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Winn

Winnresidential Adds Apartment Portfolio in Arizona

WinnResidential, the property management arm of WinnCompanies, announced today that it has assumed management responsibilities for Highridge Costa Investors, a leading developer and asset manager, at six of their multifamily communities in the state of Arizona.

As a part of this partnership, WinnResidential will take over the property management, maintenance and leasing for all six communities. The portfolio includes Casa Bonita, a 60-unit community in Tucson; Florence Park Apartments, an 88-unit community in Florence; Quail Run Apartments, a 156-unit community in Peoria; Sonora Vista Apartments, a 65-unit community in Douglas; Valle del Sur Condominiums, a 60-unit community in Tucson; and Village Square Apartments, a 116-unit community in Phoenix.

The Arizona properties are a welcome addition to the Winn portfolio,” said Deirdre Kuring, Chief Operating Officer of WinnResidential. “We look forward to providing superior service to our new residents and our client.”

The portfolio consists of a very diverse group of properties spread throughout Arizona. The furthest West is in Peoria, Ariz. and extends all the way to the Mexican border in Douglas, Ariz. These six properties are very well-maintained assets that offer senior housing, affordable housing, market-rate housing, and some properties were designed specifically for special needs residents. Each one provides community programs and activities to create a real sense of community.

WinnResidential is a well-known and highly respected property manager across the country, and we are excited to partner with them on our Arizona portfolio,” said Michael M. Snowdon, Vice President of Asset Management at Highridge Costa Investors. “We are confident that through their quality operations practices, they will provide the best possible service to residents.”

2013 Biggest Fastest Growing Business Industries

The 7 Fastest Growing Industries of 2013 – Infographic

The economy is, thankfully, recovering, and entrepreneurialism has played a large role in helping it along. One of the most interesting parts of this recovery, however, is the emergence of new types of industry. Businesses have found all new niches to fill, and seven industries in particular have shown substantial growth in 2013:

MyCorporation - The Seven Fastest Growing Industries of 2013

Matt.Widdows

HomeSmart International Expands Network into Texas

Real estate firm HomeSmart International continues its nationwide growth with the opening of its newest franchise in Cedar Hill, Texas. Based in Phoenix, HomeSmart began franchising two years ago, offering one of the most attractive business models in the real estate industry.

HomeSmart CEO and President Chuck Lemire believes this new partnership will continue the international growth of HomeSmart and provide great brokerage services through the franchise owners leadership and experience in the Dallas Forth Worth region. Dallas Fort Worth is one of the top five economic markets in the United States and HomeSmart is the number one independent brokerage firm in the Southwest.

Since opening in January 2000, HomeSmart has had tremendous success by growing to over 7,500 agents nationwide. HomeSmart provides their Franchise Partners with specific systems and technology that create efficiency in operations and keep costs down while allowing exponential growth.

Cedar Hill franchise owners Jonathan Cochran and John Gerhardt bring a unique mix of experience to HomeSmart. Cochran served in the US Navy as a Naval Flight Officer before entering the civilian work force as a real estate agent, while Gerhardt worked as a real estate agent for seven years before partnering with Cochran.

“After learning about HomeSmart and gathering an understanding of what the franchise offers for our clients and for our agents, my business partner [Gerhardt] and I chose to purchase a HomeSmart franchise and begin our new direction in real estate as HomeSmart franchise owners. It was an excellent choice,” said Cochran.

Gerhardt adds, “I have always had a passion to help others and real estate offers that opportunity in unique ways. My family and I are very excited about the opportunities that lie ahead as we embark on this new endeavor with HomeSmart.”

HomeSmart emphasizes the importance of being aware of client needs and exceeding their expectations, which in turn builds strong relationships with the buyers and sellers in every market. HomeSmart’s proprietary software also positions its franchise partners ahead of the curve. Created by Founder and Chairman Matt Widdows and his development team, the reputable systems are proven to save business owners huge costs attributed to web hosting, lead generation and back office systems. This allows the franchise owners to provide the technology to their agents for free while allowing the agents to keep 100 percent of their commissions. Other advantages to HomeSmart’s franchise program include a virtual receptionist, generous fee structure, and a full suite of branding and marketing products.

HomeSmart continues to open new offices and add jobs across the United States, with offices throughout ten states and international operations in Shanghai, China. They added approximately 3,500 new jobs in 2012, and their goal is to continue to grow nationally and internationally in 2013.

For more information on HomeSmart and its franchise opportunities, visit www.homesmartinternational.com. Follow HomeSmart on Facebook at www.facebook.com/homesmart.

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The Housing Market in Phoenix: Room for Growth

With a nickname like “valley of the sun,” what’s not enticing about Phoenix? Sprawling, sun-drenched landscapes; a thriving epicenter of culture and entertainment; and a rich tapestry of Native American history all comprise the experience of visiting the U.S.’s fifth-largest metropolitan area. There is more to Phoenix’s charm than that, however. Shortly after Arizona received its statehood in 1912, the city became a bustling center destined for rapid growth. Originally purchased for $550, the 320-acre town site blossomed exponentially throughout the decades into the 500-square-mile metropolis that it is today.

With 20 unique communities, there is always something for everyone to do in Phoenix. Sports, recreation, dining – they all make the city an attractive habitat for a variety of house hunters and job seekers. Mild winters and a low cost of living further fuel migration into Phoenix, making it one of the fastest-growing job and housing markets in the nation. But it wasn’t always this way.

During the early 2000s, the height of Arizona’s economic salad days, low real estate costs and higher-than-average income levels created the perfect environment for investors and residents to maximize their ROI. A surge in Phoenix’s job creation prodded the city’s financial growth, instilling confidence in everyone who had money to spend that spending it was the way to go. Property values skyrocketed as the city became more attractive and “flipping houses” was a profitable endeavor for investors. Life was good.

But there was trouble on the horizon brewing quietly as households across the state sunk into debt in the mid-2000s. As the housing market became a hotbed of activity, homeowners borrowed heavily in order to get a piece of the action. And then, the floor fell out. After the sub-prime crisis and the collapse of Lehman Brothers, the economy tanked, dragging Phoenix home prices with it. Properties throughout the city were worth far less than the debt homeowners accrued for them. The year was 2007.

Anecdotal evidence points to much of the occurrences transpiring at the recession’s outset. “The home buying markets, as one could imagine, became insinuated with sellers. What was interesting to note was the simultaneous demand increase for home rentals, most especially in Arizona,’ notes Marc Holland, Operations Coordinator with Home Star Search, (an online resource of rent-to-own housing availabilities). “Much of the rental demand came from individuals underwater on their mortgages. After they decided to walk away, many of them became renters. Slowly, we’ve began to see that trend reverse.”

As Phoenix’s boom busted, jobs disappeared. Unemployment rates rose as home prices fell, and those who maintained employment saw a decrease in yearly income. Commercial development ceased, homes went into foreclosure, and the city – like an exaggerated microcosm of the nation – slipped into recession.

But like its namesake, Phoenix has experienced a rebirth in the last couple of years. Rising from its failed housing market is a renewed economy that promises a return to its former glory. The cost of housing is increasing gradually and investors are helping bolster the market’s economy by purchasing approximately 30% of the homes available. Plus, the elimination of easy credit has resulted in tougher financing restrictions that should limit home purchases to those capable of maintaining their mortgage obligations.

What does all this mean for the future of Phoenix? In light of the housing market’s collapse, the resilient city seems determined to define itself beyond its traditional roles of rapid growth and tourism. It’s an ideal location for new business; there’s plenty of inexpensive real estate and – true to its history – its ability to rapidly swallow the desert to create more space for development makes it highly accommodating for an influx of new workers. Boasting four consecutive months of job growth at the end of 2011, Phoenix’s economy ranked as one of the best in the West as well as in the Top 20 of all U.S. metro areas (according to a report released by the Brookings Institution earlier this year). The primary reason: an increase in manufacturing.

Phoenix’s growth engine will always be its remarkable quality, but its economy shouldn’t depend on it so heavily. The ability to quickly garner a workforce through increased population levels means nothing if there are no jobs for said workforce once it arrives. By continuing to attract new companies and focusing on new enterprises, Phoenix’s economy will grow, restoring the housing market to health through accelerated job growth and increased employment levels.

Jared Diamond is a guest contributor who writes on a variety of real estate and personal finance topics. diamond holds a B.S. in economics and has written extensively on housing markets in relation the the Great Recession.

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GPEC: Plans To Revive The Economy

Look past the Valley’s long, slow climb out of a difficult recession to the next 10, 20, even 100 years and you see a potential hotbed of wealth and productivity: a regional economy that has diversified from its traditional reliance on growth and housing. That’s the vision painted by board members and financial supporters of the Greater Phoenix Economic Council ( GPEC ), which has been working since 1989 to leverage the many strengths of the entire metro area.

In the 22 years since its inception, GPEC already has assisted 488 companies in their moves to the Valley, which by its own count translates into 88,610 jobs, $9.96 billion
in capital investment and $3.1 billion in payroll.

In the next century, look for GPEC to shape the following sectors and services:

Municipalities

The greatest influence GPEC will have on Valley cities will be to help leaders think of themselves as a unified economy, says Mayor Scott Smith of Mesa, which is one of the 19 cities and towns that contribute financially to GPEC.

“That sounds like a simple thing, but it’s actually been a very challenging task,” Smith says, with the East Valley vying against the West Valley, city fighting city, and “Phoenix fighting everyone else” for economic development opportunities.

In the coming decades, economic activity will continue to consolidate in cities, Smith says. Already, about 85 percent of the nation’s gross domestic product is generated in cities and it is estimated that 90 percent of the new jobs created will be in metro areas. GPEC will continue to play a major role in helping cities get beyond parochialism and work together to create a regional economic powerhouse.

“The Sun Corridor is not some figment of someone’s imagination,” says Smith, referring to the corridor stretching from the middle of Yavapai County south to Tucson that is expected in the next century to merge into one integrated metro area. “We see it growing every day.”

“GPEC plays a central role in that,” he says. “We are learning how to work better together.”

Technology

The Arizona of the future will do a better job developing a culture of innovation for small, high-tech companies, says Steve Shope, president of Sandia Research Corporation and a
GPEC board member.

A short-term goal that may reap long-term benefits would be to help companies attain funding through the U.S. government’s Small Business Innovation Research program, which awards funds for research and development that has the potential to be commercialized.

“In Arizona, we’re not doing a very good job of bringing that money into the state,” says Shope, who would like to see the figure double to $50 million.

The state needs a better representation of venture capital in general, he says, and thus needs to nurture venturecapital-ready companies.

Shope is a member of GPEC’s new Innovation Council, which he says is developing a framework for how it will operate and hopes to have a master plan this year.

Another way GPEC will shape the future of the technology industry is by continuing to focus on clean tech companies, particularly renewable energy companies and those involved in residential construction and high-efficiency housing.

Unmanned aerial vehicles, a subset of Arizona’s already mature aerospace and defense industry, is a sector that “is in the Model T stage, but has potential for gigantic growth,” Shope says.

Housing

Looking back, one can see how homebuilding and construction became primary drivers of the state’s economy, says Andy Warren, president of Maracay Homes and a GPEC board member.

Looking forward to the next century, GPEC will play a major role in helping to diversify the Valley’s economy so housing plays a less dominant role in it. If GPEC can do that, Arizonans won’t be held hostage to vicious boom-and-bust cycles inherent in the real estate industry.

“If GPEC is successful, the housing industry will be a less significant player in our economy over the next century and that will be a wonderful thing,” Warren says. “The amplitude of those cycles can be pretty extreme.”

It has been estimated that Arizona has lost 300,000 jobs in the recession, with the bulk of those coming from the construction and retail sectors.

GPEC’s efforts to lure high-wage, high-quality jobs in the clean technology, healthcare and aerospace sectors and its efforts to strengthen manufacturing will be instrumental in diversifying the economy of the future, he says.

A key to that strategy is GPEC’s commitment to supporting competitive tax incentives and policies that promote growth, and its work bringing together officials and policy makers throughout the region. “It’s a great collaborative effort,” he says.

Law

When GPEC reaches out to businesses considering a site in the Valley, one of the first things business leaders ask is, “‘Do you have the legal talent in Arizona and in Phoenix to do the things we want done?’” says Barry Halpern, a GPEC board member and partner at Snell & Wilmer.

In that respect, GPEC and the legal community have a symbiotic relationship that will only deepen in the next century as GPEC brings more sophisticated and diverse industries to the Valley, Halpern says.

The legal profession in the Valley — already a diverse community — will have to rise to the needs of emergent industries.

Almost all aspects of economic development require legal representation, including the demand for capital financing or the need for representation in emerging niches like the solar industry, agrees Scott Henderson, a shareholder at Polsinelli Shughart and a GPEC board member.

“GPEC will shape the legal practice as it attracts more businesses and more industry and those businesses will require a greater depth of legal talent,” Henderson says. “To that extent, local law firms will want to play a greater role in the growth of the state. The growth of the economy helps everybody—lawyers are no exception.”

Banking

The near future for banking in Arizona is brightening as lending activity has increased and most banks’ biggest problems are behind them, says Jim Lundy, GPEC vice chairman and president and CEO of Alliance Bank of Arizona.

“The recovery is slow, it’s bumping along the bottom, but it is there,” says Lundy, who also serves as chairman of the Arizona Bankers Association.

The long-term prognosis for banks is a bit harder to predict, but Lundy says he is sure of one thing: it is inextricably linked with a diversified Arizona economy that is not dependent on population growth.

In that sense, GPEC’s goal of fostering cooperation between cities and creating a diversified economy will directly shape the industry.

“Our success and our growth depends on companies that actually produce something,” Lundy says. All the important emerging industries — like healthcare, clean tech and aerospace — create spin-offs in the economy that are good business for the banking sector.

“We need successful enterprises to make those loans to,” he says. “At the end of the day, if the banking sector is going to grow successfully it needs GPEC and its role in helping get Arizona’s economy growing again.”

Education

It’s not hard to figure out why leaders in the field of education sit on GPEC’s board of directors: education is essential to economic development, and vice versa.

“As we look to the future, we see that growing the right talent for the new markets that will be out there is imperative,” says GPEC chairman Bill Pepicello, president of the University of Phoenix.

That may require more coordination between Arizona’s “robust” array of higher education institutions—statefunded universities, community colleges and private institutions. “I envision campuses as multi-functional areas that are working cooperatively on the ground and online to serve Arizona,” he says.

Arizona’s education of the future will also need to be “efficient and effective,” says Rufus Glasper, chancellor of the Maricopa County Community College District.

In the next 30 years, he says more than 1.8 million new jobs will be created in Arizona and these jobs will require students who are competent in what is know as the STEM fields: science, technology, engineering and math.

Educational delivery systems will include more online, hybrid and fast-track training, he says, and willuse mobile devices and social media to create more access to new ideas, networks and educational exchanges.

Like Pepicello, Glasper envisions closer relationships between secondary schools, post-secondary colleges and universities.

Manufacturing

The Midwest has always been known as the heavy industry manufacturing hub of the United States. But Arizona in the next century could attract more technology manufacturing, says Steven Zylstra, president and CEO of the Arizona Technology Council, which has worked alongside GPEC in the past to nurture the tech industry here.

“To the surprise of a lot of people, manufacturing is actually coming back to the United States,” he says. Wages and manufacturing costs in China are rising, so companies that sent manufacturing overseas are finding that once they pay for shipping, it’s cheaper at home.

Areas of promise include the manufacturing of medical devices, bioscience-related products, renewable-energy equipment and the semiconductor industry.

When it comes to the semiconductor industry, that optimism is warranted, agrees Jason Bagley, a government affairs manager at Intel in Arizona.

Intel has always manufactured most of its leading-edge products in the United States, he says, and plans to continue doing so. Since 1996, it has invested $12 billion in manufacturing in Arizona, not including two projects currently under construction in Chandler.

For more information about GPEC visit, gpec.org

Arizona Business Magazine January/February 2012

Rodolfo “Rudy” Parga Jr. was named chairman of the Board of Directors of Chicanos Por La Causa, Inc.

Parga Named Chairman of the Board for Chicanos Por La Causa

Rodolfo “Rudy” Parga Jr. was named chairman of the Board of Directors of Chicanos Por La Causa, Inc. Parga, a managing shareholder at Ryley Carlock & Applewhite, had previously served as vice chair of the organization.

“Rudy has been one of the driving forces behind successful initiatives that have helped Chicanos Por La Causa become Arizona’s leading community development corporation,” said CPLC president and CEO Edmundo Hidalgo. “It is a privilege to have the opportunity to work together. We anticipate only great things under Rudy’s leadership.”

Said Parga: “I am humbled and honored to serve in this capacity for an organization that does so much good in the community, the state and the nation. CPLC is a benchmark, culturally proficient organization whose unifying voice and advocacy builds alliances, bridges borders and empowers communities.

“At a time when things can seem divisive, CPLC goes about doing great things and making our world a bit better, and bringing people together. I have been privileged to be involved for several years with this dedicated group of diverse individuals, and the growth and strength of their reach is an incredible success story.”

CPLC is a statewide community development corporation, committed to building stronger, healthier communities as a lead advocate, coalition builder and direct service provider.

The Long View 2008

The Long View

By Melissa Bordow

In real estate, as in love, beauty is in the eye of the beholder. So when you ask major players in the Valley’s office-condominium market how attractive it is, you’ll get wildly divergent answers.

long view 2008

On one hand, brokers, bankers and economists can tell you what the numbers say: Office-condo sales have lost velocity, slowed by a struggling housing market and banks that have reined in credit to commercial and residential borrowers.

On the other hand, you have developers who know that even during slow economic times, there always is growth on the Arizona horizon. They see beauty in the Valley’s long-term prospects and say they are committed to a long-term relationship.

Growth that occurred three years ago during the freewheeling days of the housing boom, they say, has produced enough roof tops in far flung areas of the Valley to still require their services.

What happened
Four years ago, office-condos were an up-and-coming niche market, and real estate advisory firm Grubb & Ellis touted Phoenix as “the office-condo capital of the nation” in a survey of 41 cities. With plenty of property available and under construction, Phoenix was “ground zero” for office-condos, according to the survey.

Today, construction has slowed and transactions are down, figures compiled by commercial brokerage firm CB Richard Ellis show.

“It’s kind of like a bouncing ball, what goes up must come down,” says Kelley Ahrens, a director in the brokerage side of CBRE’s office-condo division. “It’s down now, but like a ball hitting cement it will bounce back up.”

According to CBRE’s figures, between 2005 and 2006, developers added 3.69 million square feet of office-condo space for a total of 10.93 million square feet.

Calculations show absorption that year was about 3.3 million square feet. By the fourth quarter of 2007, with 2.63 million more square feet added, absorption was 1.4 million square feet. By the second quarter of this year, only 360,000 square feet was added to inventory, with about 330,000 square feet sold.

Figures from commercial brokerage firm Lee & Associates show the vacancy rates are hovering around 29 percent in the East Valley and 24 percent in the West Valley. Scottsdale vacancies are at 17 percent.

“Is the market overbuilt? I would consider it overbuilt, but not grossly,” says Andrew Chaney, an associate at the firm. “You need to get that vacancy number down close to 12 (percent) or the mid teens before you get people excited to build.”

Developers and brokers say less activity is due in part to banks tightening credit and underwriting requirements.

“It’s just harder to come by capital,” Ahrens says. “Developers still believe in the office product. It’s getting someone on the financial side to believe in the product.”

Valley bankers, on the other hand, say they are willing to lend, but potential buyers must show they have a viable business plan with enough potential earnings to withstand the economic downturn.

“If I have a real good, strong buyer, I’m going to finance that office-condo,” says Kevin Kinerk, vice president of Western National Bank.

There simply is not the same demand, as many small businesses that bought office-condos were affiliated with the construction and housing industries, Kinerk says.

“The last thing they’re going to do right now is buy a piece of real estate,” he adds.

In the last six months, Kinerk says he’s approved financing for 20 office-condos, about half of what he approved in the first six months of 2007. Valley wide, transactions dropped from 410 in 2007 to 130 in the first two quarters of this year, according to CBRE figures.

Troy Toolson, vice president of Valley Capital Bank in Mesa, agrees that well-established businesses that meet due-diligence requirements should be able to get a loan. Startups, though, may have a tougher time.

“We’re really positive about office condos, particularly end-users, right now. It’s just the tough economy. People are a little gun-shy right now, but there are loans available,” Toolson says.

Bob McGee, president of Southwestern Business Financing Corporation, a nonprofit corporation that partners with banks to administer Small Business Administration loans to commercial borrowers, says conventional lenders are analyzing businesses more closely and asking for more equity, historic cash flow and cash flow to debt service.

Location, location, etc.
Office-condo developments that were strategically placed and well constructed still are luring small business owners who want to own their own space.

Sales are occurring in areas where housing is built-out, but necessary amenities have yet to reach, developers say.

“It’s a good time to be strategically aggressive,” says Terry Tobey, senior vice president of business development for UTAZ. Pinal County and Queen Creek, she says, are prime locales for office-condos designed for the professional doctor, dentist or insurance agent.

“Not everyone is in a recession,” Tobey says. “There is no recession for death and taxes and health. People still need to go to the doctor.”

And they would prefer to do so, she says, close to home.cover october 2008

The medical end of the office-condo market has held up better than most, Tobey says, and UTAZ has projects under construction across from the Banner Ironwood Hospital under construction at Combs and Gantzel roads in Queen Creek, and Mercy Gilbert off the 202 Freeway and Val Vista Drive, among others.

“We’ve always picked great locations and we are still getting people wanting to purchase,” she says.

Siting an office-condo well is the key to maintaining sales, agrees Steve Beck, a vice president at COBE Development.

COBE does extensive research on an area’s demographics,schools, hospitals, traffic patterns, freeway systems, and potential growth before building. That has helped thecompany absorb 20,210 square feetthis year, says T.J. Zaharis, vice president of sales and marketing, an increase of 50 percent from 2007.

“As the market has its ups and downs, location will always pull you through,” Beck says.

www.cbre.com
www.lee-associates.com
www.wnbank.com
www.vcbaz.com
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www.utaz.com
www.cobedevelopment.com