CRE

Speed-to-Market Design

High demand for rental units has contributed to the most stable supply-and-demand condition for any property type for the past several years. Multifamily properties are underbuilt and in high demand, and rental rates have increased in double-digit percentages based on that demand. Under these circumstances, we’ve seen a larger emphasis placed on speed-to-market design.

Speed-to-market, in terms of design and construction, can refer to multiple scenarios. In this instance, we’re mainly referring to speed-to-market in terms of existing assets that are long-term holds. The properties have the goal of current cash flow, but also a focus on appreciation of returns over the next five to ten years.

Under past market conditions, we saw more short-term holds than we are seeing now. With an increase in long-term holds, we also see an increasing need for capital improvements, either to keep a luxury rental property relevant to the large influx of new builds or to reposition an asset to allow it to be competitive.

We offer a deliverable to our clients that are wanting to do just that. We refer to it as a Property Positioning Plan that assesses the property holistically, strategically lays out priorities for improvement based on the current market and the targeted demographic, and applies aesthetic and program trends to the property at hand. This plan has been used in conjunction with a developer or property manager’s business plan to finalize yearly budgets and determine the areas of attention for the most promising return on investment. The speed-to-market aspect comes into play when we address the property from the standpoint of quick updates with the most impact. By assessing the property as a whole, developers can prioritize funds based on market conditions and what will appeal the most to their prospective resident base.

One thing to consider when making these decisions is the difference between capital improvements and perceived capital improvements. For example, we had a project several years back that we were repositioning and the client was holding a large budget number to completely replace the parking awnings. They were in good condition and mainly needed only new paint and signage. When we talked to them about prioritizing those funds somewhere else, it ended up making sense because the residents would not see that upgrade as an actual upgrade. When residents perceive it as an upgrade, they are willing to pay more in rent and it’s a higher return on investment. Not all improvements will do that. If there is a choice, it’s always beneficial to lean toward resident needs and wants to gain a higher return. We’ve also found that when it comes to residents, aesthetic holds a lot of weight and new furniture and finishes can have a huge impact. —Christina Johnson, the creative director of Phoenix- and San Francisco-based Private Label International (privatelabelintl.com), a full-service interior design studio that develops hospitality environments and lifestyle brand experiences for clients worldwide GET REAL

Mohr Capital Develops Industrial Project in Surprise

Mohr Capital, a Dallas-based privately held real estate investment firm, acquired 46.26 acres in one of Arizona’s fastest-growing cities to develop a Class A industrial business park in the West Valley.

Breaking ground this month and slated for completion next summer, Summit Business Park will offer a combined space of 704,472 square feet of leasable industrial space with 453,960 square feet in Building 1 and 250,512 square feet in Building 2. These state-of-the-art buildings will be ideal for distribution, manufacturing and logistics companies throughout the Southwest with capabilities to serve numerous large urban areas located within a one- or two-day delivery zone. mohrcap.com

New North Scottsdale Luxury Community from Camelot Homes

Camelot Homes continues to expand its presence in North Scottsdale with the recent purchase of 77.5 acres, located east of the northeast corner of Lone Mountain Parkway and East Joy Ranch Road in Scottsdale. The family-owned luxury homebuilder plans to break ground on the new 52-home community called Joy Ranch in Q2 2023, offering floor plans from 4,500 to 6,500 square feet, with 4–6 bedrooms and 4.5–6.5 baths. camelothomes.com

IndiCap Bringing 110-Acre Industrial Park to Glendale

Boutique commercial real estate company IndiCap continues its formidable Metro Phoenix industrial development push with Virgin Industrial Park, which it will develop in partnership with Invesco. Located on the northwest corner of Olive and Reems roads in Glendale, Arizona, within the nationally recognized Loop 303 industrial corridor, the two-phase, 110-acre Class A development will total more than 1.5 million square feet in five buildings at build-out. Construction on Phase I of Virgin Industrial Park begins November 2022, with completion expected by December 2023. Completion of Phase II is anticipated by Q1 2024. indicapinc.com

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Surprise Power Center Development Powers over Challenges

Village at Prasada, the 700,000-square-foot retail power center developed by SimonCRE for residents of Surprise, Arizona, has proven to be a massive undertaking that has continued to move forward in the face of mounting supplychain and labor issues.

This will be the West Coast’s first power center constructed in more than a decade; currently, residents need to travel an average of 10 miles to reach the closest retail center that has comparable retail options. It is unlikely the Valley will see another center of this scale for a while, and more amenities are continually being added to the project, such as the upcoming joint venture to develop more than 500 apartments on the property. Construction on these apartments is scheduled to begin later this year, and Village at Prasada is expected to continue to grow along with it. With completion anticipated for fall, SimonCRE expects to begin delivering to its tenants then.

Their successful progress, regardless of the setbacks plaguing the construction industry, is largely thanks to the creative problem-solving utilized by the developer and the developer’s building partners. The project will provide a range of quality retail and restaurant options to an underserved community in the West Valley. The developer has worked closely with the City of Surprise’s Department of Economic Development to source highly desirable tenants, many of which represent retailers heavily requested by Surprise residents.

SimonCRE has also partnered with another developer, Carefree Partners, to develop the nearby Surprise City Center, which is intended to be more than 30 acres of mixed-use development, to provide more local activities, entertainment and lifestyle options to the residents of Surprise. This development is one that has been years in the making and is highly anticipated by Surprise residents for how it will change the landscape of their growing community.

These projects have moved forward regardless of mounting supply-chain issues affecting the construction industry, which have required quick thinking and adaptability. After the country went into lockdown in 2020, many cement manufacturing plants were temporarily shut down, leading to the current cement deficit that many builders are seeing. Distributors have been providing cement strictly on allocation, which has slowed many projects around the country. SimonCRE and its building partners responded by taking the rationed cement that they individually received and establishing a batch-plant on-site to mix and pour for the project in stages. This required deliberate planning and precision to ensure that the project continued to move forward.

Concrete did not pose the only issue, as service entry sections and electric panels are currently on extremely long delays, presenting another roadblock on the horizon if not properly planned for. SimonCRE made the decision to source two copies of each service entry section and electric panels needed to complete the first phase of construction from different suppliers. This accomplishes a few things. First, it provides a safety net to ensure the appropriate delivery of the materials in the event one shipment is delayed by unforeseeable circumstances. Second, it provides a track record of which supplier is faster or more reliable. Third, if both pairs arrive on time, backup units can be stored for the next phase of the construction project, ensuring there are no further delays.

Roofing has also presented possible issues for builders and has required more creative problem-solving to address. SimonCRE shifted from using metal trusses, which are currently on an extended back-order; instead, utilizing wooden trusses and opting to use alternative roofing materials to complete these projects.

The entire construction process has required creative partnerships with builders and tenants to source materials, as well as developing working solutions for roadblocks so that retail spaces can be completed and delivered to tenants as promised.

Village at Prasada has presented an immense project and opportunity, one that many did not imagine possible. The land sat undeveloped for years, originally intended to be an indoor shopping mall before that project was scrapped. Bringing this project to fruition has allowed SimonCRE to develop many industry partnerships and continue to develop large-scale projects going forward. —Joshua Simon, CEO of SimonCRE (simoncre.com)