SEPTEMBER JULY OCTOBER - AUGUST 2013 2013
REACHING FOR NEW HEIGHTS Valley's office outlook gets boost from 2 MSF mixed-use development
INSIDE
BIG DEALS: Top Sales, Leases p. 30 AMA: Multi-Family Muscle p. 40 CORESLAB: Superior Structures p. 76
‘When one door closes, another opens ...’
T
here are many famous quotes and accomplishments that can be attributed to Alexander Graham Bell. One of his more famous lines reads: “When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” In the commercial real estate industry, there were a lot of doors that were closed during the Great Recession. But thanks to the dogged determination, resiliency and leadership of Arizona’s commercial real estate companies — both big and small — the doors are once again opening and the industry is poised to capitalize on those opportunities. In this issue of AZRE, we look into: & Office and industrial: A panel of five experts size up two sectors that are gaining momentum once again. Also, a new and improved “Big Deals.” & Multi-family: This sector continues to sizzle. Check out our annual special section with the Arizona Multihousing Association. & Urban Land Institute: Arizona’s statewide convener for dialogue among industry leaders — true visionaries. & Coreslab Structures: Celebrating 25 years of excellence in Arizona. & Law: Social media becoming a new and necessary tool. Finally, I’m sad to say that this is the last issue of AZRE to which former editor Peter Madrid will contribute. Peter helped build AZRE into the definitive publication for Arizona’s commercial real estate industry. So while we appreciate Peter’s contributions, we are happy that Amanda Ventura (pictured above) is taking the baton and bringing her award-winning journalism skills to AZRE. Amanda’s expertise, energy and commitment to excellence will make AZRE an even more authoritative voice for the industry. When one door closes, another opens.
Michael Gossie Editor in Chief michael.gossie@azbigmedia.com 2 | September-October 2013
President and CEO: Michael Atkinson Publisher: Cheryl Green Vice president of operations: Audrey Webb EDITORIAL Editor in chief: Michael Gossie Former editor: Peter Madrid Associate editors: Amanda Ventura | Hannah Hayes Interns: Jacob Green | Jamie Mitchell ART Art director: Mike Mertes Graphic designer: Lillian Reid Photography intern: Cailey Kleiner DIGITAL MEDIA Web developer: Eric Shepperd Web and graphic designer: Lily Ciric MARKETING/EVENTS Manager: Whitney Fletcher AZRE | Arizona Commercial Real Estate Director of sales: Steve Koslowski OFFICE Special projects manager: Sara Fregapane Executive assistant: Mayra Rivera Database solutions manager: Cindy Johnson Az BUSINESS MAGAZINE Senior account manager: David Harken Account managers: Ann McSherry | Shannon Spigelman AZ BUSINESS LEADERS Director of sales: Carol Shepard RANKING ARIZONA Director of sales: Sheri King Scottsdale Living Account manager: Gail Rosier EXPERIENCE ARIZONA | Play Ball Director of sales and marketing: Zoe Terrill AZ BIG MEDIA EXPOS SCOTTSDALE SUPER EXPO/MARCH SCOTTSDALE SUPER EXPO/NOVEMBER Exhibit directors: Kerri Blumsack Tina Robinson | Marianne Avila
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Correction: >> Gabor Lorant is architect on the Downtown Phoenix Campus Sun Devil Fitness Complex project featured in the July/August Arizona Builders’ Alliance special section.
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CON T E N T S 6 30 On The Cover: Marina Heights is a 20-acre, mixed-use development along Tempe Town Lake that will include five office buildings leased by State Farm, retail amenities and a 10-acre plaza. The 2 MSF project, considered the “largest office deal in Arizona history,” will be built on ASU land and developed by Sunbelt Holdings and Ryan Companies US, Inc. Rendering courtesy of DAVIS.
FEATURES
2
Editor’s Letter Farewell after covering a great
industry, and lots of great people
6 8
New to Market Projects in the pipeline Project News
DPR renovations include healthcare projects; Mesa fire station earns LEED Gold
10 12
Executive Q&A Four faces of industry leadership After Hours Larry Ortega: artist at heart;
Neil Sherman: the sky’s the limit
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Brokerage
A demanding market boosts industrial sector
COMING NEXT ISSUE
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Brokerage Office primed for a comeback
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Brokerage Q&A: Office and industrial
overview
30 34
Big Deals Top 5 sales and leases
Real Estate Law
Getting beyond contract complexities
40
AMA
Multi-family sector flexing its muscle again
49
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4 | September-October 2013
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1 Phoenix-Mesa Gateway Airport West Terminal Expansion Developer: Phoenix-Mesa Gateway Airport Authority General Contractor: D.L. Withers Construction Architect: DWL Architects + Planners Location: Mesa Size: 6,000 SF The $4.8M project included the design and construction of two additional gates and an outdoor courtyard space north of the existing terminal building. Additionally, there will be space for a future Federal Inspection Station facility. Expected completion is 4Q 2013. 2 el Mirage Police Facility Developer: City of El Mirage
General Contractor: D.L. Withers Construction Architect: Arrington Watkins Location: Gateway Park, El Mirage Size: 22,000 SF
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The $5.1M new police station will be the first building in a civic area and will eventually include other structures. The site is south of the city’s award-winning Gateway Park. The area is planned to be a civic and retail site. Expected completion is 4Q 2013. 3 Our Lady of Sorrows Church Expansion
Developer: Society of Saint Pius X, Platte City, Mo. General Contractor: DNG Construction Architect: Laszlo Kovacs Location: 7th St. and Baseline Rd., Phoenix Size: 21,000 SF The $4M new traditional church will seat 775 with a 10,000 SF basement. The Spanish mission style church property will also include an academy and retreat center. Subcontractors inlcude ICF Specialists, Division 3, Western Underground, TPAC, Canyon State Masonry, M-Power Electric, Universal Piping and Cutting Edge Fabrication. Expected completion is 1Q 2014. 4 District 5 Multi-Purpose Building
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6 | September-October 2013
Developer: Gila River Indian Community General Contractor: W.E. O’Neil Construction Architect: DLR Group, Tucson Location: Casa Blanca Size: 31,000 SF
The $7M multi-purpose building will serve the Gila River Indian Community and will include a full gymnasium, classrooms, craft rooms, administrative areas and full kitchen. There also will be outdoor landscaped play areas and a splash pad. Subcontractors include Ellison Mills, G&G Masonry, AME Electric, Sun Mechanical, IMCOR, Mirror Works, California Pools and ELS. Expected completion is 4Q 2013.
RETAIL 5 Topgolf at Riverwalk Developer: TopGolf International General Contractor: ARCO/Murray National Construction Co. Architect: HKS Architects Location: 101 and Indian Bend, Scottsdale Size: 59,850 SF
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The $15M golf entertainment facility will feature 102 climate-controlled hitting bays that can host up to six players at a time; 2,900 SF of private event space, a rooftop terrace and full-service restaurant and bar. Subcontractors include Levake Construction, Indicomm, Native Plumbing, Red Mountain Engineering, Ace Fabricators, Brothers Masonry, Torrent, Arizona Glass and Schindler. Expected completion is 2Q 2014.
6 Sumomaya Owner: German Osio General Contractor: TBD Architect: PHX Architecture (Butler Design Group designed the shell building for Marketplace at Lincoln and Scottsdale roads). Location: 6560 N. Scottsdale, Scottsdale Size: Interior, 4,202 SF; Patio, 1,210 SF
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Sumomaya will be a restaurant that fuses East and West with influences of Asian and Mexican, with a modern design. With concrete and CMU as dominant materials on the exterior, the interior will feature a softer palette of materials, including wood and greenery. Subcontractors include NP Mechanincal, NP Engineering, Redmond Foodservice Planning, Light Control, PK Associates, and McKay Conant Hoover. Expected completion is 4Q 2013.
Education 7 Peoria Unified School District New Pre-K through 8 School General Contractor: McCarthy Building Companies, Inc. Architect: EMC2 Group Architects Planners & Fanning Howey Location: Peoria Size: 96,500 SF
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The new PUSD school campus will feature a 20,000 SF multipurpose building (cafeteria, full gym and locker room) and a 76,500 SF classroom building. It will be built south of Deer Valley Rd. between Lake Pleasant Parkway and 91st Ave. Site work includes a joint courtyard, a baseball field, a softball field, two regulation basketball courts, two grade-specific play areas and a solar power generating canopy. Estimated completion is 2Q 2014.
Mixed Use 8 ASpen Place at the Sawmill Developer: RED Development General Contractor: TBD Architect: TBD Location: Butler Ave. and Lone Tree Rd., Flagstaff
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RED Development’s Flagstaff mixed-use project will add an REI store and launch phase two with 30,000 additional SF of retail space and 222 luxury apartments. REI, an outdoor gear and clothing store, will utilize 23,550 SF in a separate building at Aspen Place. The apartments, The Village at Aspen Place, will be developed by ePartment Communities of Kansas City, Mo. RED Development also is bringing a 6,000 SF Alliance Bank to the property in 3Q 2014. Aspen Place at the Sawmill currently features 68,000 SF of retail and restaurants and ultimately will include a total of 135,000 SF when all phases are fully built. 7
Construction PLANNING & ZONING ´´State of Arizona
Effective Sept. 13, a few important revisions to the State’s Procurement Code went into effect. The first is an increase in the Request for Quotation (RFQ) dollar amount. Currently purchases between $5,000 and $50,000 are made through the State’s relatively simple RFQ process, but the amended A.R.S. 41-2535 aggregate dollar amount for RFQ procurement of State contracts being solicited and awarded through the RFQ process increased to a range of $5,000 to $100,000. This will make it possible and easier for companies to compete for and potentially obtain larger dollar contracts. The second revision, directed toward an effort for increased transparency and protection against conflicts of interest, involves a new statute, A.R.S 41-2517. It makes it a criminal offense to offer employment to a State procurement officer or employee or any State employee with a significant role in a procurement, within a specific time period related to that procurement process and the initiation of services or construction. A new bill, House Bill 2138, recently was voted into law by the State Legislature. HB 2158 alters the annexation requirements of A.R.S. 9-471 for cities when taking rights-of-way from a county. Under the previous laws, annexation required approval of more than 50% of the owners within the annexation area, as well as approval of property owners resulting in over 50% of the value of the land being annexed. HB 2138 does away with the annexation process altogether for rights-of-way when the annexing city and the divesting county agree by mutual consent, allowing the rights-of-way to be transferred without annexation.
´´Town of Buckeye
On Nov. 5 Buckeye residents will vote during a special election as to whether the community will remain a town or become a city. On one level the change is considered a result of evolution. In the year 2000, Buckeye’s population was 8,500; today it is estimated at 56,000. But the main objective of the name change is the potential for more economic development. Town leaders believe that the proposed change could bring jobs to the community and those businesses and companies looking to expand or relocate would prefer to do so in a city rather than a town. The general thought is that towns don’t grow, but cities do. It is also felt that the name change is a way of keeping up with the other West Valley communities vying for employers and developers. When a town legally becomes a city, it can adopt a city charter, which establishes the powers and authority of a city within state law and expands a city’s powers beyond those listed in state statute. With the name change, Buckeye will be granted 24 additional powers by the State, although most of them are not substantially different from the Town’s current powers except that they will have a more modern and comprehensive language to them. For additional information call the Town of Buckeye at (623) 349-6000.
´´City of Scottsdale
Requests to the City Council have been submitted by City staff to initiate text amendments to the City’s Zoning Ordinance (No. 455), to update and modernize the Planned Regional Center (PCD) District, the Planned Community Center (PCC) District, and the Support Services (SS) District. And, for the purpose of clarifying, modifying, making consistent, and resolving nonconforming and conflicting regulations related to nonconforming use and standards, general provisions additional height regulations and additional area regulations, and landscaping requirements. The case number for this request is CASE#4-TA-2013, and the complete file is available to review at the City’s Planning Office or contact Current Planning for additional information about this application at (480) 312-7000.
´´City of Tempe
Recently the first draft of Tempe’s General Plan 2040 was unveiled for public review and comments. The draft is the result of approximately six months of study and preparation by the General Plan 2040 Community Working Group (CWG) made up of 24 City residents with background in various disciplines such as architecture, transportation, business, land development, and neighborhood preservation and sustainability. CWG leadership was pleased with the consistent citizen input at scheduled group meetings but will now be aiming for additional input as a result of the release of the draft. The CWG is hoping that by the time the completed General Plan 2040 goes to a ballot vote there will be no surprises since the majority of residents have had various opportunities to contribute to the Plan’s vision for their City. For additional information call (480) 350-8331.
´´Town of Gilbert
The Town of Gilbert currently uses the 2006 edition of the International Code Council’s recommended building standards which includes standards for residential and commercial buildings as well as fire-safety regulations. A proposal for an updated set of standardized building codes is set to go before the Town Council for possible adoption this summer. This proposed code update is also making its way through other cities in the Valley and has already been adopted in Phoenix, Scottsdale and Avondale. Gilbert officials are preparing to release a draft of their amendments which should be reviewed by Town Council in August 2013. The revised codes focus on amendments that are specific to region and consistent with those in surrounding communities. While the building code updates will include some stricter requirements on some building components, they also will loosen restrictions or requirements on various other building components. For additional or more specific information call (480) 503-6700.
The P&Z column is compiled by Dave Coble and George Cannataro with Coe & Van Loo Consultants, cvlc.com 8 | September-October 2013
Project News
´´DPR renovations include multiple healthcare projects Healthcare projects kept DPR Construction busy with renovations at St. Joseph’s Hospital and Medical Center, Banner Boswell and Osborn Medical Center: • The EP Cath Lab No. 1 project at St. Joe’s was a 1,300 SF renovation of the existing cath lab room to meet ADHS Health Guidelines. HKS was architect for the $365,000 project. • The Banner Boswell hybrid OR project included updated staff lockers, finishes upgrades to the pre-op area and renovating 2 standard ORs and providing a new hybrid OR. HKS was architect for the $11M project. • The Osborn MC project included the remodeling of the 18 diagnostic care unit rooms and support space. HVAC and electrical upgrades were also performed. Synectic Design was architect for the $700,000 project. Two non-medical projects included the Chandler central plant expansion at Digital Realty and the Chandler K&L suites also at Digital Realty. Subcontractors included Bel-Aire Mechanical, Alliance Fire Protection, Cupertino Electric, Ace Controls, D.H. Pace, Ganado Painting & Wallcovering, Progressive Roofing and Metal Weld.
´´Royal Palms Resort and Spa unveils renovation of T. Cook’s The Royal Palms Resort and Spa, Phoenix’s historic boutique resort, unveiled the restaurant’s three-month revitalization project in early September. Royal Palms teamed with Phoenixbased creative design team Bar Napkin Productions and its Founding Principal Haley Balzano to develop the interior design which boasts vibrant shades of authentic colors of the desert and an overall softer palette. Boldly colored chairs surround rustic wooden tables adding depth and diversity to the dining room, while iron chandeliers create a sense of intimacy and stimulate enchanting experiences and romance. The project also features a newly crafted wine and tequila room and an expanded bar. Howard S. Wright, a Balfour Beatty company, was the general contractor.
´´W.E. O’Neil Construction picked for Hohokam Stadium Renovation in Mesa W.E. O’Neil Construction was hired as construction manager at risk for the renovation of Hohokam Stadium in Mesa, which will serve as the 2015 spring training facility for the Oakland A’s. The Chicago Cubs are getting a new facility in 2014 — Riverview Park — and the A’s are leaving Phoenix Municipal after this coming Cactus League season. The Mesa City Council voted unanimously for the hiring W.E. O’Neil to provide input on several aspects of the project and the procurement of five hydrotherapy tanks for a total cost just shy of $560,000. The GC will also have a hand in project design, cost-estimating, development and coordinating with the city during the construction process. Under a facilities use agreement signed with the A’s, the City of Mesa covers the first $15M of the renovation and the accompanying Fitch Park, and will split the next $5M with the team.
Mesa Fire Station 219 recieved LEED Gold certification, the first for a fire station in the City of Mesa.
´´ El Mirage Police facility tops out The El Mirage Police facility project topped out recently. The current facility is housed in trailers and modular buildings that are outdated and do not provide the proper space for law enforcement personnel to function in a safe and secure environment. The new police station will be the first building in a civic area that will ultimately include other structures. The site for construction is directly south of the City’s new awardwinning Gateway Park. Voters approved the funding in the fall of 2011 and Arrington Watkins, architect/designer, along with D.L. Withers Construction, were awarded the project.
´´Mesa Fire Station 219 earns LEED Gold Certification Mesa Fire Station 219 received its LEED Gold certification and plaque, the first for the City of Mesa. The project, completed in 2012 by D.L. Withers Construction and designed by Perlman Architects, used several sustainable practices that included solar panels, a solar hot water system, insulated concrete exterior walls and an insulated cool foam roof.
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EXECUTIVE Q&A By peter madrid
Rob Cortazzo
Arizona Manager Skanska Years in commercial real estate: 27 Years at company: 2 Q: WHAT ATTRACTED YOU TO THE INDUSTRY? A: In college, I worked on a commercial construction project as a laborer with a diverse group of people. I saw the impact a project has on a community. I realized there was a career that combined all of my interests and was free from the constraints of an office. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: The construction industry has become much more collaborative and team-oriented over the past 10 years. Those at the leading edge of the industry, who have embraced team-based approaches and alternative delivery methods, are realizing the benefits of successful and rewarding projects. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: During my time in Chicago, I was asked to step in as executive for a $500M Cook County Hospital Project that was having some challenges. Working with the county and designer, we were able to successfully accomplish all project goals and opened on time to serve 30,000 patients per month.
Robert Schadler
VP of Business Development Oldcastle Years in commercial real estate: 8 Years at company: 8
Brent Meszaros
General Manager Metrocenter Mall Years in commercial real estate: 20 Years at company: 2 Q: WHAT ATTRACTED YOU TO THE INDUSTRY? A: My family has been in this industry for generations — from land speculation to brokerage to management — so I grew up understanding the importance of real estate in the Arizona economy. Property management is vital to this tradition. Building ownership may change, but properties always need professionals to maximize their value. Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: The biggest change was probably the computer. It allowed one credentialed manager to do the work of three. Groups like ICSC and IREM have also elevated our knowledge base, empowering us to understand and capitalize on shifting market fundamentals and critical new trends like the “clicks and bricks” movement. Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: There are actually three: Serving as president of the IREM Phoenix Chapter; managing millions of square feet of quality retail centers for Vestar; and being selected to lead Metrocenter Mall during its resurgence in the marketplace. I’ve appreciated the opportunity to impact my industry and my community.
Kimberly Laten
Owner/Designer Color Design Development Group Years in commercial real estate: 15 Years at company: 7
Q: WHAT ATTRACTED YOU TO THE INDUSTRY? A: The long-term satisfaction of seeing a construction project start as an idea, become a design, having a hand in making that design work, then work with a dynamic team to get it built knowing that no two projects are the same.
Q: WHAT ATTRACTED YOU TO THE INDUSTRY? A: I have a passion for taking tired-looking properties and making them look fresh, new and more relevant. I also enjoy working with architects and developers on ground-up projects, helping them to select roof color, paint, stonework and pavers.
Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: Budgets have always been difficult but now construction schedules are being accelerated to an unseen point a few years back.
Q: HOW HAS THE INDUSTRY CHANGED SINCE YOU STARTED? A: I have observed many trends come and go. There have been major shifts in color palettes used in commercial and multi-family properties over the past 15 years. Today we are seeing more intricate and sophisticated choices. Color Design Development Group is able to superimpose multiple choices before finalizing.
Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: Teaming up with many of our industry partners for Canstruction every year to benefit the Phoenix Food Bank. In 2013, we donated more than 6,000 cans — quite a feat.
10 | September-October 2013
Q: WHAT PROFESSIONAL ACHIEVEMENT ARE YOU MOST PROUD OF? A: I consulted on a 478-unit student housing project in Dallas. From ground up, it far exceeded everyone’s expectations.
11
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 Michael Gossie, michael.gossie@azbigmedia.com. Photography by Cailey Kleiner
Larry Ortega
Neil Sherman
Senior Vice President Colliers International Phoenix With Colliers for 20 years; 32 years in CRE in the Valley
Senior VP and Principal Sperry Van Ness, Phoenix With SVN for 10 years; 28 years in cre in the valley
• Born in Los Angeles; moved to Arizona in the early 80s • Graduated from University of California Fullerton, was a fine arts major • Wife Sandra; children Daniel and Marla
• Born in Brooklyn, N.Y., raised in Florham Park, N.J. • Graduated from Arizona State University with a degree in business • Daughter Sydney, 10; son, Connor, 8
Responsibilities: Marketing commercial and retail properties. Representing retailers and restaurants and landlords.
Favorites: Sports/Teams — surfing, fishing, football Music — Death Cab for Cutie, Airiel, Hillsong, Alternative, Indie, Phil Wickham, Jimmy Eat World Destinations — Baja, Mexico; Guatemala, Costa Rica, Belize, Alaska Activities — Being alone in my studio, creating art.
What did you think you’d be when you were growing up? I thought of being a forest ranger working in a fish hatchery, a professional surfer and then an artist.
What accomplishment are you especially proud of? Launching Arizona City Fest/Season of Service with Luis Palau. Re-emerging as a mixed media artist working with resin, steel and light. Opening an art gallery in Downtown Phoenix in 2012.
What would people be surprised to know about you? My background as a fine artist, retailer, surfer.
ADVICE:
GIVEN – Be meaningful, provide insight, inspire and connect the dots. Be yourself. To Share– Maintain a good name at all cost.
12 | September-October 2013
Responsibilities: Long-range business planning, recruiting of new agents, mentoring junior agents, in addition to my own personal production.
Favorites:
Sports/Teams — Phoenix Suns, Arizona Diamondbacks, N.Y. Yankees, Arizona Cardinals and New England Patriots Music — Rock, Jazz, Top 40 and Classic 70s and 80s hits Destinations —Italy and France are my favorites so far. Skiing in Whistler, B.C., and most islands of Hawaii. Next up: Asia, South America, Spain and Australia. Activities — Travel, golf, long-distance cycling, working out, coaching my son’s baseball team and scuba diving.
What did you think you’d be when you were growing up? Doctor or Lawyer (several in family). I still think about law school from time to time. It’s never too late, you know. I also wanted to be a fighter pilot or Navy Seal.
What accomplishment are you especially proud of? Probably my private pilot license and instrument rating I’m now working on. Not only is it the most exhilarating thing I’ve ever done, but from a business standpoint it has paid for itself many times over.
What would people be surprised to know about you? Probably my civic and charitable work. I’ve been giving back to the community since I first got to Arizona in 1980.
ADVICE: GIVEN – Do what you love. Strive to be the best at what you do and
provide top notch service to your clients and the money will take care of itself. To Share– It’s extremely tempting when you’re just starting out in your career to either try to be all things to all people or to chase the huge paychecks. Specializing in a specific product type and starting with the more realistic transactions is critical to early success. Also there’s no such thing as a 9-to-5 job during your first few years in the business.
COMING NEXT ISSUE Economic Development: Taking the pulse of the hot Southeast Valley market Big Deals: Land rush, a look at land sales in Arizona; plus the Top 5 sales and leases AAED: The state’s economic development organization celebrates 40 years BOMA: The changing face of property management JANUARY-FEBRUARY 2013
AIA Arizona: Celebrating the 2013 Design Award winners Healthcare trends BIRTH OF A SIGNATURE SCIENCE PARK MAY - JUNE 2013
For additional information, call 602.277.6045 or visit,
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IIDA Brokerage: Industrial
A DEMANDING MARKET By Peter Madrid
While corporate users have the Valley on their radar screen, momentum of industrial deals are lagging
A
ccording to those in the trenches, the Valley’s industrial sector is in clear recovery mode, bolstered by the addition of more than 42,800 jobs over the past 12 months, strong and steady improvements in the local housing industry, and population counts that remain on the rise. However, the delivery of 2 MSF of new, local industrial construction and several large space give-backs have created a bit of a dichotomy, says Mark Detmer, Managing Director at Jones Lang LaSalle; turning a solid first quarter and positive year-todate net absorption of 1.1 MSF into a stagnant second quarter. At mid-year, Detmer says, tenant and investor demand remained strong, but total net absorption had dipped to a negative 35,000 SF, asking rent for industrial space was stagnant at a metro-wide average of $0.43 per-square-foot ($0.99 per-squarefoot for Flex/R&D), and vacancy was up from 11.2% in the first quarter to 12% in the second. “None of these factors are rebound deal breakers,” he says,
14 | September-October 2013
“but they point to the uncertainty that continues to delay a full industrial market recovery.” Adds Steven K. Lindley, executive vice president, Capital Markets at Cassidy Turley of Arizona: “Phoenix has seen some of the highest demand in the country over the past four years, and the capital markets have responded with huge interest from investors to purchase industrial properties. Prices have been going up, and there is significant buyer competition for all of our recent industrial investment offerings.” What some have seen is that demand slowed as supply rose. Many large corporate users have Metro John Pompay Rob Martensen
Phoenix on their radar screen, but the velocity of deals signed in the first half of 2013 hasn’t been as great as the industry would like. The potential is there for a strong second half of the year if some of the users in the market sign. Phoenix has a lot to offer companies looking to expand or relocate: affordable cost of living, warm climate, strong work force, strong university system, and a strong business community. While speculative construction continues in the Southwest Valley, other industrial submarkets are treading water, except for Deer Valley, says Don MacWilliam, senior VP, Industrial Properties at Colliers International. This submarket has seen increased velocity and stronger net absorption than other areas of the Valley. “The past six months have been better for the market, but not great for anyone,” says Jim Wilson, executive director at Cushman & Wakefield of Arizona. “Landlords hit bottom on this recession a while ago, but the recovery doesn’t have much velocity. It is a steady return, but we are not to the healthy point yet. Tenants are still able to get deals, but no longer at the expense of the landlord. Tenants have a variety of options from which to choose in most every sector, but now those choices come with tighter leasing parameters.” Looking ahead to the next six months, what can Metro Phoenix’s industrial market expect? According to Detmer, Jones Lang LaSalle is tracking 10 MSF to 12 MSF of requirements that are actively seeking space in Phoenix and are expected to land within the next 18 months. That said, Detmer adds, the rest of 2013 and 2014 should bring notable improvements in occupancy and stabilization as companies who are currently building product or pursuing new leases reach the point of project completions, signed leases and move-ins. Third party logistics providers will play a significant role in this improvement as they continue to ratchet up their interest, activity and impact on available Metro Phoenix industrial space. “Watch for big local results from some key industries,” Detmer says. “In the West Valley, this includes e-commerce, consumer goods/consumable product companies and furniture entities.” Some early examples of this in the West Valley are a 1.2 MSF T.J.Maxx build-to-suit distribution center, 435,000 SF Living Spaces build-to-suit project, and 10-year, 278,000 SF Conn’s furniture lease. “I expect to see strong activity in the Deer Valley market for both sales and leasing and decent sales activity in Glendale and Peoria,” says John Pompay, first vice
Don MAcWilliam
Steve Lindley
Pat Feeney
president, Industrial Group for Cassidy Turley. “Overall leasing in the submarket should remain steady or increase.” With housing starts accelerating, especially in the far Southeast Valley, and the economy mildly improving, the expectation is for the industrial market to do the same — improve at a mild pace, says Rob Martensen, CCIM, VP, Industrial Properties at Colliers International. “Small businesses learned their lessons in the past about expanding too soon; so they will likely wait until they absolutely have no choice but to relocate,” he says. Adds Pat Feeney, senior VP with CBRE’s Industrial Group: “I am optimistic about finishing big this year because of the large number of tenants that are looking at space. It will only take a few of these large industrial deals to be signed in order to see a dramatic impact on our absorption numbers. I also expect the ‘block and tackle’ size spaces to see continued strong activity through the balance of the year.” Although vacancies increased in the second quarter, the overall Phoenix industrial vacancy rate is still down a solid 30 basis points year-over-year. The biggest recent occupancy winners include Grand Avenue (+367,000 SF), Gilbert (+299,000 SF) and Deer Valley (+280,000 SF). Combined with a host of potential new tenants, this will make a first dent in the 2 MSF of new industrial space delivered in second quarter — of which just 15% is preleased. It will have less impact on the 3.7 MSF of industrial space currently under construction, as 72% of this is preleased and/or build-to-suit. On the investment side, sales volume sits at a stagnant 0.2% year-over-year, a sign that many owners are seeing a return of demand — and therefore liquidity — and are opting to hold until their funds complete or until rising values move them to a more advantageous profit position. Signs of this shift are already apparent: cap rates have dropped year-over-year from 7.33% to 6.94%, allowing values to regain some footing and pushing the Valley’s average price-per-square-foot up to $70. Among Phoenix’s most recent industrial sales, almost half (49%) have gone to private investors. Another 19% have been purchased by REITS, 15% by institutional buyers and 14% by users. “The next six months will bring more of the same,” says Cushman & Wakefield’s Wilson. “We will continue shoring up the building blocks of our market, but the recovery is not likely to pick up speed. “This cycle has been like a case of extended flu. You feel better on day 4 of the flu than you did on day 2, but you’re still sick. The length and depth of this recession created a much bigger window of time to recover.”
Mark Detmer
Jim Wilson 15
IIDA Brokerage: Office By Peter Madrid
Primed For A Rebound Market conditions including absorption rates and private sector jobs driving a favorable office outlook
W
hen it comes to the office market in Metro Phoenix, so far 2013 has been significantly more active on the lease and transaction front than what it’s been the past two or three years. This is very much expected, says John DiVall, senior vice president/city manager for Liberty Property Trust for a couple of reasons: >> Absorption has totaled nearly 700,000 SF year to date, higher than this time last year and capital activity has been fairly robust; >> Private sector job gains have played the largest part in the absorption activity, along with some pent up demand. “The demand for office space is rebounding,” DiVall says. “Companies are growing and we’ve had some nice job announcements that are fueling this, along with the fact that many companies have delayed making decisions on space needs during the uncertainty of the past three years and now they have to make some decisions.” DiVall adds that larger companies are taking advantage of market conditions to consolidate into one facility for greater
16 | September-October 2013
Liberty Property Trust’s build-to-suit Aetna office buildings at Cotton Center efficiencies in a more modern facility. He points out a Liberty Property Trust project — the Aetna build-to-suit in the Cotton Center. “I’m of the strong belief that centrally located, high-quality properties will continue to out-perform,” he says. “For example, North Tempe is the only submarket with single digit vacancy rates. Around the Valley, large blocks of vacant or contiguous space are rapidly dwindling.” Two to three years ago the focus was doing everything necessary to keep existing tenants and to fill space at whatever minimum rent and terms you could in order to meet debt covenants and maintain occupancy, says Steven Schwarz, principal at the ViaWest Group. “In the past six to nine months, we have begun pushing rents (as much as 15% to 20%) in the Southeast Valley and parts of Scottsdale,” Schwarz says. “Corporate America re-entered the picture two years ago and began taking down larger chunks of space. In the past nine months, we have seen a strong resurgence of activity by the 2,000 to 10,000 SF tenants. “The combined dynamic of corporate America and smaller tenants bodes well for the well-located, quality assets. Class
B and Class C buildings will continue to have a more difficult time until the better assets are near full occupancy and begin pushing rents further.” On the investment side, Schwarz says, there is a significant amount of capital looking for opportunities and the process has become very competitive with prices increasing very quickly. Tenant demand is very dependent upon location and quality of building. “That being said, we have been extremely pleased with the leasing activity in our buildings,” Schwarz adds. “We have bought more than $70M of assets in the past six months anticipating continued strength in the office market. Shadow space seems to be a thing of the past. Our tenants are running at near full capacity and many are in need of expansion space.” While industry experts agree the office market is healthier now than it has been over the past two to three years, there is still room for improvement. There is a tangible sense of improving conditions, says Andrew Cheney, a principal at Lee & Associates because of increasing values due to cap rate compression for Class A properties, p
IIDA Brokerage: Office some positive net absorption (job growth), “These three and more consistent deal elements — job velocity. “Office space pricing growth, absorption for tenants remains on and new projects sale, but landlords are now developing a sense of for large users — confidence that rents will are indeed some of soon stabilize,” Cheney the key ingredients says. “While values and rental rates vary widely for a more robust depending on product type, they are no longer dropping commercial real in any particular class. It’s estate market.” important to put things in perspective though; our – Keith Earnest overall vacancy was nearly 27% in 2011 and as of Q2 2013 we stand at 23.7%. Until we drop below 16% to 18%, there will be not be strong upward pressure on rents in all but a handful of buildings.” Cheney also agrees that office demand is coming back — it’s just a matter of how fast it will keep coming, he says. “Keep in mind that we still have some tenants giving back space (Medicis, University of Phoenix, Lewis & Roca). We also have some exciting news for large blocks of space leading with the incredible State Farm transaction followed up with General Motors, OnTrac, and many more in the queue. “However, if you look at the past three years overall we had a mediocre year of demand in 2011. This past year (2012) was a historically average year at 1.8 MSF of net absorption. This year we are on track to be mediocre again.” Notable trends, according to Cheney: >> More employers want to pack their employees into quality, open, collaborative spaces; >> Real estate companies are back and cautiously optimistic. Many are only willing to take on 3-year commitments with wait-and-see attitudes; >> California companies are not necessarily leaving California, but they are expanding here in Phoenix (Silicon Valley Bank, Union Bank); >> Tenants, regardless of industry, are trying to tie their leases to specific contracts they hold. Landlords with existing, functional space are the ones landing these users who will often stay well past their initial expiration. “Office space demand is closely linked to job growth,”
Andrew Cheney 18 | September-October 2013
Jim Achen
says Jim Achen, senior vice president at Brokerage: Office, at Transwestern. “Concurrent with the positive net absorption we have seen for the past five quarters and the new, substantial requirements we are seeing come to Phoenix, we are now experiencing a lack of large, Class A blocks of office space. As a result, build-to-suit activity is picking up significantly and lease rates on existing product are starting to increase and will continue to do so.” While the past few years have seen steady leasing activity, but with vacancy rates still hovering around 23% to 25%, there is still a ways to go before it can labeled a recovery, says Keith Earnest, vice president of development at RED Development. Several of the highest performing markets — Camelback corridor, Downtown Phoenix and Tempe — are experiencing a higher volume on larger deals and most of the big blocks of vacant space have been leased. “We are starting to see a shift from a completely ‘tenant favorable’ market to one that is more balanced,” Earnest says. “Tenants still have the upper hand, but that will be changing by 2014 when there will be a significant drop in vacancy rates and some speculative buildings under construction. The past 12 months have been highlighted by several large transactions including State Farm, GoDaddy, Fennemore Craig, Aetna and Lewis & Roca. In order for the market to fully recover, we will need to see more growth from small businesses and services companies. Small business growth is the catalyst for a healthy and sustainable market.” Earnest cites several trends that are impacting the market. Law firms, he says, are becoming even more efficient with their space resulting in lower occupancy costs and higher parking ratios. Another significant trend is the evolution of mixed use projects, he says. Building owners and developers are more focused on providing “experiential” spaces for tenants and visitors. Whether it’s open, shaded plazas, water features, or fast casual restaurant amenities, both old and new buildings are finding it a key component in attracting prospective tenants. “These three elements — job growth, absorption and new projects for large users — are indeed some of the key ingredients for a more robust commercial real estate market,” Earnest says. “We are seeing how these positive economic trends are definitely lifting the office sector. We hope this is a long-term phenomenon, but so many factors are at play as this sector has faced some unique challenges in recent years. Right now, things look very positive and there is reason to believe we are headed for continual upswing in overall demand and lease rates in the coming years.”
John Divall
Keith Earnest
Steven Schwarz
19
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IIDA / Industrial Office
UP
SIZING
By Peter Madrid
22 | September-October 2013
The Industrial and Office Markets
Over the past few years, the Valley’s industrial and office markets have slowly clawed their way back to recovery. On the industrial side, the economy began to add jobs favoring industrial users. As larger product became scarce, build-to-suit and then speculative projects took shape. Quarter after quarter, the industrial sector posted gains in most measurements. On the office side, there is renewed optimism as the sector is exhibiting positive vacancy, absorption, rental rates and sales velocity. Though vacancy rates remain high, there has been a steady trend downward over the past year by more than 400 basis points. Overbuilding woes have dispelled. The Ryan Companies US, Inc., and Sunbelt Holdings are developing a $600M, 2 MSF mixed-use project at Tempe Town Lake called Marina Heights that will house the new regional headquarters for State Farm Insurance. AZRE magazine turned to five industry experts for their outlook on the industrial and office sectors.
overview
Q: What is different in July 2013 in our local commercial real estate industry than a year ago?
Megan Creecy-Herman Director Leasing & Development Liberty Property Trust
MC:
On the industrial side, we have 2M more SF of distribution space in the Southwest Valley than last year which has positioned us to take advantage of those users looking for readily available spaces of 200,000 SF and above. While activity in that 200,000 SF plus size range may not be as voluminous as it was last year at this time, we still have a substantial number of e-commerce and logistics users looking to expand in or re-locate to the Southwest Valley from the west coast due to our strategic location and the 30% to 40% reduction in operating costs they can enjoy in Arizona.
KM: There is not a huge difference between today and a year
Keaton Merrell Principal Legacy Capital Advisors
ago, whereas there was a big difference when you compare 2012 to 2011. Debt and equity are both active in the market for all property types. CMBS is more active today than it was a year ago.
MM: The most notable change over the last twelve months is the
amount of capital that is pursuing property in the Phoenix market. This is obviously driven by a number of different factors depending on the buyer; but the fact that job growth is positive, the median home price has moved up dramatically, and vacancy rates are declining across all product types has caused a lot of money to look at Phoenix again. When you couple that with still historically low interest rates, it translates into some very healthy competition for product. Arizona always feels a slowing affect in July as many people are beating the Valley heat and heading to cooler climates. However, in 2012 we seemed to experience less slow down in activity than we have in 2013.
Matt Mooney Vice President and Managing Director Parkway Properties
KR:
CW: Those of us who have been through a Phoenix real estate
downturn knew what to expect. We didn’t know how long it would last, but we knew it would turn around; there just wasn’t a consensus on when. There were influencers on the economy that were waiting. And capital was sitting on the sidelines. Most people will say these influencers were waiting on the results of the 2012 elections, but I think it went much deeper than that. For whatever reason, these influencers are now back in the game. We are seeing positive signs in certain sectors of the Phoenix economy; the residential market being one. When considering all the signs, I think the difference in our local real estate industry can be summed up in one word: optimism. There are folks who are in our industry who had never experienced a downturn and had no idea what to expect. Some of them are no longer in the industry, but those of us who have survived are optimistic. We think 2013 will be good, but 2014 is when the real estate industry will be back. Keep in mind, it will never be like it was pre 2007 and nor should it be.
Kurt Rosene Senior Vice President The Alter Group
Clay Wells Senior Manager of Business Development Gilbane Building Company 23
IIDA / Industrial Office
“
One of the trends that we have been most encouraged to see thus far in this cycle has been the appetite for urban infill locations. - Matt Mooney
Q: What is the current state of our Metro Phoenix office market?
MC: While we have seen some recovery in
our local jobs numbers, the rate of economic recovery we’re experiencing here in Arizona is more lethargic than most economists would like. While our office market overall has seen moderate improvement over the last 24 months, the sluggishness of our economic recovery translates to a lack of significant improvement in the absorption of our existing office space; as an example, our overall vacancy rate was 23.9% at the end of the second quarter, same as the fourth quarter of 2012. The amount of activity, however, that we’re seeing in Tempe and Chandler has increased substantially year over year. Tenants’ desire to be centrally located with immediate access to the most educated labor pool in the valley coupled with a scarcity of large blocks of available space is exerting downward pressure on vacancy in those submarkets while also driving build-to-suit activity.
KM: Office has seen positive net absorption
over the last 18 months and we are starting to see rent growth for the first time in a long time. Banks, life insurance companies and CMBS are all actively financing office projects.
MM: The Phoenix office market is clearly in
recovery now, although the pace of the recovery depends on the submarket, and the quality of the asset. If you focus on the overall market vacancy factor, you are going to miss some opportunities because the size of the Phoenix MSA has reached the point that in our view, you must be very submarket specific. For example, the Southeast Valley has seen rapid absorption of Class A space in submarkets like Tempe and Chandler over the last twenty-four months. Most of the assets in those areas contain the right mix of newer construction,
“
amenities, transportation access, and proximity to executives and labor that tenants are seeking. Correspondingly, landlords in those submarkets have already experienced nice rent growth, which should only continue as Class A vacancy rates are single digit with little development underway. The story is not the same as you move west through Midtown, Metrocenter and the West Valley. That part of the MSA has experienced a few wins, but for the most part still has quite a ways to go before vacancy rates are anywhere close to equilibrium.
KR: There are some positive “pockets” such
as Tempe, but an overall snapshot still has the office market lingering above 20% vacancy with incentives remaining in place and rents fairly stagnant.
CW: The Phoenix office market as a whole, has
not recovered yet. But for a much clearer picture you need to break the office market down into the submarkets. Certain submarkets, like the Price Corridor area of Chandler, the vacancy rate has been reduced dramatically, but if you look at the Central Corridor of Phoenix, the vacancy rate is still over 20%. We are still a year away from speculated office projects being built. There is still too much empty space for lease to permit that from happening. The good news is there seems to be a great deal of office space projects that will be making decisions in the fall that will help reduce the vacancy rates. Another factor to consider that will affect the Phoenix office market is the State Farm Project in Tempe. This project is great news for the Phoenix real estate market, but once construction starts it will have exert pressure on both construction material prices, trade availability and labor which could delay the start of other build-to-suit or speculative office projects.
The amount of activity, however, that we’re seeing in Tempe and Chandler has increased substantially year over year. – Megan Creecy-Herman
24 | September-October 2013
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IIDA / Industrial Office Q: What is the current state of the Metro Phoenix industrial market?
MC: While tenants still remain cautious as they
continue to navigate a certain level of economic and legislative uncertainty at the national level, overall vacancy for the Phoenix industrial market was 11.9% at the end of the second quarter of 2013, down from 13.9% two years ago. The second quarter of 2013 was also the 13th consecutive quarter of positive absorption for the Phoenix industrial market which is another positive indicator. Also, while we continue to see big box distribution users looking to expand in or relocate to the Southwest Valley we are also seeing activity in the Southeast Valley from manufacturing and more high-tech users which demonstrates a healthy diversity in the tenant base.
KM: Spec building is active again. We seem
to be out of recovery mode and into expansion mode. Along with multi-family, industrial is a preferred product type for both debt and equity.
MM: Parkway doesn’t own any industrial
product, but we keep tabs on the market and industrial certainly recovered more quickly than
office. It has been great for Phoenix as a whole to see some of the huge blocks of space that groups like Amazon took down. Hopefully the pace of absorption can continue to keep up with the construction that is already underway in that sector.
KR: Overall, the industrial market has fared
much better than office. The sales activity has been very strong and leasing has been consistent. The large user activity will need to stay strong to fill all the large distribution being developed on the west side.
CW: One year ago, the Phoenix industrial
market was the only real estate sector that was doing well. Several large built-to-suit and speculative projects broke ground. It seemed we could not keep up with the demand. This spring that trend has reversed. One promenade industry real estate broker told me he had never seen this lack of activity before in his career. Everyone expects this to be a short-term effect but no one really has any concrete rational to why the activity has declined.
“
The good news is there seems to be a great deal of office space projects that will be making decisions in the fall that will help reduce the – Clay Wells vacancy rates.
Q: In what direction are values in Metro Phoenix commercial real estate moving, and why?
MC:
Values are sustained and still increasing in some instances and with cap rate compression and the diverse investor base we’ve seen in our market over the past 12 to 24 months this won’t change anytime soon. While more risk adverse investors who also require financing have been targeting stabilized assets, you have more entrepreneurial and well-capitalized investors who have been seeking value-add opportunities which yield a higher rate of return.
KM: Values for both office and industrial have
been improving. On the acquisitions side, we have seen a slight slowdown recently as interest rates have risen and cap rates have not yet followed.
MM: Values are moving up, and fairly quickly
at that for core-quality properties. Savvy buyers know that Phoenix is a high beta market, and now that the key metrics have all turned in the right direction, people increasingly want to add it to their portfolios. Additionally, interest rates remain at historic lows, which not only makes levered returns more attractive, it makes real estate look more attractive in general compared to other alternatives.
26 | September-October 2013
KR: For the most part values have been
moving up. This is true predominantly for Class A product. The main driver is availability of institutional grade buildings and the remaining conduit of capital desirous of real estate.
CW: I think as a whole, Phoenix commercial real
estate values are increasing. Lease rates for certain types of real estate are increasing quicker than others. You are seeing investor real estate purchases in the Phoenix market again and we have not seen that type of activity for several years. But to get a true feeling for how values are doing in the Phoenix market you have to break it down by industry type and submarkets. For example, there is a demand for Class A office space in certain sub-markets, but if you have a Class B or C space in the same area you are not be seeing any activity. If you have a multi-tenant industrial space you are seeing clients who are interested in 100,000 to 120,000 SF, but if you have a 500,000 SF single tenant building that activity is much less at this time.
27
IIDA / Industrial Office
“
Most markets are driven by small users, not large users. The return of the home building should help the smaller warehouse/distribution users grow and become - Kurt Rosene more active. MC: With regards to industrial trends,
Q: What trends are coming to the industry?
a recent hot topic nationally has been clear heights. While some select users require clear heights of 40 feet or above in a design build scenario, speculative warehouse buildings with clear heights above 32 feet are still not the industry standard, even in the Inland Empire. Considering that tenants need to adapt to higher clear heights with different aisle widths, new forklifts, etc., clear heights above 32 feet on speculative buildings are a trend that may become the industry standard but it may take more time to reach Phoenix than some might think.
KM: Overall, the market is trending
nicely. Using NAIOP as a barometer, going to an event in 2009, 2010 or 2011 was akin to going to a funeral. In 2012 and this year, our events are a lot more upbeat; attendance is up, event sponsorship is improving and it’s fun to be in the room again. Our membership is growing again and corporate sponsorship is up 17% in 2013 from 2012. It feels good to be in the industry; we are a resilient bunch. Lenders that had blacklisted our market are now back and doing deals.
MM: One of the trends that we have
been most encouraged to see thus far in this cycle has been the appetite for urban infill locations. We all experienced the sprawl that took place during the last cycle, and as an alternative it is nice to see so much property being purchased and redeveloped within the urban core. Some of the sizable projects that have occurred in Tempe, Downtown Phoenix, the Camelback Corridor, and along Scottsdale Road have been particularly attractive, and have met the market.
“
As a company focused on the sunbelt states, it is also encouraging to see the trend of companies and people migrating again to places like Arizona, Texas, Georgia, North Carolina and Florida. This should only spell good things for the Valley longterm to the extent we continue to seek to diversify our base of jobs, and offer a probusiness, lower-cost alternative.
KR: I hope that it is the return of the
smaller tenant. Most markets are driven by small users, not large users. The return of home building should help the smaller warehouse/distribution users grow and become more active. A recovering economy should also help the small office user finally have confidence to grow. The return of growth in the small tenant market is vital to a full recovery.
CW: That’s an interesting question. If I
knew all the answers, I would have already made a fortune in real estate. With regard to construction, there are going to be continuing upward pressures on cost due to materials and labor. I think we are very close to being over built in the multi family market in certain parts of the Valley. But the big trend I see is a recurring one: Metro Phoenix can not go back to being dependent on real estate to drive the regional economy; it’s just not substantial for the long term.
Lenders that had blacklisted our market are now back and doing deals. – Keaton Merrell
28 | September-October 2013
29
IIDA BIg Deals
T
he market is on the upswing again, and there’s plenty of action for the Valley’s brokerage firms. Beginning with this issue, AZRE will feature the Top 5 sales and Top 5 notable leases for a period of 60 days (one month out from publication). Additionally, each issue will focus on trends in a specific property type. We kick off this series with the industrial market. Next issue: Land. Supplying us with the information is Cassidy & Turley Arizona and CoStar (sales) and Colliers International and CoStar (leases). Top 5 Notable Leases (June 1-July 31, 2013) Source: Colliers International and CoStar research
Industrial / Leases
2. 2512 E. Magnolia St., Phoenix 58,890 SF Landlord: David Johnson Tenant: Draft Horse Holdings Landlord Broker: Matthew McDougall, Lee & Associates Daniel Calihan
Tricia Gumulka
1. Park 75 West
7102 W. Roosevelt St., Phoenix 153,600 SF Landlord: First Industrial Tenant: Summit Warehouse & Logistics Landlord Broker: Daniel Calihan, CBRE Tenant Brokers: Robert Stephens and Tricia Gumulka, Newmark Grubb Knight Frank 30 | September-October 2013
Robert Stephens
3. Chaparral Business Center, Scottsdale Landlord: Salt River Pima Maricopa Indian Community Tenant: Edgenuity, Inc. Landlord Brokers: Jerry Roberts, Corey Hawley and Pat Boyle, CBRE Tenant Broker: Kevin Lange, Keyser 4. Tolleson Commerce Park II, Tolleson 48,158 SF Landlord: CBRE Properties/Chambers Street Properties Tenant: Weber Distribution Landlord Broker: Daniel Calihan, CBRE 5. 3330 W. Cocopah St., Phoenix 41,000 SF Landlord: Harrison Properties Tenant: Preferred Packaging and Container Landlord Brokers: Jeff Dalton, James Harrison and Natalie Dalton, Harrison Properties
leases 2. Park Place Central, Chandler
68,867 SF Landlord: Douglas Allred Company Tenant: Infusionsoft Landlord Brokers: Mark Krison, Brad Anderson and Bryan Taute, CBRE Tenant Broker: Eric Jones, Commercial Properties Inc.
Office / Leases
3. Viad Corporate Center, Phoenix
50,119 SF Landlord: McCarthy Cook Jeff Wentworth Tenant: Dickinson Wright, PLLC Landlord Brokers: John Bonnell and Brett Abramson, Jones Lang LaSalle Tenant Brokers: Andrew Cheney and Craig Coppola, Lee & Associates
4. Henkel Corporate Center, Scottsdale Sean Spellman
1. Raintree Corporate Center
15111 N. Pima Rd., Scottsdale 135,847 SF Landlord: CW Capital Asset Management Pat Williams Tenant: Vanguard Landlord BrokerS: Jeffrey Wentworth and Sean Spellman, Cassidy Turley Tenant Broker: Pat Williams, Jones Lang LaSalle
Retail / Leases
50,000 SF Landlord: Henkel Tenant: GPS Insight Landlord Brokers: John Bonnell, Andrew Medley and Chris Corney, Jones Lang LaSalle Tenant Broker: Matthew Coxhead, Cushman & Wakefield
5. Scottsdale Northsight, Scottsdale
18,038 SF Landlord: New York Life Tenant: Amerifirst Financial Landlord Brokers: Jeffrey Wentworth and Sean Spellman, Cassidy Turley Tenant Broker: Bill Blake, Lee & Associates
2. Phoenix West Plaza, Phoenix
22,000 SF Landlord: Aetna Realty Tenant: Blast Fitness Landlord Brokers: Lizette Fonseca and Bill Bones, De Rito Partners
3. Metro Gateway, Phoenix Brian Polachek
21,000 SF Landlord: Metro Gateway LLC Tenant: Planet Fitness Landlord Brokers: Adrienne Bryant and Carl Jones, De Rito Partners Tenant Brokers: Chris Gerow and Gabriel Ortega, NAI Horizon
4. Ahwatukee Foothills Towne Center, Phoenix Scott Ellsworth
1. Centerpoint on Mill
730 S. Mill Ave., Tempe 37,645 SF Landlord: DMB Associates Tenant: AMC Theatres Landlord Brokers: Brian Polachek and Scott Ellsworth, SRS Real Estate Partners
18,000 SF Landlord: DDR Corp. Tenant: Vincent’s Baquet Hall Landlord Brokers: Lizette Fonseca and Bill Bones, De Rito Partners
5. Ahwatukee Foothills Towne Center, Phoenix
13,911 SF Landlord: DDR Corp. Tenant: Marshalls Landlord Brokers: Matt Milinovich and Kalen Rickard, Strategic Retail Group Tenant Broker: Greg Laing, Phoenix Commercial Advisors 31
BIg IIDADeals
Top 5 Sales of an individual property (June 1-July 31, 2013) Source: Cassidy Turley Arizona and CoStar research
Industrial / sales
2. ASM America HQ, Phoenix 130,282 SF; $19,750,000 Buyer: Artis Real Estate Investment Trust Seller: Robert F. Caldwell Listing Brokers: Barry Gabel, Mindy Korth and Chris Marchildon, CBRE Tony Lydon
Mark Detmer
Marc Hertzberg
Bo Mills
1. Estrella Logistics Center
563 S. 63rd Ave., Phoenix 593,600 SF; $27,899,200 Buyer: Liberty Property Trust Seller: Seefried Industrial Properties Listing Brokers: Tony Lydon and Marc Hertzberg, Jones Lang LaSalle Buyer’s Brokers: Mark Detmer and Bo Mills, Jones Lang LaSalle
Multi-Family / sales
4. Arizona School Furnishings, Glendale 78,682 SF; $4,500,000 Buyer: Barron Lighting Group Seller: Bixby Land Company Listing Brokers: Lou Finocchiaro, Tracy Cartledge, Steve Lindley and Bob Buckley, Cassidy Turley Arizona Buyer’s Broker: Jason Malcolm, CRESA 5. Building 7, Chandler 49,984 SF; $4,100,000 Buyer: Nature And Culture International Seller: Dalfen America Corp. Listing Broker: Mike Parker, CBRE Buyer’s Broker: Robert Stephens, Newmark Grubb Knight Frank
2. Pavilions on Central, Phoenix 293,028 SF; $46,900,000 Buyer: Crow Holdings Seller: Gray Development Group Listing Brokers: Tyler Anderson, Sean Cunnigham and Asher Gunter, CBRE Tyler Anderson
Asher Gunter
1. Camellero & Indian Bend Apartments
7979 E. Camelback Rd., Scottsdale 622,606 SF; $61,525,000 Buyer: Priderock Capital Partners Seller: Equity Residential Listing Brokers: Tyler Anderson, Sean Cunningham and Asher Gunter, CBRE 32 | September-October 2013
3. Cold Storage Warehouse, Glendale 105,904 SF; $9,213,000 Buyer: WAM Development Group Seller: United Insulated Structures Corp. Listing and Buyer’s Broker: Marc Bonilla, Colliers International
Sean Cunningham
3. Arcadia Cove, Phoenix 379,500 SF; $40,725,000 Buyer: Bascom Arizona Ventures Seller: BRE Properties Listing and Buyer’s Brokers: Cliff David and Steven Gebing, Marcus & Millichap 4. Villa Pallavicini, Chandler 288,702 SF; $37,500,000 Buyer: Alliance Residential Seller: Gardner Real Estate Listing Brokers: Cliff David and Steven Gebing, Marcus & Millichap 5. Painted Trails, Gilbert 176,135 SF; $25,750,000 Buyer: RK Properties Seller: Wasatch Property Management Listing Brokers: Alon Schnitzer, Jon Koberiowski, Rue Bax and Doug Lazovick, ORION Investment Real Estate
sales
Office / sales
2. US Airways Group, Tempe 225,000 SF; $41,765,000 Buyer: Parkway Properties Seller: Carey REIT II Jim Fijan
Gail LUBlin
1. North Scottsdale Corporate Phase 1
18500 N. Allied Way, Phoenix 152,162 SF; $47,600,000 Buyer: Bruce Karsh Seller: Connecticut Municipal Employees Retirement System Listing Broker: Jim Fijan, CBRE Buyer’s Broker: Gail Lubin, Signature Real Estate Services
Retail / sales
Greg Valladao
10105-10155 E. Via Linda, Scottsdale 118,730 SF; $21,250,000 Buyer: Whitestone REIT Seller: Rassier Properties Listing Brokers: Cliff Johnston, Cassidy Turley Arizona; Greg Valladao, Cushman & Wakefield
4. Mesquite Corporate Center, Scottsdale 79,537 SF; $15,250,000 Buyer: Waitt Company Seller: DPC Development Company Listing Brokers: Barry Gabel, Chris Marchildon and Mindy Korth, CBRE 5. Camelback Community Bank Building, Phoenix 104,618 SF; $14,850,000 Buyer: Fountainhead Realty Advisors Seller: Connecticut Municipal Employees Retirement System Listing Brokers: Chris Latvaaho, Cushman & Wakefield
2. Gilbert Fiesta Center, Gilbert 44,224 SF; $10,800,000 Buyer: A&C Properties Seller: KA Phoenix, LLC Cliff Johnston
1. The Mercado at Scottsdale Ranch
3. Lifeprint Health Center, Phoenix 81,875 SF; $20,500,000 Buyer: Talia Jevan Properties Seller: Winthrop Realty Trust Listing Brokers: Eric Wichterman, Mike Coover and Tom Weinhold, Cassidy Turley Arizona Buyer’s Broker: Bob Broyles, Colliers International
3. Walgreen’s, Goodyear 14,820 SF; $9,094,000 Buyer: Richard A. & Deborah Bocci Seller: Kitchell Development Listing Broker: Jamie Medress, Marcus & Millichap Buyer’s Broker: Kirk Trammell, Marcus & Millichap 4. L.A. Fitness, Mesa 45,000 SF; $8,686,000 Buyer: Brent Berge Seller: L.A. Fitness International Buyer’s Broker: Walt Brown, Diversified Partners 5. CVS Fulton Ranch, Chandler 13,013 SF; $7,913,500 Buyer: Kaneohe Ranch Management Seller: Potomac Development Corp. Listing Brokers: Case Abusharqh, Jacob Abusharqh and Jeff Bracco, Sperry Van Ness Buyer’s Broker: Bradley Richardson, Stan Johnson Company 33
RE LAW By Peter Madrid
Contract Complexity Navigating the legal side of closing a deal
T
he commercial real estate market is moving again, but some are finding that movement cautious. Recent transactions have generally related to adaptive re-use situations, particular circumstances where end users are part of the deal, purchase, sale or refinancing of distressed properties, purchase of distressed loan paper secured by CRE, and occasional leases or lease renewals. The legal side of the market, says Don Miner, director at Fennemore Craig, has been characterized by parties being more cautious about the nature, timing and expense of legal work performed. Discussion up front as to timing, fees and expenses is more common, he says. Performance deadlines have become more important to keep parties informed and to keep the transaction on a mutually acceptable track. “The model has not really changed much insofar as streamlining is concerned,” adds Chris Raddetz, also a director at Fennemore Craig. “If anything, developers are proceeding cautiously and taking more time in evaluating opportunities. In many cases, lenders financing new developments are more involved and subjecting any potential investment to greater scrutiny. It is not uncommon for buyers to ask for — and sellers to provide — longer due diligence periods, more representations
34 | September-October 2013
and warranties, and greater disclosure.” A large part of commercial real estate law focuses on contracts that can be complex and lengthy by nature. With construction case law becoming ever more complex, and new technologies, such as building information modeling, becoming more widely used, construction contracts must address a growing number of issues, says Alan Ritterband, a partner at Ballard Spahr. “I find that the way many developers address the need to get started before negotiations on a construction contract have concluded is to enter into a brief contract that permits the contractor to commence work while the negotiations on the comprehensive contract proceed,” Ritterband says. “For example, an initial contract might contain the agreement of the owner to pay the contractor an amount for site work and foundation work. It might also contain the most important core provisions, such as insurance requirements. “The owner would be permitted to terminate the contract as long as it paid the contractor for the work done before termination. This arrangement is not ideal, but it limits the risk for both parties. The contractor is assured it will be paid an agreed amount for the initial work and the owner retains the leverage of being able to terminate without penalty and bring in a new contractor.”
Re Law
With the real estate market picking up some steam, there is a tendency to rush into new deals, hoping to take early advantage of the ascending market, says Sharon Shively, an attorney at Sacks Tierney. “Sometimes, this means submitting proposals, offers and like before they have been reviewed by counsel,” Shively says. “Consequently, we have been seeing contracts with serious mistakes — such as the wrong property description. “As attorneys, we acknowledge the need for speed, but there is no substitute for making sound business decisions and ‘getting it right.’ In some cases, problems in the documentation can be later remedied by well-meaning parties; more common are problematical deals where, in retrospect, getting it ‘right’ would have been a good idea. Thus, whether it is an LOI, purchase contract, loan transaction or construction contract or subcontract, it is good business to have a knowledgeable attorney prepare (or at least review) the documentation before pressing forward.” The days of easy commercial real estate transactions ended with the market crash in the late 80s, says Michael Tiffany, attorney at law at Tiffany & Bosco. Since then, most significant deals have generally been difficult to negotiate, document, hold together, and close. The sources of capital, such as investment bankers, have much more control over the acquisition, financing, development, and operation of the projects. This has resulted in a greater complexity in the transactions and documents, primarily between the developer and capital source. Funding for projects often come from three sources. The developer is expected to have “some skin in the game,” Tiffany says, with the source of additional capital usually providing the bulk of the equity. There is James Gibson often a lender, which could be a bank or an affiliate of the source of capital. Except for smaller transactions, the organization and contract documents have been complex and the due diligence expensive and involved. Other than speculators, the investors, developers and institutional sources of funds usually do not want to take risks other than what will happen with the market. They want assurances they will receive all of DON MINER the needed entitlements and enough time to do that. The lenders will also require this. Contracts for complex transactions can usually be divided into multiple elements each of which is less complex. The challenge is to fully understand the business agreement of the parties before the document preparation begins, Tiffany adds. Experienced real estate attorneys will have a library of forms from
Sharon Shively
which they can draw. Also, the attorney for the source of capital may mandate the form of documents, probably from a similar transaction. In any event, the form must be Chris Raddatz tailored to the specific transaction. The “one contract fits all” approach doesn’t work. Experienced real estate attorneys will make the process easier, quicker, and less expensive. “Almost everyone I know in real estate and construction had at least one project that burned them during the recession,” Shively says. “Many times, those were good projects Alan Ritterband with well-intentioned partners; some were undone by external forces, while others could have been saved if, at pivotal stages in the deal, everyone had taken a deep breath and focused more sharply on the details and the potential threats. “While I continue to see a push for speed in getting deals done, the painful memories of the recent past are causing many of my clients to exercise more caution, and to place Michael Tiffany a higher priority on proper documentation. I have noticed that, to help speed up the process without taking too many risks, a larger number of terms are being discussed between the parties earlier in the process, resulting in longer and more comprehensive term sheets.” If anything, today’s deals are becoming more complicated as buyers and sellers maneuver for additional protections. During the recent economic downturn, there were ample examples of buyers who were unable to perform, and sellers who faced the pressures of declining values and carrying costs. “As a result, parties are taking more cautious approaches to their contracts,” says James Gibson, attorney of counsel at Squire Sanders. “Buyers are seeking more contingencies for entitlements and financing approvals, and structuring deals to minimize the upfront capital needed to close. “On the flip side, sellers remain skeptical of buyers,” he says. “Many sellers are insisting on benchmarks for entitlements, and retaining review and approval rights, to ensure that buyers are proceeding diligently and on schedule. These additional protections tend to make for more complicated business terms, and in turn, more complex contracts.” Despite the added complexities, the contract process has become more streamlined in some ways. Advances in technology, including on-line data and mapping tools, are helping to identify issues and verify information much earlier in the process. “Buyers and sellers are able to save significant time that otherwise would be spent drafting around alternative scenarios, allowing them to focus on the issues that really matter,” Gibson says.
35
RE LAW By Peter Madrid
The Message Is In The Medium
Commercial real estate practice groups embracing social media as a source and outlet of gathering, disseminating relevant news
A
s with other businesses, social media is becoming a big part of the commercial real estate industry. Construction companies follow industry groups on Twitter. Brokerage firms announce their deals on their Facebook pages and on LinkedIn. One segment of the industry that is finding unique ways to embrace social media is commercial real estate practice groups at law firms. More and more, individuals are using social media as a primary source to gather news, see market trends and share information that relates to business. Snell & Wilmer’s Real Estate Litigation Group recently launched the Real Estate Litigation Blog and Twitter page. “Our goal is to offer timely and important information to the public, and engage commercial actors in a discussion regarding current developments in the law of real estate,” says Snell & Wilmer’s
Andy Kvesic
Jordan Rose
BEN REEEVES
Matt Fischer
36 | September-October 2013
Matt Fischer. “We intend our blog to be a medium for posting relevant articles, and we invite our readers to comment on all posts. Currently, we disseminate our posts to subscribers via email, and we use our Twitter account, @RE_Lit, to share the articles with a larger audience who might not yet have seen our blog.” By extending the practice group’s presence into the social media arena, its goal, says Benjamin Reeves, is to maintain the firm’s prominent position within the legal industry on all real estate matters and to engage interested followers in a discussion of relevant topics. “Now that we’ve successfully launched the blog and have a steady stream of original content, we want to grow the blog into a credible, reliable and well-regarded source for current developments in real estate law,” Reeves says. At Rose Law Group, the firm is so committed to the information sharing that goes on with social media that about three years ago it formed another company, Rose Law Group Reporter, and hired a former journalist to provide online content, says President and Founder Jordan Rose. “We provide information that will be helpful to our clients’ business (news about the market, real estate deals, politics and local government actions),” Rose says. “RLGR is now a daily publication that attracts 5,000 readers a week. We further committed in forming a partnership with BREW last year to help enhance the online presence.” A few months ago it formed a partnership with Belfiore Real Estate Consulting where just before lunch each day it blasts ‘The Dealmaker,’ the top five CRE stories . Undeniably, social media is here to stay. In order to stay relevant, Fischer says, it is inevitable that the legal world will need to embrace the technology and use it as a tool to improve the practice of law. Snell &
Wilmer launched the Real Estate Litigation Blog to remain at the forefront, and the hope that the blog becomes the “go-to” source for news, trends and analyses of real estate law. All social media networks allow users to share information with unprecedented speed and ease, whether it’s Facebook, LinkedIn or Twitter. “For our practice group, we decided that we would focus on blogging,” Snell & Wilmer’s Reeves says. “We chose blogging because we thought it provided the best medium to produce new content and accomplish its dissemination. The blog provides the freedom to write as much or little as we want, about whatever topic we want, and structure the page however we want. Just because we focus on blogging does not mean we ignore the other main social media networks.” Real estate litigation can be extremely complex and has had its fair share of challenges during the recent economic downturn. In good times or bad, the industry is always evolving and developing. Currently, Reeves says, blogging seems to be the most effective medium for the Snell & Wilmer Real Estate Litigation practice group to comment on these developments to a broad audience. “Blogging allows our attorneys to write on topics of their choosing, without limits on characters or word count, link to important references, and to share their substantive analyses in a timely but easily digestible manner,” he says. Says Andy Kvesic, a real estate litigant at Ryley Carlock & Applewhite: “We utilize social media such as Facebook and LinkedIn to get the word out to our clients about issues that are important to their line of business. Through these online mediums, we help our clients stay ahead of the curve on legal developments and industry trends.”
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37
Construction Management Association of America By Peter Madrid
MANAGING
BY EXAMPLE CMAA’s vision is to be the recognized authority in managing the development and construction of projects
T
he mission of the Construction Management Association of America is to promote and enhance leadership, professional development and excellence in managing the design and construction of projects and programs. Its vision is to be the recognized authority in managing the development and construction of projects and programs. How does a construction manager guide a construction project to success, at the same time meeting the time, budget, and quality goals of the owner? “A successful construction project results from the combined efforts of many different companies and agencies, each with its own agendas, brought together because of their specific talents or price of their service,” says Rob Hildreth, a CMAA Arizona member and CCM at Vanir Construction This project team, Hildreth says, consists of owners, designers, contractors, regulators, and inspectors. “Add interested stakeholders and user groups, and you have a whole bunch of folks with self-serving agendas but they share a common goal,” Hildreth says. “Each entity is motivated differently.” The solution for success begins and ends with nurturing and maintaining good relationships and understanding the people that make up the project team. The construction manager always has his or her sights set on achieving a successful project, but must always be sensitive to the relationships among team members. “They must achieve the team goal while helping individuals meet needs,” Hildreth adds. “The construction manager must understand their motivations and help them succeed. Secondly, without a shared vision of project success, the self-interest of the parties will take over. “A fully developed partnership helps every stakeholder succeed financially and professionally. A successful CM manages the people, and keeps them all pulling in the same direction.” In its attempt to promote this leadership, CMAA Arizona provides is members with professional development. It does so with activites such as monthly breakfast events, education events and CCM certification. Through CMAA National’s Professional Development Department, construction managers are provided with the industry’s most competent source for professional education and training relating to their chosen profession.
Education programs include:
The Professional Construction Management Course: This course will benefit anyone seeking to acquire sound basic CM knowledge, as well as more experienced professionals seeking a fresher, continuing education or effective preparation for the Certified Construction Manager examination. Construction Manager in Training (CMIT) Program: Looking to get your foot in the door in this fast paced and challenging industry? A connection to the profession and the path leading to the CCM is the driving purpose of CMAA’s fast growing CMIT program. Enter at or near graduation as you begin your career. Online Learning Center: Discover CMAA’s catalogue of flexible computer-based education tools that provide CM/PMs the knowledge needed to advance at every stage of their careers.
38 | September-October 2013
Q&A MELANIE McCARGAR
President of CMAA Arizona HOW DID CMAA ARIZONA MEMBERS WEATHER THE GREAT RECESSION? Our members demonstrate that extremely valuable set of characteristics that is essential to survival during rough times: flexibility and diversity. They work in both public and private markets, delivering vertical and horizontal projects of every type from municipal to military to commercial to healthcare to alternative energy and emerging technologies. This group was the first to excel at CMAR, Design-Build, LEED, and BIM when they hit the scenes and they continue to innovate and change with the times, taking on Integrated Project Delivery, CM/ GC, and P3 methods.
BESIDES FINANCIAL ISSUES, WHAT ARE OTHER ISSUES AND CHALLENGES CMAA ARIZONA MEMBERS FACE? This is the era of “doing more with less.” Our construction project owners are trying to do it, which means fewer jobs for many of us in the industry. Member firms are trying to do it, which means letting some employees go and asking the rest to fill in the gaps and manage greater workloads than ever before. One of the places where this particular rubber hits the road is the space in which many professionals used to maintain their industry relationships, participate in charity events, and attend networking and training programs. Viewed as discretionary, these activities have simply been cut from the docket to make room for billable tasks instead. This affects our Chapter in two opposing ways: 1) industry members must be much more selective when choosing where to spend time out of the office; and 2) we need to develop more compelling events and advantages to offer the industry, and with the assistance of fewer volunteer hours than ever. When it comes to the programs we want to roll
out at CMAA-AZ to grow the chapter and better serve our audience, this conundrum has definitely created that challenge of “champagne tastes on a beer budget.” (Don’t get me wrong — we love beer.) How to do more with less is the question that plagues us every day. Even more troublesome, trying to answer this question without sending our volunteers running for the hills is what keeps me up at night.
AS PRESIDENT OF CMAA ARIZONA, WHAT ARE YOUR GOALS FOR THE CHAPTER? Looking back on the roots of our local organization, I am humbled at how much we have accomplished. We have diversified our board, implemented new technology for marketing and event management efforts, and created a program calendar that honors members’ favorite annual events and also reflects timely topics and new trends in the market. But, for this organization to keep serving our members, we need to support and reward our valuable infrastructure of volunteers. We have big dreams for the chapter and big dreams require a significant amount of energy to become a reality. The sad fact is that burn-out is extremely common in non-profit organizations (to the extent that it can feel unavoidable), but our team includes truly amazing people and I am dedicated to helping them stay fired-up and in the game. My main goal for CMAAAZ is to make board participation less burden and more benefit. Whether this means more helping hands on committees, different event formats, better training tools, or more opportunities for growth, exposure, and networking; if it will help the team, that’s where we need to go.
WE UNDERSTAND YOU WON CMAA NATIONAL CHAPTER OF THE YEAR AWARD AT THE AT 2012 NATIONAL CONFERENCE. HOW PROUD ARE YOU OF THAT HONOR? Personally, receiving this award is just such a big deal. We are a volunteerrun organization that competes for membership, participation, and attendance for our professional development and charity programs with much larger industry organizations that are often chaired by paid executive positions and administrative teams. CMAA-AZ’s board and committee members juggle responsibilities with the very pressing daily requirements of their regular paid jobs. These people work hard every month to deliver programs and opportunities for our members and guests that will help them reach the next level in their own careers. We do so because we believe it’s important, but this level of commitment can be a sacrifice. There are so many groups out there vying for our time, so saying “yes” to this often means saying “no” to something else. That’s why national recognition is
such an honor; because it is validation of this labor of love and the dedication of our awesome supporters. Melanie McCargar is Owner and President of Gatekeeper Marketing. She has served Arizona’s A/E/C firms for 12 years, including GCs, PM/CMs, and consultants. She is motivated by a passion for promoting the people, businesses, and concepts she believes in and feels blessed to be a part of this industry every day. 39
Arizona multihousing association By Peter Madrid
MultiFamily Muscle Changing demographics and an improving economy are keeping the cycle on the right path
Broadstone Camelback photo/ Lillian Reid 40 | September-October 2013
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year ago, you couldn’t drive around the Valley without bumping into a construction site where a new multi-family project was going up. One year later some of those upscale apartment complexes have opened their doors or are near completion. In July, Phoenix-based Alliance Residential opened the first of its three high-profile apartment projects — the 270-unit Broadstone Camelback in Phoenix. Two additional communites, Broadstone Lincoln (264 units) and Broadstone Waterfront (259 units), are well underway in Scottsdale. Not much has changed in the past year regarding the perception of the multi-family market, says Ian Swiergol, Alliance’s Managing Director for the Southwest. In fact, he adds,the positive perceptions from last year have been further bolstered by improving market fundamentals and market performance over the past 12 months. “The high-profile properties already delivered in the current development cycle are being widely accepted by the market,” Swiergol says. “That said, today’s renters are much more discerning with regard to where they choose to live — they consider all aspects of the community in their decision-making process (location and proximity to employment/restaurants/entertainment, unit finishes and the property amenities). The duration of any development cycle is tied to overall market economic conditions. As the national and Metro Phoenix economies continue to recover, we believe multi-family is well-positioned to continue to exhibit strong performance.” Just how hot is Arizona’s multi-family market on a national scale? In helping renters find their ideal place to live, Apartment Guide compiled a list of the Top 10 metros in America to identify where rental costs are lowest yet provide top amenities. Tulsa, Okla., was No. 1, followed by Tucson at No. 2; Phoenix was No. 7. “The health of the multi-family and singlefamily markets are similar in many aspects, and both are tied to the health of the economy — their performances do not oppose each other,” Swiegol says. “Our goal as a company has always been to deliver quality projects in excellent locations that are not dependent on short-term timelines.” The high-end properties being developed are now coming to the market. Nearing completion is Roosevelt Point, a 326-unit project in Downtown Phoenix. Also enjoying the multi-family boom are P.B. Bell Companies and Mark-Taylor Residential. P.B. Bell is well into a healthy building cycle, says company President R. Chapin Bell. The Scottsdale firm has properties going up in ; ;
AMA
Rendering of Scottsdale Crossroads, a P.B. Bell Companies’ project.
Gilbert, Chandler and North Scottsdale. “Based on the demographic trends supporting the multi-family market, the improving economy, the pace of the development pipeline and the unit absorption projections, we feel good about the strength and future of the multi-family market in the Arizona market,” he says. “We expect the market to remain strong for another 4 plus years. We do not develop outside of Arizona, but many of the trends that are having a positive impact on us here are also benefiting the rest of the country.” Chris Brozina, Vice President | Mark-Taylor Development, says the outlook has remained pretty similar, with a strong new development Chapin Bell pipeline planned over the next three years, but a fairly tepid number of deliveries to this point. “The most notable feature of this current development cycle is the concentration of high density, mid-rise and high-rise developments being planned, which is far different than previous cycles where suburban, garden style designs dominated the pipeline,” Brozin says. Ian Swiergol “Mark-Taylor is very much continuing to participate in the development. We just fully stabilized and completed construction on two projects and have five communities currently under construction.” How long does he expect the cycle to last? “I’m not exactly sure how to define ‘it lasting;’ however, I think the amount of construction we are currently seeing is very close to the appropriate amount — supply equaling demand. If the pace 42 | September-October 2013
remained constant and the Valley continued to grow jobs at the current pace, which also seems conservatively possible, this could be a long-term trend.” Mark-Taylor has secured the land to build consistently for a few years. All of its construction to this point has occurred in Metro Phoenix, but it just broke ground in Oro Valley. “They’ve been very welcoming to us there and we look forward to getting involved in that new market for us,” Brozina says. “We will remain dedicated to the Arizona market and do not have plans to venture out of it.” Has a recovering housing market had any influence on an aggressive development schedule? “As a result of the continued improvement and health within the multi-family market, the recovering housing sector has not had a major influence on our development schedule,” Bell says. “A recovering housing market can help the multi-family sector as increasing housing prices has a negative effect on housing affordability and renters’ ability to buy a new home. Rising interests will also impact housing affordability. One negative of the improving housing sector is the impact this can have on construction costs.” Adds Brozina: “I wouldn’t characterize our development schedule to this point as ‘aggressive,’ but more as ‘normal.’ The recovering housing market is a good sign for everyone and the economy as a whole and we welcome it. Single family housing obviously has some relationship with multi-family housing; however, our motivation to build is based on offering the renter a safe, highly-amenitized and well-appointed place to live. In that sense we are targeting the discretionary renter, who may be choosing to rent versus own a home, even in an improved housing market.”
AMA: Members Mike Rochon
Owner Distinctive Carpets, Tucson
Amy Davidson
Ariz. Manager of Indirect Sales
Cox Communications
Kerry McWenie
Sales Representative Cactus Asphalt
Gary Sherwood
Director of Marketing ADANAC
Years at Distinctive Carpets: 24 Years at Cox: 17 Years at Cactus: 1½ Years at ADANAC: 2 Years in AMA: 24 Years in AMA: 10+ Years in AMA: 1½ Years in AMA:
Q: Professionally, what does Q: Professionally, what Q: Professionally, what does it Q: Professionally, what does it mean does it mean to you to be a member of AMA?
A: Being a member of AMA means allowing me to form and maintain business relationships in the multihousing market. Q: What about AMA do you
find to be the most rewarding?
A: I find the AMA events
invaluable because I can cultivate more one-on-one relationships outside of a business setting.
Q: Was there an “aha
moment” when you realized being a member was invaluable?
A: Before I became an AMA member, I was on a sales call to a property management company and they denied an interview with me because I was not an AMA member. They told me not to come back until I was. That is when I realized how important AMA was in the multi-family housing industry.
it mean to you to be a member of AMA?
mean to you to be a member of AMA?
A: As a restoration/renovation
Q: What about AMA do you find
company, the AMA represents a large segment of the commercial market that we target. It is widely known and has a great presence in the community both in their charitable and legislative causes. When I travel to management companies or to property owners, I consistently talk about the benefits of belonging to the AMA whether they are a member or not.
A: Cox has been a member of the AMA longer than most of us can remember. In Arizona, apartment communities represent a significant portion of both our residential and business customers. Professionally the AMA provides both Cox and I the opportunity to support, learn, and develop business solutions directly with our industry partners.
A: Being a member of AMA has allowed me the opportunity to facilitate business relationships with fellow professionals throughout the organization. Additionally, AMA provides an environment for events, trade shows and educational meetings that are both fun and positive and allow for members to create personal relationships.
Q: What about AMA do you find to be the most rewarding?
A: The yearly state conference
A: Through networking,
has been my most rewarding experience with AMA. I had the opportunity not only to reconnect with existing customers, but also meet many new managers I hope to have the opportunity to work with in the future. The culture at the AMA yearly conference is so positive and fun and has become one of my favorite yearly events in my work.
events, and other meetings, the AMA provides insight to the economic, legislative, and general business matters of the apartment industry, as well as, networking and learning that I would not get access to otherwise.
Q: Was there an “aha moment” when you realized being a member was invaluable?
A: Like many, my first year in the AMA I spent a lot of time observing. I immediately noticed that when AMA members came together, they were able to produce results. This theme has remained true in all of my years with the AMA; in recent months I can count several like the Big Hearts for Little Hands campaign, several legislative wins, AMA Career Fair and record-setting events.
to be the most rewarding?
Q: Was there an “aha moment”
when you realized being a member was invaluable?
A: The first event I attended with AMA was an evening mixer and, being new to the organization, I was nervous to attend and meet so many new people. The night, however, was very fun; all of the managers and vendors were so friendly and happy to see one another. I knew from that first event that AMA was not only an invaluable organization to be a part of, but a fun one as well.
to you to be a member of AMA?
Q: What about AMA do you find to be the most rewarding?
A: The relationship building on both sides of the membership, property owners/management companies as well as the associate members. It becomes a great networking tool not just for our business but for many other avenues of life. The events are another great opportunity to show case ADANAC’s services.
Q: Was there an “aha moment”
when you realized being a member was invaluable?
A: I think being a Platinum sponsor of the 2011 Perspectives & Projections Conference just four months into our membership and the visibility we received was a nice little lift. It became the impetus to continue to sponsor additional events and thus becoming one of just a handful of Platinum sponsors within the AMA. This led to participating in a number of committees and eventually a chair position on the membership committee. 43
AMA By Peter Madrid
ering t s Ma
& Managing
Roles expanding for property management firms as multi-family market continues its hot streak
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he signs are there: Demographic trends are favoring the multi-family industry and a current pipeline of new apartments in development will be easily absorbed. Is it safe to say property management companies are also benefitting from a strong market?
44 | September-October 2013
“Absolutely,” says Robert Hicks, Senior Vice President of Operations at Alliance Residential. “Both Alliance and the local multi-family industry are benefiting greatly from the uptick in delivery of highend product, as it appeals to the new type of resident we are increasingly seeing — the ‘renter by choice’ profile.
AMA
multi-family properties? “This demographic is looking for an upscale “As properties gently age, the importance of taking community in a great location that offers walkability care of current residents grows,” says Mark Schilling, and easy access to retail shopping and dining, coupled Senior VP Director of Operations for MEB. “Great with the expectation that their residence will offer customer service never goes out of fashion. Ongoing an amenity package and interior finishes that meet or training for all staff members to enable them to exceed what they would have in a single-family home,” understand and market the unique values of their Hicks says. “The upscale properties entering the market property is critical.” have been specifically designed to capitalize on this Robert Hicks And with a healthy economy, he says, the industry is pent-up demand.” seeing both occupancies and net effective rents rising. As property managers, the challenge is to meet those “The recession had a pruning effect, in that, some rental needs with quality product and exceptional owners lost properties,” Shilling says. “During the customer care, says Melanie Morrison, principal at MEB recession, very few communities were renovating and Management Services. making improvements. Today, many buyers see the “Our industry has come a long way since the days of opportunity for added value. As the market continues ‘mom and pop’ management of apartment communities to recover, we believe buyers will see strong demand with little training and questionable customer service,” Lesley Brice and rent growth.” Morrison says. “Today’s property managers must The new construction is just beginning; however, master new technologies and meet the expectations of based on what the industry is experiencing thus far, savvy renters. In addition to providing the ‘old school’ older properties are doing quite well since there is basics of quality housing, we strive to outperform sizable rent delta between new and older properties, our competitors through use of technology to market Brice says. apartments, communicate with our residents, and “There has been a lot of pent up demand for units reduce operating expenses for our clients.” as many emerging renters sat on the sidelines waiting Some key technological areas, Morrison Melanie Morrison for jobs to return,” she says. “Now that there is job says, include revenue management, reputation growth, we are seeing those first time renters leasing management, and social media. our older units due to their affordability. The key for “Our firm focuses on our purpose, which is to enrich us has always been to keep our older properties fresh the lives of our residents, our clients, and our fellow while being careful not to over improve so as to be in team members,” she says. “We find that by focusing direct competition with the new product.” on creating value for those groups, we have an edge on Property managers with older communities will our competition.” need to find ways to increase the value of those Because MC Residential owns and manages all of its Mark SChilling properties either through improved service to own properties, its end game is cash flow and return on residents or improvements to the product, Morrison investment, says Lesley Brice, partner and president. She says. Many investors are entering the market looking says MC Residential believes that the best way to achieve for “value add” opportunities. and outperform business plan benchmarks is through “We will see these older communities add intensively service-oriented management. value through better management and physical “Our teams are focused on providing the highest improvements,” she says. level of service to help our properties stand out,” she The industry still has a way to go to get to presays. “We have a department dedicated to service Debbie Willis recession levels in many markets, Brice says, but that focuses on resident retention and reputation on the short term “we are going to see some great management through electronic satisfaction surveys, improvement in rents.” live customer service support and continuous online The higher rents (or even the thought of the higher rents) has rating management.” In one form or another, says Debbie Willis, President and developers clamoring to construct new units. “Our pipeline in Phoenix alone is 6,000 units under construction Designated Broker at P.B. Bell Companies, the industry always benefits from new inventory regardless of whether or not it may and permitting activity is up 120% year over year according to be painful in the short term. “The main benefit as I see it is Hendricks-Berkadia,” Brice says. “This kind of growth may outpace rent growth over the long term,” Willis says. “Initially, we most our demand and cause rents to go flat again over the long term.” Adds Morrison: “The recession was a crazy ride for us. likely will see short term concessions in submarkets with large amounts of lease ups but their proforma rents will still drive rent Management providers saw good clients who bought during the height of the market lose their properties. When you really growth in the long term. “As new product comes on line with higher rents, the existing care about your clients and the market prevents you from product will in turn be able to increase their rents and will create saving their investments, it is a tough situation for a property a shift in demographics as people must seek housing more in line manager to experience. “The good news is that now many of those clients are buying again with their income. Knowing your resident demographics is going and are reaping the rewards of their experience and persistence. We to change is paramount to providing excellent customer service.” How is the number of new units being built affecting older think the next few years will be good for everyone.” 45
46 | September-October 2013
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Q&A
IIDA AMA By Peter Madrid
TOM SIMPLOT President / CEO
Q: The multi-family sector is
leading the economic recovery of Arizona’s commercial real estate industry. Has this helped your organization?
A: The AMA has grown along with the
recovery of the industry. As construction has resumed, challenges return, including new building codes, resistance to new development, and local politics. The AMA has increased our presence in all major cities across Arizona, and we work closely with elected officials and management to ensure a smooth, productive growth period over the next few years.
Q: Are there any submarkets or
niches within the industry that have benefitted from the hot multi-family sector?
A: Without a doubt the East Valley has
been the hot market in this recovery. Almost all new units are being built in Scottsdale, East Phoenix, Tempe, Chandler, Gilbert and Mesa. The recovery has not extended past Central Avenue, unless it is along the Metro Light Rail, and there are several new projects in the works along the light rail to capture that energy. The West Valley is at a standstill until apartment rates and occupancy start moving upward.
Q: What trends are you
currently seeing in the multifamily marketplace?
A: New development in the Metro
Phoenix market is trending in two directions: the under-30 crowd and seniors. New communities typically have
48 | September-October 2013
smaller units, but with much more high-end touches and common areas that recognize the way people socialize nowadays. Where tennis courts may have been popular 30 years ago, now people want comfortable communal spaces to connect online while being with others. Senior housing is the next big deal, and we see hundreds of new units in pre-construction mode in the north and east areas of the Valley.
Q: In the past the predominant
source of mortgage capital for stabilized multi-family rental communities came from government sponsored entities. Do you see that changing?
A: Government financing assistance will be
available as long as there is a need for new housing. Therefore, the answer is yes. We may hear a lot about the political process and that government financing is in jeopardy, but in the end, that is highly unlikely.
Q: Has there been any
legislation — either local or national — that has affected AMA and its members in the past year?
A: During the Great Recession the
private sector took great steps to prevent a backlash from local governments as the economy recovered. People outside the development community easily forget that just 20 years ago there were efforts
to create “growth boundaries” and there were efforts to enact impact fees that would dissuade new development. If the legislature had not taken progressive, preventative steps to preempt those efforts during the Recession, we would likely be facing much more resistance in our local areas. The two biggest pieces of legislation which passed this year also happened to be Gov. Brewer’s two main priorities: Transaction Privilege Tax (TPT) reform and Medicaid Expansion. Both directly impact the apartment industry and both will have long-lasting, positive impacts on our general economy. 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. A longtime resident of Phoenix, Simplot 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 president of the Maricopa County Board of Health, president of the Maricopa County Industrial Development Authority, 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.
2013
INSIDE A Community Voice AzTAP: Knowledge Sharing Community Plan: Providing the Tools Q&A: A New Kind of Urbanism Taking Hold
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Urban Land Institute Arizona By Peter Madrid
Talk Of The
Towns
The ULI Arizona District Council is the leading voice when it comes to discussing how our communities should grow
52 | September-October 2013
T
he mission of the Urban Land Institute Arizona District Council is pretty straight forward: It is the opportunity to come together to achieve a worthy goal and become partners in creating better places. “As a neutral convener — emphasis on ‘neutral’ — we provide a safe forum for fundamental discussion amongst public and private sector thoughtleaders regarding Arizona’s future,” says Executive Director Deb Sydenham. “We address legacy issues that challenge our communities day to day and year after year. “ULI’s unique ability to bring together disparate perspectives to strategize towards a common goal strengthens our community fabric for future generations
to build upon,” she says. “As a 76-yearold institute, ULI’s global resources, highcaliber human capital, and member-wide passion to foster healthy communities allow us to bring a powerful credibility to the table.” The foundational purpose of ULI as a neutral convener has never been more important than today, Sydenham says. ULI has vast resources available at the national level and the on-theground expertise in the local district council allows it to tackle timely and controversial land use and development issues through impactful programs. Those include: k AzTAP (Arizona Technical Assistance Panel); k Community Plan (a public officials educational curriculum).V
53
ULI
‘ULI has really done an excellent job increasing its involvement and program offerings related to Arizona’s real estate market. The annual forecast is very well attended, but the monthly events are also very relevant and provide both excellent content and the opportunity to meet industry leaders on a more informal basis. Clearly, the local ULI organization has put in a significant amount of time to create and develop a wide range of programs for the benefit of the CRE community.’ — Tyler Anderson, CBRE ‘ULI plays an essential role in any of our industries, opportunities and dilemmas. Virtually every organization draws lines in the sand in order to represent their constituencies and are either for or against a certain situation that will require them to take a stand. Everyone knows that ULI will not vote pro or con, but try to assemble the forces on each side in a meaningful dialogue in order to shed impartial light on the subject at hand.’ — Pete Bolton Newmark Grubb Knight Frank
“We are fast becoming the ‘go-to’ organization in providing guidance and thought-leadership across local, regional, and statewide platforms addressing real estate and land use policy,” Sydenham says. “The importance of these partnerships cannot be underestimated. Our work with Reality Check in 2008 and 2010, resulting in the ‘Connected Centers’ concept, is just one example of our broad reach. “ULI’s focus on exchanging best practices and serving community needs strengthens the resource toolbox Arizona communities can draw upon to ensure resilient futures as they grow and prosper.” According to Becky Burnham, Shareholder with Greenberg Traurig, ULI Arizona truly delivers on its mission to be a facilitator and information sharing organization on land-use issues in our state. “Its advisory board, membership and outreach extend not just to traditional industry constituents like developers and homebuilders, but also to a broad crosssection of state and local governments and agencies and their elected officials and staff, other community organizations whose missions touch on land-use issues, and educational institutions whose programs and research intersect with land-use matters,” Burnham says. “Consequently, ULI Arizona fosters a broader level of dialogue than is possible within the confines of other more limited real estate industry organizations, particularly those whose mission is advocacy of particular interests.” How does Burnham view its role as a provider of an unbiased and non-partisan exchange of ideas relevant to Arizona communities and how they grow? “ULI Arizona, in my view, is and has been extremely effective at bringing together diverse constituents to share information and attempt to forge consensus on issues that are important both to our industry and the future economic welfare of our state; for example, in the areas of transportation, workforce housing and natural resources,” Burnham says. “In so doing, ULI Arizona has become a change agent, in the sense of providing a forum for all parties interested in these issues to convene and, by encouraging the collaboration necessary to find common ground, advancing the ball on land-use policy issues that are critical to the future of our industry and communities. “I give a lot of credit to ULI Arizona’s prior and current leaders, both at the advisory board and staff level — they are committed to the mission and tirelessly ‘walk the talk.’ Our firm is proud to be associated with ULI, nationally and in Arizona.” In her estimation, Rose Law Group President and Founder Jordan Rose says ULI has been crucial to the development industry. There is no other group, she says, that identifies the V
Jordan Rose 54 | September-October 2013
Chris Toci
Deb Sydenham
ULI ‘The mission of ULI is perfectly suited to address the needs of Arizona that relate to growth, development, the economy and the environment and finding the right balance that enhances this great state.’ — Greg Vogel Land Advisors ‘Interests in Arizona are deeply divided politically on so many levels that it is especially important to find a source of independent, unbiased information regarding the policies surrounding land use. Due to its apolitical orientation and commitment to unbiased research on any and all issues relative to development, ULI fills this need.’ — Heidi Kimball Sunbelt Holdings ‘Trends Day is a great forum for bringing my management team together to gain timely and relevant knowledge that enhances our ability to secure land rights for our water and power facilities, better understand implications to our customers and service territory, and interact with our industry peers.’ — Sandy Byra Salt River Project
56 | September-October 2013
relevant issues, thoroughly studies them and then formulates responsible market based solutions. “The conversations that are initiated through ULI provide us with a focus to ensure the industry remains strong and innovative,” Rose says. “When ULI speaks, the development industry and local communities listen. Arizona’s quality growth is directly related to the quality ideas that ULI has initiated over the years. It is not Republican or Democrat. ULI speaks of quality and everyone respects that.” Mark Singerman, Regional Director-Arizona for the Rockefeller Group, agrees. He says ULI seeks to illuminate the best practices in sustainable real estate development. “They do an excellent job of finding examples of such developments worldwide,” Singerman says. “Developers make use of these project profiles found in ULI’s monthly magazine by applying some of the best practices to their own projects. No other publication provides the depth of project details relevant to real estate decision makers.” ULI Arizona is in a unique position to act as a convener for dialogue among industry leaders because of its diverse membership, lack of political agenda, and statewide coverage, says George Cole, Director, Fennemore Craig. Unlike governments or industry specific groups, whose scope is geographically limited and whose officials must be responsive to political considerations or whose focus is a limited segment, Cole says, ULI Arizona can offer both practical and academic analyses of land use issues across political boundaries and without regard to political considerations. Virtually all such input is offered by volunteer members free of charge. One of the principal offerings of ULI Arizona is Trends Day, a full day of panels and presentations by industry experts. Another major offering is its AzTAP panels, as Sydenham alluded to. “These are panels offered to governmental and charitable entities to spend a full day making suggestions addressing the particular land use questions of concern to the entity sponsoring the day’s panel,” Cole says. “A third major program providing an exchange of ideas is an Urban Plan program for high school students where students experience a hands-on approach to land use issues, trade offs and economics under the guidance of industry experts.” The challenges the industry faces in Arizona real estate are both unique Rebecca Burnham and shared across a broad spectrum of stakeholders, says Charley Freericks, President of DMB Associates. ULI, he says, brings together public, private, nonprofit, and for profit community leaders for exercises and conversations around the planning and development of strong, livable communities. “The organization brings together competitors and colleagues to share lessons and perspectives, analyze Charley Freericks national and international trends, and V
apply these lessons across a variety of development industry sectors so we can help grow this region into a desirable and more sustainable community,” Freericks says. “How we live today and how technology, the environment, global business and market forces will impact the future are all studied and shared at ULI. We can take the theoretical, explore it with our trusted peers, and decide how to apply the best lessons to our next great projects. For smaller Arizona communities and those approaching redevelopment opportunities, ULI’s research can provide critically important tools for how to successfully approach growth. In the metro regions, we are able to build consensus in a non-partisan arena on how we can approach growth in the Sun Corridor and develop responsibly.” ULI Arizona, says CBRE’s Mindy Korth, has established itself as the one place where all leaders within the real estate industry gather to grapple with the tough, messy issues that make a huge difference in the quality of life for Arizona’s citizens. While other organizations may take parts of this, ULI is the organization that takes on the whole piece of it. This
is because it is multi-disciplinary, and not advancing an agenda except the agenda of sharing information for a better outcome of how space is used in our community, Korth says. “ULI is essential to the success of our community, and should be supported by all who earn a living through real estate activities,” she says. “Other organizations take on advocacy to advance a particular agenda, but ULI’s mandate is to educate. By maintaining a non-partisan/unbiased approach, the dialogue is collaborative and information sharing is open. This is essential to be a catalyst and connector to transfer best practices from one part of the community to another. Then advocacy can take place, after ULI has set the stage with appropriate levels of investigation and education.” Adds Chris Toci, Executive Director, Capital Markets Group at Cushman & Wakefield: “ULI does a fabulous job of bringing the finest minds in real estate together. The saying, ‘under all is the land,’ is very relevant, and one of the things ULI does well is discuss land use issues and the impact relative to the community. ULI provides solutions.”
Mark Singerman
Mindy Korth
57
Urban Land Institute By Peter Madrid
ULI Arizona 2014 Real Estate Trends Day
Spreading Prosperity: Innovation and Job Growth for Arizona’s Future
E
ach year the ULI Arizona District Council convenes Trends Day — a one-day 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 public and private sector partners. This year’s theme is Spreading Prosperity: Innovation and Job Growth for Arizona’s Future. Known as Arizona’s pre-eminent forum for trends and relevant information, this year’s event will feature panel discussions on healthcare, land development, infrastructure, foreign investment and job growth and the five hottest districts driving Arizona’s economy. Additionally, the day will feature quick hit discussions on employment and economic development, tourism and the Super Bowl, state land and capital markets. “ULI’s Trends Day is known for accurately forecasting what trends will impact land use patterns and real estate in the coming years,” says Tom Johnston, ULI Trends Day co-chair. “Typically close to 1,000 industry leaders and public officials attend to learn what to watch in the coming decade. It is the most comprehensive event in the Valley.” Attendees learn about major trends, hot projects, key players and critical issues shaping real estate development in the future. The event provides serious take home value and the opportunity to network with thought-leaders and change-agents representing public and private sector perspectives. The 2014 Trends Day will be held on Wednesday, Feb. 19 from 7:45 a.m. to 5 p.m. at the Sheraton Phoenix Downtown. Tom Johnston, senior vice president of Leasing and Sales, PhoenixMart; Charley Freericks, president, DMB Associates, Inc.; and Heidi Kimball, VP, Sunbelt Holdings; are Trends Day 2014 co-chairs.
58 | September-October 2013
2013 Real Estate Trends Day at the Sheraton Phoenix Downtown
IF YOU GO What: 2014 ULI Trends Day When: Wednesday, Feb. 19, 2014 Where: Sheraton Phoenix Downtown For More Information: arizona.uli.org (Sponsorship packages available)
ULI
A zTA P
By Peter Madrid
Making some of the best and brightest talent in the industry available to local government
T
he Arizona Technical Assistance Panel (AzTAP) program was instituted by ULI Arizona to afford high-level land use and real estate executives an opportunity to help communities in the state with difficult development and planning issues. AzTAPs assist municipalities, counties, regions and nonprofits in the preliminary study of unique land use planning, development, and redevelopment issues. The goal is to make some of the best and brightest talent in the industry available to local government. At an AzTAP held in Gila Bend recently, the team focused on creating a foundation to support the community’s emerging solar industry. Short-, mid-, and long-range strategies centered on creating a town center, enhancing housing stock, leveraging natural attributes, enhancing commercial services and maximizing opportunities provided by the municipal airport. This TAP was unique compared to past programs, says ULI AzTAP Chair, Lance Ross, president of Ross Property Advisors. “It was a facilitated charrette — a work session rather than a moderated panel approach. There was a lot of hands-on engagement throughout the day. Maps on the table allowed the group to analyze open spaces and spaces available for development. The interaction and frank discussion was invaluable to the community.”
60 | September-October 2013
As land use and real estate professionals with important skill sets to offer, ULI believes they have a responsibility to foster the highest quality development and redevelopment projects within our communities to create vibrant, healthy places. Arizona District Council members move the ULI mission forward by addressing challenging planning and development issues to encourage sustainable thriving communities throughout Arizona. Because of the diverse talents of ULI members, a broad array of community challenges can be evaluated through the AzTAP process. Expertise can concentrate on commercial, retail, industrial, residential, design aesthetics, mixed use and others in a multiplicity of urban forms. The AzTAP team addresses concepts that contribute to sustainable, high quality development, generally focusing on issues pertinent to a particular site or study area within a community, such as critical corridors in the Town of Buckeye, and opportunities along the 32nd Street Corridor. AzTAP analysis could include: Defining site characteristics and limitations; Identifying and assessing neighborhood, community, or regional goals; Consideration of alternative land sue and development strategies in the context of preliminary feasibility analysis and recommendations for next steps.
• • •
AzTAP Sponsor Obligations
Upcoming AzTAP programs include the City of Goodyear and the Town of Carefree. Ross says economic conditions make those municipalities ideal locations. “In Goodyear, there is the impact of employment around the airport,” Ross says. “The Carefree downtown and retail core offers ways and methods to develop that area. One of the things being done by AzTAP is to bring new ideas to the table.” The AzTAP team analysis is not intended to be a detailed highest and best-use analysis. Rather, utilizing the input of experienced professionals who can speak to physical, market, and financial viability, the analysis is intended to produce a realistic range of alternative options. In most instances, the process will not necessarily lead to strong recommendations for a highly specific project. A range of options are generally identified including “low hanging fruit” and long term strategies. At a minimum, an AzTAP introduces new thoughts, ideas and directions that may not have been previously considered. According to Ross, AzTAP sprang from ULI Arizona’s membership committee about ten years ago. “AzTAPs bring the real estate community together to discuss challenges, opportunities in the market,” he says. “It has helped bring the public sector from different municipalities into ULI, the academic community, and the private sector.” The sessions are well-received and ULI gets very good feedback, Ross adds. The net results ULI hopes to achieve are tangible successes for Arizona communities. “Our panelists and moderators do great work in preparation and participation. A lot of commitment and time goes into these impactful programs. This is the best of the best.”
***For more information visit arizona.uli.org
>> Briefing Materials: The sponsor assembles all relevant background information relating to issues being addressed in a compact resource book for panel members. >> List of Resource People: The sponsor (community or nonprofit) prepares a list of resource people who may be interviewed by panel members, if needed. >> Project/Area Tour: Sponsor provides panel members with a tour of the project or area prior to panel day to provide greater context. >> Resource Materials: Often, additional information critical to AzTAP success but not appropriate for the Briefing Book is made available for review on panel day. >> Panel Meeting Room(s): The sponsor provides a conference room which is used by the panel for meetings, group interviews (if deemed necessary), and the panel discussion/presentation. *** 61
Leadership Circle DMB Associates, Inc Platinum Sponsors DRA Strategic Communications Newland Real Estate Group, LLC Gold Sponsors Anamorphics APS Cole Capital Real Estate Investments JRC Design Land Advisors Organization Macerich SRP Sunbelt Holdings Silver Sponsors Alliance Bank of Arizona AV Homes CBRE Desert Troon Companies Holualoa Companies Meritage Homes Phoenix Sky Harbor International Airport Rockefeller Group International, Inc. Rose Law Group PC Union Pacific Building America Vestar
62 | September-October 2013
Bronze Sponsors AAM BBVA Compass Bank Beus Gilbert Carefree Partners Cassidy Turley Commercial Real Estate Services Cushman & Wakefield DAVIS El Dorado Holdings, Inc. Ernst & Young Everest Holdings Fennemore Craig Grayhawk Development Greenberg Traurig Harvard Investments Lewis and Roca LLP Newmark Grubb Knight Frank Picor / Cushman Wakefield Rancho Sahuarita RBF Consulting Snell & Wilmer L.L.P. Thomas Title & Escrow Supporting Sponsors Davis Enterprises Investment & Development Hilgart Wilson Round Lens Photography The Sieb Organization
ULI By Peter Madrid
Community Plan
An outreach program for development, planning and infrastructure
64 | September-October 2013
U
LI Arizona touts Community Plan as a free resource for communities and regions to learn the foundational aspects and finer nuances of issues affecting land use, planning, and development. Kristen Keener Busby, program manager for sustainability with ADOT and Chair of Community Plan, says it is an outreach program that is far-reaching and impactful.
“Community Plan is a statewide program to work with public officials in workshops in their communities and regions on a variety of planning and development related topics. It is intended to be a valuable educational resource, particularly to some of the smaller, rural communities where the needs for information and assistance may be greater,� Busby says. Community Plan is intended to build leadership capacity for informed local decision-making to enhance sustainable communities.
Community Plan is an unprecedented partnership of eight statewide organizations who have joined together to spearhead this educational curriculum for public officials. Partners include the Urban Land Institute Arizona District Council, the Arizona Chapter of the American Planning Association, the Arizona Departments of Housing, Transportation, and Health Services, the Arizona Association for Economic Development, the League of Arizona Cities and Towns, and the County Supervisors Association of Arizona. Funding to jump start the ; 65
ULI By Peter Madrid
development of Community Plan was povided by a ULI Foundation grant. Community Plan can help communities and regions, especially those who are grappling with the day to day, address important issues and challenges and learn more about a variety of community building topics, like planning and land use, finance, housing, economic development, community health, and transportation, and demonstrate how they are all interconnected and vital to a prosperous community future.
Busby says the recent kick-off workshop in the City of Globe illustrated the value for a resource such as Community Plan. “The workshop provided the City Council, the Planning Commission, city staff, and interested citizens the opportunity to get together to learn about the nuts and bolts of general plans in accordance with state statutory requirements and to collectively think about their own plan update as the roadmap to implemnent their community vision. The general plan is one of the most important planning endeavors for a community because it sets the course for where it’s going.” The goal of the Community Plan Collaborative Partnership initated by ULI is to ensure communities have the knowledge and tools to make informed and sound decisions that lead to community success. The recession tested local budgets and resources, but leaders must continue to plan and make decisions for their citizenry to ensure a resilient future. The program encourages local leaders to engage in thoughtful planning now to improve their economy and quality of life, to support livability, to create new planning approaches, to match infrastructure needs to population growth, and to make the necessary investments to accomplish these visions. The Community Plan Program will be working with the Town of Quartzite on the importance of planning and their general plan update for its next workshop taking place this fall, Busby says. Pinal County also has expressed interest in a Community Plan workshop. “ULI Arizona is an important partner and convener of the Community Plan Program because they are the go-to for information and leadership for the real estate and development industries,” Busby says. “ULI is the gold standard.” 66 | September-October 2013
What is A Community Plan? • A 2- to 4-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 multidisciplinary 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. • Outcomes: 1) Develop a better understanding of land use planning and zoning; housing; multimodal transportation and mobility; real estate development; economic development; finance and infrastructure. 2) Outline the connectivity between the community building blocks, the importance they have within a community or region, and the necessity for using a holistic lens to achieve long-term goals. 3) Creat a toolbox of information, case studies, and online resources that can enhance community decision-making. 4) Develop an action plan to apply what was learned.
For more information visit arizona.uli.org
Arizona’s Most Comprehensive Annual Real Estate Awards
Nominations Accepted October 1 - December 31
2014
Visit AZREmagazine.com to download nomination form
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RED-Nominations-HP-Horizontal.indd 1
8/30/13 1:55 PM
As the preeminent multidisciplinary real estate forum, with 40,000 members in nearly 100 countries, ULI facilitates an open, non-partisan exchange of ideas, information, and experience among local, national, and international industry leaders and policy makers dedicated to creating better places.
Benefits of ULI Membership
PEOPLE:
Creating networks and building careers.
SHARING KNOWLEDGE:
Practical information from experienced professionals.
THINKING BIG:
A think tank or real estate development and land use challenges.
BUILDING BETTER COMMUNITIES:
Working together to create better places.
BE A LEADER: Join ULI Our mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.
www.Arizona.ULI.org
67
Q&A
ULI By Peter Madrid Photography by Lillian Reid
A New Kind Of Urbanism Taking Hold
ULI Arizona is at the forefront of real estate trends in our state, working to improve the way our communities grow. A convener for dialogue among industry leaders, ULI Arizona provides an unbiased and non-partisan exchange of ideas relevant to Arizona communities. Greg Bielli (pictured above right) is ULI Arizona’s Chairman and Wellington (Duke) Reiter (above left) is Vice Chairman. In a discussion for AZRE magazine, they address the improving real estate landscape across Arizona and outline how ULI Arizona is leading the discussions on how, where and at what pace we grow.
68 | September-October 2013
Q: As the real estate market continues to improve, what are your shared goals for moving the mission of ULI Arizona forward?
A: The development sector in this region is significantly impacted by the ebb and flow of the national and even international economies, and we have seen how rapidly the region can tip over the past half dozen years. Understanding trends in all areas of the economy and how we can contribute to a more diversified, nimble, and vibrant circumstance throughout Arizona is critical to our mission. As a neutral convener of different points of view, ULI Arizona’s main goal is to create dialogue that leads to better built environments. Too often community design progresses because of political compromise rather than creating long-term value through well-designed and executed projects. As a neutral convener, our goal is to ensure ULI Arizona has a long-range impact for many generations. ULI Arizona also brings the public and private sectors together so both groups can collaborate to create thriving and healthy communities. Our goal is to address compelling issues that can impact Arizona’s built environment and work together to bring forth resources to assist in decision-making. Our focus is on issues such as healthy living, financing strategies, technology and education connectivity. Accordingly, the programming that we develop reflects a wide spectrum of interests, issues, and constituencies. ;
Urban Land Institute Q: Your individual expertise in real estate varies. How
Q: : Paint a picture of the Arizona landscape in the next 5 to 10 years. Where will growth be concentrated? How will ULI Arizona help lead the way?
DR:: Like ULI itself, Greg is a great convener. His deep experience locally, regionally and throughout the western U.S. provides a big picture (and big project) perspective through his current work with Newland. Greg understands the nuances and complexities of community building at the grass roots level as a result of his experience as a councilman in Scottsdale. Few others have such a reservoir of expertise from which to draw.
A: It is well documented that the knowledge economy is urban, whether in Metro Phoenix or nationally. Patterns of living, transportation, and recreation are changing and the competition to attract new industries and citizens is fierce. ULI Arizona keenly observes these trends and creates opportunities for community dialogue to advance our collective interest in breaking down traditional jurisdiction boundaries that limit creativity and innovation. It was not by accident that the national spring meeting was held in Phoenix two years ago. For those who had not been to the area in the past decade, they witnessed a new kind of urbanism taking hold, one which featured state-of-the-art public transportation, new housing options in the city center, and the integration of new educational and research facilities into Downtown Phoenix and the surrounding cities. As a neutral convener and change agent, ULI Arizona can continue this momentum by encouraging density in the right places, transportation and infrastructure effectiveness in moving goods, people, and services, and techniques to create a healthy, built environment. ULI Arizona is dedicated to leveraging our expertise for the betterment of our members and the community. We look forward to leading the way on key trends and issues to create thriving communities across Arizona.
do you capitalize on your diverse perspectives to provide leadership in land use issues?
GB Duke has a gift of sharing his creativity and design background to help others think more broadly. His work with the education community adds depth to the land use dialogue. Most private and public sector participants do not relate the importance of education and education environments in creating great places. Duke’s success in building the ASU downtown campus adds credibility to the discussion.
Q: ULI Arizona is an exemplar among other ULI District Councils. What ULI Arizona programs and activities are making headlines nationally?
A: ULI National views the Arizona District Council as a laboratory for innovation. With approximately 840 members throughout Arizona, we work to create initiatives that will positively impact our many communities. One example is Community Plan. A program designed to help local governments engage in comprehensive dialogue about their community and its future. The success of the program has drawn the attention of the district councils in Hong Kong and Shanghai. They are working to replicate this ULI Arizonacreated concept. When a more specific question is being asked about the future of an area or city center, the Arizona Technical Assistance Panel (AzTAP) process is a remarkable tool, one in which the “host community or nonprofit” can benefit from the collective wisdom of a carefully assembled group of experts. At the request of many communities, ULI Arizona has deployed our members and other leaders to serve on AzTAP’s in Fountain Hills, Buckeye, Phoenix, Gila Bend, and many other municipalities so that they might advance a vision for the future of their community. Each year, ULI Arizona Trends Day does a phenomenal job of gathering more than 30 experts to discuss the future of broader land use and real estate development trends. During the one-day deep dive, we discuss issues that have significant impact on the state’s economic success such as education, national sports teams, and technology innovation. In 2013, more than 750 attendees participated in this comprehensive educational opportunity — a marquee event unsurpassed by any ULI District Council. On a much larger scale, the Reality Check program, which we used to great effect several years ago helped to cement the notion of a vibrant constellation of “connected centers” in the metro area. This effort brought together hundreds of individuals from the private and public sectors to imagine where we might take Metro Phoenix and the forces needing to be shaped in order to achieve a sustainable outcome. 70 | September-October 2013
Greg Bielli is Chair of the Arizona District Council of ULI. As Regional President, West Region for Newland Communities, Bielli provides operational and senior leadership to the development of Newland’s residential master-planned, commercial, retail and urban mixeduse real estate projects. He leads the growth strategy for the West region through oversight and coordination of acquisition opportunities. Wellington “Duke” Reiter, FAIA, is Senior Vice President and Managing Director for the Solutions Initiative at the ASU Foundation for A New American University. A past president of the School of the Art Institute of Chicago, former Dean of the College of Design at Arizona State University, long-time MIT Department of Architecture faculty member, Vice-Chair for ULI Arizona District Council and ULI Trustee, Reiter is the recipient of the AIA Arizona Architects Medal.
2013 Celebrating 25 years of Excellence in Arizona
INSIDE: Structural Superiority Timeline: 25 Years Signature Projects Q&A with Ron Harman
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Congratulations Coreslab Structures on your 25th anniversary!
IIDA Coreslab Structures: Celebrating 25 Years of Exellence in Arizona By Peter Madrid
Structure Superiority Coreslab Structures celebrates 25 Arizona’s most high-profile buildings
W
hen Ron Harman talks about the product for which his company is known, you would think he was talking about a precious metal or gem stones. He uses words such as “strong” and “flawless” in his description. Harman is Vice President and General Manager of Coreslab Structures, a manufacturer of precast/ prestressed concrete products and hollowcore slabs. The company is celebrating 25 years of producing precast/prestressed self consolidating concrete products that have been used in the construction of some of Arizona’s most high-profile buildings. Some include: ¢ The Burton Barr Central Library in Phoenix; ¢ Fountainhead Office Plaza in Tempe; ¢ Jobing.com Arena in Glendale; ¢ The Maricopa County Superior Court Tower in Phoenix. “One of the things that has been important about our product is its ability to continue to adapt our product to be more cost effective and high performance,” says Harman, who opened the Phoenix office 25 years ago. “That’s one of the things we hang our hat on. Self consolidating concrete is a technology that is still relatively new. The process is a huge benefit in that it makes concrete a more sustaintable product.” Precast concrete has become one of the most popular building materials because its strengths satisfy today’s demanding requirements. In 1975 Coreslab Limited entered the precast/ prestressed concrete industry with the purchase of a Hollowcore
76 | September-October 2013
manufacturing operation in Burlington, Ontario, Canada. Throughout the late 70’s and early 80’s this operation evolved into a premier producer of Hollowcore slabs and related precast concrete products servicing both Ontario and the Northeastern U.S. In 1987, after a partnership restructuring, a newly invigorated Coreslab initiated an expansion strategy that continues to this day. In early 1988, Coreslab purchased its first structural facility in Phoenix, followed that same year by one in Austin, Texas. “Some of our more prominent structures, such as the Burton Barr Library, have great history with the company,” Harman says. “(Renowned architects) Will Bruder and DWL Architects won numerous awards for the design. It was also one of the first structures that met all the criteria for LEED certification.” When it comes to Coreslab Structures’ bread and butter, one need look no further than some of the West’s largest parking structures. According to Harman, precast makes more sense for that type of project as it has less impact on the site, it is efficient, and construction time is faster. In Arizona, Coreslab helped build the Chase Field (Bank One Ballpark) parking structure in 1997, the East Economy Parking facility at Phoenix Sky Harbor International Airport in 2000 and the Grand Canyon University parking structure in 2011. Its largest structure to date is the 2 MSF Mandalay Bay Hotel & Casino parking structure in Las Vegas in 1997. Coreslab has built lasting relationships with some of Arizona’s top general contractors, architects and engineers. “Their reps are always knowledgeable and bring specific
Coreslab
years of helping construct some of with its precast concrete products technical information to the table regarding their product, precast concrete,” says Mike Edwards, principal at DAVIS Architecture. “Our most recent project we completed with Coreslab was Fountainhead. The Coreslab team cast several test panels for the parking garage and the office buildings for our review until we were satisfied. And they brought their sandblasting expert to the site to do touchup work on some of the precast panels after they were in place due to color shifting. “You could tell they wanted the project to look perfect when they were done. As you can imagine, precast concrete is very durable, both literally and visually. It has a ‘solid’ look to it compared to some lesser expensive exterior building materials, such as stucco or EIFS. “They are great to work with,” Edwards adds. “They seem to always be the precast concrete contractor at the table on all of my projects that have precast concrete work.” Cliff Paul, principal of PK Associates Consulting Structural Engineers, has personally worked with Coreslab for more than 30 years. PK has worked with Coreslab since PK’s formation 20 years ago. “I have always enjoyed our working relationship and have found their team to always be very creative, cost conscious, and committed to work excellence,” Paul says. The most recent project PK Associates and Coreslab have partnered on is the CyrusOne Data Center in Chandler. It was a difficult, factpaced, precast data center. “Coreslab provided great solutions to the project,” Paul says.
“CyrusOne Data Center is the largest building of its kind in the U.S., with 110 megawatts of power capacity generated from a substation right on the property. The CyrusOne data center is a marquee facility and one of the most advanced data centers in the industry, featuring energy-efficient technology, cutting-edge design, and enterpriseclass standards.” “Coreslab has a great management team,” Paul adds. “I have always VP / GM of Coreslab Ron Harman found them to be highly photo/ Lillian Reid professional, responsive, and ahead of the curve with design solutions and ideas.” Ryan Companies US, Inc. has worked with Coreslab for more than 15 years. “We’ve performed a number of successful projects with Coreslab,” says Ryan Director of Construction Services Steve Jordan. “We find them to be extremely collaborative, professional, and very good to work with.” 77
IIDA Coreslab Structures: Celebrating 25 Years of Exellence in Arizona
The Coreslab management team (above seated) VP/GM Ron Harman; (standing L to R) Projects Manager Ron Vancs, Director of Business Development Rick Reichenberg, Operations Manager Charlie LeMaster and Controller Denise Millanes. (Opposite page) The Maricopa County Superior Court Tower in Downtown Phoenix.
The two most recent Coreslab/Ryan partnerships stand out for different reasons, Jordan says. The Maricopa County Superior Court Tower project (15 stories, 695,000 SF on a tight urban site) had numerous challenges and a significant portion of the building facade was precast with several finish profiles. With that many stories, Jordan explains, the engineering aspects become a factor in the design. “Our design collaboration was enhanced with Coreslab’s BIM capabilities, so we were able to integrate their designs into our building model which was very effective and efficient,” Jordan says. The most recent collaboration was on the NAU San Francisco 78 | September-October 2013
parking structure (6 stories in the heart of NAU’s campus). It stood out, Jordan says, because of Coreslab’s flexibility, especially in the preconstruction phase. In order to meet the fast track schedule, materials had to be procured early. “During an unforeseen 6-week legislative issue out of our control, Coreslab bridged the gap to ensure the materials were procured to meet the schedule,” he says. “This was done at a time when the market was still down, so the strength of their company benefited the NAU project. “Precast can assist with schedule, and in tight site conditions,” Jordan adds. “Its quality, which is prefabricated in a controlled environment, was most beneficial
for installation in Flagstaff, especially during the winter. Sustainability is applicable on many levels, including regional materials, which was a specific criteria on the Maricopa County Superior Court Tower, not to mention the economic impact of employing local ancillary businesses in their process.” Sundt Construction also has enjoyed a relationship of more than 20 years with Coreslab. “We have a very rich history with Coreslab,” says Sundt COO Eric Hedlund. “They have done a large number of projects for us, and have always performed with excellence. “We will frequently bring Coreslab on as a pre-selected specialty contractor and utilize their expertise in reducing the cost and schedule of a project, and maintaining or enhancing quality outcomes for a client. Those early selection projects have all been a success due to Coreslab’s participation. “Coreslab’s leadership has always been responsive and solutions oriented,” Hedlund says. “The value they bring to our team is directly related to the value they provide Sundt and our customers. They have consistently shown their expertise in adding value. Looking ahead to the next 25 years of Coreslab Structures and its precast concrete products, Director of Business Development Rick Reichenberg says the future is bright. “In the years to come, we believe that designers and builders
will continue to be focused on specifying materials that are sustainable, manufactured in a quality controlled environment and provide reduced construction costs,” Reichenberg says. “Coreslab is uniquely positioned to offer products and services to meet that demand.”
Steve Jordan
Mike Edwards
Eric Hedlund
Cliff Paul
79
IIDA Coreslab Structures: Celebrating 25 Years of Exellence in Arizona By Lee anne Barrick
M
uch has changed the past 25 years for Coreslab Structures. Technology, the facility and its staff have expanded and adapted to clients’ changing needs. Coreslab has earned a reputation for excellence in service, conceptual vision, product fabrication and on-site installation. A look back as Coreslab celebrates a quarter century of excellence in Arizona.
Coreslab Structures acquires a production facility in Phoenix, the first for the company in the U.S.
The Hollowcore production facility is installed.
Scottsdale Fashion Square Mall parking structure goes up.
1988
1989 2013
1990 2011 The Grand Canyon University parking structure opens.
Construction begins on the Pima County Courts Building in Tucson.
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The Charles Schwab Data Center in Phoenix is selected as Best Precast Office Building by the Precast Concrete Institute.
1992
Intel Fab 12.
1994 2010
A banner year for the company: the introduction of the 12-foot wide Double Tee and the completion of Fountainhead Office Plaza in Tempe, two office buildings, a 10-story and 6-story, and a 5-level parking structure; and the Grand Canyon University Arena.
New York New York Hotel & Casino’s 10-level parking structure goes up, the tallest on the Las Vegas Strip at the time.
1995
Coreslab increases Double Tee production to 100,000 SF per week.
A core cast machine is installed for Double Tee production. It greatly increases efficiency and quality.
1996 2008 The Maricopa County Courts Tower rises in Downtown Phoenix.
Mandalay Bay’s 2 MSF parking structure is the largest project of its kind to be built by Coreslab.
1997 2007
Scottsdale Quarter’s two parking structures are built.
The East Economy Parking facility is built, the first of two parking structures for Sky Harbor Airport. Coreslab introduces self consolidating concrete.
1998 2004
The Sky Harbor Rental Car Center comes on line.
2000 2002
Jobing.com Arena, home of the Phoenix Coyotes, is built.
81
Coreslab: Projects By Jacob Green
Burton Barr Central Library (1993) Contractor: Sundt Construction Architect: Will Bruder Architects Engineer: TLCP Structural, Inc. Owner: City of Phoenix This iconic Arizona library is one of acclaimed architect Will Bruder’s proudest pieces of work. When he was assigned the project, though, he was presented with the challenge of having to complete it at less than $100 per square foot. With such a significant budget constraint, he says it was an early decision to utilize precast concrete, and was glad he did. “It was probably one of the most expressive precast concrete jobs in the late 20th century, where every part is scaled, proportioned, and detailed to be the architecture of the building,” he says. The project, which he referred to as “a point of pride in our city,” boasts flexibility as one of its virtues, and he notes that Coreslab allowed that to happen.
Chase Field (Bank One Ballpark) Parking Structure (1997) Contractor: CORE Construction Architect: Peter A. Lendrum Architecture Engineer: TLCP Structural, Inc. Owner: Arizona Sports Authority Architect Brian Moore, while working at Peter A. Lendrum Architecture, had never designed a parking structure until he was assigned the one that would accompany the new home of Arizona Diamondbacks, Bank One Ballpark, now called Chase Field. With the high-profile assignment of accommodating Arizona’s first MLB franchise, Moore hired Coreslab, which he says became “an invaluable resource.” Coreslab, he adds, worked with the design team in coming up with structural and aesthetic ideas, as well as consulting him on the limitations and opportunities of the structure. One challenge, he says, was integrating the brick from the ballpark into the design of the parking garage. Despite the fact that tolerances for precast and brick are much different, Coreslab was able to find the aesthetic he was looking for. “The entire team was happy with the final project. It integrates well with the city and the ballpark, and has stood up well over time.”
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Projects Fountainhead Office Plaza (2010) Contractor: Sundt Construction Architect: DAVIS Engineer: TLCP Structural, Inc. Owner: Metro Commercial Properties With the University of Phoenix as tenant, Fountainhead Office Plaza helps mold the landscape of Tempe. Mike Edwards, architect at DAVIS, says it was one of his most unique projects, noting the distinctive lake that separates the two main towers. In taking on a 440,000 SF office property, Edwards relied on Coreslab’s precast, in part he says, because of its customer service. “They were always willing to let us in the yard to help improve panels and choose colors, and even came out to the parking structure upon completion with a sandblaster to touch up spots,” he says. “I’ve worked with subcontractors in the past where you have to twist their arms to fix problems, especially minor problems. Coreslab was always willing to come out for whatever we needed.”
Jobing.com (Glendale) Arena (2002) Contractor: Tutor Perini Building Corporation Architect: HOK Sports+Venue+Event Engineer: Martin Harper & Associates, Inc. Owner: City of Glendale In order to complete the arena in time for the Phoenix Coyotes season, Ken Schacherbauer of Tutor Perini Building Corporation had to operate on a tight schedule. In taking steps to expedite the construction, Coreslab were brought in early on. The precast work was extensive, utilizing Coreslab’s work for a variety of the structure’s attributes. Despite challenges — including having to set precast at night — he says, “They were very cooperative and involved in the design of the concrete structure, and met our schedule.” Schacherbauer and Coreslab managed to beat the expedited schedule, giving Arizona hockey fans a new venue to watch their Coyotes. “It was great to see the structure go up, and turn it over to the owner on time,” he says.
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Coreslab: Projects Grand Canyon University Parking Structure (2011) Contractor: Pono Construction Architect: Architect & Planners International, Inc. Engineer: PK Associates Owner: Grand Canyon University When Campus Development Manager Bob Machen was planning the development of a new parking structure at Grand Canyon University, he wanted to avoid having it look exactly like a parking garage. He also wanted it completed on time and on budget. Coreslab Structures, he says, managed to fulfill all of his objectives. “The way they do their construction, they were exactly what we were looking for,” Machen says. “They did everything in advance, and under budget. As a person that’s hiring someone to do something, that’s exactly what you’re looking for.” Machen says he still receives compliments on the aesthetic of the building.
Maricopa County Superior Court Tower (2010) Contractor: Gilbane/Ryan Companies US, Inc. Architect: Gould Evans+DMJM Design Engineer: Paragon Structural Design Owner: Maricopa County Todd McMillan of Gilbane has been working with Coreslab for the past 11 years, so when he was given the large project of designing the Maricopa County Superior Court Tower, he wanted someone he knew he could rely on. “They’ve been one of our top performers over the years because they consistently produce quality,” he says. The scale of the project meant that early design was necessary, he adds, in order to ensure it could handle the large weights the project entailed. He says that Coreslab was able to meet this objective, adding, “having that good and accurate information early on added value to the project.” Coreslab kept him involved in the design phase, he says, allowing him to choose the coloration and mimic some of the architectural elements of the historical downtown courthouse. “I was thrilled with the final product,” McMillan says. 84 | September-October 2013
Projects Ocotillo Corporate Center (2003) Contractor: The Weitz Company Architect: DLR Group Engineer: DLR Group Owner: Wells Fargo One of the most eye-catching buildings in Chandler, the Ocotillo Corporate Center followed a rigorous design process. According to Chris Harper of The Weitz Company, the owners had “a very specific look they were looking for, and it was a very complex system.” Coreslab, he says, spent a significant amount of time ensuring its work met the vision of the owners. “They spent a lot of time on understanding the project,” Harper says. “They really knew what the owner was looking for.”
Phoenix Art Museum (2004) Contractor: Kitchell Architect: Todd Williams Billie Tsien & Associates Engineer: Severud Associates Owner: City of Phoenix In the construction of this unique Phoenix landmark, Felix Ade, project manager at noteworthy New York City architectural firm Todd Williams Billie Tsien & Associates, wanted to find a way to tie the building to the fabric of the city. The precast technology that Coreslab specialize in, he says, is something the city is known for, and was the perfect way to blend his New York City architectural style with something unique to Phoenix. “We haven’t found this technology anywhere else in the world, but it really added to our project in Phoenix,” Ade says. “It was very simple and economic to use their panels, and we were very happy with the outcome because it provided us with a very good finish.”
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IIDA Coreslab By Peter Madrid Photography by lillian Reid
Q&A
RON HARMAN Vice President & General Manager
Q: What has Coreslab
Structures done over the past 25 years to keep pace with the challenges in the construction industry and to meet the needs of your clients?
A: Our focus has always been on continuous improvement and to provide a quality product at a competitive price to our clients. We have invested heavily in our production facility over the years and have increased our double tee production to 100,00 SF per week, added a hollowcore production facility, added a new batch plant, and introduced self compacting concrete to the marketplace. Q: In the past 25 years, Coreslab Structures
has grown to 17 production facilities that are located throughout North America. How has the collective construction knowledge and resources of all of those facilities benefitted Coreslab Structures in the Phoenix market?
A: Each one of the 17 production facilities is unique and
diversified to their market area. That range of diversification within the Coreslab family of companies is a huge benefit and allows for sharing of technologies and construction methods. Also, many of our clients also do work in other regions of the country as well and have the benefit of working with a familiar precast supplier who is also located near their project.
86 | September-October 2013
Q: For the past several years, designers
and owners are more focused on sustainability in their building projects. How does Coreslab Structures meet the sustainability requirements that the design community seeks?
A: Precast concrete is specified by designers because it
does have sustainable characteristics that can be used in the calculations for LEED certification of a building. The precast concrete products that we manufacture include a significant amount of recycled material including fly ash, an additive to the concrete mix, and rebar and mesh manufactured from recycled steel.
Q: what are the factors that have made
Coreslab Structures a success for the past 25 years?
A: The character of our company has always been built around three things — safety, quality and customer service. Working in a precast concrete facility is hard work, and every day brings new challenges. It is very important that we provide our employees a safe working environment and provide them with the tools and technology to produce a quality product. Another big reason for our success has come from the support and the relationships that we have developed with our clients. Q: The delivery methods for construction projects have changed greatly over the years from the traditional Design-BidBuild to the more recent Design/Build and Construction Manager At Risk. What capabilities does Coreslab Structures offer for delivery of a building project?
A: One of our core strengths is preconstruction. We
have tailored our sales and estimating departments to assist designers and contractors at the conceptual stages of a project and offer advice on structural framing, construction methods, scheduling and budget pricing. We have worked extremely hard over the years to gain a high level of trust from our clients. We consider ourselves experts in precast concrete construction and with that assertion comes the responsibility of collaborating with our clients at every phase of the project to ensure that the information that we provide is reliable and accurate.
Ron Harman has been with Coreslab Structures Arizona for 25 years, since it opened its operations. Prior to Coreslab, Harman was with Phoenix-Redi Mix and Stanley Structures as quality control manager and architectural production manager, totaling 33 years of experience working at the Phoenix plant from its construction in 1980. Professional leadership includes serving as chairman of the Plant Certification Committee and a member of the Quality Activities Counsel for the Prestressed Concrete Institute. Born in Nebraska, Harman moved to Arizona more than 56 years ago and graduated from the University of Arizona. He and his wife, Karen, have three grown children. 87