. #1 brokerage in Arizona1 #1 in financial performance—by any measure2 #1 real estate outsourcing firm3 #1 in investment sales4 #1 in loan origination and loan sales5 #1 in brokerage services6 #1 most admired brand7 #1 property management firm8 #1 in multi-housing brokerage services9 #1 Freddie Mac seller/servicer10 #1 in facilities management11 #1 in environmental sustainability12 #1 in corporate responsibility13 #1 in real estate technology14 Only Fortune 500 real estate services firm15 Only Arizona “most admired” full-service real estate firm

We thank our clients for making our success possible. #1 in real estate services worldwide www.cbre.com/phoenix | 602.735.5555 www.cbre.com/tucson | 520.323.5100

1) “Top Commercial Brokerage Firms: 25 Brokers or More,” Ranking Arizona, 2012. 2) Company financial filings; CBRE 2011 revenue: $5.9 billion; CBRE 2011 normalized EBITDA: $802.6 million; CBRE 2011 normalized EBITDA margin: 13.6%. 3) #1 outsourcing company among real estate services firms, IAOP, Fortune, May 23, 2011. 4) Real Capital Analytics, December 2011. 5) “Top 20 Financial Intermediaries,” National Real Estate Investor, June/July 2011 (with the inclusion of loan sales volume). 6) “Top 25 Brokerages,” National Real Estate Investor, April 2012, 9th consecutive year. 7) The Lipsey Company Brand Survey, 2012, 11th consecutive year; Highest-ranked commercial real estate services firm in Fortune’s Most Admired Companies ranking, March 2012. 8) “Top 25 Property Managers,” National Real Estate Investor, June/July 2011. 9) Best multi-housing brokerage firm, Multi-Housing News, October 2011. 10) Freddie Mac ranking, 2010 through Q3 2011. 11) Best facilities manager for financial services (U.K.), European CEO Facilities Management Awards, September 2011. 12) Newsweek, October 16, 2011; U.S. EPA 2011 Sustained Excellence Award (Partner of the Year status four consecutive years). 13) Only commercial real estate services company on “Companies That Care Honor Roll,” The Center for Companies That Care, 2012, 5th consecutive year; Winner of the IAOP/ISG Global Outsourcing Social Responsibility Impact Award. 14) Only commercial real estate services firm in the top 100, InformationWeek 500, September 2011. 15) Fortune, May 21, 2012. 16) Only full-service commercial real estate firm among the 60 winners, Arizona Business Magazine, September 2011.

BIG DEAL BROKERS

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Rookie Broker (1-3 years service) Will Strong

Senior Associate Cushman & Wakeﬁeld

 Years in CRE: 4 (2 1/2 as active broker)  In the past 12 months, biggest deal in size: 407,461 SF multi-tenant, 3-building

industrial park

 In the past 12 months, biggest deal in dollar amount: $24.525M, sale deal  When closing the “big deal,” what is your best advice? To summarize lessons

taught to me by mentors (Mark Detmer and Bo Mills) and my managers (Tom Johnston and Cathy Teeter), the goal is to always work hard, serve clients with excellence, be creative, remain ethical, follow through and remember to do what you said you were going to do.

Finalists Scott Boardman, Cassidy Turley BRE Commercial; Rusty Kennedy, CBRE; Don Richardson, Tucson Realty & Trust; Ryan Timpani, Colliers International

Broker Team Tom Adelson, Kevin Calihan, Jim Fijan, Jerry Roberts (clockwise)

CBRE

 Years in CRE: Adelson, 30 ; Calihan, 15;

Fijan, 30; Roberts, 25

 Years at CBRE: Adelson, 29 ; Calihan, 15;

Fijan, 29; Roberts, 24

 In the past 12 months, biggest deal in size:

299,540 SF sale Hayden Ferry Lakeside II

 In the past 12 months, biggest deal in dollar amount: Fijan, $86M, same deal  When closing the “big deal,” what is your best advice? Jim Fijan: Stay persistent and don’t let the inevitable roadblocks deter your effectiveness toward getting the deal done; Jerry Roberts: My advice is to understand the speciﬁc needs of the tenant and structure a deal that meets those needs while still maintaining a lease structure that is acceptable to the landlord, creating a true win-win situation for both parties.

Finalists Bo Mills and Mark Detmer, Cushman & Wakeﬁeld; Jerry Noble, Gregory Mayer and Patrick Devine, CBRE; Joe Porter, Pat Feeney, Dan Calihan, Rusty Kennedy and Julie Becker, CBRE; Brett Adamson, John Bonnell and Don Mudd, Jones Lang LaSalle

34 | September-October 2012

BIG DEAL BROKERS

BIG

DEALS

Capital Markets/Investment Sales Dennis Desmond

Senior Managing Director Jones Lang LaSalle

 Years in CRE: 33  Years at JLL: 3  In the past 12 months, biggest deal in size: 150,892 SF Scottsdale Financial Center II

 In the past 12 months, biggest deal in dollar amount: $21.7M, same deal

 When closing the “big deal,” what is your best advice?

To the broker(s) involved … stay calm and try to put yourself in the shoes of both the buyer and seller to ensure the deal results in a “win–win” scenario for all. To the buyer and seller … be honest, candid and do what you say you’re going to do.

Finalists Geoffrey Harris, Marcus & Millichap; Rocco Mandala, CBRE; Steve Pritulsky, Land Advisors Capital; Eric Wichterman, Cassidy Turley BRE Commercial

Tenant Advisory/Representation Gary Gregg

Managing Principal Cresa Phoenix

 Years in CRE: 15  Years at Cresa: 12  In the past 12 months, biggest deal in size:

114,000 SF Fender Guitar Headquarters, Scottsdale

 In the past 12 months, biggest deal in dollar amount: $32M, same deal  When closing the “big deal,” what is your best advice? Assemble a quality brokerage team

at the onset of any large or complex transaction. At Cresa, we approach these type of projects with multidisciplined teams and always include our in-house project management group to oversee the design and construction of the tenant space.

Finalists Steve Corney, Jones Lang LaSalle; Jay Hoselton, Cushman & Wakeﬁeld; Chuck Nixon, CBRE; Bo Sederstrom, Heiple & Associates

Property Manager Darwyn Harp

General Property Manager Hines

 Years in CRE: 16  Years at Hines: 16  In the past 12 months, biggest deal in size: Renewed property agreement for

580,000 SF with one client

 In the past 12 months, biggest deal in dollar amount: $490,000, same deal  When closing the “big deal,” what is your best advice? I believe it is

always about value creation, which can be monetary and/or non-monetary. The client must perceive they are receiving value for their investment in or with you. I further believe great customer service cannot be overemphasized as it enhances the perception of whatever value you may be creating.

Finalists Barry Bartle, NAI Horizon; Sandra Bryce, Crown Realty; Susan Engstrom, ACP Property Services; Tiffany Lauchlan, The Muller Company

Top Leasing Firm Cushman & Wakefield Tom Johnston,

Senior Managing Director Cushman & Wakeﬁeld of Arizona

 Number of years doing business in Arizona: 32  Firm’s biggest lease in size: 1.267 MSF, 800 N. 75th Ave., Phoenix  Firm’s biggest lease in dollar amount: $27.122M, 6835 W. Buckeye Rd., Phoenix.

 When closing the “big deal,” what is your best advice? Every deal is big

to every client as it is typically their highest operating expense after employee expenses. Always keep the client’s best interest in mind while being aggressive and creating as much leverage as possible with competitive properties. Use all the resources available to you to create the best outcome for your client.

— Tom Johnston

Finalists Carlson Real Estate Services, CBRE, Colliers International, Lee & Associates 36 | September-October 2012

Join us for the

Thursday, November 8, 2012 Scottsdale Fairmont Awards and Dinner Reception Tickets $95 / Corporate Tables $900

www.feiaz.org

The CFO of the Year Awards are given to financial professionals for outstanding performance in their roles as corporate financial stewards. This program, now in its sixth year, provides many benefits to the region’s business community by highlighting the importance of financial executives in the region.

2011 CFO of the Year Recipients LARGE PRIVATE COMPANY MICHAEL ZIMMERMAN Go Daddy

SMALL PRIVATE COMPANY MARK D. CAVANAUGH Firetrace USA, LLC

NON-PROFIT WILLIAM “BILL” MCCLUNG Southwest Human Development, Inc.

PUBLIC COMPANY DAN URNESS Cavco Industries, Inc.

Be there for the announcement of the 2012 CFO recipients. RSVP today. FOR MORE INFORMATION OR TO RESERVE YOUR SPACE, PLEASE CALL 602.277.6045 Advertising Space Deadline: October 12th 37

BIG DEAL BROKERS

BIG

DEALS

Top Sales Firm CBRE Craig Henig,

Senior Managing Director and Arizona Market Leader

 Number of years doing business in Arizona : CBRE has been serving clients in Arizona for 60 years, opening its ﬁ rst ofﬁce in Phoenix in 1952.

 Firm’s biggest sale in size: 1.58 MSF Riverside Industrial Center Investment portfolio  Firm’s biggest sale in dollar amount: $131.66M, same deal  When closing the “big deal,” what is your best advice? Through the entire transaction process

you should always have your client’s best interest at heart. A deal isn’t done until it’s done. You are a trusted advisor to your client. You also need to stand by your core values of RISE (Respect, Integrity, Service, Excellence) in everything you do personally and professionally. — Craig Henig

Finalists Cassidy Turley BRE Commercial, Cushman & Wakeﬁeld, Jones Lang LaSalle, Lee & Associates

Commercial Financial Lender Legacy Capital Advisors Keaton Merrell and Jim Pierson, Principals (left to right)  Number of years doing business in Arizona: 3  What Arizona commercial real estate market segment do you see coming back ﬁ rst and last in the next year: From

a fi nancial markets perspective, multi-family has been back for awhile and has the most aggressive fi nancing options. Industrial is a strong product type right now and retail is coming back slowly. Office is probably the hardest product type to get fi nanced right now.  When closing the “big deal,” what is your best advice? Our business is all about relationships and managing the deal through the loan process (i.e. getting a deal quoted by multiple lenders, choosing the most aggressive lender and managing the closing process). — Keaton Merrell

Finalists BBVA Compass Bank, Keystone Commercial Capital, NorthMarq Debt/Equity Services, Wells Fargo Bank

Commercial Title/Insurance Company Lawyers Title National Commercial Services Howard Weiner, President; Mel Platt, Vice President/Manager (left to right)  Number of years doing business in Arizona: Lawyers Title

has been in the Valley since 1945, starting out as Arizona Land Title & Trust Company. The National Commercial Services ofﬁce opened in 1989.

 What Arizona commercial real estate market segment do you see coming back ﬁ rst and last in the next year: As far as transactions go, ﬁ rst, multi-family; last, hospitality.

 When closing the “big deal,” what is your best advice? Be

ﬂexible, adaptable, creative, cooperative and resourceful; have the conﬁdence that you can solve any problem that arises. — Mel Platt

Finalists BBVA Compass Bank, Keystone Commercial Capital, NorthMarq Debt/Equity Services, Wells Fargo Bank 38 | September-October 2012

Accelerating success.

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BIG DEAL BROKERS

BIG

DEALS

Commercial Real Estate Accounting/Tax Firm Wentworth Webb & Postal Deron Webb and Dan Postal, Principals (left to right)  Number of years doing business in Arizona: 16  What Arizona commercial real estate market segment do you see coming back ﬁ rst and last in the next year: Large

Industrial big boxes have already come back and discussions of speculative industrial building have started. For ofﬁce properties and even retail, we have already seen positive activity in trophy properties so the timing may be as much about the class of the property and location (i.e. retail and ofﬁce may see better results in more core urban areas) as the market segment.  When closing the “big deal,” what is your best advice? Be creative, patient, persistent and straightforward.

— Dan Postal

Finalists Deloitte, Ernst & Young, Grant Thornton, KMPG

Commercial Real Estate Law Firm Fennemore Craig Don Miner, Director  Number of years doing business in Arizona: Fennemore Craig has been in Arizona since 1885. It has 42 Arizona attorneys involved in commercial real estate.

 What Arizona commercial real estate market segment do you see coming back ﬁ rst and last in the next year: The multi-family income property purchase and

sale market is likely to continue growing and prices are likely to continue to increase. The industrial market has already seen improvement and it appears that improvement will modestly continue during the next year. Class A and B ofﬁce market segments also appear to be recovering. Class C ofﬁce markets are more likely to remain stagnant over the next year.  When closing the “big deal,” what is your best advice? For those “big deals,” be patient and persistent now more than ever in this market. Deal makers are starting to see light at the end of the tunnel but are still cautious. It is important to continue to work with and reassure them that the gains and recovery we are starting to see will continue and that now is the time to jump in so as to secure the lowest rents and prices. — Don Miner

Finalists Buchalter Nemer, Polsinelli Shughart, Sherman & Howard, Quarles & Brady

Commercial Real Estate Appraisers NAI Horizon Thad Seligman and Terry Martin-Denning, Principals (left to right)

 Number of years doing business in Arizona: 23  What Arizona commercial real estate market segment do you see coming back ﬁ rst and last in the next year: First, ofﬁce; last, industrial.

 When closing the “big deal,” what is your best advice?

If you are attempting to close the “big deal” you need to be there for your client every step of the way and beyond. Over time, the relationships you build with your clients and colleagues are paramount; deals begin and end but relationships can last forever. You must continue to be proactive in maintaining and nurturing the connections you have. Let your clients know how important they are to you both professionally and personally. — Thad Seligman

Finalists Appraisal Technology, CBRE, Colliers International, Lefevers Viewpoint 40 | September-October 2012

MORE THAN JUST A NAME

PH EX

Ashton Pointe Luxury Apartments

Village at the Boulders Shopping Center

Montage at Pecos Ranch

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$26,722,800 Apartment Complex Avondale, AZ Permanent Loan HUD

$10,250,000 Shopping Center Prescott, AZ Acquisition Financing Life Insurance Company

$19,000,000 Apartment Complex Chandler, AZ Permanent Loan Freddie Mac

$4,100,000 Shopping Center Glendale, AZ Permanent Loan Life Insurance Company

Jim Pierson | 602-926-7426

Keaton Merrell 602-926-7429

Matt Manor 602-926-7430

legacycapitalaz.com

AZ MBL No. CMB-0912058

ADOLFSON & PETERSON BY PETER MADRID

BUILDING AN EXCELLENT REPUTATION

Adolfson & Peterson Construction embraces value beyond building as the foundation of its core goals

t says it right there on the company website. “So, why partner with A&P? The answer to that lies in three key words — value beyond building. These words guide each and every project we undertake, and they form the foundation for our approach.” for more than 20 years in Arizona, Adolfson & Peterson Construction has been bringing value beyond building to its projects. More than just a general contractor, the company identifies itself with an additional three words: Innovate. Collaborate. Outperform. And it all starts with A&P’s people. “One of our biggest investments over the years has been with our employees,” says Bryan Dunn, Senior vice President of Adolfson & Peterson’s Southwest office in tempe. “ We are continually trying to find new and innovative ways to be the best place to work in our industry. During this recession we have invested more than ever into our people.” The company was founded in 1946 in the basement of George

42 | September-October 2012

Adolfson’s house in Richfield, Minn., as he and partner Gordon Peterson ventured into the home building business. Now, 66 years later, A&P is a leader in the construction industry. It has achieved that through:  Innovation: It works smarter and looks for ways to do more with less;  Collaboration: It understands the unique needs of its projects is the key to a successful process;  Outperformance: Delivering a building within budget and on schedule is a given on each project. At its tempe office, A&P has invested in new BIM (Building Information Modeling) software that promotes greater team collaboration and improves the accuracy of estimating and scheduling. vico Office Suite is a cutting-edge program that contains multiple modules which allow users to import a 3D model to review constructability and coordinate building systems. It also contains modules for model-based scheduling (4D) and estimating (5D). Previously, a separate proprietary software package was used

BIM technology (as seen in an image of Devine Legacy on Central) allows for greater collaboration among team members striving for a common goal.

for each task, and time-consuming manual input was required whenever a variable changed. “ The vico platform streamlines the BIM process, produces more accurate results, and gives us the flexibility to change design concepts with minimal downtime,” says Ben lehan, A&P Assistant Project Manager. “The combination of mobile devices and software will allow the field personnel to minimize duplication of processes and ensure proper documentation and electronic organization.” The next few years are going to be a transformational time in the construction industry. Gone are the days when contractors worked independently in a vacuum. In order for projects to move forward, collaboration will be a key element. According to Dunn, A&P has had to make a substantial shift in its business strategy. One of the biggest shifts will be an emphasis on collaboration. Over the next decade, Dunn says, the industry will continue transitioning to a more integrated project delivery (IPD) approach. “In one respect, we have already seen more clients interested in

IPD and design/build than ever before,” Dunn says. “Our clients have complex challenges getting projects funded and delivered. This approach is much more transparent, consistent, and economical.” Another shift in the market is joint venture partnerships. With bonding limits being scrutinized by lenders and credit lines being tightened by banks, the industry is seeing reputable contractors getting pushed out of the market. This delivery method with allow smaller contractors to continue their relationships with their current clients, according to Dunn. last — but by no means least — A&P’s mission is to outperform the industry in everything it does. “The spirit of outperform has helped transform our business,” Dunn says proudly. “We have had to stop thinking like a contractor and more like a delivery partner. In doing so, we have been able create new ways to service our clients. We have invested in growing our preconstruction services by incorporating professional resources in development and project finance to help our clients to get deals done.” 43

ADOLFSON & PETERSON BY PETER MADRID

Apache ASL Trails in Tempe

Mastering Multi-family Experience and expertise in tax-credit structuring make A&P the right ﬁt

dolfson & Peterson is recognized in the industry for its specialized expertise in tax-credit structuring and experience in multi-family development. Those qualities are evident in two A&P projects that opened their doors in 2011 — Devine legacy on Central and Apache ASl trails in tempe. >> Devine legacy is a 100,340 Sf, 65-unit affordable housing community for working families in Phoenix, and one of the first affordable housing communities along the MEtRO light rail line. It won the 2012 RED Award for Best Multi-family Project and the 2012 Charles l. Edson tax Credit Excellence Award (Metro/urban Housing). It is also lEED Platinum. >> Apache ASl trails is a 97,843 Sf, 75-unit housing project and Arizona’s first all-deaf community, providing barrier-free living for deaf seniors 55 years and older who communicate primarily with American Sign language (ASl). It is also on the light rail line. The owner retained a deaf architect to ensure the use and proper placement of lighting and other elements that the deaf have a heightened sense to. It won the 2012 Charles l. Edson taxCredit Excellence Award (Special Needs Housing). “With the economy slowing and the impacts we have felt here in Arizona, many multi-family developments that were conventionally financed had to find other financing structures that were just too time consuming, required a complete redesign or an entirely different capital stack,” says Quinn Gormley, A&P’s director of multi-family projects. “The multi-family projects financed through the sale of federal Housing tax Credits, administered by the Arizona Department of Housing, have remained consistent and not deeply affected by market conditions as those similar market rate conventionalfinanced developments.” A&P began its venture into these “non-conventional” financing structures prior to the economy slowing and soon realized that these often complicated transactions were consistent, predictable, created about 100+ jobs per project, provided rental advantage over similar developments, revitalized communities, and would be a stable housing production platform during the economic downturn. Devine legacy and Apache trails are examples of quality

44 | September-October 2012

affordable rental housing that wouldn’t have been possible if it wasn’t for the equity raised from the sale of the Housing tax Credits. Each serve incomes at or below the Phoenix Area Median Income level (around $35,000 per annum). Rents are 10 % to 20% below similar units of the same size and quality. Selecting A&P to build Devine legacy was a sound decision, says Diana Yazzie Devine, CEO of the Native American Connections, developer of the project. “NAC had a great experience in working with A&P and we definitely felt the impact of their collaboration,” Devine says. “We feel quite strongly that through integrated design, open lines of communication and understanding all of our partners’ objectives, that everyone would be successful. “A&P spent a great deal of time up-front with the owner, the architect and engineers and key subcontractor trades to ensure that the construction drawings met our vision,” she says. Mark klann of Cardinal Capital Management, developer of Apache ASl trails, says A&P was chosen for many reasons. The most important were it had experience with federal and/or state funded projects, experience and staff to work with Davis Bacon requirements, experience in multi-family construction and was very organized on-site and had previously completed projects in tempe. “I was hoping that we had selected the right contractor for this job,” klann says. “I now know that we did. Th is project was on budget and was completed on time because of the terrific communication between myself, the project manager and the site supervisor. They would be our first choice on our next project.” Adds Gormley: “looking back at many of the Housing tax Credits developments that A&P has worked on, and seeing Devine and Apache outperform many similar conventionally financed developments, has galvanized a space within A&P that assists developers and their development team in understanding these complex transactions. “forecasting essential timing and funding requirements, staging and delivering units, and helping developers structure the Housing tax Credits and construction financing has allowed us to serve in a role that takes the development beyond concept, and provides a value beyond just being a contractor.”

i n n ova te . co ll a bo ra te . o ut perform.

value beyond building

ww w.a -p.co m

ADOLFSON & PETERSON

Q&A

Senior Vice President Bryan Dunn

: How did you get your start in the construction industry? A: My father was an architect for most of his career. However, he spent his last 10 years as a professor at Colorado State university in the Construction Management Program. It had a profound impact on me growing up and always knew that I wanted to spend my career in the construction industry. After graduating from CSu I went to work as a project engineer for a large construction company in kansas City. I had an opportunity to travel all over the Midwest and mountains for work. I later transitioned my career from project management to pre-construction and then moved my family to Arizona to work with Adolfson & Peterson.

: How did A&P weather the Great Recession, which took its toll in Arizona on the CRE industry? A: We had to take a long hard look at the direction our industry was going and needed to make a strategic decision on how to approach the market. Over 90% of our work is negotiated, which closely aligns with our team and our culture. Our team made a conscious decision to focus on improving the level of services we had as opposed to cutting services. We grew our pre-development and pre-construction teams to make sure we can assist our clients in getting projects moving forward and maximizing our clients budgets.

: What is it about A&P that makes the company more than just a general contractor? A: Our focus is to outperform the industry and outperform our clients’ expectations.

46 | September-October 2012

In doing so, we know that we need to think bigger and broader than being just a construction company. We have the autonomy to find innovative and creative ways to serve our clients. We have been able to get several deals across the finish line this year by finding creative solutions to complex funding challenges. We have a team of people looking to raise capital, leverage equity, and find permanent financing for our clients.

: What has made A&P so successful in a highly competitive industry? A: I think it’s simple — we are open, honest and transparent in everything we do. Our goal is to build relationships in the industry where we are viewed as a business partner. We are seeing a stronger emphasis on collaboration than ever before. Everyone in our industry was hit hard by this recession, and we are needing to lean on one and others expertise more than ever before.

: In your current position, what project (or projects) are you most proud of? A: While I’m proud of all the projects we undertake, three come to mind that stand out above the rest:  Central Arizona College Superstition Mountain Campus Expansion: unique in that it includes an iconic building that will be the focal point of the college campus.  Coronado High School Modernization: unique in that an entire high school campus ($50M / 350,000+ Sf) was rebuilt while students continued to attend classes over two school years.  Apache ASl trails: unique in that it serves such a specialized community — deaf seniors.

Adolfson & Peterson Senior Vice President Bryan Dunn is responsible for all of the ﬁrm’s operations in the Southwest and West Coast. Dunn has been involved in a number of large-scale sustainable housing developments in the Southwest. He recently worked with other industry leaders and the Arizona Department of Housing on a subcommittee for the greening of affordable housing. His industry expertise also recently landed him positions on the Urban Land Institute’s Regional Advisory Board and Valley Forward’s Board of Directors. Dunn is an expert in both sustainable design/construction and multi-family housing development and frequently presents on the topics to local industry organizations. He is a 1999 graduate of Colorado State University.

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INSIDE

Living in Luxury Changing lifestyles creating a market for upscale apartment projects

AMA Members

Q&A Q President and CEO Tom Simplot

Building Boom Multi-family sector outperforming all other property types

Lending A Hand Government sponsored entities giving developers a financial boost

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WHAT “BEST IN CLASS” LOOKS LIKE.

The next generation of Mark-Taylor is taking hold in the best neighborhoods across the Valley. We have set the standard for luxury apartment living, from our world-class architecture to our impeccable service. It’s why residents ask for us by name, and have done so for 26 years. Now Mark-Taylor has evolved to become brighter, stronger and even better than ever. Our newest communities take a bold step forward by featuring “best-in-class” amenities like kitchen islands, wood plank flooring and direct access garages. No detail is overlooked when it comes to quality – a practice that extends to every facet of our business. From management to development, when you’re working with Mark-Taylor, you’re working with the best. Welcome to the next generation of Mark-Taylor. To learn how to become a part of our team as a client, a resident or an employee, visit mark-taylor.com.

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AMA BY PETER MADRID

Living in Luxury Changing demographics and changing economic conditions create the perfect storm for upscale apartment projects

Developers of luxury apartment units in Arizona couldn’t be happier — or busier — these days. For the first time since 2001, the national multi-family vacancy rate has dipped below 5%, coming in at 4.7% for 2Q 2012. In Metro Phoenix, the rate ended the same period at just 8.6%, the second lowest figure since 2006 (the market low was 8.5 percent in 1Q 2012). According to HousingWire.com, new construction is meeting the increased demand nationally, with 70,000 units scheduled for completion this year and about 175,000 to be completed in 2013. In Arizona, Class A projects are coming out of the ground at an impressive rate as market conditions have changed and a new demographic of renter has entered the multi-family market. “We are seeing a renter looking for a certain lifestyle; wanting that turnkey, luxury community with amenities,” says Omar Mireles, executive vice president of HSL Properties in Tucson. “They are looking for a larger space. Professional style fitness facilities. A resort-style pool. Dog parks. True movie theaters. “We do believe there is pent up demand for that type of property,” Mireles adds. “In 52 | September-October 2012

Tucson there had been a lack of supply in the market.” Not anymore. In July — with the final installation of the 1-acre Encantada Dog Ranch amenity — HSL opened Encantada at Riverside Crossing, a 304-unit, luxury apartment community. The $32M project, which includes a 69,000-gallon, resort-style pool and spa, a 27-seat, stadium-style THX movie theater and Starbucks coffee bar, was completed in 18 months and is already 90% leased. What has contributed to the perfect storm of a growing need for that type of product? According to industry experts, there are several factors: land costs, improved economic conditions, municipalities wanting to see inactive sites activated, and of course, available locations. Mike Lieb, a broker/developer with Lieb Ltd., works with other developers to identify the best sites and navigate the process. In the past year, he has helped bring a planned 4,000 units to the market. They include projects in Tempe, Scottsdale, Phoenix and Chandler.  In Tempe, a 75,000 SF former LA Fitness retail center at Scottsdale and Curry roads is being re-developed into a 240-unit luxury apartment complex;

 In Scottsdale, a DC Ranch-area development is underway for 224 luxury apartments on a previously planned condo site, which is currently a vacant lot;  In Phoenix, a 13-acre site at 56th St. and Deer Valley Rd. is being developed into 370 apartments;  In Chandler, Archstone Apartments is planning for 398 luxury units on a 22-acre site at Arizona Ave. and Queen Creek Rd. It’s the single-family home poking its head out again, Lieb says. The hoops people have to jump through to qualify for a mortgage is a real eye opener. There is still a huge amount of people who can’t get mortgages. But Lieb adds there has also been a huge surge in sites and rezoning. Projects are well funded and they will get built. People can be more selective now. “The X Generation has a lot to do with it, too,” Lieb adds. “Mom and dad were always taught, ‘go buy a house because home ownership is a key. Build equity. What they’re telling them now, is ‘go rent.’ These are people who work out of their house and want to be more ﬂexible.”

Mark-Taylor Residential Mark-Taylor Residential also is reaping the rewards of the brisk luxury

Alliance Residential’s Broadstone Waterfront in Scottsdale calls for 259 units.

apartment market in Metro Phoenix. It currently has three projects under construction as it brands its new communities “The Next Generation:”  San Marquis Apartments, 224 units, $24M, Baseline and Rural roads in Tempe (developed in conjunction with Kitchell);  Parcland Crossing, 383 units, $44M, Loop 202 and Alma School Rd., Chandler (also in conjunction with Kitchell);  San Norterra, 388 unit, Norterra Pkwy. and N. Valley Pkwy. in North Phoenix. “A negative economic dynamic the past couple of years has produced positive returns for those in multi-family commercial real estate,” says Dale Phillips, president and designated broker for Mark-Taylor Residential. “Unemployment is high and it’s hard to get a loan. You just don’t know if our job today will be your job tomorrow. “Locally, employment truly is a factor;

although Phoenix has always proved to be resilient. And it’s improving faster than other markets. It will continue to recover. There will be available affordable housing and an eager employment force. Those factors make it an attraction to relocate. When you factor in the amount of construction jobs available in the next 3 years, that is going to continue to bolster the apartment market.” How long does Phillips predict the boom will last? “If we were to look at it in terms of the multi-family market going forward, it’s a favorable cycle, but it might already be over. If you don’t have your land secure and permits in place, you might be too late to the dance. The housing market will get its feet underneath it very soon. As soon as home loans become available, ownership will be in direct competition of multi-family.”

The P.B. Bell Companies P.B. Bell Companies is an awardwinning, midsize builder that specializes in garden style apartments. It is in various stages of developing multi-family projects at Morrison Ranch in Gilbert, Liv in North Scottsdale, and two in Chandler. In addition, the company manages close to 6,000 Class A-C units in Metro Phoenix and Tucson. “The ‘American Dream’ is different than it used to be,” says company president Chapin Bell. “Not everyone is concerned about owning a home. They saw what happened to friends, families – themselves. Living in an apartment is OK. This is kind of reverse, and it’s helping a robust apartment industry. “The other thing is the product that is being built is ‘A++,’” Bell adds. “Amenities are granite counter tops, detached garages, 53

AMA

Amenities at Mark-Taylor Residential’s Parcland Crossing in Chandler include a state-of-the art gym.

fitness centers, theaters. People want to live there.” How long does Bell predict the cycle will last? “I believe it still has some legs to it,” he says. “Look at the economy. It’s still improving at a small pace. I feel this market has got another 3-5 years. My largest concern is overbuilding. If we eliminate the risk of overbuilding, then this thing’s got some legs.”

Weidner Apartment Homes The current demographic of renters of Weidner Apartment Homes are those who desire the ﬂexibility that apartment rentals provide, says Lesa LaRocca, the company’s regional director. “Flexible living environments allow them to take advantage of a wider range of job offer opportunities that may take them to a different side of our sprawling Valley or even out of state,” LaRocca says. “As the job market continues to remain delicate, having the ability to uproot and move to ensure peace of mind for fi nancial wellbeing is critical to our generation of renters.” LaRocca says many of Weidner’s young renters chose to navigate through the 54 | September-October 2012

rough times by enriching their educational level and biding their time. Confronted with significant student loan debt, many are challenged with paying down financial balances and, therefore, saving for a home loan down payment is positioned secondarily. They are also sensitive to watching their parent’s generation; those who are either trapped in their current home and cannot sell it or have been positioned out of the home because they can’t afford it. “These factors limit the aspiration to purchase single family homes, inversely impacting healthy occupancy rates for the multi-family sector,” LaRocca says. “At Weidner, our portfolio site teams are versed on maximum expense control strategies while still maintaining the highest integrity of the asset. Th is focus was a necessity for the entire industry over the past four years and although operations are more robust, we are committed to our continued quest to deliver the best quality in this regard.”

Alliance Residential To say that Alliance Residential is in a development mode for luxury apartments is

an understatement. Nationally, Alliance has 4,000 units in production from Seattle to Phoenix to Dallas to Atlanta. Most projects are going up in areas of urban infi ll. Ian Swiergol, managing director for the Southwest, is responsible for sourcing new investments and managing Alliance’s development process throughout Phoenix and Tucson. Th is includes originating and negotiating land purchases for development, managing the development and construction process, and overseeing the leasing and asset disposition activity for each investment. In Metro Phoenix, three Alliance projects are in different stages of development. They include Broadstone Camelback (270 ultra upscale units), Broadstone Lincoln (264 luxury units) and Broadstone Waterfront (259 luxury units). Alliance, Swiergol says, also is pursuing the new demographic of apartment renter. “As we develop more Class A locations, we’re attracting the renter who is looking at this (where he or she lives) as more of a lifestyle,” Swiergol says. “Our Class A properties have more a higher-edge finish, and they’re in active locations. That’s what’s bringing folks into the rental pool.”

AMA: MEMBERS

Amy Smith Bella Investment, Flagstaff

all it a change of heart, but Amy Smith’s relationship with the Arizona Multihousing Association is back on solid ground. Several years ago, the managing partner at Bella Investment Group says she felt the AMA was not providing valuable services to the northern Arizona area so she pulled the membership. She was later challenged to rejoin and serve on the board of directors and the government affairs committee. After just one year of being part of the government committee, Smith says she found the true value of belonging to the AMA. “The inﬂuence they were able to have on changes made to the issues that address our industry really impressed me,” Smith says. “The AMA has an incredible government affairs arm that stays on top of everything. At the end of the year I knew I would keep my membership.” She has maintained her membership for the past 6 years and says she now feels differently about the organization. “Having the association behind me and willing to commit resources within the office and the intangible resources such as advice and direction has been invaluable,” Smith says. The AMA has opened her eyes to what she calls the “high quality people” in her industry. “If I have any questions, I have resources,” Smith says. “I have a way to call anybody.”

56 | September-October 2012

Kim Fitch Nicolosi & Fitch, Tucson

member of the Arizona Multihousing Association since 1995, Kim Fitch becomes chairman of the board in 2 years. It’s an honor she says she is very excited about. Fitch says being part of the AMA has been a hugely beneficial professional resource for her over the past years. “We have contacts because of the AMA,” says Fitch, part owner, certified property manager and CFO of Nicolosi & Fitch in Tucson. “I’ve made great contacts.” As for her favorite part of being a member of the association, Fitch says working on legislative aspects is what makes it all work while. “I fought the 2% renters tax four times and finally got it defeated in Tucson,” she says with pride. “It’s extremely gratifying to work on something and see it to the end and be involved in something that had such huge ramifications. It’s making decisions that will affect our industry.” After being involved all these years with the AMA, Fitch says she has nothing but pride for the organization. “I have the upmost respect because it is extremely professional,” she says.

Leigh Massey Centurion Management Company

sk Leigh Massey about her committee involvement with the Arizona Multihousing Association and she has nothing but great things to say. Massey has been a member of the AMA for the past 13 years. However, she has been active on various committees for the past 5 years. “I really started becoming part of the committees when I realized it was worth it,” says Massey, vice president of daily operations for Centurion Management Company. Massey works with Project SAFE (Safety Awareness Family Education), a nonprofit that strives to help end domestic violence through educational programs. With about 130 events each year featuring police officers and fire fighters as speakers, Massey says she considers them to be “giant parties.” “Even if we touch just one person at that party it’s done its job,” she says. Massey also works with the Raising a Reader program, another nonprofit that seeks to promote literacy. “It’s so fun,” Massey says. “It’s my second favorite part of AMA.” She sums up her commitment working with AMA committees in four simple words: “Wow, this is amazing.”

AMA PHOTOGRAPHY GLORY SHIM

Q&A

President and CEO Tom Simplot

Tom Simplot was named president and CEO of the Arizona Multihousing Association (AMA) in July, 2008. Prior to joining the AMA, he was an active real estate agent and worked as a corporate political consultant. As president, his duties include management and oversight of a $1.2M budget and 15 staff and contract professionals. A longtime resident of Phoenix, Simplot has been active in the community and is an elected member of the Phoenix City Council. He represents a widely diverse district in the heart of central Phoenix, representing some of the highest density neighborhoods in the metro area. He has served as the president of the Maricopa County Board of Health, president of the Maricopa County Industrial Development Authority, served as chair of the Phoenix Historic Preservation Commission, vice-chair of the Phoenix Encanto Village Planning Committee and was a member of the Phoenix Housing Commission, among other boards and commissions.

: What is the role of the AMA within the multi-family industry in Arizona? A: The Arizona Multihousing Association is the voice of the rental housing industry in Arizona. As the trade association for the industry we are a resource for information, and work with all levels of government. Members of the AMA are committed to providing professionally managed properties, which typically set the bar higher for the rest of the industry. To do so, we provide education classes and state of the art information to our members on an ongoing basis. We are the primary resource of rental housing data for elected officials and have a long history of legislative success over our 45 years. : How would you describe the eﬀect of the economy on the multi-family industry the past 5 years? A: It has been difficult, no doubt. However, the net effect has been positive. It has forced management companies and property owners to re-examine their business models and product line and make improvements in both. The migration of former homeowners to rental communities has resulted in more amenities

58 | September-October 2012

and new design standards which we didn’t see just a few years ago. Very few apartment communities were built during the Great Recession, which resulted in a dramatic upswing in occupancy and property values. The net effect was that the apartment industry was the first section of the real estate industry to recover here in Arizona and throughout the U.S. : What trends, positive or negative, are you currently seeing in the multi-family marketplace? A: For the first time in several years there are numerous new communities being planned and built. We are seeing new designs and a recognition that tastes and needs have changed. There is a definite trend towards urban development, and redevelopment with environmental considerations at the forefront of the planning process. Many investors and management companies are also rehabbing and retrofitting existing properties to better reach their target demographic. Simultaneously, these target demographics are being more tightly defined and specifically catered to. From senior housing to student housing and every group in between, owners and management companies are working to ensure that their properties have the appropriate wireless capabilities and community amenities to attract and retain their target market. : Are there any particular submarkets or niches within the industry our readers should be on the lookout for? A: There is growth both demographically and geographically: from private student housing to senior housing and from suburban living to urban living along METRO light rail. Student housing is going to be one of the fastest growing markets within the state over the next few years. Th is submarket has really taken off and with the expansion of ASU, UA and NAU it looks to continue into the foreseeable future. Conversely, Baby Boomers have created a need for senior housing as well as a shift in the historic home-owner mentality: Renting is the new and highly acceptable way to live. : What eﬀect, if any, has the light rail in Phoenix had on the multi-family marketplace? A: As a sitting Phoenix City councilman, former board chair of METRO, and CEO of the AMA, I am happy to say that METRO has exceeded all expectations. Ridership continues to build month to month, with the largest numbers found between ASU/Tempe and ASU/Downtown. The naysayers of light rail failed to see the development opportunities and shift in living styles that would occur. There are hundreds of new apartment units planned along the 20-mile light rail line, and there will be many more as extensions of the line occur in central/west Phoenix and in Mesa.

Q Q

PERSEPCTIVES AND PROJECTIONS CONFERENCE What: Each year the AMA gathers business leaders, lenders and investors for a market outlook. Industry decision makers hear from experts who present information and insights needed to formulate strategies for their Arizona apartment investments. The conference is specifically tailored to owners, executives, asset managers and lenders. When: Nov. 7, 8 a.m. to 1 p.m. Where: Phoenix Convention Center South Building For more information: Contact Michelle Rill at (602) 296-6209 or at mrill@azama.org or visit azama.org.

AMA BY PETER MADRID

Building Boom Arizona’s construction industry is benefitting as the multi-family sector outperforms other commercial real estate property categories

ith Arizona’s commercial construction industry making a slow and deliberate comeback, there’s at least one property type that’s fi lling job sites and keeping cranes chugging at full speed. Look around Metro Phoenix and it’s evident that the multi-family sector is outperforming all other commercial real estate markets. Need proof? Look no further than hardison/downey Construction. The Phoenix-based general contractor’s scorecard:  In preconstruction: Archstone Apartments, Chandler, 380 units; SanTan Village Apartments Phase 2, 380 units.  Just broke ground: Downtown Phoenix Apartments, 326 units; Manzanita Hall, Tempe, 241 units; SanTan Village Phase 1, 380 units.  Nearly complete: Casa de Oro Student Apartments, Glendale, 100 units; Hilltop Townhomes, Flagstaff, 144 units; The Suites Student Apartments, Flagstaff, 275 units; Villas at Vista del Sol Student Apartments, Tempe, 104 units. The totals: $297.4M, 2,332 units and 2.981 MSF. “It’s kind of a perfect storm — in a good way,” says Bob Hardison, president and co-founder of hardison/downey. “We’re just here as a building contractor in a position to be a perfect fit for what is going on. We have the expertise in what is a very popular market.” These aren’t your father’s apartment complexes. Elsewhere around the Valley, Alliance Residential is building Broadstone Camelback (270 ultra upscale units) in Phoenix with two more projects on the drawing board; and Optima DCH Development is building Optima Sonora Village (493 units) in Scottsdale. Down the interstate in Tucson, HSL Properties just completed Encantada at Riverside Crossing, a 304-unit, luxury apartment community. According to HSL, the project employed 63 subcontractor companies during its planning and construction, 53 of which were Tucson companies. The project paid out $22M to local contractors, and it took an estimated 45,000 work hours to complete. And HSL isn’t done yet in the Old Pueblo. It broke ground in August on Encantada at Dove Mountain, a 272-unit, $29M project. Additionally, HSL plans to begin construction on Encantada at Steam Pump Ranch, a 288-unit, $30M project in 4Q 2012. Why the great interest and building boom in multi-family properties? “There is a huge surge in occupancy, and investor interest, in multi-family properties,” Hardison says. “It’s also a combination of a lot of people not being in position to find financing to buy a home. Some may have lost their house (to foreclosure) and can’t qualify. Or they’re not interest in what used to be a good investment and is not anymore. “It’s macroeconomic factors that really have driven this market’s demand,” Hardison added. “And it’s showing up in the occupancy numbers and rents going up. For investors, the cap rate (return) is falling.” Nationally according to Multifamilyexecutive.com, experts predict that multi-family starts in 2012 will hit their highest totals

60 | September-October 2012

in a few years. But in 2Q 2012, the volatile start numbers, which had been moving up 10% to 30% each month, actually fell. Industry experts also are seeing a trend in multi-family among those in Generation X, and also in student housing. Young people, some say, prefer to keep their options open when it comes to their living situation. Rather than plunking down thousands of dollars to get into a house, they see the upscale, condo lifestyle more suited to their needs. “Whatever the demographic, there’s a big commitment being made to significant amenities at some of these new properties,” Hardison says. “Th is includes spa facilities, weight rooms, movie theaters, resort-style pools. There is a lot energy around the social aspect of this type of living.” Another trend is investors purchasing distressed or older properties and making substantial improvements or converting them to upscale units. Are some of the smaller builders benefitting? Yes and no, says Jim Kowalski, owner of Kowalski Construction. “We find that for us an early indicator that there is more optimism in the marketplace is when companies start expressing an interest in spending money on their properties,” Kowalski says. “Th is in turn generates additional work for us providing estimates. Early in the cycle we experience a lower capture ratio as companies go through their exploration. “Mid cycle finds some of these companies following through with their inquiries and actually having the work done. Eventually things ‘smooth’ out later in the cycle when a more normal capture ratio is created when companies return to more normal spending habits. I would say that we are currently in the middle cycle.” Where does Hardison see the multi-family construction cycle and how long will it last? “It’s so hard to predict the demand,” he says. “Units we are finishing right now are leasing up at a phenomenal rate. Maybe another 2½ to 3 years. By end of 2013 maybe we see one more round.”

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Chair Elect: Robert Hicks, Alliance Residential Company, LLC

Vice Chair: Kimberly Fitch, Nicolosi & Fitch, Inc.

Treasurer: Christine Shipley, Dunlap & Magee Property Management, Inc.

Secretary: Chris Evans, HSL Asset Management

Immediate Past Chair: Lesa LaRocca, Weidner Apartment Homes

Directors David Adame,

Kohl Eisenhour,

John Rials,

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Riverstone Residential

Greystar Real Estate Partners

Vicki Allison, AllisonShelton Real Estate Services, Inc.

Enrique Grove,

Mike Rochon,

Republic Media Services

Distinctive Carpets, Inc.

Matt Koglmeier,

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Jen Ambrosius,

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MEB Management Services

Chapin Bell,

Kay-Kay Realty

Pam Shelton,

The P.B. Bell Companies

Jim Kowalski,

Reid Butler,

Kowalski Construction

Allison-Shelton Real Estate Services, Inc.

Butler Housing Company

Pam McCarthy,

John Carlson, Mark-Taylor Residential

Simply Better Management, LLC

Scott Clark,

Omar Mireles,

Law Offices of Scott M. Clark, P.C.

HSL Asset Management

Mike Clow,

MEB Management Services

Greystar Real Estate Partners

Kim Pacheco,

Liz Culibrk, Fairfield Properties, L.P.

Amy Davidson, Cox Communications

Melanie Morrison,

Scotia Group Management

Dale Phillips, Mark-Taylor Residential

Erica Reinke, Camden Property Trust

Amy Smith, Bella Investment Group, LLC

Pamela Sullens, Silver Mountain Real Estate Group

Rondetta Troutman, Picerne Real Estate Group

Pete TeKampe, Marcus & Millichap

Debbie Willis, The P.B. Bell Companies

Tom Simplot, President & CEO

AMA BY PETER MADRID

Lending A Hand Multi-family developers find a financing boost from government sponsored entities

ith the purse strings loosening on bank lending, interest in multi-family properties is leading a commercial comeback, but financial experts say that is just the jumping in point. “We’re not going into (the commercial real estate) market with just a bet that we’re just doing multi-family,” says a senior executive vice president and CFO of a national financial firm. “Certainly multi-family will be in the mix, it will be one of the things we’ll be doing … ” In Arizona, with the multi-family market outperforming all other commercial property types, the predominant sources of mortgage capital for stabilized multi-family rental communities has come from government agencies Freddie Mac and Fannie Mae, says Rocco Mandala, executive vice president of CBRE. “The Federal Housing Administration/U.S. Department of Housing and Urban Development (FHA HUD) has also been a source of debt capital as well as life companies, but on a much smaller scale,” Mandala says. “Banks have also been the primary source of capital for construction financing and properties in transition. Mandala says there are three reasons why Freddie Mac and Fannie Mae are the dominant debt capital providers for multi-family mortgage financing:  Debt capital availability: Strong investor demand provides a continuous ﬂow of funds to Freddie Mac and Fannie Mae for the financing of multi-family communities. Evidence of this financing activity can be demonstrated by CBRE’s loan production volume in Arizona between January 1, 2011 to the present, Mandala says. During this period, CBRE closed 32 loans (9,867 units) on multi-family properties totaling $497.4M.  Best cost-of-capital: When compared to other traditional sources of debt capital, the government agencies provide the most competitive pricing. The interest rate for the loan is based on the price (spread) that investors are willing to pay for the security(ies) through a bidding process among multiple investors.  Timing and competitive underwriting: With the exception of FHA HUD, loans with all of the lending sources can be closed within 45-60 days. It takes typically 6-8 months to close a FHA HUD loan. Th is timing lends itself to both acquisition financing and refinancing. “Prior to the Great Recession, there was much more competition among lenders for multi-family loans including life companies, securitized (CMBS) lenders, CDO’s (Collateral Debt Obligations) and banks,” Mandala says. As a way of comparison, consider CBRE’s loan production volume between Jan. 1, 2006 and July 2007 as Aug. 1, 2007 was basically the start of the Great Recession. That’s when all lenders except for the government sponsored entities (GSE) put a virtual halt to their lending activities for new production.

62 | September-October 2012

During that period, CBRE’s Arizona production consisted of 28 loans (9,760 units) on multi-family properties totaling $354.9M. The average loan size is $12.7M with 12 loans being provided by GSE’s, eight loans being provided by CMBS lenders, four loans being provided by life companies and three loans being provided by CDO’s. Although the Great Recession has had a dramatic negative impact on single-family homes in regard to foreclosures and a decline in home values, Mandala says, multi-family properties have benefitted with increased occupancies, which in turn has resulted in an increase in rents. The rise in multi-family rents coupled with the significant decline in interest rates has contributed to the robust multi-family market during the past 18 to 24 months. What has contributed to a robust market? According to Brandon Harrington, director capital markets for Cohen Financial, since 2010 just 1,600 apartment units have been delivered in Metro Phoenix, a scant 0.7% increase in inventory. Harrington says this is a remarkably small increase to inventory, particularly when compared to historical norms in the market. From 2005-2009, he says, annual apartment deliveries averaged more than 5,300 units per year — in the past three years, Metro Phoenix has averaged just 10% that figure. “With supply in check, it’s natural to look at sources of demand,” Harrington says. “For multi-family, the primary source of demand is job growth. After suffering severe losses during the Great Recession, employment growth has been bouncing back more rapidly in Phoenix than in most of the rest of the country.” Traditional segments that have been vital to Metro Phoenix’s employment health — and demand for apartments — are recording some of the strongest growth, Harrington says. Also, multi-family vacancy ended the second quarter at just 8.6%, the second lowest figure since 2006 (the market low was 8.5% in 1Q 2012). Since vacancy peaked at more than 13% in late 2009, the multi-family market has come storming back, with demand being fueled by employment growth and former homeowners transitioning to renting and minimal supply growth. The local apartment vacancy rate has been below 10% for the past six quarters. The natural long-term vacancy rate for Phoenix apartments is in the 9% to 10% range. Since late-2009, net absorption of apartments has exceeded 10,000 units metrowide. Is the multi-family market in a boom period? “We will see more construction of units as demand dictates the need for it,” says William L. Spart, senior vice president at Wells Fargo Bank. “We see a lot of demand for infi ll sites around major employers and shopping. The 24th Street and Camelback area and Lincoln and Scottsdale submarkets are examples of infi ll locations. Markets in the East Valley are also showing strength as well.”

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2012 Arizona

SEVENTY-FIVE YEARS OF

BUILDING COMMUNITY

66 A Change Agent

ULI’s Arizona District focuses on educating and improving communities

68 Q&A

Deb Sydenham, Executive Director

70 A True ‘Institute’

ULI Arizona is a resource for the private and public sectors

72 Trends Day

Highlight of ULI Arizona’s year

Benefitting From Knowledge Sharing

Case studies, programs help push thinking behind DMB communities

76 Urban Infill

New zoning ordinance in place to revitalize urban core areas

78 Programs, Community Plan A look at ULI Arizona in the community

PUBLISHED BY

ULI BY PETER MADRID

A CHANGE AGENT FOR ARIZONA

ULI’s Arizona District Council focuses on educating, improving communities and providing the right tools for success

or an organization that had a modest beginning, the Urban Land Institute Arizona District Council now boasts almost 900 members, and has one of the highest participation rates of any ULI district council. The Arizona District Council was formed in the early 1980s in response to the need for educational gatherings and events. For more than 25 years — the national governing body is celebrating its 75th anniversary — ULI Arizona has convened discussions for dialog among change agents and industry leaders in providing an unbiased and non-partisan exchange of ideas relevant to local communities. The common mission of ULI: to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. ULI was founded on the basis of sharing mistakes made and lessons learned. “ULI has a mission of being more of a facilitator and information sharing organization for the state of Arizona on

66 | September-October 2012

land use issues,” says Greg Bielli, incoming ULI Arizona District Council Chair and president, Western Region for Newland Communities. “Our role is to unite transdisciplinary land use professionals and communities in dealing with growth and planning endeavors as our state continues to mature.” In recent years, ULI Arizona has helped communities such as Fountain Hills, Buckeye and Queen Creek with technical advisory assistance on land issues for economic development and quality of life efforts. ULI Arizona also has worked with the Maricopa Associations of Governments (MAG) and the City of Phoenix on facilitating input for their individual study efforts. It also has educated policy makers statewide on their roles and provided tools to advance their communities. The Young Leaders Group is also an active part of ULI Arizona. It is open to members under 35 years of age. It holds regular events, has undertaken a community outreach project and has its own committee to drive its activities.

Each year ULI Arizona brings together industry leaders for Trends Day, a conference that is considered the group’s marquee event. It has grown to be one of the most successful real estate forums in the state with more than 600 attendees each year. “ULI has had a significant impact upon Arizona,” says Mark Winkleman, 2012 Trends Day co-chair and COO of ML Manager. “The Arizona chapter has been one of the fastest growing chapters in the nation. ULI Trends Day is the premier annual event in the real estate industry to identify the activities in the marketplace and future trends. “The City of Phoenix was selected to be one of the inaugural cities to participate in the Rose Scholar program, which assists cities in identifying and advancing planning issues affecting the cities,” Winkleman adds. “The programs that ULI Arizona presents throughout the year are of the highest quality and continually address the relevant issues faced by the real estate industry.” ULI Arizona has evolved from being a

FINANCE & INFRASTRUCTURE

LAND USE PLANNING AND ZONING

HOUSING ECONOMIC DEVELOPMENT

REAL ESTATE DEVELOPMENT

“Collaborative teamwork among public and private partners is more important today than ever before to improve the business and economic environment and ensure healthy cities, towns and counties throughout Arizona.” Steven A. Betts, ULI Arizona District Council Chair, 2010 - 2012

MULTIMO L LTIMO DAL TRANSPORTA TATION TA ATION & MOBILITY

community leader in real estate and development programs and initiatives into a true change agent for the betterment of community development projects and growth pattern, says Steve Betts, outgoing district council chair and senior vice president and managing director of assets for the ASU Foundation. That evolution has taken place through broad participation convenings such as the Reality Check process that resulted in the “well-regarded” Connected Centers regional plan for the Valley; Arizona Technical Advisory Panels (AzTAP) made up of diverse industry experts brought together to work with local communities to provide innovative planning and development solutions to local problem areas; and the new Community Plan program, which assists in the training of new planning and zoning commissioners and council members on development processes and issues. “Through the Reality Check process and convening, and the resulting Connected Centers plan and report, the Valley finally has a clear consensus and vision for an improved growth

pattern and urban fabric that can be pursued into the future,” Betts says. “Our numerous ULI Arizona programs have set the bar ever higher for the quality of commercial and community development in our Valley and state.” As incoming chair, Bielli says he says three goals for ULI Arizona:  To advance the organization as more of a change agent in Arizona. “We have been limited because of the economic downturn we have all experienced, but we are now organized and have better resources to help our communities with the main issues they face surrounding planning and development.”  To grow the Southern Arizona efforts working with Tucson leaders to help them develop programs and facilitate community dialogue. “We are the Arizona District Council of ULI, so that means all of Arizona and not just the Metro Phoenix metro area.”  To advance our existing efforts with programs, forums, technical advisory panels and overall helping Arizona communities with the issues they all face. 67

ULI

Q&A Deb Sydenham, Executive Director, ULI

: What prior experience translates into your present position as executive director for ULI? A: Everything. That’s the fabulous part about my role as executive director for the ULI Arizona District Council. Having spent some time in the solar industry, as a planning consultant with A. Wayne Smith & Associates, and then with the State of Arizona at the Arizona Departments of Commerce and Transportation, I have a vast array of private and public sector experience that enhances what I do each day. My work with elected and appointed public officials throughout the state and the relationships I’ve built over nearly 20 years with the Arizona Department of Commerce are helping me to bridge land use and real estate philosophies between the public and private sectors. The importance of partnerships cannot be underestimated. An ability to build and strengthen teams is critical to success in any organization, especially a nonprofit, so thankfully much of my career has been spent doing just that.

: What does ULI’s mission mean to you? A: It’s a legacy statement that resonates with me on both personal and professional levels. The ULI mission is “to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.” Whether you’re in public service or the private sector, it’s a responsibility that comes along with leadership. It’s a challenge to all of us to think holistically about cumulative impacts of the decisions we make every day. How can we contribute to ensuring vibrant, competitive 68 | September-October 2012

communities throughout Arizona for the next 100 years? For future generations? Our communities include elements of both the natural and built environment and the success of those communities are dependent upon the policy decisions of political leaders, projects brought forth via the land use and development industry, and local choices made by residents and visitors. I believe the mission of ULI is an opportunity to demonstrate teamwork to achieve a worthy goal and become partners in creating better places.

: You often refer to ULI as a change agent in Arizona. What does that mean? A: The Urban Land Institute is celebrating its 75th anniversary. This industry “Gold Standard” began in 1936 as a think tank for land use and real estate development challenges. That foundational purpose has never been more important than today. ULI has vast resources available at the national level and on-the-ground expertise in our local district council. As an organization, we do not lobby; therefore we are an ideal neutral convener and can bring together differing perspectives to tackle timely and controversial issues in an open exchange of ideas, information, and experience. Through educational programs we can advocate for thoughtful land use patterns and development and are fast becoming the “go-to” organization for information and advice. We can bring together leaders from across the fields of real estate and land use policy to exchange best practices and serve community needs. ULI Arizona is collaborating with

local governmental entities on critical projects and through the Arizona Technical Assistance Panel (AzTAP) program we offer top-level expertise to communities as they address local and regional development challenges. Being a change agent not only embodies the ULI mission, it also allows ULI Arizona to be a leader in local, regional, and statewide land use and policy issues that create resilient communities through a framework of success.

: What do you think the market might look like in the next 3 to 5 years? A: From a global perspective, the world is urbanizing as never before, bringing both opportunity and challenge. In Arizona, our urban and rural communities are addressing economics, population demographics, and environmental factors, sometimes struggling with changing markets and values, while also encouraging creativity, leadership, and problem solving. The way communities tackle new challenges ripples into the future, creating long term opportunities and constraints. We’ve seen new paradigms shaping investments in both infrastructure and property. Projections and speculations abound and everyone is prognosticating. Metro Phoenix especially is experiencing significant activity in the multi-family industry as that sector re-emerges from hibernation, resulting in a certain amount of hope that Arizona is done bumping along the bottom. Investment strategies are continuing to evolve and renewed interest in developing the cores of our communities is on the rise whether through infill development or infrastructure investment.

: What lies ahead for ULI? A: ULI Arizona will continue to make a difference. Through collaboration with local governments and our neutral, non-partisan convener role, we are strengthening our ability to be a change agent. ULI also has an eye to the future through mentorship of young industry professionals by land use and real estate thought-leaders in Partnership Forum, nurturing the understanding of development by high school students through Urban Plan, and enhancing local decision-making capacity through the Community Plan public officials education curriculum. These efforts strengthen the fabric of our communities and regions and allow ULI to achieve success as together we work to create and sustain thriving communities throughout Arizona.

Deb Sydenham joined ULI Arizona as executive director in September 2010 after nearly 20 years with the State of Arizona, and 9 years in the private sector. Prior to joining ULI, Sydenham was deputy director for the Office of P3 Initiatives at ADOT and was involved in establishing the state’s program to use public-private partnerships (P3) as a tool to address Arizona’s transportation requirements. She is a graduate of Michigan State University and a fellow of the American Institute of Certified Planners (AICP). In 2012, she was named one of the 25 Most Admired CEOs in the Phoenix Metropolitan Area. Her vast statewide experience working at the regional level, with state governments, and tribal communities, serves as a solid foundation to moving the ULI mission forward. 69

ULI BY PETER MADRID

A True ‘Institute’

ULI Arizona evolves into a think tank and a resource for the private and public sectors

ith various organizations representing the commercial real estate industry in Arizona, how is Urban Land Institute’s role different? “Unlike other real estate industry organizations, ULI is a true ‘Institute,’ a think tank and resource for the private sector and public sector on a wide array of development issues,” says Steve Betts, outgoing ULI Arizona District Council chair. “It is non-political and non-partisan, and does not lobby, like many other groups. Instead, it is a thoughtful convener of industry and community leaders with a common goal to improve our built environment and urban fabric.” ULI provides a unique international perspective of best practices in real estate development across the spectrum, says Heidi Kimball, vice president of Sunbelt Holdings. “Other organizations are more limited in their representation, and so serve a more specialized constituency,” she says. “ULI also addresses regional infrastructure and development trends that most industry groups cannot. ULI does not advocate, it educates.” ULI’s impact in Arizona is evident in forging public/private partnerships and in the increased level of discourse between governments, private developers, and educational institutions. In addition, ULI has provided a window into the development process for students and the public at large through many of its programs and publications. “The Valley is blessed with several excellent organizations that focus on various aspects of the real estate industry,” says Mark Winkleman, 2012 Trends Day co-chair and COO of ML Manager. The Urban Land Institute is different than other real estate organizations in that its primary focus is on the sharing of ideas and providing educational opportunities for it members. “ULI believes that through the sharing of ideas, information and experiences the best planning and projects will develop.” Adds Mark Singerman, Regional Director Arizona for the Rockefeller Group: “The programs it presents try to be content rich, timely and relevant to the local real estate community in Arizona. ULI leadership consults with local and state staff and politicians to provide professional input on infrastructure issues to help them accommodate growth through public-private partnerships and other funding mechanisms like Community Facilities Districts (CFD’s).”

70 | September-October 2012

...The Urban Land Institute is different than other real estate organizations in that its primary focus is on the sharing of ideas and providing educational opportunities for it members.

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ULI

ULI Arizona’s Real Estate Trends Day

ach year the ULI Arizona District Council convenes Trends Day — a deep-dive into the most current state and national land use and real estate trends, with a focus on what to expect in the future, where the best opportunities can be found, and how these components affect both public and private sector partners. Known as Arizona’s pre-eminent forum for trends and relevant information, the day’s format includes outstanding content from a renowned keynote speaker, interesting panelists, and top industry leaders addressing the most compelling concerns currently affecting Arizona. More than 30 industry experts elaborate on issues and trends regarding the economy, sustainability, capital markets, development types, public policy initiatives, the impact of social and political trends on land use and real estate, and other timely topics. Trends Day brings together individuals engaged in ensuring the vitality of Arizona communities and regions for a day of no-nonsense, expert insight. The event provides the opportunity to connect with and learn from thought-leaders and change-agents representing both public and private sector perspectives. In one day, attendees learn about major trends, hot projects, key players, and critical issues shaping real estate development over the next year and network with national and regional land use and real estate leaders, decision-makers, and visionaries. The 2013 Trends Day will be held on Tuesday, Feb. 12, from 7:30 a.m. to 6 p.m. at the Sheraton Downtown Phoenix. Mark

72 | September-October 2012

ULI Trends Day 2012 (above and right).

Winkleman, COO of ML Manager, and Tom Johnston, senior managing director of Cushman & Wakefield of Arizona, are Trends Day 2013 Co-Chairmen. “ULI continues to innovate this sought after event ensuring that we provide the most relevant and timely information for Arizona decision-makers as they contemplate ways to ensure vibrant and competitive communities statewide,” Winkleman says. “The 2013 event promises to be unrivaled.” Visit arizona.uli.org for more information. Sponsorship packages are available.

IF YOU GO What: 2013 ULI Trends Day When: Feb. 12, 7:30 a.m. to 6 p.m. Where: Sheraton Downtown Phoenix For more information: arizona.uli.org

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ULI BY PETER MADRID

DMB communities beneﬁt from ULI’s knowledge sharing

f there is one person who can speak authoritatively about the impact of the Urban Land Institute Arizona District Council, it’s Charley Freericks, president of DMB Associates Inc. DMB has been an active member of ULI for years, and its team members — from finance to community life to entitlements to development — have benefitted from the knowledge sharing that comes with their association, Freericks says. “The conferences, case studies and programs push our thinking and planning for DMB and our communities,” Freericks says. “Community building programs like Reality Check and AzTAP bring together public officials, economic development leaders and industry partners to creatively solve problems and discuss opportunities for improving the development process and outcomes.” Not only do those programs build stronger relationships within the community, they allow a company such as DMB to discuss challenges and gain insight from industry peers in an educational setting. “In DMB communities, we focus significant resources on building a strong community life component where the built environment stimulates interactions and authentic connections to people and places.” Freericks says. “From the parks of Verrado to the trails into the McDowell Mountains at DC Ranch, we have oriented our communities to integrate and connect to the larger community.” “Those community building ideals have been studied by ULI over the years, and they believe, like we do, that people crave those interactions with people and nature,” he adds. “At Martis Camp and Kukui’ula, we designed resort communities that invite generations to play together. In addition to golfing, skiing and spas, we’ve created community gardens, theaters, libraries, bowling centers, soda shops and more to foster multi-generational play.” At Eastmark, DMB’s new development in the Southeast Valley, Freericks says the company will take this education to a new level. How will Eastmark reﬂect ULI’s mission? “ULI’s mission is continuing education and fostering collaboration to develop better places,” Freericks explains. “DMB’s mission — A Passion for Great Places — mirrors that idea. We are a company that is constantly learning more about how people want to live, how they work today, and in the future, how generations will come together. “We are interested in weaving into our built environments opportunities for lifelong learning and wellness to create special places where people want to live, work and play. We draw on ULI’s

74 | September-October 2012

Community building ideals such as the ones in DMB’s Eastmark development (above) have been studied by ULI over the years.

knowledge of conservation, land use, and sustainable development to create the best communities that reﬂect the local area.” “DMB and its partners have dedicated countless hours to ULI as contributors, presenters and attendees so we can learn from the very best and improve our communities and our business model.” Eastmark offers DMB another opportunity to redevelop a former industrial site, leverage new technologies in reclamation to recycle and reuse materials from the former General Motors Proving Grounds in Mesa and create something totally new for the East Valley. The size, scope and long-term vision gave the City of Mesa a reason to collaborate with DMB on a plan to use the form-based code as the framework for the community’s development. While this was a new concept for Mesa, it has embraced the concept and has already adopted it for other developments. “With a shift toward connection and proximity, the clustering of jobs and the need for employment attraction, a focus on healthcare and education, we hope that Eastmark will stand as a model for good planning and development,” Freericks says. “The location offers an unparalleled opportunity to create a heart and hub in the East Valley.”

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Urban Legend Cities turn to special zoning ordinance to revitalize underutilized urban core areas

special zoning ordinance created to attract new development to key areas in Scottsdale and Phoenix is gaining traction and transforming urban areas in the Valley. Phoenix created a Planned Unit Development (PUD) just prior to the start of the Great Recession while Scottsdale actually used the economic downturn to study, review and create the ordinance. In Downtown Phoenix, the Jackson Street Entertainment district is the result of a PUD — a streamlined planning process in urban core areas where development is provided fewer restrictions on height, density and signage to encourage development in these areas. “Essentially, developers write their own zoning code, and provide neighbors and the city with justification on why it makes sense and will be good for the area, as opposed to using out-ofdate codes that are no longer relevant for the direction urban cores are going,” says Mike Curley, a zoning attorney with Earl, Curley & Lagarde in Phoenix. Legends, the lighting district in Downtown Phoenix, is a text amendment and was inspired by L.A. Live. Los Angeles created a special sign district around the stadiums, which ultimately resulted in an inﬂux of development in a previously blighted area. Legends is hoping its sign district will also attract development to downtown. “Most of the city ordinances drafted in ’60s and ’70s were done so with a suburban mentality,” Curley says. “It was single-family community, commercial facility, office. Then came the advent of new urban developments to areas such as Downtown Scottsdale, Central Avenue, 7th and Van Buren.” 76 | September-October 2012

The urban environment, Curley says, brings a “real true mix of integration.” Previously, zoning ordinances drafted could not accommodate that kind of development. Curley adds a number of cities have adopted a PUD to make their own zoning district. And some parts of Phoenix are more urban than have existed in the past 40 years. The Arcadia neighborhood, 16th St. north of Missouri, has witnessed an explosion of local restaurants that had not before existed. “The area is getting really hip, chic restaurants in infi ll parcels,” Curley says. “Those areas were totally neglected before. But cities have done things wisely with vacant parcels. In his role as a zoning attorney, Curley helps his clients to get some relief from rigid zoning requirements by working with neighbors and the city. He also helps navigate developers and users through the bureaucratic process. “When the City (of Phoenix) wanted to do an entertainment district, it was, ‘Let’s allow the development to go out to the street. Create a festive environment. Lots of visuals. Stuff you would want to see at 44th and Camelback. What they did on the downtown was serve as a template. In Denver they created a ‘LoDo’ area. They wanted to create that kind of buzz. To do that they had throw the rule book out and make it be applicable.” No residential builders back in the ‘80s or ‘90s would ever think of doing residences downtown. Curley says these new parameters for urban or downtown development are catching on elsewhere in the Valley. PUDs are also in use in Peoria, Chandler, Avondale and Glendale.

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ULI

ULI Arizona Programs 2012

ULI Arizona Programs 2013

Sept. 10 and 25: Urban Plan Facilitation(Desert Vista High School) Sept. 11: New Member Breakfast Sept. 11: Southern Arizona Young Leaders Group(Speakers Series) Sept. 13: Main Program 1 — Capital Markets Sept. 19: Knowledge Series 1

Jan. 10 and 18: Urban Plan Facilitation, Horizon High School Jan. 23: Urban Plan City Council, HHS

Oct. 2-4: Urban Plan City Council, DVHS Oct. 16-19: 2012 ULI Fall Meeting, Denver Oct. 25: Dinner Conversations Oct. 30: Central Arizona Young Leaders Group — Mixed-Use Development

March 5-7: Urban Plan City Council, DVHS March 12: Knowledge Series 3; Main Program 3 — Homebuilder Analysts

Nov. 8: Southern Arizona Main 1 Nov. 13: Main Program 2 — Infill Redevelopment Nov. 15: Dinner Conversations Dec. 4: Knowledge Series 2 Dec. 5: Central Arizona Young Leaders Group Holiday Mixer Dec. 7: Community Plan Boards & Commissions Conference; Southern Arizona Main 3; Joint Holiday Mixer

a public official’s education Pivot Point for Community Building Arizona is at a crossroads. To move Arizona forward into a prosperous second century, it is vital to ensure that our communities have the tools to make informed and sound decisions that lead to community success. State and municipal budgets have been reduced to essential services, yet local leaders must continue toplan and make decisions that ensure a sustainable future for their citizenry. Local leaders should engagein thoughtful planning now to: • Create new approaches to sound land use planning • Protect air, water, and natural areas • Match infrastructure needs to population growth • Improve the economy and quality of life • Build more livable communities • Make the necessary investments to accomplish these visions

78 | September-October 2012

Feb. 12: Annual Trends Conference Feb. 22 and 27: Urban Plan Facilitation, DVHS

April 17: Central Arizona Young Leaders Group — Non-Traded Public REIT; COLE Southern Arizona Young Leaders Group Speaker Series 2 May 13-17: ULI Spring Meeting, San Diego June 11: Knowledge Series 4 Main Program 4 — Healthcare & Biotech Southern Arizona Main 5; Spring Program For more information: arizona.uli.org

curriculum

What is Community Plan? What • A two- to four-hour interactive workshop for public officials that provides effective tools for addressing pressing community and regional issues. All workshops are pro-bono and taught by multi-disciplinary faculty comprised of experienced professionals, all of whom are volunteering their time. Target Audience • Elected officials, planning and zoning commissions, economic development and housing committees, boards of adjustment, regional organizations, staff, and others.

For More Information Visit the Community Plan clearinghouse, hosted on the Urban Land Institute, Arizona District Council website, arizona.uli.org

Outcomes • Develop a better understanding of: - Land use planning and zoning - Housing - Multimodal transportation and mobility - Real estate development - Economic development - Finance and infrastructure • A better understanding of the connectivity between the community building blocks, the importance they have within your community or region, and the necessity for using a holistic lens to achieve long-term goals. • Toolbox of information, case studies, and online resources that can enhance community decision-making. • Develop an action plan to apply what was learned.

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OCTOBER 23-25, 2012 National Marketing Exposure Reduced Buyers Premium to Attract More Buyers Accepting All Asset Types & Product Classes Space is Limited; Call Soon to Ensure Placement NATIONAL FIRM PARTICIPANTS:

CLOSE YOUR PROPERTIES & NON-PERFORMING LOANS BY YEAR END! Call your local SVN office for more information or to submit a property for consideration.

(480)425-5500

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