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NAIOP Roundtable 2011 - AZRE Magazine September/October 2011

NAIOP Arizona announces new chairman, board members

Tom Johnston

Tom Johnston

NAIOP Arizona named Tom Johnston of Voit Real Estate Services as its Chairman for 2015. The industry group also named new officers, three new board members and re-nominated an existing board member.
Johnston, Managing Director at Voit, will be joined by new officers Bob Hubbard, Vice Chairman, LBA Realty; Larry Pobuda, Programs Chair, The Opus Group; Tammy Carr, Treasurer, Balfour Beatty; and Laurie Sandau, Secretary, GPE Commercial Advisors.
New board members include Rusty Kennedy, CBRE; Tom Knoell, Desert Troon Companies; and Larry Pobuda. Anthony Lydon of JLL was re-nominated to the board. Officers serve a one-year term; new board members serve a three-year term.
“We’re excited to have our mentorship program taken to a higher level that includes training relevant to each participant’s career path while building relationships with experienced real estate professionals,” Johnston said of one of his goals as chairman. “The creation of our philanthropic foundation will further demonstrate our commitment to giving back to our community.”
Megan Creecy-Herman of Liberty Property Trust served as the 2014 chairman and will remain on the Executive Committee.

Stop 2: Liberty Center at Rio Salado

DriveTime Automotive signs 96KSF lease at Liberty Center

Liberty Property Trust announced the signing of a 96,000 square foot lease with DriveTime Automotive Group for a new corporate headquarters in Liberty Center at Rio Salado in Tempe.  It will be the third class-A office building that Liberty will deliver at its newly launched park since construction began in the fourth quarter of 2013.

“We are excited to continue the development momentum at Liberty Center at Rio Salado by providing an opportunity for DriveTime to expand,” John DiVall, senior vice president and city manager for Liberty’s Arizona region. “When designing Liberty Center at Rio Salado our intent was to design a first-class park to cater to high-profile companies such as DriveTime and we look forward to working with them to create an innovative new corporate headquarters that will reflect their identity.”

“DriveTime selected Liberty Center at Rio Salado not only for the central location and amenities of the Tempe Town Lake area but also for the quality of Liberty Property Trust projects,” said Ernie Garcia, Chairman of the Board of DriveTime.  Garcia continued, “We are confident that the new building that Liberty develops will be key to attracting and retaining over 300 new employees that will join the 250 existing quality employees that will work together under one roof at the new DriveTime Home Offices in Tempe.”

Located at 1720 West Rio Salado Parkway, the building will be designed and constructed to meet the LEED® Silver level of certification for new construction.  The building will feature high performance glazing, 16 foot open ceilings, a large atrium lobby, state-of-the-art telecommunications, LED lighting, and six-per-1,000 parking. Twenty percent of the building’s construction materials will consist of recycled content, including the concrete, steel, aluminum, and drywall. Liberty anticipates the project completion by November 2015.

DriveTime joins other new technology businesses that have moved to or expanded in Tempe’s urban core, adding thousands of new jobs to the valley city. “We are thrilled that DriveTime selected Tempe and Liberty Center and we were happy to work with the Discovery Triangle Development Corporation on this project. DriveTime will bring hundreds of new high-paying technology jobs and young people to our city to add to the quality growth we have seen in recent years,” said Tempe Mayor Mark Mitchell.

The architect for the building is Butler Design Group, the interior architect is PDO (Phoenix Design One)and the general contractor is Wespac Construction.

Fred Darche of Lee & Associates and Tom Adelson of CBRE represented Drive Time and Brand Anderson and Mike Strittmatter of CBRE represented Liberty in the transaction.

The lease agreement with DriveTime also brings Liberty’s year-to-date total leased space in Arizona to more than 600,000 square feet, a record for the region.

Megan Creecy-Herman

Megan Creecy-Herman takes the helm of NAIOP-AZ

Megan Creecy-Herman, Senior Director, Leasing & Development at Liberty Property Trust, has worked in commercial real estate for 11 years, 10 of which have been as a member of NAIOP. In 2013, the 33-year-old was the first female chair of NAIOP Arizona and one of the youngest in the country to hold that position. She was recently asked to sit on the NAIOP National Executive Committee and will once again sit on the National Board of Directors next year.

“I am very proud to be working with such an esteemed group of national leaders from around the country in an effort to continue to strengthen NAIOP nationally,” she says.

You were also the first recipient of NAIOP’s Developing Leaders Award, for which you were a founding chairperson. Was chairwoman a role you sought?

Yes, I was the founding chairperson of the NAIOP Developing Leaders in 2009 and it was really through my leadership of that group that I was selected to serve on the Arizona and national NAIOP boards. My work ethic has always been one of the traits that has set me apart. When I joined NAIOP Arizona’s board of directors in 2010, I didn’t necessarily set out to become chairwoman. I just went to work at giving 110 percent for the organization. It was really through the past chairmen witnessing my dedication and my leadership skills [that I became chairwoman].

A few of the former chairmen were at the helm during trying times. How would you describe the state of the industry during your term?

I’ve been on the Arizona Chapter Board of Directors since 2010, so I remember what it was like for our board and the respective chairmen to navigate such a challenging market. I was the corporate sponsorship chair on the Board of Directors during that period and fundraising was challenging to say the least. Fortunately, the market has continued to recover this year and our membership is feeling optimistic about where the industry is headed. We actually set the record for the most money ever raised through corporate sponsorship this year at $610,000, which blew away the prior record of $525,000 in 2008.

You’ve been credited with a clear agenda for NAIOP’s educational goals. How have those progressed under your term?

Very well. Our signature speaker event featuring Billy Beane from the Oakland A’s was very successful. We’ve also continued our partnership with the ASU Masters in Real Estate Development (MRED) program where we bring industry leaders in to speak to the MRED students on various topics, and we’ve received very positive feedback on that program as well. We have a new education committee this year and they have done a tremendous job in overseeing both of these programs as well as planning our quarterly Market Leaders Series events and also planning our Tempe market tour.

What are other achievements or goals you’ve started working toward as chairwoman?

Strengthening NAIOP’s public relations efforts has also been a goal of mine this year. We have a new communications committee, and they have done a great job executing on our plan to increase NAIOP Arizona’s brand recognition throughout the broader business community while also building stronger ties between NAIOP and all of the local media outlets. Ensuring that NAIOP Arizona’s voice is heard throughout the Phoenix business community is very important to me.

What are two things you find most interesting about the Arizona market right now?

First, that it’s as bifurcated as it is. When it comes to office product, no two submarkets are created equal and that’s extremely evident when looking at Tempe versus the rest of the market. The overall office vacancy rate stands at 17.7 percent and Tempe’s vacancy rate is less than 9 percent and less than 4 percent when it comes to class-A product. It will be interesting to see whether other submarkets can get some momentum going as our recovery continues.

Secondly, the fact that our industrial recovery is becoming more widespread across submarkets and sizes is interesting and encouraging. In 2013, we saw a very pronounced shift in demand from the larger big box tenants who were in the market from the end of 2011 through the beginning of 2013 to the smaller regional tenants in the +/- 15,000 SF to +/- 80,000 SF range, with those users predominantly focused in the airport submarkets and east Valley. During the third quarter, however, we have started to see activity pick up again in the southwest Valley as well, which is a positive indicator for 2015, especially considering that summer is always the slowest time of year in Phoenix.
 
What is NAIOP’s position and effect on the market?

NAIOP Arizona is the preeminent commercial real estate organization in Arizona. The fact that we have the diverse and experienced Board of Directors that we do helps us to continually monitor the pulse of our market and ensure that we’re providing our members with what they need, whether it be education on what’s happening in the market now or providing opportunities to network with the key players who are doing deals.

Liberty Center at Rio Salado is a partnership between Liberty Property Trust and Markham Contracting Co.

Liberty Center at Rio Salado completes first building

From the left to right on the couch: Mayor Mark Mitchell of Tempe, Megan Creecy-Herman (Liberty Property Trust) , John DiVall (Liberty Property Trust), Andrew Ching (City of Tempe). From left to right back row: Alex Smith (City of Tempe), Shannon Selby (City of Tempe), and Ryan Levesque (City of Tempe).

From the left to right on the couch: Mayor Mark Mitchell of Tempe, Megan Creecy-Herman (Liberty Property Trust) , John DiVall (Liberty Property Trust), Andrew Ching (City of Tempe). From left to right back row: Alex Smith (City of Tempe), Shannon Selby (City of Tempe), and Ryan Levesque (City of Tempe).

Liberty Property Trust announced that it has completed the construction of its 155,000 square foot Class A office building, located at 1850 W. Rio Salado Parkway in Tempe.  The building opening marks Liberty’s first of up to potentially 11 buildings planned at Liberty Center at Rio Salado, and officially launches the innovative mixed-use business park.

 

Liberty also welcomes WageWorks, the first tenant in the brand new state-of-the art sustainable building. WageWorks is occupying the first floor of the building and the second floor of approximately 78,000 square feet is still available for lease.

 

“This has been a very exciting project for us and we have been looking forward to the official opening of Liberty Center at Rio Salado,” said John DiVall, senior vice president and city manager for Liberty’s Arizona region. “We have long believed that the live-work-play concept of the park will be of tremendous appeal to prospective companies looking to enhance their employees overall work environment.”

 

The building features energy-efficient glazing, a minimum ten-foot ceiling height, an elegant open lobby, teak-stone throughout the interior and exterior of the building, state-of-the-art telecommunications and fiber optics, and six-per-1,000 parking. Twenty percent of the building’s construction materials consist of recycled content, including the concrete, steel, carpet, ceiling tiles and similar materials. The building also features a 10kw solar panel array.

 

The architect for the building is RSP Architects, the general contractor is Wespac Construction, and the civil

engineer is Wood/Patel.

 

In addition to the building’s official opening, now on display at the entrance to the park on Rio Salado Parkway are three unique Agave Torch sculptures, ranging in size from 13’, 15’ and 17’, which were designed and created by local artist and well-known sculptor Kevin S. Berry. The base of each torch is reminiscent of saguaro cacti and the baskets of each torch pay tribute to the Hohokam Indian tribe. The blue-green glass in the base of each torch represents the water from the Salt River on which the project is located and all three sculptures are internally illuminated at night.

 

The company celebrated the opening of its building at a broker event held last night. In attendance at the event were top brokers from the area, in addition to several local representatives from the city including Tempe Mayor Mark Mitchell and Tempe City Council members Robin Arredondo-Savage, Kolby Granville and Corey Woods. Liberty Property Trust’s John DiVall, senior vice president and city manager, Megan Creecy-Herman, senior director of leasing and development, and Jay Ohanesian, senior project manager were joined by Jim Lutz, senior vice president of development for Liberty Property Trust (nationally) and the rest of the Arizona Liberty Property Trust team at the evening’s event.

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.

Liberty Center at Rio Salado, a Class A LEED Silver office development in Tempe.

Ground breaks on second building at Liberty Center at Rio Salado

Liberty Property Trust will break ground this week on its second building at its new park, Liberty Center at Rio Salado in Tempe. Located at 1910 W. Rio Salado Parkway, Building Two will be a two-story, 156,030 square foot Class A office building. The project is designed to achieve LEED® Silver certification and the total investment is approximately $33 million.

“Leasing interest in Liberty Center at Rio Salado remains high, and we are excited to continue that momentum with this new building,” said John DiVall, senior vice president at Liberty Property Trust. “Beginning construction of Building Two on the heels of Building One (currently under development) will allow us to meet anticipated demand by delivering more Class A office space with structured parking at the right time in the market. Additionally, we will also be completing the park’s infrastructure and common area amenities.”

Last quarter, Liberty announced that it had signed a lease for the 76,162 square foot first floor of Building One.  The second floor of 78,000 square feet remains available for lease.

In total the park will offer more than one million square feet of office, industrial and flex space. Buildings One and Two are part of Phase I, which when complete will include seven office and one industrial building. Phase II, which will be located across Priest Drive, is slated to include a hotel, retail and additional office buildings.

The architect for building two is RSP Architects, the general contractor is Westpac Construction, and the civil engineer is Wood/Patel.

In 2012, Liberty Property Trust was selected by the City of Tempe as the developer for the 100 acre site located at Priest Road and Rio Salado Parkway. Liberty Center at Rio Salado is centrally located in the heart of the Phoenix Metropolitan Area, offers unparalleled visibility from Arizona Route 143 and Red Mountain Loop 202, and is within minutes of Sky Harbor International Airport and Arizona State University. The location is less than five miles from the company’s fully leased 1.2 million square foot business park Liberty Cotton Center.

Liberty Center at Rio Salado, a Class A LEED Silver office development in Tempe.

Liberty Property Trust Closes Seven Deals in Arizona in the First Quarter 2014

Liberty Property Trust today announced it has closed seven lease agreements totaling approximately 425,000 square feet during a very strong first quarter of 2014.

“We are extremely pleased to announce this record level of lease transactions in Arizona,” said John DiVall, senior vice president at Liberty. “Our high volume of activity includes new leases and tenant renewals, both of which speak to the quality of our customer service as well as to the product we have available in the market.  We sense both office and industrial markets continuing to recover and we are very optimistic about moving forward in the Phoenix market as we continue to expand.”

The quarter was marked by three new leases and four renewals. New leases in the region include:

•    Power-One Renewable Energy Solutions, which signed a new lease for 105,542 square feet at Liberty Sky Harbor Center, located at 2626 S. 7th Street. The agreement brings the complex, which reopened last May after a complete renovation and rebranding, to 100% occupancy.

•   WageWorks Inc., which signed a new lease for 76,162 square feet at 1850 W. Rio Salado Parkway, which marked the first tenant agreement to be signed at the Liberty Center at Rio Salado, the company’s new Class A LEED® Silver office development.

•   The company also reports that it has signed a new lease for 42,639 square feet at 9801 S. 51st Street in Phoenix.

Notable lease renewals in the region include:

•   Veracity Logistics, which has signed a lease renewal for 74,124 square feet at 8313 W. Pierce Street in Tolleson. The company has been a Liberty tenant since 2011.

The Source Bakery, which has signed a lease renewal for 62,194 square feet at Liberty Tolleson Center. Located at 8601 W. Washington Street, the company has been a tenant at the building since 2003.

•   American Beverage Corporation, which has signed a lease renewal for 40,684 square feet at Liberty Sky Harbor, located at 2626 S. 7th Street. The company has been a tenant at the building since 2009.

•   Blood Systems Inc., which has signed a lease renewal for 23,455 square feet at 4405 E. Cotton Center Boulevard in Phoenix.  The company has been a tenant at the building since 2003.

In other news, earlier this quarter Liberty received LEED Silver certification for its newly opened building at 4500 E. Cotton Center Blvd. in Phoenix. The 139,403 square foot Class A two-story office building was built in 2013 and is fully leased to Aetna.

Liberty Sky Harbor Center, which is now at 100% occupancy.

Liberty Sky Harbor Center, which is now at 100% occupancy.

Rio Salado, Liberty Property Trust, WEB

Liberty Property Trust Signs First Tenant at Liberty Center at Rio Salado

Liberty Property Trust has signed a lease with WageWorks Inc. for 76,162 square feet, marking the first tenant agreement to be signed for the company’s Class A office development, Liberty Center at Rio Salado business park in Tempe. Located at 1850 W. Rio Salado Parkway, Building One is a two-story 155,000 square foot development that is designed to achieve LEED® Silver certification, and is slated to come online in October 2014.

“The level of tenant demand for this project is high,” said John DiVall, senior vice president at Liberty Property Trust. “WageWorks is well suited for our new mixed-use business park and its employees will enjoy the contemporary amenities and the live-work-play environment that the park will offer. We look forward to celebrating the opening of their office in Building One later this year.”

“Tempe has been a critical hub for WageWorks and we are excited about expanding our local footprint and moving into the Liberty Center.  As our company continues to grow, this facility will become the new home of the WageWorks Service Center, designed to deliver outstanding service to our employer clients and their participants, and help us recruit and retain happy, healthy and productive employees,” said Joe Jackson, CEO of WageWorks.

WageWorks has leased the entire first floor of Building One, and the second floor comprised of approximately 77,000 square feet is available for lease. Building One is a part of Phase I, which when complete will include seven offices and one industrial building. Phase II, which will be located across Priest Road, is slated to include a hotel, retail and additional office buildings. In total the park will offer more than one million square feet of office, industrial, flex and retail space.

Tim Glenn, Jason Moore, Keith Lammersen and Jim Sadler with JLL represented WageWorks and Megan Creecy-Herman represented Liberty in the transaction.

CBRE to Market Liberty Center at Rio Salado in Tempe

CBRE has been awarded the marketing assignment for the +/- 800,000 SF office portion of Liberty Center at Rio Salado, the ±1 million-square-foot, mixed-used project being developed by Liberty Property Trust. The ±100 acre property will focus on high-performance buildings with a sustainable design at the northwest corner of Rio Salado Parkway and Priest Drive in Tempe, Ariz.

Construction is already underway, with completion of the first speculative building, a two-story 155,000-square-foot, class A office building, slated for mid-year. The building, located at 1850 W. Rio Salado Parkway, is designed to achieve LEED Silver certification. CBRE has begun marketing Building One for lease, as well as other land parcels within the business park for build-to-suit opportunities. The state-of-the-art mixed use development project is expected to pique the interest of major companies looking at metro Phoenix as a place to locate or expand operations, due to its central location, highly educated labor pool and immediate access to Mill Avenue amenities in downtown Tempe.

The currently-under-construction 1850 building at Liberty Center will offer a large block of existing space that will be unmatched in terms of location and quality,” said CBRE’s Brad Anderson, who along with Michael Strittmatter, will head up the marketing team for the project. “There is an increasing shortage of large blocks of quality contiguous space across metro Phoenix. Liberty Property Trust recognizes the need for quality options for users and the development of Liberty Center will help meet that need.”

Liberty Center at Rio Salado is our largest project to date in Arizona, and the selection of CBRE to manage the marketing for the office portion of the park is an exciting step as we get underway,” said John DiVall, senior vice president for Liberty Property Trust’s Arizona region. “This park will provide work environments that will make a difference in the quality of people’s lives, through our commitment to sustainability, as well as through design that promotes productivity and innovation.”

In concert with Building One, Liberty is building a formal entrance as well as installing significant infrastructure to serve the entire park in anticipation of announcing the development of a second building by year’s end. The first building is part of Phase I, which will eventually include seven office buildings and one industrial building. Plans for Phase II, which will be located at the northeast corner of Priest and Rio Salado, include a hotel, retail and additional office buildings. At build-out, Liberty Center at Rio Salado will feature more than one million square feet of space. All buildings will be designed to meet LEED certification.

Megan Creecy

Executive Q-and-A: Megan Creecy-Herman

Megan Creecy-Herman
Senior Director, Leasing & Development, Liberty Property Trust

Years in CRE: 11
Years at company: 1.5

What was it about the industry that attracted you?
The excitement of building a career in an industry where I knew that no two days would be the same. Our industry is dynamic and constantly evolving with the broader economy as companies’ logistics and office needs change and become more sophisticated. It is really the dynamic nature of our industry that first attracted me to commercial real estate, and it has been the excitement of watching our industry evolve that has kept me in the industry for more than 10 years.

How has the industry changed since you started?
I entered the industry in 2003 and to say that things have changed since then would be an understatement. Our industry has evolved in many ways, not only due to the economic downturn we experienced from 2008 to 2011, but also due to changes in the way companies do business. Since the beginning of the last recession in late 2008 we have seen many themes including a flight to quality, tighter lending standards and a sharp decrease in the velocity of new development. With regards to how business has evolved, we continue to see the impact of e-commerce on our industry and how it continues to shrink the footprint of retail big box space. In addition, the needs of e-commerce users are driving the evolution of big box warehouses with a focus on energy efficiency, higher clear heights and more strategically located distribution centers in order to deliver product to the consumer faster. In the office sector, there has been a growing trend toward more open floor plates and increased energy efficiency. These needs are translating into increased productivity, lower build-out cost and higher parking ratios.

Of what professional achievement are you most proud?
I would have to say my Master of Business Administration (MBA), which I received from the University of Arizona. I pursued my MBA through a 20-month accelerated program while working full-time and serving in leadership roles in NAIOP Arizona, NAIOP National and the Junior League of Phoenix. The experience was invaluable.

Liberty Propert Co, Liberty Center

Liberty Property Trust Breaks Ground on Liberty Center at Rio Salado

Liberty Property Trust will today break ground on the first of up to 11 planned buildings at Liberty Center at Rio Salado business park in Tempe. When complete in mid-2014, Building One (1850 W. Rio Salado Parkway) will be a two-story 155,000 square foot Class A office building. The speculative project is designed to achieve LEED Silver certification.

The ceremony will be hosted by William P. Hankowsky, chief executive officer, and John DiVall, senior vice president of Liberty Property Trust with remarks by Tempe Mayor Mark Mitchell.

“Today will mark the start of our largest project to date in Arizona, and we are excited to be getting underway,” said Hankowsky. “Our strategy is to create work environments that can make a difference in the quality of people’s lives. We believe that Liberty Center at Rio Salado – with its sustainable buildings and commitment to amenities such as an outdoor amphitheater and Wi-Fi – will provide a terrific location for creativity, productivity and innovation. This location in Tempe will offer a live-work-play environment.”

In concert with the development of Building One, Liberty will develop the formal entrance to the park near the southwest corner of the intersection of Priest Road and Rio Salado Parkway. Well-known local sculptor and designer Kevin S. Berry is developing an iconic piece for the entrance and several more that will dot the park. Landscaping will feature native plants and the bike and walking paths will link into the City of Tempe bicycle paths.

Liberty is in the process of earthwork and installing infrastructure in anticipation of announcing the development of a sister building by the end of the year. These two buildings are part of Phase I, which when complete will include six office and one industrial building. Phase II, which will be located across the road, is slated to include a hotel, retail and additional office buildings. In total the park will offer more than one million square feet of office, industrial, flex and retail space.

Liberty Propert Co, Liberty Center

Liberty Property Trust Breaks Ground on Liberty Center at Rio Salado

Liberty Property Trust will break ground on the first of up to 11 planned buildings at Liberty Center at Rio Salado business park in Tempe on Monday. When complete in mid-2014, Building One (1850 W. Rio Salado Parkway) will be a two-story 155,000 SF Class-A office building. The speculative project is designed to achieve LEED Silver certification.

The ceremony will be hosted by William P. Hankowsky, chief executive officer, and John DiVall, senior vice president of Liberty Property Trust with remarks by Tempe Mayor Mark Mitchell.

“Today will mark the start of our largest project to date in Arizona, and we are excited to be getting underway,” said Hankowsky. “Our strategy is to create work environments that can make a difference in the quality of people’s lives. We believe that Liberty Center at Rio Salado – with its sustainable buildings and commitment to amenities such as an outdoor amphitheater and Wi-Fi – will provide a terrific location for creativity, productivity and innovation. This location in Tempe will offer a live-work-play environment.” 

In concert with the development of Building One, Liberty will develop the formal entrance to the park near the southwest corner of the intersection of Priest Road and Rio Salado Parkway. Well-known local sculptor and designer Kevin S. Berry is developing an iconic piece for the entrance and several more that will dot the park. Landscaping will feature native plants and the bike and walking paths will link into the City of Tempe bicycle paths.

Liberty is in the process of earthwork and installing infrastructure in anticipation of announcing the development of a sister building by the end of the year. These two buildings are part of Phase I, which when complete will include six office and one industrial building. Phase II, which will be located across the road, is slated to include a hotel, retail and additional office buildings. In total the park will offer more than one million square feet of office, industrial, flex and retail space.

Megan Creecy

Liberty Property Trust’s Megan Creecy-Herman Installed as NAIOP-AZ Chairman

A bit of history was made on Friday, November 22 when the first woman to serve as chairman of the Arizona chapter of NAIOP (National Association of Commercial Real Estate Development), Megan Creecy-Herman of Liberty Property Trust, was sworn in at the organization’s annual board retreat.
“Since the day she joined, Megan has brought a tremendous amount of energy and dynamism to NAIOP-AZ,” said organization president, Tim Lawless. “In 2009 she served as the founding chairperson of our Developing Leaders Group for commercial real estate professionals age 35 and under; in 2010 her peers voted that she be named the first recipient of the NAIOP Arizona Chapter Developing Leaders Award. Her work in developing continuing education, focus on increasing diversity in commercial real estate, and commitment to her profession make her a tremendous asset to NAIOP-AZ and we are excited for her as she begins her term.”
Creecy-Herman takes over with what Lawless calls a “clear agenda” for improving the chapter’s educational opportunities. One of her goals is to bring back a “signature speaker” series; another is to offer programs for CLE credit. She is an accomplished fundraiser who has spearheaded the raising of more than $500,000 to help pay for large-scale NAIOP-AZ networking events.
Creecy-Herman serves as Liberty’s director of leasing and development in Arizona and is responsible for marketing the company’s portfolio and working on existing and future development projects throughout the Valley. Since joining the company in mid-2012, she has been responsible for Liberty’s complete renovation of 2626 S. 7th Street in Phoenix, now known as Liberty Sky Harbor Center; lease transactions totaling more than 350,000 square feet; and assistance with the acquisition of two key properties: a nearly completed 593,600 square foot warehouse currently known as Liberty Logistics Center I, and, in a separate deal, 73 acres of land currently known as Liberty Logistics Center II, both in the highly desirable Southwest Phoenix Industrial submarket.
John DiVall, senior vice president at Liberty Property Trust and a previous NAIOP-AZ chairman noted that “Megan is a consummate professional and brings tremendous insight into what motivates individuals and groups. Her enthusiasm is contagious and it is exciting to contemplate what the organization will be able accomplish during her term as president.”
Before joining Liberty, Creecy-Herman served at EJM Development Co. in Phoenix, where she held various positions in leasing, acquisitions and development. A graduate of Arizona State University, Creecy-Herman earned her Bachelor of Science Degree in Business. She earned her Masters of Business Administration from the University of Arizona.
In addition to serving on the NAIOP Arizona Chapter Board of Directors, she is a past member of the NAIOP Corporate Board of Directors and is an active member of the Junior League of Phoenix, as well as the Arizona State University Real Estate Alumni Club.

Estrella Logistics Center

Liberty Property Trust Acquires One Of Valley's Largest Vacant Warehouses, 73 Acres Of Land

 

Liberty Property Trust finalized two acquisitions in the past few days, purchasing a nearly completed 593,600 SF warehouse — Estrella Logistics Center; and in a separate deal, bought 73 acres of land at Buckeye Logistics Center West.

Both are in the highly desirable Southwest Phoenix Industrial submarket.

“The Southwest Phoenix industrial submarket is poised for explosive growth, and these acquisitions give us two things: the largest contiguous cross-dock industrial space in the market and land on which to develop even more,” said John DiVall, senior vice president & city manager, Liberty Property Trust. “We are very pleased to have two great opportunities by which to expand our presence in this part of the market.”

The industrial building is at 563 S. 63rd Ave. and was purchased from Seefried Properties and USAA. Marc Hertzberg and Anthony Lydon of Jones Lang LaSalle represented the seller and Bo Mills and Mark Detmer of Jones Lang LaSalle represented Liberty Property Trust.

The building will be rebranded as “Liberty Logistics Center I” and marketed to distribution center users who want to expand in or locate to Phoenix.

“We are currently monitoring more than 10 MSF of industrial users who seek space solutions greater than 100,000 SF,” said Anthony Lydon who, with partner Marc Hertzberg, will retain the leasing assignment on the building.

“Southwest Phoenix provides the perfect supply chain nexus for the near-shoring of Mexico and far-shoring of China/India through the ports of Los Angeles and Long Beach. Liberty Logistics Center I will provide the modern amenities that the logistics industry mandates for today’s multi-channel fulfillment needs.”

The sustainable building, designed to meet LEED certification, is a state-of-the-art cross-dock facility that features 32-foot clear heights, a fully gated concrete truck court, 7 points of ingress and egress, R-19 insulation and skylights on 2% of the roof.

“This is a building we would have built ourselves,” DiVall said. “The high quality and sustainable features are very similar to our own products. It is meant for one or two large users. There’s nothing else in the market like it.”

The land purchase is 1.5 miles west of the new building at 71st Ave. and Buckeye Rd. Acquired from The Alter Group, the site is pre-planned to offer more than 1.4 MSF of industrial space across three proposed buildings.

It will also be rebranded, as “Liberty Logistics Center II.” Rob Martensen of Colliers International represented the seller in the transaction.

“Once we reach about 50% occupancy in Liberty Logistics Center I, we plan to begin work on the first building at Liberty Logistics Center II,” DiVall added.

Liberty currently has a presence in the Southwest Phoenix Industrial Submarket, including the 403,321 SF Liberty Tolleson Center at 8591–8601 W. Washington in Tolleson; 227,259 SF at 8313 W. Pierce in Tolleson, and 112 acres of developable land in Goodyear.

In total, the company’s Arizona portfolio now includes 2.658 MSF of industrial and office space and 204 acres of developable land in Phoenix, Southwest Phoenix, Tolleson and Goodyear.

 

8591 W. Washington, Tolleson

Liberty Property Trust Continues Momentum With 3 New Leases In Phoenix, Tolleson

 

Liberty Property Trust announced that it has leased more than 170,000 SF of office and industrial space across three properties since Jan. 1 — one in Phoenix and two in Tolleson.

“We can really feel the momentum in Tolleson, where one of the two leases we signed took a building we bought just a year ago to 100% occupancy,” said John DiVall, senior vice president and city manager, Liberty Property Trust.

“Tenants are seeking value — and also the promise of a ‘step up’ in quality — and locations such as Liberty Tolleson Center in Tolleson and Liberty Cotton Center in Phoenix can deliver those steps.”

The three leases announced include:

>> Bose Corporation has signed a lease for 91,811 SF of industrial space at 8591 W. Washington St. in Tolleson. The company will move into the premises in June, bringing the building to 100% occupancy. Kevin Cosca and Pete Wentis of CBRE represented the tenant. Tony Lydon and Marc Hertzberg of Jones Lang LaSalle served as the listing brokers.

>> Educational Furnishings of Arizona, LLC has signed a new long-term lease for 48,121 SF of industrial space at 8601 W. Washington St. in Tolleson. The company will move into the premises in mid-May. Jeff Conrad and Allen Lowe with Lee & Associates represented the tenant. Tony Lydon and Marc Hertzberg of Jones Lang LaSalle served as the listing brokers.

>>  Midland Credit Management Inc. has signed a new long-term lease for 31,096 SF of office space at 4405 E. Cotton Center Blvd., in Phoenix. The company will move into the premises in June, which will bring Liberty Cotton Center to 100% occupancy. Ryan Bartos and Mitch Clawson with Cushman & Wakefield represented the tenant, and Jackie Orcutt, with Cushman & Wakefield and Mark Detmer, Bo Mills, and Karsten Peterson, formerly of Cushman & Wakefield, served as the listing brokers.

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Liberty Property Trust Transforms Sky Harbor Center In Phoenix

 

Liberty Property Trust this week announced the grand reopening and rebranding of 2626 S. 7th St., now known as Liberty Sky Harbor Center in Phoenix.

Since acquiring what was a run-down, obsolete warehouse last September, the company has completed a redevelopment of the property and its transformation into a state-of-the-art cross-dock distribution center.

“The Sky Harbor submarket is ripe for this kind of redevelopment because large industrial buildings with ample areas for outdoor storage and parking are rare and in demand,” said John DiVall, senior vice president & city manager, Liberty Property Trust.

“We have a terrific team that was able to look past what was – a dilapidated, outmoded facility – and see what could be, and the result is a modern, accessible and spacious facility that is in the ‘sweet spot’ of what the airport market needs.”

Liberty began redevelopment of Liberty Sky Harbor Center in January and completed the massive project in just four months. The team included Phoenix-based firms Deutsch Architecture and Howard S. Wright Constructors, a Balfour Beatty Company. The listing broker is Bob Crum of Ross Brown Partners in Scottsdale.

The updated and upgraded property now offers 185,834 SF of Class A cross-dock warehouse and distribution space with 67 dock doors, 360-degree truck access and more than eight acres of paved area for outside storage and trailer parking.

Sustainable approaches to the building included the re-use of 85% of existing structures on site, recycling of asphalt, concrete and steel demolished as part of the redevelopment, installation of upgraded radiant insulation with an R-30 value, and the use of low VOC paint. Approximately 105,000 SF of the building is available for immediate lease.

Liberty Sky Harbor Center is located south of I-17 with convenient access to both the I-10 and Loop 202 freeways, just minutes from Sky Harbor Airport.

The property is within a short distance of another recently announced Liberty project, Liberty Center at Rio Salado, a sustainable mixed-use business park on 100 acres to be developed in conjunction with the City of Tempe.

 

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Liberty Property Trust to Begin Redevelopment of Newly Acquired Industrial Building

 

Liberty Property Trust announced it will begin redevelopment and renovation of a newly acquired industrial building at 2626 S. 7th St. in Phoenix.

The property is located within minutes of Phoenix Sky Harbor International Airport and the company has rebranded the property, which it purchased in September, “Liberty Sky Harbor Center.”

Work will begin in January 2013 and is expected to be complete in 2Q 2013.

“The redevelopment of Liberty Sky Harbor Center comes at a time when interest is high in well-located, efficient industrial space,” said John DiVall, senior vice president and city manager for Liberty’s Arizona region.

“This is more than a face lift; it’s a repositioning of the property that will be attractive for potential tenants seeking a cross dock warehouse building with expansive outside area in the Sky Harbor International Airport submarket, which is virtually non-existent today.”

DiVall said he anticipates the work will begin with the demolition of a smaller office building on the east end of the property. That area is slated for an expansive parking area for trailers and outside storage.

New dock doors will be installed along the south side of the building with a new concrete truck court on the south side of the property as well. The existing fencing will be relocated back to the property line on the south and southwest sides of the property and high efficiency exterior site lighting will be added.

Work on the building itself will include the installation of additional dock doors on the south, east and west sides of the building and new asphalt throughout the property. Improvements will also include energy efficiency steps such as a complete roof overlay, new R-11 insulation to be added to the underside of the roof deck, native landscaping for water conservation and the use of low-VOC paint on the interior and exterior.

Liberty purchased the property this fall from Emerik Properties Corp. The seller was represented by Jerry McCormick of CBRE and Liberty was represented by Bob Crum of Ross Brown Partners, who will also have the leasing assignment. The general contractor for the project is Howard S. Wright.

Liberty owns approximately 2 MSF of industrial and office space in Arizona. In addition to Liberty Cotton Center, major holdings include Liberty 303 Business Park in Goodyear, the LEED Gold 8501 E. Raintree Drive in Scottsdale and Liberty Tolleson Center.

rsz_liberty_tech_center

CBRE Completes 46,725 SF Lease at Liberty Tech Center

CBRE completed a lease for Liberty Tech Center, a 46,725 SF warehouse building at 921 S. Park Lane in Tempe.

Bill Bayless and Andrew Brigham of CBRE’s Phoenix office represented the landlord, Malvern, Penn.-based Liberty Property Trust, in negotiating the 10-year lease agreement. The tenant, Sutter’s Mill Specialties Inc. of Tempe was represented by Paul Anton of Elmalon Partners in Scottsdale. The exact financial terms of the transaction were not disclosed.

Sutter’s Mill Specialties manufactures and distributes promotional and advertising products for companies throughout the world. The business, which also has a facility at 2249 W. Fairmont Dr. in Tempe, will expand its local operation when it occupies the property in December 2012.

Liberty Tech Center has 16,000 SF of office space. The balance of the building is air-conditioned manufacturing space with grade-level doors and a double truck well for product loading. The property also has convenient access to the area’s connected freeway system via Interstate 10, which is less than a mile away.

Megan Creecy-Herman

Megan Creecy-Herman Joins Liberty Property Trust

Liberty Property Trust today announced that Megan Creecy-Herman has joined the company as director of leasing and development.

Creecy-Herman will be responsible for marketing the portfolio and working on existing and future development projects throughout the Valley.

Creecy-Herman comes to Liberty from EJM Development Co., where she held various positions in leasing, acquisitions and development. That company specializes in the acquisition of unimproved land and the development and management of commercial/industrial projects in California, Nevada, Arizona, Utah and New Mexico.

“I’m extremely pleased to announce the addition of Megan to our Arizona team,” said John DiVall, senior vice president and city manager, Liberty Property Trust. “I met Megan through some of our mutual NAIOP responsibilities and was very impressed. She will play an integral role in helping me continue to grow our portfolio.”

In 2009, Creecy-Herman was the founding chairperson of NAIOP Arizona’s Developing Leaders Group for commercial real estate professionals age 35 and under. That year she was a recipient of first the NAIOP Arizona Chapter Developing Leaders Award and then the NAIOP National Developing Leaders Award.

In 2010, she became the youngest person elected to the NAIOP Arizona Chapter Board of Directors. She has also served as the co-chair of the NAIOP National Developing Leaders Diversity Task Force.

A graduate of Arizona State University, Creecy-Herman earned her Bachelor of Science Degree in Business.  She recently received her Master’s of Business Administration from the University of Arizona.

Creecy-Herman continues to serve on the NAIOP Arizona Chapter Board of Directors and the NAIOP National Industry Trends Task Force. She is an active member of the Junior League of Phoenix Leadership Team, and the Arizona State University Real Estate Alumni Club.

Liberty Property Trust

Liberty Property Trust To Develop 2-Story Office Building

Liberty Property Trust today announced that it will develop a 140,000 SF, 2-story office building for Aetna Insurance on 12 acres of land at Liberty Cotton Center Business Park.

“Aetna is a valued national Liberty customer and we are pleased to have the opportunity to work together in Arizona,” said John DiVall, senior vice president and city manager for Liberty’s Arizona region. “Liberty Cotton Center remains a highly desirable location for companies doing business in the market. The Aetna project will be our fourth development in the park. It’s been very exciting to watch Cotton Center really fill out and take shape as a major employment center in the area.”

Aetna has signed a long-term lease for the building. Liberty will break ground on the sustainable Class A building – which has been designed to achieve LEED certification – in early August and expects to deliver it in June 2013.

“Phoenix is an attractive place to do business, the center of a dynamic regional economy,” said Tom Kelly, president of Aetna Medicaid.   “We like the Cotton Center location, and the LEED certification is a strong enhancement.  Aetna has a long commitment to sustainability efforts, and the green building design aligns with that broader strategy.”

The building has been designed by Balmer Architectural Group. Wespac Construction will serve as general contractor. Both companies are based in Phoenix. Aetna was represented by Jones Lang LaSalle’s national Corporate Solutions Team, with local representation by John Pierson. Liberty Property Trust was represented by Mark Detmer, Bo Mills, Jackie Orcutt, Karsten Peterson and Dave Seeger of Cushman and Wakefield.

Liberty purchased Cotton Center in 2007 in a deal that included nine buildings and 38 acres of land. The company has developed four buildings in the park, including the one announced today. The master plan includes the potential for one more 100,000 SF building on the remaining seven acres of land.

With the completion of the Aetna building, Liberty Cotton Center Business Park, which is currently 97.5% leased, will offer more than 1.225 MSF of Class A office and flex space. The park is located within the 280-acre master planned Cotton Center business community, five minutes from Sky Harbor International Airport, in the heart of metropolitan Phoenix.

Other key tenants include Freeport McMoran, Caris Diagnostics, Education Management, United Health Care, GE Medical, Shutterfly.com and Progressive Insurance.

Liberty owns 1.9 MSF of industrial and office space in Arizona. In addition to Liberty Cotton Center, major holdings include Liberty 303 Business Park in Goodyear, the LEED Gold 8501 E. Raintree Drive in Scottsdale and Liberty Tolleson Center.

Liberty Property Trust

Liberty Property Trust Buys 3 Buildings In Phoenix And Tolleson

Liberty Property Trust recently purchased three  Class A buildings for its Arizona portfolio: a flex building in Phoenix and two industrial buildings in Tolleson.

“By the close of 2011, our portfolio was nearly 100% leased,” said John DiVall, senior vice president and city manager for Liberty Property Trust’s Arizona region. “We had a number of inquiries from companies – including many in our current portfolio – seeking larger amounts of industrial and flex space, and we anticipate that the acquisition of these properties will be met with enthusiasm in the marketplace.

“Additionally, these acquisitions are consistent with our local strategy of adding well-located assets, at below replacement cost, to our region’s portfolio,” DiVall added.

Liberty Property Trust purchased an empty flex building at 9801 S. 51st St. in Phoenix from GE Capital last month at an investment of approximately $4.3M. The property is a 71,550 SF state-of-the- art call center located just a half-mile from the Interstate 10 freeway at Elliott Road.

On the same day that Liberty Property Trust purchased the building, the company also signed UPS to a new lease for 29,181 SF of space.  This brought occupancy to 41%. UPS has been a Liberty tenant in several regions across the country over the years.

Liberty Property Trust was represented by Karsten Peterson of Cushman Wakefield. The tenant was represented by Steve Corney of Jones Lang LaSalle of Phoenix.

At Ancona Tolleson Center in Tolleson, Liberty Property Trust purchased two industrial buildings from E&V Investments for approximately $17M. The first is a 219,225 SF facility located at 8591 W. Washington St. (above photo) that is 39% occupied. The second, a 184,096 SF building located at 8601 W. Washington St., is 74% occupied.

In this deal, Liberty Property Trust was represented by Mark Hertzberg of Jones Lang LaSalle and the seller was represented by Bob Beardsley of Southwest Commercial Brokerage.

At the close of 2011, Liberty Property Trust also purchased a 46,725 SF industrial flex building at 921 S. Park Lane in Tempe from Hohokam Park, LLC for approximately $2.7M. The property, which was fully occupied at purchase, is now available for lease. Bill Bayless and Andrew Brigham of CBRE represented the seller and have been retained by Liberty Property Trust to lease the building.

Liberty Property Trust owns 1.7 MSF of industrial and office space in Arizona. Major holdings include Cotton Center in Phoenix, Liberty 303 Business Park in Goodyear, the LEED Gold 8501 E. Raintree Dr. in Scottsdale and Ryan West Business Park in Tolleson.

For more information on Liberty Property Trust, visit www.libertyproperty.com

NAIOP Roundtable 2011 - AZRE Magazine September/October 2011

NAIOP Roundtable 2011

NAIOP Roundtable 2011

The commercial real estate industry is clearly recovering. Companies are absorbing vacant space, build-to-suit development is active and abundant capital is pursuing core real estate. The key question remains, however, how do we compare with the other major markets when it comes to job and population growth?
In short, when will the market justify new development and how will the state and our local commercial real estate industry assist in this effort? To be sure, the future remains bright in Arizona but the recovery will last longer before the next boom.

— Mike Haenel


NAIOP Roundtable Participants KeyNAIOP Roundtable - AZRE Magazine September/October 2011

Roundtable Participants

 

1 — SB: Scott Bjerk
President
Bjerk Builders, Inc.

2 — MC: Megan Creecy
Leasing and Development Manager
EJM Development Co.

8 — JD: John DiVall
Senior VP
Liberty Property Trust

MH: Mike Haenel
Executive VP, Industrial Group
Cassidy Turley BRE Commercial
Chairman Profile

6 — TH: Todd Holzer
VP of Development
Ryan Companies US

5 — KM: Keaton Merrell
Principal
Legacy Capital Advisors

7 — BM: Bob Mulhern
Managing Director Greater Phoenix
Colliers International

3 — DW: Deron Webb
Managing Principal
Wentworth Webb & Postal

4 — CW: Clay Wells
Director, Business Development
McShane Construction Co.


Q: What is different in July 2011 in our local commercial real estate industry than a year ago?

BM: The short answer is that the market is stronger, but still burdened by vacancy rates that are high by historical standards, despite being lower than recent peaks. What is decidedly different, however, is that the outlook is considerably brighter than it was a year ago.

Last year at this time, uncertainty was the overriding theme and it plagued the market. The industrial market had posted just one quarter of positive absorption, and it was unclear whether that was a one-time burst in activity or a sign that tenants were more optimistic and the industrial market was beginning to turn a corner. Now we can see that tenant demand for industrial space has been sustained for more than a year, vacancy is tightening, and rents are stabilizing. We are also seeing headline-making announcements from companies such as Amazon and First Solar that not only improve the numbers, but also renew confidence in the market as a whole.

The office market has been slower to bounce back, but it is far more stable today than it was a year ago. A year ago, we were averaging negative net absorption of more than 500,000 SF per quarter, and the vacancy rate was shooting higher. While absorption has been mixed in recent quarters — up one quarter, down the next — the overall vacancy trend is essentially flat. The market hasn’t necessarily started to improve, but it’s no longer in free fall. We’re forecasting slightly positive absorption in the second half of 2011 and then positive absorption of nearly 1 MSF in 2012. We think rents will likely tick lower through the remainder of this year, because the high availability of space will continue to create competition in the marketplace.

MC: Activity is up, but it is still the quintessential “tale of two tenants.” National companies with 200,000 SF+ warehouse requirements are in the market. And, there are definitely more of those types of requirements (including build-to-suits) in the market today than there were last year at this time.

When looking, however, at say deals in the 5,000 SF to 20,000 SF range, there has been an increase in activity, but the regional and local tenants who comprise a large portion of that market segment are still facing a lot of challenges, such as difficulty obtaining financing, and economic uncertainty. These challenges result in a constraint on their ability to expand and the lack of confidence needed to make long term real estate decisions, which is why we are still seeing a number of these tenants in the smaller size ranges wanting only short-term extensions in their current spaces.

TH: I sense that we are now a local real estate industry made up of survivors. The attrition of firms is over for the most part. Those remaining have right sized for this “new normal” that we find ourselves in. Companies in our business have had to make changes in their business plans and doing activities that they did not anticipate 4 to 5 years ago. I think that this transformation has completed where a year ago it was still finding itself.

Q: How would you compare our Metro Phoenix commercial real state market to other major markets throughout the Western U.S.?

BM: At present, the characteristic that best describes the Phoenix commercial real estate market is the vacancy rate, which is among the highest, if not the highest of the major markets in the Western U.S. In the period immediately preceding the recession, development in Phoenix was fairly active, and when the economy cratered and companies slashed payrolls, there was a significant supply/demand imbalance.

The difference between Phoenix and the major California markets — where employment losses were nearly as dramatic as losses here — is that those markets didn’t have nearly as much speculative construction in the pipeline. As a result, vacancies rose in California, but not to the heights that they rose in Phoenix.

The other state that makes for an interesting comparison is Texas, where development has historically been quite active — just like Phoenix. The primary difference between Phoenix and the major Texas markets in the recession and thus far in the recovery is that the Texas markets weren’t hit nearly as hard by job losses during the downturn and the state has led the way with job gains during the recovery.

Looking ahead, the picture brightens significantly. Most forecasts call for Phoenix to rebound favorably once the economic recovery really gains traction nationally. Long-term forecasts call for annual population and employment gains in the 2.5% range, which should be similar to the major Texas markets and far outpace the California markets. This anticipated expansion is the primary source of optimism in the Phoenix market — now we’re just waiting for it to happen.

CW: The Metro Phoenix commercial real estate market has actually fared no worse or better than the other major Western U.S. markets. Retail and office continue to struggle in most markets while industrial vacancies for building over 500,000 SF have started to decrease. Recently a 500,000 SF speculative building broke ground in the Inland Empire and I believe if the economy stays as is we will see a speculative industrial building in Phoenix breaking ground by 3Q 2012. Where the Phoenix market differs from the rest of the Western U.S., with the exception of Las Vegas, is the residential real estate market. Metro Phoenix was too dependent on the residential construction market for creating jobs.

The reason this is so important until we create new jobs to replace these lost jobs, the retail and office sectors will continue to be slow to recover. People have to have a job, which allows them to have diposable income to spend at stores creating a need for new retailers. The same can be said for the office market. Until new companies locate to Metro Phoenix or are created here the need for office space will remain depressed. Most activity we are seeing in the office market are new investors coming to Metro Phoenix and buying distressed properties at a discount. This allows them to quote reduced rents forcing a downward pressure on existing landlords, who must rent space at a loss or lose a tenant. Office markets in some cities that have a more diverse economic base are recovering at a better pace than Metro Phoenix.

MC: While there has been increased activity across the Western U.S., the divergence is in the stage of recovery in primary markets such as the Inland Empire, vs. secondary markets like Phoenix.

The Inland Empire, for example, is one of the strongest industrial markets in the country with vacancy at 6.3%, which is the lowest vacancy rate in 14 quarters. By comparison, Phoenix’s Q2 2011 industrial vacancy rate was 13.9%, which was our 5th consecutive quarterly decline. But, I would say that the steady decline in vacancy we are experiencing here in Phoenix is a positive indicator, and it is only a matter of time before our recovery picks up speed.

Todd Holzer, NAIOP-AZ - AZRE Magazine September/October 2010

NAIOP-AZ Chairman Todd Holzer Provides Leadership At Crucial Time

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AZRE Magazine September/October 2010

NAIOP, AZRE Magazine September/October 2010

NAIOP Roundtable 2010: Q&A With Members of NAIOP

NAIOP Roundtable 2010: Q&A With Members of NAIOP

Members of NAIOP-AZ sat down with AZRE magazine in a roundtable discussion, discussing the state of the local commercial real estate industry.


NAIOP Roundtable 2010NAIOP Roundtable 2010 Participants

NAIOP Roundtable 2010 Participants:

1 — DW: Deron Webb, Managing Principal, Wentworth Webb & Postal5 — BM: Bob Mulhern, Managing Director Greater Phoenix, Colliers International

2 — JB: Jodi Bailey, VP Property Management Services, Transwestern

6 — KR: Kurt Rosene, Senior VP, The Alter Group
3 — WS: William L. Spart, Senior VP & Manager, Middle Market Real Estate, Wells Fargo Bank7 — TH: Todd Holzer, VP of Development, Ryan Companies US
4 — MH: Mike Haenel, Executive VP, Industrial Group, Cassidy Turley/BRE Commercial8 — JD: John DiVall, Senior VP, Liberty Property Trust

Economy

TH: We are more than two years into the so-called “Great Recession.” How much longer will it last? Will Arizona pull out the same time as the rest of the nation? Since the commercial real estate industry is closely tied to the job market, it’s been a bumpy ride.

Q: What is different in July 2010 in our local commercial real estate industry than a year ago?

MH: The two biggest differences today compared to a year ago, are that tenant demand is on the rise and there are limited distressed industrial real estate opportunities available for sale. It’s important to note that, because we have not seen the oversupply of distressed real estate hit the market, values are higher than we thought they would be given the overall market conditions. This has translated into a significant and noticeable increase in tenant demand.

JD: It is marginally better. As part of the Arizona NAIOP, I wish I could say substantially better, but it’s not. There is more activity, but rates are still depressed, and we are now in the summer doldrums. We are clearly experiencing a jobless recovery. With no new construction on the horizon, we should gradually absorb space and improve.

WS: There are more lenders jumping into the market. We are seeing conduit, CMBS, life and other banks. A year ago we did not see much activity.

Q: How would you compare our Metro Phoenix commercial real estate market to other major markets throughout the Western U.S.?

BM: Phoenix’s metro commercial real estate market has been hit harder than most Western cities, with Las Vegas being the exception. At the end of the second quarter Phoenix vacancies for office (29 MSF/22.5%), industrial (41 MSF/17.7%) and retail (28 MSF/13.3%) were all in historically high ranges, and they remain significantly higher than other Western cities such as Denver (6.7% industrial/14.8% office), San Diego (8.7% industrial/16.2% office), and Los Angeles (not including Orange County and the Inland Empire — 5.0% industrial/12.7% office). Most of the basic fundamentals that draw people to the Valley are still in place, but the lack of job growth, coupled with the depressed residential housing market, are continuing to act as detriments to a commercial real estate rebound. Recognizing these realities, it should be noted that multi-family sales, for which purchase financing is available, are very strong, and that foreign investors, especially from Canada, are entering the market and helping create some velocity in the private client sales market.

JB: Phoenix is a very dynamic commercial real estate market with a highly skilled labor force, an abundance of labor because we are a right-to-work state with competitive wages, and reliable, lower cost energy sources for large users. Ultimately, this means that we attract a wide variety of users from semiconductor manufacturers, biotech/life science laboratories, aerospace and Department of Defense manufacturing, as well as back office and data center occupiers of space. Each building occupier has their reasons for choosing Phoenix over other markets, but we find ourselves to be very competitive as compared to other regional markets.

TH: Phoenix is in the infamous Bermuda Triangle of both residential and commercial real estate, which also includes Las Vegas and the Inland Empire of California. Because of the housing market dive, cities in this area went into recession mode before the rest ofthe nation, and the drop in our economy has been greater than most. Los Angeles, San Francisco and Seattle keep their economy above water due to Pacific Rim trade. Denver has energy and high tech, and Salt Lake City was not overbuilt. Texas has fared well due to energy and the George W. Bush presidency. It will be a long and difficult struggle for Metro Phoenix to pull out of the tough times it finds itself in.

Q: How are the boycotts and state public policies affecting our industry?

BM: I have not heard one comment about the boycott in our offices or from any of our clients, which is an indication to me that the boycotts, though serious issues, do not rank high in the commercial real estate priorities of concern. Shrinking rents and occupancies are a much bigger issue these days.

Regarding public policy, the inability of the federal and state governments to implement policies and programs to stimulate job growth is prolonging our recession. There will not be a jobless recovery so, until jobs are created, our industry is continuing to experience high levels of tumult.

Public policy toward banks is also prolonging our recession as the de-leveraging process is being allowed to be spread over time, preventing the painful, but inevitable total market reset necessary to stabilize the real estate market and allow it to begin to create some positive momentum.

TH: The boycotts are affecting the convention and tourist sector, but I do not believe that they have affected the office and industrial markets here in Arizona. Companies choose to come here due to the ease of doing business and quality of life, not due to our state’s policy on immigration. That being said, our state needs to make job creation and business attraction a primary focus. We need the Legislature and the governor’s office to make jobs our No. 1 priority. I suggest a formal jobs bill from our legislative leadership should come forward that includes a lower tax burden on hiring businesses and commercial property owners.

DW: After the initial national “knee jerk” reaction of higher deficit spending and dubious stimulus policy, leaders underestimated the outcry and we did not do a good job of getting the message out nationally. Projects have been stalled and some major players are taking a wait-and-see attitude. Any time there is substantial disturbance, those active in the market cool.