Issue 2, 2017 by Commercial Executive Magazine

CEM-AZ.COM â&#x20AC;¢ I S S U E 2, 2017

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Special Legends of Law Edition

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EXECUTIVE PUBLISHER Mandy Purcell mandy@mpmediaaz.com EDITOR-IN-CHIEF Sarah Stecko sarah@mpmediaaz.com BUSINESS DEVELOPMENT Isabel Menzel isabel@mpmediaaz.com GRAPHIC DESIGN Crown Press, Inc. art@crownpress.com EDITORIAL April Atwood Josh Gordon Tim Randall Wayne Schutsky PHOTOGRAPHY Isabel Menzel Matthew Strauss Tony Elliot Carl Schultz

© 2017 BY MP MEDIA, LLC All rights reserved. No part of this publication can be reprinted or reproduced without publisher’s permission. Opinions expressed are those of the authors or persons quoted and not necessarily those of CEM. 2920 East Camelback Road, #228 Phoenix, AZ 85016 602-955-2899

“An investment in knowledge pays the best interest.” – BENJAMIN FRANKLIN

For the March issue’s premier cover story, we featured Leo Beus and Paul Gilbert – a pair that are recognized nationally for their diligence, ethics and stamina. Being both from humble beginnings, their competitive nature and unbreakable friendship has led to the highly respected legacy and well-known name they have today. /// Nothing builds trust in the commercial real estate world more than permanence, and that’s exactly why the “Company Spotlight” was represented by Arizona’s longest-standing CRE firm, Tucson Realty & Trust Co. President and CEO Hank Amos shares how the company’s root values have attributed to its reputation of security and consistency. /// Because a main focus of our readers’ is the economic climate of the state, we’ve provided special insight on how investors in the healthcare real estate market are reacting to the changing dynamics of new administration in Washington D.C. and what this means for the Phoenix market. /// Also, another concern is for our water laws and sustainability and that is addressed in a sector update by an industry professional from Snell & Wilmer who even has dedicated a blog to the effort.

Mandy Purcell

In this special edition of Commercial Executive Magazine, we’ve zoned in on the legal side of the business and its leaders who help make the deals happen. The 2017 “Legends of Law” lineup is literally that — complete with mugshots and sequential numbers — and they were all great sports about it! We’ve included in-depth profiles of the representing attorneys from Gammage & Burnham, Fennemore Craig, Snell & Wilmer, Lewis Roca Rothgerber Christie, Gust Rosenfeld, Galbut & Galbut and Burch & Cracchiolo. /// Sticking to the theme of legal expertise, this issue has answered some of your requests for content with a Q&A on what you need to know about tribal land use. Find out what the unique challenges are, or if developers should be more confident moving in that direction. /// Then, focusing on the Tucson market to see how it compares to Phoenix in the retail sector, we’ve featured an update that is more optimistic than you may think. Even with “e-commerce” being used as a curse word these days, Tucson’s retail overview stills shows a low vacancy and significant absorption, proof that the industry is adapting to meet the needs of the customer today.

Sarah Stecko Editor-in-Chief

Legends of

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“If there were no bad people,

Legends of

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there would be no good lawyers.”

Legends of

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learly not all professional partnerships end up succeeding, but Leo Beus and Paul Gilbert seem to have the secret key – that yin and yang balance that is an ancient Chinese philosophy of one person’s skillset filling in for where the other might lack and vice-versa. While partners Leo and Paul could each share hundreds of experiences from their storied legal careers, the remarkable tale behind the pair’s friendship and eventual partnership in law is equally as compelling.

“We started talking about practicing law together back when we were on our Mormon missions [in the Netherlands], so we had that in mind clear back then and we were 19-year-olds,” says Gilbert, who along with Beus, is a devout member of the Church of Jesus Christ of Latter-day Saints.

Legends of

The firm has been awarded over $4 billion in settlements and verdicts since then, due in large part to its namesakes. Beus, a commercial litigator representing plaintiffs, has won numerous highprofile cases, including one on behalf of Brigham Young University recovering $450 million in a case against Pfizer, involving the issue of who first discovered the science leading to the development of the COX-2 inhibitor, Celebrex. Beus also won a $338 million jury verdict against accounting firm,

PricewaterhouseCoopers. /// Gilbert, a land use and zoning attorney, has represented some of Arizona’s most well-known developers, including JDM Partners, LLC, El Dorado Holdings Property Company, Wentworth Property Company, LLC and William Levine/Pacific Proving. /// Both partners attended Brigham Young University prior to going on their missions and returned to the university as fast friends. They studied together frequently, were partners on the debate team and went on plenty of double dates. Gilbert eventually went on to serve as student body president with Beus as his campaign manager. /// While both are genial and goodnatured in person, the competitive

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streak that makes them successful in the courtroom showed up in their friendship in college, which was littered with competitive rivalry. At one point, when Gilbert received a marginally higher grade on a history exam, Beus went so far as to argue his grade with their professor and wound up one point ahead. /// Following their time at BYU, the men went off to separate law schools. Beus departed first, heading off to study at Michigan, though he spent some time in the military after getting drafted following his first year. Gilbert chose to head west to The University of California, Berkeley School of Law.

E A R LY CA R E E R Unsurprisingly, the pair who had achieved such good grades in law school were not short on job offers following graduation. /// “We were fortunate,” Beus says. “If you had a haircut and a white shirt during the Vietnam days that meant you got a job anywhere you went. I interviewed at what I thought were the 16 best firms in New York City, and I got 16 offers, but the farm boy in me thought ‘this is a lot of concrete and I’m not sure I could do New York.’” /// Gilbert also received numerous offers from the Los Angeles and Phoenix firms he interviewed with. /// Despite the wide array of choices before them, fate brought the two men back together when they were recruited to come to the same Phoenix firm, Jennings, Strouss and Salmon, by Rex Lee, who would eventually become U.S. Solicitor General under President Ronald Reagan. /// At the firm, the young lawyers made a name for themselves in their chosen specialties, Beus as a commercial business litigator and Gilbert as a land use attorney. /// “Paul is clearly a zoning lawyer at a level that I don’t think anyone else has ever been,” Beus says. /// Beus initially got his start as a tax lawyer and had the chance to litigate his first case almost immediately after being admitted by the Arizona Bar. He won the case and won the appeal in the 9th Circuit but decided to focus on commercial litigation. /// “That would have been a waste of a great talent had Leo stayed a tax lawyer,” Gilbert says. “He was born to be a litigator and they recognized that at our firm.” /// But those early days were not all glitz and glamor. In fact, the two men shared a $165 Chevrolet Corvair for years before they grew tired of having to roll it down a hill just to get it to start! That called for an upgrade to a newer model for $365, and they finally splurged on a $1,120 Volvo. That is until their wives convinced them they needed separate cars. /// For a few years, the pair also operated a drapery business with their wives to make extra money, selling and installing window coverings, carpet and vacuum cleaners to residents of the new Sun City community. © Copyright 2017 by MP Media, LLC

Areas of Expertise: Accountant, Lawyer, & Underwriter Liability, Litigation, Officer & Director Liability & Securities & Investment Fraud No. of years practicing: No. of firms worked at:

(previously at Jennings Strouss) Three adjectives to describe your work style:

Prepare, prepare & prepare

If you weren’t a lawyer, you’d be:

A coach One thing people assume about lawyers that is not true:

I do think people believe lawyers do not try to solve problems, but I think they generally do.

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Areas of Expertise: Basically, real estate law is the area I practice in. Probably the majority of my time deals with real estate entitlements. I also do a plethora of other things associated with real estate, such as real estate transactions, leases, development agreements, etc.

Leo & Paul on the basketball team against the Jennings, Strouss & Salmon partners

No. of years practicing: No. of firms worked at: Both Leo and I have only worked at two firms – Jennings Strouss and Salmon (where we began) and some combination of Beus Gilbert. Three adjectives to describe your work style:

Thorough, complex & go-to guy Biggest challenge in RE law now:

The pace of change in the Valley. If you weren’t a lawyer, you’d be:

A college history professor. One thing people assume about lawyers that is not true: That lawyers put their own interests first.

BEUS GILBERT

The firm was founded in 1982 with some other colleagues from Jennings, Strouss and Salmon. While Gilbert and the others were initially hesitant to pull the trigger and start their new firm, Beus was gung-ho on the idea and convinced everyone else to get on board. /// That decision paid off in droves thanks to the hard-working nature of the founding partners as well as the help of their clients and friends. One early supporter of Beus Gilbert was their longtime friend, Allen Rosenberg, who was the chairman of a large local bank. He arranged for the new firm to receive the business loan it needed – $345,000 – without a promissory note or a financial statement. /// Rosenberg then took Beus out to lunch at Phoenix Country Club and introduced him to an important new client. He then repeated those lunches for three straight weeks until the new firm nearly had more clients that it could handle. /// “We call him the Godfather of our firm,” both say. /// Over the years, Beus Gilbert has benefited from the loyalty of many prized clients, including John Teets, Bill Levine, Herb Owens, and Gary Davidson. /// It’s not hard to see why. In addition to being world-class attorneys, both men have infectious personalities, clearly care about the work they do, and are devoted to their communities. They have given back by being involved in a multitude of philanthropic causes, especially relating to higher education, at BYU and ASU, and within their church. /// Despite garnering unimaginable success over the past several decades, Beus and Gilbert are showing no signs of slowing down. ///

What is the secret to all of that success? “The secret is trust,” Gilbert says. “The best thing I can do if I have a negotiation with Leo is say ‘Leo do what you think is fair.’” /// “And I hate when he does that,” Beus laughs.

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T om C hauncey & C hris M c N ichol GUST ROSENFELD

AREAS OF EXPERTISE:

NO.

YEARS PRACTICING: 44

NO.

YEARS PRACTICING: 31

NO.

FIRMS WORKED AT: 1

NO.

FIRMS WORKED AT: 2

First Amendment & Media Law, Commercial & Real Estate Transactions, Litigation

Commercial & Real Estate Transactions, Litigation, Creditors’ Rights

THREE ADJE CTIVE S TO DE S CRIBE YOUR WORK STYLE:

BIGGE ST CHALLENGE IN R.E. LAW NOW: Separating opportunity

BIGGE ST CHALLENGE IN R.E. LAW NOW: Avoiding needless complexities

Prepared, promt & personal

from bubbles

IF YOU WEREN’T A LAWYER, YOU’D BE: A helicopter pilot ONE THING PE OPLE ASSUME AB OUT LAWYERS THAT IS NOT TRUE: It is not always about the money.

Constructive, sensible & efficient

IF YOU WEREN’T A LAWYER, YOU’D BE: A teacher ONE THING PE OPLE ASSUME AB OUT LAWYERS THAT IS NOT TRUE: That lawyers don’t care about the ethics of the legal profession.

Tom & Chris last featured as Commercial Executive Magazine's "Leaders in Real Estate Law" in 2012

Real Estate

Legends of

s Law Leader

LAW

remier Valley attorneys Tom Chauncey and Chris McNichol of the prominent firm, Gust Rosenfeld last appeared in Commercial Executive Magazine in 2012, as some of the best of the best in commercial real estate law. Now, five years later they return with even more successes and some fresh takes on the Greater Phoenix CRE sector.

GUST

ROSENFELD

has been the home of Chauncey and McNichol since 1972 and 1990 respectively. The firm, which has more than 60 lawyers located in Phoenix, Tucson, and Wickenburg, is a hub of legal expertise with a robust and diverse roster of practice competencies. /// “We stand on the shoulders of John Gust, Fred Rosenfeld and the other founding partners,” Chauncey says humbly. “They gave us a tradition and culture of client service and doing the right things for the right reasons.” /// Originally from Philadelphia, Pa., McNichol graduated from Villanova University Law School in 1986 and moved to Phoenix for his first legal position. “I made a lateral move to Gust Rosenfeld in 1990. Tom was instrumental in helping me come to the firm,” McNichol says. /// For Chauncey, who was born and raised in Arizona, his background was an interesting mix of working on the family’s ranch in Mayer (now donated to the YMCA for a kids camp), and later as a reporter and photographer for the family’s media business. /// Chauncey most recently partnered with Westcor to redevelop the family’s horse property at Frank Lloyd Wright and Loop 101 into an area of high end auto dealerships, apartments and retail. /// “I worked fulltime in news all through law school at Arizona State University during evenings and weekends,” he says. “It did irritate my roommate because I would listen to the police scanner all night.” /// A journalist by education at Northwestern University, Chauncey’s career as an esquire began on a dare of sorts. A chance meeting with attorney F. Lee Bailey after an interview, during which Bailey declared the innocence of his client, Chauncey approached Bailey and said in no uncertain terms that the lawyer’s argument made little sense. /// “Bailey puffed up and said: ‘Young man, how would you know? You’re not a lawyer.’ I went to law school the next year to prove him wrong,” he says.

IN LEADERS W TE LA REAL ESTA

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JULIE BROWN

Com mer

PROFILES BY

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“ I L I K E A C HAL L E NGE .”

E A S T VA L L E Y

T: “The Southeast area is still really on fire.” “Retail will never be the same. But the smart brick-and-mortar retailers are reinventing space and are redeveloping their properties into mixed-use commercial, residential and office opportunities.” – T O M “It’s a real positive for local commerce as the political climate, at least on the state level, has cooled down. Companies see a less politically charged environment and that is a good thing for bringing business here.” – C H R IS “Phoenix can’t be considered a major city without downtown sports franchises. Sports are a big driver of an exciting downtown, so the talk about the Diamondbacks and Suns possibly leaving downtown for other areas in the Valley, is very concerning.” – T O M © Copyright 2017 by MP Media, LLC

C: “Given the swaths of public land abutting portions of the greater Phoenix area, the southeast Valley has a desirable availability of developable private land, and that market should be heating up.” W E S T VA L L E Y

T: “Progress is slower in the West Valley; however, Avondale and Buckeye are doing well.” C: “The West Valley, for example, Buckeye, has well positioned itself for the future.”

Legends of

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Chauncey was honored by the Sandra Day O’Connor College of Law in March as the “Outstanding Alumnus” during their annual alumni luncheon for his accomplishments, commitment and contributions to the legal profession. Chauncey’s commitment to ASU is not limited to the law school. He was one of the instrumental individuals in establishing The Walter Cronkite School of Journalism. /// “Tom is far too humble to even bring that up in a conversation,” McNichol says. /// Chauncey’s deferential nature also extends to his considerable work in philanthropy, where he has served as an advisor, supporter and board member for many of the Valley’s nonprofit entities. /// “I am involved with legacy charitable organizations, which are run by terrific people and are well-established,” he says. “I also enjoy helping start-up entities.” /// The names of the many venerable institutions he has served with distinction, among others include: Friendly House, Foundation for Blind Children, Arizona Community Foundation, St. Joseph’s Hospital and Barrow Neurological Institute. One of his real passions now is with fledgling nonprofits, and in particular Soldier’s Best Friend, which provides U.S. military veterans living with combat-related Post Traumatic Stress Disorder (PTSD), or Traumatic Brain Injury (TBI) with service, or therapeutic companion dogs which are sourced from rescue organizations. /// “I fell in love with what they were doing [so I got involved]. It is such a great idea and to date they have paired more than 160 dogs with veterans,” he says.

Outside the doors of Gust Rosenfeld, McNichol keeps busy as well, teaching continuing education classes for real estate brokers and agents at the Arizona School of Real Estate & Business. He also finds time to extend some expertise to listeners of Money Radio 1510AM/105.3FM in Phoenix. “Boiling down sometimes complicated legal concepts to present well to a radio audience is a fun challenge,” he says. /// McNichol also recently completed work on the Arizona State Conservation Acquisition Board where he served as Chair. “The goal was to evaluate and distribute resources to worthy governmental entities so they could acquire land to preserve as open space for the benefit of the entire community. The people who had the foresight to originally set up the program are to be commended.” /// Big Brothers Big Sisters of America also benefits from his generosity, in particular, Quentin, a 14-year-old whom McNichol has mentored. “We have gone to local events such as the WM Golf Tournament, an ASU hockey and a Suns game, museums, and the science center, strummed guitars together, and golfed, kayaked, jeeped in the desert, and played tennis. It’s a special and very personal feeling for me.” he says. /// Personal activities tend to merge with philanthropy for McNichol. As an example, he and his wife Mary Alexander, Executive Vice President and General Counsel for DMB Associates, supported the Arizona Kidney Foundation by participating in its annual “Dancing with the Stars” event. The couple took home the “People’s Choice Award” in 2014. “It gave new meaning to ‘relief’ when we walked off the stage, having not tripped over each other during our dance routine.”

Gust Rosenfeld’s reputation in the community for legal excellence is bolstered by the presence of Chauncey and McNichol. Both understand and believe in the founding vision of the practice which is essentially to add value for the client, not how many billable hours are generated. •

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Legends of

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For the FAT HE R & SON legal team of Martin and Keith Galbut, their law practice provides a platform not only to actively engage in the discipline they have a passion for, but also to engage in community, social, environmental, and philanthropic efforts that are important to each of them.

“We both believe in the motto: “Arizona rooted, globally minded,” Martin says. “We are excited about the growth opportunities for the Phoenix community and the further development of Phoenix’s culture,” Keith adds. /// With six lawyers today, Galbut & Galbut has grown in size and stature since the firm’s inception over three decades ago. “The origin of Galbut & Galbut was centered in commercial litigation, trial work and dispute resolution,” Keith says. “Over the last 12 years we have expanded into transactional work, including international business, real estate, banking and finance, and entrepreneurial law. Martin leads the litigation team, and I lead the transactional practice.” /// For Martin, the law was almost a foregone conclusion as far back as high school. “My father was always frustrated that he had not become a lawyer,” he says. Taking cues from his high school debate

coach and mentor, Lena McClure, Martin pursued the legal path, earning a Juris Doctor cum laude from Northwestern University in 1971, after graduating with a B.S. there in 1968. /// What landed him in Phoenix was his first position, working and learning under the tutelage of two other important mentors, Jack Brown and Paul Eckstein. /// Keith, on the other hand, was not immediately convinced of a pursuing a legal career despite being around law growing up. “I always thought of myself as an entrepreneur,” he says. “Through time, I recognized that working with entrepreneurs is what I really wanted to do.” /// Keith earned his Juris Doctor from Arizona State University in 2003, after first earning a B.A. in economics from Emory University in 1997 and a Masters of International Management (MIM) MBA in 2001 from the Thunderbird School of Global Management.

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Martin Galbut Areas of Expertise: Business Litigation, Real Estate Litigation, Corporate and Securities Law Litigation, Intellectual Property Litigation, Alternative Dispute Resolution No. of Years Practicing:

No. of Firms Worked at: Galbut & Galbut, P.C. since 1986. Three prior firm associations. Three adjectives to describe your workstyle: Tenacious, conscientious & thorough Biggest Challenge in R.E. Law now: Factoring into the analysis of inevitable real estate & economic cycles, & the unexpected (e.g., RTC and the Great Recession) If you weren’t a lawyer, you’d be: A Landscape & Seascape Painter One thing people assume about lawyers that is not true: Lawyers, as a group, are very community service and civic-minded.

Keith Galbut Areas of Expertise: Business & Real Estate Law No. of Years Practicing: 14 No. of Firms Worked at: 1 Three adjectives to describe your workstyle: Collaborative, long-term thinking & careful Biggest Challenge in R.E. Law now: Integrating market trends & realities into today’s strategy If you weren’t a lawyer, you’d be: Entrepreneur One thing people assume about lawyers that is not true: Lawyers are problem solvers and care deeply about their communities.

Galbut & Galbut Across a variety of practice areas, the Galbuts and their team of accomplished esquires pride themselves on delivering a very high level of expertise and knowledge for their clients. /// “Over the last 25 years there has been numerous acquisitions of small local law firms by large regional and national firms, which has materially changed client/lawyer interactions,” Martin says. “We still have a clientcentered approach based on flexibility and agility, providing us a competitive advantage.” /// Despite their small size relative to larger firms in the community, Galbut & Galbut’s talented staff has distinguished itself with multiple “Best Attorney” and “Top Attorney” awards, locally, regionally and nationally. /// “We are very fortunate to work on projects that large firms would ordinarily be involved with,” Martin says. “In today’s legal environment that is very exceptional.”

Beyond Phoenix The father and son share a unique bond beyond the law, as each has a love of all things international, both business and personal. “Travel is very exciting and there are always wonderful things to see,” Martin says. “Our family has been fortunate enough to travel all over the world including Japan, Russia, China, Italy and Croatia.” /// Martin is also an avid art curator, especially for Asian historic pieces. His office is adorned with his findings of sculptures with intricate detail, centuries-old vases and other themed antiquities. Paintings that tell stories of long ago also embellish the halls of Galbut & Galbut, as well as Martin’s own artwork. /// Taking after his father’s itinerant spirit, Keith has profound interest in international policy and history. “I have been involved in international health and social issues for many years,” he says. “One of the life experiences that I appreciate most was delivering medical supplies to those in need in Guatemala, Mozambique and Nicaragua.” Keith has traveled and worked in over 45 countries. /// As part of the organizations Advanced Guatemala and the Phoenix Committee on Foreign Relations (PCFR), all of which he serves on as a Board of Directors member, Keith is not only working to better the conditions of the developing world in health and education, but also expanding the footprint of Phoenix as a global city.

Community Arizona and the Greater Phoenix community are also beneficiaries of the two gentlemen, as both supply an indefatigable energy to the state and Valley. Martin in the past was asked by former Arizona Governor Bruce Babbitt to sit on the Governor’s Task Force on Urban Air Quality. He also chaired the Arizona State Air Pollution Control Hearing Board, and in addition he headed the City of Phoenix Environmental Quality Commission. /// Keith’s significant efforts with organizations such as Central Arizona Big Brothers Big Sisters, where he has been a big brother for 14 years, Banner Health Foundation, where is he a board member; Phoenix Committee on Foreign Relations, where he is a board member and Chairman, and Advance Guatemala, where he is a board member, are strengthening the community.

Trends Much of the work the firm handles involves commercial real estate, and Martin is quick to point out that CRE in Greater Phoenix runs in patterns. “We have experienced many cycles since I started practicing in the early ‘70s – including the RTC days and the most recent downturn,” he says. “Now we are in an upturn, but the real estate market is always cyclical.” /// Against this backdrop of cautious optimism, Martin sees lifestyle and work drivers as fundamentally changing the face of this industry. Specific to trends in the legal space, he notes that localized business knowledge is becoming a necessity for lawyers to be exceptional. /// “You have to be multi-disciplined,” he says. “Finance, accounting and business acumen are now married into the law.” /// For the father-son duo, the excellence of the firm is rooted in their belief of high standards. “My mentors recognized and demanded excellence – and that is how I learned,” Martin says.

A collector of antique Asian artworks, this scuplture is one of the many beautiful pieces displayed in Martin’s office.

Legends of

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“I am trying to groom the next generation of Fennemore Craig lawyers.” Jay Kramer, a Director at Fennemore Craig who chairs the Commercial Transactions section, knows the value of a good mentor. /// Spending 33 years and counting in the real estate transaction and finance area of law, Kramer attributes his growth to amazing mentors and a genuine passion for what he does. These days, he spends his time stewarding a recovering market for the next chapter and equipping the next generation of legal professionals with the tools they need to hold their own in the Phoenix market, which Kramer sees as heading toward a positive shift in the near future. /// “I think that 2017 is going to be a strong year in the homebuilding business,” he says. /// With this prediction, Kramer is looking specifically to the Southeast Valley, Pinal County, Queen Creek and Maricopa areas, along with a handful of cities on the west side.

But the apartment boom will be nearing a close, he predicts, with the perfect storm of high rents and aging millennials. /// “I think multifamily has run its course for the time being. It’s getting expensive. So theoretically, as the cost to lease increases, it makes home ownership seem more appealing,” he says. /// Like many others who are foreseeing the Millennial movement toward single-family homes once they start thinking about having children, Kramer believes many of the millennials will trade the urban lifestyle for private homes with backyards and swimming pools, and better school districts for their children.

No. of YEARS

PRACTICING

3 Adjectives to describe your work style: Knowledgeable, enthusiastic & 18

solution-driven

Areas of Expertise: Real estate transactions & finance, including acquisition, infrastructure financing, entitlements, development & disposition

If you weren’t a lawyer, you’d be:

Biggest challenge in R.E. law now:

A Real Estate Developer

Technology. Law firms and lawyers that are early adopters and adapt to the changes in the marketplace, new technologies, and new practice areas will thrive in this fast-moving environment and will be the industry leaders.

No. of FIRMS

One thing people assume about lawyers that is not true: Lawyers are

untrustworthy. 99% of the lawyers with whom I interact are ethical, honest people and strong advocates for their clients.

Office Market Kramer is not particularly bullish on the Valley’s office market. Although there are pockets of fantastic growth such as the State Farm project at Tempe Town Lake, the trend of decreasing square-footage per employee will continue due to technology, telecommuting and hoteling, and increasing price pressures on the services industries, including law firms. /// And while he passes on his insights and market predictions to those coming up in his field, it’s not just in business that he’s hoping to mold the next generation. /// Within Fennemore Craig, Kramer is actively engaged in informal mentoring and relationship-building that goes on outside of conference rooms. /// “Because of all the people who mentored me during my career, I try to give back to others and help them along in their careers.”

Jay at the Bob Bondurant School of High Performance Driving. “The Corvette Z5 did over 115 mph in 3rd gear!”

The Fennemore Craig Foundation

Jay & other Fennemore Craig family & friends (including Big Red) at the Valley Partnership 2016 Community Project at Sunshine Acres in Mesa

It’s not just the finer points of daily real estate transactions he hopes to impart, but also a deep sense of community awareness within his team. /// As one of the founders of the “Fennemore Craig Foundation,” Kramer has been making volunteerism a primary focus of his professional and personal life for the past 15 years. Employees within Fennemore Craig come together regularly to participate in a wide variety of events, including sock drives, walk-a-thons, and serving meals to the homeless. He estimates the firm participates in roughly 30 volunteer opportunities per year, involving children, animals, families and seniors – whatever covers the interests of the employees. /// This spirit of giving is also something he hopes to instill in his children. /// “I always strived to get my kids into some philanthropic interests from a young age,” he explains, and recalls grandparents raising grandchildren picnics and the annual highway clean-up days near Picacho Peak and the picnic lunches afterward. /// Ultimately, Kramer sees the Arizona market as poised for exciting growth, and expects we will be at the forefront of a continuing, if slowmoving, economic recovery. Meanwhile, he will continue doing what he loves to do. /// “I really love practicing law. Too many people these days are practicing law as a ‘job’ so they can earn enough money to do something else. But I truly enjoy practicing law,” he says. “Fennemore Craig has been here since 1885, and I want to make sure it is here for another 100 years!” 19

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“It’s simple: We want good people here who work well

Edwin “Ed” Bull, President of the esteemed Burch & Cracchiolo law firm, is a man of few words, instead choosing to let his actions do the talking. “I believe the most important characteristic that our lawyers and staff have is integrity,” he says. “We have a common goal, providing excellent representation for clients, supporting each other in the firm, and helping serve our community.” Close to nearly four decades, Bull has been part of the fabric of Burch & Cracchiolo. Beginning as a law clerk in 1978, Bull remained loyal to the company and grew as its culture and mentors enabled him to perfect his craft in the practice of land use and zoning law. /// “We have always been a firm of good people,” Bull says. “We work well together, we want to be here, and pride ourselves on doing the best work as counselors.” /// Now with 41 lawyers, the firm began with founders Haze Burch (now deceased) and Dan Cracchiolo, and is considered one of the finest practices in the region today.

HUMBLE BEGINNINGS

Born and raised in Nebraska, Bull grew up with parents who were sharecroppers and his education began in a one-room schoolhouse. “I come from a very humble background,” he says. “I know where I come from and perhaps that is why I appreciate everything today.” /// The modest beginnings however, only fueled Bull’s ambition to achieve with a belief that his destiny was not in the farming business. In high school, he was chosen to attend the Nebraska Crime and Judicial Commission, being one of only two students selected. /// “This group was comprised of judges and lawyers and provided the opportunity for me to interface with them, which I liked,” he says. “I decided then that I wanted to become an attorney.” /// After earning a Bachelor of Arts degree from the University of Nebraska in Lincoln in 1976, Bull attended law school at Arizona State University and graduated in 1980 with a Juris Doctor degree. /// “I received acceptances from several schools, but ASU waived the out-of-state tuition [for me], so I attended,” he says. “I loved the entrepreneurial environment and have lived in the Valley ever since.”

BURCH & CRACCHIOLO Even before ASU, Bull was ever so eager to get started on his career. “I printed a bunch of résumés and made a map of the area law firms,” he recalls. “My roommate and I drove to each one and I handed my resume to a receptionist, naïve enough to think it would end up in the hands of a decision-maker.” /// Fortunately, the strategy worked and Bull got a call from Burch & Cracchiolo to begin what would become a life partnership there. “I had just finished my first year of law school and did not know you could not get a job at a law firm after just one year,” he says. “Lucky, I guess.” /// Over the years, Bull has built an impressive reputation in lock-step with the firm and has been recognized by Best Lawyers in America every year since 2003.

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together & are proud to be part of this community.” COMMUNITY

Bull points to Burch & Cracchiolo’s commitment to the community as one of the defining aspects of the firm. “We believe in giving back to the community in as many ways as possible,” he says. “We strongly encourage philanthropic activities and support our people in their endeavors.” /// The list of organizations that benefit is an exhaustive one, including prominent names such as Phoenix Children’s Hospital, Alzheimer’s Association, Epilepsy Foundation of Arizona and Salvation Army. /// Close to Bull’s heart is Valley Partnership and its community project. “Over 30 of our staff have been involved for 13 years,” he says. “It is great to come to a site in the morning and transform it into something beautiful by the end of the day.” /// The firm also invents unique ways to motivate its teams to contribute financially. “We have a ‘Jeans Friday,’ which allows members to donate some dollars to wear jeans and then Burch & Cracchiolo matches the total,” he says. “Last year created a successful contribution sent to Ryan House and this year we will be donating to Sunshine Acres.” /// On a personal note, Bull is appreciative of the time he has spent witnessing the expertise and commitment of military personnel at Luke Air Force Base, and was recently awarded as a Blue Blazer Squadron, part of its Honorary Commander Alumni Association. /// “I take great pride in being asked to participate,” he says. “I enjoyed flying shotgun in an F-16. More than that, though, these are wonderful people doing their jobs.”

T R E N D S Bull has seen definite changes in the industry

since his career began. “Technology has certainly changed the way business is conducted,” he says. “Now everyone is connected 24/7. The impact of technology and information is transformational.” /// As for commercial real estate in the Valley, Bull is noticing considerable activity around infill development, as well as industrial. Further, like other “Legends of Law” featured, he sees growth opportunities proximate to light rail. /// “Light rail is going to expand into the West Valley and the I-10 Corridor and that is a positive,” he says. /// Under Bull’s leadership, Burch & Cracchiolo will continue to expand its influence across the Southwest U.S. and beyond. Critical to that vision is Bull’s commitment to follow in the footsteps of the firm’s founders. /// “It’s simple: We want good people here who work well together and are proud to be part of this community.”

ZONING, LAND USE ENTITLEMENTS & REAL ESTATE DEVELOPMENT Areas of expertise:

No. of years practicing:

No. of firms worked at: 1 Three adjectives to describe your work style:

PASSIONATE, DOGGED & HONEST Biggest challenge in R.E. law now:

INSTANTANEOUS EXPECTATIONS If you weren’t a lawyer, you’d be:

MUCKIN’ HORSE STALLS One thing people assume about lawyers that is not true:

THAT LAWYERING IS A 9-5 JOB THAT YOU LEAVE AT THE OFFICE 21

Legends of

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Areas of expertise: Land Use, zoning & real estate No. of years practicing: 18 • No. of firms worked at: 2 (Gammage & Burnham & Beus Gilbert) Three adjectives to describe your work style: Collaborative, friendly & trustworthy Biggest challenge in land use law now: Changing political environment If you weren’t a lawyer, you’d be: in the Foreign Service One thing people assume about lawyers that is not true: That all lawyers like to argue 22

Before entering law, Vaz immersed herself in Arizona politics and government. An Arizona State University graduate, she interned for U.S. Sen. John McCain and then worked for the late U.S. Rep. Jay Rhodes during his time on Capitol Hill. /// Following her time with Rhodes, Vaz worked as Chief of Staff for Maricopa County Supervisor Tom Rawles, a position that gave her a wealth of land use and zoning knowledge. She used that knowledge, along with her experience working with zoning lawyers at the county, and returned to ASU to earn her Juris Doctor. /// Like Vaz, Ricker did not travel a traditional path towards a career in law. In fact, she studied math and science as an undergraduate before moving back to Arizona to help run her family’s furniture business. It was her experience at her family’s company, which included some real estate development deals that first gave Ricker a look at the world of real estate law. /// One moment in particular had a major impact on her: While working at the furniture store, Ricker received a phone call from a representative for Stephon Marbury, then-point guard for the Phoenix Suns. He wanted the store to stay open late, so he could purchase some furniture. While Ricker didn’t recognize the name, her father – an avid Suns fan – did, and told her to definitely keep the doors open. © Copyright 2017 by MP Media, LLC

Legends of

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That chance encounter actually blossomed into a friendship that led Ricker and her family to get involved in a retail “ Everywhere I go I run into people – development deal with Marbury outside of Chicago. That deal clients, elected officials, public employees, convinced Ricker that she was meant to be a real estate lawyer, so she went back to school and earned her Juris Doctor from developers, homebuilders, architects, etc. – ASU. /// Both women also use the skills they picked up in their who tell me what a great job Manjula does former careers as assets in their roles as attorneys. Vaz was always more interested in politics and community-building & how much they enjoy working with her. than transactional law and now takes a community-oriented She is a huge asset to our firm & we have approach in her practice, which includes land use-related services, master-planned zoning approvals, due diligence, been blessed by her presence.” and the negotiation and implementation of development agreements, amongst other services. /// She also had plenty — G R A D Y G A M M A G E, JR. of help along the way and points to great mentors like Paul Gilbert (another one of this issue’s “Legends of Law”), Karrin Taylor and Grady Gammage, Jr. as a few of the professionals who informed her approach to land use and zoning law. /// “Not only are they good lawyers, they are important and good stewards of the community,” Vaz says. /// In addition to affecting the community through law, Vaz is an avid volunteer and currently on the Tempe Community Action Agency Board of Directors. /// While Vaz’ role is to gauge and respond to public opinion and deal with the politics of land use and zoning, Ricker describes her job as making sure development strategies and agreements are well documented, so that once a strategy is selected, it is executable and to maintain responsiveness to the community and support redevelopment. /// And support development, she has. Her practice includes client representation in mixed-use, retail, industrial, office, resort and condominium projects – and she was recently named in Best Lawyers in America. /// Despite being a mother of three young girls, she also finds time to be support philanthropy. Her favorite is Colleen’s Dream Foundation, a local charity that supports ovarian cancer research.

“You have to love all of it” Areas of expertise: Real estate transactions law No. of years practicing: 11

• No. of firms worked at: 3

Three adjectives to describe your work style: Goal-oriented, focused but flexible Biggest challenge in RE law now: This is a wonderful time there is no single, great challenge. If you weren’t a lawyer, you’d be: Asleep! One thing people assume about lawyers that is not true: That we’re misanthropists - it’s usually the opposite

Ricker says, speaking about her work and life balance. “Sometimes one thing needs more attention, sometimes the other does, but if you really enjoy all of it – and I feel fortunate that I do – It’s pretty organic.” /// As both lawyers move forward in their careers, they see balance as a key component of Gammage & Burnham’s path moving forward. They both agree that it is necessary to balance working with large, institutional clients and smaller local clients in order to offer communities the development they want and services they need. /// Vaz points to her work representing ASU and also helping developer, Dave Wetta bring Postino to the old art studio and schoolhouse in Tempe as an example of that balance.

One pertinent question Vaz asks is “How do we make sure this is the community we all want?”

/// In the long term, Vaz sees a need for those in her profession to remain responsive to the communities they work in and also plan for the integration of new technologies. For instance, Vaz is interested in seeing how the potential emergence of driverless vehicles will affect parking structures, parking needs for new development, and land use in general. /// “For me and my practice, it’s a lot about knowing the politics of the cities and the city councils and being more attuned [to client needs],” Vaz says. “I think when we’re looking at the future of law, we’re looking at law as much more of a strategic advice, and you’re probably talking about both business strategy and legal strategy as opposed to ‘this is what the law says.’” /// She also sees the need for more services-oriented development, such as a grocery stores, in Downtown Phoenix in order to attract people to both work and live there. /// In the future, Ricker sees some of that development playing out and even believes a grocery store will be coming to Downtown Phoenix sooner rather than later. She also sees an emerging push towards multi-use development, vertical development and redevelopment projects. She believes some redevelopment projects passed over during the last upswing will be picked up this time around. /// “We are very lucky to be involved in big marquee projects but, satisfying as they are, it is just as satisfying to be involved in smaller projects with big community impact,” Ricker says. © Copyright 2017 by MP Media, LLC

REIAC Southwest Open Invitation Event REIAC/Rockefeller Challenge Thursday, May 4, 2017, 4:00 pm – 6:30 pm REIAC Southwest REIAC/Rockefeller Challenge May 4, 2017 Arizona Country Club Online Registration Open Please join us for the 4th annual REIAC/Rockefeller Challenge in support of the Master of Real Estate Development (MRED) program at the W.P. Carey School of Business. Three competing teams of graduating MRED students will each present a development solution for a storied piece of local Arizona real estate. Each team will have just 10 minutes to present, with the winning team selected by the audience. The winning team members will each receive a $1,000 cash prize, up to $6,000. Registration to attend is open to the public. Schedule:

Location:

4:00pm Registration and Networking 4:30pm – 5:30pm Challenge 5:30pm – 6:30pm Networking Mixer

Registration:

Thursday, May 4, 2017

Hosted beverages and appetizers.

Arizona Country Club 5668 E. Orange Blossom Lane Phoenix, AZ

REIAC Members: Free Invited Guests: Free – must be accompanied by a member. Non Members $35.00 Students $25.00

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Legends of

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is a partner at Lewis Roca Rothgerber Christie LLP and a renowned expert on Arizonan land acquisition, entitlement and development issues. Although he is well-recognized for successful real estate projects, including many in the Desert Ridge master plan development such as High Street and American Express projects, he did not follow the conventional path to this career he has excelled at. The 1988 recession took him off the law firm litigation track and on a path through the Attorney General’s Office and the State Land Department.

When Phalen was a boy, law interested him because he saw it as a common occupation of U.S. Presidents. /// “When I was younger, I was very interested in history and political science. I studied the Presidents and realized that most of them were lawyers,” Phalen says. “Because I wanted to be President, I thought I needed to become a lawyer first. I have since reconsidered that career path.” /// Like most students, his career path was still undefined when he graduated from law school. After clerking for Judge William Eubank on the Arizona Court of Appeals and entering law as a litigator, he soon found that litigation wasn’t for him. He was met with a blessing in disguise when he was laid off during the recession in the late 1980s. That career transition led to apposition in the Arizona Attorney General’s Office as an Assistant Attorney General in the Land and Natural Resources Section, working during the Bob Corbin and Grant Woods administrations. /// During his time there, one individual in particular helped him develop his transactional skills: Patricia Boland, a top Assistant Attorney General working at the agency at that time, who offered him friendship, mentorship and guidance. She taught him about real estate transactions, introduced him to many in the Arizona real estate development community, and set the ground work for a successful private practice career as a real estate and land use attorney. /// “The 1988 recession actually did me a great service,” Phalen says. “It forced me to change the direction of my career. It introduced me to some great people and it allowed me to transition from litigation into land use and real estate transactional work. You never know where circumstances are going to take you.” /// His diligence and hard work paid off and he eventually advanced to manage the Planning and Asset Management Section at the Arizona State Land Department. He soon transitioned back to a private real estate law practice. © Copyright 2017 by MP Media, LLC

Legends of

A R E A S O F EX PE R T I S E : • Real Estate Development • Zoning & Land Use • Acquisition & Leasing of State Land

LAW

NO. OF YEARS PRACTICING: 33 NO. OF FIRMS WORKED AT: 7 (including 2 state agencies) IF YOU WEREN’T A LAWYER, YOU’D BE: A real estate developer

ONE THING PEOPLE ASSUME ABOUT LAWYERS THAT IS NOT TRUE: People always ask me “Isn’t there a law that says ….” They think there’s a law for everything & that every lawyer knows every law in the statute books off the top of their head. There isn’t and we don’t.

BIGGEST CHALLENGE IN RE LAW NOW: There are many still

stung by the recession & trying to save money by proceeding without legal advice, without appropriate preparation, & without much of a strategy. This ends up costing them time & money.

The year of 1999 was a turning point for Phalen. He opted to return to private practice because he longed for a career that offered him more independence and flexibility. /// He began at what was then Streich Lang in Phoenix, which later evolved into Quarles & Brady, where he practiced as a Real Estate and Land Use attorney. From there he transitioned to Fennemore Craig, a firm where he would spend 14 years and earn countless relationships in Phoenix. He chaired the zoning and land use subgroup there before moving to his current position at Lewis Roca Rothgerber Christie, LLP. /// Phalen’s extensive expertise in the field has allowed him to guide his clients through the complexities of rezonings, purchase and sale agreements, ground leases, development agreements, and the often process-intensive governmental affairs and municipal law cases. /// “In many ways, the agencies are no different from the private sector. Many times the process requires both you and your client to do our part of the transaction. It’s an educational process factoring in the additional time required to perform our part, and to balance the needs of both sides, to work together, and get the deal done,” he says.

Outside of work, Phalen is a dedicated family man, with a philanthropic wife and three children that are just on the cusp of entering their own professional careers. His daughter is following in his footsteps and entering law school this fall, while his sons are studying public policy and nursing. /// On the subject of giving back, Phalen himself feels passionately about offering aid to domestic abuse victims. He and his team were the first to successfully obtain city bond funding for a new domestic abuse center on behalf of Chrysalis, a shelter for victims of domestic violence. /// “We were lucky enough to be the first ones to successfully get through the process to obtain the City bond funds and the funding came just in time for them to open their brand new shelter facility,” he says. /// Following this win, he served on the board of Chrysalis for five years. Now, he assists his wife, who is a chemistry teacher at Tempe High School and an active leader in the school’s Key Club, helping her with community service programs and fundraising. /// “She’s involved in a lot of events, so I get involved in a lot of them too. Basically, I follow her around and she puts me to work,” Phalen jokes. /// His advice for young professionals interested in real estate law is that now is a good time to pursue it, because the demand for young lawyers is increasing due to the improving economy and the gap in the supply of young lawyers caused by the recession. /// “The demand [to enroll] in law schools has dropped dramatically,” he says. The schools are more actively seeking students, which creates a big opportunity.” 27 © Copyright 2017 by MP Media, LLC

Legends of

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Rusing, Lopez & Lizardi, P.L.L.C.

IF YOU WEREN’T A LAWYER, YOU’D BE:

A lawyer; it is what I love doing.

ccording to a Morrison Institute for Public Policy at Arizona State University report from 2014: “The population of the Sun Corridor (which includes Phoenix and Tucson) is expected to grow by 60 percent between 2010 and 2040, so 60 percent more roads, houses, schools, offices and shopping centers will need to be constructed in order to meet demand. /// So, long-time Tucson resident and attorney, Pat Lopez, who also has ties to Greater Phoenix, has strategically been heavily involved in the commercial real estate legal transactions that are making up this “megapolitan” surge. /// “The Tucson market is doing real well now after lagging Phoenix early in the recovery from the last downturn,” Lopez says. “Employment numbers are solid, which means there are healthy commercial businesses on the horizon.”

AREAS OF EXPERTISE: Commercial real estate transactions & development, land use, commercial finance & business transactions

NO. OF FIRMS WORKED AT: 3 (Brown & Bain, now Per-

kins Coie; Gammage & Burnham; Rusing, Lopez & Lizardi). I also did a 4-year stint as a full-time professor at the University of Arizona College of Law.

THREE ADJECTIVES TO DESCRIBE YOUR WORK STYLE:

Collaborative, creative & caring BIGGEST CHALLENGE IN RE LAW NOW: It has always been, & remains, predicting the future

NO. OF

YEARS

PRACTICING:

ONE THING PEOPLE ASSUME ABOUT LAWYERS THAT IS NOT TRUE:

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years ago, Lopez and Mick Rusing opened the doors of Rusing and Lopez (now Rusing, Lopez & Lizardi), a firm with expertise in a diverse set of competencies including real estate transactions and development; lending and finance; commercial litigation; business and corporate transactions; labor and employment law; and intellectual property transactions. “After teaching for four years at the University of Arizona College of Law, Mick was the first person I called after deciding I wanted to return to private practice,” Lopez says. “We met for lunch, and out of that came the idea to start our own law firm.”

Sunny Starts Even as a young child growing up in Tucson, Lopez had a notion that he wanted to attend law school. His father helped pave the way for the legal journey by introducing the young scholar to an unlikely fountain of wisdom on the subject: an Oriental Studies professor at U of A, where Lopez would later attend as an undergraduate. /// “He gave me some fabulous advice, which I have since passed on to others,” he says. “He said it did not matter so much what I majored in to get into law school, but rather it was important to choose a subject that I was interested in, and to take a diverse curriculum of business and English courses in addition to my chosen major.” /// Keeping this in mind, Lopez earned his B.A. in Psychology in 1978 and along the way discovered an interest in commerce. “Heading into law school I realized I was drawn toward the business aspects of the law, specifically economics, finance and tax,” he says. /// And finding his passion proved to lead Lopez in the right direction. Upon graduating from the prestigious Stanford Law School in 1981, he began his professional career at Brown & Bain (presently Perkins Coie) in

Phoenix, working under Ron Lowe and handling CRE transactions. After his initial foray into private practice, Lopez accepted the aforementioned faculty position at U of A. /// “I had the fortunate opportunity to teach full-time on real estate transactions, contracts and land-use planning.”

Rusing, Lopez & Lizardi That career-changing phone call Lopez made to Rusing to meet for lunch was really not anything outof-character. “Mick was a year ahead of me [at Stanford],” he says. “There was not a large contingent of Arizona (native) students at Stanford, and so we became quick friends. We even wrestled together on the law school intramural team.” /// And so the firm was born, along with a secretary who quickly became a full-time employee. “We then hired our first associate who was a former student of mine,” Lopez recalls. /// Later as the firm expanded, Oscar Lizardi came on board as a partner. “As we grew we had our eye out for talented lawyers who could join us.” Today, Rusing, Lopez & Lizardi has a staff of 16 lawyers.

Community Efforts Beyond his legal prowess, Lopez has crafted an impressive resume of community-oriented philanthropy efforts. “I first worked with Chicana Por La Causa in 1981 and joined its Tucson Advisory Board Directors in 1990. I have helped with its mission ever since. It has been an honor,” he says. Chicana Por La Causa is a statewide community development corporation that aids residents of low-income neighborhoods through a variety of programs focused on assistance and economic growth. /// Lopez also has devoted considerable time and energy in a capacity as a Board Member for various nonprofits, including Directors of Our Faith, Our Hope, Our Future Charitable Foundation, the CTSO Scholarship Foundation, and Arizona Land and Water Trust.

A Side Note

From Lopez’ perspective, the most fundamental transformation in the CRE industry has been in financing. “There has been an evolution,” he says. “When I began in the business, commercial banks, insurance companies and institutional investors were lending dollars directly to owners. Now many transactions are conducted through securities offerings and lending pools.” /// Collateralized mortgage backed securities, which Lopez describes, have altered the traditional relationship between lender and borrower; he says: “There are no counter-parties to negotiate with now when situations arise. The borrowing costs are lower, but the servicers of these obligations do not have the authority or flexibility to alter the terms of the loan agreement when the need arises.” /// This type of scenario has caused problems in more than a few of his transactions. “It is in the best interests of lenders and owners to work out problems when changes are needed, and that is far more difficult [to do] now,” he says. /// Lopez, along with his team, will be helping to shape the future of the Sun Corridor in the firm’s next 25 years. “I learned the importance of commitment, dedication and drive at Stanford,” he says. Undoubtedly those characteristics are what motivate Lopez to serve his clients and community with continued passion and excellence. © Copyright 2017 by MP Media, LLC

At the rim of Mount Kilimanjaro (Pat is pictured in the dark green jacket, his daughter in the red, and his old friend, Jim Komadina, is in the blue on the far right).

Expert

UPDATE

“I didn’t know I wanted to be an attorney, but I always knew I wanted to be involved in natural resources.” KARLENE MARTORANA

made her dream of working with natural resources come true by becoming an attorney with Snell & Wilmer, where she practices water, natural resources and real estate law. She has been listed in the “Southwest Super Lawyers,” Rising Stars Edition in the category of “Energy & Natural Resources” during the years 2013 through 2015. /// After attending the University of Arizona for environmental science, this native Arizonan went away to the University of Maryland, where she obtained her Juris Doctor with a certificate in environmental law. Today, she helps municipal, industrial and agricultural water users around the state and represents clients in the negotiation of contracts for the transfer and storage of water rights. In her opinion, one of the best parts of being in water law is that it’s always presenting a new, interesting challenge. /// “Water law is always changing, as is the supply. You don’t know the amount of water that nature will deliver in any given year, which changes the dynamic of applying the water laws we have in place,” Martorana says.

CHALLENGES In a place like Arizona where construction continues

to sprawl outward beyond the main bastions of water supply, this can pose a unique set of challenges. Not to mention, threaten one of the favorite pastimes of the desert dwellers: golf. /// “When development was occurring on the fringes of developed areas, water challenges were more pronounced, but for any new significant water use, industries or golf courses with high water demand – those are the clients that face the biggest challenges,” she says.

FUTURE

Martorana foresees a future where water users must become more creative in finding water solutions, in order to effectively get water to the places they want to build in order to maintain a competitive edge. /// “Real estate developers are facing challenges in shrinking water supplies and increasing demands,” she says. “Within populated areas of Arizona (that have more regulations for water use), it becomes harder and harder to comply with those regulations if the water is not physically or legally available.” /// As Chair of the Environmental Natural Resources Council for the State Bar, Martorana spends most of her hours in and out of the office focused on natural resources, constantly broadening her knowledge base to best serve her clients. /// This type of continuing education is exactly what she encourages future lawyers interested in water to invest their time into, yet those interested in water law would best serve their careers by not focusing too narrowly on one area. /// “Water rights involve so many different types of law, so it’s always good to have a background in finance law, for example, or corporate law, real estate, etc.,” she says. “It’s good to have exposure to other areas of the law in order to be a well-rounded water attorney.” /// As Arizona laws regarding water and the technological advances that drive change continue to evolve, Martorana is keeping her focus on what she loves – her family, including two small children, and maintaining a strong presence in her community with professional organizations, such as Urban Land Institute. /// “You live in the desert, but you never should take for granted the fact that we turn on the faucet and water just comes out. In practicing water law, I’ve really come to appreciate how that water got there,” Martorana says. © Copyright 2017 by MP Media, LLC

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Expert

UPDATE

From the S&W Environmental & Natural Resources Law Blog:

Top Five Issues to Watch in Arizona Water Law By Karlene Martorana CAP SYSTEM USE AGREEMENT. DROUGHT ON THE COLORADO RIVER. Although the winter snowpack in the Rockies is off to a good start, the drought in the southwest is not over. One wet season cannot overcome the water deficit in reservoirs along the Colorado River caused by the prolonged drought. While Arizona has received substantial winter storms this year, Lake Mead is still less than half full.

DROUGHT CONTINGENCY PLAN. If the elevation level in Lake Mead drops below 1,075 feet, the Bureau of Reclamation would cut deliveries of Colorado River water to Arizona. California, Nevada and Arizona are negotiating a plan to address how the states would allocate a shortage on the Colorado River differently than provided for under existing guidelines.

REGULATORY CHANGES TO WATER REUSE. Treated wastewater is used frequently in Arizona to water turf in parks and golf courses. But under current Arizona regulations, direct potable reuse (adding treated wastewater to the drinking water supply) is prohibited. The Arizona Department of Environmental Quality has begun revising the rules governing the use of reclaimed water. ADEQ plans to issue draft rules in two or three installments in 2017 and 2018.

On Feb. 2, the Central Arizona Project and the Bureau of Reclamation entered into an agreement to allow the CAP system to be used to transport non-CAP water. The agreement will permit non-CAP water to be wheeled within the 336-mile long canal, which will facilitate the recovery and delivery of stored water and help the state meet firming obligations under Indian water right settlements. As we watch the implementation of the System Use Agreement we should see an increase in creative solutions to meet demands.

CLOSURE OF NAVAJO GENERATING STATION. The owners of the Navajo Generating Station (NGS) announced this week that they voted to close the station in 2019. The NGS provides power to move water through the CAP canal 24/7. CAP officials recently reported that, in 2016, CAP would have saved approximately $27 in energy costs per acre-foot of water if it had purchased its power from the open market rather than from NGS. Whether the CAP’s change in power supplies will actually decrease the costs of CAP water, or perhaps just offset increases in cost under a drought contingency plan, remains to be seen. *Read the complete blog entry at: http://www.swlaw.com/ blog/environmental-and-natural-resources/2017/02/18/topfive-issues-to-watch-in-arizona-water-law/

Broker of the

MONTH

Commercial Executive Magazine’s March 2017 issue’s “Broker of the Month,” Rick Foss, made the decision to embark on a commercial real estate path in 2000 as his second career choice, but it has proven to have been a visionary one. As a highly successful industrial sector broker and a senior vice president at NAI Horizon, Foss has built a sterling reputation in the Valley by providing his clients with unique market insight and actionable intelligence on leasing, sale and purchase decisions. /// “I was in sales management at the time and my wife was an officer in the Air Force,” Foss says. “When she was leaving her posting in Washington, D.C., she told me she wanted to go home to Phoenix. That’s how I ended up here with a career change and it was the best decision I ever made.”

With the decision to venture west to put down roots, Foss needed to find a new path professionally. His brotherin-law was an office broker and was the one who put the idea of joining the CRE industry in his head. With that endorsement in mind, Foss began reaching out to the brokerage community and ultimately signed on to Insignia (acquired by CBRE in 2003), working for Pete Klees. Although Klees was younger than Foss, the pair worked well together to develop a strategic framework for growing the business. /// “He gave me some great advice – to bring value to the office and clients, I need to specialize in a geographic area and a product type,” Foss says. “Pete was working the industrial sector and we mapped out where our

office was underserved in the owner / user manufacturing space.”

CRE CAREER SUCCESS After four months filled with dawn-to-dusk doorknocking and outreach, Foss grew impatient, but remained persistent in trying to capitalize on deals. /// “I thought I would just kill it, as I was very successful in my previous career, but I quickly learned that this business is not what you know, but who you know – as cliché as that may sound,” he says. “Even then, it takes time for contacts to run through their leases, or outgrow their space before you get to work with them.” /// Despite taking three years to return to his previous career’s paycheck

level, Foss knew that the CRE choice was the correct one. /// “What I love about this business is that you are responsible for yourself, and you earn what you earn,” he says. “If you don’t go out, make the calls, and create value for business owners, you have nothing.” /// More than that, Foss appreciates the ethics of the industry: integrity, transparency, and trust. /// “I learned from my grandfather that your word is your bond and the handshake is more important than the contract itself,” Foss says. “Every day I bring my reputation and earn respect by keeping promises.” /// Other mentors extend throughout his family, including his father, who was a surgeon. /// “I was supposed to go into medicine, but did not want the responsibility of

life or death,” he says. /// Undoubtedly though, the most important guidepost for Foss is Karen. The two have been married for 30 years and he credits her for much of his success. /// “She is my best friend and just an amazing individual,” he says. /// A director at Banner Health, Karen introduced Foss to many general officers while stationed at bases during her military career. /// “I remember one conversation I had with a two-star general in Biloxi, Mississippi, at Keesler Air Force Base. I asked him how he handled all of the pressure as a base commander, and he replied that he was not operating on anyone and did not have his finger on the nuclear button. I always have thought that was great perspective,” Foss says. © Copyright 2017 by MP Media, LLC

Broker of the

MONTH

RICK FOSS, Broker of the Month Presented by

Willmeng Construction

“The willingness of NAI Horizon professionals to collaborate with each other and an aggressive recruitment initiative are among the strengths of our company. We now own our shop and welcome other experienced agents seeking to grow their business.” 35 © Copyright 2017 by MP Media, LLC

Broker of the

MONTH

A NEW HORIZON

SPECIALIZATION

After spending eight years at Grubb & Ellis, Foss made his move to NAI Horizon, the largest CRE managed network worldwide. NAI Horizon has completed more than $55 billion in annual transactions and manages more than 250 million square feet, with 325 offices located in 55 countries. /// As each office is locally owned and operated, the Principal and CEO of the NAI Phoenix office, Terry Martin-Denning, said she believes clients benefit from the international platform and broker ownership, because then the decisions are not corporate-driven. /// Foss is quick to point out MartinDenning’s role in building a culture of collaboration, talent and outstanding client service. /// “She gets more work done in a day than I do in a week,” he says.

Foss focuses his industrial expertise on owner/users of builders ranging from 10,000 to 50,000 SF, and most recently on properties on the lower end of that range in the 10,000 to 12,000-SF market. /// “Rick has a flair for working with unique industrial properties and meeting diverse clients’ needs,” Martin-Denning says. /// “The process is about thinking beyond the obvious and being creative,” he says. “Finding properties are the easy part – it’s walking the client from start to finish that is the difficult, but fun part of the job.” /// Some of his most interesting deals include the renovation of a 26,000-SF space for use by the Coyote Curling Club. /// “The owner could not lease the building for three years,” Foss says. “Now the tenants love this space and their three ice rinks.” /// Another project involves a 5.5-acre Mesa site that Foss and a NAI Horizon colleague, Tom Bean, listed two months ago. /// “The building is a high-end construction facility. The owner no longer needs the building, the location is highly specialized, and there is not a lot of product,” he says. “There are significant upgrades including a worldclass security system and a sand and oil interpreter system to protect ground water /// In addition, a larger 35,000-SF build-to-suit for First Electronics showcases Foss’s commitment to the long-run success of his clients. /// “I have watched and been with the company owner as she outgrew her previous space,” he says. “Last December she moved from her 13,000-SF location to the new facility. She is a true state-of-the-art success story.”

TRENDS For Foss, there is one overriding trend that is impacting the Valley in the industrial space: lack of supply. /// “Clients are looking for product that really does not exist in the market,” he says. “There is just not enough build-to-suit and there has not been large-scale building for this sector since 2007.” /// The lack of new construction means Foss is working with existing buildings, many of which have become obsolete. /// “If you look at the availability, where there might have been 10-14 viable options available potentially meeting a clients’ needs, now there are only three to five.” /// He was also pleased to report the increase in energy awareness by owners and tenants, particularly in the use of energy efficient lighting. /// “Efficiency is becoming increasingly important,” he says. “Unfortunately one area where adoption is still slow is solar for the small to medium businesses. Solar needs to become more efficient and more affordable.” /// This issue’s Broker of the Month’s value proposition is a simple one. /// “I talk to clients and present them the truth and straightforward information,” he says. “I find out what the client’s concerns, needs and fears are, and then I help them make intelligent decisions. I never push a client to do anything that is not in their best interest and that’s what I’d like my legacy to reflect.” 36 © Copyright 2017 by MP Media, LLC

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Company

UPDATE

Founded in London in 1783, JLL is one of the oldest commercial real estate firms in the world, but that doesn’t mean it is content with resting on its laurels.

he latest example: A visual identity refresh that emphasizes the personal relationships that make up the industry and give clients a front row seat to the collaborative climate that drives each of JLL’s 280 offices across the globe. /// “A lot of firms have identities that are unique to the city in which they operate,” says John Bonnell, Managing Director at JLL in Phoenix. “We are a bit different. Our customerfirst, very human approach is shared throughout our company, regardless of office location. You can expect those values to translate across our global

footprint.” /// This carefully crafted visual identity rebrand was initiated by JLL’s Chief Marketing Officer Jill Kouri roughly two years ago and went live on Valentine’s Day of this year. Kouri saw the need for the company to pursue an innovative direction that would differentiate it from the competition and speak to the heart of JLL’s timetested approach. /// Under her direction, the company will keep its logo and name, while shifting customerfacing marketing materials so that they are friendlier and more welcoming to clients. /// “The client always comes first,” says Dennis Desmond, Senior Managing Director at JLL

in Phoenix. “Are the clients’ goals being met? That runs through every industry line that we have. I think the marketing tools that we have now say exactly that.” /// This includes a shift away from materials that are inundated with building photos or mountains of text-based information. JLL is still focused on providing the industry-leading data they have become known for, and that clients trust to make informed decisions, but the company will implement those tools in a very “human” way that tells a visual story to the client – an approach that is not currently available in commercial real estate. /// “Today’s world is much

more visual, and our team has never shied away from using the latest tools to connect with the market in a very fresh and approachable way. It comes down to how we can best transfer information and opportunities to our clients, so that they are their most successful,” says John Pierson, Managing Director at JLL in Phoenix. /// Clients who have visited the company’s website since the launch or have interacted with brokers and representatives will notice the change, but they will also see the same JLL they’ve trusted for years.

Company

UPDATE

Company

UPDATE

In the course of just eight years, the As it grows and evolves, JLL continues to serve clients based on the Phoenix office has expanded to include not principles that have made it a leading force in commercial real estate. only tenant representation but also agency The Phoenix office has deep roots in the Valley. It has long provided leasing, commercial real estate investments, facility management services for local clients and, when operating multifamily investments, retail brokerage as the Staubach Company, was known as one of the premier tenant and project development services in industries representation firms in the metro market. The big shift came in ranging from banking and healthcare to education 2008, when JLL purchased the Staubach Company (founded and data centers. /// “We’re in the corporate services by former NFL quarterback Roger Staubach) and started world for major corporations,” Pierson says. “When growing JLL in Phoenix as a new entity. Prior to the deal, we partner with a client on their commercial real JLL had hundreds of facilities management employees estate needs, we’re able to provide value and expertise in in the Phoenix area embedded with corporate clients all aspects of their transactions.” /// That means JLL may like Intel and Bank of America. /// JLL’s purchase of have everything from a broker managing their site selection, the Staubach Company allowed it to now emerge leasing, acquisition or disposition, to a facility manager on as a brokerage force, beginning a process that site managing a whole facility to occupancy planners for client would grow the office’s commercial real estate employee growth and workplace strategies. service lines dramatically.

“People who engage with us on a daily basis know who we are,” Bonnell says. “Those values will continue to shine through, though our materials will definitely be presented in a new way.”

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Company

UPDATE The New Assets In order to manage these new services, JLL brings two major assets to the table: technology and collaboration. The company has wholeheartedly embraced the role of technology in the industry, but does not let that distract from the importance of maintaining positive working relationships between all of its business service lines. /// To emphasize the importance it puts on being cutting-edge, JLL spends $250 million per year on technology to help its employees best serve clients. On a national level, JLL has two teams dedicated to finding new technologies that aid in property marketing and business development. JLL also acquires new technologies that serve everything from marketing purposes to tenant representation. /// “We don’t follow the change; we create a lot of the change that you will see happening,” says Desmond, referring to JLL’s collaborative approach and the adoption of new technologies in the industry. /// For instance, the company recently acquired Corrigo, a technology solutions company serving the facilities management sector that uses apps and automation to streamline initiating work orders and other facility management needs. /// JLL is able to leverage its global footprint to bring these “best technologies” from all markets to Phoenix and its other offices. /// “Technology may emerge at a JLL office in New York or Australia, but it doesn’t stay exclusively there,” Bonnell says. “It gets shared across all of the JLL offices, so our teams and our clients get the benefit of this major company brought down to a personalized level.” /// The company is also heavily invested in CRM, 3D mapping, drones and virtual mapping tools that all improve client experience. JLL even utilizes a proprietary technology that allows brokers to give out-of-town prospects virtual fly-throughs of facilities, so they can make informed decisions from thousands of miles away.

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Company

UPDATE An Even Larger Footprint JLL keeps a detailed database of client and prospect interactions so that brokers in different cities know when they are dealing with the same client. This allows brokers from multiple offices to work together to provide service to clients who have footprints in multiple marketplaces and provides a smoother client experience by eliminating redundant calls. /// The company also promotes collaboration across service lines by creating an environment that encourages innovation and employee retention. JLL’s “DaVinci Awards” are given out annually to employees who discover innovative solutions to problems facing the industry. /// Yet as much as one of the world’s oldest brokerage houses champions technology, in the end, it knows that modern advancements are only truly successful when they are used to strengthen personal relationships and client trust. ///

“The bottom line is it’s always going to be all about people,” Desmond says.

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Company

SPOTLIGHT

“My father told me ‘you’re going to be faced with decisions in business that maybe monetarily you’ll make more, but you should never go down that road if it compromises your integrity,’” Hank says. “Your integrity is everything; it’s worth more than money. Once you’ve lost that, you’ve lost it all.” /// Tucson Realty and Trust Co. started before the birth of Arizona as a state in 1911 and it has stood strong through all its challenging economic times. /// When his grandfather, George H. Amos, led the company, it was an insurance, real estate, property management and trust company. When the firm passed to his son, George H Amos Jr., the insurance division merged with Lovitt and Touché in the 1980s and became one of the top 50 insurance companies in the country. /// Hank’s family shares his passion of real estate. His cousin Pat Swingle is involved in the insurance side, while his brother gravitated more towards big development deals and now owns over 15 mobile home parks in the southwest. /// Hank believes he owes his strong work ethic from his father, George H. Amos Jr., who instilled that value into him and his brother. /// “You almost feel guilty when you’re not working, because it feels like you’re not honoring your commitment,” Hank says. “There’s that sense of balance that you need to have, and I’m working on that.” /// Although his father and his grandfather were focused primarily on the insurance side of the company, Hank found himself drawn toward CRE. When he took over the company in 1988 at the age of 28, he transitioned the residential division toward luxury real estate. In 2001, he sold that 500-agent insurance division to the parent company of Long Realty, a Berkshire Hathaway Affiliate; however, he continued to grow the company’s property management and commercial division. /// While this period was taxing on him, as it was the beginning of the RTC period that devastated Tucson’s economy, he was thankful for everything he had learned during those trying times. /// “Tucson in the last 10 years has been in a recession, and I’m proud in my ability to navigate the very challenging and dangerous waters that a lot of companies didn’t survive during those difficult periods.” /// He has strived to follow in his father’s footsteps and continued to aim for a reputation of excellence.

believes the foundations of a successful real estate firm are integrity and hard work. These values were engraved in him from his father, and they’ve paid off – after all, Hank is the President of Arizona’s longest standing real estate firm today and it has been the center of his family’s work for three generations.

Company

SPOTLIGHT

Tucson Realty and Trust Co. current team

Tucson Realty and Trust Co. team in the 1930s “What sets us apart is that we’re the leading independent real estate company, we’re not affiliated with a national brand, and a lot of individuals want to do business with a local expert,” Hank says. “We’re known for our ethics, integrity and fair play, not only from a business standpoint, but also from being involved in helping our community and shaping it.” /// Hank formed Southern Arizona Leadership, where he has concentrated on merging Tucson’s resources and leaders to enhance the city’s economic stability. He was also awarded “Man of the Year” and raised more than $50,000 for pediatric cancer for the City of Hope hospital. /// Humbly, he says he owes a lot of his success to the mentorship he was offered by his forum through the Young President Organization (YPO). The forum is a lot like a private board of directors, covering business, family and personal

issues. /// “I was blessed to have individuals like that in my forum group,” Hank says. “They are true leaders in the state of Arizona.” /// And looking ahead, Hank sees the upcoming years looking very bright for Tucson economically, which he attributes to the Rio Nuevo Multipurpose Facilities District and improving political leadership. /// “The Govenor has really focused on the success of Tucson. He’s realized that for the state to succeed you can’t have only one community be the economic engine,” he says. “You have to have a blanaced state. Gov. Ducey realized Tucson needed his help and he has reolcated businesses to Tucson. He also understands the importance of trade with Mexico.” /// Additionally, this magnitude of economic prosperity hasn’t been seen since the mid ‘80s. /// “Last year we were third in the nation in job growth. We created 5,300 jobs and that’s had a really positive impact on Tucson,” Hank says.

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History of:

WELLS FARGO

The History of

W E L L S FA R G O Sure, many of you have in your wallet a credit card with the signature red boxed-logo or at least have walked into one of the 6,314 branches – but how much do you really know about the history of the second largest bank in terms of deposits, home mortgage servicing, and debit cards? /// Yes, we’re talking about that distinctive red and gold stagecoach.

Interior of Bank of Arizona in Prescott, 1898. Sheriff & Rough Rider Bucky O’Neill stands at the teller window.

On March 18, 1852,

Wells, Fargo & Co. was born in New York City by two successful expressmen, Henry Wells and William G. Fargo. It was during the “Gold Rush” of California and they knew they had to get in on the action, so they jumped on the bandwagon of using a stagecoach and founded an express and banking business that would connect the East Coast with the gold fields of the West. Not long after, Well Fargo altered its name and opened for business in San Francisco and Sacramento on July 13, 1852. By 1866, the company with the slogan, “The Fargo Way” was managing the largest stagecoach operation in the world, causing it to become one of the most recognizable logos today.

History of:

In 1864, Henry Wells was famously quoted for summing up the company’s philosophy:

“There was one very powerful business rule. It was concentrated in the word courtesy.”

WELLS FARGO

Why was it so successful? Wells Fargo consolidated the operation of the major stage lines in the West. And now more than ever, the stagecoaches connected eastern and western states until the completion of the transcontinental railroad in 1869. However, the company refused to get replaced by the “iron horse,” and went on to become the nation’s first transcontinental express company, offering service “ocean to ocean” by rail. /// It didn’t take long for Wells Fargo to create a presence in over 100 Arizona communities, from Flagstaff, Prescott, Mesa and Scottsdale, to Yuma, Tucson and Phoenix. It proved to be very useful for many early banks, including Bank of Arizona, which opened in Prescott in 1877 as the first chartered bank here. When it later opened an office in Phoenix and was purchased by other ownership, it operated as The National Bank of Arizona by 1887. Of course both banks, like the others across the country, were hit hard by The Great Depression – but both survived. In 1957, these historic institutions joined forces to form the First National Bank of Arizona. /// Fast-forward to Post-World War II, Wells Fargo picked up on another strong need: financial services with auto, home and business loans. Innovative ways were found to serve a new generation on the move by adding neighborhood branches, motor banking, and even the new technology of ATMs in 1970. With the arrival of the digital age, Wells Fargo became the first bank to offer secure internet banking in 1995 and mobile phone banking in 2007. /// In 2017, Wells Fargo continues to be a diversified financial services company that holds true to its founders’ vision of satisfying all its customers’ needs with Wells Fargo’s Phoenix office in 1879 integrity.

was located near what today is Central Avenue & Washington Street.

Q&A

Many people in the CRE industry in the Valley may not even know of the complications of tribal land use/leasing. What can you tell us about the unique challenges associated with it? There are extraordinary opportunities for developers on Indian reservations in Arizona. Financing presents an initial challenge because tribal land is held in trust by the federal government for the benefit of a tribe. For this reason, tribes cannot sell or mortgage reservation lands, but they can be leased, and leasehold interests may be mortgaged to finance a development project. This is where we come in – leasehold mortgages tend to be complicated because they are generally subject to federal and tribal oversight as well as the express terms of the lease. Leases and leasehold mortgages typically require approval by the tribe having jurisdiction over the land, and may require consent by the Secretary of the Department of the Interior as well.

How else do you play a role in tribal negotiations?

In addition to complying with the technical requirements to acquire and develop on reservation land, it is important to establish trust and support for the project with the governing tribe. For the tribe, a development project is not just a business venture, it is an economic development opportunity. The tribe may be interested in employment for its members, prospective tax revenue, and public health and safety on the reservation. As attorneys, we strive to maintain consistent outreach to tribal leaders and staff to communicate progress and maintain support for the project.

What other impacts should the development community be aware of? Developing on tribal land involves a complex regulatory network. Tribal law always applies, federal law is likely to apply, and state law may also. In many cases, a project will be subject to federal environmental laws, such as the National Environmental Policy Act, Clean Water Act, Clean Air Act, National Historic Preservation Act, and the Endangered Species Act. For certain impacts, like displacement of endangered species, the federal government will get involved to negotiate a mitigation plan. Development projects also involve consultation or agreements with local governments relating to public works or services. In most successful projects, the developers and tribe join forces and work together to efficiently resolve non-tribal requirements.

What are some of the main issues that remain? Developers new to working with Indian tribes may be concerned that a tribe will use sovereign immunity to shield itself from contractual obligations. Most tribes have a sophisticated approach to this issue and will consider a limited waiver request. A reasonable waiver will protect the developer’s investment, and at the same time protect the sovereign interests of the tribe. Overall, appreciation for a tribe’s culture and the policy behind federal and tribal requirements is critically important to successful projects. The key is to understand how a tribe makes decisions, and what a tribe will consider to be a win-win project.

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SECTOR

UPDATE:

RETAIL – Tucson Edition

MARKET OVERVIEW •

Tucson’s retail market ended 2016 with a 6.4% vacancy, the same as year-end 2015, supported by a healthy market with positive growth in retail sales.

•

With the exception of 2013, positive net absorption of 386,786 SF for the year exceeded the total for each year since 2007.

•

Gross absorption was also at a three-year high.

•

Millennial shopping trends and e-commerce’s growth remain clear drivers of the changing retail landscape.

“E-commerce is definitely a main issue [in retail] in Tucson, too. In the positioning and leasing of shopping centers, the goal now is to focus on businesses that cannot be replicated on the internet, mostly service-types like spas, urgent care, dental, and obviously hair, nail and eyelash salons. Specialized resale boutiques are now a desirable tenant and big traffic generator,” says Greg Furrier, Principal – Retail Properties, Cushman & Wakefield | PICOR. “Retailers are adjusting their platforms to have both a storefront and an internet presence even if it’s locally owned. It’s just the reality of today.”

PA R K I N G •

“Customers parking in Southern California, for example, understand they need to leave earlier to account for the time it takes to find parking. In Arizona, we have a different mentality where we believe we should always have parking right in front of the destination whereas other cities do not have those high expectations,” Furrier says.

• Department store sale trends impacted malls, with the erosion of these anchor tenants affecting the dynamics of Tucson’s regional mall trade areas. While local Macy’s or Sears stores were not included in the closure announcements, the national trend toward more open-air environments equates to opportunity for large-box discounters and entertainment venues to move into anchor spaces. © Copyright 2017 by MP Media, LLC

Sector Update “The downtown Tucson renaissance has created momentum and energy. Two new hotels have been announced by Rio Nuevo, which will aid in

•

Projects such as City Park, the AC Marriott Hotel, Health on Broadway, and a new life for La Placita Village are planned.

•

Walkability has taken hold, and national retailers’ logos are now appearing downtown.

•

Interest and activity in the investment sector was high during the year with Wilmot Plaza trading for $47.3 million in September, the highest sale of 2016.

•

The top three sales of the year had cap rates in the low 6% range, though with recent interest rate increases, cap rates have begun to adjust upward, albeit nominally.

attracting convention business in the future,” says Barbi Reuter, President,

RETAIL

Cushman & Wakefield | PICOR. •

Absorption will be significant in Q1 2017, continuing the velocity of activity from year-end.

•

New construction has been sensitive to the market, catering to pent-up demand, and is being absorbed readily.

•

Redevelopment activity in infill locations will increase.

•

Small and mid-sized local businesses are bullish on the economy, and retail will benefit from job growth and a business-friendly environment in Tucson.

Greg Furrier, a life-long Tucsonan, has been active in commercial real estate since 1985. He joined CB Commercial in 1986 as a retail sales and leasing specialist. By 1996, he went on to Cushman & Wakefield | PICOR as a Principal and has focused primarily on landlord and tenant representation ever since. Furrier is the all-time leading retail broker in both sales and leasing volume in the Tucson market.

On Jan. 1, 2017, Barbi Reuter took over as President of the Tucson-based commercial real estate firm, Cushman & Wakefield | PICOR, where she previously served as the company’s COO since 2014. Reuter has been with the firm since its inception, hired by Founder Mike Hammond while a scholarship student at the University of Arizona in 1985. She launched and managed the firm’s market-leading Property Management Division through 2007. Reuter and her husband, David, are long-time Tucsonans and parents of two daughters and two sons.

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HEALTHCARE

Sector Update

As we head into 2017, the medical office marketplace is experiencing new waves of uncertainty due to the new administration in Washington D.C. and the continuously changing dynamics of the healthcare marketplace. /// The Republican Congress and President have made it clear that they will seek potentially significant changes in the Affordable Care Act — if not outright repeal it. The ACA was a driving force in change in the healthcare market, so any changes to it will certainly have a ripple effect. /// Those effects will, of course, hit the medical office real estate market. Hospital groups, physicians, clinics and other providers make decisions based on their patient load and how insurance providers pay for services, and those decisions include how they approach their medical office space needs.

So, the market-wide uncertainty does have some groups reevaluating real estate decisions and considering new strategies — but it’s still full steam ahead for some tenants and buyers. We will see new groups coming into the market to acquire and potentially expand physician networks, and we will continue to see private physicians merge into hospital groups. /// And while it seems counterintuitive to the trend above, we’re also seeing an increased appetite for autonomy on the part of doctors who aren’t following the temptation to merge into larger groups. These physicians are actually boosting the market for outpatient specialty facilities, such as surgery centers. 54 © Copyright 2017 by MP Media, LLC

HEALTHCARE

Sector Update

Larger hospitals are expanding their footprint on their campuses. This is requiring the hospitals themselves

to change and adapt to the marketplace, including ensuring a robust supply of medical office facilities for specialists in and around the major hospital campuses. /// And with the aging baby boomer population, combined with those additionally insured through the Affordable Care Act, the hospitals themselves in many cases are growing and expanding. We’ve seen several hospitals in the Valley launch significant expansion efforts in the past couple of years, including Banner Good Samaritan, Dignity Westgate and several other campuses. /// Additionally, we’re still seeing growth in a trend toward increasing access to healthcare by bringing healthcare into neighborhood locations, along transportation corridors and in highly visible areas. For example, a few weeks ago, HonorHealth announced an affiliation that will open cancer treatment centers out in the community, but with full connectivity with the Virginia G. Piper Cancer Center and the Shea Hospital Campus. ///

We are also seeing expansion of urgent care centers, “mini-hospitals” and short-term stay facilities being built at the community level as well, and an increased desire for physician-owned outpatient centers

in the market, which has been resurfacing within the marketplace. /// Overall, it’s a time of change for the medical office marketplace, but we expect the results of that change to be positive and to help strengthen the medical office sector overall. It will be an interesting next few years, to be sure.

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