azre magazine july/august 2012
DESCRIPTION
AZRE magazine is published bi-monthly with its in-depth coverage, projects news, economic development issues and other compelling CRE articles that our readers have come to expect.TRANSCRIPT
JULY-AUGUST 2012
Major education building construction projects ready
to open their doors
Office, Industrial Overview: Hope
on the Horizon p. 10
Tucson Outlook: New Buzz in the Old Pueblo p. 20
AZCREW: An Advocate for
Women in CRE p. 36
INSIDE
Major education building
Back toSchool
Delivering value through energy management and sustainability strategies.
Health Care REIT’s Management Services Group is committed to supporting tenants in creating a healthier care environment.
By aligning health care real estate with high-quality, sustainable business practices, Health Care REIT creates positive outcomes for its tenants.
Schedule your tour today at one of our many properties throughout Arizona and all of the Western United States.
FOR LEASING INFORMATION: Roland Van Loan [email protected] 800.551.4977
WWW.HCREIT.COM/MSG
Project Featured:
Arizona’s First Net Zero School
Colonel Smith Middle School
Completion Date: July 2012
Ft. Huachuca Accommodation School District #00
Ft. Huachuca, Arizona
Images: EMC2 Group Architects Planners, PC; Turner Construction CompanyTurner Construction Company
637 S. 48th Street, First Floor
Tempe, Arizona 85281
Offi ce (480) 557.4700
ROC 071159
Building the Futurew w w.turnerconstruc t ion.com/tempe
Preconstruction Consulting | Project Management | Construction Management | CM-at-Risk | Design-Build | General Construction | Building Maintenance
BUILDING THE NEW MODEL OF K-12 FACILITIESNet Zero, Energy Ef f ic ientState - of-the -Ar t TechnologyLiv ing Learning EnvironmentSTEM Curr iculum
2 | July-August 2012
AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602) 277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2012 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.
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AZRE: ARIZONA COMMERCIAL REAL ESTATE
EDITORIAL
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MAGAZINE.COM
Looking down on an industry that is fi nally starting to look up
I fl ew out of Sky Harbor International Airport recently and my bird’s eye view of construction cranes reaching to the sky around the Valley off ered further proof that the industry is making a comeback.
Work is moving along on a new student housing project for ASU stu-dents attending school in Downtown Phoenix. Although the Kimpton Palomar Hotel opened in June at CityScape, a remaining crane stands guard, ready to spring back into action. (My guess is that upscale residences could be next).
And as the airplane made a turn to head south, workmen on the ground in Chandler resembled industrious ants at the new Phoenix Premium Outlets next to Wild Horse Pass Hotel & Casino.
Th ese projects are not only crucial to the major general contractors in the state. Th ey are also the lifeblood of the many Arizona subcontractors, some of which are featured in our annual Arizona Builders’ Alliance supplement.
Th e July/August issue of AZRE also profi les Arizona Commercial Real Estate Women, better known as AZCREW. Formed in 1985, AZCREW “promotes the advancement of professionals in commercial real estate by providing high-level networking opportunities, connections and access to decision-makers within the Phoenix market.” Th e local chapter also does a wonderful job giving back to the community.
Finally, our annual statewide real estate update focuses on Tucson.As my return fl ight began its descent, I challenged the passenger sit-
ting in the window seat across the aisle to a spirited game of “Name Th at Property Type.” Four points for medical offi ce; 3 for multi-family, 2 for a retail center and 1 for industrial.
I skunked him, 21-0. After all, if the editor of a commercial real estate magazine can’t identify a medical offi ce building or industrial warehouse from the air, who can?
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OUR CLIENTS INCLUDE: BMW OF NORTH AMERICALUCENT TECHNOLOGIESDELTA AIRLINES UNILEVERCOSMETICS INTERNATIONALS E I K O CORPORATION OFAMERICA CRATE ANDBARREL TIAA-CREF MORGANSTANLEY P E A R S O NE D U C AT I O N NOVARTISAT&T MCGRAW-HILLCOMPANIES TIME INC. TEJONRANCH SPORTCRAFTF E D E R A L E X P R E S SWYNDHAM GARDEN HOTELSL E H M A N B R O T H E R S BMW OF NORTH AMERICALUCENT TECHNOLOGIESDELTA AIRLINES UNILEVERCOSMETICS INTERNATIONALS E I K O CORPORATION OFAMERICA CRATE ANDBARREL TIAA-CREF MORGANSTANLEY P E A R S O NE D U C AT I O N NOVARTISAT&T MCGRAW-HILLCOMPANIES TIME INC. TEJONRANCH SPORTCRAFTF E D E R A L E X P R E S SWYNDHAM GARDEN HOTELSL E H M A N B R O T H E R S BMW OF NORTH AMERICALUCENT TECHNOLOGIESDELTA AIRLINES UNILEVERCOSMETICS INTERNATIONALS E I K O CORPORATION OFAMERICA CRATE ANDBARREL TIAA-CREF MORGANSTANLEY P E A R S O NE D U C AT I O N NOVARTISAT&T MCGRAW-HILLCOMPANIES TIME INC. TEJONRANCH SPORTCRAFTF E D E R A L E X P R E S SWYNDHAM GARDEN HOTELSL E H M A N B R O T H E R S BMW OF NORTH AMERICALUCENT TECHNOLOGIESDELTA AIRLINES UNILEVERCOSMETICS INTERNATIONALS E I K O CORPORATION OFAMERICA CRATE ANDBARREL TIAA-CREF MORGANSTANLEY P E A R S O NE D U C AT I O N NOVARTISAT&T MCGRAW-HILLCOMPANIES TIME INC. TEJONRANCH SPORTCRAFTF E D E R A L E X P R E S SWYNDHAM GARDEN HOTELSL E H M A N B R O T H E R S BMW OF NORTH AMERICALUCENT TECHNOLOGIESDELTA AIRLINES UNILEVERCOSMETICS INTERNATIONALS E I K O CORPORATION OFAMERICA CRATE ANDBARREL TIAA-CREF MORGANSTANLEY P E A R S O NE D U C AT I O N NOVARTISAT&T MCGRAW-HILLCOMPANIES TIME INC. TEJONRANCH SPORTCRAFTF E D E R A L E X P R E S SWYNDHAM GARDEN HOTELS
Tom McCormick, SIOR, FRICSSenior Vice President and Regional Development Officer
Mark Singerman, LEED® APAssistant Vice President andRegional Director - Arizona
rockgroupdevelopment.com
For information regarding current Rockefeller Group Development Corporation projects, please contact:
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www.rgdcchandler101.com(The ASU W. P. Carey Evening
MBA Program wil be located atChandler 101.)
Rockefeller GroupNorth Gateway
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BY THE FOLLOWING BROKERS:
In Chandler and Gilbert
Colliers International2390 E. Camelback RoadSuite 100Phoenix, AZ 85016602-222-5000 tel.colliers.com/phoenix
In Tucson
PICOR1100 N. Wilmot StreetSuite 200Tucson, AZ 85712520-748-7100 tel.www.picor.com
Phil Breidenbach, SIORPaul Sieczkowski, SIORRob Martensen, CCIM, SIORLindsey CarlsonSteve Larsen
Peter Douglas, SIORRob Glaser, CCIM, SIOR
*6859 RGI-1114-AZRE 8x10.875 new photo:*3619 RGI5107 REF 8.125x10.4375 12/15/11 2:08 PM Page 1
BaCK tO sCHOOL
FEatUrEs
6 new to market Projects in the pipeline
10 Brokerage Th e Valley is seeing an uptick in offi ce and industrial property types
18 Project news New Arizona Opera offi ces; new assisted care facility for the Hopis
20 Economic Development Tucson overview: Confi dence building again in the Old Pueblo
26 Building Green Fort Huachuca middle school earning straight A’s in sustainability
32 investment SkySong catalyst for innovation, technology and research
36 aZCrEW Women’s CRE group an advocate for professional development
44 iCsC UNION brings novel retail approach to Biltmore Fashion Park
47 newsmakers Th e Valley is seeing an uptick in offi ce and industrial property types
48 after Hours Monica Perez: Architect by day, women’s roller derby star by night
sPECiaL sECtiOn
50 tops in ti ABA members at their best when it comes to tenant improvement
54 member Projects From schools, to industrial buildings to mixed-use projects
60 Q&a Five questions with ABA Executive Director Mark Minter
62 member Profi les Staying connected helps ABA members to stay in business
COminG nEXt issUE » All-Star Brokers » Arizona Multihousing Association » Adolfson & Peterson » Urban Land Institute
The Interdisciplinary Science & Technology Building 4 is an 8-story research, outreach and administration facility on ASU’s Tempe campus. General contractor is Sundt Construction and architect is Steve Ehrlich Architects and HDR Architecture Inc.
taBLE OF COntEnts July-August 2012
4 | July-August 2012
06 18 26 32
Access AZRE online with this QR code
Some show up just to rev their engine. We’re focused on pulling ahead as the first true alternative to real-estate-as-usual. We’ve put the pedal to the metal to help our clients race forward with investments in new markets, top talent, and a unified global brand in more than 520 offices in 62 countries worldwide. We’ve got the inside track on service to accelerate your success.
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FASTERFORWARD
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Some show up just to rev their engine. We’re focused on pulling ahead as the first true alternative to real-estate-as-usual. We’ve put the pedal to the metal to help our clients race forward with investments in new markets, top talent, and a unified global brand in more than 520 offices in 62 countries worldwide. We’ve got the inside track on service to accelerate your success.
Putting the pedal to the metal.
Phoenix +1 602 222 5000 | Scottsdale +1 480 596 9000 | www.colliers.com
FASTERFORWARD
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nEW tO marKEt
6 | July-August 2012
HEaLtHCarE
EDUCatiOn
2 vEtErans aFFairs CLiniCDeveloper: U.S. Dept. of Veterans Aff airsGeneral Contractor: McShane Construction Co.architect: Rees AssociatesLocation: NEC S. Val Vista Dr. and S. Market St., Gilbertsize: 60,000 SFA new, 2-story clinic will replace an existing VA healthcare facility in Mesa. Th e new outpatient clinic will provide healthcare services to more than 19,000 veterans in Maricopa County and parts of Pinal and Gila counties. Th e facility will be designed and built to meet LEED Sil-ver standards. Expected completion is 2Q 2014.
1 aDELantE mEsaDeveloper: World PropertiesGeneral Contractor: LGE Design Buildarchitect: Cawley ArchitectsBroker: Aaron KuhlLocation: Dobson and Main, Mesasize: 41,000 SF
3 mOUntain ranCH mEDiCaL COmmOnsDeveloper: IrgensGeneral Contractor: Ashworth Constructionarchitect: 33 North ArchitectsLocation: Estrella Parkway and Elliot Rd., Goodyearsize: 18,000 SFIrgens, Banner Health and Estrella by Newland Communities plan to develop the Class A medical offi ce facility on 5.3 acres of land in Estrel-la. Th e single story-structure will off er custom-designed medical space, upscale amenities and a sustainable design. Expected completion is 2Q 2013.
4 ranCHO sOLana sCOttsDaLE CamPUsDeveloper: MindspringGeneral Contractor: hardison/downeyarchitect: Ayers/Saint/GrossBroker: CBRELocation: 9180 E. Via de Ventura, Scottsdalesize: 82,000 SFA new campus will include space for 700 students (300 middle school; 400 high school), dedicated fi ne arts spaces, learning commons, media center and a full-size soccer/football fi eld. A 23,000 SF student center will also be part of the project, which will involve more than $10M in improvements. Subcontractors include Arctic Air, Wilson Electric, Pin-nacle Plumbing, RCI and Dicken Quality Demolition. Expected comple-tion is 3Q 2012; 4Q 2012 for the student center.
Th e $6M medical offi ce build-ing will be located on the East Valley Institute of Technology campus and will be pursuing LEED certifi cation. Expected completion is 3Q 2012.
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AzrePeople to Know in Commercial real estatenominations are now open.Go to azremagazine.com
I N C O M M E R C I A L R E A L E S T A T E
EvEnts & sEminars
8 | July-August 2012
mULti-FamiLY
HOsPitaLitY
PUBLiC
5 tHE PrEmiErE at Dana ParKDeveloper: Route 2 and PCS DevelopmentGeneral Contractor: Adolfson & Petersonarchitect: Todd and AssociatesLocation: US 60 and Val Vista Rd., Mesasize: 199,000 SF
6 san tan viLLaGE aPartmEntsDeveloper: LWI PropertiesGeneral Contractor: hardison/downeyarchitect: Architects Orange (Orange, Calif.)Location: Williams Field Rd. and San Tan Village Parkway, Gilbertsize: 575,000 SFTh e $30M, 382-unit, garden-style apartment complex will include 22 2- and 3-story apartment buildings, as well as a 2-story clubhouse with a fi tness center, theatre, and resort-style swimming pool with indoor/out-door cabanas. Solar panels will be installed on parking shelters to provide energy. Expected completion is 3Q 2013.
7 CasinO ariZOna BinGO HaLLDeveloper: Salt River Pima-Maricopa Indian CommunityGeneral Contractor: Kitchellarchitect: Seaver Franks ArchitectsLocation: 101 and McKellips, Scottsdalesize: 26,000 SFTh e new addition marks a return to bingo for the SRPMIC. Th e multi-use room will primarily be used for bingo, but can also be used for large events. It will accommodate 1,000 people. Expected completion is 4Q 2012.
8 CitY OF mariCOPa CitY HaLL anD POLiCE statiOnDeveloper: City of MaricopaGeneral Contractor: Okland Constructionarchitect: GenslerProject manager: ABACUSLocation: NEC Bowlin Rd./White and Parker, Maricopasize: 45,000 SF City Hall; 11,000 SF Police StationTh e $14.5M project is a fi rst in the community’s history as it celebrates the building of a permanent City Complex. Th e fi rst phase will include construction of Maricopa City Hall and the Maricopa Police Station. Expected completion is 4Q 2013.
Th e $18M project is a 198-unit market rate multi-family development. Th e buildings will feature a mixture of studio and 1- to 3-bedroom units. Amenities will include a club-house, cabana, outdoor bar/patio areas, a pool and spa and fi tness and yoga studios. Expected completion is 3Q 2013.
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Building Successful Arizona Projects for 26 Years480.497.2300 • fax: 480.497.9610 • www.bjerkbuilders.com
License B1-088897
FortitudeA contractor’s reputation for excellence grows by completing projects on time, within budget, and by continually exceeding expectations.
Fortitude-HalfPg_Layout 1 12/13/11 7:40 AM Page 1
602-268-7877
www.ArizonaCrew.org
Email Christine Olson at [email protected] for more information.
WINE � WOMEN � WEBSITE
NEW MEMBEREVENT
this August!
WWWStay tuned for our August new member
event! At WWW (Wine, Women, Website), new AZCrew members will learn the ropes
of the CREW Network website and mix and mingle with current board members.
More Details Coming Soon!
Hope on the Horizon
After 4 to 5 years of being bludgeoned, the Metro Phoenix industrial and offi ce markets appear to be on the mend.
“It has been our belief that in order for the indus-trial and offi ce segments to return to health, the Metro Phoenix housing market would fi rst need to be fi rmly entrenched in recovery — and it is,” says
Chris Toci, executive director, Cushman & Wakefi eld of Arizona.As one of the four states hammered during the subprime hous-
ing fi asco, Arizona — specifi cally the Valley — received more than its share of negative press during the Great Recession. Arizona’s fall from grace was hard as the state witnessed a peak-to-trough decline in the median single-family home price of about 55%.
According to the Arizona Regional Multiple Listing Service (ARMLS), median home prices in Phoenix peaked in June 2006 near $265,000 and hit bottom near $120,000 fi rst in March/April 2009 and then again in late 2010 after the $8,000 new home price stim-ulus was withdrawn. Th rough 2Q 2012, the median home price is $147,960, 24.9% higher from the lowest point in 2Q 2011.
“Th e key metrics to indicate a bottoming real estate cycle are one, trend reversal on price, and two, an increased velocity of sale transac-tions,” Toci says.
With the median home price 25% higher than 2Q 2011 and with annual sales of single family residences approaching, and in some instances exceeding, peak levels in 2005, there are indications to sug-gest that Arizona has bottomed in the housing market. Continued reduction in housing supply — combined with elevated demand from new home buyers and investors purchasing at deep discounts — have led to new aff ordability levels which have had the impact of attract-ing major employers to the Valley, namely American President Lines (APL), Amazon.com, eBay/PayPal, Safelite Auto Glass, Transperfect
and Power One.Both the Metro Phoenix industrial and offi ce markets are the ben-
efi ciaries of this employment growth. In 2005, Phoenix was No. 1 in the nation in terms of job growth with 103,800 new jobs added. Th ree years later, in 2008 and 2009, Phoenix lost nearly 230,000 jobs.
During that time, the industrial market, with a current base inventory of 263 MSF, suff ered negative absorption of 2.3 MSF and 2.8 MSF, respectively. Similarly, the offi ce market, with a current base inventory of 78 MSF, suff ered negative absorption of 1.1 MSF each year in 2008 and 2009. With 2010 being a transition year, 2011 wit-nessed 6.1 MSF and 1.1 MSF of positive industrial and offi ce absorp-tion, respectively. 1Q 2012 trends are continuing with nearly 600,000 SF of industrial and 210,000 SF of offi ce absorption, respectively.
“Phoenix is leading the national recovery in housing and com-mercial development,” says Kurt Rosene, senior vice president for Th e Alter Group. “Th e current activity from potential corporate reloca-tions looking at Arizona are at an all-time high. Phoenix is on every site selection list, based upon aff ordable housing, strong educated employment base, the availability of zoned land, a relatively easy development process and a proactive state government that keeps signing additional economic incentives into law.
“We believe that all of these factors will combine to cause posi-tive job growth in Arizona, maintaining the recovery that has already taken place in the industrial distribution sector,” Rosene adds.
According to Toci, rental rates for the industrial sector are begin-ning to fi rm with strong rental increases projected within the next 12 months across many of the submarkets. Offi ce rents in certain submarkets are beginning to fi rm and will continue to do so in those submarkets with rapidly declining vacancy rates. More peripheral offi ce submarkets will take more time to chew through excess supply levels generated in the last development cycle.
10 | July-August 2012
BrOKEraGE
BY PETER MADRID
as jobs return to arizona, industry experts predict a brighter future for the industrial and offi ce markets
Dick’s Sporting Goods
“After nearly five years of ‘chill’ in Phoenix, institutional investors are beginning to lift their restrictions for acquisitions,” Toci says. “As trite as it sounds, blue sky and sunshine will once again prevail and will continue to attract residents from the frozen tundra of the Rust Belt.
“The systemic challenges related to California’s deep budget deficit will serve as a catalyst for future growth in Phoenix and we will once again demonstrate that the Valley of the Sun’s resilience should never be taken lightly.”
Industrial outlook“Net absorption of industrial space slowed
in the first quarter following a 2-year run where tenants moved into a net of more than 12 MSF. The easing pace of absorption was not a function of a retreating demand, however, but rather a function of a lack of available product, particularly among large users.
“Tenant demand for large blocks of space has been driving the local industrial market, and will fuel future development. After peaking at approximately 20% in early 2010, vacancy in industrial buildings 250,000 SF and greater fell below 7% in the first quarter, well below the rate for all industrial properties in the market and nearly identical to levels achieved from 2002-2006.”
— Bob Mulhern, managing director, Colliers International
“The Metro Phoenix industrial market has seen 2+ years of growth as demand among users continues, resulting in declines in vacancy and positive absorption. Large users, 250,000 SF and greater, continue to be active and have fueled the growth in the Southwest Valley. With only three or four viable options in this
size range, Phoenix will see both spec and build-to-suit development projects break ground this year. In 2012, and specifically during the second quarter, there has also been renewed interest from mid-size users looking for 100,000 to 200,000 SF of industrial space. Growth among the mid-size user, continued interest from large users, and developers willing to pull the trigger on new development are strong indicators that the Phoenix will continue its positive trend as one of
the country’s leading industrial markets.”— Brad Ahrens, vice president, Cassidy Turley BRE Commercial
“With the banks beginning to loan to owner-occupied small business industrial sites, I predict that smaller industrial spaces will become scarce and the average price will begin to rise. A small busi-ness person can now purchase a building with an equal to or lower mortgage payment than lease payment and only put down 10% for an SBA loan.
“This re-entering of the banks into industrial building loans should start to slowly drive up prices.”
— Rex Griswold, VP sales & leasing, Commercial Properties Inc.
Office outlook“During the first quarter of 2012, the Greater Phoenix office
market failed to gain any notable momentum and similar perfor-mance is forecast for the remainder of this year. Vacancy ended the quarter at 22.1%, marking the 12th consecutive quarter where the rate was above 20%. While the local economy is showing signs of life, more sustained expansion will be needed to ultimately prompt devel-opers to move new projects into the pipeline. The good news for the office market is the accelerating pace of employment growth in Metro Phoenix. The addition of more than 23,000 workers in the first three months of 2012 was the strongest quarterly growth in six years and forecasts for future expansion were recently revised higher.”
— Bob Mulhern, managing director, Colliers International
“All of the leading indicators — vacancy, rental rates and net absorption — were flat at the end of the first quarter. However, every-one agrees that we are seeing much more tenant activity in the market whether its calls, tours or proposals. Based on this increased first- and second-quarter demand, I believe we will look back at year-end and see significant leasing activity in the third and fourth quarters. Our sense is that the indicators will move from flat to positive as vacancy declines, net absorption increases and rental rates start to improve in the metro Phoenix office market.”
— Tyler Wilson, vice president, Cassidy Turley BRE Commercial
11
Chandler Corporate Center
Mulhern
Ahrens
12 | July-August 2012
BrOKEraGE
We are still experiencing a high number of well known companies searching for large, big box, distribution space in the West Valley. The amount of spaces more than 300,000 SF has severely decreased over the past 2 years leaving the user who is looking with a minimal amount of spaces to choose from. There are currently only 2 options left for a tenant that needs 300,000 SF or more. There are 5-6 well known
developers who are in various stages of design for speculative distribution style buildings ranging from 400,000 SF up to 1 MSF. All
of these facilities are located in the West Valley. Rental rates remain low in
the West Valley but most antici-pate a rise in the rates due to the increased volume of activity and the decreased number of func-tional spaces. There are two build-to-suits
underway in the West Valley, Dick’s Sporting Goods for 600,000 SF and TJ Maxx for 1 MSF. There are also a few on hold, a large boot company and a door company. In the East Valley, the sales
market remains strong for the owner/user type facilities with 11 buildings being sold of more than
40,000 SF in 2011 and a number of buildings in escrow of the same size range now. Smaller facilities from 5,000
SF to 20,000 SF for sale are dif-fi cult to fi nd. The sales prices have dropped but the inventory is also low. The leasing activity in the
East Valley is slow for the local and regional companies ranging in size from 5,000 SF to 25,000 SF. Most of these small companies have made it through the econom-ic downturn and are now trying to recover. A large majority of them still rely on the “home-building” industry and as that market slowly
returns so will their confi dence. Companies in the East Valley
that are buying and leasing are in industries including aerospace, nutrition, technology and of course all of the contract work with Intel and its massive construction proj-ect in Chandler. Overall, the sales activity for
small buildings is up and trending that way. The product is hard to fi nd for those buyers but most buildings that are for sale today have good activity. Overall, the leasing activity for
small space remains slow and the large distribution spaces remain robust.
“The office market remains mired at 27% vacancy. After a reasonable 2011, net absorption reverted to negative in 1Q 2012. We continue to be bullish. Long term, however, we need job creation from basic industries to spur expansion and a lower-ing of the vacancy rates. As long as vacancy stays at this level, there will be downward pressure on rents. We are still surprised at some of the low terms we have been able to negotiate for ten-ants we represent. “One bright spot is Class A properties. They are leasing up (at the expense of Class B properties) and have been able to tighten their leasing criteria in select areas.
— Craig Coppola, principal, Lee & Associates
“To date, 2012 is showing a lot of positive signs. Tenants are certainly active relative to that of 2010 and 2011. Businesses seem to be gaining confi dence in the market as well as in their own industries and in turn are looking to relocate and expand. Distressed properties are being traded and struggling owners are being replaced with sta-ble, healthy owners that are in a much better position to raise funds for capital and tenant improvements and to sign leases at rates in line with this environment.”
— Justin Horwitz, senior advisor, Sperry Van Ness
“Per square foot sale prices will increase throughout 2012, espe-cially for assets in good locations with 80% occupancy or higher. We will experience cap rate compression due to a scarcity of good assets on the market and the infl ux of institutional investors that have been priced out of larger/coastal markets.
“Rental rates will remain relatively fl at through 2012 and incen-tives (free rent, higher fees, etc.) will likely remain unchanged. We should experience rental increases in 2013, as the vacancy for Class A and B spaces begins to fall, and incentives will begin to decrease.
“Over the next 12 months, we will see a handful of build-to-suits and pre-leasing of certain planned developments (in core markets), with limited speculative development taking place.”
— David Carder, senior vice president, CBRE
“Th e offi ce market is still scraping along the bottom and will remain there until more jobs are created. Companies are taking advantage of this huge buying opportunity to own their space and reduce and control their occupancy costs.”
— Craig R. Trbovich, commercial real estate advisor, CPI
Today’s market
Expect more build-to-suits by local and national contrac-tors. While the market has a number of vacant buildings, the number of quality buildings available for sale is very low. Expect 2-3 developers to
break ground on speculative dis-tribution facilities within the next
year in the West Valley. Expect to see a slight
increase in rental rates in all sectors of the market, distribu-tion, fl ex and multi-tenant. The sales prices on build-
ings will increase faster than lease rates and outpace the leasing market.
Lenders will remain strict in underwriting, however, the SBA program will stay in place and allow the smaller buyers the ability to buy real estate. Expect institutional investors
to pay a premium for institutional grade product, as they are fl ush with cash and need to place it.
Nationally, Phoenix is showing a turnaround and those who did not get in during the last cycle fi nd themselves trying to get in on this cycle at a lower basis.
Source: Chris McClurg, principal, Lee & Associates
Future market
13
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Plans for a 600,000 SF spec industrial warehouse in Southwest Phoenix and a 92,000 SF, 2-story offi ce building in Chandler’s Price Corridor are signs that those two property types are making a comeback in Metro Phoenix, some industry experts are cautiously predicting.
In January, California-based Doug Allred Company broke ground on Park Place, the Valley’s fi rst post-recession spec offi ce complex to be built since 2009. In October, Th e Alter Group breaks ground on a 605,700 SF spec warehouse at the Buckeye Logistics Center.
And according to those in the trenches, the reason could be as simple as supply and demand.
“Developers are responding to the lack of (industrial) supply avail-able in the market by revving up activity, particularly in the Southwest Valley,” says Bob Mulhern, managing director for Colliers Internatinal. “By the end of this year, multiple developments totaling approximately 4 MSF are forecast to be under way, with other projects likely to enter the development pipeline in 2013.”
With regard to offi ce, the market is still very weak for that property type, says Clay Wells, director of business for McShane Construction Company. However, he does add that news of the new offi ce building in Chandler is encouraging.
“Th e street buzz is that they may already have a tenant who will take the entire building,” Wells says. Th at rumor, in fact, became reality in June when software maker Infusionsoft announced it would move its headquarters from Gilbert to Park Place in Chandler.
“Th e other real activity is in Tempe where the next tower at Hayden Ferry will come out of the ground when there are enough leases signed, and that could be a while,” Wells adds. “Downtown is the last submarket where both RED (Development) and Colliers (International) are mak-
ing noises about new towers. A clue there could be the tower crane at CityScape is in the air and the hotel opens in two weeks.”
According to Cushman & Wakefield research, strong absorption levels driven by trailing 12-month job growth through March of 43,200 jobs are posi-tively influencing both industrial and office vacancy and rent levels. Industrial vacancy levels crested in 2009 at 15.9% and currently are near 12%.
Industrial has been very hot over the past year, especially for users look-ing at 500,000 SF to 1 MSF buildings. While there is one building (it’s in the West Valley) remaining that fi ts that criteria, there are three to fi ve developers talking about doing a “spec building in the 300,000 to 600,000 SF range that could be expanded to more than 1 MSF,” Wells says.
Th ere is optimism from the brokers as well.“Th e developers who have land holdings that we meet with are now
busy with construction preparation and plans in response to an emerg-ing warehouse demand, coupled with a thinned out inventory,” says Isy Sonabend, senior vice president at NAI Horizon. “When we see the fi rst warehouse walls being tilted, it will be the leading indicator that our economy is recovering.”
Offi ce vacancy levels spiked in 2010 at 25% and are more slowly inch-ing their way down. Except for “one-off ” projects, it will be 3 to 5 years before the offi ce market witnesses new development, says Chris Toci, executive director, Cushman & Wakefi eld of Arizona.
Uncertainty will cloud most business decisions for small- to medium-sized companies where 70+% of all jobs are created in this country, says Mark Singerman, Regional Director – Arizona for Rockefeller Group Development Corporation. Th is will restrain demand for offi ce space until after the presidential and congressional elections, he adds.
“Larger companies will continue their eff orts to consolidate or down size to become more effi cient to reduce operating overhead,” Singerman says. “Th ey will represent the majority of offi ce demand until smaller com-
14 | July-August 2012
BrOKEraGE
BY PETER MADRID
as vacancy rates shrink, new industrial and offi ce developments could break ground in the valley
Supplying the Demand
panies feel that they can project their costs for at least the next 2-3 years.“Hopefully, after the elections, enough uncertainty will be removed so
businesses can plan and make strategic moves to grow their businesses, regardless of who or which political party wins in November. Business can adapt to almost any set of circumstances, except uncertainty. Th is freezes everything.”
On the industrial side, Singerman says, changes in consumer buying patterns that include more purchases via the Internet will continue to impact retailer’s capital investment plans.
“It makes sense for national retailers to allocate some of their invest-ment capital to warehouse/distribution facilities to service their e-com-merce business,” he says. “Th is has been driving a lot of the industrial demand in the Southwest Valley. I believe this will continue with national companies. But as with offi ce space, the small- to medium-size users of industrial space are afraid to make real estate decisions until the future is less uncertain.”
A lot of what happens in the Valley depends on what happens to supply and demand for industrial buildings in the Inland Empire of California, namely Riverside and San Bernardino counties. If the spec buildings being developed in that market do well, which reports from brokers in that market indicate that they will, that will bode well for the Southwest Valley, which has traditionally been a viable yet less expensive alterna-tive for users looking to service southern California, Arizona and other Southwestern states.
If, however, the Inland Empire struggles to fi nd tenants for all of their spec buildings, that is a good indicator that demand is not strong enough to warrant spec inventory in the Southwest Valley.
“For the rest of this year, I see build-to-suit continuing to dominate industrial development activity in the Phoenix area,” Singerman says. “Long term, spec buildings will return as demand fi rms up.”
15
Software maker Infusionsoft plans to move its headquarters to Allred Park Place (left photo) in Chandler. The Buckeye Logistics center may break ground in 4Q 2012 in Southwest Phoenix.
16 | July-August 2012
BrOKEraGE
SALES
PHX INDUSTRIAL
¢ Team Toci of Cushman & Wakefield sold the 336,665 SF Lincoln Commerce Park 2 to Cornerstone Real Estate Advisors of Santa Monica, Calif., for $26.1M. The seller was Lincoln Commerce Park II Limited Partnership. Team Toci (Chris Toci and Chad Littrell) represented both buyer and seller, along with Allen Lowe and Jeff Conrad of Lee & Associates.
¢ Cassidy Turley BRE Commercial completed the $7.3M sale of Arrowhead Commerce Center, 8581-8643 W. Kelton Lane, Peo-ria. Arrowhead Commerce Center Partners LLC purchased the 120,948 SF multi-tenant industrial park California-based MECG-Arrowhead 1, LLC, Et Al. Paul Boyle, Rick Danis, Tom Atkinson and John Pompay represented the seller.
¢ Lee & Associates and Cushman & Wakefield helped negotiate the $3.28M sale of a 57,128 SF warehouse at 21405 N. 15th Lane, Building F. MAB Ventures was the seller. The buyer was Deer Val-ley 15 Investments. The seller was represented by Mark Linsalata and Jeff Conrad with Lee & Associates. Kyle Westfall at Cushman & Wakefield represented the buyer.
PHX MULTI-FAMILY
¢ Cassidy Turley BRE Commercial completed the sale of The Metro-politan Lofts, 535 W. Thomas Rd., for $2.7M. David Fogler, Ste-ven Nicoluzakis and Don Arones handled the deal for the 61-unit partially completed residential community is located at 535 W. Thomas Rd. in Phoenix. Lead Properties V, LLC out of Centennial, CO purchased the lender owned property from ML Manager LLC.
¢ CBRE negotiated the $1.25M sale of Homeside Acres Apartments to Turney Properties LLC of Phoenix. The 29-unit property is at 2019 and 2025 E. Turney Ave. Brian Smuckler and Jeff Seaman represented the buyer and the seller, 2025 E. Turney Ave. LLC.
PHX OFFICE
¢ Parkway Properties Inc. purchased Hayden Ferry Lakeside II, 60 E Rio Salado Parkway, Tempe, for $86M. Sumitomo Corporation was the seller.
¢ Artis Real Estate Investment Trust of Canada acquired the 210,202 SF FBI Regional Headquarter building, 21711 N. 7th St., Phoenix, $75M. Ryan Companies US was the seller. Thomas Holtz with CBRE in Minneapolis represented the seller, and procured the buyer in the deal.
¢ Excel Trust Inc. bought the Promenade Corporate Center, 16427-16435 N. Scottsdale Rd., Scottsdale, for $56M. Levine Invest-ments LP was the seller.
PHX RETAIL
¢ Voit Real Estate Service directed the $6.2M sale of Santan Gateway South. The 57,038 SF shopping center, 1305-1445 S. Arizona Ave. in Chandler, is anchored by Sam’s Club. Darren Tappen, Troy Nel-
son and Scott Nelson of Voit’s Phoenix office and Pete Beauchamp of Voit’s Irvine office represented the seller.
PIN LAND
¢ CBRE completed the $3.05M sale of 556 acres four miles east of Quail Run Road on the north side of Skyline Drive in Pinal County. Mike Ratliff, Dave Headstream and Jason Hyams of CBRE’s Land Services Group represented the seller, SA Group Properties Inc. of Los Angeles. The buyer, Seventh Heaven Family Trust of Carlsbad, Calif., was represented by John Finnegan, Chaz Smith and Ramey Peru of Colliers International.
TUC INDUSTRIAL
¢ DCM Development purchased a 36,727 SF industrial build-ing,1765 W. Prince Rd., from Richard Geare for $300,000. Patrick Welchert with Cushman & Wakefield | PICOR Commercial Real Estate Services represented the seller; Dave Hammack with Volk Company represented the buyer.
TUC LAND
¢ Land Advisors Organization-Tucson negotiated the $1.957M sale of 29 lots at Preserve III at Dove Mountain in Marana. Lennar Ari-zona was the buyer; Miramonte at Dove Mountain was the seller. Will White of LAO handled the deal.
LEASING
PHX LEASING
¢ Lee & Associates and CBRE negotiated an 80,158 SF lease of a building that will house Rancho Solano Private School, 9180 E. Via de Ventura, Scottsdale. Bill Blake, Colton Trauter, Craig Coppola, Mark Linsalata and Andrew Cheney of Lee & Associates represent-ed the landlords, Farallon Capital Management and GEM Realty Capital. Jim Fijan of CBRE represented the tenant.
¢ Jones Lang LaSalle and Lee & Associates negotiated a 50-month sublease of 70,000 SF for IPOWER in Papago Buttes Corporate Plaza, 1500 N. Priest Dr., Tempe. Stein Koss of Lee & Associates represented the sublessee. Don Mudd, John Bonnell and Brett Abramson of JLL represented the sublessor.
¢ Sperry Van Ness and Orion Realty Group negotiated a 31,889 SF lease for Integrated Software at Portales Corporate Center II, 4900 N. Scottsdale Rd., Scottsdale. Justin Horwitz of Sperry Van Ness represented the tenant. Tom Imparato of Orion represented the landlord, Principal Financial Group, Inc.
TUC LEASING
¢ UnitedHealth Care Services leased 81,835 SF at 9040 S. Rita Rd., Suite 1500, from Campus Research Corp. The location will house a healthcare customer service center for OptumRx, a division of UnitedHealth Group. Peter Douglas and Brandon Rodgers of PI-COR Commercial Real Estate Services handled the deal.
Nominate yourself or a colleague in any of the following categories.
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18 | July-August 2012
COnstrUCtiOn: PrOJECt nEWs
BRYCON BUILDING ASSISTED LIVING FACILITY FOR HOPI TRIBEBrycon Construction is the general contractor and Jarratt
Architecture is the architect for the $3.5M, 12,000 SF Hopi Assisted Living Facility in the Upper Village of Moenkopi, southeast of Tuba City. Th e facility is a 16-bed, masonry and wood new ground up. Brycon, working with the Hopi Assisted Living Facility Task Team, was able to increase the expected fl oor plan area by 3,000 SF and include an on-demand/solar hot-water system. Estimated completion is 4Q 2012.
BRIGNALL GC FOR INDIAN CULTURAL CENTER; RENOVATING 2 ARTS BUILDINGSBrignall Construction has been selected as general contractor
and SmithGroupJJR will provide design services for the 44,000 SF Yavapai-Prescott Indian Cultural Center to be built on the Yavapai-Prescott Indian Reservation. Th e new cultural center will be located on a 3.5-acre site on the reservation. Th e building will contain spaces for a museum and cultural education center. Brignall also is reno-vating Arizona Opera and Ballet Arizona buildings for the City of Phoenix. Th e opera project, 1636 N. Central Ave., will be completed in two phases. Phase I is the construction of an 8,700 SF rehearsal hall and 3,200 SF storage facility and all site work and improve-ments. Phase II will completely gut the existing 16,800 SF building to allow for new offi ces, fi tting rooms, coaching rooms, the costume department and storage. Motley Design Group is the architect. Th e other project, 2835 E. Washington St., is the renovation of a 52,800 SF warehouse to include a black box theater, three rehearsal studios, the administration department and storage ware-house. Architect is Durkin + Durkin Architects.
D.L. WITHERS, ORCUTT | WINSLOW TEAM UP FOR 2 NEW PHOENIX SCHOOLSD.L. Withers is general contractor and Orcutt | Winslow is archi-
tect for the new M.C. Cash K-8 Elementary School. Th e 105,000 SF campus is being built adjacent to the existing M.C. Cash Elementary School, which will replace the old campus. Once the new campus is open, the old structures will be demolished to make way for new recreation and sports fi elds. Both fi rms also combined eff orts on the 80,000 SF Painted Rock Academy, Greenway Rd. and Black Canyon Freeway. Th e academy is the second school in the Reid Traditional Schools family. It will have the capacity to serve more than 700 K-8 students. Th e structure will include more than 30 classrooms, a library and a cafeteria. Th e school is scheduled to open Aug. 13.
DPR CONSTRUCTION PROJECTS INCLUDE NEW OPERATING ROOMS AND CLEAN LABDPR Construction was awarded the $3.7M, 7,383 SF Phase 1
GMP (Good Manufacturing Practice) Lab at Caris Life Sciences in Phoenix. Th e fast-track TI project includes a 1,200 SF mezzanine. Lord Aeck Sarent | Van Boerum & Frank Associates is the architect; GF Group is the engineer. In addition, DPR is building two operat-ing rooms — one hybrid and one CVOR — at University Medical Center in Tucson. Shepley Bulfi nch and Richardson and Abbott are architects for the $6.5M, 22,600 SF project. Phoenix project subs:
UMEC, Wilson Electric, Able Steel, KTI Tile, Ganado Painting and Star Roofi ng. Tucson project subs: J.B. Steel, RBG Construction, Sun Mechanical and Stark Electric.
REHABILITATION MEDICINE BUILDING RISING AT VA CAMPUS
A $9.5M, 36,000 SF Rehab-ilitation Medicine Building is cur-
Brycon’s Hopi Assisted Living Facility will feature a solar hot-water system.
The new look for Arizona Opera’s offi ces, being built by Brignall Construction.
COnstrUCtiOn
19
rently under construction at the Veterans Affairs campus, 650 E. Indian School Rd., Phoenix. General contractor for the building, developed by the U.S. Dept. of Veterans Affairs, is RCDS Contractors Inc. Th e architect is Westlake Reed Leskosky. Th e 2-story building will off er a new rehabilitation area to house physical therapy, prosthetics and orthotics departments. Expected completion date of 2Q 2013.
ADOLFSON & PETERSON FAST-TRACKS 4 CHARTER SCHOOLSAdolfson & Peterson Construction and Schoolhouse Development,
LLC completed work on four charter schools in Metro Phoenix that open this upcoming school year – Paideia Academy of South Phoenix, Th e Odyssey Institute for Advanced and International Studies in Buckeye, and two American Leadership Academy cam-puses (Mesa and Queen Creek). Th e four campuses were fast-tracked and completed at the end of June. Details:
• Paideia Academy: New 47,800 SF preschool, K-6 charter school and family services center to accommodate 850 students at 7777 S. 15th Terrace;
• Th e Odyssey Institute for Advanced and International Studies: New 34,900 SF college-preparatory charter school with a 29,000 SF gymnasium;
• American Leadership Academy Queen Creek Campus (K-6 and 7-12): New 31,350 SF K-6 and 38,500 SF 7-12 charter schools with a 29,000 SF gymnasium;
• American Leadership Academy Mesa Campus (K-6): New 31,350 SF K-6 charter school.
MCCARTHY AWARDED CONTRACT FOR PHASE III OF CHANDLER WATER PROJECTTh e Southwest Region of McCarthy Building Companies was
awarded a contract for preconstruction and construction services for the Phase III Airport Water Reclamation Facility Expansion proj-ect, 905 E. Queen Creek Rd., in Chandler. Th e project is a 7 MGD expansion that will allow the Airport Water Reclamation Facility to treat up to 22 MGD on a maximum month basis. In 4Q 2009, McCarthy completed construction of the Phase II Chandler Airport Water Reclamation Facility Expansion project. It expanded the facil-ity’s liquid processing from 10 MGD to 15 MGD. Th e anticipated con-struction schedule of Phase III is June 2012 to June 2014.
SUMMIT BUILDERS NAMED GC FOR MARRIOTT PROPERTY IN TEMPESummit Builders is general contractor for the $28M, 173-room
Residence Inn by Marriott to be built at 125 E. Fifth St. in Tempe. Th e developer is Finvarb Group and the architect is LawKingdom Architects of Kansas City, Mo. Th e hotel in Downtown Tempe will feature guest suites with fully-equipped kitchens. It will off er state-of-the-art amenities, including an outdoor rooftop pool and fi re pit with panoramic views of downtown, 3,500 SF of meeting space and 5,700 SF of ground-level retail. Expected completion is 1Q 2014.
MERIT PARTNERS DEVELOPING 260,000 SF WAREHOUSE IN TOLLESONMerit Partners of Scottsdale broke ground on a 260,000 SF build-
to-suit industrial warehouse in Tolleson. Colliers International rep-resented MiTek Industries Inc. in negotiating a 10-year lease agree-ment for the warehouse at 7890 W. Lincoln St. Nitti Graycor is gen-eral contractor and Ware Malcomb is the architect.
COnstrUCtiOn: P&Z
CITY OF GOODYEARTh e City of Goodyear has been processing a 2012 revision
to its Engineering Design Standards & Policy Manual and its Engineering Standard Details. A draft revision of these stan-dards was completed in 2010 but was never taken through for City Council approval. Th e current 2012 version is an updated version of the 2010 draft.
Th e Engineering Department has posted the 2012 version in the City’s “draft documents” web page for the development community to view and to provide comments. In order to keep the process at a manageable size, the document has been broken into groups that will be up for review at diff erent times through-out the year. Review time allotted for each group is 20 business days. Visit: ci.goodyear.az.us/index.aspx?NID=36
CITY OF TEMPEIn accordance with Arizona Revised Statutes, the City of
Tempe gave notice of proposed adoptions of, or changes to, city taxes or fees. Th e City adopted its fi nal property tax levy for fi s-cal year 2012-13 on June 28. Information can be found by con-tacting the City of Tempe Finance and Technology Department at (480) 350-8350.
CITY OF AVONDALE Avondale’s new Alarm Ordinance took eff ect on May 1.
Residents and businesses are required to register their burglar alarms online with Public Safety Corporation’s CryWolf at cry-wolf.us/avondaleaz. Th e new program is aimed at cutting down on false alarm activations in the City along with the amount of time police offi cers spend responding to false alarms. Under this program residents will not be fi ned for the fi rst two false alarms that occur within the same year.
CITY OF MARICOPATh e City of Maricopa has joined more than 20,000 communi-
ties nationwide that are allowed to purchase federally-backed fl ood insurance. Th is availability follows the community’s adop-tion and enforcement of ordinances to reduce fl ood losses and acceptance by the National Flood Insurance Program (NFIP). Property owners wishing to take advantage of this program should be aware that there is a 30-day waiting period before the fl ood insurance coverage goes into eff ect.
Lenders must require borrowers whose properties are in a designated fl ood hazard area to purchase fl ood insurance as a condition of receiving a federally backed mortgage loan in accor-dance with the Federal Disaster Protection Act of 1973.
The P&Z column is compiled by Dave Coble and George Cannataro with Coe & Van Loo Consultants, cvlc.com.
20 | July-August 2012
ECOnOmiC DEvELOPmEnt: trEO
tucson’s commercial real estate cycle starting to churn again as key indicators show positive signs
There’s a new vibe in the Old Pueblo these days as the commercial real estate industry is slowly making a comeback down the interstate.
Th e multi-family industry in particular is seeing a resurgence as more than 3,000 Class A apartments — including two housing projects for University of Arizona students — are projected to be built in the
next two years.“While average gross rents have trended upward, rates remain
below peak levels achieved in late 2008,” says Bob Kaplan, principal in apartment and investment sales at PICOR Commercial Real Estate in Tucson. “Numerous student housing and other Class A projects are under construction.
“Despite strong pre-leasing, many are concerned about the region’s ability to absorb signifi cant new inventory. From an investment standpoint, we expect a balance of distress and overleveraged sales with a mix of stabilized properties changing hands,” Kaplan says. “Th e months ahead may be timely to sell or refi nance at today’s attractive rates, given many analysts predicting an interest rate and cap rate
increase after the November elections.”Industrial buildings are also beginning to fi ll up after a horrendous
2008 when a chain reaction of massive vacancies snowballed. Window manufacturer Pella Corp. closed its 260,000 SF facility; air systems manufacturer Krueger Industries vacated its 245,000 SF building — and all this happened on top of children’s novelty manufacturer Lisa Frank shuttering a 300,000 SF building near Tucson International Airport.
Th e Tucson industrial market has recently been buoyed by three major construction projects: Iowa-based Involta recently broke ground on a $15M, 40,000
SF data center; Sargent Aerospace & Defense just moved into its 278,000 SF
offi ce and manufacturing plant; Graybar Tucson also moved into a new building, a 55,000 SF
LEED certifi ed facility.“Market fundamentals have approached the bottom for Tucson
industrial space,” says PICOR industrial specialist Russ Hall. “While fl ex space is still abundant and facing downward rent pressure, lease
BY PETER MADRID
The South Also Rises
The District on 5th, new student housing for UA, is being built by Construction Enterprises, Inc. (CEI) of Nashville and architect is Humphreys & Partners Architects of Dallas.
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24 | July-August 2012
ECOnOmiC DEvELOPmEnt: trEO
rates for warehouse space should not decline fur-ther. We expect vacancy to improve by year end on an increase in demand in the market for space larger than 15,000 SF.”
Similar to the recovery of the commercial real estate industry in Metro Phoenix, how the Tucson housing market bounces back is also critical.
Th e unemployment rate in the Metro Tucson (Pima County) has dropped to 7.2% as of 2Q 2012 from a recession peak of 9.5 percent.
“Th e recovery of Arizona’s economy from the Great Recession continues, and we’re gaining a little momentum,” Marshall Vest, director of the Eller College of Management Economic and Business Research Center, told a group of busi-ness leaders at a midyear economic outlook in June. “We see unem-ployment coming down, but it’s still painfully high.”
Although new-home construction continues to lag, Vest predicts an 18.7% increase in permits for the remainder of 2012 and a spike of more than 45 percent in 2013. However, the UA research center trimmed its forecast for local residential permits this year to 2,662 from a forecast of 3,877, Vest says.
As in most markets, employment and housing have a trickle down eff ect on retail. In Tucson, the retail market is marked by slow but steady progress, says PICOR retail specialist Greg Furrier.
“Th e pendulum has begun to shift from years in the tenant’s favor to a more balanced marketplace,” Furrier says. “Th e convenience store, gas and drug stores remain active in competition for quality sites, and certain franchises are in site selection for multiple locations.
“Grocery-anchored centers continue to fare better than unanchored retail, with vacancy rates 7.2% for the former and 15.8% for the latter. Sales
volume is markedly improved year over year and expected to increase.”In the offi ce sector, PICOR’s Tom Nieman says the market has stabi-
lized, both in terms of lease rates and occupancy. “Looking forward, we see modest improvement in both sale and
lease activity, with the most promising growth in healthcare-related space, from new practitioners to urgent care. Vacancy should improve by year end, while we expect asking rents to remain fairly fl at.”
Th e Economic and Business Research Center at UA’s Eller College of Management updates its forecasts quarterly at ebr.eller.arizona.edu
Adds UA economist, Gerald Swanson, who says he also sees improvement:
“Th e good news is, we are growing, and we’re not Europe.”And when asked what goals he would like to see the commercial
real estate industry in Tucson strive for, Tucson Regional Economic Opportunities (TREO) President and CEO Joe Snell says:
“Embrace a changing economy and be open to new ideas. Seize exciting opportunities ahead.”
More than 3,000 Class A apartments, including student housing (above), will be built in Tucson during the next two years. On the industrial side, Graybar Tucson moved into a new, 55,000 SF facility.
Any firm can claim to be the best. We let the facts speak for themselves.
We thank our clients for making our success possible.
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26 | July-August 2012
BUiLDinG GrEEn
BY MARIA THOMPSON
Sustainability is gradually becoming a new favorite subject at schools across the U.S.
Turner Construction Company — along with Emc2 and Fanning/Howey Architects — is in the fi nal stages of com-pleting the fi rst net-zero certifi ed school in Arizona.
Colonel Smith Middle School at Fort Huachuca in Southern Arizona is the most recent school to adopt certain sustainability techniques that allow for a net-zero qualifi cation. Th e 26-acre ener-gy effi cient project broke ground May 2011 and is scheduled to open its doors in July — just in time for the 2012-2013 school year.
Turner Construction is one of the increasing number of gen-eral contractors nationwide that are embracing sustainability. Shawn Rosenberger, vice president and general manager of Turner Construction Company AZ, says his fi rm’s skill set and availability matched with the needs of the project.
“Th e stars were aligned,” he says. Net-zero buildings are becoming more practical because of
increasing costs of traditional fossil fuels and the negative impact on our environment’s ecological balance.
Richard Clutter, Emc2 architect and Colonel Smith Middle School project manager, distinguishes the principal approach and design as important steps to the project’s overall success and completion.
Th e $17M school will generate more energy than it consumes on an annual basis through its energy-effi cient design, solar potable water heating, photovoltaic panels, daylighting techniques, and wind machines. In addition, the project has undertaken a major water harvesting operation.
With an instructional focus on Science, Technology, Engineering and Mathematics (STEM), planners of the Colonel Smith Middle School complex re-thought the traditional design of educational buildings. Th e new facility will support a project-based learning model with fl exible common and collaboration spaces that facili-tate learning both indoors and outdoors. Th e 88,693 SF school will accommodate approximately 350 students in grades 6, 7, and 8, pri-marily children of military families.
Students will be exposed to energy-saving strategies and will be provided with real-world situations. By training students at an early age, the contractors and architects can reach out to that younger generation, hopefully preparing them to be catalysts for future sus-tainability projects.
In early January, Tuner Construction Company installed the fi rst of two 25,000-gallon water tanks that was lowered 15 feet into the ground. Th e purpose of the tanks is to harvest and store rainwater that will be used for landscape irrigation. Th ey will be managed by
Earning Straight A’s in Sustainability
Colonel Smith Middle School in Fort Huachuca makes the grade as state’s fi rst net-zero certifi ed school
Colonel Smith Middle School in Fort Huachuca is targeting net-zero
certifi cation.
27
the students and faculty, allowing additional opportunities for students to learn the impor-tance of the environment, ecosystems and water conservation.
“Features of sustainability are meant to be exposed and ‘out there’ for the students,” Rosenberger says. “We are taking it out of the textbook.”
Turner Construction Company presented the plans for the net-zero certified school at a symposium at Arizona State University in February. The Council of Educational Facility Planners International and the Global Institute of Sustainability sponsored the event.
“What’s Next for Sustainable Schools and Communities?” focused on various issues that elementary and high schools face while striv-ing to achieve sustainability. These matters include rising costs for operations and sub-sequent lack of funding. As a spectator of the symposium, Rosenberger says it was interac-tive and he says he believes it was well received by the audience.
Aside from hosting the symposium, ASU also has taken mea-sures to promote sustainability with its unique program that works to develop practical solutions for economic and environmental chal-lenges.
Quinn McLamb, a freshman at ASU studying sustainability with a focus in urban planning, acknowledges the innovative work his program is currently implementing into real life situations and solu-tions.
“Since the first day of class we’ve been learning that the smallest features such as solar panels and ‘green roofs’ hold the greatest value and efficiency in the sustainability world,” he says.
Colonel Smith Middle School was built on the basis of generating short-term investments for long-term savings.
“We are enabling plenty of sustainability features at minimal cost,” Rosenberger says.
“It was a team approach and collaborative process from the begin-ning, and this process was needed to understand the team’s goals,” Clutter adds.
Students at Colonel Smith Middle School will be exposed to energy-saving strategies and provided with real-world sustainable situations every day.
28 | July-August 2012
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The State of Sustainable ArchitectureA glimpse of what Arizona has achieved through AIA 2030 Commitment and the Architecture 2030 Challenge
30 | July-August 2012
BUiLDinG GrEEn
BY GARY WORTHY, AIA, ASLA
Nearly 7 years ago, the American Institute of Architects and other leaders in sustainable design put forth a challenge to drastically reduce carbon emission and energy consumption in the building industry to positively impact the health of our environment. Th e specifi c target of carbon-neutral buildings
is set for the year 2030, with incremental improvements to be achieved every 5 years beginning in 2010 with a 60% reduction in CO2 emissions for all new buildings.
Th e goals set by AIA’s 2030 Commitment (based on what is known as the 2030 Challenge) called on architectural design fi rms to not only embrace the eff ort to positively impact the health of the environment, but asked for a commitment to track and report their eff orts through multi-year plans and strategies.
A brief overview of how Arizona architects and their clients are com-mitted to changing the way they design for more sustainable results:
Commitment to energy Modeling As never before, designers are able to predict costs of operating a
building through software tools known as Energy Modeling. Th ese tools can accurately measure amounts of daylight and glare entering a building at certain times of the day and through every season of the year. Th ey can measure the operational impact of setting a building in a slightly diff erent orientation for tremendous energy savings, or fi nd “hot spots” in a specifi c room of a building that requires moving a win-dow to a diff erent location.
Energy Modeling not only makes buildings more effi cient, but has become a way of communicating methods of energy savings and healthy buildings to owners and future occupants of the facility. Conceptual modeling during early design stages is not a luxury for a project anymore. It is quickly becoming standard practice for architects and owners serious about high performance design solutions. Th is year the AIA 2030 Commitment 2nd Annual Progress Report noted that of the 656 MGSF reported, 57% used energy modeling to predict opera-tional energy consumption.
For building owners such as the Paradise Valley Unifi ed School District who are committed to energy reduction solutions for their
schools, energy modeling helped them decide how best to apply the dol-lars they had for achieving a near net-zero facility for their new Fireside Elementary School (above). Th is included everything from the building envelope design, to insulation, to glazing options, space conditioning methods, rainwater harvesting and Energy Star equipment.
Commitment to renewable energyAs much as reducing the carbon footprint of the built environ-
ment requires commitment to reduction eff orts, reaching that golden ring of net-zero nearly always requires an equal commitment to production of renewable energy. Renewable energy encompasses a vast array of solutions including solar photovoltaic panels, wind turbines or geothermal heating and cooling.
In Arizona, the most apparent expansion of renewable energy is in the solar photovoltaic solutions. Solar panels are appearing in nearly every public venue, from universities to rural elementary schools, churches and business parks, to vast fi elds of panels har-vesting sunshine as seen in Yuma County’s Agua Caliente Solar Project which will produce suffi cient electricity to power about 100,000 homes per year.
Arizona is at a cross-roads in becoming a leader in sustainable design and renewable energy solu-tions. Th e possible meth-ods to achieving carbon neutrality in Arizona are endless. But the eff ort is embodied in that single word – commitment.
Gary Worthy, AIA, ASLA, is the Southwest Design Leader at DLR Group in Phoenix.
architecture 2030A non-profi t, non-partisan and independent organization established by architect Edward Mazria in response to the global-warming crisis.
the 2030 ChallengeA request issued by Architecture 2030 to the global design and building community to adopt specifi c targets in reducing global greenhouse gas emissions with the ultimate goal of carbon-neutrality by the year 2030.
aia 2030 CommitmentThe AIA’s formal request for fi rms to provide annual metrics proving progress toward fulfi ll-ing 2030 Challenge targets.
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SkySong becoming a catalyst for innovation, technology, research
I t was supposed to be the new home of the Phoenix Coyotes.
Before that, it was a boarded-up, vacant mall.It hardly sounds like the perfect location for a global center
for innovation.But despite battling an economic downturn that crippled
many businesses and most new development, SkySong, the ASU Scottsdale Innovation Center, has become one of the most success-ful incubator and technology centers and one of the Valley’s most remarkable success stories since the recession.
How remarkable?Th e projected economic impact of SkySong over the next 30 years
is equivalent to the Valley hosting the Super Bowl every year. According to a Greater Phoenix Economic Council study: SkySong is projected to generate more than $9.3B in economic
growth over the next 30 years. SkySong has now generated more than $397M in economic
impact for the City of Scottsdale since the doors of SkySong I were opened in late 2007. SkySong also has generated more than $460M in economic
impact for the Valley as a whole. Over a 30-year period, SkySong is now expected to generate
$8.5B in economic output for Scottsdale. During a 30-year period, SkySong is expected to create $9.9B
in total economic output for the Greater Phoenix area.“We wanted to create an environment where innovation was part
of the culture and companies had a variety of resources available to them to improve their chances of success in the global market-place,” says Don Couvillion, vice president of real estate for the ASU Foundation. “Th is vision has become a reality for a large number of the companies at SkySong, creating a great result for these organiza-tions, their employees and the community as a whole.”
Th e original vision for SkySong was started with ASU President Michael Crow, who wanted to create the kind of technological and innovation-minded environment that would attract companies and job creation to the metro Phoenix area. Crow’s idea was to create a mixed-use project of 1.2 MSF that would draw entrepreneurs and innovators into the project, give them the resources they need to grow and thrive, and provide them a home for when their businesses begin to take off .SkySong’s 42-acre campus was designed to: Create an ecology of collaboration and innovation among high-
profi le technology enterprises and related researchers. Advance global business objectives of on-site enterprises. Raise Arizona’s profi le as a global center of innovation through
co-location of ASU’s strategic global partners. Create a unique regional economic and social asset.Crow’s vision has been realized. Expansion by existing tenants
and new leases by several new companies has boosted SkySong I and SkySong II (opened in 2008) to 97% occupancy. More than 1,000 employees are now on site, working for the more than 70 companies
32 | July-August 2012
invEstmEnt
BY MICHAEL GOSSIE
Sky’s the Limit
SkySong (below and facing page) is projected to generate more than $9.3B in economic
impact during the next 30 years.
SkySong, The ASU Scottsdale Innovation Center has been one of the biggest success stories in the
Valley economy over the past few years. It has fulfilled its mission of becoming a hub for companies from startups to Fortune 500 companies that thrive on innovation and technology. The unique culture at SkySong, as well as the on-site resources of Arizona State University, the largest and fastest growing research institution in the country, have helped companies at SkySong experience dramatic growth.
Now at 97 percent occupancy at its first two buildings, SkySong is preparing for the future. The project has begun pre-leasing on SkySong III and SkySong IV (below), with completion of the additional 300,000 square feet of office space scheduled for late 2013.
Whether your company is a larger organization looking for significant build-to-suit space, or a startup looking for ways to get a leg up in a superior working environment, we invite you to become another SkySong success story.
Visit www.skysongcenter.com for more information, or contact:
ASU SkySong, Janice Kleinwort480.884.1860 | [email protected]
SkySong commercial office opportunities: Andrew Cheney, Lee & Associates602.954.3769 | e-mail [email protected]
Innovation. Technology. Success.
Rendering of SkySong III and IV
from 10 diff erent countries that are housed at SkySong and the ASU SkySong incubator.
Th e SkySong team is now working to make the next two buildings, SkySong 3 and 4, a reality. SkySong is reaching out to progressive, technology-focused companies that can benefi t from its entrepre-neurial and innovative environment.
“SkySong is truly living up to its potential as a job creator for the Phoenix metropolitan area, and having 1,000 employees on site is a signifi cant milestone for the project,” says Sharon Harper, president and CEO of Plaza Companies, the developer of the project. “We are very pleased at how the project is evolving and the incred-ible economic impact on Scottsdale and the Valley as a whole. Th e combination of technology, research and innovation taking place at SkySong is clearly a winning formula.”
34 | July-August 2012
invEstmEnt
Building SkySongDeveloper: Plaza Companies in partnership with the Arizona State University Foundation and USAA Real Estate CompanyBrokerage services: Lee & AssociatesProperty management and construction services: Plaza del Rio Management CorporationArchitects: Pei Cobb Fried and Partners, DMJM Design, Butler Design Group and Kendle Design Collaborative
Plaza Companies is the developer of SkySong.
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36 | July-August 2012
aZCrEW
azCreW’s mission for its members is to provide professional development, networking opportunities
When Jackie Orcutt interviewed for a job at a local commercial real estate fi rm she was steered into the marketing department — despite her desire to be a broker.
Men historically have dominated commercial brokerage fi rms, and not many in Orcutt’s new company appreciated her desire to be a broker.
So she set about looking for supportive role models in the industry.Her search led her to Arizona Commercial Real Estate Women
(AZCREW), an organization whose mission is to provide profes-sional development and high-level networking opportunities to the growing number of women in commercial real estate.
With hard work and support from AZCREW professionals, Orcutt managed to land a job fi ve years later as an associate broker at Cushman & Wakefi eld, where there are now four women under the age of 35 in her area of expertise, industrial and fl ex products.
Founded in 1985 as Women in Commercial Real Estate in Arizona, AZCREW off ers education, mentoring and service oppor-
tunities to its 92 members. “It’s not just networking, even though that is a part of what we do,
but it’s more than that,” says President Christine Hughes, an assis-tant vice president and branch manager for Fidelity National Title Agency. “It’s professional development. We want to encourage and support women in commercial real estate.”
Membership is open to men and women, she says, although cur-rently all but two of its 92 members are women.
What is important, she says, are the professional qualifi cations members bring to the table.
To join, one must have decision-making authority on the job, have been in the commercial real estate industry for at least two years, and derive 75 percent of one’s income from commercial real estate.
AZCREW’s roster contains representatives from throughout the industry: brokers, attorneys who specialize in commercial real estate, property managers, lenders, and, like Hughes herself, title insurance professionals.
Membership has its rewards.
Helping Women Rise Through the Ranks
BY MELISSA BORDOW · PHOTOGRAPHY BY JIM AMRINE
Jessicah Amrine (right) of Wells Fargo Bank and Laurie Sandau of Title National Commercial Services celebrate a great shot at the annual Golfi esta Charity Golf Tournament. The event has brought in more than $40,000 for AZCREW’s philanthropic efforts.
Sometimes, expertise in CRE fi nancing wears a suit of a different color.
Vicki WilliamsSenior Vice PresidentManager, Phoenix Commercial Real Estate Department
Portfolio: Some of the most respected developers, owners and investors in Arizona.
Member, Board of Directors, AZ CREW
B.A., Davidson CollegeM.A., Thunderbird School of Global Management
602.386.5500
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Member, Board of Directors, AZ CREW
B.A., Davidson CollegeM.A., Thunderbird School of Global Management
602.386.5500
Investing in commercial real estate today demands in-depth local knowledge and fi nancial power to transform opportunity into success. At Alliance Bank, we know it takes experts like Vicki to make it happen.
If you haven’t met our CRE fi nancing team, we welcome the opportunity to become part of your business team.
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38 | July-August 2012
aZCrEW
How AZCREW gives backAZCREW actively supports charities and scholarship programs. As its website says, “A little goes a long way … but a lot goes further.”Here’s how AZCREW is giving a lot: The annual AZCREW Golfi esta Charity Golf Tournament and caddy auction is held each year around the Cinco de Mayo holiday. Now in its 11th year, the Golfi esta is gaining momentum, bringing in more than $40,000 for AZCREW philanthropic efforts. This year’s benefi ciary was the Ryan House, a home where Arizona families can care for children with life-threatening conditions. The golf tournament helps fund AZCREW’s annual scholarship, given each year to a woman in Arizona State University’s Masters in Real Estate Development Program. This will be the 4th year AZCREW has awarded the scholarship. The chapter put together a team last year of 27 volunteers to walk in the Susan G. Koman Race for the Cure, which funds breast cancer research.
AZCREW is part of a national network of chapters, the CREW Network that includes 8,000 members in 74 major markets.
Th e Crew Network casts an even wider net, providing members opportunities to work with professionals in other markets, tap into CREW Network white papers and benchmark studies and take advantage of its professional development programs.
In the beginningAZCREW was founded at a time when networking and professional
development opportunities for women in commercial real estate were sorely needed.
“In the 1980s there were very few women in the commercial real estate industry, it was very male dominated, as many industries are,” says Kathryn Ferron, a certifi ed public accountant and partner at Ernst & Young, where she works primarily with commercial real estate clients.
“It’s still not great, but it is improving,” says Ferron, who credits AZCREW with opening doors and keeping her “on top of the market.”
An important professional development tool is AZCREW’s month-
ly luncheons, held at Th e Biltmore.Hughes says AZCREW works hard to feature topics that are timely
and informative and often out in front of other commercial real estate groups in the Valley.
Topics cover four broad categories: development or redevelopment case studies on specifi c projects or areas of the Valley; market and fi nances updates; topics that impact real estate, like the light rail’s impact on the industry; and fi nally, iconic fi gures in the Valley, includ-ing at least one high-powered woman each year.
Philanthropy is another important goal of AZCREW, members say.Its primary fundraiser is an annual golf tournament, but this year,
Hughes says members are working to boost donations to the CREW Network Foundation, which off ers 10 $10,000 scholarships to undergraduate women studying commercial real estate.
A new fundraising event is scheduled for November, and Hughes says the chapter hopes to increase contributions not only to the national net-work but also to its own scholarship, given annually to a woman in Arizona State University’s Master’s in Real Estate Development program.
AZCREW members and volunteers relax with lunch after the 2012 Golfi esta. President Christine Hughes (below) addresses the audience at Gainey Ranch.
www.evgre.com
Arizona2390 E. Camelback Rd., Suite 410,
Phoenix, AZ 85016�Phone: 6�02-808-86�00 Fax: 6�02-808-9100
Colorado12460 1st St., P.O. Box 247,Eastlake, CO 80614-0247
Phone: 303-552-6160 Fax: 303-280-2978
California200 N. Maryland Ave., Suite 201,
Glendale, CA 91206Phone: 818-240-8727 Fax: 818-240-1823
www.evgre.com
Evergreen is a proud member and supporter of Arizona
Commercial Real Estate Women (AZCREW) and is pleased
to announce Laura Ortiz has been named a Managing
Partner of Evergreen.
Evergreen is dedicated to helping customers achieve their growth and expansion goals through a commitment to quality, integrity and partnership.
Over our nearly 40-year history, we have completed more than 400 retail, commercial and multi-family development projects across the United States and we are always looking to explore new opportunities.
Helping Our Customers Grow
40 | July-August 2012
aZCrEW: mEmBErs
BY KELLY CHURCH
Karen Halpert, Cole Real Estate Investments
Next year marks Karen Halpert’s 10th as a member of AZCREW, a milestone highlighted by the fact
that she take over as president. Already she is looking ahead.
“It’s important to support the orga-nization because it is a way to show that women can be successful at commercial real estate and it provides a forum and mechanism to inform the next round of women leaders in the industry,” says Halpert, senior vice president at Cole Real Estate Investments.
Giving back to the community is important as well, she says. AZCREW has a tradition of partnering with orga-nizations such as Susan G. Komen, and Halpert says she hopes the charity she chooses next year will continue to help raise awareness for AZCREW.
Another important aspect of being a member of AZCREW is the networking opportunities, Halpert says.
“It’s important to have a good net-work that you can reach out to,” Halpert says. “Th at’s the best way to keep your fi nger on the pulse of what is happening in the industry.”
Being part of an industry that has seen its share of highs and lows, Halpert says the group is trying to adjust memberships to allow women in transi-tion phases of their careers to remain involved in the network.
“It’s nice to have a place where I’ve been anchored and in times of change it is always nice to have support from oth-ers in the industry,” Halpert adds.
Melinda Hinkson, Sigma Contracting
As an active member of AZCREW, Melinda Hinkson says those in the organization drive her to be
devoted to the industry and also be the best professional she can be.
“You are always mixing and mingling with smart and powerful women and they know how to make things happen,” says Hinkson, sales executive for Sigma Contracting. “Th ey work hard and they play hard.”
AZCREW’s charitable work is the part of her membership that she enjoys most, she says.
“When you see that many people coming together for a common cause to not only support your own organiza-tion, but to support an organization that does so much good for the com-munity, you know you are in the right place,” she says. “What you can do col-lectively is amazing.”
Hinkson is active in AZCREW’s golf and membership committees, and says she has never been involved with a group that is this successful at giving back to the community.
“(Th e women) have a good time doing what they are doing,” she says, which is why she always looks forward to attend-ing AZCREW-sponsored events.
Hinkson also says the network that makes up AZCREW is, “the inspiration and challenge” for her to be the best.
edythe Higgins, Wells Fargo Bank
Whether it’s raising funds for charity, scholarships or help-ing other members remain in
the organization, Edythe Higgins is AZCREW’s ace. Th at’s a fi tting analogy for the vice president of Wells Fargo Bank, an 8-year member of AZCREW who is also very active on the golf com-mittee.
“Th e money usually goes to one non-profi t that we work with for two years and the other part goes to AZCREW that we donate for scholarships that help women with their education,” Higgins says.
AZCREW also channels funds toward helping women remain in the organization.
Higgins says that in these tough eco-nomic times retaining membership is a challenge. Companies that do pay the AZCREW membership dues for their employees tend to cut back on such things in a down economy.
“I feel that it’s a really good way to allow people to continue to network,” she says of AZCREW utilizing its own funds to retain members.
Higgins also says the opportunity to build relationships with other women in the industry is very important to her. In addition, she says staying active and attending meetings allows her to have the newest information on what is hap-pening in the economy and in the com-mercial real estate industry.
“I feel that it’s a great organization to meet very strong, knowledgeable women and develop great relationships,” Higgins says.
At Wells Fargo, we take time to get to know Arizona businessesBy getting to know you and your business, our experienced business bankers can create customized financing options that can help meet your financial needs. Our lending options include:
• Commercial real estate loans • Construction loans • Equipment financing
• Vehicle financing • Lines of credit • And more
No matter what stage your business is in, come see a Wells Fargo business banker today about financing your business.
Christina Heide • 602-653-0368 Edythe Higgins • 602-885-6290
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At Wells Fargo, we take time to get to know Arizona businessesBy getting to know you and your business, our experienced business bankers can create customized financing options that can help meet your financial needs. Our lending options include:
• Commercial real estate loans • Construction loans • Equipment financing
• Vehicle financing • Lines of credit • And more
No matter what stage your business is in, come see a Wells Fargo business banker today about financing your business.
Christina Heide • 602-653-0368 Edythe Higgins • 602-885-6290
wellsfargo.com
Growing your business is easier when you have a dedicated team
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Returning interest in the Metro Phoenix mar-ket from the nation’s retailers highlighted the International Council of Shopping Centers’ RECon 2012 in Las Vegas.
Attendance at the Las Vegas Convention Center was up: more than 32,000 commercial real estate pro-fessionals were there. Th e four-day event was abuzz
with activity in both the South and Central Halls, which is signifi cant considering the past couple of years the Central Hall has been a virtual ghost town.
Several brokers indicated they had busy schedules and came away from their meetings with retailers with an overall positive feel. While many meetings may have been repeat pitches of sites from the previous couple of years, retailers seemed to fi nally be receptive of those sites and actually willing to move forward.
When asked about the biggest diff erence between this year’s event and those of the past couple years, Torrey Briegel of Phoenix Commercial Advisors summed it up: “We’re having real meetings for real sites and real deals are actually getting done.”
One example of the increased retailer activity was evident in the South Hall with ICSC’s version of the “sandwich wars.” You couldn’t walk through the South Hall without being bombarded with off ers of free sandwiches or drinks from Jimmy John’s, Firehouse Subs, Jersey Mike’s or Quizno’s; all of which have been very active in the Phoenix MSA over the past 12 months.
New development, however, continues to be almost non-existent, with the focus on existing product and infi ll redevelopment opportuni-
ties. Well located and high profi le properties remain in high demand. B and C properties continue to struggle with vacancy issues and aren’t receiving much attention from the national retailers.
Activity in the investment market also was brisk, with individual investors coming back into the market as fi nancing is more readily avail-able. Th is trend has been compressing cap rates on single tenant net leased properties, in some cases matching their lowest levels from 2005 and 2006.
Brad Richardson of Stan Johnson Company summed up the increased investor activity in the market: “Last year was the year of the institution-al investor, 2012 is going to be the year of the individual investor.”
Overall there was the positive feeling that we’ve turned the corner. Th e glass was half-full this year vs. the half-empty outlook of previous years. Th ere was even an uptick in maybe the biggest bellwether of all – the night-life. LMFAO made a surprise appearance at one industry sponsored party that was reminiscent of “networking” events of the previous decade.
And perhaps there is no better indicator of the renewed confi dence in the market than a packed casino fl oor at the Cosmopolitan teeming with members of the Valley’s commercial real estate industry. Even if we’re just breaking even, it feels good to feel good again.
James Neal, associate broker at Hinkson Company in Scottsdale, is an active member of the commercial real estate community and has attended ICSC RECon every year for the past 8 years. Neal is co-chair for the ICSC Southwest Idea Exchange, ICSC’s local convention for the Southwest Region including Arizona, New Mexico and Nevada. Hinkson Company, LLC is a full service brokerage and development fi rm. hinksoncompany.com
42 | July-August 2012
iCsC
BY JAMES NEAL
Better Oddsat iCSC’s reCon 2012 in Las vegas, the Metro Phoenix retail market is hot talk once again
Biltmore Fashion Park is taking something old, squeezing in something new and providing a retail shopping experience that has been done before — but not quite like this.
With comparisons being made to the Ferry Building in San Francisco and the Limelight Shops in New York City, Biltmore Fashion Park is
adding a unique shopping experience into its already established mall, called UNION. Expected opening date is Nov. 8.
With just under 7,000 SF, UNION will provide 19 opportunities for local, independent retailers to sell their products in a 200 SF to 500 SF space.
“I know it has been done before, but usually it’s done on a small-er, more independent base,” says Lew Gallo, the artistic designer behind UNION. “I think the idea of a big retail center that’s already established, like Biltmore, hasn’t been done under these terms or these conditions before. Th at’s what makes this unique.”
Biltmore teamed with local architect Hayes McNeil, the princi-pal and founder of Plus Minus Studio, to design the space. UNION will embrace both warm woods and an industrial shell, creating a fresh and elegantly modern environment with overhead chande-liers. Each of the retailers’ spaces has sliding doors and glass pan-els, which will allow for growth and any potential changes.
“UNION will open up to the interior of the mall and to the Camelback Road facing side,” says Mary Boyd-Williams, senior manager of leasing for Macerich. “It will have a very open feel.”
UNION will consist of 12 shops and seven “permanent kiosks,” according to Boyd-Williams. Th e local and independent retailers fi lling the spaces will include “the best of the best of retail,” includ-ing women’s and men’s apparel, skin care, baked goods and more — giving these independent retailers more exposure, Gallo adds.
“We have new start-up companies that no one has seen before,” Gallo says, “and we have the local favorites that have been around for a long time and are working on new concepts.”
With these smaller spaces, retailers have faced the challenge of fi tting into the space, while still maintaining an urban feel.
“A lot of people have had to rethink their formula to make it fi t, coming from a 2,000 SF space and having fi t into a 500 SF space,” Gallo says. “Th ey’ve had to rethink their concept in a completely new window to what they’re going to do when they create their space.”
For instance, the restaurant on-site has just 738 SF with which to work, which has created many limitations, such as no access to natu-ral gas. But with a little creativity, these retailers are making it work.
“What I think it’s going to produce is a restaurant that’s very diff erent and unique to Phoenix,” Gallo says. “It actually created a completely new dining concept based on its limitations.
“We had a certain standard of food we were expecting to pro-duce, so they thought out of the box and looked to places like Italy where there are very old buildings and Europe with smaller, con-fi ned areas and not quite the access you have in more newer, mod-ern places. It’ll be a little bit of old, a little bit of new.”
But UNION is not only embracing local businesses; it is creating a sense of community as well.
“When I moved to Phoenix, I felt like it was missing that down-town street where you found great shops,” Gallo says. “And not only was it great to shop, but you knew you were going to run into some-one you knew and see new things. Th is will be the closest thing Phoenix has to that — that downtown with heart to it and energy.”
A 250 SF “foodie’s” farmer’s market with “all high-quality pro-duce” is also in the works, which will be available to the public seven days a week and open the same hours as the mall.
biltmore fashion Park’s union offers local, independent retailers a home within the urban mall
44 | July-August 2012
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Sophisticated Senior Living p. 10
Kitchell: Innovative Healthcare
Builder p. 18
Valley Partnership Celebrates
25 Years p. 35
INSIDE
MARCH-APRIL 2012
2012 Outlook by Industry p. 8Valley Partnership Roundtable p. 28AZRE's 7th Annual RED Awards p. 40
INSIDE
The Valley's multi-family market will be brisk in 2012 with projects such as Optima Sonoran Village in Scottsdale.
JANUARY - FEBRUARY 2012
45
As we approach the fi fth year of the downward part of the real estate state cycle that has included the “Great Recession” and the bust of the Phoenix metropolitan housing and commercial real estate markets, we have
identifi ed a number of trends in commercial property manage-ment that have and will continue to impact our industry.
Value ProtectionThe old mantra, of maximizing revenues, minimizing ex-
penses and thereby maximizing cash fl ows and values has now been replaced with managing to protect the investment and cash fl ows until the economy and markets recover. For the well-capitalized institutional owner, today’s depressed values are irrelevant as they are fortunate to be in the position that they do not have to sell. Their current strategy is two-fold, fi rst, reduc-ing costs through real estate tax appeals, vendor rebidding and scope modifi cations (i.e. going from janitorial service 5 days a week to 3 days a week), and second, focusing on obtaining and retaining tenants by agreeing to shorter term leases and lease restructures at today’s lower market rates.
Non-Traditional Asset / Property ManagersIn an effort to keep key staff in related fi elds where there is
little activity, owners are now having their acquisitions, devel-opment project managers and fi nance personnel act as asset managers. Additionally, they are taking on signifi cantly more assets which results in substantially less time to understand and
provide clear direction on the management strategy for each asset. This leads to down-sourcing many tasks to the property managers as a way to get it all done without hiring an army of consultants. Today’s property managers are assisting with loan restructuring, lease restructuring, tenant’s bankruptcy, collection and liquidation situations which is at levels not previously seen by traditional property managers.
Green Buildings/Energy Effi ciency InitiativesBeginning in the early 2000’s, there began a growing aware-
ness of green buildings and energy effi ciency initiatives which would lead to operational costs saving and therefore increased values. However, due to the economic downturn, owners’ focus was drawn away from these initiatives as they dealt with much bigger issues. President Obama is seeking to re-focus commer-cial building owners with his Better Buildings Initiative, which will reward those owners who invest in retrofi ts and energy effi ciency initiatives with generous tax credits and loan guaran-tees. The goal of improving the energy effi ciency of commer-cial buildings by 20% by 2020 would take green building to an unprecedented level.
Michael Mathews, President, and Leslie Sherrod, Vice President, of Main Street Real Estate Advisors, a commercial property management company in the Phoenix metropolitan market that specializes in institutional quality offi ce, retail and mixed-use projects, including the commercial associations affi liated with the management of those projects. For more information, visit www.msrea.net
Trends in Commercial Property Management
MainStreet.indd 1 2/18/11 8:55:23 AM
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46 | July-August 2012
traDE OrGaniZatiOns
ABA Arizona Builders’ Alliance Phx: 602-274-8222 tuc: 520-881-7930 azbuilders.org
ACA Arizona Commerce Authority 602-771-1100 • azcommerce.com
ACA Arizona Contractors Association 602-246-8627 • azca.com
ACt Alliance of Construction traders 520-624-3002 • actaz.com
AGC Associated General Contractors of America 602-252-3926 • agc.org
AIA American Institute of Architects 602-252-4200 • aia-arizona.org
AMA Arizona Multihousing Association 602-224-0135 • azama.org
APA Arizona Planning Association 602-866-7188 • azplanning.org
ASA American Subcontractors Association of Arizona 602-274-8979 • asa-az.org
AAeD Arizona Association for economic Development 602-240-2233 • aaed.com
AzASLA American Society of Landscape Architects (Arizona chapter) 602-258-8668 • azasla.org
AzCreWArizona Commercial real estate Women 602-361-6478 • arizonacrew.org
BoMA Building owners & Managers Association 602-200-3898 • bomaphoenix.org
Core CoreNet Global Desert Mountain 623-581-3597 • corenetdesertmtn.org
DPP Downtown Phoenix Partnership 602-254-8696 • coppersquare.com
eVP east Valley Partnership 480-834-8335 • evp-az.org
GPeC Greater Phoenix economic Council 602-256-7700 • gpec.org
ICSC International Council of Shopping Centers 646-728-3800 • icsc.org
IfMA International facility Management Association ifmaphoenix.org
IIDA International Interior Design Association 602-273-6210 • iidasw.org
IreM Institute of real estate Managment 602-253-1852 • iremphx.org
LAI Lamda Alpha International lai-phx.org
MPA Metropolitan Pima Alliance 520-878-8811 • mpaaz.org
NAIoP National Association of Industrial & offi ce Properties 602-230-1645 • naiop-az.org
PCA Phoenix Community Alliance 602-254-7477 • phoenixcommunityalliance.com
SMPS Society for Marketing Professional Services smparizona.org
treo tucson regional economic opportunities 866-600-0331 • treoaz.org
ULI Urban Land Institute 480-727-9889 • arizona uli.org
USGBC Untied States Green Building Council usgbcaz.org
Vf Valley forward 602-240-2408 • valleyforward.org
VP Valley Partnership 602-266-7844 • valleypartnership.org
WeSt WeStMArC 623-435-0431 • westmarc.org
» At CBRE: Traci Russell joined the Phoenix office as vice presi-dent in the Retail Group. She brings more than 10 years of real estate experience at the regional and national levels. ... John Ash was pro-moted to senior associate in the Tucson office. Ash specializes in the sale and lease of industrial properties, as well as negotiating invest-ment and land transactions. … Two retail investment sales profession-als, Steve Julius and Jesse Goldsmith, joined the Phoenix office. The brokerage team comes to CBRE from Grubb & Ellis. ... Gavin McPhie, managing director for Valuation & Advisory Services (VAS), achieved Member Appraisal Institute (MAI) designation. McPhie has more than 10 years of real estate appraisal and consulting experience. … Mitch Stravitz rejoined the Phoenix office as vice president in the Industrial Group. Most recently he was a vice president at Grubb & Ellis. He started his career at CBRE in 2004, leaving in 2008 to pursue other opportunities.
» At Sundt Construction: John Stewart was named precon-struction project manager responsible for mining and industrial projects. Stewart brings more than 35 years of mechanical industry experience to Sundt. … Gary Graham was hired as a senior estima-tor. He brings more than 25 years of experience and served as a proj-ect manager at Sundt from 2007-2010. … Shawn Yeager was hired as a senior estimator in the preconstruction department. Yeager will work on the coordination of preconstruction and estimating services for mining and industrial construction projects.
» John Kobierowski and Alon Shnitzer joined the Scottsdale office of Orion Investment Real Estate as senior vice presidents and co-founded The Orion Multifamily Group. The are partnering with senior vice president Rue Bax and vice pres-idents Doug Lazovick and Eddie Chang in establishing the group.
» The Phoenix office of Jones Lang LaSalle promoted Derek Ruterman to vice president, expanding his role in the firm’s Project and Development Services (PDS) Group. Formerly a project manager for JLL, Ruterman manage key PDS projects and also help the company capitalize on new opportunities and manage a grow-ing pipeline of jobs in Arizona and Nevada.
» Frank Scopetti, senior vice president of McCarthy Building Companies, was promoted to business unit leader of the Water Services team in the Southwest Region. Scopetti is responsible for all aspects of the Southwest Region’s water/ wastewater treat-
ment plant projects and serves as team lead on some of the larg-est and most complex projects in Arizona, Colorado, New Mexico, California and Texas. He replaces Bob Knochenhauer, who retired from McCarthy after a 40-year career.
» Lee & Associates hired Kurt Saulnier as associate broker. He is considered a market leader in the East Valley and has worked with such clients as Abus Lock, Innovion, Datex Instruments, Infinity Trading and Solutions, McFarland Machine and Ceiba Technologies. Most recently he was with Grubb & Ellis.
» Cushman & Wakefield | PICOR Commercial Real Estate hired Aaron LaPrise as a retail broker in the Tucson office. He previously worked at The Harpel Company and CBRE.
» Sperry Van Ness appointed Phoenix-based Mark Phillips to establish and lead
its new National GSA Team. The team will provide full-service brokerage expertise for niche GSA transactions, ranging from site sourcing for developers to completed, occupied and stabilized investments for buyers.
» GPE Management Services added Danielle O’Dea to its prop-erty management team. She will handle a portfolio of properties including Alma School Corporate Center, St. Luke’s Medical Center MOB and Arizona Medical Plaza among others. O’Dea previously was with Healthcare Trust of America.
» D.P. Electric added Ernie Bonham as field operations manag-er. Bonham is responsible for monitoring the mentoring program. He spent 19 years at Kearney Electric as general foreman and field operations manager.
» Land Advisors Resort Solutions hired Ben Jenkins, who has more than 15 years of experience and $3M in resort sales. He will be responsible for strategic direction, new client acquisition, sales leadership and project feasibility. He previously was vice president of Sales Development for DMB Realty Network.
» SRS Real Estate Partners hired Susan Riddle as marketing coordinator. She will be responsible for executing the nation-al and local marketing strategies for the Phoenix office including broker transaction support, SRS identity building, and lead gen-eration initiatives. She previously was with Rowland Constructors.
» Cassidy Turley BRE Commercial added Thomas C. Weinhold to the Healthcare Practice Group as senior vice president. Weinhold has more than three decades of brokerage experience with empha-sis focusing on healthcare real estate.
Kobierowski
LePrise
Ash GoldsmithRussell
nEWsmaKErs
47
Riddle
48 | July-August 2012
aFtEr HOUrs
PHOTOGRAPHY CORY BERGQUIST PHOTO COLLAGE MOHAMMED MUNIR
Knowing more about the people we work with is the fun side of the business. It helps start conversations and strengthens business relation-ships. To nominate a colleague, request an After Hours form from Peter Madrid, [email protected].
monica Perez
Project Manager, Archicon Architecture & InteriorsBorn in PhoenixAttended Phoenix College, where she received an AAS in Drafting and CAD Technology; attended Arizona State Univ., where she received a B.I.S. in Architectural Drafting and Urban PlanningHas been with Archicon for 3½ yearsHas a 17-year-old son, Nicholas, who graduated from Brophy College Prep in May
responsibilitiesOversees and executes various phases of tenant improvement projects from the initial design concept to construction administration.
FavoritesActivities: Full-contact sports have always interested me, although I played team sports all my life, soccer being my preference.
DestinationsMy son and I had a blast surfi ng the North Shore in the warm waters of Hawaii and devoured the diverse cuisine in London. I would like to hike Machu Pichu with my with son before he goes off to college.
What did you think you’d be when you were growing up? As an adolescent and through my early teenage years I was a huge tomboy and thought I was going to be a professional kick boxer or a big-rig mechanic. My father was a truck driver, which infl uenced the mechanic career.
What accomplishment are you especially proud of?Raising an intelligent, respectful young man is my defi nitive personal accomplishment. I am also the only person in my family to have a college degree.
What would people be surprised to know about you? Th is is my third season playing banked roller derby for the Arizona Derby Dames, the only all-woman banked track roller derby league in Arizona. I play for the Bombshells as well as the all-star team AZDD Hot-Shots. My name is “Th e Lap Dancer # $20 HOLLA!”
adviceReceived: “Lying to ourselves is more deeply ingrained than lying to others.” – Dostoyevsky. In other words, “Being honest to yourself and others will grant the respect you deserve in every aspect of life.”
to share “Whatever you want to do, do it now. For life is time and time is all there is.”
INSIDe
50 tI to the rescue a resurgence in refurbishing
and renovating of projects
54 ABA Member Projects
60 Q & A with Mark Minter
62 ABA Members
2012
TI to the Rescuetenant improvement projects provide a much-needed boost to general contractors as the industry bounces back from a soft economy
Contractors are adopting what might be considered busi-ness-as-usual operations as they work with clients that are opting for tenant improvements instead of putting up new buildings.
Pushed to the limit in today’s still-struggling econ-omy, general contractors often take on building renovations and complete the work while the client’s employees remain on the job — hence, business as usual. Such projects often require doing some of the work and scheduling the delivery of materials and products in off -hours to minimize disruption.
Even general contractors that formerly specialized in major industrial and commercial projects and residential builders that have seen their market dry up have turned their eff orts to TI.
TI projects the past year include a former Honeywell facility in Glendale, an unfi nished former Countrywide Financial building in Chandler, three law fi rms in Downtown Phoenix, offi ce improve-ments in Scottsdale, medical facilities in Mesa, regional headquar-ters for two hotel chains in Scottsdale, State Bar of Arizona offi ces, and two Maricopa County Community College projects.
With an abundance of available Class A offi ce space in Metro Phoenix and continuing tight budgets, it becomes an obvious cost-cutting decision for businesses to consider tenant improvements as a way to enhance productivity as well as their bottom line. A benefi t of clients such as law fi rms moving into Class A offi ce space is that “A-minus” and “B-plus” spaces open up, needing to be retrofi tted and upgraded.
“Th ere is defi nitely an art to properly renovating occupied build-ings,” says Jim Kurtzman, vice president of client development for hardison/downey construction, inc. “Most of these projects are
being built at night so as not to disturb adjacent existing tenants with noise, odors, utility shut downs, safety, ingress and egress.”
Kurtzman says many so-called TI projects require asbestos abatement and upgrades to outdated electrical, mechanical and safety systems.
Roz Lipsey, president and CEO of Jokake Construction, says it makes fi nancial sense to buy a commercial building or facility at a relatively low cost and put dollars into its upgrade or renovation.
“Several of our clients are also ‘repurposing’ the buildings that they have bought,” Lipsey says. “For instance, one client bought an old movie theater and we renovated it into a healthcare clinic. Th ey could not have built a new healthcare clinic in that part of town for less money.”
More than 90% of Jokake’s work is in occupied facilities, includ-ing hospitals, commercial offi ce buildings, banks, school campuses, data centers, and hotels.
“In these environments, you need to understand the existing building, facility, or campus infrastructure and how the renovation will integrate into the infrastructure of the old facility,” Lipsey says. “In addition, we are operating in and among our clients’ operations, their employees and their customers, so safety, site access, and avoidance of disruption to the client is key.”
Lipsey says her fi rm’s goal in occupied facilities is to eliminate disruptions so their clients “can operate under the adage of busi-ness as usual, even though there may be a major renovation hap-pening in their space.”
At D.L. Withers, Tiff any Mancuso, director of business develop-ment, says her fi rm’s TI projects range from $500,000 to approxi-mately $4M. Public sector clients had the money to do new con-
50 | July-August 2012
aBa
BY DON HARRIS
One of The Weitz Company’s sig-nature TI projects (left) is the offi ces
of Polsinelli Shughart at CityScape. WESPAC Construction’s TI of the
Lumension reception area (above).
struction four years ago, but today some of those projects have been shelved, she says. “Now, they’re shuffl ing the deck, using current inventory,” Mancuso says. “For the past few years, municipalities have been scrambling to fi nd existing space to remodel.”
Projects that formerly took four-to-fi ve months to complete are on a much tighter schedule. Perhaps 45 days, to save money, she says.
Kelly Billings, senior marketing and communications manager at Th e Weitz Company, says TIs have become more popular in both the public and private sectors. “Th e metro area is saturated with vacant space,” Billings says. “Why build when it’s already built for you?”
She adds: “In the public sector where budgets are tight and fi s-cal responsibility is important, renovating an existing space allows tenants to get a new space without the perception of overspending. And, in the private sector, businesses are really seeing great deals on leasing new space. Property managers want to get that space leased, and some of these off ers have been too good to pass up.”
Weitz has seen a big increase in TIs in recent years. “Th at has really kept us busy,” Billings says.
Jim Zodrow, vice president of tenant improvements at WESPAC Construction, says the fi rm has been in the TI fi eld for 18 years. “It’s always been our bread and butter,” Zodrow says. “TI has become a bigger percentage of our overall workload as new construction slowed down.”
Joe Hitzel, president of SAB (Southwest Architectural Builders), says the TI market is still strong, in part, because major potential
clients are waiting for the market to bottom out.“Th ey missed it,” Hitzel says. “It happened about a year ago. We
are very close to the lowest lease rates in Phoenix’s reset economy. Lease rates are about 40 percent lower than they were in 2008.”
Even so, tenant improvement projects remain a very important component of the Metro Phoenix economy.
“It’s the beginning of Phoenix’s rise out of this economic mess,” Hitzel says. “We need to consume and fi ll the vacant space before developers feel comfortable in constructing new projects. TIs are the fi rst to consume that vacancy.”
52 | July-August 2012
aBa
Universal Technical Institute, Jokake Construction
53
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Sargent Aerospace & Defense New offi ce/Manufacturing facilityDeveloper: Sargent AerospaceGeneral Contractor: Chestnut Construction CompanyArchitect: Gromatzky Dupree & AssociatesLocation: 5600 W. Coca Cola Dr., TucsonSize: 278,000 SFValue: $7.815MStart/completion: 3Q 2010/2Q 2011Subcontractors: Magnum Paving, Achilles, Santa Rita Landscaping, Geronimo Glass, Valenzuela Drywall, Avila Concrete, Premier Metals, Taylor’s Demolition, Millwork by Design Th e project was a redevelopment of an existing site and included demolition of the existing building and re-grading a site for new park-ing. Th e new building is rectangular, maximizes the site area and creates a connection to the existing building. Th e project created a campus setting with an open air employee patio/break area.
town & Country: Major A, Shops A and SiteworkDeveloper: RED Development and Town & Country Camelback, LLCGeneral Contractor: Chasse Building TeamArchitect: Butler Design GroupLocation: Camelback Road and 20th St., PhoenixSize: 60,973 (combined)Value: $3.2MStart/completion: 4Q 2011/2Q 2012Subcontractors: Creative Masonry, Ganem Construction, ACE Asphalt, MJB Electric, Saguaro Steel Th is project includes two retail buildings and site improvements at Town & Country shopping center along the Camelback Corridor. Phase 1 includes Major A (future Nordstrom Rack) at the site that was previously Bookstar. Phase 2 includes a new retail building that will include tenants such as Potbelly Sandwich Shop, Five Guys and Café Rio. In addition to the new buildings, the parking lot was newly reno-vated at the NEC corner of the shopping center.
the Avenue of the fountainDeveloper: Th e Avenue of the Fountain LLCGeneral Contractor: Adolfson & Peterson ConstructionArchitect: RSPLocation: Saguaro Blvd. and Avenue of the Fountains, Fountain HillsSize: 70,561 SFValue: $10.3MStart/completion: 3Q 2012/4Q 2013Subcontractors: List was not yet available at press time. First phase of the entertainment/retail project in the Town Center area of Fountain Hills will consist of three buildings. Th e project will include a 12-screen theater (60,983 SF), restaurant (2,200 SF) and retail section (7,378 SF).
54 | July-August 2012
aBa: mEmBEr PrOJECts
Sargent Aerospace & Defense New Offi ce/Manufacturing Facility in Tucson
The Avenue of the Fountainin Fountain Hills
56 | July-August 2012
aBa: mEmBEr PrOJECts
CityScapeDeveloper: RED DevelopmentGeneral Contractor: Hunt Construction and Th e Weitz CompanyArchitect: CallisonLocation: 1 E. Washington, PhoenixSize: 1.8 MSFBrokerage Firm: CBREValue: $900MStart/completion: 1Q 2007/3Q 2012Subcontractors: HACI Mechanical, WJ Maloney Plumbing, Climatec (EMS Controls and Smoke Control with web accessible ten-ant override) CityScape is a high-rise, mixed-use development in Downtown Phoenix incorporating offi ce, retail, residential, and a hotel. Th e project covers three downtown Phoenix city blocks and is situated between 1st Ave. and 1st St., between Washington and Jeff erson streets.
Paradise Valley Community College, Kranitz Student Center renovation and AdditionDeveloper: Maricopa County Community College DistrictGeneral Contractor: Jokake Construction ServicesArchitect: SmithGroupJJRLocation: 18401 N. 32nd St., PhoenixSize: 67,000 SFValue: $6MStart/completion: 2Q 2012/2Q 2013Subcontractors: D.P. Electric, Midstate Mechanical, Western States Fire, Progressive Roofi ng Th e project includes an addition of a 12,000 SF student services and community meeting facility, and multi-phased renovation of the existing 45,000 SF student center. Th e facility includes student dining, counseling, admissions, fi nancial aid, disability services and veterans services. Renovation includes major mechanical upgrades, interior fi nishes, structural modifi cations, plumbing, electrical and fi re suppression upgrades.
Barry Goldwater High School Modernization Project Phase IIIDeveloper: Deer Valley Unifi ed School DistrictGeneral Contractor: McCarthy Building CompaniesArchitect: ADM Group Inc.Location: 2820 W. Rose Garden Ln., PhoenixSize: 118,000 SF renovation; 500 SF additionValue: $9.8MStart/completion: 1Q 2012/3Q 2012Subcontractors: McCarthy Mechanical, Irontree Plumbing, Allied Accoustics, Pueblo Mechanical, Urban Electric, Foothills Fire Protection, Twin City Hardware, Progressive Roofi ng, Stone Cold Masonry, ISEC Phase III of this major renovation includes a 118,000 SF remodel of Buildings 400, 700, 800, 900 and 1,000, which includes remodel of performing arts, administration, science classrooms, gym and exten-sive site and way fi nding improvements. Also includes new HVAC, lighting, ceiling grid, paint, millwork and fl ooring.
ASU Interdisciplinary Science & technology Building 4Developer: Arizona Board of RegentsGeneral Contractor: Sundt ConstructionArchitect: Steven Ehrlich Architects and HDR Architecture, Inc.Location: 781 E. Terrace Rd., TempeSize: 297,000 SFValue: $114MStart/completion: 1Q 2010/1Q 2012Subcontractors: Wilson Electric, Dynamic Systems, KT Fabrication, Elward Construction Co., Sundt Concrete, Sundt Civil, TP Acoustics, PCI, Brothers Masonry, ISEC, Pete King Construction Co., RCI Systems ISTB 4 is an 8-story building with three missions: Research — It contains 166 laboratory modules inclusive of metals-free, special chemistry, wet and computational spaces, as well as microscopy suites; Outreach — Th e center of the building contains galler-ies, classrooms, a 245-seat auditorium, and a meteorite vault; and Administration — Offi ces and meeting rooms.
ASU Interdisciplinary Science & Technology Building 4
CityScape
Paradise Valley Community College, Kranitz Student Center Renovation and Addition
Proud Builder of Sun devil Country SinCe 1969
2620 S. 55th Street, Tempe, Arizona 85282(480) 293-3000 www.sundt.com
Arizona Contractor License Nos.: ROC068012-A; ROC068013-B01
Clockwise from top left: Interdisciplinary Science & Technology Building 4; Lattie F. Coor Hall; The Biodesign Institute, Building A; Walter Cronkite School of Journalism and Mass Communication; The Biodesign Institute, Building B
58 | July-August 2012
aBa: mEmBEr PrOJECts
Phoenix Biomedical Campus — Health Sciences education BuildingDeveloper: Arizona Board of RegentsGeneral Contractor: DPR Construction • Sundt Construction (Joint Venture)Architect: CO Architects, Ayres Saint GrossLocation: 435 N. 5th St., PhoenixSize: 268,000 SFValue: $129MStart/completion: 3Q 2010/3Q 2012Subcontractors: JJR, Kaplan Gehring McCarroll Lighting, John A. Martin & Associates, AEI Engineers, Dibble Engineering, Transsolar Energietechnik, Professional Service Industries, Rolf Jensen & Associates, Lerch Bates, Th e Sextant Group, Davis Langdon, Sun Valley Masonry, University Mechanical & Engineering Contractors, Twin City Hardware, KT Fabrication, Cannon-Wendt Electric, Barrett-Homes Contractor, Otis Elevator Co., Kovach Properties, Western States Fire Protection HSEB is part of the 28-acre Phoenix Biomedical Campus to be used by the University of Arizona College of Medicine-Phoenix, the UA College of Pharmacy, and the UA Mel and Enid Zuckerman College of Public Health, as well as by Northern Arizona University’s College of Health and Human Services programs.
DPr Construction Phoenix regional offi ceOwner: DPR ConstructionGeneral Contractor: DPR ConstructionArchitect: SmithGroupJJRLocation: 222 N. 44th St., PhoenixSize: 16,000 SFStart/completion: 1Q 2011/4Q 2011Subcontractors: KEMA, PK Associates, Climatec, Suntec Concrete, Dickens Quality Demolition, Wilson Electric, Benson Security, Workspaces, KT Fabrication, Carter’s Inc., Kovach, Arizona Professional Painting, Bel-Aire Mechanical, Progressive Roofi ng, KYI Tile DPR converted an empty community eyesore into a showcase for living and working sustainably in the desert environment. Th is adaptive re-use project is an example of challenging standard design assumptions to create what is on track to be the fi rst building in Arizona to operate at net-zero effi ciency.
John C. Lincoln Central Utility PlantOwner: John C. LincolnGeneral Contractor: Gilbane Building CompanyArchitect: Orcutt | WinslowLocation: 3rd St. and Dunlap, PhoenixSize: 15,500 SFValue: $13.6MStart/completion: 3Q 2011/2Q 2012Subcontractors: Aulerich & Assoc., Waste Management, Sentinel Maintenance, Contractors & Builders, R.A.M.M. Engineering, Suzie’s Temp Fence, American Cleaning Systems, Dickens Quality Demo, Jones Concrete Construction, Suntec Concrete, Sun Valley Masorny, Bell Steel, Pioneer Roofi ng, Climatic, Cannon & Wendt, ISEC, AMD, WD Manor Gilbane is providing CMAR services for the new central utility plant on the John C. Lincoln campus. Th e project includes the demoli-tion of an existing medical offi ce building. Th e new plant encompasses 15,500 SF with a 7,900 SF enclosed building.
ASU Student recreation CenterOwner: Arizona State UniversityGeneral Contractor: Gilbane Building CompanyArchitect: Studio MaLocation: ASU Tempe campusSize: 84,500 SFValue: $21MStart/completion: 2Q 2012/3Q 2013Subcontractors: DQD, Valley Rain, Siteworks, Code One, Schuff Steel, Kortman, Suntec, TD Ind., Th yssenKrupp, Div 9, Kovach, Tempe Mech., TP Acoustics, Diversifi ed, Aero, Stout, IES, ISEC Th e expansion of the Student Recreation Center (SRC) spans 84,500 SF with an additional 18,800 SF of exterior covered area. Th e project includes a 2-court gym, a multi-activity court gym and a strength and fi tness area. Th e design is targeting LEED Gold Certifi cation.
DPR Construction Phoenix Regional Offi ce
Phoenix Biomedical Campus — Health Sciences Education Building
ASU Student Recreation Center
Q: Has the recent economic slowdown solved hiring problems in the construction industry?A: No. In 4Q 2011 and 1Q 2012 contractors have reported an uptick in volume and employ-
ment opportunities. Unfortunately, they are also reporting that it is diffi cult to fi nd qualifi ed and experienced workers in both management and craft positions. It is possible that the recession in Arizona has lasted so long that qualifi ed workers have left for other states or stayed in Arizona and gone to work in other industries. As the economic recovery continues skilled employee shortages will continue to be an huge problem.
Q: Has there been any positive legislative action benefi tting the construction industry? A: Th e passage of HB 2830 is a positive item for contractors in the energy sector of the
industry. HB 2830 allows public agencies to enter into energy savings contracts to upgrade and improve existing facilities. Currently, if an agency wanted to upgrade a building for energy sav-ing purposes they would have to have the project designed, built and paid for in the current fi scal year.
Th is new law allows agencies to use a single contract to design, building, operate, maintain and fi nance the project. Th e complete cost of the upgrade can be paid for from future energy savings. Th is works well for agencies that have little or no money for capital improvements and creates a huge market for contractors.
Q: How will the outcome of the November election aff ect Arizona’s economy?A: Regardless, the outcome of the November elections Arizona can expect an improving
economy. Th is is a great state in which to live. People and companies will continue to move here to enjoy the climate, environment and opportunities present here. I have recently talked to several new transplants to Arizona. One person had lived around the U.S. and in several foreign countries. He was extremely excited about moving to Arizona and all the wonderful opportunities there are and fun things to do. He confi ded to me that this was his last move.
Q: How is new technology impacting contracting?A: Technology comes at us from so many directions simultaneously that it is often hard to
sort out the impacts. New technology is a marketplace opportunity for certain contractors. As fi rms upgrade their technology they often need new or remodeled physical space. Hi-tech manufac-turing, such as Intel, is also an opportunity. On the other side contractors need to keep pace them-selves with technology and the abilities of their fi rms and employees. Technology has now spread to all levels of every fi rm. We expect instant response to communications from everybody. We also expect all fi rms to be up-to-date on new hardware and software to facilitate that communication. Good luck to the fi rm that skimps on technology in the future. Th ey will become dinosaurs before they know it.
Q: Is construction fi nancing readily available?A: Construction fi nancing is a challenge for the banking industry. If an owner has the right
project in the right place at the right time, there might be funding available. But, banks are very selective. Metro Phoenix continues to have very high vacancy rates for offi ce buildings. We are among the highest 2-3 metro areas in the country. Until vacancy rates come down, don’t expect easy lending for new offi ce buildings.
60 | July-August 2012
aBa: Q & a
Executive Director Mark Minter
Q&A
Mark Minter is Executive Director of the Arizona Builders’ Alliance, a trade association of commercial and industrial builders including general contractors, subcontractors, suppliers and service companies. The ABA was founded June 1, 1994 as a result of a merger between the Associated Builders and Contractors and the Associated General Contractors. Prior to the merger Minter was with the AGC since 1977 in a variety of positions, including executive director, assistant director and Tucson branch manager. As Executive Director of the ABA his duties include overall operation of the alliance. He has worked extensively in the areas of labor relations, lobby-ing, government relations, safety and oversees educational programs.
PHOTOGRAPH BY CORY BERGQUIST
62 | July-August 2012
aBa: mEmBErs
Industry associations such as the Arizona Builders’ Alliance exist to provide material support to its members, including training work-shops and legal guidance. Lorraine
Bergman, owner of Caliente Construction in Mesa and vice president of the ABA, praises the programs off ered by the organization but emphasizes the less tangible benefi ts of her experience at the organization.
Lorraine and her husband, Tom, founded Caliente in 1991, though she did not become personally involved with the management of the company until around 2000. When he died of cancer in 2005, Bergman, as the new sole owner of Caliente, needed to learn how to man-age a commercial real estate fi rm.
Th e ABA off ered an executive training course for just that purpose. But more important was the emotional support she received from other members. “Members were very support-ive of me taking the reins of the company, and they off ered me support and guidance to help through some very diffi cult times,” she says.
Getting involved with the ABA has allowed Bergman to bring the organization’s resources to bear on issues that aff ect her industry. As a member of the legislative com-mittee, she corresponded with Arizona state lawmakers in 2002 as they debated a bill to change the process by which the state approves bids for public construction projects. During the recent economic downturn, she and the rest of the executive committee off ered fi nancial and legal classes that taught members how to do business diff erently in bad times.
Jerry Mangone, regional sales manager of Sunstate Equipment in Phoenix and a mem-ber of the Arizona Builders’ Alliance, helps to supply construction equipment to contractors around the Southwest. As a member of ABA,
he has taken advantage of social connections to other people in the construction industry, accumu-lating the knowledge he needs to serve builders.
Mangone was a beer distributor before joining Sunstate, so he knew nothing of the inner workings of a construction project. Th e personal connection to business insiders fostered by the ABA enabled him to adapt to his new fi eld, he says.
“It took a while, and if it wasn’t for the patience of a lot of good people, I wouldn’t have gotten there,” he says.
Mangone’s education involved understanding the needs of his customers. Builders depend fi nan-cially on punctual delivery of equipment, careful maintenance, and speedy responses when they request repairs, so rental prices on paper may belie the true cost if the equipment provider is slow or sloppy, Mangone explains. Knowing what his cus-tomers value lets him satisfy them.
“Fortunately, most of our customers understand that price is certainly an important thing, but per-formance and the overall cost of getting their job done far exceeds that,” he says.
Th e relationships Mangone has cultivated with others in the industry have also satisfi ed him in less tangible ways.
“It’s fun to be out meeting people,” he says. “It’s fun to learn from people, to see ways to do things that you, left to your own devices, would have never fi gured out. Th at part of it is — it’s hard to describe how much fun it is.”
Th e ABA organizes donations to projects that serve charitable causes, and Mangone says he feels personally fulfi lled when he helps to build institu-tions for disabled children, seniors, and battered women by donating equipment.
“I’m a strong believer that anything you can do to give back to the community, regardless of whether it’s with ABA or some other organization is something that is almost part of being alive.”
Preston Achilles, owner of Achilles Air Conditioning Systems in Tucson and president of the Arizona Builders’ Alliance since February, pointed to several benefi ts of mem-
bership, including the opportunity to learn about the industry, stay abreast of new technol-ogy, and make an impact on legislation.
Th e opportunity to work with, and learn from, a variety of diff erent businesses attracted Achilles to the offi ce of president. “It’s a lot of work,” he says, but the job rewards him with useful knowledge about his business.
His work as president exposes him to the diversity of the industry; some members represent billion-dollar companies while others come from much smaller firms. Achilles has found regional dif-
ferences as well between firms in the Phoenix area and those in the Southern Arizona chapter.“We’re pretty limited down here in how we see things,” he says. “You’re working with
the best companies in the state, and they make you better.”Th e ABA allows member organizations to associate as equals and to focus on com-
mon interests, a contrast to the hierarchical nature of a construction project, Achilles explains.
“Th ey’re our bosses when we work for them, but when we work for ABA meetings we’re on the same level,” he says.
“Information comes much more quickly” in the computer era, he says, greatly accel-erating the pace of construction projects. ABA membership has kept Achilles’ air-condi-tioning business informed about new technology, including AutoCAD.
Jerry Mangoneregional Sales ManagerSunstate equipment
Lorraine BergmanownerCaliente Construction
Preston Achillesownerachilles air Conditioning Systems
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