Tag Archives: hayden ferry


Phoenix ties San Francisco for No. 1 in tech job growth

Businesses looking for office space in the nation’s hottest tech markets should expect to pay a premium – and a hefty one in many of the top tech cities, according to a new research report by CBRE Group, Inc. The report, which analyzes the top 30 tech cities across the U.S. and Canada, showed an aggregate rent premium of 11 percent across all 30 markets. And while the numbers may have tech tenants in some markets cringing, companies located in or looking at metropolitan Phoenix should feel pretty good about two areas in particular: job growth momentum and rental rate growth.

Metropolitan Phoenix posted a two-year growth rate of 42.7 percent for high-tech services/software-centric jobs from 2012 to 2014. This translates to 12,662 new tech jobs added to the market over the two-year period. These jobs comprised 31.3 percent of overall new jobs added to the Valley’s office base. Comparatively, San Francisco also saw a high-tech services/software job growth rate of 42.7 percent from 2012 to 2014, which was 55.1 percent of that market’s overall office-job base. San Francisco’s actual number of new jobs in that time frame was 16,976.

In Phoenix, major high-tech leasing activity exceeded 1.0 million sq. ft. over the past two years; 40% was transacted through Q2 2015, making the current year tech companies’ most active yet in the metropolitan area. Tech firms employed 42,304 people Valley-wide at the end of 2014.

Rent growth across the Tech-Thirty markets display some of the biggest increases in office sectors across North America, with San Francisco and Silicon Valley topping the list with rental growth rates of 30.7 and 28.1 percent from Q2 2013 to Q2 2015, respectively. This growth translated to the two top tech markets posting average office rental rates of $67.99 and $49.20, respectively, in Q2 2015. In that same period, Phoenix saw rental growth rates of 8.3 percent and as of Q2 office lease rates were $22.06. Comparatively, Denver and Austin – two cities Phoenix regularly competes with in site selection bids for tech companies – have seen rental rate growth of 11.8 and 11.4 percent and posted Q2 rental rate averages of $24.15 and $31.33, respectively.

“Metropolitan Phoenix is undergoing major changes. We talk a lot about the diversification of the Phoenix and Arizona economies and reports like this one prove the investments that have been made towards economic expansion are paying off,” said Kevin Calihan, senior vice president with CBRE’s Phoenix office. “The Valley has a growing, young and educated workforce and an office market that’s attractively priced when compared to our competitors.”

Tempe came in as the Valley of the Sun’s hottest tech submarket, registering 18th on the Tech-Thirty list of the top tech submarkets in each market in terms of rent growth and 13th in net absorption. Tech occupiers’ demand for amenity-rich environments and quality office product has caused Tempe rental rates to appreciate when compared to overall market rates. And while current average rental rate in Tempe is $22.08, just two cents over the Valley wide average, premier properties can command rates nearing $40.00.

“Rental rates in Tempe can fluctuate depending on a number of factors, including location within the submarket,” said Calihan. “Rates in the more suburban parts of Tempe typically fall in the mid to upper $20.00 range, while rates in downtown Tempe are about $10.00 higher.”

In submarkets like Tempe, the lack of available space in blocks of 25,000 sq. ft. or more in buildings proximate to walkable amenities has developers jockeying to initiate new projects to chase this demand. Those developers that are successful in getting projects launched are being met with significant interest from tenants. Parkway Properties’ Hayden Ferry Lakeside is a prime example. The project’s third building broke ground in May 2014, and as it nears completion the property is already 85 percent pre-leased.

“There is definitely an urban migration happening in a variety of submarkets across the Valley,” said Calihan. “Companies, particularly tech companies, recognize employees want to work in amenity rich environments with access to public transit, multifamily housing options, and vibrant recreation and nightlife – submarkets like Tempe with projects like Hayden Ferry check all of those boxes.”


Zenefits continues rapid growth with new Tempe office building

Zenefits, the free, cloud-based human resources technology company that automates and eliminates HR administrative work for businesses, has announced that due to its rapid growth and hiring it has signed a 10-year lease for a large, new office in Tempe, which will be its second office site in greater Phoenix.

The San Francisco-headquartered company will move into a newly constructed building in Tempe’s Hayden Ferry complex this fall. Zenefits will occupy five floors (135,000 square feet) in the building owned by Parkway Properties, Inc.

“With small businesses across the country wanting to take the HR headaches out of managing their companies, the demand for our HR automation software is off the charts,” said Parker Conrad, CEO and co-founder of Zenefits. “With this fast growth, we need more people to join our team – and a place to put them. We are delighted that we found such a great space here in Arizona.”

The Tempe office which will mirror the careers they’re hiring for in San Francisco — account managers, executives, benefits advisors, HR specialists, operations personnel, sales representatives, and client support staff. The Tempe office will ultimately house more than 1,000 employees. Zenefits already has 600 employees in the Scottsdale office it opened in November.

Zenefits is a free, cloud HR automation platform that makes it effortless to manage a business and its employees by automating all of the associated HR administrative work: compliance, on-boarding, payroll updates, health insurance, and other employee benefits.

Zenefits is widely considered to be the fastest-growing SaaS company in history. In May, the company announced that it had raised $500 million in Series C funding, at a $4.5 billion valuation. Zenefits has more than 10,000 business customers and serves 100,000 employees in 48 states.

Zenefits’ arrival in Arizona last year was the largest expansion from a California-based tech company into the greater Phoenix region since PayPal in 2010.

The expansion in Tempe will enable the company to meet the needs of its rapidly increasing customer base.

“Zenefits initial footprint for market entry has since exceeded expectations, as they expand within one of the hottest tech markets in the U.S. with a new location in Tempe,” said Chris Camacho, president and CEO of the Greater Phoenix Economic Council. “The leadership demonstrated within the greater Phoenix region from leaders such as Phoenix City Councilmember Kate Gallego and Mayor Greg Stanton, Scottsdale Mayor Jim Lane, and Tempe Mayor Mark Mitchell, is to be celebrated as we welcome the expansion of one of the fastest growing tech companies.”

Zenefits currently employs more than 1,000 people, up from just 15 at the beginning of 2014.

Matt Coxhead and Ryan Bartos of Savills Studley represented the growing startup in their lease negotiation along with co-broker, Jon Dishotsky Custom Spaces, who represents Zenefits globally.
Todd Holzer, NAIOP-AZ - AZRE Magazine September/October 2010

NAIOP-AZ Chairman Todd Holzer Provides Leadership At Crucial Time

After more than a quarter century in commercial real estate, Todd Holzer, chairman of NAIOP-AZ, has been witness to many industry ups and downs.

Holzer began his career with Opus Southwest in Phoenix and San Diego. After 12 years at Opus, he moved on to DeRito Partners, where he spent eight years developing retail projects. Now in his sixth year at Ryan Companies US Inc., specializing in office and industrial projects and overall marketing for its Southwest regional operation, Holzer says market conditions in Arizona make for some intriguing times.

“Two things that I find interesting about our local market: First, the volatility of the Metro Phoenix market has to be among the greatest of all major U.S. markets,” Holzer says. “It seems that in my career, the overall market conditions for office and industrial have either been on fire or in the dumps. There are days I wish we were a little more steady, like some other Ryan offices in the Midwest. The feast-or-famine scenario we have can be an emotional and economic roller coaster for those in the business.

“Secondly, and again unfortunately, I always think about what could have been a very cool, relevant Downtown Phoenix. Despite some good vision out of the City of Phoenix political leaders, we are still a metro area that has grown outward with sprawl. I wonder if true urbanism can happen here. Most people live here to take advantage of activities that are suburban in nature: golf, hiking and other outdoor activities that don’t occur in a downtown setting.”

Holzer takes the reins at NAIOP-AZ during rocky economic times, but he says he is up to the challenge. When he started at Opus, he joined NAIOP-AZ mainly for networking purposes.

“When I moved into retail development, I spent more time and energy in other organizations such as ICSC, Valley Partnership and ULI,” he says. “But when I came to Ryan with an office and industrial focus, I decided that I needed to get back into NAIOP and take on a leadership role.”

Holzer has been on NAIOP’s local board of directors for five years and on the national board for three. After about two years on the local board, he was asked to take on the time and challenge of training for his eventual role as chairman.

“I have served under a few visionary and hard-working chairmen that have given me the experience to run the local chapter in what are very challenging times,” he says.

Holzer is not one to dwell on the negative. Instead, he says focus should be put on the quality of projects being built today, including NAIOP-member LEED certification initiatives.

“I take my hat off to some developers in our market that build with quality and with vision,” he says. “RED Development building CityScape and SunCor building Hayden Ferry are great projects that went to a level that most developers would not go.

“In my opinion, there has not been an increase in the quality of office projects over the last 15 to 20 years. The granite exterior projects built in the ’80s and early ’90s have stood the test of time. Most developers don’t build true quality because they are building to the level requested by the tenant and user market, and tenant and user groups have been fixed upon cost rather than quality and amenities.

“On the other hand, industrial projects have been built in the last cycle to a much higher standard of function than in the past.”

Among those higher standards is building to LEED specifications and the move toward more energy-efficient projects. Nationally, Holzer says, NAIOP has become fully engaged in LEED initiatives by having educational events tied around the green movement, with the major event being an annual conference dedicated to energy-efficient development. Phoenix hosted the conference a few years ago.

“Locally, we are giving awards to the best energy efficient new development each year at our Best of NAIOP event,” he says.

Examples of recent projects, Holzer cites, are Liberty Property Trust and its Scottsdale building for Vanguard; Lincoln Property Company and the Arizona Game and Fish Department building; Ryan’s 3900 E. Camelback building; and Hines’ office building at 24th Street and Camelback. There also are numerous local municipal and higher-education projects that have been built to LEED standards.

For those in the commercial real estate industry preparing for the future, Holzer offers this advice:

“At the present time, our industry is going through a monumental change,” he says.

“Speculative development will not re-appear for approximately five years in the Valley, so new development will be way down and that side of the business will not be hiring. People and companies will need to reinvent themselves. Take your strengths and use them in different ways within our industry.

“We are still the fifth-largest city in the country and our role as a major place of commerce in the Western U.S. will continue to grow.”

Holzer predicts 2011 will be a sequel of 2009 and 2010; users and tenants are price sensitive and looking for deals.

“We are in a period where land, rents and construction costs are on sale,” he says. “Those with a long-term approach and sufficient funding can solve real estate needs at very attractive costs.”

Some of the biggest challenges Holzer sees in 2011 are lack of capital and nominal job growth. The industrial sector needs capital to be available to companies for expansion and purchasing of inventories and equipment, he says, and the office sector is tied to job creation.

“Unless we can get local and national job creation to pick up dramatically, high-vacancy rates and shadow space inventory will continue with us,” Holzer explains. “The main challenge facing most sectors of commercial real estate is the national political scene and the decisions coming out of Washington, D.C. There is too much uncertainty currently for small business owners to make real estate decisions.”

For more information about NAIOP-AZ and Todd Holzer, visit naiop-az.org.

AZRE Magazine September/October 2010