Tag Archives: CBRE

Welnick Skyline Rendering, WEB

Historic Welnick Bros. market slated for infill project

CBRE has completed the sale of Welnick Bros. Marketplace located at 345 W. Van Buren St. in downtown Phoenix. The property, which has been earmarked for a future, urban-infill retail project, commanded a sale price of $930,000.

Christoper Ackel and Pat Horan with CBRE’s Phoenix office negotiated the transaction on behalf of both buyer and seller. The buyer was a joint venture between James Kuykendall, a former Bar-S Foods Co. CFO, and Pat Cantelme, a former CEO of PMT Ambulance. The seller was Joyce Reiff.

The development of downtown continues to be a positive trend for the City of Phoenix,” said CBRE’s Ackel. “A strong downtown core is essential to an economically strong central business district and projects like the one planned at Welnick Marketplace will only enhance what Downtown Phoenix offers those who frequent the area, whether because they live or work downtown or they want to experience one of the many entertainment options in the area.”

Welnick Bros. Marketplace is listed on the Arizona State Historic Property Inventory and the City of Phoenix considers the building one of the most distinctive Spanish Colonial buildings in Phoenix. The property was built in 1927 by Leo and Ed Welnick. The brothers came to Arizona in 1912 to build their grocery business. At time of construction, Welnick Bros. Marketplace was one of the best equipped groceries in Phoenix, even including cold storage for fish and poultry. The builder was Wasielewski Contruction Company, whose projects also include Brophy College Prepatory School, The Luhrs Tower and the Hotel St. James.

Most recently, the property was home to Dave Reiff Printing Co. Dave and Joyce owned and operated the printing company for nearly 40 years, but the property has been vacant the last ten. Mr. Cantelme and Mr. Kuykendall have plans to restore and redevelop the property for retail use and will retain the Welnick Marketplace moniker, dropping the “Bros.” The purchase and redevelopment of Welnick Marketplace is the first urban infill project for Mr. Kuykendall and Mr. Cantelme, but will likely not be the last. The two say they are exploring other potential acquisition and redevelopment projects that will bring value to the City of Phoenix.

DynamiteTatum, WEB

Shops at Dynamite & Tatum sells for $1.9M

CBRE has completed the sale of the Shops at Dynamite & Tatum, a retail strip center located at 28255 N Tatum Blvd, in Cave Creek, Ariz. The property commanded a sale price of $1.9 million.

Steve Julius and Jesse Goldsmith with CBRE’s Phoenix office negotiated the transaction on behalf the seller, Bainbridge Island, Wash.-based Pacific West Land. The buyer, Cave Creek Shoppers Mall, LLP, of Vancouver, B.C., Canada, was represented by Nathan Cardon of Cardon Commercial.

The Shops at Tatum & Dynamite is a quality, well-leased and stable property,” said CBRE’s Julius. “It should provide the buyer with steady cash flow over the years.”

Developed in 2006, Tatum & Dynamite Plaza is located just north of the Desert Ridge area. It is conveniently located along the border of Phoenix and Cave Creek with Scottsdale’s border just to the east. The retail strip center totals 8,725 square feet and tenants include Goodwill Donation Xpress, Allstate Insurance, Pieh Tool Company, Summit Chiropractor, as well as a barber shop and a dentist.

Desert Ridge Corporate Center, CBRE

Desert Ridge Corporate Center sells for $58.6M

CBRE has completed the sale of Desert Ridge Corporate Center (DRCC) located at 20860, 20830 and 20910 N. Tatum Blvd. in Phoenix. The institutional grade office and retail development is located in the Desert Ridge master-planned community. The asset totals 293,161 square feet and commanded a sale price of $58.6 million. The property was 75 percent leased at time of sale.

Barry Gabel and Chris Marchildon with CBRE’s Phoenix office, along with Kevin Shannon, Ken White and Paul Jones in Los Angeles, negotiated the transaction between the buyer, Los Angeles-based Regent Properties, and the seller, FCA Partners, LLC of Charlotte, N.C.

Despite the fact the property is not fully stabilized, Desert Ridge Corporate Center attracted significant interest from local, regional and national buyers,” said CBRE’s Gabel. “This is definitely a testament to the continued recovery of the Phoenix investment market as well as the resiliency of the Paradise Valley submarket, which continues to perform at the top of the metro Phoenix market.”

Desert Ridge fits perfectly within our strategy of buying value-added office properties across the western United States,” said Eric Fleiss, President of Regent Properties. “We are committed, experienced investors in the Phoenix market specifically, and believe this high-quality asset is a great addition to our portfolio.”

DRCC consists of two class A office buildings (137,983 and 137,225 square feet, respectively) and a 17,953-square-foot, multi-tenant specialty retail building. The property is located on land encumbered by a State of Arizona ground lease with 78 years remaining. Tenants include GEICO Insurance, Vantage Retirement, Wells Fargo Bank, C.H. Robinson Worldwide, K. Hovnanian Homes, Summit Energy, SimonMed Imaging and Scottrade.

Developed in 2007, DRCC benefits from an amenity-rich location in the Paradise Valley submarket. The property is minutes from the 1.2 million-square-foot Desert Ridge Marketplace, two championship golf courses and the 628,000-square-foot High Street mixed-use development. DRCC is also highly accessible at the intersection of the Loop 101 Freeway and State Route 51.

Coldwater Depot Logistics Center

Coldwater Depot Logistics Center enters phase 3

Trammell Crow Company (TCC), one of the nation’s largest commercial real estate developers and investors, and joint venture partner Clarion Partners, a leading U.S. real estate investment manager, announced Tuesday that construction has begun on Coldwater Depot Logistics Center, Phase 3, a 187KSF, class-A speculative industrial building in Avondale, Ariz. Construction is scheduled to be complete 2Q 2015. This is the third and final phase of the venture’s 66 acre master-planned Coldwater Depot Logistics Center industrial park.

Coldwater Depot Phase 3 will be the first distribution building developed in Southwest Phoenix in 7 years that is specifically designed for 100,000-150,000 square foot warehousing requirements. This historically important user size range has been largely underserved as new developments in recent years have focused on much larger buildings. Much of the existing inventory of smaller distribution buildings are now 20-30 years old and do not have desirable attributes such as 30’ clear height, 52’ x 60’ column spacing, ample truck maneuverability, trailer parking and the ability to secure truck courts.

“The Coldwater Depot Logistics Center project has been a tremendous success for the TCC/Clarion venture given the quality of buildings, location along the Interstate 10 freeway and growth and demand within the submarket,” said Cathy Thuringer, Principal with Trammell Crow Company’s Business Unit.  “This third phase will target the smaller industrial user, a segment of the market that has become increasingly active as the economy continues its recovery.”

Coldwater Depot Phase 3 sits on 11.7 acres along Interstate 10 at 127th Avenue in the heart of the Southwest Phoenix industrial market. The site is minutes from Loop 101, Loop 303 and I-17, with close proximity to Sky Harbor International Airport and downtown Phoenix. The facility has access to local, regional and national markets via an integrated network of interstate and intrastate freeways. Local amenities include Avondale City Center, Gateway Pavilions, Shops at Alameda Crossing, Gateway Crossing, Hilton Garden Inn, Homewood Suites, The Estrella Falls Regional Mall and Wigwam Golf Resort & Spa.

“We’re excited about kicking off this project with the Trammell Crow Company and growing our portfolio in the Southwest Phoenix submarket,” said Ryan Collins, Vice President with Clarion Partners.

Rusty Kennedy, Dan Calihan and Pat Feeney with CBRE’s Phoenix office have been appointed the leasing agents for the building. Butler Design Group is the architect and Renaissance Companies will serve as the general contractor.

Economic Forecast

IREM, CCIM announce 9th annual CRE Economic Forecast

IREM and CCIM will present the 9th annual commercial real estate Economic Forecast at the Tempe Center of the Performing Arts on Thursday, Jan. 15, 2015. IREM and CCIM will begin the program by honoring Jerry Colangelo, who will be recognized as the Person of the Year by the organizations.

The panel discussion will be moderated by Peter Bolton of Newmark, Grubb, Knight, Frank. Each panel member will discuss their area of expertise as it relates to the current commercial real estate environment and then predict, based on the metrics of the commercial real estate business, achievements by year’s end.

The program will begin at 8 a.m. and continue until noon. The program will include;
Jerry Colangelo Program Honor

Multi-Family Panel
o    Cindy Cooke – Colliers International
o    Mark Schilling – MEB
o    Tom Lewis – Alliance

Office Panel
o    Jim Fijan – CBRE
o    Chris Toci – Cushman & Wakefield
o    Matt Mooney – Parkway Properties

Retail Panel
o    Judi Butterworth – Velocity Retail
o    Greg Laing – Phoenix Commercial Advisors
o    Pat McGinley – Vestar

Industrial Panel
o    Stein Koss – Lee & Associates
o    Tony Lydon – JLL
o    Mark Singerman – Rockefeller Group

The Tempe Center of the Arts is located at 700 W Rio Salado Parkway, Tempe, Ariz., and more information on the 2015 IREM/CCIM Economic forecast can be found here.

Talavi, courtesy of CBRE

Progressive Leasing to bring 500 jobs to Phoenix in 2015

CBRE has negotiated a 20,000-square-foot office lease at Talavi Corporate Center located at 5651 West Talavi Blvd. in Glendale, Ariz. Progressive Leasing, a Draper, Utah-based financial services vendor for retailers and merchants, will open its first operations center in Arizona, bringing approximately 500 new jobs to metropolitan Phoenix by the end of 2015.

Ashley Brooks, Jim Bayless and Jenny Aust with CBRE’s Phoenix office negotiated the lease between the landlord, Los Angeles, Calif.-based ROF II Talavi, LLC and the tenant.

Progressive Financial helps retailers and merchants service their customers by offering a lease/purchase program to customers that currently cannot qualify for traditional financing or as an alternative financing option. The company was founded and is headquartered in Draper, Utah. The lease at Talavi Corporate Center marks Progressive’s first location outside of Utah.

Our new Glendale facility is an important part of Progressive’s growth plan and our ‘always up’ strategy,” said Ryan Woodley, CFO/COO of Progressive. “Our expansion requires a great labor force, superior facilities, and few geographic or weather anomalies. Glendale was a perfect fit for our needs.”

Opening in November, the new support center will be Progressive’s second operations site and include underwriting, customer service, retailer support, and collections teams. Progressive anticipates hiring 50 employees per month, reaching 500 employees at the center before the end of 2015. Open positions will be posted at www.progleasing.com.

Glendale is an excellent location because of our abundant, qualified workforce and close proximity to multiple major transportation corridors,” said Economic Development Director for the City of Glendale Brian Friedman. “Our process for expedited development services has really given us the reputation of working with the client to ensure they open within their timeframe.”

Developed in 2002, Talavi Corporate Center is a ±152,936-square-foot, class A, three-story office project in Glendale. The property offers tenants access to a talented, well-educated labor pool of nearly 1.3 million within a 30-minute commute. Additionally, the property’s corporate neighbors include Delta Dental of Arizona, Alaska USA Federal Credit Union, CSAA/AAA Insurance, Phoenix Heart PLLC, John C. Lincoln Medical Services and Credit Union West creating a dynamic professional environment in the immediate area.

OldSchool07, WEB

Old School O7 sells for $6.1M

Joe Compagno of CBRE has sold Old School O7, considered one of the most unique urban infill redevelopment projects in Phoenix. The 9,293-square-foot shopping center commanded a sale price of $6.1 million – or $656 per square foot – and a cap rate of 5.5 percent. The tenants include Starbucks, the Z’Tejas restaurant-concept Taco Guild and Buffalo Exchange.

CBRE’s Compagno represented the local seller, O7, LLC, a company formed by Phoenix-based Wetta Ventures, in the transaction. The buyer, Beverly Hills, Calif.-based Old School Property, LLC, was represented by Steven Stein with TauroREIS of Torrance, Calif.

“Successful urban infill retail projects like Old School O7 are highly sought after by investors. As economic drivers move demand back to city-centers, urbanization and adaptive reuse will continue to be significant forces in the commercial real estate market in Phoenix,” said Compagno. “Redevelopment efforts like Old School O7 exemplify this trend. We recognized a window in the marketplace to capitalize on aggressive pricing for this unique piece of real estate, consulted ownership and then proceeded to set the market with this sale.”

Old School O7, formerly a Methodist church and a school building built in the late 1800s, was purchased by the seller in the spring of 2012 and was quickly redeveloped into one of the most captivating infill retail projects in metropolitan Phoenix. The former church is now home to the Taco Guild restaurant, while the school houses the Buffalo Exchange. The Starbucks is in a newly constructed free-standing 1,700-square-foot building located on the hard corner. Old School O7 is nestled in the heart of Central Phoenix along the coveted 7th Street major arterial at Osborn Road.

Esplanade rendering, courtesy of CBRE

Esplanade to undergo Gensler-designed renovations in 2015

The Esplanade has announced that the mixed-use development will undergo renovations to its ground plane and retail space with work slated to begin in first quarter 2015.

Renovation plans currently include strategies to open up the three main entry points to the retail portions of the property to make them more inviting and accessible to visitors. Additionally, the walkways will be redesigned so retailers can provide their customers with indoor/outdoor spaces in which to shop and dine. The central corridor will be reimagined to create a community square offering a space for the Esplanade community to come together. The space will offer outdoor seating as well an area for community events.

The Esplanade is one of the area’s most prestigious and sought-after office locations; it’s the heart of the Camelback Corridor,” said Andi St. John, managing director of Asset Services with CBRE, which oversees management of the entire Esplanade complex. “The planned renovations will capitalize on the existing cache commanded by the property and create a first-class retail experience better connecting the complex to the Biltmore community.”

MetLife, the owner of the property, has tapped CBRE to oversee management of the renovations. Gensler has been selected as the project’s architect and design firm. A general contractor has yet to be announced. CBRE is also responsible for property management and the marketing and leasing of the retail portions of the property. JLL handles the marketing and leasing of the office space.

Located on E. Camelback Rd. in Phoenix, the Esplanade benefits from proximity to a wealth of amenities, including adjacency to the Biltmore Fashion Park with its myriad of iconic retailers and restaurants. Offering office tenants a vibrant community in which to work, shop and dine, the Esplanade epitomizes the “lifestyle” type of work environments modern office users want.

Real estate professionals recognize that economic drivers are moving move back to city-centers and office buildings can no longer just be office buildings,” said Traci Russell, vice president with CBRE, who oversees the marketing and leasing assignment on retail space at the Esplanade. “The Esplanade already offers office tenants a mixed-use, well-amenitied environment in a core location. With the planned renovations the complex will be elevated to become the epicenter of the Biltmore community. Not only will office tenants benefit, but the Esplanade will become a place for neighborhood residents and Biltmore visitors to gather and connect as well.”

KohlsShops, WEB

Prescott Valley shopping center goes for $2.75M

CBRE has completed the sale of a net leased shopping center located at 3264 N. Glassford Hill Road in Prescott Valley, Ariz. Shadow-anchored by a Kohl’s department store, the 8,639-square-foot retail property commanded a sale price of $2.75 million. The property is known as The Shops at Glassford Hill Marketplace.

Joseph Compagno with CBRE’s Phoenix office represented the seller, Prescott Valley Signature Entertainment, L.L.C. of Prescott Valley, Ariz., in the transaction. The buyer, Oceanside, Calif.-based Zynda Family Trust, was represented by Rob Walter of Century 21 Arizona West.

This shopping center is brand new 2014 construction.  Our team brought this property to market prior to any tenants being open for business.  We executed on a pre-sale for the developer and sourced an all cash Southern California 1031 exchange investor,” said CBRE’s Compagno. “We took Phoenix pricing to Prescott Valley, Arizona.”

The Shops at Glassford Hill Marketplace consists of five-tenants on triple net leases in a 100 percent occupied building. The property totals 8,639 square feet and sits on 1.02 acres. The building was under construction as the property went to the market for sale and was finished just prior to the close of escrow.  The property sits as a pad to a Kohl’s department store. Brand new leases have been signed with Pacific Dental Services, Sally Beauty Supply, Verizon Wireless, Presto Title Loans and Nationwide Vision. The property also benefits from proximity to a new Walmart Supercenter and Fry’s, which both border the property.

Joseph Compagno specializes in the sale of net leased retail investments across the United States.  His retail team works on the behalf of both private and institutional owners.

Building six at the Sonoran Corporate Center

Helix acquires Sonoran Corporate Center building

Helix, an Arizona-based commercial real estate brokerage, management, investment services and development company, recently acquired new Scottsdale commercial property, Sonoran Corporate Center Building 6 for $1.57 million.

Located just off the 101 and Princess Drive, in Scottsdale, Sonoran Corporate Center includes a 10,154 square foot building that is 100 percent occupied by Medical Practice Innovations Inc. The property was purchased from A Company of Brothers, LLP, a Washington limited liability partnership. The broker for the buyer was Mitchell Stravitz with CBRE Inc.

“Although this asset is 100 percent leased, we still looked at this as a value add play,” said Ryan Spiekerman, founding principal of Helix Capital. “With rents significantly below market we feel we can create value once the lease expires or sell it to an owner/user. It is an optimal size in a highly desirable sub-market.”

With expertise in acquisition, construction, development and disposition of millions of square feet of real estate in Arizona and throughout the Southwest, the Helix team has worked in nearly every segment of the commercial real estate industry: office, retail, industrial, land, self-storage multi-family housing, assisted living and medical.

Fiesta Arms

Fiesta Arms apartments sells in Phoenix

Elain and Maher Meida from Phoenix has purchased the Fiesta Arms apartment complex, a 20-unit multi-family property located at 8822 North 1st Street in Phoenix, from FSFA 89, LLC, of Phoenix, Ariz. Brian Smuckler and Jeff Seaman of CBRE’s Phoenix office represented the seller in negotiating the $740,000 transaction.

1100 N. Hamilton_office

Bell Steel buys industrial property in Chandler

CBRE has completed the sale a 46,119-square-foot industrial property located at 1100 N. Hamilton St. in Chandler, Ariz. The property, which sits on 14.83 acres, commanded a sale price of $4.5 million.
Evan Koplan and Mike Parker with CBRE’s Phoenix office negotiated the sale on behalf of the seller, TW Steel of Chandler. The buyer, Gilbert-based Bell Steel Inc., was represented by Steve Larsen with JLL.
1100 N. Hamilton Street in Chandler is an extremely unique opportunity given its size, heavy industrial zoned land, cranes, power, and location within the thriving Chandler submarket,” said CBRE’s Koplan. “We were able to find the buyer, who instantly found value in all of the existing improvements, within hours of bringing this property to the market. With the Chandler submarket vacancy rate just above 6 percent for this particular product type, it’s currently very challenging for a user to find existing opportunities like this.”
The property at 1100 N. Hamilton Street features a mix of  buildings on heavy industrial land. The sale included a 4,000-square-foot office building, a 29,319-square-foot fabrication building, a 10,800-square-foot office/warehouse building and a 2,000-square-foot storage building all on 14.83 acres. The property also features multiple cranes with heavy power and covered parking.

Rancho El Mirage, CBRE, WEB

Rancho El Mirage Plaza sells for $3.07M

CBRE has completed the sale of Rancho El Mirage Plaza, ±20,130 square foot retail strip center in El Mirage, Ariz. The asset commanded a sale price of $3.07 million.

Andrew Fosberg, Cam Stanton and Molly Busch with CBRE’s Phoenix office represented the seller, El Mirage Partners, LLC of Portland, Ore. The buyer, Ladera Ranch, Calif.-based Casa Mirage Properties, LLC, was represented by Trent McCullough and Shari Tucker with Sperry Van Ness.

Built in 2005, Rancho El Mirage Plaza consists of two buildings at the northeast corner of Dysart and Thunderbird Roads. The retail center benefits from proximity to a Walmart Supercenter. The property, which was ±94.7 percent occupied at time of sale, offers a complimentary mix of tenants, including an Anytime Fitness and Little Smiles Dentistry.

Goodyear Gateway South, EJM Development

Michael Lewis Co. buys parcel in Goodyear Gateway South

Goodyear Gateway South, the 221-acre industrial zoned park being developed by EJM Development Co. just north of the Phoenix Goodyear Airport, has announced its first user. Michael Lewis Co. (MLCo) has purchased a 30-acre parcel for development. The financial terms of the transaction were not disclosed.

Pat Feeney, Dan Calihan and Rusty Kennedy with CBRE’s Phoenix office represented EJM Development in the transaction. MLCo was represented by Andy Cloud with Cassidy Turley.

MLCo is a global provider of in-flight and catering products, logistics and supply chain management solutions. MLCo plans to build a 250,000-square-foot warehouse and distribution facility on the newly-purchased, 30-acre parcel at Goodyear Gateway South, taking advantage of the park’s foreign trade zone (FTZ) designation. This facility marks an expansion for the company in metropolitan Phoenix. The new facility will increase the company’s current operation and will feature a combination of refrigerated space, dry storage and office space

“This purchase and planned facility is a great example of the draw of an FTZ designation,” said Fred Stiles, Regional Director with EJM Development Co. “FTZ status allows metropolitan Phoenix to compete for companies doing business internationally. What’s more, in Arizona there is an additional tax benefit for properties in FTZs that allows for significant reductions in both real and personal property tax.”

“We are thrilled to have Michael Lewis Co. locate in Goodyear” said Mayor Georgia Lord. “This addition to our business community will bring with it more than 100 jobs and helps us launch one of our premier employment corridors – the Goodyear Gateway South development. We appreciate EJM Development’s investment in infrastructure on this property. As a result of our strong partnership with them, we are confident we will continue to see industry investment in this area and additional jobs for our City.”

This land purchase comes just months after EJM Development broke ground on significant infrastructure at Goodyear Gateway South. In May of this year the developer began work on $5 million worth of construction on streets and utilities, which is nearing completion and should be finished by year’s end. The street improvements include full width 143rd Avenue from Van Buren Street to Yuma Road and improvements to Yuma Road, as well as a traffic signal at 143rd and Van Buren.

“EJM strategically laid the framework for the Goodyear Gateway South,” said CBRE’s Feeney. “The West Valley has emerged as the next epicenter of major commercial development in metropolitan Phoenix and major employers are looking to locate and expand in the Valley. It’s important that we are able to offer high-quality, industrial-zoned, shovel-ready sites. The development of infrastructure, streets and utilities at Goodyear Gateway South is a major step toward being ready for incoming users.”

The 221-acre, foreign trade zone-approved Goodyear Gateway South is ideally situated for users that transport goods intra- and inter-state. Additionally, the park provides companies access to the talented, deep and productive workforce living in the immediate area, while freeways put it within an hour of all 3.8 million workers in Greater Phoenix. Goodyear Gateway South is part of the larger Airport Gateway at Goodyear master-planned community. At build-out, Airport Gateway will feature approximately 3 million square feet of planned industrial/work space at Goodyear Gateway South and at Goodyear Gateway North, home of the Cancer Treatment Centers of America’s state of the art medical treatment facility, an additional 2.5 million square feet of upscale regional retail, hotel, office and medical office uses.

 

Chandler Viridian, CBRE

CBRE to market office space at Chandler Viridian

CBRE has been awarded the marketing assignment for the ±240,000 SF office portion of Chandler Viridian, the $150 million, mixed-used project to be developed by Hines. The multi-faceted development project will be located on the former Elevation Chandler site near Chandler Fashion Center. Construction on the project is slated to begin 1Q 2015 and will include multifamily and hospitality components in addition to the premier, class A office product.

The Offices at Chandler Viridian will benefit from an excellent infill location in the heart of Chandler’s major employment and tech-hub. In addition to the strong corporate employment located to the southwest in the Price Road Corridor, the property will also boast proximity to numerous restaurant, retail and entertainment options within blocks of the project in addition to amenities that will be on-site upon Viridian’s completion.

Hines is a world-class developer with a keen understanding of what modern office users want and CBRE is incredibly excited to be a part of this project,” said CBRE’s Jerry Roberts, who along with Corey Hawley and Pat Boyle will head up the marketing and leasing team for The Offices at Chandler Viridian. “With its corporate friendly environment and diverse, well-educated workforce, Chandler Viridian will be located in the core of one of the Valley’s major employment hubs. Chandler is already well-known for drawing industry leaders from all knowledge-worker sectors including high technology, aerospace,bioscience and financial services. The addition of a premier, live-work-play environment offered by Hines’ Viridian will only serve to further enhance the area’s appeal for major employers.”

The state-of-the-art project is expected to draw the interest of major companies looking to locate or expand in metropolitan Phoenix, and will be a welcome addition to a submarket currently suffering from a dearth of available office product, particularly large blocks of quality contiguous, space. At the end of Q2 2014, the Chandler submarket led the Valley office market with a vacancy rate of 10.1 percent, compared to a 22 percent vacancy Valley-wide. Additionally, class A space in Chandler recorded a vacancy rate of only 3.9 percent at mid-year, compared to 16.9 for the entire metro area.

We expect The Offices at Chandler Viridian will be met with high demand from users. The City of Chandler is as business-friendly as any in the Valley and the community’s strong leadership has created an environment that companies want to locate in,” said Roberts. “Unfortunately, those users are currently faced with a lack of available product to suit their needs. Viridian will help to satisfy some of that demand.”

At build out, the 25.6-acre Chandler Viridian will feature 335 apartments units in a four-story building, ±240,000 square feet of office space in a six-story building, a 10-story, 150,000-square-foot hotel with 180 rooms and two pads for retail/restaurants. The pedestrian friendly project will feature gardens, promenades, courtyards and plazas that would be interconnected with 1.5 miles of paths and trails. The commercial components of office, hotel and retail will be developed on the northern portion of the tract and the multi-family residential units would be situated in the southern part of the site along the west side of the 101 Loop/Price Road Freeway and just north of the 202 Loop/San Tan Freeway.

 

valley-submarkets

Valley Of The Submarkets

Jeff Hays, senior vice president of sales and leasing at Commercial Properties Inc., is starting his 30th year specializing in the industrial sector and will be the first to tell you that everybody’s busy and no one’s complaining.

LGE Design Build has 54 industrial projects either in the ground or in design, says President Dave Sellers. Brock Grayson, vice president of Layton Construction and co-chair of GPEC’s Community Building Consortium, shares the same sentiments with Layton’s 650KSF of build-to-suit and expansion projects in Arizona.

While LGE’s sweet spot, says Sellers, includes many manufacturing buildings and design-build projects for companies that won’t fit into a spec space, spec isn’t dead. About five spec industrial buildings are in the planning or permitting process. From Sellers’ perspective, the sector is suiting up, so to speak. In the last two months, Sellers says, LGE Design Build has received seven new build-to-suit projects. Layton Construction has also seen some build-to-suit demand. The rise in these projects for Layton has little to do with a declining interest in spec development, says Grayson and Layton Executive Vice President Andrew Geier. They’re just keeping busy with everything else.

patfeeney-andrewgeier-brockgrayson-jeffhayes-davesellers

Between the build-to-suits and the spec development, though, are the empty spaces contributing to deceptively high vacancy rates. These are the semi-obsolete industrial buildings that need some tenant improvement or a functional change.

A lot of businesses need excess land for more parking or equipment or yard storage, he adds. “It has become a lot more difficult to find quality buildings. That’s leading to some build-to-suits,” he says.

CPI has worked on a handful of distribution center build-to-suits, including Barrel of Fun in Tolleson and Legends Furniture. Unlike office and retail, there’s less interest in aesthetics as much as functionality — clear heights, power capabilities and square-footage.

It’s one thing that’s keeping obsolete industrial spaces from becoming dysfunctional. It’s about $25 per square foot to raise a roof, for instance, so office users looking for that industrial feel are more likely to take the old 16-foot industrial space than someone who is looking for the new 36-foot clear heights. Users are safer bets (they’ll pay more), but Hays says CPI is seeing more action from investors lately, particularly with those in California.

speculative-construction-2014

MARKET UPDATE
While the rents seem to have stabilized overall and absorption in 2Q was 4MSF, things still aren’t where they were. But CPI’s Hays isn’t concerned as long as the market can reach a happy medium. More end-users are upsizing, build-to-suits are seeing success and quality buildings are becoming harder to find. The effect of rising construction costs depends on the submarket in which a developer is looking.

Papago Tech Exterior

Papago Tech Exterior

The airport, East Valley and Deer Valley submarkets are seeing upward pressure on rental rates due to short supply of industrial space. In turn, CBRE Senior Vice President of Industrial Services, Pat Feeney, says the short supply of investment properties are putting downward pressure on cap rates for leased investments. The lack of available land is another way Feeney says developers can combat rising construction rates.

“Those that are lucky enough to own in these submarkets are really in the driver’s seat when it comes to tenant negotiations,” Feeney says. On the other hand, he says, the Southwest Valley submarket is “lethargic.”

Canal Crossing Logistics Center

Canal Crossing Logistics Center

“The next couple of large square footage users that lease space are going to be treated as the belle of the ball,” Feeney says. “I think that today the landlords are financially sound so it is unlikely we will see lease rates drop to the levels we saw in 2009 when the market was similar in terms of supply.”

“If it’s at the right price, someone will take it,” says Hays, adding that many class-B and -C industrial was absorbed for other uses during the downturn. “People are still looking for good quality buildings.”

A lack of leased warehouse product in the Southwest Valley available to investors, despite high demand, keeps values up, Feeney says. “Currently, the big box distribution user activity and inquiries are at a high level, but users in this group have been very slow to commit to executing leases,” says Feeney.

“However, it should be noted that while large users have been hesitant to commit, the 20KSF to 100KSF users have been extremely active. Users in this size range have been carrying the market so far this year with more than 1.3MSF of positive net absorption in the first half of 2014.

I believe that as soon as we see five to six large leases signed in the Southwest Valley big box distribution market, we will reach a balance of supply and demand that we have not seen since 2005 and 2006. I am very encouraged with the current condition of the market.” When big box distribution sees some absorption, he says, overall vacancy stands a chance at single digits.

The C3 office building, in Los Angeles, was re-imagined by Gensler to include more "front doors" for suites, which are depicted by the colorful stairways on the building's exterior.

Office Mate: The creative endgame for functional obsolescence

Forget the corner office. These days, it’s about the coffee shop around the corner, the food trucks outside the lobby, the light rail that passes an office building every 15 minutes.

The work place is all about the worker. Employee and entrepreneur are synonymous. Human resource departments are working in concert with building owners, managers, developers and brokers.

Employee demographics are spanning radically different generations with equally varied needs for a work-life balance. These are all observations shared by industry experts, from international architecture, design and planning firm Gensler, to brokerage houses and developers in the Phoenix Metro.

About a decade ago, traditional offices began to open up for collaborative space. Since then, office environments have contracted around the remote worker and many other trends that ultimately call for very specific, versatile influenced by a company’s DNA. A demand for trendy, compact work environments that encourage collaboration, focus, creativity and accommodates mobility has led to many new speculative and build-to-suit office developments tailored to an end-user’s needs. This is all while vacancy rates in the market hover around 25 percent.

However, many experts say this statistic is misleading. It’s weighed down by the many office buildings constructed in the ’80s or earlier that are structurally — and aesthetically — outdated.

Courtesy of Cassidy Turley

Courtesy of Cassidy Turley

THE OBSOLETE
As Cassidy Turley’s head of research, Zach Aulick, puts it: “functional obsolescence” are the buzzwords of 2014.

Aulick cites Rockefeller Group Vice President and Regional Director Mark Singerman’s assessment at a Bisnow event that vacancy rates in the market were much lower, by about 5 to 7 percent, without including obsolete buildings. Aulick, prompted by such buzzings and the news that speculative and build-to-suit development was happening despite vacancy rates higher than 20 percent, looked into the functional obsolescence among office properties in the Phoenix Metro and found that Singerman was right.

Net absorption of office buildings constructed after 1990, Aulick reports, accounted for 4.4MSF in 1Q 2014. In that same period of time, buildings completed prior to 1990 were reportedly declining in about 320KSF and 200KSF in 1Q and 2Q, respectively. The major contributors or obsolete space is parking ratios and floor plate size.

Midtown, Aulick says, is perhaps one of the hardest hit areas with 10MSF of office and an average age falling pre-‘90s. That area’s options are limited by available space. It takes entrepreneurship, says Cassidy Turley’s Vice President of Marketing Alison Melnychenko, to recognize the highest and best use for the land on which an obsolete building sits.

GETTING IN THE GAME
If an owner isn’t going to sit back on 80 percent occupancy, there are a few options that could raise the appeal of an outdated building. The first move is to retrofit a space — tear out floors or half floors to make higher ceilings. That can be costly and reduces overall volume. The other option is to add to the building’s function. For instance, the Freeport McMoran Center in downtown Phoenix had high user demand for parking. It was turned into a Westin hotel. Buildings along Central Avenue have been converted into apartments and condos — a trend CBRE Senior Vice President of Office Services Bryan Taute says will likely continue.

Retail and industrial buildings are sometimes flipped into office spaces, given the parking issue can be solved. This is more popular in areas such as Midtown or near the airport.
“I think Midtown has the potential to figure a way out of (obsolescence),” says Taute. “If building owners are willing to sell them to new owners with capital to give creative funky ideas. I’m a big believer in mass transit and infill.”

The general idea among people is that Phoenix won’t pay for that kind of re-activated space. But there is more enthusiasm than meets the eye, says Gensler Principal Beth Harmon-Vaughan. Brokers, developers, business owners, she says, see the potential and there are a handful of undisclosed projects in the pipeline on which Gensler is already working.

This call center space features a blue webbing on the beiling as a navigational tool that unites a uniuqe 75KSF floorplate.

This call center space features a blue webbing on the beiling as a navigational tool that unites a uniuqe 75KSF floorplate.

On a local level, a call center space built in an old Motorola manufacturing facility was designed by Gensler to “control the churn” of the company’s employees who go through 12 weeks of extensive training. The existing building’s unique floor plate led Gensler to use a blue webbing on the ceiling as a navigational tool that brings the 75KSF area together.

The call center is proof that these trendy spaces aren’t just for software and video gaming companies either. Real estate offices such as CBRE in Los Angeles have adopted these new space use trends, and Gensler says more professional and traditionally staunch companies such as law firms are coming onboard.

CBRE’s office in L.A., co-developed with Gensler, has a “free-address” system of office space use, often called “hot desking,” which can be reserved for individual use during certain times.

Despite the increase in remote work, companies still want employees to come to the office. Whether its the highly crafted informality of a Quicksilver office’s mix-matched meeting chairs in a windowless warehouse or the raw floors, pet amenities and employee-generated wall art at Facebook’s Menlo Park campus, the younger generation is revolutionizing office space.

Other trends include authenticity – designing the DNA of a company into its office spaces – and having a “front door” instead of anonymous-feeling lobbies. Gensler’s design of Los Angeles’ C3, for example, achieves a “front door” feel through colorful exterior stairwells to upper-story suites.

Phoenix may not be on that level, but change is coming — even to the ’80s-heavy areas of Midtown.

Mod turned a re-purposed Midtown lobby constructed in 1985 into a co-op office space that helps keep the building's outdated features from making it obsolete.

Mod turned a re-purposed Midtown lobby constructed in 1985 into a co-op office space that helps keep the building’s outdated features from making it obsolete.

It just takes a drive down Central Avenue to see the buildings in need of change. The Class-B high-rise at 2828 N. Central Avenue was built in 1985 and offers the typical functionally obsolete issues, parking ratios and small floor plates, explains Aulick. However, it was a building that — with a little renovation — could be turned into the headquarters for the co-op workspace known as “mod on Central.” It’s stylized as a hotel, features a cafe and is a public workspace for remote employees that, as Lynita Johnson, of Olson Communications says, are looking for somewhere that’s “never boring or beige.”

“It’s the way you want to work, because it’s the way you like to live,” she says of the development. Finance and law firms are among the next wave of industries adopting the new kind of office space. Old, dated, standard offices such as Rose Law Group’s former eight-year residence has transitioned into a high-tech, smart, fun, sleek and creative space in Old Town Scottsdale, near a cultural hub of restaurants.

Rose Law Group’s employees skew “young and energetic,” says Jordan Rose, founder of Rose Law Group. “We are 85 percent below the age of 40.” “If we weren’t locked into our old lease we would have been the first to the open floor plan party at least six years ago,” says Rose. “We knew as soon as we moved into the old space that we needed a more collaborative atmosphere that would only be achieved through design.

That said, traditionally law firms are not known as hot beds of creative thought and collaboration. We have a bit of a different model in that we employ lawyers and non-lawyer planners, MBAs, project managers and energy consultants who can help shape the ultimate advice we provide our clients. Sometimes legal advice in a box is just really bad for a client’s bottom line.”
Non-traditional changes include minimizing the firm’s waiting room area, meant to remind the team that clients shouldn’t wait long to see their attorney.

Conference rooms and open space areas are named after employees and balconies that can be used to host meetings. Offices are centered around a park space where people can eat lunch. There are also a few old, full-sized arcade games.

ELBOW ROOM
As space allotted per employee continues to drop to about 167 SF per person — down nearly 100 SF in the last few years, with CoreNet Global estimating a further drop to 151 SF by 2017 — developers are tasked with finding ways to make the workplace more enjoyable. Right now, that looks like raising the roof (or, rather, knocking out floors in high-rises). Floor-to-floor heights in buildings constructed in previous decades have been about 13.5 feet. Now, says Sven Tustin, vice president of development and investment for Trammell Crow, they’re about 15 to 16 feet floor-to-floor.

While eight-foot ceilings won’t make an office building obsolete, Taute says a space will be more challenging to sell and demand a lower rental rate than an office with higher ceilings. Buildings with lower parking ratios typically see leasing 80 percent of its space as success.

Tustin has seen some significant repurposing happen in southern California, most recently at Playa Vista, a former Howard Hughes hangar that received a $50M makeover that includes an office campus for media, entertainment and tech firms.

“There’s an authentic experience to be had,” says Tustin. “In Phoenix, it’s a little more challenging. Our office employment is a little less creatively geared and more focused on labor.”
Midtown is the only submarket that has experienced negative absorption over the last decade, thanks to the light rail, amenities and the right neighborhood.

“The trick,” says Tustin, “is buying those buildings cheap enough. “We’ve explored a lot of new developments for infill. We’ve been promoting this initiative quite a bit and one thing we’ve been concerned with is our flight of the younger demographics who view places as more fun.”

Trammell Crow has challenged itself to create a project that could be just as fun, though not as extreme, as Playa Vista. Also, Phoenix doesn’t boast a lot of old warehouses, notes Taute.

Trammell Crow is working on a 200KSF project at Cooper Road and Loop 202 that’s a two-story tilt-up office building with 50KSF floor plates and 16-foot, floor-to-floor heights. The building, he says, targets software and financial service companies. Trammell Crow is focused on creating “the arrival experience” with escape areas, shade structures and “the small things.”

“Developers have probably emphasized aesthetics more than the experience of a building,” says Tustin. “I think it’s worth reallocating the investment toward the employee.” zThis is where Millennials come in.

“From my perspective, it’s a lot more fun because in Phoenix it has always been about price and the things that create it as a commodity,” says Taute. “Now, the office space is being looked at as an attraction tool, which means people are willing to spend more money. If they can get the rents, to make cool office space…All of those things are good for our city. The longevity is better than cookie cutter office buildings.”

Crossroads Corporate Center

Crossroads Corporate Center sells for $7.18M

CBRE has completed the sale of Crossroads Corporate Center located at the northwest corner of I-17 and Bell Road in metropolitan Phoenix. The ±105,107-square-foot office/flex building commanded a sale price of $7.18 million.

Barry Gabel, Chris Marchildon, Ashley Brooks, Jim Bayless and Jenny Aust with CBRE’s Phoenix office negotiated the sale between the buyer, a joint venture between Scottsdale-based Everest Holdings and Chicago-based Walton Street Capital, and the seller, Pittsburgh, Penn.-based Kossman-Phoenix Limited Partnership. Brooks, Bayless and Aust will also handle the marketing and leasing of the property, which is currently vacant.

“Crossroads Corporate Center offers a significant opportunity for additonal value,” said CBRE’s Gabel. “With 105,107 square feet of contiguous space and the possiblity of a second level, the property has excellent lease-up potential and should be met with much demand from users in the market.”

Crossroads Corporate Center was built in 1987 and renovated in 2009. The property sits on ±11 acres and features multiple points of ingress and egress. With ±24’ clear height, abundant glass-line, a large floor plate and eight per 1000 parking ratio, Crossroads Corporate Center is an ideal option for employers with heavy parking needs who are also looking for the open-concept, modern work space today’s employees demand.

“Crossroads Corporate Center offers potential tenants an excellent opportunity for customization of the space; the property is a blank slate,” said CBRE’s Brooks. “The space could be leased to a number of different user-types with a variety of needs. It has excellent potential for a traditional corporate user or could be utilized by a company looking to create modern, flexible workspace with a mix of collaborate and private office space and common/recreation areas for employees.”

The property benefits from proximity to the intersection at the I-17 and Loop-101 Freeways as well as full visibility from I-17 and two access points to the frontage road, which allows for easy access to labor markets, amenities, and residential developments. The property is accessible to 1.49 million people within a 30 minute drive and offers 1.5 million square feet of retail and restaurant amenities within a five-mile radius.

 

Estates at North Mountain, CBRE

CBRE Phoenix office brokers $3.65M Calif. deal

Estates at North Mountain, LLC from Los Angeles, Calif. has purchased the Estates at North Mountain apartment complex, a 128-unit multi-family property located at 11850 North 19th Avenue in Phoenix, Ariz., from GLZ Holdings, LLLP of Vancouver, Canada. Brian Smuckler and Jeff Seaman of CBRE’s Phoenix office represented seller in negotiating the $3,625,000 transaction. CBRE Phoenix office brokers $3.65M Calif. deal

 

 

AMC, CBRE, WEB

CBRE Phoenix office brokers $6.2M sale of Colo. theater

CBRE has completed the sale of an AMC Theater property in Parker, Colo. The ±32,142-square-foot, triple-net leased property commanded a sale price of $6.2 million.

Jesse Goldsmith and Steve Julius with CBRE’s Phoenix, Ariz. office negotiated the transaction on behalf of the buyer, STORE Capital which is headquartered in Scottsdale, Ariz. The seller, Franmar Presentations, LLC of Parker, Colo. was represented by Matt Henrichs with CBRE’s Denver, Colo. office.

The buyer is going to do very well with this acquisition. This is a top performing theater with minimal competition in the sub market,” said CBRE’s Goldsmith.

Built in 2002, the property is situated on ±5.07 acres at the northwest corner of South Twenty Mile Road & East Main Street in Parker. The freestanding retail building is home to an AMC Theater. AMC is the nation’s number two movie theater chain with over 387 theaters nationwide. The property benefits from its location in the heavily trafficked Parker Retail Corridor and proximity to dense suburban areas with more than 59,000 people within a three-mile radius.

 

ElementAtKierland, WEB

SheKnows leases 20KSF at Element at Kierland

CBRE has completed a 20,000-square-foot office lease at Element at Kierland located at 14614 N. Kierland Blvd. in Scottsdale, Ariz.

Luke Walker, Dave Carder and Eric Schultz with CBRE’s Phoenix office represented the landlord, Montana Avenue Capital Partners, LLC (MAC) of Santa Monica, Calif. The tenant, Scottsdale-based SheKnows, was represented by Clint Hardison with Keyser.

MAC has made significant investments to the property over the past several months with $1.3 million invested in upgrading the common areas and enclosing the breezeway, creating a new common lobby area at the main building entrance. The way office tenants are utilizing space is changing, and property owners like MAC recognize that,” said CBRE’s Walker. “The activity we’ve seen so far and the lease with SheKnows have reinforced the fact that Element at Kierland, and the type of space offered therein, will meet the demand for creative, modern, flexible workspace and offer the “lifestyle” type of work environments users want.”

The space at Element at Kierland will serve as SheKnows’ corporate headquarters. The Scottsdale-based women’s lifestyle media platform currently operates out of 16101 N 82nd Street. The move to Element at Kierland will offer the company a premier office suite with a mix of private meeting rooms and open-concept work space. The 20,000-square-foot space will also feature a custom studio space for the website’s many popular video series and test kitchen for a variety of cooking-related features.

Previously known as Kierland Fairways, MAC purchased Element at Kierland in February 2014 with the intent of bringing new life to the ±55,268-square-foot office building. The property, which is currently being renovated with plans to launch in November, offers high-end creative office space designed by Davis Architects with cutting edge architectural elements including polished concrete floors, LED lighting, and exposed ceilings and beams. The property will offer users spaces with a mix of open work environments and private offices, outdoor collaborative spaces and spectacular views of Kierland Golf Course. Located in the heart of Kierland and Scottsdale Airpark submarkets, the property also benefits from proximity to numerous amenities, including some of Scottsdale’s finest resorts, restaurants, golf courses, and shopping.

 

Low Level Aerial view of Downtown Tucson, Arizona

One South Church attracts 22KSF of new office tenants

CBRE recently negotiated long-term office leases with major tenants at One South Church, the landmark building in downtown Tucson, Ariz. Global engineering firm HDR has leased 9,659 square feet of space, while Regus, the world’s largest provider of flexible work space, has inked a deal for the entire 12,659-square-foot 12th floor.

Buzz Isaacson with CBRE’s Tucson office represented the landlord, Chicago, IL-based Equity Commonwealth. Kevin Calihan with CBRE’s Phoenix office represented Regus, and Pat Williams with JLL’s Phoenix office represented HDR.

Regus’s lease marks its entrance to the Tucson market. The company has an expansive presence in Phoenix with 21 locations Valley-wide in the best office building in almost every submarket in the metropolitan area.

We’re very excited about the Tucson market,” said Rob Downing, Regional Director of Real Estate for Regus. “The Southwest, and Arizona, in particular, has been a focus for us over the past several quarters. Our Phoenix centers are performing exceptionally well, but our clients were regularly inquiring about locations in Tucson. With the space at One South Church we will finally be able to meet that demand.”

Regus’s new center is currently undergoing tenant improvements to ensure the company will be able to offer its full suite of flexible workspace solutions to the Tucson market. The new work center is slated to open in mid December. Regus is also in the process of identifying a second location in north Tucson with hopes to open that work center sometime in 2015.

HDR relocates to One South Church from their previous location at Williams Centre. The global engineering firm played a major role in bringing the Sun Link Modern Streetcar project to fruition and this move brings the company right onto the streetcar’s 3.9-mile route.

Regus and HDR are excellent examples of companies seeing the value of locating in amenity-rich downtown Tucson,” said CBRE’s Isaacson, who has held the marketing and leasing assignment for One South Church since 1986 and has brokered the sale of the building twice. “There has definitely been a demographic shift toward urban, live-work-play environments. Smart employers recognize that in order to attract and retain top talent they need to locate in areas that offer the “lifestyle” type of work environments employees want.”

Built in 1986, One South Church is Tucson’s premier high-rise office building. Located in the heart of downtown Tucson, the 23-story office tower is located in one of Tucson’s three major employment centers, along with the University of Arizona and Tucson International Airport. Located along the new Sun Link Modern Streetcar route and within minutes of Interstate-10, which boarders the west side of downtown, the property benefits from easy accessibility as well as the numerous retail amenities located in the area.

Papago Tech Center, Courtesy of CoStar

Auto finance company leases 40KSF in Tempe

CBRE has completed a 40,000-square-foot office lease at Papago Technology Center located at 1700 N. Desert Drive in Tempe, Ariz.

Bryan Taute with CBRE represented the landlord, WDP Partners of Phoenix. The tenant, Greenville, NC-based Regional Acceptance Corp. a division of BB&T Bank, was represented by Jason Moore and Keith Lammersen with JLL.

This lease is another good example of a new office user to the market being drawn to a centrally located building that allows them to easily attract new employees,” said CBRE’s Taute.

Regional Acceptance Corp., a division of BB&T Bank, is a national auto finance company and this lease marks an expansion for the national auto finance company. The 40,000-square-foot space at Papago Technology Center will allow the company to house approximately 300 new employees.

Regional Acceptance Corp. is looking to capitalize on Papago Technology Center’s location in the heart of one of metro Phoenix’s most desired labor pools and plans to hire approximately 300 new employees to staff the center. The company also plans to make significant improvements to the newly-leased space in order to offer future employees a state-of-the-art, modern facility. The company plans to take occupancy of the space in March 2015.

Built in 1993, Papago Technology Center is a 75,000-square-foot flex/office building located in the heart of Tempe and one of metropolitan Phoenix’s largest, most-desired labor pools. The property benefits from direct access to the light rail system via the station at Washington Street and Priest Drive as well as proximity to the Loop-202 via Priest Drive. The property currently has 33,795 square feet of remaining space available for rent.