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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.


Networking with a cause

Last fall, Rachel Luttrell was standing in front of a grill at a Central Arizona Shelter Services (CASS) campus in the midst of monsoon season. She was volunteering at one of NAIOP’s Dream Team barbecues that fed more than 10,000 homeless individuals last year. The grills were having a hard time staying lit, and she recalls the smell of smoke filling her clothes.

“I felt defeated,” Luttrell says. “We grabbed the batch of burgers to refill the serving line and were greeted by volunteers and CASS clients smiling. The smoke smell no longer smelled foul; it smelled delicious! A few clients raised their hands in the air and welcomed the rain on their skin. No frowns, just joy!”

Luttrell, a senior property manager at ACP Property Services and philanthropy chair for NAIOP Arizona’s Developing Leaders Chapter for professionals under the age of 35, says the moment reminded her to be thankful for the food, shelter and support network she has. Developing Leaders hosts five to 10 events a year, including a Halloween costume drive for UMOM, a “Feeding the Homeless” event at CASS and an event that benefits Children’s Cancer Network.

“We realize the importance of strong community in the success of future generations,” Luttrell says.

Most of Developing Leaders’ events, like NAIOP’s Dream Teams, founded in 2013, cap at 30 people. However, Luttrell points out that most networking events that reach much larger groups of NAIOP members can be turned into a philanthropic opportunity (i.e. making admission to an event nonperishable food).

Above: Cushman & Wakefield of Arizona staffers (left to right) Blaine Black, Bonnie Machen, Greg Valladao and Patrick Devine flip burgers on the grills at the Human Services Campus in Phoenix.

Cushman & Wakefield of Arizona staffers (left to right) Blaine Black, Bonnie Machen, Greg Valladao and Patrick Devine flip burgers on the grills at the Human Services Campus in Phoenix.

“It was recognized early on that NAIOP’s members are actively involved in the communities they live and work therefore philanthropy was a natural addition to the existing advocacies. The Developing Leaders felt building relationships occurs best when you are alongside each other, stripped of titles and suites, working together for a common cause.”

Charity is a relatively recent addition to the NAIOP Arizona chapter. In 2008, Megan Creecy-Herman established Developing Leaders’ philanthropy committee, which pre-dates NAIOP Arizona’s own official adoption of charitable efforts in 2010.

Legacy Capital Advisors Principal Keaton Merrell points out that the chapter has engaged in philanthropic events over the years, but didn’t make it a part of annual programming until four years ago. In that time, the chapter has raised about $150,000 for charitable causes through its annual Crawfish Boil benefiting Ryan House and has served about 23,000 meals to homeless individuals. In 2013, NAIOP established Dream Teams, groups of 30 volunteers comprised of about 10 people from three firms, who get together once a month to barbecue burgers and hot dogs for the homeless.

In 2013, NAIOP Arizona fed more than 10,000 homeless people as member firms volunteered on 12 Friday afternoons. Given the name “Dream Teams,” NAIOP Arizona members this year have fed almost 3,000 homeless people.

In 2013, NAIOP Arizona fed more than 10,000 homeless people as member firms volunteered on 12 Friday afternoons. Given the name “Dream Teams,” NAIOP Arizona members this year have fed almost 3,000 homeless people.

“It is always great to see a Dream Team with volunteers who have never done it before and see them team up to feed 800 homeless people,” Merrell says. “Seeing this massive line of people that you are feeding is very gratifying. People that show up for the first time literally had no idea they would be affecting that many people.”

There’s literally a quarter-mile-long line of homeless, says Chuck Vogel, senior vice president of real estate joint ventures and dispositions at American Realty Capital Properties, Inc.
“Until you go down [to 12th and Madison avenues] and do it the first time, you don’t even get it,” he says.

Just wrapping up its first year, word has spread and there’s a waiting list to get assigned to a Dream Team. Currently, there are more volunteers than space to feed the homeless. Registration costs about $75 per volunteer.

“It’s funny,” Vogel says. “We send a follow-up email with photos, and we get phone calls from people saying, ‘Hey we want to go, too.’ It’s almost a competition. They see who has participated. It’s more about who isn’t on that list. Not who is on it.”

Stop 1: Hayden Ferry Lakeside III

Ticket To Ride: NAIOP Arizona Tempe Tour

The NAIOP bus tour is kicking back into gear this fall with plans to roll through the largest hub for Valley development — downtown Tempe. Tour trollies will cycle through stops at Marina Heights, Hayden Ferry Lakeside and Liberty Center at Rio Salado, where participants may network and meet the sites’ respective developers.

“The biggest catalyst to starting the bus tour concept again is the number of exciting projects that are underway,” says Parkway Properties Vice President and Managing Director Matt Mooney.

“Everyone in our industry experienced the challenges of the Great Recession, so to now have the Valley, and specifically Tempe, exemplifying such strong development in certain segments is worth seeing. Also, many of the major developments underway in Tempe are NAIOP member projects and this bus tour is a great opportunity to showcase the development prowess and expertise of NAIOP’s leading development firms.”

It’s also a way for members and non-members to meet with the developers of the respective projects.

“We wanted to feature Tempe as it is one of the strongest performing submarkets across all of the western United States, and these projects were chosen specifically because of their proximity and size,” says Mooney. “Marina Heights is the largest office development in Arizona history, Liberty Center is already two buildings into what will ultimately be a mixed-use park of more than 1MSF, and Hayden Ferry III is the first mid-high rise multi-tenant office building in this cycle.”

NAIOP’s end goal, Mooney says, is to give members insight into how and why the projects on the tour came together, what they will be and the trends to which they speak.

Where: Tempe Center for the Arts

When: Thursday, Oct. 23, 2014

Tickets: $50 for members, $100 for non-members (includes cocktails and hors d’oeuvres)

Stop 1: Hayden Ferry Lakeside III

Stop 1: Hayden Ferry Lakeside III

Stop 1: Hayden Ferry Lakeside III
Developer: Parkway Properties General Contractor: Ryan Companies US, Inc.
Architect: DAVIS
Location: Tempe, Ariz.
Size: 311,505 SF (including parking garage)
Brokerage Firm: CBRE
Value: $42 million
Start/Completion: April 2014 to September 2015
Subcontractors: CECO Concrete, Kovach Building Enclosures, Kearney Electric, Comfort Systems, W.J. Maloney Plumbing

Hayden Ferry Lakeside was the first major development along Tempe Town Lake and precipitated other, more recent developments such as Marina Heights, the new home of State Farm. The boat-shaped, nautical-themed Hayden Ferry Lakeside buildings I and II were completed in 2002 and 2007, respectively. The last phase of the three-building project, HFL III, broke ground in May 2014. It is a 267KSF, 10-story, Class-A office building with one level of below grade parking that ties into an existing parking garage.

Stop 2: Liberty Center at Rio Salado

Stop 2: Liberty Center at Rio Salado

Stop 2: Liberty Center at Rio Salado
Developer: Liberty Property Trust
General Contractor: Wespac Construction
Architect: RSP Architects
Location: 1850 W. Rio Salado Parkway, Tempe, Ariz.
Size: 155,000 SF
Brokerage Firm: CBRE
Value: WND
Start/Completion: December 2013 to September 2015
Subcontractors: Quality Building Maintenance, Speedie & Associates, Hunter Engineering, Arizona Traffic Signal, Buesing Corp., Gunsight Construction, Mister Bugman, Torrent Resources, Desert Services, JJ Sprague of Arizona, The Landscape Broker, Suntec Concrete, Coreslab Structures, Re-Create Companies, Bernies Brass, S&H Steel, E2 Innovations, Fine Line Cabinetry, Rite-Way Thermal, Diversified Roofing, AK&J Sealants, Walters & Wolf, American Direct, Demers Glass, Stucco Renovations of Arizona, Adobe Drywall, Berg Drywall, Wholesale Floors, Adobe Paint, Ganado Painting & Wallcovering, Trademark Visual, Partitions & Accessories, Thyssen Krupp Elevators, Ryan Mechanical, RCI Systems, Alpine Mechanical, DP Electric, Simplex Grinnell, Arizona Control Specialist, Cookson Door Sales, U.S. Mobile Communications, Norcon Industries, Standard Restaurant Equipment, Mountain States Drapery
At full build-out, Liberty Center at Rio Salado is a 1MSF mixed-use project at the northwest corner of Rio Salado Parkway and Priest Drive. The 100-acre property will focus on high-performance buildings with a sustainable design built to achieve LEED Silver certification. Designed to accommodate the businesses of today, the project features a 6/1,000 parking ratio and is just minutes from the downtown Tempe entertainment district and Sky Harbor Airport.

Stop 3: Marina Heights

Stop 3: Marina Heights

Stop 3: Marina Heights
Developer: Sunbelt Holdings / Ryan Companies US, Inc.
General Contractor: Ryan Companies US, Inc.
Architect: DAVIS
Location: Tempe, Ariz.
Size: 2,095,000 GSF
Brokerage Firm: Phoenix Commercial Advisors (Retail)
Value: $600 million
Start/Completion: 2013 to est. 2017
Subcontractors: Buesing, Suntec Concrete, Walters & Wolf, Delta Diversified, Harder Mechanical, HACI, Sun Valley Masonry, Brothers Masonry, Sturgeon Electric, Jencco, Kovach, Otis Elevator, Olympic West, Aero Automatic, Alliance Fire Protection, Berg Drywall, Adobe Drywall, Custom Roofing, Progressive Roofing, Red Pont, Speedie, CTS, Meade Engineering, Kraemer Consultants, EME, Design Element

This project is the new hub office campus of State Farm, a Midwestern insurance company. The LEED Silver design concept covers an area of approximately 20 acres and includes five office towers of varying heights; three to four stand-alone retail buildings; and two below grade parking garage levels.

Approximately 40KSF of retail amenities will complement the transit-oriented development and include food service, coffee shops, restaurants, business services and fitness facilities.
The site will also feature a 10-acre lakeside plaza, which will be open to the public. The total project will consist of approximately 2,040,000 gross square feet of office and retail space and 8,600 parking spaces.

Arizona Health Care Cuts, AHCCCS

NAIOP Arizona announces opposition to Prop 480

The NAIOP Arizona board of directors has unanimously opposed Prop 480, an item on the Nov. 4 general election ballot that asks Maricopa County voters to approve a $1.4 billion general obligation bond over 27 years for the Maricopa Integrated Health System (MIHS).

If passed, Prop 480 would be the third largest bond issuance in Arizona history, according to the Arizona Tax Research Association (ATRA), the group spearheading the effort to defeat the proposition.

The NAIOP board could have supported a narrower bond request focused more on the behavioral health component and replacement of the Level One Trauma Center and Arizona Burn Center, NAIOP-AZ President Tim Lawless said.

However, it is opposed to the bond issuance, which would pit a taxpayer supported institution against a number of private healthcare systems where there is much duplication of services and excess hospital beds that private payers must support within a relatively small geographic radius of about five miles.

“We are especially concerned about duplication and unfair competition with taxpayer money,” Lawless said. “While the proponents claim there are three discrete funding components, the wording of the ballot proposal seems far more open-ended regarding the purposes the monies can be used.

“The timing of the bond issuance is also troubling as there was a massive property tax shift from residents to businesses during the Great Recession and these same businesses are still struggling to recover,” Lawless added.

From fiscal year 2010 to fiscal year 2014, there was a 30 percent increase in property tax rates for businesses. If the bond passes, a typical small business with assessed valuation of $1 million will be paying $7,800 more over time in property taxes.

“We also believe patience is the watchword as we still are not certain of all the impacts of the Affordable Care Act, which was allegedly created to better meet the needs of the uninsured yet who are cited as the primary reason for the bond,” Lawless said. “Related to this, the state expanded Medicaid insurance to the poor to draw down more federal dollars and there appears to be an equity issue that only Maricopa County residents are being asked to pay for the MIHS services when these same taxpayers already pay $65 million per year.”

The point that proponents make where interest rates are near or at historic lows thereby decreasing overall costs seems valid until it is realized that the total cost of the bond ($935 million is the actual amount) with principal and interest will exceed $1.4 billion over 27 years.

The NAIOP board says it needs the Affordable Care Act provisions to be understood with all of the attendant costs associated with its implementation before Arizona embarks on the bond issuance where a new hospital and multiple clinics financed by taxpayer money are constructed only to compete against private hospital systems in an area that already has excess bed capacity and duplication of services. The costs will be shouldered by the same private payers.

“Our board has also set aside some level of funding for the opposition campaign formed by ATRA,” Lawless said of a $10,000 contribution to be made by NAIOP Arizona to the opposition campaign.

Healthcare Trust of America hires three employees

Healthcare Trust of America, Inc. (NYSE:HTA), has hired Jaime Northam as Senior Vice President, Leasing, Sabrina Nayer as Director of Operations, Midwest Region and Rachael Kimsey as Senior Leasing Associate.

Northam will oversee third-party leasing across HTA’s portfolio, while creating new market strategies and identifying new investment and development opportunities.  Northam brings significant experience in commercial real estate development, leasing and economic development from various nationally recognized firms, including Grubb & Ellis and The Alter Group. Previously, Northam held a position with HTA as Regional Asset Manager and managed leasing, operations and overall performance for HTA’s Midwest portfolio. Prior to coming back to HTA, Northam was the Vice President, Business Development at Greater Phoenix Economic Council where she focused on national business attraction and ensuring the economic growth of the Greater Phoenix Area. Northam also sits on various local and national boards, including NAIOP Commercial Real Estate Development Association’s National Board of Directors.

Sabrina Nayer, HTA

Sabrina Nayer, HTA

Nayer will oversee property management and operations activities of HTA’s Midwest Region, which is comprised of Minnesota, Wisconsin, Michigan, Missouri, Illinois, Indiana and Ohio markets totaling over 2.9 million square feet. This region constitutes over 20 percent of HTA’s total portfolio of 14.6 million square feet, and includes one of HTA’s key markets, Indianapolis, IN. Prior to joining HTA, Nayer was a Senior Property Manager with Transwestern Commercial Services where she oversaw property management and reporting of a 4.5 million square foot portfolio.

Kimsey will assist in marketing and leasing HTA’s portfolio in Arizona. She will be responsible for the management of prospecting, researching market trends, organizing market research and assisting in leasing efforts directly related to HTA’s portfolio of medical office buildings.  Prior to joining HTA, Kimsey was a Brokerage Associate with Cushman & Wakefield of Arizona where she acted as a secondary contact for owner/broker/tenant inquires, created marketing pieces and coordinated marketing events. Kimsey holds a Bachelors of Social Science from Biola University in La Miranda, CA.

“HTA prides itself not only on our high-quality portfolio of on-campus medical office buildings, but also on our first-class team of in-house management and leasing professionals. These three individuals share HTA’s commitment to deliver superior service at competitive rates through a relationship-based management approach. We are excited to welcome Jaime, Sabrina and Rachael to the HTA family as we continue to expand the company in key markets,” said Amanda Houghton, Executive Vice President of Asset Management for HTA.

Commercial Real Estate Market - AZRE Magazine March/April 2011

NAIOP: Commercial real estate strongest since economic recovery

The commercial real estate development industry grew at the strongest pace since the economic recovery began in 2011, according to an annual report on the state of the industry released today by the NAIOP Research Foundation.  The report, entitled “The Economic Impacts of Commercial Real Estate,” determined that the economic impact realized by the development process rose a significant 24.06 percent over the previous year, the largest gain since the market began to recover in 2011. Direct expenditures for 2013 totaled $124 billion, up from $100 billion the year before, and resulted in the following economic contributions to the U.S. economy:

·       Total contribution to U.S. GDP reached $376.35 billion, up from $303.36 billion in 2012;
·       Personal earnings (or wages and salaries paid) totaled $120.02 billion, up from $96.75 billion in 2012; and
·       Jobs supported (a measure of both new and existing jobs) reached 2.81 million in 2013, up from 2.27 million the year before.

The report says that the outlook for the remainder of 2014 and into 2015 is that the figures will continue to rise, with year-over-year growth expected in the range of 8-15 percent.

Commercial real estate development has an immense ripple effect in the economy, providing wages and jobs that quickly roll over into increased consumer spending.

“Commercial development’s economic impact is tremendous; simply put, a healthy development industry is critical to a prosperous U.S. economy,” said Thomas J. Bisacquino, NAIOP president and CEO. “As the uneven pace of the nation’s economic recovery continues, the industry seeks public policy certainty that bolsters investors’ and developers’ confidence. Despite this lack of assurance, we see positive indicators of a rebounding industry, but believe the industry could be more robust.”

Industrial, Warehousing, Office and Retail Show Strong Gains:

·       Industrial development posted a year-over-year gain of 48.5 percent due mainly to groundbreaking of energy-processing facilities.
·       Warehouse construction registered a third strong year of increased expenditures in 2013, gaining 38.1 percent in 2013. This is on top of 2012 growth of 28.4 percent and 2011 growth of 17.8 percent, showing a sustained increase in demand for warehousing space.
·       Office construction expenditures rose for a second year in 2013, up 23.3 percent from 2012.
·       Retail construction expenditures rose modestly for a third year in 2013, up 4.8 percent from 2012.

Operations and Maintenance Surge Even As Building Owners Cut Costs With Energy Efficiencies and New Technologies:

Through increased energy efficiency and advanced technology, building owners cut the average per-square-foot cost of operating building space in the U.S. by 14  cents, from $3.20/square foot to $3.06/square foot. Still, maintaining and operating the existing 43.9 billion square feet of commercial real estate space resulted in $134.3 billion of direct expenditures, and resulted in the following economic contributions to the U.S economy:

·       Total contribution to GDP in 2013 $370.9 billion;
·       Personal earnings (wages and salaries) totaled $116.8 billion; and
·       Jobs supported, 2.9 million.

Top 10 States by Construction Value for Office, Industrial, Warehouse and Retail:

1.     Texas
2.     Louisiana
3.     New York
4.     California
5.     Iowa
6.     Florida
7.     Maryland
8.     Georgia
9.     West Virginia
10.  Oregon

Four new states joined the list: Louisiana at No. 2, Maryland at No. 7; West Virginia at No. 9, and Georgia at No. 10. These states made the top ten list due predominantly to development of highly specialized and expensive energy-related processing facilities.

Illinois, Ohio, Massachusetts and North Carolina dropped off the top 10 list, slipping to Nos. 11, 14, 15 and 18 respectively. The report includes detailed data on commercial real estate development activity in all 50 states, and also ranks the top 10 states specifically according to office, industrial, warehouse and retail categories.

The report is authored by Dr. Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, and funded by the NAIOP Research Foundation.

Where Arizona ranks nationally in terms of value of construction:

>> Office……………………………… 10
>> Industrial………………………… 41
>> Warehouse ……………………… 8
>> Retail/entertainment ……..22

>> Overall..…………………………..22

The Maricopa County Court Tower in Downtown Phoenix exceeds the OEI criteria by more than 25 feet.

NAIOP Arizona urges FAA to retract proposed OEI procedures

The Arizona Chapter of NAIOP has urged the Federal Aviation Administration to retract the proposed One Engine Inoperative (OEI) Procedures in the Obstruction Evaluation Studies published in the Federal Register on April 28.

“While  NAIOP-AZ fully supports the FAA’s role to oversee aviation safety, we oppose this proposed OEI policy, note that it does not address safety, does not contain adequate justification, penalizes unfairly communities surrounding airports by impeding much needed economic development, and lacks rigorous cost-benefit analyses,” Tim Lawless, President of NAIOP Arizona, said in a letter to John Speckin, Airport Obstruction Standards Committee, Region and Center Operations, Office of Finance and Management in Washington, D.C.

The FAA is considering a substantial reduction in the maximum height limit of buildings near U.S. airports to ensure aircraft have clearance to continue an ascent should an engine fail at takeoff. The proposed policy would limit building heights of new commercial projects within 10,000 feet of the end of the runway to no more than 160 feet tall.

NAIOP Arizona is the largest commercial real estate trade association in the state and one of the 10 largest business trade associations in Metro Phoenix. It also represents the economic interests of those who construct commercial office and industrial buildings and advocates for policies that bring high-wage jobs to Arizona.

“We especially have a keen interest around one of the largest airports in the U.S., Sky Harbor International Airport in Phoenix where a number of our members have existing and planned buildings in multiple communities in relatively close proximity to the airport,” Lawless said in the letter. “In short, we are of the belief that if the policy determination outlined recently in the Federal Register is driven by economic considerations, we believe the policy will have a chilling effect on developers constructing new facilities and on firms and tenants who may want to own existing facilities for investment purposes should a facility be close to or exceed the lower height requirements.”

An independent study released  last year by New York-based real estate consulting firm Weitzman Group determined that a new FAA policy would impact existing and future developments around  almost 400 private and public airports across the country. About 4,000 proposed projects would be affected, the study said.

NAIOP Arizona’s letter states the proposed OEI policy would have significant impact on Tempe and Phoenix. According to an article on the Phoenix Business Journal’s website, about 60 projects Valley wide would be affected.

>> In Downtown Phoenix, the recently completed, $341 million Maricopa County Court Tower exceeds the OEI criteria by more than 25 feet, and the recently completed Virginia G. Piper Sports and Fitness Center at the Arizona Bridge to Independent Living would also be grandfathered-in under the policy, unable to add any height with roof-top equipment or signage without a new determination.

>> In Tempe, Zaremba Group’s West 6th apartments comprise two towers that exceed the policy’s limitation by 209 feet at maximum.

“We recommend that the FAA withdraw its proposed OEI policy,” Lawless said in the letter. “This is a proposed solution in search of a problem.  If it intends to move forward with such a fundamental change, the FAA should only so if it has conducted the necessary economic and efficiency analysis that would (a) justify shifting the economic burden from airlines to communities, and (b) justify a change in the underlying rule, with an adequate opportunity for the public to provide meaningful comments on the FAA’s justification for the proposed policy.

“Should the FAA move forward, any OEI policy should, at a minimum, provide for certainty to developers and communities who engage in long-term planning, take into account the impacts and views of all stakeholders – not just in the aviation community, and be subjected to robust legislative rulemaking requirements of the Administrative Procedures Act, including a full cost- benefit and Federalism analysis.”

Comments are due by July 28.

Ryan Companies promotes John Strittmatter to chairman

Ryan Companies US, Inc. CEO Pat Ryan announced today the promotion of longtime SouthWest Division President John Strittmatter to Chairman of the SouthWest Division. Strittmatter opened Ryan’s Phoenix office as its President in 1994 with just two employees.

John Strittmatter1Today the company employs 125 in its Phoenix and San Diego offices and has been responsible for the construction and development of more than 20 million square feet in Arizona and California.

“Ryan has been successful in Arizona and California because of John’s leadership and the relationships he has built and sustained,” said Pat Ryan. “He has maintained an unparalleled commitment to the company, its employees, our customers, our vendors and the community and his reputation is impeccable.”

In addition to his responsibilities as President of Ryan Companies SouthWest Division, Strittmatter has been actively engaged in the community and will continue to do so as Chairman. Currently, he is Chairman of the Brophy College Preparatory Board of Trustees, a Director of the Banner Health Foundation Board and an Advisory Board Member at US Bank in Phoenix. John and his wife, Pat, are also co-chairing the new Banner MD Anderson Cancer Center “Hope Starts Here” campaign.

“We are so grateful for John’s constant support of Brophy, its students, faculty and campus. His service to others is just remarkable,” said Father Eddie Reese, President of Brophy.

“John stepped up to co-chair the “Hope Starts Here” campaign at a critical time in the evolution of our cancer center,” said Andy Kramer Petersen, President and CEO, Banner Health Foundation. “His involvement already has saved lives and will continue to change the lives of cancer patients for decades to come.”

With Strittmatter at the helm, Ryan Companies in Phoenix has received numerous industry awards. In 2013 alone, Ryan Companies was named Owner/Developer of the Year, Firm of the Year and General Contractor of the Year by NAIOP. Ranking Arizona named Ryan Companies Developer of the Year in 2014, Ryan’s 12th year receiving this accolade. Strittmatter was honored with the Best of NAIOP Lifetime Achievement Award in 2010.


CBRE Office Brokerage Team Wins NAIOP Award

A team of brokerage professionals in CBRE’s Phoenix office, Tom Adelson, Jim Fijan, Jerry Roberts and Corey Hawley, were awarded as the Office Broker Team of the Year by the Arizona Chapter of the National Association of Industrial and Office Properties (NAIOP). For Adelson and Fijan, who have worked together since 1983, this marks the 19th time in 24 years they have won this award. Roberts joined the company, and team, in 1988 and Hawley in 2004.

Executive Vice Presidents Adelson, Fijan, Roberts and Senior Associate Hawley are consistently among the top producing teams in CBRE’s Phoenix office. Since the beginning of their careers and partnership at CBRE, the team has been the most productive sales professionals with the greatest number of transactions in the Phoenix office. In 2013, the team completed 140 sale and lease transactions representing more than 3.55 MSF of office product and 2.7 acres of land.

“What’s most unique about this team is our ability to keep evolving over the years,” says Roberts. “Early on we realized that if we all focused on the parts of the business that came most naturally to us and enjoyed we’d be able to cover a lot more ground and touch a lot more clients.”

“Over the past 22 years that formula has worked well, but what is most important is that everyone on the team has our clients’ best interests in mind,” said Fijan. “Although we try not to overlap pursuits, we all know what the other team members are working on and we are constantly exchanging ideas and strategies to ensure our clients get the benefit of our team’s market knowledge and experience as a whole, as well as ensure all of our clients’ expectations are fulfilled. We’re all extremely knowledgeable about the office real estate market, but when you combine our individual skill sets the capabilities we have as a whole are quite impressive.”

Fijan, along with his associate Will Mast, focuses on office investment and land sales and consistently leads the market in transaction volume. Fijan has, thus far in his career, closed 90 million square feet in transactions for a total consideration of $9 billion. Adelson represents occupiers and corporate tenants looking for space in the market or around the world and maintains the status as the preeminent corporate services broker in Arizona and the country. Roberts, along with Hawley, provides landlord leasing services to owners and developers of commercial real estate throughout the greater Phoenix area. In 2013 alone, they leased over 1.6 million square feet and represented 18 different landlords in 48 lease transactions.

“Winning NAIOP’s ‘Best’ award is as much a testament to the high-level performance of the brokerage team as it is their ability to leverage CBRE’s extensive market reach and comprehensive platform of services,” said Craig Henig, senior managing director and Arizona market leader.  “But the big winners are our clients, who benefit from the local market knowledge and industry-specific expertise these individuals, and our company, provide.”

Bill Petsas, WEB

EastGroup Properties’ Bill Petsas Receives NAIOP Award

Bill Petsas, senior vice president at EastGroup Properties, received the Lifetime Achievement Award at the 2014 Best of NAIOP event held at the Arizona Biltmore.

Prior to joining EastGroup in 2000, Petsas was a VP with Prologis where he forged a career in the development, acquisition, leasing and management of industrial real estate. At EastGroup, Petsas oversees 34MSF of industrial space with a total market capitalization in excess of $2.8B.
The Lifetime Achievement Award is presented by the Arizona Chapter Board of Directors to an exemplary individual who has made a significant and positive impact on the office and industrial commercial real estate market in Arizona over a period of no less than 15 years.

It was also a big night for Ryan Companies US, Inc. and Marina Heights – Ryan’s $750M, 2MSF development in Tempe.  Marina Heights won the prestigious Transaction of the Year and Talk of the Town awards.  Ryan Companies was named Owner/Developer of the Year, Firm of the Year, and General Contractor of the Year. Ryan is the owner/co-developer and general contractor for Marina Heights. Sunbelt Holdings is the other co-developer and The DAVIS Experience is the project architect.

Winning top broker awards were Jim Wilson, Cushman & Wakefield of Arizona, Industrial Broker of the Year; Tom Adelson, Jim Fijan, Jerry Roberts and Corey Hawley, CBRE, Office Brokers of the Year; and Mindy Korth, Colliers International, Investment Broker of the Year.

Economic Impact Project of the Year went to Able Engineering – Phoenix-Mesa Gateway Airport. JLL was named Brokerage House of the Year.

The event, organized by NAIOP Arizona, was attended by 900 commercial real estate professionals.

Molly Ryan Carson, WEB

NAIOP-AZ Elects Molly Carson to Board of Directors

The Arizona chapter of NAIOP, the commercial real estate voice for the state, elected Molly Ryan Carson, Vice President of Development with the Ryan Cos., to the 2014 Board of Directors this month.


Carson joins the board leadership of NAIOP Arizona Chapter with a three-year term, after having been an active NAIOP member for more than 5 years.


Chairman Megan Creecy-Herman of Liberty Property Trust said, “Our Board of Directors is made up of a very esteemed group of commercial real estate leaders from throughout the Valley and we are proud to welcome Molly as the newest member of our leadership team.”


With over a decade of experience at Ryan as a developer, Carson offers unique insight into the varied aspects of real estate development. As Vice President of Development, she is responsible for site selection and acquisition, municipal use permits and approvals, design and construction coordination, financial packaging and lease or sale negotiation at Ryan Cos.


Carson brings extensive leadership with other local associations and philanthropic organizations to the existing 18-member board.

Keaton Photo 3.19.14, WEB

Legacy Capital’s Keaton Merrell Named NAIOP Outstanding Chapter President of the Year

Keaton Merrell, co-founder of Legacy Capital Advisors, Phoenix, was recently named Outstanding Chapter President of the Year for the National Association of Industrial and Office Properties (NAIOP) at the Chapter Leadership and Legislative Retreat in Capital Hilton, Washington, D.C.


As part of the 2014 NAIOP Chapter Merit Awards, Merrell was recognized for his 11 years of service and seven continuous years of active leadership with the Arizona NAIOP chapter, having served as program chair, treasurer, Developing Leader mentor, as well as significantly expanding the chapter’s philanthropic efforts. Through Merrell’s efforts, the chapter rallied the efforts of member firms to feed more than 10,000 homeless in Phoenix throughout the year.


He also was active legislatively to promote economic development and job creation and forged coalitions with like-minded organizations to advance the industry and provide greater industry education.


The Outstanding Leadership by a Chapter President award identifies contributions to the local chapter based on chapter growth during their term, new programs and events and legislative knowledge and involvement, as well as their commitment and capabilities as president. “Keaton’s leadership has taken our philanthropic activities to a higher level as he exemplifies giving back to the community.  We greatly appreciate his stellar service on behalf of our trade association and congratulate him for winning this prestigious national award.“ NAIOP Arizona Executive Director Tim Lawless stated.

Next Gen Industrial

Industrial Space Demand Could Approach Record Levels in 2014

A new report released by the NAIOP Research Foundation says that net demand for industrial space could reach 250 million square feet in 2014, surpassing the near-record level of 233 million square feet set in 2013. This significant level of absorption is due to the expected return of housing construction, which requires warehouse space for building materials, appliances and furniture; the continued expansion of e-commerce which shifts goods from retail stock rooms to fulfillment and distribution centers; and the improving economy expected to grow by more than 3 percent.

“Demand for all types of industrial space – warehouse, fulfillment/distribution center, manufacturing and flex – is robust,” said Thomas J. Bisacquino, president and CEO of NAIOP, the Commercial Real Estate Development Association. “An intense increase in e-commerce has steepened the demand for distribution and fulfillment centers, and companies are gobbling up space as a result.”

Study authors, Dr. Hany Guirguis and Dr. Joshua Harris, predict growth will most likely result from the construction and retail trade sectors. Increases in new housing starts, up 18 percent in 2013, will likely continue due to sustained population growth and lack of new housing currently available on the market. Falling unemployment rates and increased growth in the U.S. have enabled families to spend more, fueling gains in retail sales, which set another all-time high in December 2013. The combined forces of these two trends likely will result in continued growth in demand for warehousing and distribution facilities, specifically from the retail trade and housing construction sectors.

Report Highlights Include:

· 2013 industrial net absorption reached a near-record 233 million square feet.
· Fourth quarter 2013 industrial net absorption came in higher than expected at 70 million square feet.
· 2014 quarterly net absorption will range between 60 and 65 million square feet.
· 2015 quarterly net absorption figures will range between 61.5 and 75.2 million square feet, with a mean forecast of 68.8 million square feet.
· As consumers purchase items online versus in person at traditional stores, demand for distribution and fulfillment centers will increase.

“We see the return of housing as a significant part of the economy driving the need for industrial space, as building products and materials need to be warehoused and shipped across the nation to meet local demand. Further, each new housing unit will need to be furnished and will create demand for other household goods, which in turn fuels even more industrial space demand. These are long-term trends and thus partially explain the forecast of strong levels of industrial space absorption,” said Harris.

“While we are encouraged by this positive growth in industrial, it is important to recognize that the same demand isn’t being experienced across the industry,” said Bisacquino. “The commercial real estate industry as a whole has yet to reach its full potential, due to uncertainties about fiscal policy and an unsteady economy.”

Alexandra Loye, GPE, WEB

Alexandra Loye Joins GPE Commercial Advisors

GPE Commercial Advisors welcomed Senior Vice President Alexandra Loye to its brokerage team on Wednesday. Loye brings more than five years of commercial real estate experience throughout the Metro Phoenix area. She specializes in seller, buyer and tenant representation for medical office and office users.

Loye closely tracks the medical office and office market and measures the financial and economic trends affecting the Phoenix market.

Prior to joining GPE, Loye was with NAI Horizon where she worked with clients in the public and private sectors, investors and developers as well as servicers, receivers and REO asset managers. She serves as a committee member on the Developing Leaders Philanthropy Committee of NAIOP (National Association of Industrial and Office Professionals), is involved with AZCREW (Arizona Commercial Real Estate Women) and is a board member for the Epilepsy Foundation of Arizona.

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.


Arizona Business Community Supports HB2111

The undersigned organizations and businesses want to express their strong support for the passage of HB2111 with the floor amendment that will be offered by Senator Steve Yarbrough. This final amendment represents major concessions to address concerns that have been expressed by the city representatives.

This final amendment reflects the cities’ request for a separate online portal for the collection of sales taxes in the 18 non-program cities. In addition, the amendment reflects the cities’ demand to maintain the authority to audit single-location businesses in their city. Lastly, the amendment removes all of the changes to prime contracting tax except for the trade and service contractors.

While the Yarbrough amendment reflects major concessions to the cities that undermine some of the important reforms recommended by the Transaction Privilege (Sales) Tax Simplification Task Force, we believe this final proposal still reflects historic progress that deserves final passage.

The Senator Yarbrough floor amendment will provide for the following:

* Single Point of Administration – the Department of Revenue (DOR) will become the single point of administration and collection of TPT. However, at the request of the cities, there will be a separate online portal for the 18 non-program cities. Despite this concession, the cities remain opposed because they want to continue to require businesses making paper sales tax remissions to pay the state and city separately. Their proposal provides most small businesses no administrative relief from making multiple payments to multiple jurisdictions each month.

* Single and Uniform Audit – DOR will administer a standardized state audit program where all state and city auditors are trained and certified by DOR. Despite major concessions from the business community to allow cities to continue to audit local businesses, the cities continue to push for further changes that will undermine much needed reforms to standardize state and local audits.

* Trade/Service Contracting Reform – Service contractors working directly for an owner to maintain, repair, and replace existing property would pay tax on materials at retail and not be subject to the Prime Contracting Tax. During Task Force deliberations, the cities repeatedly conceded that this area of the prime contracting tax was problematic and should be changed. However, after almost a year of study and discussion, they have offered a change to the taxation of service contractors that provides no administrative relief and couples that change with a request that the state give the cities $80 million from use tax collections.

Arizona’s chaotic and dysfunctional sales tax system has been the subject of considerable controversy at the Capitol for over 30 years. The creation of the Task Force, as well as the appearance for the first time that the cities recognized the need for reform, gave Arizona businesses great hope that this system would finally be reformed. We strongly encourage state policymakers to pass a sales tax reform bill that is grounded in sound tax policy and focuses on reducing the extraordinary compliance costs on Arizona businesses.

Kevin McCarthy, President, Arizona Tax Research Association
Michelle Lind, Chief Executive Officer, Arizona Association of REALTORS
Bas Aja, Executive Vice President, Arizona Cattlemen’s Association
Glenn Hamer, President & CEO, Arizona Chamber of Commerce
Steve Macias, Chairman, Arizona Manufacturer’s Council
Francis McAllister, Chairman, Arizona Mining Association
Courtney LeVinus, Arizona Multihousing Association
Michelle Allen Ahlmer, Executive Director, Arizona Retailers Association
Steve Chucri, President/CEO, Arizona Restaurant Association
Rick Murray, Chief Executive Officer, Arizona Small Business Association
Steve Zylstra, President & CEO, Arizona Technology Council
Greg Turner, Vice President, Senior Tax Council, Council On State Taxation (COST)
Lisa Rigler, President, Small Business Alliance AZ
Todd Sanders, President & CEO, Greater Phoenix Chamber of Commerce
Tom Franz, President, Greater Phoenix Leadership
Connie Wilhelm, President, Home Builders Association of Central Arizona
Tim Lawless, Chapter President, NAIOP
Farrell Quinlan, Arizona State Director, NFIB
Ronald E. Shoopman, President, Southern Arizona Leadership Council
Scot Mussi, President, The Arizona Free Enterprise Club
Matt Beckler, Vice President, Treasurer & Chief Tax Officer, Apollo Group, Inc.
Steve Barela, State & Local Tax Manager, Arizona Public Service
Steve Trussell, Executive Director, Arizona Rock Products Association
Michael DiMaria, Director of Legislative Affairs, CenturyLink, Inc.
Gayle Shanks, Owner, Changing Hands Bookstore
Michelle Bolton, Director of Public Affairs, Cox Communications
Nikki Daly, Owner, Flair! Salons
David Karsten, President, Karsten’s Ace Hardware
Reuben Minkus, Minkus Advertising Specialties
PetSmart, Inc.
Tina Danloe, General Manager, Pima Ace Hardware
Molly Greene, Senior Government Relations Representative, Salt River Project
Les Orchekowsky, President & Co-Owner, Sierra Ace Hardware, Inc.
Ann Seiden, Administrator/Corporate Public Affairs, Southwest Gas Corporation
Joseph Hughes, Director of Government Affairs, U.S. Airways
Walgreens Co.

Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry. The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans.

CBRE - Rusty Kennedy

CBRE's Rusty Kennedy Receives National NAIOP Award

CBRE Senior Associate Rusty Kennedy has been named one of the recipients of NAIOP’s 2012 Developing Leader Award.

The annual award is presented to 13 exceptional young professionals from across the country based on their achievement in their field, as well as their outstanding contribution to the industry and the NAIOP organization.

Kennedy, who began his career at CBRE in 2007, focuses his business on the industrial market. Earlier this year, the Arizona NAIOP chapter recognized him among its Industrial Brokerage Team of the Year and named him its Developing Leader.

Kennedy is also active in industry and community organizations including vice chairperson of NAIOP Arizona’s Developing Leaders Steering Committee, a member of the Council of Supply Chain Management Professionals, Southwest region leader of CBRE’s National Associate Industrial Broker Network, Young Life leader at Camelback High School and a board member of the Junior Golf Association of Arizona.

The developing leaders will receive their awards at a presentation at NAIOP’s national conference, which will be held in October 2012 in Washington, D.C.

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.

Maricopa County Court Tower Garners Awards

Maricopa County Court Tower Garners Awards

Good things come in pairs. The Maricopa County Downtown Court Tower (MCDCT) team, comprised of Gilbane Building Company in association with Ryan Companies US, Inc., can attest to that.

After winning the 2011 Best of NAIOP Economic Project of the Year Award, the MCDCT team also received a RED Award honorable mention in AZRE for Best Public Project. The tower was recognized for outstanding industrial or office economic projects that impact the county and the construction community in a beneficial way.

“The Economic Project of the Year Award is proof of the wisdom of the Maricopa County Board of Supervisors and Department of Public Works,” said Todd McMillen, Gilbane’s project executive.

The 700,000 SF tower opened on Arizona’s 100th birthday, Feb.14, with its long-awaited debut and a dedication by former Supreme Court Justice Sandra Day O’Connor.

Designed by Gould Evans Associates, the tower sits in the heart of Phoenix and houses more than 200 courtrooms. Not only is the tower Maricopa County’s first LEED Silver certified project, it has benefitted the economy through creating more than two million hours for employment opportunities.

Due to infrastructure improvements, and a land exchange between the city and the county, hundreds of thousands of dollars of annual deferred maintenance were omitted. The project created more than 1,600 jobs; 1,200 in the construction trades, 300 in professional, and 100 service jobs in such things as printing, delivering, and other areas.

Over the life of the project, the estimated local payroll benefit will be $110M in taxable income. In addition to local businesses benefiting, the vast majority of the tower was completed using Arizona businesses and Arizona workers, even more proof of the economic impact.

Local materials were purchased whenever possible: Schuff Steel provided the steel and fabrication; Coreslab provided the precast facade.

“This project was a major economic engine for construction in the greater Phoenix area for over three years,” said Steve Jordan, Ryan Companies director of construction. “Not only did it provide for a consistent source of income for many workers and their families, but because the project was paid for in cash, it also saved the citizens of Maricopa County nearly $200 million in financing charges that will never need to be collected in higher taxes.”

Arizona Commercial Real Estate Development

Arizona Ranked No. 5 In Commercial Real Estate Development In 2011

Arizona was ranked No. 5 in 2011 in direct spending in all three phases of development across all categories of commercial real estate, according to a report issued last week by NAIOP.

Arizona’s development accounts for $4.2B in spending and 74,117 jobs supported, up from No. 14 last year. Arizona’s development contributed heavily to 2011 being the first year commercial real estate (office, industrial and retail buildings) has posted gains since the recession, according to NAIOP’s report, How Office, Industrial and Retail Development and Construction Contributed to the U.S. Economy in 2011.

The NAIOP Research Foundation Study:
· Construction spending grew more than 12% from 2010 to 2011;
· 238.3 MSF built in 2011 was 2.5% more than in 2010;
· New projects provided capacity for 610,000 jobs;
· Commercial real estate development and construction contributed $262B to a GDP increase of 13% from 2010

Construction spending on commercial real estate totaled $92.3B, a more than 12% increase over 2010. This spending supported nearly 2 million jobs nationally.

“2011 was a transition year for the U.S. economy and the construction sector,” said the report’s author, economist Stephen S. Fuller, PhD, Dwight Schar Faculty Chair, University Professor and the Director of the Center for Regional Analysis at the George Mason University. “The U.S. economy shifted from a federal stimulus to private-sector driven growth pattern and construction spending grew accordingly.”

In addition to the advances made in 2011, forecasts for 2012 call for project construction spending to increase  and to accelerate further in 2013 and 2014, according to the report.

“For the first time we are seeing across the board increases in this sector,” said Thomas J. Bisacquino, NAIOP president and CEO. “We believe this is the most solid evidence yet of a strengthening recovery.”

The impact of the new spending was felt throughout the nation. The following states posted the highest amounts of direct spending in all three phases of development across all categories of commercial real estate (number in parenthesis refers to that state’s rank in 2010):

1. Texas (Previous rank: 2), $7.9B in spending, 150,102 jobs supported;
2. New York (1), $6.5B in spending, 83,762 jobs supported;
3. West Virginia (48), $5.9B in spending, 100,889 jobs supported;
4. California (3), $4.5B in spending, 70,817 jobs supported;
5. Arizona (14), $4.2B in spending, 74,117 jobs supported;
6. Utah (26), $3.6B in spending, 77,550 jobs supported;
7. Florida (4), $3.4B in spending, 64,970 jobs supported;
8. Illinois (10), $3.0B in spending, 50,136 jobs supported;
9. Massachusetts (21), $3.05B in spending, 41,382 jobs supported;
10. (tie) North Carolina (7), $3.05B in spending, 55,920 jobs supported.

Fountainhead Office Plaza

Fountainhead Office Plaza Earns Best LEED-Certified Development Of 2011

Fountainhead Office Plaza in Tempe, winner of the 2012 RED Award for Best Office Project, has been designated the Best LEED-Certified Development of 2011 by the Arizona Chapter of NAIOP.

The award recognizes the best new LEED development in the state of Arizona based on sustainable design, construction and operation.

NAIOP is a leading organization for developers, owners and related commercial real estate professionals, and provides industry networking, education and public policy advocacy.

KBS Real Estate Investment Trust II (KBS REIT II), a non-traded real estate investment trust based in Newport Beach, Calif., acquired the LEED-certified Fountainhead Office Plaza immediately upon its completion in 2011.

The two-building complex was designed and constructed per exact LEED standards and features an Energy Recovery Ventilator (ERV) that cleans incoming air, protects against pollutants and reduces energy costs.

Situated within the 140-acre master-planned Fountainhead Corporate Park, Fountainhead Office Plaza consists of 6- and 10-story buildings totaling 165,300 and 273,800 SF, respectively. Both buildings are 100 percent occupied through 2023 to the University of Phoenix, the nation’s largest accredited private university.

Developers of the project are USAA Real Estate Company and Metro Commercial Properties; general contractor is Sundt Construction; and architect is DAVIS, which won the 2012 RED Award for Architect of the Year.

Commercial Real Estate Industry - AZRE Magazine September/October 2011

How Legal Issues Will Affect The Commercial Real Estate Industry Recovery, 2012

How Legal Issues Will Affect The Commercial Real Estate Industry Recovery, 2012

Arizona legislators packed the recent regular session with 357 new bills covering everything from food stamps to firearms.

But barely a handful will directly impact the state’s commercial real estate industry in 2012, and even those not significantly, says Greg Harris of Lewis and Roca LLP.

Still, that doesn’t mean the recent doings of Arizona’s state government, whether dictated by seemingly non-real estate focused laws or budget issues, won’t make a difference to the industry in the coming year, Harris and other local legal experts predict.

The few commercial real estate-related bills which did make it through the recent session were aimed at easing or clarifying municipal regulations and procedures that otherwise could hamper new development, Harris says.

SB1525, which was the latest of a series of laws aimed at limiting development impact fees, and SB1598, which attempts to provide some uniformity in permitting procedures among municipalities, are examples he cited.

Snell & Wilmer partner Ron Messerly adds a few more. SB1166 creates a tax exemption for certain commercial lease structures, and SB1474 has the effect of restructuring insurance requirements on multi-housing projects, Messerly says.

But any or all of those are unlikely to make much of an impact, the lawyers said.

Nor is anything monumental blowing in the wind for the next legislative session.

“There is nothing bright and shiny on the horizon that will have a significant impact on the commercial real estate industry,” Messerly says.

And that is good news, adds David Kreutzberg of Squire, Sanders & Dempsey.

“The legislature was so absorbed with budget problems, it took energy from other issues,” he says.

Kreutzberg, who specializes in hotel real estate, says he was especially pleased that certain  laws which were proposed didn’t pass during the previous session.

He noted a chunk of immigration-related bills that were rejected by the legislature or vetoed by the governor.

“SB1070 was a disaster for the hospitality industry,” Kreutzberg says. “I think the legislature got the message that they were doing injury to the state.”

On another positive note, the legislature’s continued efforts to reform the business property tax structure is a hopeful sign, and the abolishment of the Commerce Department and establishment of the new Arizona Commerce Authority is “promising,” he says.

NAIOP Arizona chairman Mike Haenel echoed Kreutzberg’s concern about revising the tax structure to make Arizona attractive to potential new or expanding businesses.

Haenel says job generators will fuel the future of Arizona’s commercial real estate industry, and HB2001 may have more of an impact on the industry in the coming years than any of the actual real estate-focused bills passed during the recent legislative session.

All those legal issues help establish Arizona’s attractiveness as a place for businesses that might be looking to expand or establish new offices in the state, he said.

A legislative negative, however, is state budget cuts for public schools, Kreutzberg says.

“We’re losing our competitive edge. It’s one of the things that is holding Arizona back,” he says. “The governor and the legislature need to face the fact that it’s a big issue.”

And not all legal issues impacting Arizona’s business growth, and therefore it’s commercial real estate industry, are spawned by the lawmakers.

Harris is concerned less about what the legislature did than what local advocacy groups did or may do to restrict development.

Examples include recent litigation and unfavorable rulings on Phoenix’s incentives for upscale mixed use complex City North, and Glendale’s proposals for saving the Phoenix Coyotes, the centerpiece of the city’s vast commerce cluster.

“Even if you have a project that most think is a good idea, advocacy groups challenging (incentives) may have a chilling effect on investors moving forward,” Harris says.

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For more information about the real estate industry and the firms mentioned in this story, visit the following links:



AZRE Magazine September/October 2011


November Commercial Real Estate Networking Events

November Networking Events

November Networking Events

Western Maricopa Coalition (WESTMARC)

Best of the West Awards
Nov. 3 & 5 p.m.
9495 W. Coyotes Blvd., Glendale

Come join the Western Maricopa Coalition for its 19th annual Best of the West Awards, which celebrates the best of Western Maricopa County, recognizing outstanding contributions to the image, lifestyle and economic development in the county. Business or cocktail attire is required at this event. The reception starts at 5:30 p.m., while the dinner and awards start at 7:00 p.m.


NAIOP Golf Tournament
Nov. 17, 8 a.m.
9998 E. Indian Bend Rd., Scottsdale

Show off your best athletic skills at the NAIOP Golf Tournament at the Talking Stick Golf Resort. The pre-reception and registration begin at 8 a.m., with the shotgun start at 9 a.m. and the post-reception at 3 p.m.

Valley Partnership

Friday Morning Breakfast
Nov. 18, Dec. 16, 7 – 9 a.m.
2901 N. 7th St., Phoenix

Come check out Valley Partnership’s annual holiday wreath raffle at this month’s Friday Morning Breakfast, held at the Phoenix Country Club. Members are strongly encouraged to donate a holiday wreath, which will be presented and raffled off during the event. All proceeds from the raffle tickets will be donated to Maggie’s Place, the charity chosen for this year.

American Subcontractors Association of Arizona

Holiday Open House
Dec. 14, 4 p.m.
4105 N. 20th St., #230, Phoenix

Arizona Commerce Authority

Board Meeting
December 13, 10 a.m.
333 N. Central Ave., Phoenix

ACA focuses on recruitment of quality companies and jobs for Arizona as well as the expansion of established, local companies already here and will hold a board meeting December 13.

AZRE Magazine November/December 2011

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
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
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.