Tag Archives: july-august-2012

Rancho Solana Scottsdale

Education: Rancho Solana Scottsdale Campus

Rancho Solana Scottsdale Campus

Developer: Mindspring

General Contractor: hardison/downey

Architect: Ayers/Saint/Gross

Broker: CBRE

Location: 9180 E. Via de Ventura, Scottsdale

Size: 82,000 SF

A new campus will include space for 700 students (300 middle school; 400 high school), dedicated fine arts spaces, learning commons, media center and a full-size soccer/football field. A 23,000 SF student center will also be part of the project, which will involve more than $10M in improvements. Subcontractors include Arctic Air, Wilson Electric, Pinnacle Plumbing, RCI and Dicken Quality Demolition. Expected completion is 3Q 2012; 4Q 2012 for the student center.

AZRE Magazine July/August 2012

Veterans Affairs Clinic

Healthcare: Veterans Affairs Clinic

Veterans Affairs Clinic

Developer: U.S. Dept. of Veterans Affairs

General Contractor: McShane Construction Co.

Architect: Rees Associates

Location: NEC S. Val Vista Dr. and S. Market St., Gilbert

Size: 60,000 SF

A new, 2-story clinic will replace an existing VA healthcare facility in Mesa. The new outpatient clinic will provide healthcare services to more than 19,000 veterans in Maricopa County and parts of Pinal and Gila counties. The facility will be designed and built to meet LEED Silver standards. Expected completion is 2Q 2014.

AZRE Magazine July/August 2012

Mountain Ranch Medical Commons

Healthcare: Mountain Ranch Medical Commons

Mountain Ranch Medical Commons

Developer: Irgens

General Contractor: Ashworth Construction

Architect: 33 North Architects

Location: Estrella Parkway and Elliot Rd., Goodyear

Size: 18,000 SF

Irgens, Banner Health and Estrella by Newland Communities plan to develop the Class A medical office facility on 5.3 acres of land in Estrella. The single story-structure will offer custom-designed medical space, upscale amenities and a sustainable design. Expected completion is 2Q 2013.

AZRE Magazine July/August 2012

Adelante Mesa

Healthcare: Adelante Mesa

Adelante Mesa

Developer: World Properties

General Contractor: LGE Design Build

Architect: Cawley Architects

Broker: Aaron Kuhl

Location: Dobson and Main, Mesa

Size: 41,000 SF

The $6M medical office building will be located on the East Valley Institute of Technology campus and will be pursuing LEED certification. Expected completion is 3Q 2012.

AZRE Magazine July/August 2012

GoodyTwos Toffee Company

GoodyTwos Toffee Company Is Sweet On Technology

Scottsdale business uses cloud-based iPad app to grow customer base

Who would have thought that a business which handcrafts toffee from scratch daily using local ingredients could be a technological innovator?

On the heels of its recent expansion into a larger space in Scottsdale, adding a full toffee bar and enhancing its product line, Scottsdale-based GoodyTwos Toffee Company has launched an innovative element into its brand: iPad registers and a streamlined back-end portal. Unveiled in April, the new point of sale (POS) system, called ShopKeep, utilizes cloud-based technology and iPads, which allows small businesses to grow more effectively.

GoodyTwos owners and mother-daughter duo, Donna Gabrilson and Stacey Barnes, have recently replaced their bulky cash registers with two sleek white iPads affixed to an acrylic dock, which flips so customers are able to see their order, slide their debit or credit cards and sign their receipt on the touch screen. Since starting the company in 2004 using their original family recipe in their home kitchen, the company’s owners have seen technology advance drastically. So the team decided to utilize the technology available, make a smart change and switch to a Web-based program which would allow them more freedom in their business decisions.

The system is connected to an online portal or app called BackOffice, which automatically updates bookkeeping, sales, graphs, inventory and more while offering a more streamlined approach to the business.

“I can pull up the app on my phone while working remotely and see daily sales, what products are moving and essentially be more effective in our day-to-day operations,” says Barnes, co-owner of GoodyTwos.

The move to the iPads represents GoodyTwos’ dedication to a quality product with an innovative twist.

“The system allows us to show our brand in a new, exciting way,” says Gabrilson. “GoodyTwos has always been about our wholesome products showcased in a modern, fun light and this adds an element of technology to GoodyTwos.”

Not only are the owners enhancing their business using this new POS system, Gabrilson and Barnes are also in the process of completing the Academy for the Advancement of Small, Minority-and Women-owned Enterprises (AAAME) program sponsored by APS. The AAAME is a two-year business-mentoring program which allows selected entrepreneurs the opportunity to attend business training classes, build networks, develop resources and meet with individual advisors to assist them in reaching their next level of business success.

“We hope, and actually know that AAAME has and will continue to provide us with the necessary tools to continue growth in an effective smart way and not just by shooting from the hip,” says Barnes. “In turn it will not only help take your business to the next level of running smarter but also creating more jobs in Arizona and helping the local economy grow.”

SATISFY YOUR SWEET TOOTH

Valley residents can satisfy their sweet cravings and technology itches by visiting GoodyTwos Toffee Company at 6990 E. Shea Blvd. Scottsdale, Monday through Saturday from 11 a.m. to 6 p.m. or order their favorite toffee flavors online at goodytwos.com.

Arizona Business Magazine July/August 2012

Grant Thornton

Women At Grant Thornton Initiative Create An Environment Where Females Can Thrive

Stella(r) Leadership

For Stella Shanovich, an audit partner at Grant Thornton in Phoenix, her team is anything but a Good Ol’ Boys’ network or a Women-Only Club. It’s a group of men and women focused on building a dynamic, talented team.

“However, while inclusivity is key, it is also important to understand women and men are different in the ways we lead, communicate and build relationships,” says Shanovich, who became Grant Thornton’s first female partner in the Phoenix office in 2008. “These differences are neither wrong nor right — just different.”

It is the celebration of these differences that has helped Grant Thornton thrive in the valley over these past eight years.

A chief collaboration is “Women at Grant Thornton.”

The initiative, which Shanovich has headed on both a local and national level, focuses on:

  • Ensuring a culture that enhances retention and recruitment of women;
  • Enhancing personal development in client serving areas;
  • Increasing awareness of women’s successes;
  • Increasing the number of women in leadership roles within the organization.

Shanovich and her team connect this mission statement to one or more of the firm’s strategic drivers, including revenue growth, talent development, operational excellence, client service and branding, when considering an event or program for the initiative. Her team identifies the specific audience for each individual effort — be it females, males, seniors, staff, partners and managers or even newcomers.

The result? Five signature education programs:

  • Centered Leadership, which focuses on developing leaders through the way they think, act and communicate to achieve impact;
  • Executive Presence, which focuses on image in the business world;
  • Networking, which focuses on techniques for building productive and mutually-beneficial relationships;
  • Rainmaking, which focuses on cultivating relationships into business opportunities;
  • Conflict Cure, which focuses on awareness through recognizing one’s conflict style as well as how to constructively defuse conflict.

Shanovich and her team have also participated in, or sponsored, women-in-business panel discussions, negotiation skills training, work-life integration seminars and dress-for-success events.

According to Ralph Nefdt, Grant Thornton’s Phoenix office managing partner, the Women at Grant Thornton program helped senior management truly understand that to develop great leaders, it must develop a culture of flexibility. this realization has led to flexible work policies, back-up dependent care, adoption assistance, paid parental leave and more for all members of the team nationwide.

“Today, half of our leadership roles here in Phoenix are filled by females,” Nefdt says. “But the real power of the Women at Grant Thornton program lies in its ‘people focus,’ not simply its female focus.”

As such, the men at Grant Thornton are regularly invited and encouraged to participate in the various activities/events to enhance their skills as well.

“Arizona businesses deserve the benefit of a team dedicated to leveraging their talents to bring innovation and perspective,” Shanovich says. “We bring our clients collaborative individuals who believe in having a voice and being part of something different.”

For more information on Grant Thornton, visit www.grantthornton.com.

Arizona Business Magazine July/August 2012

Construction Project News - July August 2012

Construction: Project News July/August 2012

BRYCON BUILDING ASSISTED LIVING FACILITY FOR HOPI TRIBE

Brycon Construction is the general contractor and Jarratt Architecture is the architect for the $3.5M, 12,000 SF Hopi Assisted Living Facility in the Upper Village of Moenkopi, southeast of Tuba City. The facility is a 16-bed, masonry and wood new ground up. Brycon, working with the Hopi Assisted Living Facility Task Team, was able to increase the expected fl oor plan area by 3,000 SF and include an on-demand/solar hot-water system. Estimated completion is 4Q 2012.

BRIGNALL GC FOR INDIAN CULTURAL CENTER; RENOVATING 2 ARTS BUILDINGS

Brignall Construction has been selected as general contractor and SmithGroupJJR will provide design services for the 44,000 SF Yavapai-Prescott Indian Cultural Center to be built on the Yavapai- Prescott Indian Reservation. The new cultural center will be located on a 3.5-acre site on the reservation. The building will contain spaces for a museum and cultural education center. Brignall also is renovating Arizona Opera and Ballet Arizona buildings for the City of Phoenix. The opera project, 1636 N. Central Ave., will be completed in two phases. Phase I is the construction of an 8,700 SF rehearsal hall and 3,200 SF storage facility and all site work and improvements. Phase II will completely gut the existing 16,800 SF building to allow for new offices, fi tting rooms, coaching rooms, the costume department and storage. Motley Design Group is the architect. The other project, 2835 E. Washington St., is the renovation of a 52,800 SF warehouse to include a black box theater, three rehearsal studios, the administration department and storage warehouse. Architect is Durkin + Durkin Architects.

D.L. WITHERS, ORCUTT | WINSLOW TEAM UP FOR 2 NEW PHOENIX SCHOOLS

D.L. Withers is general contractor and Orcutt | Winslow is architect for the new M.C. Cash K-8 Elementary School. Th e 105,000 SF campus is being built adjacent to the existing M.C. Cash Elementary School, which will replace the old campus. Once the new campus is open, the old structures will be demolished to make way for new recreation and sports fi elds. Both firms also combined eff orts on the 80,000 SF Painted Rock Academy, Greenway Rd. and Black Canyon Freeway. Th e academy is the second school in the Reid Traditional Schools family. It will have the capacity to serve more than 700 K-8 students. Th e structure will include more than 30 classrooms, a library and a cafeteria. The school is scheduled to open Aug. 13.

DPR CONSTRUCTION PROJECTS INCLUDE NEW OPERATING ROOMS AND CLEAN LAB

DPR Construction was awarded the $3.7M, 7,383 SF Phase 1 GMP (Good Manufacturing Practice) Lab at Caris Life Sciences in Phoenix. Th e fast-track TI project includes a 1,200 SF mezzanine. Lord Aeck Sarent | Van Boerum & Frank Associates is the architect; GF Group is the engineer. In addition, DPR is building two operating rooms — one hybrid and one CVOR — at University Medical Center in Tucson. Shepley Bulfinch and Richardson and Abbott are architects for the $6.5M, 22,600 SF project. Phoenix project subs: UMEC, Wilson Electric, Able Steel, KTI Tile, Ganado Painting and Star Roofing. Tucson project subs: J.B. Steel, RBG Construction, Sun Mechanical and Stark Electric.

REHABILITATION MEDICINE BUILDING RISING AT VA CAMPUS

A $9.5M, 36,000 SF Rehabilitation Medicine Building is currently under construction at the Veterans Affairs campus, 650 E. Indian School Rd., Phoenix. General contractor for the building, developed by the U.S. Dept. of Veterans Affairs, is RCDS Contractors Inc. The architect is Westlake Reed Leskosky. Th e 2-story building will off er a new rehabilitation area to house physical therapy, prosthetics and orthotics departments. Expected completion date of 2Q 2013.

ADOLFSON & PETERSON FAST-TRACKS 4 CHARTER SCHOOLS

Adolfson & Peterson Construction and Schoolhouse Development, LLC completed work on four charter schools in Metro Phoenix that open this upcoming school year – Paideia Academy of South Phoenix, The Odyssey Institute for Advanced and International Studies in Buckeye, and two American Leadership Academy campuses (Mesa and Queen Creek). The four campuses were fast-tracked and completed at the end of June. Details:

  • Paideia Academy: New 47,800 SF preschool, K-6 charter school and family services center to accommodate 850 students at 7777 S. 15th Terrace;
  • The Odyssey Institute for Advanced and International Studies: New 34,900 SF college-preparatory charter school with a 29,000 SF gymnasium;
  • American Leadership Academy Queen Creek Campus (K-6 and 7-12): New 31,350 SF K-6 and 38,500 SF 7-12 charter schools with a 29,000 SF gymnasium;
  • American Leadership Academy Mesa Campus (K-6): New 31,350 SF K-6 charter school.

MCCARTHY AWARDED CONTRACT FOR PHASE III OF CHANDLER WATER PROJECT

The Southwest Region of McCarthy Building Companies was awarded a contract for preconstruction and construction services for the Phase III Airport Water Reclamation Facility Expansion project, 905 E. Queen Creek Rd., in Chandler. Th e project is a 7 MGD expansion that will allow the Airport Water Reclamation Facility to treat up to 22 MGD on a maximum month basis. In 4Q 2009, McCarthy completed construction of the Phase II Chandler Airport Water Reclamation Facility Expansion project. It expanded the facility’s liquid processing from 10 MGD to 15 MGD. Th e anticipated construction schedule of Phase III is June 2012 to June 2014.

SUMMIT BUILDERS NAMED GC FOR MARRIOTT PROPERTY IN TEMPE

Summit Builders is general contractor for the $28M, 173-room Residence Inn by Marriott to be built at 125 E. Fifth St. in Tempe. The developer is Finvarb Group and the architect is LawKingdom Architects of Kansas City, Mo. The hotel in Downtown Tempe will feature guest suites with fully-equipped kitchens. It will offer state-of-the-art amenities, including an outdoor rooftop pool and fire pit with panoramic views of downtown, 3,500 SF of meeting space and 5,700 SF of ground-level retail. Expected completion is 1Q 2014.

MERIT PARTNERS DEVELOPING 260,000 SF WAREHOUSE IN TOLLESON

Merit Partners of Scottsdale broke ground on a 260,000 SF build-to-suit industrial warehouse in Tolleson. Colliers International represented MiTek Industries Inc. in negotiating a 10-year lease agreement for the warehouse at 7890 W. Lincoln St. Nitti Graycor is general contractor and Ware Malcomb is the architect.

Construction: P&Z

CITY OF GOODYEAR

The City of Goodyear has been processing a 2012 revision to its Engineering Design Standards & Policy Manual and its Engineering Standard Details. A draft revision of these standards was completed in 2010 but was never taken through for City Council approval. The current 2012 version is an updated version of the 2010 draft.

The Engineering Department has posted the 2012 version in the City’s “draft documents” web page for the development community to view and to provide comments. In order to keep the process at a manageable size, the document has been broken into groups that will be up for review at different times throughout the year. Review time allotted for each group is 20 business days. Visit: ci.goodyear.az.us/index.aspx?NID=36

CITY OF TEMPE

In accordance with Arizona Revised Statutes, the City of Tempe gave notice of proposed adoptions of, or changes to, city taxes or fees. Th e City adopted its final property tax levy for fiscal year 2012-13 on June 28. Information can be found by contacting the City of Tempe Finance and Technology Department at (480) 350-8350.

CITY OF AVONDALE

Avondale’s new Alarm Ordinance took eff ect on May 1. Residents and businesses are required to register their burglar alarms online with Public Safety Corporation’s CryWolf at crywolf.us/avondaleaz. The new program is aimed at cutting down on false alarm activations in the City along with the amount of time police officers spend responding to false alarms. Under this program residents will not be fined for the first two false alarms that occur within the same year.

CITY OF MARICOPA

The City of Maricopa has joined more than 20,000 communities nationwide that are allowed to purchase federally-backed flood insurance. Th is availability follows the community’s adoption and enforcement of ordinances to reduce flood losses and acceptance by the National Flood Insurance Program (NFIP). Property owners wishing to take advantage of this program should be aware that there is a 30-day waiting period before the flood insurance coverage goes into effect.

Lenders must require borrowers whose properties are in a designated flood hazard area to purchase flood insurance as a condition of receiving a federally backed mortgage loan in accordance with the Federal Disaster Protection Act of 1973.

The P&Z column is compiled by Dave Coble and George Cannataro with Coe & Van Loo Consultants, cvlc.com.

AZRE Magazine July/August 2012

Supplying The Demand

Supplying The Demand

As vacancy rates shrink, new industrial and office developments could break ground in the Valley

Plans for a 600,000 SF spec industrial warehouse in Southwest Phoenix and a 92,000 SF, 2-story office building in Chandler’s Price Corridor are signs that those two property types are making a comeback in Metro Phoenix, some industry experts are cautiously predicting.

In January, California-based Doug Allred Company broke ground on Park Place, the Valley’s first post-recession spec office complex to be built since 2009. In October, The Alter Group breaks ground on a 605,700 SF spec warehouse at the Buckeye Logistics Center.

And according to those in the trenches, the reason could be as simple as supply and demand.

“Developers are responding to the lack of (industrial) supply available in the market by revving up activity, particularly in the Southwest Valley,” says Bob Mulhern, managing director for Colliers International. “By the end of this year, multiple developments totaling approximately 4 MSF are forecast to be under way, with other projects likely to enter the development pipeline in 2013.”

With regard to office, the market is still very weak for that property type, says Clay Wells, director of business for McShane Construction Company. However, he does add that news of the new office building in Chandler is encouraging.

“The street buzz is that they may already have a tenant who will take the entire building,” Wells says. That rumor, in fact, became reality in June when software maker Infusionsoft announced it would move its headquarters from Gilbert to Park Place in Chandler.

“The other real activity is in Tempe where the next tower at Hayden Ferry will come out of the ground when there are enough leases signed, and that could be a while,” Wells adds. “Downtown is the last submarket where both RED (Development) and Colliers (International) are making noises about new towers. A clue there could be the tower crane at CityScape is in the air and the hotel opens in two weeks.”

According to Cushman & Wakefield research, strong absorption levels driven by trailing 12-month job growth through March of 43,200 jobs are positively influencing both industrial and office vacancy and rent levels. Industrial vacancy levels crested in 2009 at 15.9% and currently are near 12%.

Industrial has been very hot over the past year, especially for users looking at 500,000 SF to 1 MSF buildings. While there is one building (it’s in the West Valley) remaining that fits that criteria, there are three to five developers talking about doing a “spec building in the 300,000 to 600,000 SF range that could be expanded to more than 1 MSF,” Wells says.

There is optimism from the brokers as well.

“The developers who have land holdings that we meet with are now busy with construction preparation and plans in response to an emerging warehouse demand, coupled with a thinned out inventory,” says Isy Sonabend, senior vice president at NAI Horizon. “When we see the first warehouse walls being tilted, it will be the leading indicator that our economy is recovering.”

Office vacancy levels spiked in 2010 at 25% and are more slowly inching their way down. Except for “one-off ” projects, it will be 3 to 5 years before the office market witnesses new development, says Chris Toci, executive director, Cushman & Wakefield of Arizona.

Uncertainty will cloud most business decisions for small- to medium-sized companies where 70+% of all jobs are created in this country, says Mark Singerman, Regional Director – Arizona for Rockefeller Group Development Corporation. This will restrain demand for office space until after the presidential and congressional elections, he adds.

“Larger companies will continue their efforts to consolidate or down size to become more efficient to reduce operating overhead,” Singerman says. “They will represent the majority of office demand until smaller companies feel that they can project their costs for at least the next 2-3 years.

“Hopefully, after the elections, enough uncertainty will be removed so businesses can plan and make strategic moves to grow their businesses, regardless of who or which political party wins in November. Business can adapt to almost any set of circumstances, except uncertainty. This freezes everything.”

On the industrial side, Singerman says, changes in consumer buying patterns that include more purchases via the Internet will continue to impact retailer’s capital investment plans.

“It makes sense for national retailers to allocate some of their investment capital to warehouse/distribution facilities to service their e-commerce business,” he says. “Th is has been driving a lot of the industrial demand in the Southwest Valley. I believe this will continue with national companies. But as with office space, the small- to medium-size users of industrial space are afraid to make real estate decisions until the future is less uncertain.”

A lot of what happens in the Valley depends on what happens to supply and demand for industrial buildings in the Inland Empire of California, namely Riverside and San Bernardino counties. If the spec buildings being developed in that market do well, which reports from brokers in that market indicate that they will, that will bode well for the Southwest Valley, which has traditionally been a viable yet less expensive alternative for users looking to service southern California, Arizona and other Southwestern states.

If, however, the Inland Empire struggles to find tenants for all of their spec buildings, that is a good indicator that demand is not strong enough to warrant spec inventory in the Southwest Valley.

“For the rest of this year, I see build-to-suit continuing to dominate industrial development activity in the Phoenix area,” Singerman says. “Long term, spec buildings will return as demand firms up.”

AZRE Magazine July/August 2012

House Calls

House Calls Make A Comeback

Home Visits From Healthcare Professional Might Be A Better And Cheaper Way Of Providing Treatment

Medical care has changed dramatically in the 21st century.

The thought of a medical professional turning up at her patient’s home, medical bag in hand, is an old-fashioned and idyllic idea that most of us thought had seen its day.

Think again.

Medical professionals in the valley are showing patients that house calls might be a better and more cost-effective way of providing treatment, especially for busy business executives, stay-at-home mothers of multiple children, and the elderly who have a difficult time getting out of the house.

“We are cutting out all the excuses people have for not taking care of themselves,” said Shuree K. Oldehoeft-Ohlemann, a physician’s assistant and owner of Arizona Mobile Medicine.

“We take care of busy business executives that don’t want to stop to go to the doctor. We go to their office. We have stay-at-home mothers who don’t want to deal with taking all three kids to the doctor, so we go to their home. We also take care of some older folks who don’t want to have to leave their home.”

Oldehoeft-Ohlemann says the medical professionals with Arizona Mobile Medicine can do everything in a home or office than can be done in a primary care physician’s office.

“There really aren’t any limitations,” said Oldehoeft-Ohlemann, whose company can do everything from blood sugar checks to botox injections. “We’ve tried to cut out every limitation or obstacle. We even carry common prescriptions so you don’t have to go to the pharmacy. We try to make it as convenient as possible so we are a one-stop shop for our patients’ medical needs.”

And in an era of spiraling medical costs, house calls can actually be relatively affordable. Most medical professionals in the valley who make house calls charge around $150-$175 for a house call. Most don’t take insurance.

“What most people like best is the personalized care we are able to give them,” said Megan spears, a nurse practitioner and owner of Arizona House Calls, which offers house calls to treat chronic medical conditions such as heart failure, emphysema, diabetes, high blood pressure, paralysis and others. “For those who are taking care of loved ones, we are able go into the home while they are working to handle medical needs. We almost become part of the family.”

Another big segment for the house-call industry are tourists and winter visitors. To help with their guests’ medical needs, Oldehoeft-Ohlemann is on call for sanctuary on Camelback Mountain Resort and Spa, The Boulders, and Scottsdale Marriott at McDowell Mountains.

“Most of the questions people have,” Oldehoeft-Ohlemann said, “are, ‘Am i going to get the same person each time? Can you be my primary care physician? Do you take credit cards?’ The answer to all those questions is ‘yes.’

“We are bringing back personalized care,” she continued. “We have gotten so far away from that and people get so frustrated when they have to see a different person each time they go to the doctor’s office. The bottom line is that we just want to help people. It’s as simple as that.”

Arizona Business Magazine July/August 2012

Hope for Industrial and Office Markets

Hope On The Horizon For Industrial And Office Markets

As jobs return to Arizona, industry experts predict a brighter future for the industrial and office markets

After 4 to 5 years of being bludgeoned, the Metro Phoenix industrial and office markets appear to be on the mend.

“It has been our belief that in order for the industrial and office segments to return to health, the Metro Phoenix housing market would first need to be firmly entrenched in recovery — and it is,” says Chris Toci, executive director, Cushman & Wakefield of Arizona.

As one of the four states hammered during the subprime housing fiasco, Arizona — specifically the Valley — received more than its share of negative press during the Great Recession. Arizona’s fall from grace was hard as the state witnessed a peak-to-trough decline in the median single-family home price of about 55%.

According to the Arizona Regional Multiple Listing Service (ARMLS), median home prices in Phoenix peaked in June 2006 near $265,000 and hit bottom near $120,000 first in March/April 2009 and then again in late 2010 after the $8,000 new home price stimulus was withdrawn. Th rough 2Q 2012, the median home price is $147,960, 24.9% higher from the lowest point in 2Q 2011.

“The key metrics to indicate a bottoming real estate cycle are one, trend reversal on price, and two, an increased velocity of sale transactions,” Toci says.

With the median home price 25% higher than 2Q 2011 and with annual sales of single family residences approaching, and in some instances exceeding, peak levels in 2005, there are indications to suggest that Arizona has bottomed in the housing market. Continued reduction in housing supply — combined with elevated demand from new home buyers and investors purchasing at deep discounts — have led to new affordability levels which have had the impact of attracting major employers to the Valley, namely American President Lines (APL), Amazon.com, eBay/PayPal, Safelite Auto Glass, Transperfect and Power One.

Both the Metro Phoenix industrial and offi ce markets are the beneficiaries of this employment growth. In 2005, Phoenix was No. 1 in the nation in terms of job growth with 103,800 new jobs added. Three years later, in 2008 and 2009, Phoenix lost nearly 230,000 jobs.

During that time, the industrial market, with a current base inventory of 263 MSF, suffered negative absorption of 2.3 MSF and 2.8 MSF, respectively. Similarly, the office market, with a current base inventory of 78 MSF, suffered negative absorption of 1.1 MSF each year in 2008 and 2009. With 2010 being a transition year, 2011 witnessed 6.1 MSF and 1.1 MSF of positive industrial and office absorption, respectively. 1Q 2012 trends are continuing with nearly 600,000 SF of industrial and 210,000 SF of office absorption, respectively.

“Phoenix is leading the national recovery in housing and commercial development,” says Kurt Rosene, senior vice president for The Alter Group. “The current activity from potential corporate relocations looking at Arizona are at an all-time high. Phoenix is on every site selection list, based upon affordable housing, strong educated employment base, the availability of zoned land, a relatively easy development process and a proactive state government that keeps signing additional economic incentives into law.

“We believe that all of these factors will combine to cause positive job growth in Arizona, maintaining the recovery that has already taken place in the industrial distribution sector,” Rosene adds.

According to Toci, rental rates for the industrial sector are beginning to firm with strong rental increases projected within the next 12 months across many of the submarkets. Office rents in certain submarkets are beginning to firm and will continue to do so in those submarkets with rapidly declining vacancy rates. More peripheral office submarkets will take more time to chew through excess supply levels generated in the last development cycle.

“After nearly five years of ‘chill’ in Phoenix, institutional investors are beginning to lift their restrictions for acquisitions,” Toci says. “As trite as it sounds, blue sky and sunshine will once again prevail and will continue to attract residents from the frozen tundra of the Rust Belt.

“The systemic challenges related to California’s deep budget deficit will serve as a catalyst for future growth in Phoenix and we will once again demonstrate that the Valley of the Sun’s resilience should never be taken lightly.”

Industrial outlook

“Net absorption of industrial space slowed in the first quarter following a 2-year run where tenants moved into a net of more than 12 MSF. The easing pace of absorption was not a function of a retreating demand, however, but rather a function of a lack of available product, particularly among large users.

“Tenant demand for large blocks of space has been driving the local industrial market, and will fuel future development. After peaking at approximately 20% in early 2010, vacancy in industrial buildings 250,000 SF and greater fell below 7% in the first quarter, well below the rate for all industrial properties in the market and nearly identical to levels achieved from 2002-2006.”

— Bob Mulhern, managing director, Colliers International

“The Metro Phoenix industrial market has seen 2+ years of growth as demand among users continues, resulting in declines in vacancy and positive absorption. Large users, 250,000 SF and greater, continue to be active and have fueled the growth in the Southwest Valley. With only three or four viable options in this size range, Phoenix will see both spec and build-to-suit development projects break ground this year. In 2012, and specifically during the second quarter, there has also been renewed interest from mid-size users looking for 100,000 to 200,000 SF of industrial space. Growth among the mid-size user, continued interest from large users, and developers willing to pull the trigger on new development are strong indicators that the Phoenix will continue its positive trend as one of the country’s leading industrial markets.”

— Brad Ahrens, vice president, Cassidy Turley BRE Commercial

“With the banks beginning to loan to owner-occupied small business industrial sites, I predict that smaller industrial spaces will become scarce and the average price will begin to rise. A small business person can now purchase a building with an equal to or lower mortgage payment than lease payment and only put down 10% for an SBA loan.

“This re-entering of the banks into industrial building loans should start to slowly drive up prices.”

— Rex Griswold, VP sales & leasing, Commercial Properties Inc.

Office outlook

“During the first quarter of 2012, the Greater Phoenix office market failed to gain any notable momentum and similar performance is forecast for the remainder of this year. Vacancy ended the quarter at 22.1%, marking the 12th consecutive quarter where the rate was above 20%. While the local economy is showing signs of life, more sustained expansion will be needed to ultimately prompt developers to move new projects into the pipeline. The good news for the office market is the accelerating pace of employment growth in Metro Phoenix. The addition of more than 23,000 workers in the first three months of 2012 was the strongest quarterly growth in six years and forecasts for future expansion were recently revised higher.”

— Bob Mulhern, managing director, Colliers International

“All of the leading indicators — vacancy, rental rates and net absorption — were flat at the end of the first quarter. However, everyone agrees that we are seeing much more tenant activity in the market whether its calls, tours or proposals. Based on this increased first- and second-quarter demand, I believe we will look back at year-end and see significant leasing activity in the third and fourth quarters. Our sense is that the indicators will move from flat to positive as vacancy declines, net absorption increases and rental rates start to improve in the metro Phoenix office market.”

— Tyler Wilson, vice president, Cassidy Turley BRE Commercial

“The office market remains mired at 27% vacancy. After a reasonable 2011, net absorption reverted to negative in 1Q 2012. We continue to be bullish. Long term, however, we need job creation from basic industries to spur expansion and a lowering of the vacancy rates. As long as vacancy stays at this level, there will be downward pressure on rents. We are still surprised at some of the low terms we have been able to negotiate for tenants we represent. “One bright spot is Class A properties. They are leasing up (at the expense of Class B properties) and have been able to tighten their leasing criteria in select areas.

— Craig Coppola, principal, Lee & Associates

“To date, 2012 is showing a lot of positive signs. Tenants are certainly active relative to that of 2010 and 2011. Businesses seem to be gaining confi dence in the market as well as in their own industries and in turn are looking to relocate and expand. Distressed properties are being traded and struggling owners are being replaced with stable, healthy owners that are in a much better position to raise funds for capital and tenant improvements and to sign leases at rates in line with this environment.”

— Justin Horwitz, senior advisor, Sperry Van Ness

“Per square foot sale prices will increase throughout 2012, especially for assets in good locations with 80% occupancy or higher. We will experience cap rate compression due to a scarcity of good assets on the market and the influx of institutional investors that have been priced out of larger/coastal markets.

“Rental rates will remain relatively fl at through 2012 and incentives (free rent, higher fees, etc.) will likely remain unchanged. We should experience rental increases in 2013, as the vacancy for Class A and B spaces begins to fall, and incentives will begin to decrease.

“Over the next 12 months, we will see a handful of build-to-suits and pre-leasing of certain planned developments (in core markets), with limited speculative development taking place.”

— David Carder, senior vice president, CBRE

“The office market is still scraping along the bottom and will remain there until more jobs are created. Companies are taking advantage of this huge buying opportunity to own their space and reduce and control their occupancy costs.”

— Craig R. Trbovich, commercial real estate advisor, CPI

Today’s market

  • We are still experiencing a high number of well known companies searching for large, big box, distribution space in the West Valley. The amount of spaces more than 300,000 SF has severely decreased over the past 2 years leaving the user who is looking with a minimal amount of spaces to choose from. There are currently only 2 options left fora tenant that needs 300,000 SF or more.
  • There are 5-6 well known developers who are in various stages of design for speculative distribution style buildings ranging from 400,000 SF up to 1 MSF. All of these facilities are located in the West Valley.
  • Rental rates remain low in the West Valley but most anticipate a rise in the rates due to the increased volume of activity and the decreased number of functional spaces.
  • There are two build-to-suits underway in the West Valley, Dick’s Sporting Goods for 600,000 SF and TJ Maxx for 1 MSF. There are also a few on hold, a large boot company and a door company.
  • In the East Valley, the sales market remains strong for the owner/user type facilities with 11 buildings being sold of more than 40,000 SF in 2011 and a number of buildings in escrow of the same size range now.
  • Smaller facilities from 5,000 SF to 20,000 SF for sale are difficult to find. The sales prices have dropped but the inventory is also low.
  • The leasing activity in the East Valley is slow for the local and regional companies ranging in size from 5,000 SF to 25,000 SF. Most of these small companies have made it through the economic downturn and are now trying to recover. A large majority of them still rely on the “home-building” industry and as that market slowly returns so will their confidence.
  • Companies in the East Valley that are buying and leasing are in industries including aerospace, nutrition, technology and of course all of the contract work with Intel and its massive construction project in Chandler.
  • Overall, the sales activity for small buildings is up and trending that way. The product is hard to find for those buyers but most buildings that are for sale today have good activity.
  • Overall, the leasing activity for small space remains slow and the large distribution spaces remain robust.

Future market

  • Expect more build-to-suits by local and national contractors. While the market has a number of vacant buildings, the number of quality buildings available for sale is very low.
  • Expect 2-3 developers to break ground on speculative distribution facilities within the next year in the West Valley.
  • Expect to see a slight increase in rental rates in all sectors of the market, distribution, flex and multi-tenant.
  • The sales prices on buildings will increase faster than lease rates and outpace the leasing market.
  • Lenders will remain strict in underwriting, however, the SBA program will stay in place and allow the smaller buyers the ability to buy real estate.
  • Expect institutional investors to pay a premium for institutional grade product, as they are flush with cash and need to place it. Nationally, Phoenix is showing a turnaround and those who did not get in during the last cycle find themselves trying to get in on this cycle at a lower basis.
  • Source: Chris McClurg, principal, Lee & Associates

AZRE Magazine July/August 2012

shopOrganic - AZ Business Magazine July/August 2012

ShopOrganic Provides Natural Products Online

shopOrganic provides health-conscious consumers with natural products online

Cara Silverstein says passion and connection led to the development of an innovative Arizona-based and womenowned business.

“We had all worked closely together at a previous employer,” Silverstein says. “We realized we made a great team and had a complimentary blend of skills to start a business together, so we created a business plan for shopOrganic in early 2008 and launched the website that May.”

shopOrganic — which Silverstein owns with business partners Susan Snedaker and Lisa Mainz — offers organic and natural products to online customers throughout the U.S. and Canada. Products range from groceries and bulk, household and cleaning supplies, to health and beauty, pet products and more.

“We are all passionate supporters of organic agriculture and as more and more shopping shifts to online shopping, we wanted to create a site for customers who are looking for quality organic foods and natural products,” Silverstein explains. “Food choices are so intensely personal and people are realizing that clean, healthy food is a healthy choice. Our goal was to create an e-commerce site that is inviting and easy to use and is packed with reliable product information.”

Silverstein says shopOrganic’s best-selling products are organic ingredients that are the foundation of great meals — olive oil, herbs and spices, sprouted or wild rice and other grains, nuts, seeds and dried fruits. Quantities range in size from one to 50 pounds.

“We have been able to identify two main demographic segments,” Mainz says. “One is the urban customer with high income and education levels from areas such as New York, Phoenix and Chicago. These customers appreciate both high quality organic foods as well as unique gourmet and artisanal products that they can’t find locally. Our other main segment is the rural customer who is interested in a sustainable lifestyle, but has limited local access to organic and natural products.”

Despite launching the business in the midst of the economic downturn, Snedaker says they have been able to grow the business each year and are in the process of revamping the company’s current website to include four distinct stores: shopOrganic, shopNatural, shopGMOfree, and shopGlutenFree.

“We adjusted and responded, and in this economic climate, that’s a real accomplishment,” Snedaker says. “We’ve not only survived, we’ve thrived. We have a strong, loyal and growing customer base. We have the highest quality organic and natural products on the market today and the three of us are still great friends and business partners. That’s what we’re proud of.”

For more information on shopOrganic, visit shopOrganic’s website at shopOrganic.com.

Arizona Business Magazine July/August 2012

Az Business Magazine

AZ Business Magazine July/August 2012

Arizona Business Magazine July/August 2012

HEAR THEM ROAR

Michael GossieThe economic downturn affected almost every business. But consider this: women-owned businesses saw sales increase 95.5 percent and employment grow 46.4 percent from 1997-2012, according to an American Express OPEN research report.

“It’s amazing the inroads women business owners have made … especially in male-dominated industries,” says Carolyn Lefebvre, president and CEO of AutohausAZ.com, who has grown her automotive parts business from annual sales of $1.2 million in 1999 to anticipated 2012 sales of $17 million. “The 1970s sales slogan, ‘You’ve come a long way, baby!’ couldn’t be more appropriate had it been scripted specifically for the meteoric rise of women in business.”

Women-run companies are flourishing in Arizona. There are 139,500 women-owned businesses that employ 148,700 people and generate $22.1 billion in sales.

So it’s an ideal time for an all-women’s issue. Regular departments all feature stories about women business leaders. And to top it off, we unveil our first list of the 50 Influential Women in Arizona Business and five that are sure to be the next generation of leaders.

Enjoy. I guess it’s time for me to put my apron on.

Michael Gossie Signature

Michael Gossie, Managing Editor

Read more articles from this issue on AZNow.Biz.

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Redflex Traffic Systems - Karen Finley

Karen Finley, Redflex Traffic Systems

Karen Finley, President and CEO at Redflex Traffic Systems, shares what it is like to be the CEO of Redflex Traffic Systems and gives advise to women who aspire to have a C-Level managment job.

Are there misconceptions about Redflex?

One of the myths about the photo-enforcement industry is that we are always filming everybody. If you don’t break the law, you don’t get your picture taken. It’s as simple as that. The other thing is that we don’t decide who gets a ticket. It’s up to the police to accept or reject the violation. We just provide a tool for law enforcement.

Video by Cory Bergquist

Redflex’s revenues have increased 20-fold during your tenure. How did you do that?

It’s kind of a halo effect. As you implement a safety program into a community, the community next door is watching. They start talking to colleagues in neighboring communities and it starts to roll. I come out of a service background. We are providing a service to our clients and our focus on customer service has come across to clients. As a company, we have been very successful in winning programs from competitors based on customer service.

What qualities does an effective CEO have?

A lot of CEOs lose track of the fact that it’s the people around them who have helped grow the company. I am somebody who didn’t just land in a top job. I worked my way up. So I understand what it’s like to be the everyday employee. I think that understanding has made me a better leader. It’s important is to have compassion for your staff.

How is working at Redflex Traffic Systems different from other industries you worked in?

I worked in operations in the insurance industry and never had to work with anything political. I didn’t even fully understand how the Legislature worked. In the photo-enforcement industry, there is a lot of politics involved. It’s fun because you get to learn how bills become law and you don’t really get an appreciation of that until you work it every day.

What has been your biggest challenge?

Managing the magnitude of growth — especially in the early days — and making sure we had the right people in the right seats and retaining those people was the biggest challenge. It was a stressful time — the fun kind of stress — but it was a new technology and we were the first to use digital technology, so there was a lot of hand-holding and educating clients on the efficacy of the images. It was a very exciting, but challenging time.

What is your greatest accomplishment?

When I came to Redflex Traffic Systems in 1998, we had three contracts and about 20 employees. Today, we have 262 contracts and have 395 employees. I attribute that growth to the strength of the Redflex family. I am very proud of that.

What advice would you give to women who aspire to have a c-level management job?

Don’t give up. Be open to new new ideas. When I was working at an insurance company 14 years ago, if someone told me I would be where I am today, I wouldn’t have believed them. Finding a good mentor is still the best way to learn. There are a lot of things that come up every day that business school just doesn’t teach you. There is nothing in a textbook that can teach you how to manage through a crisis. But a good mentor can.

If you weren’t doing what you’re doing now, what would you be doing?

If money wasn’t an object, I would do more with my dog rescue, which is something that is very near and dear to me. I would foster more dogs and find more homes for dogs.

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Vital Stats: Karen Finley

  • Promoted to president and CEO of Redflex Traffic Systems in the spring of 2006.
  • Before joining Redflex Traffic Systems, spent 20 years in the insurance industry, most recently as the director of corporate services where she oversaw 200 employees.
  • Earned her bachelor’s degree in business management from the University of Phoenix and her master’s in finance from Western International University.
  • Has a passion for dogs, especially Weimaraners. She dedicates much of her personal time to rescuing dogs and is in the process of setting up a 501c3 with a group of other dog lovers.

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For more information about Redflex Traffic Systems, visit Redflex Traffic Systems’ website at redflex.com

Arizona Business Magazine July/August 2012

July/August 2012 - AZRE Magazine

AZRE Magazine July/August 2012

AZRE Magazine July/August 2012

Looking down on an industry that is finally starting to look up

Peter MadridI flew out of Sky Harbor International Airport recently and my bird’s eye view of construction cranes reaching to the sky around the Valley offered further proof that the industry is making a comeback.

Work is moving along on a new student housing project for ASU students attending school in Downtown Phoenix. Although the Kimpton Palomar Hotel opened in June at CityScape, a remaining crane stands guard, ready to spring back into action. (My guess is that upscale residences could be next).

And as the airplane made a turn to head south, workmen on the ground in Chandler resembled industrious ants at the new Phoenix Premium Outlets next to Wild Horse Pass Hotel & Casino.

These projects are not only crucial to the major general contractors in the state. They are also the lifeblood of the many Arizona subcontractors, some of which are featured in our annual Arizona Builders’ Alliance supplement.

The July/August issue of AZRE also profiles Arizona Commercial Real Estate Women, better known as AZCREW. Formed in 1985, AZCREW “promotes the advancement of professionals in commercial real estate by providing high-level networking opportunities, connections and access to decision-makers within the Phoenix market.” The local chapter also does a wonderful job giving back to the community.

Finally, our annual statewide real estate update focuses on Tucson.

As my return flight began its descent, I challenged the passenger sitting in the window seat across the aisle to a spirited game of “Name That Property Type.” Four points for medical office; 3 for multi-family, 2 for a retail center and 1 for industrial.

I skunked him, 21-0. After all, if the editor of a commercial real estate magazine can’t identify a medical office building or industrial warehouse from the air, who can?

Editors Letter Signature

Peter Madrid, Editor

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