Tag Archives: JLL

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.

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.”

Chris Latvaaho joins JLL office leasing group

Chris Latvaaho, JLL

Chris Latvaaho, JLL

The Phoenix office of JLL has hired local broker Chris Latvaaho as Vice President in its Phoenix office leasing group. Latvaaho joins the existing JLL team of Managing Director John Bonnell and Vice President Brett Abramson, who specialize in agency representation for existing and ground-up developments, and both institutional and entrepreneurial landlords.

Prior to Joining JLL, Latvaaho served for 14 years as an associate director in the Phoenix office of a national commercial real estate brokerage firm. In that time, he completed more than 500 lease and sale transactions, particularly in the core business of leasing and investment sales, and with a strong emphasis on owner representation. Latvaaho started his career with Heitman Properties in Minneapolis, where he was responsible for managing a large office investment portfolio for institutional clients.

“I’ve had the pleasure of working with Chris on several transactions, and have seen firsthand his strong business acumen and client commitment,” said JLL Senior Managing Director Dennis Desmond. “We are thrilled to welcome him.”

“The Phoenix office market is definitely heating up,” said Bonnell. “Chris’ strong skill set and reputation will be a valuable part of our bench as we pursue opportunities in this rebounding economy.”

Latvaaho earned a bachelor’s degree from the University of Northern Iowa in Cedar Falls. He is a member of the National Association of Industrial and Office Properties (NAIOP).

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.

Infusionsoft

Opportunity for high-tech firms spills into Phoenix’s suburban markets

As goes the high-tech industry, so goes opportunity. Once a high-tech company anchors a neighborhood, housing prices rise, new amenities spring up and unemployment dips. JLL’s latest High-Technology Office Outlook reveals where high-tech companies are looking for (and finding) reasonably priced labor and real estate, and how new and unexpected markets like suburban Phoenix are getting a piece of the action—and a second economic wind.

“Tech companies are looking for new locations for many reasons, not just for intellectual capital, or venture capital funding but other factors such as standard of living,” said Julia Georgules, co-lead of JLL’s Technology research group.  “In our research, we call this ‘market dynamism.’ We have looked at different lifestyle factors for each of the 34 tech hubs, including proximity to transport and walkable amenities.”

JLL’s report, which helps high-tech companies make informed expansion decisions and provides insight for investors, features the top 34 high-tech markets across the country, including Phoenix.*

Follow the Hipsters

While the high-tech industry’s growth is driving employers to find new locations for both talent and real estate, traditional high-tech cities are not exactly struggling. Long-standing hubs continue to function as the industry’s economic engines; in fact, seven traditionally high-tech-centric markets represent more than a fifth (21.7 percent) of the 65.4 million square feet of office space under construction across the country. Still, looking beyond the top tier locations is when the economic story gets interesting.

As rents escalate and space becomes scarce in mainstay markets like San Francisco, Silicon Valley and Manhattan, the lure of more affordable prices have high-tech companies seeking talent and real estate elsewhere. The savings potential is huge: downtown Palo Alto, considered the heart of Silicon Valley, has seen such high demand that the office market is just 3.6 percent vacant with average asking rents at $86 per square foot compared to the national average of $30. In comparison, the average asking rent for high-tech office space in Phoenix is $21.11 per square foot. Twenty six percent of the total supply is available, and 2.3 million new square feet is under construction.

“High-tech’s growth is not exclusive to traditional high-tech markets anymore,” said Cara Trani, co-lead of JLL’s Technology brokerage group. “High-tech clusters have become much more common as high-tech innovations form the backbone of new product development in all industries.”

“The race is on among cities vying to become ‘the next Silicon Valley.’ As a result, more incentives and tax credits become available to lure high-tech companies into markets that are in need of jobs and economic growth,” she concluded.

The New Tech Frontiers

Along with emerging high-tech centers like Detroit, Charlotte, and Indianapolis, Phoenix, and particularly its Southeast Valley suburbs, are holding their own.

“Phoenix is definitely an emerging high-tech market,” said Andrew Medley, Vice President, Tenant Relations in the Phoenix office of JLL. “The most interesting part of this growth may be the building locations themselves—a huge percentage are in suburban markets like Chandler, Tempe and South Scottsdale. These are places that are known for young, educated families and quality of life. When Apple moved here, they did not go into the core. They went to Mesa and introduced hundreds upon hundreds of new jobs. The same can be said for many other companies… Intel, Honeywell, GoDaddy, InfusionSoft. The list goes on and on.”

According to the annual report, high-tech companies are also taking advantage of Phoenix’s local business incentives that make Phoenix an affordable alternative to other markets. The report also nods to employment generators like Arizona State University, University of Arizona and other respected local colleges.

“Phoenix’s current high-tech employment concentration is dominated by jobs in computer and electronic products,” said Medley. “This makes up about half of our local high-tech jobs. Another third is in computer systems design and services.”

“When start-ups and established high-tech companies look to expand, understanding the dynamics of local markets and innovation clusters is essential,” said Greg Matter, co-lead of JLL’s Technology brokerage group. “While it’s common for companies to look at just one factor, such as high-tech employment, when considering new market expansions, JLL’s index shows the decision should have greater depth. Each city has its own unique qualities that should be aligned with a company’s growth objectives. Companies should look at each location’s talent pool, for example, and ask, how are investment conditions? Do we need space to expand? What are the amenities and lifestyle factors for employees?”

About the High-Technology Office Outlook Report

The 2014 High-Tech Outlook helps technology companies make informed expansion decisions and provides insight for investors looking to find the next high-tech hot spot.  This year’s report digs deeper into what makes a market “cool” or “liveable” with a new metric included in the index: Market Dynamism. While traditional metrics such as employment, wage growth, intellectual capital, and venture funding are essential to tracking the momentum of a high-tech market, JLL studied the various amenities in the 34 markets in this year’s report to better understand what makes a market tick.

West 101 Corporate Center, CBRE, WEB

CBRE leases 67KSF to Arizona’s newly created CSFS agency

CBRE has completed two office leases totaling 67,335 square feet in Metropolitan Phoenix. The leases are representative of new office requirements by Arizona for the newly created Child Safety and Family Services agency (CSFS).

A 26,265-square-foot, full-floor space in West 101 Corporate Center, which is owned by Los Angeles, Calif.-based Regent Properties and located at 1860 N. 95th Lane in Phoenix, will service CSFS’s West Valley clients. The second location is a 41,070-square-foot office building at the Corridors business park, formerly owned by Chicago, Ill.-based The Alter Group and recently purchased by Los Angeles-based Adler Realty Group. Located at 1925 W. Pinnacle Peak Rd. in Phoenix, this location will service North Phoenix.

Jim Bayless, Ashley Brooks and Jenny Aust with CBRE’s Phoenix office negotiated the long-term lease transactions on behalf of Regent Properties and The Alter Group. The State of Arizona was represented by Chris Corney with JLL’s Phoenix office.

1860 N. 95th Lane is a three-story, class A office building located within the West 101 Corporate Center master-planned business park. The property benefits from proximity to more than 1 million square feet of retail amenities, including Gateway Pavilions and Gateway Crossing. The building also has immedate access to the I-10 and Loop 101 freeways. The tenant, whose lease agreement brings the property to 72 percent leased, will take occupancy in early November.

An 80-acre business park, Corridors currently features single-story buildings as well as land for expansion and build-to-suit opportunities. Located near the southeast corner of Pinnacle Peak Road and the I-17 freeway, the park benefits from proximity to more than 1.7 million square feet of retail amenities. Current tenants include Chubb Insurance, Arizona State Credit Union, Syntellect, Bechtel, Belcan Engineering, Kutta Technologies and Performance Software. The Child Safety and Family Services lease, whose operations will take occupancy of in early December, brings the business park to 88 percent leased.

Liberty Tolleson Center

Liberty Tolleson Center reaches 100 percent occupancy

Liberty Property Trust announced it has signed a lease with Green Light Direct Services at Liberty Tolleson Center, bringing the 200KSF project to 100 percent occupancy.

Green Light Direct Services will move into its new location, 8601 W. Washington Street, in October. Rick Collins of CD Commercial Advisors represented Green Light Direct Services and Tony Lydon, Marc Hertzberg and Riley Gilbert of JLL represented Liberty Property Trust in the transaction.

“There continues to be strong interest in high quality assets in prime locations throughout our Arizona portfolio,” said John DiVall, senior vice president and city manager for Liberty’s Arizona region.  “We’ve seen momentum in the Southwest Valley returning as of late, spanning from 50,000 square feet and up.”

Since January, Liberty has closed eight lease agreements totaling more than 500,000 square feet across the Arizona region.

Granite Commerce Center

Laminate company renews 16KSF lease at Granite Commerce Center

Cushman & Wakefield of Arizona, Inc. negotiated a long-term lease renewal at Granite Commerce Center, 405 N. 75th Ave., Suite 180, for a lamination distribution company.

The lease renewal of 15,988 square feet is for USI Inc. of Madison, Conn. USI  markets roll and pouch laminating machines and films, binding equipment and supplies and many other office accessories including photo ID systems and mounting and display boards.

“The Southwest Valley industrial submarket is one of the most desirable in Metro Phoenix for USI’s business,” said Keri Scott. “USI decided to continue its operations at Granite Commerce Center because of its proximity to major freeways so it can service clients in adjacent states.”

Scott, Jackie Orcutt and John Grady of Cushman & Wakefield represented the tenant, USI. Kyle Westfall of JLL represented the landlord, Crow Holdings of Dallas.

Airport I-10

Anixter commits early to Airport I-10 spec development

Wentworth Property Company/Clarion Partners and the Phoenix office of JLL have secured a benchmark 63,000-square-foot tenant lease commitment this week at Airport I-10 Business Park—one of the largest Sky Harbor Airport-area speculative industrial developments in Phoenix history.

The lease, made by Illinois-based Anixter International, Inc., fills almost half of Airport I-10’s “Building E” months before anticipated shell construction completion.

JLL Executive Vice Presidents Pat Harlan and Steve Sayre, and JLL Associate Kyle Westfall represented the building owner. John Werstler, Jerry McCormick and Cooper Fratt of CBRE represented Anixter.

“It is rare in today’s Phoenix industrial market to secure lease commitments on a spec property that’s still under construction—before tenants can physically see and touch the space,” said Harlan. “The fact that Anixter has signed on at Airport I-10 at this early stage speaks volumes. It is a welcome post-recession event and a strong statement about the caliber of the project and our industrial market as a whole.”

“We are extremely pleased to welcome Anixter,” said Wentworth Property Company Principal James R. Wentworth. “A commitment by such a large, well respected company confirms Airport I-10 Business Park as the preferred airport location for corporate users. It also underscores the ongoing need for new, high quality industrial product in the Airport submarket. This area continues to rank among Phoenix’s top industrial locations but has an extremely limited supply of land.”

Located at the northwest corner of 24th Street and Rio Salado, Airport I-10 Business Park represents the last large, developable parcel left in the Sky Harbor International Airport submarket. Phase I includes three Class A industrial buildings totalling more than 600,000 square feet (277,954 square feet, 169,109 square feet and 156,000 square feet). This portion of the project is slated for completion in fall 2014. For more insight from Harlan, visit http://bit.ly/1ps2sgj.

According to JLL research, while there is limited inventory of modern industrial space within the Sky Harbor Airport submarket, demand continues to climb. Of the 40 million square feet of industrial space in the submarket, only 218,052 square feet was built in 2009 or later. Yet in 2013, the Airport submarket still represented almost 30 percent of the more than 3.5 million total square feet of industrial space absorbed Valley-wide.

At build out, the 58-acre Airport I-10 property will include five Class A industrial buildings totalling 920,584 square feet, with a modern environment for corporate users and fully equipped with state-of-the-art features such as ESFR sprinkler systems, 30- to 32-foot clear heights, cross-dock loading and 140- to 200-foot truck courts.

Anixter International, Inc. is a leading global distributor of enterprise cabling and security solutions, electrical and electronic wire and cable, and OEM supply fasteners and other small parts. It operates approximately 210 warehouses in more than 250 cities and more than 50 countries.

ChandlerCorpCenter, WEB

Palisades Private Capital Fund acquires Chandler Corporate Center

Palisades Private Capital Fund 1, a $50-million Fund created by Palisades Mexico Partners (PMP), has acquired Chandler Corporate Center, a two-story, 67,561-square-foot Class A office asset in Chandler, Ariz., for $13.9 million.

PMP is a joint venture of Joaquin de Monet, founder and managing principal of Palisades Capital Realty Advisors, LLC, an investment management and advisory firm, and Sergio Argüelles, president/CEO of Monterrey, Mexico-based FINSA, one of the foremost industrial real estate development firms in the Americas.

“Chandler Corporate Center is a well located, attractive office building with sustainable features that provide the tenants with economical operations and a comfortable, healthy work environment,” said Argüelles, a Mexican real estate mogul who transformed his family-owned company into a highly successful real estate development firm in Mexico. “The asset offers our investors a stabilized, secure and growing cash flow, with the opportunity for significant rent increases as the market continues to improve,” he added.

“Growth in the region’s high-tech sector has boosted job growth, beginning in the last quarter of 2013,” explained de Monet, a successful and seasoned executive with expertise in large global real estate investments and property management. “This upturn in Chandler’s economy is increasing demand for office space and this acquisition is in the right place, at the right time,” he noted, “offering an opportunity to invest in the right cycle of the market.”

Situated on 7.24 acres at 585 North Juniper Drive northwest of Chandler Boulevard and McClintock Drive, this LEED-certified building, which was built in 2008, is PMP’s first investment in the Arizona market.  The property provides tenants, including MediServe Information Systems, STA Travel and Garmin International, Inc., ample open and canopied, surface parking spaces with an excellent 6.63:1000 parking ratio.

Jones Lang LaSalle handled the transaction for both the seller, Held Properties, Inc., and PMP.

Palisades Private Capital Fund I, which has raised $50 million in private capital and is on target to increase the Fund to $100 by yearend, is focusing on value-add, Class A and B office assets in growing western suburban markets. The Fund initially will acquire institutional-quality office assets in Southern California, Arizona and Texas. Besides the Chandler asset, PMP recently acquired a property in Southern California: 2929 Imperial, a two-story, 121,143-square-foot, office building in Brea, for $20.8 million.

PMP’s capital campaign is connecting with high net-worth individuals and family offices specifically in Mexico and Latin America. PMP will accumulate a diversified pool of suburban office properties priced below replacement cost, with solid in-place cash flow and average 75% occupancy. De Monet and his team at Palisades Capital will source investments and manage the Fund, improving the assets, creating value and capturing rent growth over the targeted hold period of three to five years.

Durango, WEB

JLL completes one of the largest industrial leases of the year in SW Phoenix

On behalf of Clarion Partners, the Phoenix office of JLL has completed a 93,489-square-foot lease with Benson Industries, LLC at Durango Commerce Center in Phoenix. The deal represents one of the largest industrial lease transactions in Phoenix’s Southwest Valley submarket this year. It also brings the 670,000-square-foot, two-building Durango Corporate Center to 91 percent occupied and locates Benson Industries into its first-ever Arizona address.

Portland-based Benson Industries manufactures curtain wall systems for skyscrapers and other commercial structures. Just one of their latest projects includes the exterior shell and glass for One World Trade Center in New York City.

“Benson secured this location primarily to serve its major construction projects in California,” said JLL Executive Vice President Pat Harlan, who represented building owner Clarion Partners along with JLL Executive Vice President Steve Sayre and JLL Associate Kyle Westfall. “By locating in Arizona, tenants can maintain direct access to California but sidestep that market’s sometimes costly barriers to entry. At the same time, they gain the benefits of Arizona’s exceptional business environment, competitive tax rates and growing economy.”

Benson will use its new Phoenix location for manufacturing, assembly and distribution. Isy Sonabend and Richard Foss of NAI Horizon represented the tenant, Benson Industries.

Situated at 2225 S. 75th Ave. in Phoenix, Durango Commerce Center is a best-in-class, institutional-grade distribution property that offers direct access to I-10, 30-plus-foot clear height, ample parking and a modern ESFR system. The project is currently 91 percent leased to tenants such as The Gap, Consumer Connect and Regal Distribution. An additional 62,305 square feet of industrial distribution space remains available for lease.

ChandlerCorpCenter, WEB

Chandler Corporate Center sells for $13.9M

Capital markets experts in the Phoenix office of JLL have completed the $13.914 million sale of Chandler Corporate Center I, a 67,561-square-foot Class A office property in Chandler, Arizona. The sale price breaks the $200-per-square-foot mark for suburban office space—a significant indicator according to JLL.

JLL Senior Managing Director Dennis Desmond represented the property seller, Chandler HFP, LLC, an affiliated entity of Held Properties, a California real estate development firm. Palisades Capital Realty Advisors is the property buyer. JLL Managing Director Dave Seeger serves as the project’s exclusive leasing broker and partnered with Desmond to market the property for sale.

“This building came out of the ground in 2008 and has outperformed the Phoenix and Chandler markets ever since,” said Desmond. “This includes through the toughest office market recession we’ve ever experienced. That is evidence of the strength of the Chandler market and was a tremendous draw for investors looking for stable acquisition properties located in high-growth markets.”

According to JLL research, in the four years from 2009 to 2012, Chandler was responsible for 66 percent of Greater Phoenix’s total office space absorption. At year-end 2013, Chandler Corporate Center I was only 8.5 percent vacant, compared to an overall Chandler submarket office vacancy rate of 13.9 percent and an overall Phoenix office market vacancy rate of 23.9 percent.

“When it comes to the velocity of our recovery, Chandler is definitely one of our market’s bright stars,” said Seeger.

Chandler Corporate Center I is located at 585 N. Juniper Drive in Chandler, northwest of Chandler Boulevard and McClintock Drive, and with direct access to the Loop 101 and Loop 202 freeways, and the burgeoning Price Road technology corridor. The two-story building totals 67,561 square feet with a 6.63/1,000 parking ratio, modern office construction and benefiting from the area’s highly educated labor pool.

JLL will retain the leasing assignment at the property and assume the property management responsibility.

Mark Stevens hired as JLL national director

Stevens_MarkAs part of its ongoing commitment to strategically grow the industrial property management services it provides for clients, JLL has hired Mark Stevens as a National Director of Industrial Property Management in the West Region. Stevens will be based in the firm’s Phoenix office, responsible for the development of industrial property management business opportunities across the Western U.S. He will also partner with the JLL East Region to pursue and grow joint national opportunities.

“The West holds tremendous opportunity for JLL to expand our industrial property management services and best serve our clients, and we’re very pleased to welcome Mark into that process,” said Dan Pufunt, JLL President of Property Management. “Mark has an outstanding reputation and a broad knowledge base that spans leasing, investment and management. This gives us unprecedented capacity in the Western states and a great partner to help advance our national business development strategy.”

“We are equally pleased to have Mark headquartered out of our Phoenix office,” said Dennis Desmond, Senior Managing Director and head of the JLL office in Phoenix. “Our local team has grown exponentially in the last five years. Mark’s presence only adds to that depth of expertise and to the collaboration we’re able to foster with other JLL offices and clients across the West.”

Stevens most recently served as Director – City Leader in the Western U.S. Industrial Practice at the Phoenix office of a competing local brokerage firm. Prior to that, he held executive-level positions in the acquisitions, asset management and brokerage/leasing functions at Cabot Properties, RREEF and Cabot Industrial Trust, among others.

Stevens is an alumnus of Loyola Marymount University in California and holds an Arizona Real Estate License. He is an active member of the National Association of Industrial and Office Properties (NAIOP) and the Urban Land Institute (ULI).

ecommerce

E-commerce opens retail channels

It’s estimated that U.S. e-commerce sales will be $278B in 2014. By 2016, that spending will be $327B — a 62 percent increase in five years, according to Forrester, Inc. estimates. Yes, that’s a drop in the pool of the U.S. retail market (about 3 percent). However, it’s not one that brick-and-mortar retail brokers are ignoring. Local brokers weighed in on how Phoenix can and should adapt to the changing channels of retail real estate.

“People have a tendency to separate e-commerce from brick-and-mortar stores. The retailer of the future has to learn to adapt to do both,” says Velocity Retail Group Executive Vice President Darren Pitts. “The strong retailers of the future will continue to evolve with a multi-channel, often referred to as an omni-channel approach, that takes advantage of various sales mediums including mobile devices, the internet, catalog, as well as brick-and-mortar.”

De Rito Partners’ Brokerage President Stan Sanchez says e-commerce will affect the way business is conducted but not replace store-front appeal to some customer groups.

“Service-oriented businesses and daily needs stores will always have a role in commercial real estate, because those tenants can’t be replaced by online retailers,” he says.

“While some may think that e-commerce threatens brick-and-mortar venues, the truth is it simply adds a new dynamic to the location, the size, and the type of real estate these businesses are looking for.”

E-commerce is shifting many retailers into smaller stores and creating more flexible shopping centers, says JLL Vice President of Retail Tyson Switzenberg.

“While e-commerce and technological innovations threaten certain retail models like bookstores or video stores, it’s not the whole story and does not represent all retailers,”adds Switzenberg.

What’s an important trend in retail that people should be watching?

Stan-SanchezStan Sanchez
President, De Rito Partners
One of the most important trends to emerge in retail, along with e-commerce, is the growth of buying power from groups such as millennials and Hispanic consumers. These two groups are growing at a rapid rate and control an enormous (over $1 trillion in consumer spending) amount of purchasing power. The key for retailers is learning the purchasing habits of these groups and making adjustments to their purchasing characteristics. Many see millennials as a segment of society that is in-tune with technology. For retailers, the goal is to take advantage of integrating that technology into physical stores and to track their customer’s buying habits to help increase the bottom line.


DarrenPittsDarren Pitts
Executive Vice President, Velocity Retail Group
Personalized offers or information provided to a shopper when they enter a store and sent directly to their mobile device. These offers are specific to the customer’s purchasing pattern and only for their use while they are in the store. Another trend is retailers who use their stores as fulfillment centers. As an example, if a customer wants a particular type of shirt but it is not in the store they are physically in, but in another, they can have it shipped directly to their home. The retailer controls their inventory better, and the customer gets what they want.


Switzenberg_TysonTyson Switzenberg
Vice President, JLL
Experiential retail. Retailers need to give shoppers a good reason to make an in-person visit to their stores—to go beyond a simple retail transaction that shoppers can do virtually anywhere. Customers are looking for an experience. Some retailers practicing this include: Apple Store: the “Genius Bar” offers hands-on troubleshooting, where customers can interact with friendly, trained experts in a unique, designated space; Flix Brewhouse: As America’s Cinema Brewery, this retailer combines the latest Hollywood productions, custom crafted beer and great food – all served “in theater” and a la carte basis so that the experience can be customized.

JLL-Clarion-Kuehne-CGrande

JLL leases 200KSF in Casa Grande

The Phoenix office of JLL has completed a 201,666-square-foot, five-year warehouse/distribution lease with global logistics company Kuehne + Nagel, Inc. in Casa Grande. The lease establishes Kuehne & Nagel’s presence in the Central Arizona market—a growing site selection consideration for industrial distribution and logistics users in the Western United States.

“For the right users, Pinal County definitely offers an alternative to the high costs of Southern California industrial space,” said JLL Executive Vice President Pat Harlan, who represented building owner Clarion Partners along with JLL Executive Vice President Steve Sayre and JLL Associate Kyle Westfall.

According to JLL’s Q1 Industrial Report, warehouse/distribution space in Pinal County has done well in the past 24 months, dropping from 17 percent vacancy in 2012 to 13.1 percent vacancy today. Although absorption has remained flat, market recovery is pushing developers to consider new industrial and warehouse projects in the area.

“Creating an inland port environment in and around Casa Grande—half way between Phoenix and Tucson—would allow companies to move their products from California’s ports directly to a more cost effective, inland location, then on to the rest of the U.S.,” said Harlan.

Kuehne + Nagel’s new space is located at 2592 E. Hanna Rd., approximately five miles southeast of central Casa Grande and directly adjacent to Interstate 10. With approximately 63,000 employees at more than 1,000 locations in over 100 countries, the Kuehne + Nagel Group is one of the world’s leading logistics companies.

5th Street 5x7

JLL closes $9M industrial sale for Clarion

The Phoenix office of JLL has completed the $9 million sale of 5th Street Industrial, a 110,000-square-foot industrial building at 3405-3445 S. 5th Street in Phoenix. The deal bolsters the rapid recovery of Phoenix industrial space in the 50,000 – 150,000-square-foot range, as highlighted in the first quarter Phoenix Industrial Report released last week by JLL’s local research team.

JLL Managing Directors Mark Detmer and Bo Mills were the industrial capital markets brokers involved with the sale between the property seller, Clarion Partners, and the property buyer, DCT Industrial Trust. JLL Executive Vice Presidents Pat Harlan and Steve Sayre, and Associate Kyle Westfall, are the project’s local market leasing brokers.

“This size and type of Phoenix industrial space is definitely outperforming the larger blocks of space in the local industrial sector,” said Detmer. “That is not to say that other blocks of space haven’t entered the recovery cycle. They just haven’t done so at this same rapid clip.”

“The 5th Street Industrial asset is irreplaceable for a number of reasons,” said Sayre. “It has an excellent location west of the I-10 in the heart of the Airport submarket. It is fully leased to a long-term credit tenant, and it was priced at a point that allows the new owner, DCT Industrial Trust, to take advantage of some strong investment upside potential. This is a compelling combination.”

5th Street Aerial 5x7According to JLL’s most recent research report, Phoenix’s Q1 industrial absorption—totaling 829,777 square feet—was driven primarily by users in the 50,000 – 150,000-square-foot range. Leasing activity among this user type has increased in lockstep with the recovering economy. Built in 1986, 5th Street Industrial includes 26-foot clear height, grade- and dock-level loading, and A-2 zoning on 6.55 acres.

“DCT is pleased to add 5th Street to our Phoenix portfolio, a 100 percent occupied building with a credit tenant,” said Mark Bowen, Regional Vice President at DCT Industrial.  “This acquisition demonstrates DCT’s focus on continually upgrading our portfolio in our focus markets, with the acquisition of Class-A buildings in highly desirable submarkets.”

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The Esplanade

JLL earns exclusive leasing assignment for Esplanade office towers

After an extensive vetting process, the Phoenix office of JLL has been selected as the exclusive leasing agent for the four Class A office towers at The Esplanade, a 1-million-square-foot landmark mixed-use project located at 24th Street and Camelback Road, in the heart of Phoenix’s prestigious Camelback Corridor.

JLL Managing Director John Bonnell and JLL Vice Presidents Brett Abramson and Greg McMillan will direct all office leasing efforts for The Esplanade’s 10- and 11-story, Class A office towers. The buildings were constructed between 1989 and 2002, and represent a total 906,459 square feet of space at 2425, 2525, 2575 and 2555 E. Camelback Rd. Each tower features high-end finishes, panoramic views of Camelback Mountain and Piestewa Peak, private balconies, 24-hour security, on-site conference and fitness facilities, concierge and abundant covered parking.

JLL is also working with property owner by MetLife, Inc. as it implements extensive, project-wide renovations that are delivering new building lobbies, new corridors, an upgraded amenity package and new speculative office suites.

“The Esplanade represents some of the Valley’s nicest office space in an equally premier location. It is one of those iconic projects that checks virtually every box on the tenant and employee wish list,” said Bonnell. “It also has an owner that recognizes the value of these advantages, and will make the investment necessary to ensure The Esplanade remains a market leader for the long term.”

In addition to its office towers, The Esplanade includes a first-floor retail component, fine and casual dining, a 14-screen AMC Theatre, a 291-room Ritz Carlton Hotel, and a pedestrian-friendly design that links the project to neighboring Biltmore Fashion Park, one of the metro area’s most upscale shopping and dining environments.

The Esplanade is within one mile of Piestewa Freeway/State Route 51 and minutes from the Valley’s Loop freeway system, Interstate 10, Downtown Phoenix and Sky Harbor International Airport. These factors combined to rank Camelback Road as #34 on JLL’s list of Most Expensive U.S. Streets for Office Space in 2013—an overview of the nation’s most premier, in-demand submarkets for office space.

Tempe, JLL, WEB

Demand for Density Meets Demolition Strategy

Greenlaw Partners and The Broe Group have selected the Phoenix office of JLL to market a 90KSF office project in Tempe, Ariz., where the demand for high density space spurred demolition of a portion of the complex in exchange for a higher parking ratio. Greenlaw Partners and The Broe Group purchased the project for $3.5M.

Tempe 10/60 Corporate Center (formerly known as Corporate Fountains) is located at 4415 – 4625 S. Wendler Dr. in Tempe, alongside Interstate 10 and just south of the I-10/SR-60 (Superstition Freeway). The project originally totalled 110,000 square feet in two 45KSF, two-story buildings and one 20,000-square-foot, single-story building. Upon review of the property, Greenlaw and The Broe Group recognized the opportunity to add value to its investment through a number of key physical changes. In an effort to increase density, one of the project’s buildings—located at the center of the property—was demolished to create a two-building, 90KSF campus.

The demolition upgraded the project’s parking ratio from 5:1,000 to 7:1,000. The new owners plan to complete additional improvements in the coming months, including the demolition-rebuild of existing building interiors.

“This creates a greater corporate advantage and improved occupancy costs for our target users,” said Scott San Filippo, partner at Greenlaw Partners. “JLL is a great choice to market this asset in that they are a strategic partner in effectively positioning creative opportunities such as Tempe 10/60 Corporate Center. Phoenix has a lot of value-add opportunity and it will be a market where we look to remain active.”

“Going to this length to create a high density environment underscores Phoenix’s demand for this type of space,” said JLL Managing Director Dave Seeger, who is marketing Tempe 10/60 Corporate Center with JLL colleague and Managing Director Karsten Peterson. “A parking ratio of 4:1,000 or 5:1,000 is good, and 6:1,000 is great, but a ratio of 7:1,000 is outstanding.”

According to JLL’s Q1 2014 Phoenix Office Report, tenants across the Valley are beginning to see their already limited space options dwindle in hot submarkets like Tempe. This is driving up rental rates and creating growing upside potential for owners, including those with high-density space that is attractive to users like call centers, high tech companies and financial institutions.

“We’re excited about the opportunity to partner with Greenlaw on this acquisition,” said Jim Crawford of The Broe Group. “We’re bullish on Phoenix as well, but recognize that success is based on teaming with owners who are experts at adding value and who understand the dynamics of the tenants in the market.”

“Corporate America as a whole is moving toward the open office configuration—highly efficient, very flexible, higher density footprints,” said Peterson. “Adaptive reuse plays like Tempe 10/60 Corporate Center are a prime example of how owners can repurpose inefficient, zombie space to economically reposition a project.”

Originally built in 1985, Tempe 10/60 Corporate Center features 10-foot ceilings, floor-to-ceiling windows, generous landscaping and immediate freeway visibility and access to Interstate 10 via Baseline Road. It is minutes from the I-10/US-60 interchange, Arizona Mills Mall, Sky Harbor International Airport and Arizona Grand Resort.

Camelback Arboleda

JLL Completes $24.9M Sale of Camelback Arboleda

Capital Markets experts in the Phoenix office of JLL have completed the $24.9M sale of Camelback Arboleda, a 178,792 SF, multi-tenant office building located at 16th Street and Camelback Road, in the heart of Phoenix’s prestigious Camelback Corridor.

JLL Senior Managing Director Dennis Desmond and JLL Senior Vice President Brian Ackerman represented the property seller, Camelback 1661, LLC. The property buyer is Merced Restart Phoenix Investors I, LLC.
This is the second time in two years that JLL has brokered a Camelback Arboleda sale—an indication, JLL says, of the market’s ability to deliver upside potential for strategic buyers.

“Investor interest in the Phoenix office market has increased dramatically since 2011-2012,” said Desmond. “Our client recognized the opportunity in this trend, and significantly improved the appearance of Camelback Arboleda and the quality of its rent roll to take advantage of improved investor appetite.”

“The property also has attracted an increasing amount of medical tenants seeking a quality location in a tightening market, creating another stabilizing factor in the positioning of this asset,” added Ackerman.
Camelback Arboleda’s leasing team, Chris Latvaaho and Michael Crystal of Cushman & Wakefield, assisted with the transaction and will retain the leasing assignment for the new owner.

According to JLL’s Q1 2014 Phoenix Office Report, rental rates in the Camelback Corridor submarket have grown significantly in the past two years, from an average $23.77 per square foot in early 2012 to an average $25.12 per square foot today. “The new Camelback Arboleda building owners believe these rental rates will continue to grow, as do we,” said Desmond.

JLL Report

As Phoenix Suburban Office Markets Recover, Skyline Poised to Follow

“Game on” seems to be the sentiment of Phoenix office tenants as they continue to bounce back from the recession, albeit with smaller work spaces that must achieve greater efficiencies with a reduced footprint. Suburban office markets—primarily in Tempe, Chandler and the Camelback Corridor—that are close to employees and offer higher-density parking are leading this trend, according to JLL’s Spring 2014 U.S. Skyline Review. (see link below)

“The Phoenix Skyline experienced the full force of the recession, and most of its tenant base shed jobs and reduced their real estate footprints in response,” said Dennis Desmond, Senior Managing Director in the Phoenix office of JLL. “But Phoenix jobs are returning, and with them a steady growth in occupancy that is tightening and pushing rental rates Valley-wide. Over the next several years, we expect this to have the same impact on the Downtown and Midtown Skyline submarkets.”

JLL’s proprietary Skyline report identifies and tracks micro-segments of 43 city centers across the nation. The Skyline features Trophy and Class A buildings where tenants and investors focus demand for office space in a flight to quality and efficiency. (Check out the themes that shape the U.S. skyline.)

Though the direct vacancy rate for Phoenix’s Skyline still sits at 22.9 percent, sights are set on rapidly improving Skylines across the nation—where competition for office properties in 2013 propelled the national vacancy level to an average 13.4 percent.

“If you look at the JLL Skyline Clock, Phoenix sits squarely between the ‘Bottoming Phase’ and the ‘Rising Phase’,” said John Bonnell, Managing Director in the Phoenix office of JLL. “This is a perfect storm for tenants who appreciate the price differential, central location and amenities that Downtown and Midtown have to offer. It’s an opportunity that we remind our clients about constantly, and one that we expect to continue throughout 2014, since new construction is also very limited.”

In spite of tightening market fundamentals, construction activity in Skylines across the nation remains low. Seven U.S. Skylines—including Phoenix—show no current development. Two Skylines indicate just one proposed project.

”The lack of development is causing a space crunch on each end of the spectrum,” said John Sikaitis, Managing Director of Research at JLL. “Trophy properties are far outperforming the broader market with respect to occupancy levels and rents, and a similar tightening exists in value-add properties. This squeeze from both ends is expected to have a significant impact on the properties in the middle as tenants are being priced out of their former go-to options.”

Read Phoenix_Skyline_Report

Oblique & Renderings of Airport I-10-1

Groundbreaking Arrives for Phase I of Airport I-10 Business Park

Groundbreaking day has arrived for the first phase of Airport I-10—a Wentworth Property Company/Clarion Partners Class-A industrial project being leased by the Phoenix office of JLL that, at completion, will represent one of the largest Sky Harbor Airport-area speculative industrial developments in Phoenix history.
Located at the northwest corner of 24th Street and Rio Salado, Phase I of Airport I-10 Business Park includes three Class A industrial buildings totalling more than 600,000 square feet (277,954 square feet, 169,109 square feet and 156,000 square feet). Phase I of the project is slated for completion in the fall of 2014. At build out, the 58-acre site will comprise five Class A industrial buildings totalling 920,584 square feet.
“This is the last large, developable parcel left in the Sky Harbor International Airport submarket—an area that consistently ranks among the Valley’s top industrial locations,” said Wentworth Property Company Principal James R. Wentworth. “Airport I-10 is already garnering great interest. With Phoenix’s continued population and job growth, we expect this demand to do nothing but rise in the years ahead.”
According to JLL research, the Sky Harbor Airport submarket absorbed approximately 1 million square feet of industrial space last year—almost 30 percent of the more than 3.5 million total square feet of industrial space absorbed Valley-wide in 2013.
Airport I-10 will offer a modern environment for corporate users and will be fully equipped with state-of-the-art features such as ESFR sprinkler systems, 30- to 32-foot clear heights, cross-dock loading and 140- to 200-foot truck courts.
“About 90 percent of the buildings in the airport submarket were built before 2000 and lack the modern features that today’s users are looking for,” said JLL Executive Vice President Pat Harlan, who serves as an exclusive leasing broker for the project along with JLL Executive Vice President Steve Sayre, JLL Associate Kyle Westfall and JLL Managing Director Mark Detmer. “Airport I-10 delivers those benefits at a central location—a site that is truly at ‘main-and-main’ for industrial real estate.”
“Users are looking for space in the 50,000- to 300,000-square-foot range and there simply isn’t the product to accommodate that demand,” said Harlan.

JLL 21410 Deer Valley, WEB

JLL Brokers $17M Meritex Entry into Phoenix Industrial Market

Meritex announced today its entry into the Phoenix market with the acquisition of a two-building industrial portfolio totaling 193,366 SF. The Class-A properties are located at 21410 and 21415 N. 15th Ln. in Deer Valley, Ariz.

“We are excited about the addition of the Deer Valley properties to our portfolio and our entry into the Phoenix market,” commented Dan Williams, chief investment officer for Meritex in Minneapolis. “The acquisition of these assets complements our investment strategy of entering into markets that provide opportunity for growth, expansion and diversification of our industrial portfolio. Meritex continues to seek additional investment opportunities in the Phoenix market.”  JLL managing directors Tony Lydon and Pat Harlan represented Meritex in the transaction, which closed on March 7.

Meritex has selected Metro Commercial Properties to continue management of the properties.  “We look forward to working with Metro Commercial Properties,” commented Arvid Povilaitis, chief operating officer of Meritex.  “The properties are located in the thriving Deer Valley submarket and have a proven track record of consistent demand. The properties are currently 97% occupied by 10 tenants including a recent tenant expansion of nearly 15,000 SF.”  John Pompay of Cassidy Turley has been retained as the listing agent for the properties.

7200 West Buckeye Rd, JLL

JLL Brokers $26.25M Deal of Industrial Property

Phoenix industrial absorption rates may have hiccupped mid year, but investors are not deterred, as illustrated by the sale of 7200 W. Buckeye Rd. in southwest Phoenix. Jones Lang LaSalle’s Capital Markets experts facilitated the sale on behalf of the owner this week. 7200 West Buckeye Road Industrial Investors, LLC purchased the 400,000 SF industrial property for $26.25M.

Jones Lang LaSalle Managing Directors Mark Detmer and Bo Mills represented the buyer and the seller.

Located on Buckeye Road within minutes of Interstate 10, 7200 Buckeye Road is 100 percent leased through 2017 to national credit tenant, Home Depot U.S.A., Inc. The building was built in 2009 and includes state-of-the-art features such as 32’ clear height, ESFR sprinklers, cross dock loading, concrete truck courts and trailer storage.

“This industrial project competes toe-to-toe with the best assets in the Valley,” said Detmer. “As our industrial market continues to strengthen, this property—like so many others in Phoenix—will deliver on its upside potential through rent growth, tenant retention and steadily rising values.”

According to JLL research, industrial vacancy levels in southwest Phoenix are almost 10 percent lower than they were two years ago, with more than 10 MSF of requirements still actively touring the market for space. As of September, the firm’s quarterly Phoenix Industrial Market Report shows the southwest Phoenix warehouse/distribution inventory at 15.6 percent total vacancy and average total asking rents of $0.92 per-square-foot. This compares to an overall Valley warehouse/distribution vacancy rate of 12.7 percent and average asking rents of $0.43 per-square-foot.

FairmontCommerceCet

DAUM Completes 83,200 SF Lease in Fairmont Commerce Center

DAUM Commercial Real Estate Services announced that it represented the tenant, MXD Group, in the leasing of the Fairmont Commerce Center, an 83,200 sq. ft. building located at 440-444 W. Fairmont Drive in Tempe.

Steve McKendry, Kirk Jenkins and Trevor McKendry of DAUM’s Phoenix office exclusively represented MXD Group in the transaction.

MXD Group specializes in final mile delivery logistics solutions for North American retail brands across the consumer electronics, furniture and appliance segments.  The business coordinates and executes approximately 2.3 million non-conveyable product deliveries annually utilizing a nationwide network of professional managed and certified independent contractors and agents.  The newly rebranded business is a leader in white glove home delivery and retail replenishment solutions and services.