Tag Archives: November-December 2009

Pima Heart - AZRE Magazine November/December 2009

Medical: Pima Heart at RiverWalk

Pima Heart at RiverWalk

Pima Heart - AZRE Magazine November/December 2009Owner: Med Properties
Contractor: Lloyd Construction Co.
Architect: Gansline & Assoc. Architects & Planners
Size: 23,800 SF
Location: River & Campbell roads, Tucson

The $6M, multi-building project began construction in May 2009, and is scheduled to finish March 2010. Pima Heart will occupy 16,000 SF of the development, with the remaining space available for lease. Pima Heart is a cardiology group in Southwest Arizona. Brokerage firm is Oxford Realty Advisors.

TOBY - AZRE Magazine November/December 2009

TOBY ‘09

This year’s BOMA Greater Phoenix TOBY awards were held Aug. 28, 2009. Two local winners of The Office Building of the Year were also International TOBY award winners at BOMA’s annual convention in Philadelphia.

BOMA Greater Phoenix would like to congratulate the local 2009 TOBY award winners.

TOBY - AZRE Magazine November/December 2009Under 100,000 SF
Arcadia Gateway Center
Owned by: Phoenix Seminary Inc.
Managed by: Joel Bell
Real Estate Manager
CB Richard Ellis
TOBY - AZRE Magazine November/December 2009100,000 SF to 249,999 SF
3131 East Camelback
Owned by: KBS Realty Advisors
Managed by: Tawnya Peirce, RPA, LEED AP
Real Estate Manager
CB Richard Ellis
TOBY - AZRE Magazine November/December 2009250,000 SF to 499,999 SF
Great American Tower
Owned by: 3200 North Central
Ventures LLC
Managed by: Susan Engstrom, RPA, FMA
Sr. Real Estate Manager
Tiarna Real Estate Services
TOBY - AZRE Magazine November/December 2009Renovated
Mesa Financial Plaza
Owned by: Mesa Financial
Plaza Investors LLC
Managed by: Marii Covington-Jones, RPA,
LEED AP Real Estate Manager
CB Richard Ellis
TOBY - AZRE Magazine November/December 2009Government
ASU Fulton Center
Owned by: ASU Foundation
Managed by: Janet Atwell
Assistant Property Manager
Lincoln Property Commercial
TOBY - AZRE Magazine November/December 2009Medical
Desert Medical Pavilion
Owned by: Lillibridge Healthcare Services
Managed by: Devona Whorton
Designated Broker
Lillibridge Healthcare
TOBY - AZRE Magazine November/December 2009Earth
Collier Center
Owned by: GE Asset
Managed by: Jami Vallelonga, CPM, RPA,
LEED AP Real Estate Manager
CB Richard Ellis

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AZRE Magazine November/December 2009

Plaza del Lago - AZRE Magazine November/December 2009

Medical: Plaza del Lago, Phase II

Plaza del Lago, Phase II

Plaza del Lago - AZRE Magazine November/December 2009Developer: Bade Companies
Contractor: BCS Development Group
Architect: Barduson Architects
Size: 48,182 SF
Location: NWC Lake Pleasant Pkwy. & Yearling Rd., Peoria

Comprised of 8 buildings, with various condo sizes available, the MOB will finish construction 4Q09. Brokerage firm is Bade Commercial Services Inc.

Relifing - AZRE Magazine November/December 2009

The Cost Of Relifing A Building During The Age Of Environmental Thrift

The Cost Of Relifing A Building During The Age Of Environmental Thrift

Breath of Life – Relifing

Difficult financial times teach us that it is possible to do more with less, but also that doing more with less takes both thought and effort.

In 1965, Adlai Stevenson, then U.S. Ambassador to the United Nations, notably said, “We travel together, passengers on a little space ship, dependent on its vulnerable reserves of air and soil.” This phrase alerted the world to the necessity to preserve Earth’s natural assets and resources. However, it is only in recent times — with the discussion of climate change — that serious attention has been paid widely to the question of the use of scarce natural resources and the effect of that use on the environment. The world has entered an era in which using natural resources sparsely has become critical, perhaps even a cause célèbre — this is The Age of Environmental Thrift.

The construction industry has been making serious efforts to catch up by adopting sustainable design practices represented by the LEED certification system. However, traditionally there has been no systematically adopted, mathematical approach to test whether an existing building could be successfully “relifed” instead of being demolished. Clearly, relifing an existing building saves natural resources — it does more with less.

Life Options

For all building owners — especially those with large sophisticated healthcare facilities such as hospitals, clinics, etc. — it should be natural to start by asking the question, “Can we economically extend the life of our existing building by 5, 10 or 20 years instead of demolishing?”

The difficulty in the past was that there was no simple, definitive, mathematical way to determine a solution to this question. However, when the state of Arizona adopted the concept of studying relifing options through building life extension studies, it broke new ground in managing taxpayer funds. These studies have been conducted on many buildings, including laboratories and state hospital buildings, with good success.

A relifing study determines the “useful life” of a building by analyzing the cost and service life of its various components:

  • structure
  • external cladding
  • internal fit-out
  • building systems

From these components, a life expectancy may be calculated. The study then analyzes and prices recommendations for maintenance, upgrades, renovation and replacement of various building components necessary to extend the building’s life to certain milestones. When the analysis is compared with the cost of building a new structure, owners have a quantitative tool to determine which option will make the best use of their functional and financial resources.

Private sector clients would be well advised to follow the state’s lead. By measuring and analyzing the service life possibilities of each building and relifing those that can be saved, millions of dollars and thousands of cubic yards of natural resources can be saved. With more thought, more can often be done with less.

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AZRE Magazine November/December 2009

Young Professionals - AZRE Magazine November/December 2009

BOMA’s Young Professionals Group Grooms The Next Generation

Leading the Way

“Young professionals cannot afford to sit on the sidelines,” says Jami Vallelonga, a BOMA Greater Phoenix board member. “It has become increasingly important to develop a professional network and get the training and tools needed to advance as a management professional.”

Welcome to the Young Professionals Group

Jami Vallelonga, a real estate manager at CB Richard Ellis, formed the Young Professionals Group (YPG) in January 2009 to offer professionals (age 40 and younger) a forum for interaction and support within the property management industry, and to promote career growth and development.

Marion Donaldson, who co-chairs the Young Professionals Group with BOMA members Colleen LeBlanc and Vallelonga, says, “Our goal is to encourage young leaders to take educational courses and obtain their industry designations, volunteer on BOMA committees, increase community activism and awareness, ultimately fill vital leadership positions in 5 to 10 years, and make sure that BOMA Greater Phoenix remains a viable, effective industry group.”

Donaldson, a 7-year member of BOMA Greater Phoenix, works as a sales and customer service manager for Commercial Service Solutions, a commercial floor care company. With a background in both property management and the services industry, she notes BOMA-YPG is an important group for professionals in both fields.

A subsidiary of BOMA Greater Phoenix, the Young Professionals Group offers the benefits of BOMA membership including:

  • industry networking
  • enhanced educational opportunities
  • career building
  • a powerful voice in the industry

LeBlanc joined BOMA 5 years ago for its network.

“We’ve never had a salesperson work for this company,” she says, referring to ProGuard Security Services, a company that provides security to commercial and high-rise properties.

“All of our business has been earned through relationship building, which can be tied to BOMA membership.”

She started with ProGuard Security Services 5 years ago as the director of customer relations, and began running the Phoenix office as vice president 3 years ago.

How it Works

Monthly luncheons and quarterly events enable Young Professional Group members to connect with industry professionals, both inside and outside of the group.

The YPG recently teamed with NAIOP Developing Leaders (NAIOP’s young professionals) to extend industry connections.

These large networking events can be a little intimidating for new members, notes Donaldson. She recalls walking into her first BOMA luncheon as an assistant property manager at age 24 and feeling “wholly intimidated” because she did not know anyone there.

It was at that moment she knew the group needed a way to make members feel welcome and get networking faster.

What resulted is the Ambassador Program, adopted by the Young Professional Group, to personally welcome all new members and help them navigate the monthly luncheons. This includes introducing newcomers to other members.

Additional Value

For management professionals, the Young Professional Group may offer a free ticket to some of their education.

The Young Professional Group raises money through sponsored events to enroll members in the BOMA Real Property Administrator (RPA) and Facilities Management Administrator (FMA) certification courses.

These are important certifications for property managers, Vallelonga says, who started her career in property management as a receptionist and worked her way up the ranks to real estate manager of CB Richard Ellis. She holds the RPA, CPM and LEED AP designations.

However, the group’s education opportunities extend beyond certification classes.

“Every company has different styles of management,” LeBlanc points out. “Our group offers young property managers a chance to interact with many management companies and gather ideas that can help tremendously in their careers. BOMA is kind of a one-stop shop where you are going to find information, mentors, or perhaps your next job.”

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For more information about Young Professionals Group, call BOMA Greater Phoenix at (602) 200-3898.



AZRE Magazine November/December 2009

Chatham Medical Building - AZRE Magazine November/December 2009

Medical: Chatham Medical Building

Chatham Medical Building

Chatham Medical Building - AZRE Magazine November/December 2009Owner: Drs. Jean & Joseph Chatham
Contractor: LGE Design Build
Architect: Cawley Architects
Size: 8,039 SF
Location: Power & Baseline roads, Mesa

A $1.8M build-to-suit medical building adjacent to Banner Baywood Hospital in Mesa. The father-and-son owners will occupy 6,500 SF and lease the remaining space. Construction began April 2009 and will finish in November.

Healthcare Reform - AZRE Magazine November/December 2009

How National Healthcare Reform Could Define A Chronic Condition For Valley Construction

Healthcare Reform – Healthy Choice?

Healthcare reform has been a national hot button lately, and with it comes a focus on all related industries, such as healthcare design and construction. With the development of proposed plans, comes the scrutiny of every penny allocated, prompting a public perception that the cost of healthcare facilities drives up the cost of healthcare. Because of this opinion, many healthcare operators are feeling pressure to decrease spending on their facilities to prevent a collective outcry.

Despite the myriad subjective view points on this issue, several facts substantiate that healthcare construction should not cease.

Injecting Capital Into Growth

History has proved that government-provided medicine hinders the development of new healthcare facilities and does nothing to foster innovation or improvement. There have been many newsworthy examples of limited investment in facilities maintenance programs and improvements, resulting in run-down, non-viable centers, which minimize effectiveness of healthcare delivery.

Capital expenditures (facilities and equipment) typically comprise 10% to 15% of a healthcare organization’s budget, while staff costs can total 60% or more. Spending on projects should not be limited, but instead examined to elicit greater efficiencies through planning and design.

Booming Healthcare

The Phoenix and Tucson metropolitan areas have invested in healthcare facilities, but rural areas still lack capacity. The Hill-Burton Act of 1946, implemented “to modernize hospitals that had become obsolete due to lack of capital investment,” caused a surge of rural hospitals to be built in the 1950s and ’60s. Many of these hospitals still exist in almost the same condition today as when they were first built — unable to support current clinical demands and technological needs.

According to a U.S. News and World Report article published earlier in 2009, Phoenix ranks No. 11 on the top 20 list of cities where baby boomers are likely to retire, based on the expected senior population growth. The oldest boomers will begin to retire in 2011, and the Valley is not ready to receive them.

Arizona is short 1.5 beds per 1,000 residents, based on the national average. Because the demand on our statewide facilities will increase, not investing in additional healthcare facilities now will yield a greater shortage in the future. Seventy-six million baby boomers are anticipated to have multiple chronic conditions due to longer life spans (90+ years is the fastest-growing demographic) and will require more in-patient and primary care.

Baby boomers don’t plan to live in traditional nursing homes, as they prefer a community-centered lifestyle. The “old school” model of long-term care won’t suffice, requiring innovative facilities to accommodate the increasing numbers in a supportive manner.

To compound the demographic dilemma, earlier this year the under-20 population, or Gen Y, surpassed the number of baby boomers. This cohort now comprises roughly 28% of the U.S. population and is fast becoming equally as influential as the boomers, but with new expectations. Because this generation is just now beginning to enter its child-bearing years, more women and children’s services will be in demand at the same time boomers’ healthcare needs peak.

Reviving Investment Through Operations

As the healthcare reform debate rages, investment in design and construction of healthcare facilities must continue. Implementing effective planning and design strategies can actually help to reduce operational costs, such as staffing, because of improved efficiencies. Investing in facility updates also emphasizes a focus on better patient care through the creation of quality, healthy environments that take advantage of current technologies and meet best-practice expectations at a minimum.

To help spawn the future success of healthcare in Arizona, it is necessary for design and construction to continue at the high caliber of success it has achieved — and lead the way to providing innovative healthcare programs and facilities for the nation’s aging and future generations.

AZRE Magazine November/December 2009

Estrella Mtn. Community College - AZRE Magazine November/December 2009

Education: Estrella Mtn. Community College, Mariposa Hall

Estrella Mtn. Community College, Mariposa Hall

Estrella Mtn. Community College - AZRE Magazine November/December 2009Owner: Maricopa County Community College District
Contractor: McGough Companies Southwest
Architect: Orcutt | Winslow
Size: 25,600 SF
Location: 3000 N. Dysart Rd., Avondale

The goal of the $8M expansion and redevelopment of the Southwest Skill Center, scheduled to finish in December, is to create collective learning spaces, outdoor learning environments and a high-tech image, while respecting the character of the existing LEED Silver campus. Subs include Able Steel, Brothers Masonry, RML Electric, Suntec Concrete, Centimark and SunTech.

Kilowatt Krackdown - AZRE Magazine November/December 2009

BOMA Greater Phoenix Launches Kilowatt Krackdown Initiative

BOMA Greater Phoenix launches Kilowatt Krackdown initiative to reduce energy consumption marketwide.

Last year, BOMA International announced its 7-Point Challenge, encouraging local chapter members to reduce the carbon footprint of their buildings. BOMA Greater Phoenix embraced the opportunity and formed the Green Buildings Committee to further this goal, and in the process, pursued LEED certification for one of their member’s existing buildings. This year, the committee extends the sustainability challenge to the commercial real estate community.

What is Kilowatt Krackdown

Kilowatt Krackdown, an initiative launched by the committee in July 2009, challenges the industry to take on the first 2 steps of the 7-Point Challenge:

  • Decrease building energy consumption by 30% by 2012
  • Benchmark energy performance through the EPA’s ENERGY STAR tool


Phoenix Metro ranks 22nd in the country for the number of ENERGY STAR-qualified buildings in 2008, points out Dave Munn, principal and chief technical officer at Chelsea Group Ltd. and co-chair of the Green Buildings Committee. “Given that we are No. 5 in the country in population … we need to bolster efforts here to get more facilities to participate in this program, and show the country that we are indeed committed to energy efficiency.”


Phoenix Mayor Phil Gordon was the first mayor in the United States to endorse BOMA International’s 7-point Challenge, and to begin benchmarking energy performance of municipal buildings. The committee continues to work on recruiting mayors of other cities to accept the challenge.


APS and SRP have partnered with the committee on the Kilowatt Krackdown initiative to sponsor an energy efficient training series for building management and maintenance staff. In a 4-hour, interactive workshop, participants learn how to use the EPA’s ENERGY STAR Portfolio Manager benchmarking program, which provides ENERGY STAR ratings on buildings, makes comparisons to similar facilities in the geographic area, tracks energy performance over time and pinpoints specific ways to save energy in the future. The online tracking system provides a print-out of kilowatt usage and a new ENERGY STAR rating every 4 to 6 weeks.

“People need tangible results,” says Susan Engstrom, senior real estate manager at Tiarna Real Estate Services and president of BOMA Greater Phoenix. “I think it’s encouraging to see a piece of paper comparing your energy usage month-to-month and year-to-year, and to get an ENERGY STAR rating each time. This gives an incentive to improve.”

The workshops also explain how to take advantage of the power companies’ resources and incentive programs. According to Jerry Ufnal, new construction liaison for the APS Solutions for Business Program and BOMA Green Buildings Committee member, the power company offers the next step to the benchmarking program.

APS and SRP can evaluate each of their customer’s facilities to identify areas in need of improvement. They can also train building operators on how to run equipment more efficiently, give rebates for energy studies and energy-efficient upgrades, and provide information on current renewable energy resources available in Arizona, such as solar, wind, geothermal, biomass and bio-gas.

“I consider energy efficiency to be one of the strongest things you can do from a green perspective,” Ufnal says. “It has tremendous advantages for building owners because they reduce the cost of operations and maintenance of their buildings, which makes them more profitable. And at the same time they are saving energy and resources. It just makes good, logical sense.”

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AZRE Magazine November/December 2009

UC Davis - AZRE Magazine November/December 2009

On-Site At UC Davis Surgical Center

UC Davis Surgical Center – A Look Inside the Box

UC Davis Health Systems in Sacramento, Calif., was in urgent need of more surgical space. Medical advances had led to a massive increase in demand for outpatient surgeries, and existing facilities were bursting at the seams. The solution to the dilemma was found in an accelerated form of construction provided by design-build general contractor Accelerated Construction Technologies (ACT), based in Phoenix.

ACT used modular construction methods to build the 12,231 SF UC Davis Same Day Surgical Center, which included booms and lights with integrated audio-visual components to support most modern surgical techniques, allow teleconferencing, and Web casting from surgical suites for educational purposes. Overall project costs were $9 million to $10 million, including finishes, furnishings and medical equipment. However, construction costs alone only accounted for $3.8 million.

UC’s Same Day Surgical Center features 12 pre- and post-operative beds, as well as a waiting area for patients and families. Construction began in October 2006, and the campus opened in the beginning of November 2007. The center performs primarily ophthalmic, orthopedic, otolaryngology and plastic surgery procedures in four operating suites.

Site Prep & Factory Construction

Murray and Downs, a Sacramento-based architecture firm, drafted the preliminary design for the campus. ACT created the final design and construction blueprints, which it adapted to meet its modular construction method.

Construction began at the ACT manufacturing facility, while the slab foundation and infrastructure were prepared on-site at the campus. At the factory, the steel structure, custom wall panels, roof panels, electrical conduit and gear, plumbing pipe, fire sprinklers, and special systems conduits were installed to accommodate OSHPOD and UC Davis specifications for medical gases, air ventilation standards, vibration criteria, seismic requirements and existing chiller plant compatibility.

While the surgical center is a stand-alone building, the mechanical systems had to be connected with existing nearby structures. ACT, UC Davis Construction and Project Management Division, and a full staff of university engineers worked together to accomplish the project goals.

Craig Sorenson, vice president at ACT, says, “Compatibility and the ever-evolving project scope were the biggest project challenges. We were able to overcome these challenges with careful planning and a completely informed team.”

Campus Construction

When the factory reached approximately 60% completion on the building, it was disassembled into modules, wrapped and then transported from Phoenix to California. At the UC Davis campus, a field installation crew craned each module into place over the completed infrastructure. Under-slab plumbing and electrical that had already been in place was connected, and the building was welded to steel plates located in the slab. The factory’s brace steel, placed around the modules to keep the structure stiff during craning, was removed and returned to the Phoenix factory to be used on another building. The final touches for the new campus development included interior finishes and special systems installation.

While 13 months seems like a fast turnaround for a medical building of this level of sophistication, Sorenson says, “A typical project of this magnitude would take approximately 9 months for ACT to build — a mere blip on the timeline of traditional construction. We experienced delays to accommodate change orders, but overall we feel this project is a tremendous success.”

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AZRE Magazine November/December 2009

Mechanics’ Lien - AZRE Magazine November/December 2009

Project Owners Can Avoid Mechanics’ Lien Nightmares

Mechanics’ Lien & Property Crawlers

Project owners face a number of challenges when completing a project. Some owners have completed their project, paid their prime contractor, and then discover there are unpaid subcontractors and suppliers with mechanics’ lien rights. Unless the issue of mechanics’ liens is addressed before final payment is made, a project owner may literally have to pay twice. By taking a few extra precautions, owners can avoid mechanics’ lien claims and avoid double payment.

Strangers Are Using Your Property As Security For Their Credit Transactions

Many project owners do not understand there are dozens of credit transactions occurring between subcontractors and suppliers, each using the owner’s property as security. For example, a supplier may agree to deliver $1M worth of steel on credit to a subcontractor on the owner’s project. Without the owner’s permission or knowledge, the supplier can use the owner’s property as security for the subcontractor’s promise to pay for the materials. If the subcontractor fails to pay its steel supplier, that supplier can record a lien on the project, which could allow the supplier to sell the project owner’s property to satisfy the subcontractor’s debt. Although this may sound like it should be illegal, Arizona’s mechanics’ lien laws allow this.

Finding Protection For Your Asset

The simplest way a project owner can limit mechanics’ lien claims is to require the prime contractor to record a payment bond pursuant to certain statutory requirements. Once a payment bond in proper form is recorded, no subcontractor or suppler may use the owner’s property as security. If a payment bond in lieu of lien rights is not utilized, owners can employ other methods to avoid mechanics’ liens.

All potential mechanics’ lien claimants must serve the owner with a statutory form called a preliminary 20-day notice. Each notice must identify the potential lien claimant, entity they’re working for, type of labor or materials to be supplied and estimated total value. An informed owner can use this information to ensure that progress payments are used to pay subcontractors and suppliers.

A project owner should require the prime contractor to obtain a waiver and release from every claimant that has provided a 20-day notice. Each waiver and release must follow the statutory form. An owner should not pay its prime contractor until all potential claimants provide fully executed waiver and release forms.

The owner may also ensure potential lien claimants are paid by issuing payment to potential claimants directly, or by joint check payable to the prime contractor and the potential lien claimant. Many prime contracts permit the owner to issue payment directly or by joint check to subcontractors and suppliers.

Some owners mistakenly assume the construction lender is required to ensure that subcontractors and suppliers are paid, but most loan agreements do not require the lender to make this effort. Other owners believe a waiver and release from the prime contractor is sufficient. However, an owner should require waivers and releases from every entity that has provided a preliminary 20-day notice.

The prudent owner will require its contractor to record a payment bond or will maintain a list of the entities that have provided a preliminary 20-day notice. The owner can use this list to ensure potential lien claimants are receiving payment on a regular basis, by collecting waiver and release forms or by issuing payment directly or by joint check. By using these methods, owners can avoid mechanics’ lien claims and avoid paying twice for their construction projects.

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Article written for AZRE by James Csontos, a partner with Jennings, Haug & Cunningham in Phoenix.



AZRE Magazine November/December 2009


Greenbuild 2009

Greenbuild 2009 – What’s in store for the Arizona development community?

The Greenbuild International Conference and Expo will envelop the Phoenix Convention Center during the second week of November. At this conference, the Valley will host more than 25,000 attendees from 91 countries. In only its seventh year, Greenbuild has become the world’s largest green building conference and expo. Event delegates are expected to have a $30 million direct-spending impact on the local economy.

Greenbuild attendees will participate in more than 100 educational sessions and will tour 80 sustainable, LEED buildings throughout Arizona. They will also have access to more than 1,000 booths showcasing some of the best in sustainable products, materials and technologies available.

Mark Wilhelm, principal of Green Ideas, will chair the Greenbuild 2009 Host Committee, along with vice chair Sandy Werthman and executive director Beth Vershure, for the Arizona Chapter of the U.S. Green Building Council.

Making Green Ubiquitous

The biggest challenge is to leverage this 3-day event to help anchor sustainability throughout Arizona. To accomplish this, the committee will reach out to industry, political and financial leaders with compelling messages about the importance of sustainable development; showcase green building best practices to achieve quick payback and positive ROI; and help define road maps that lead to more sustainable design, construction and operations.

The Host Committee has partnered with local leaders to focus on “Community Conversations” that will happen before, during and after Greenbuild. These events will host experts and audiences to address the following:

  • Greening municipalities
  • Sustainable manufacturing
  • Leveraging solar resources
  • Conservation of water and energy resources

Some sustainable-minded organizations have stepped forward to support the Greenbuild Host Committee efforts, furthering the message of sustainability in Arizona.

  • APS, SRP, Intel, PetSmart, General Dynamics, Arizona State University, Adolfson & Peterson Construction, Sundt Construction, the Arizona Cement Association, GeOasis and Ramsey Community Services Foundation have committed funds to help leverage Greenbuild for the benefit of Arizona.
  • The cities of Phoenix, Tempe, Scottsdale and Flagstaff are taking green building to the streets by extending the reach of Greenbuild beyond the Convention Center. Each city will host a “Green Streets” party one night during Greenbuild week.
  • The University of Phoenix, the Pulliam Trust and Habitat for Humanity have funded specific Greenbuild Legacy Projects that will showcase sustainable development long after Greenbuild 2009 has left Arizona.

There also will be several noteworthy events that will run concurrently with Greenbuild:

  • The World Green Building Council International Congress will be held Tuesday, Nov. 10 at the Phoenix Convention Center. International experts in sustainable development will showcase projects from both developed and developing countries.
  • Former Vice President Al Gore will address thousands of Greenbuild attendees at Chase Field, home of the Arizona Diamondbacks, as part of the Greenbuild Opening Keynote and Celebration on Wednesday, Nov. 11. He will be followed by Sheryl Crow in concert.
  • Greenbuild 2009 Residential Summit will be held on Nov. 12 and 13 at the Sheraton Phoenix Downtown Hotel. This summit will feature an opening general session with KB Home CEO Jeff Mezger, Bensonwood Homes company steward Tedd Benson and “Renovation Nation” host Steve Thomas.

For more information, visit www.greenbuildexpo.org, while there be sure to click on “Program by Market Sector” and “Commercial Sector” to see the specific educational sessions designed to appeal to corporations, building operators and developers.

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AZRE Magazine November/December 2009

LEED Certification - AZRE Magazine November/December 2009

LEED Certification – Making Existing Buildings More Eco-Friendly

Eco Buddies

This summer, two Phoenix office buildings entered new territory for existing private-sector buildings in Arizona. Collier Center and Phoenix Plaza became Arizona’s first privately owned multi-tenant existing buildings to receive the U.S. Green Building Council’s consideration for LEED certification, thanks to the efforts of their owners and their two building managers. Both buildings are seeking LEED-Existing Buildings: Operations & Maintenance (LEED-EB O&M) Silver-level certification.

Of course, LEED certification isn’t just about saving the world. It’s also about being best-in-class, separating a company’s building from its competition and improving operating efficiency. LEED-certified buildings promote an eco-friendly workplace and, in most cases, offer lower overall operating expenses — two factors tenants are specifically looking for these days.

LEED in the Private Sector

Yet, to date, the USGBC lists only three LEED-certified existing buildings in Arizona, two single-tenant quasi-government buildings and a single-tenant manufacturing facility. Arizona’s other LEED-certified buildings are new construction, and almost all are owned by the government.

So why aren’t more private-sector owners of existing buildings interested in LEED certification? Most either don’t know enough about the program or assume it’s too expensive. However, research entities like CB Richard Ellis are proving that LEED certification costs far less than believed, and can result in significant savings that will continue for the life of the asset.

For example, Collier Center reduced its electricity consumption by 30%, or 2.7 million kWh, between January 2009 and July 2009. Compared to the same time period in 2008, that’s a savings of $216,000, or 67 cents, PSF annualized — Phoenix Plaza’s results are equally as dramatic.

Also, Collier Center and Camelback Esplanade III are transitioning janitorial services to daytime cleaning, and anticipate reductions in annual lighting costs of 10 cents to 15 cents PSF.

The Cost of Green

Minimum costs to pursue LEED certification include a small registration fee of about $500 and a certification fee, which depends on a building’s size. As property manager for both Collier Center and Phoenix Plaza, CBRE reports these costs at $12,500 for each building. Additional costs to satisfy prerequisites and credits vary from building to building. Of the 30 applications CBRE’s Sustainability Programs group has completed so far, the costs to certify averaged 24 cents PSF, and ranged from 10 cents to 67 cents PSF.

For CBRE, the certification projects took approximately 6 months to complete, including determining each building’s existing status and satisfying certification requirements in 6 categories under LEED-EB O&M:

  • sustainable sites
  • water efficiency
  • energy and atmosphere
  • materials and resources
  • indoor environmental quality
  • innovation in operation
  • and upgrades

Overwhelmingly, the process has been favorably received by existing tenants — and many have even begun seeking ways to improve on their own green efforts.

A broad implementation of sustainability practices, such as LEED, in the nation’s private-sector existing buildings can significantly advance progress toward energy independence and precious resource conservation, while also promoting eco-friendly workplace environments and cutting operating costs.

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AZRE Magazine November/December 2009

Senior Housing - AZRE Magazine November/December 2009

Multi-family Market Sector And Senior Housing

Multi-family market sector and housing for the aging boomer generation

One might think that the suffering single-family housing market would be a good thing for multi-family. Foreclosures create demand for rentals — shouldn’t the multi-family market be booming? Well, it isn’t — at least not at the moment.

Senior Housing - AZRE Magazine November/December 2009In Phoenix and Tucson, multi-family followed single-family trends over the past 10 years. Nationwide, the National Association of Homebuilders reported in August 2009 that while some sectors of the housing industry are showing signs of rebounding, the apartment sector isn’t one of them. Data from NAHB for the second quarter of 2009 show a continued downward movement across all rental sectors.

“The continued contraction in multi-family starts is exacerbated by the ‘shadow market’ of empty foreclosed single-family homes and condos that are being rented at below-market rates by investor-owners,” says NAHB chief economist David Crowe in a press release.

“Lenders see the high apartment vacancy rates and vacant condo inventory, and step away from backing any new production.”

Industry experts in Arizona agree. “One of the big challenges in the multi-family market is that it continues to compete with the single-family market,” says Tyler Anderson, vice chairman of CB Richard Ellis’ Institutional Group. “So many of the homes investors buy are becoming rentals. It’s a great time to be a renter with the deals you can cut, but it’s a tough time for owners.”

For 2009 in the Phoenix area, about 5,100 units are projected to be built. Anderson adds that if it’s not under construction today, “Then it’s not going to happen this year.”

These numbers are a far cry from the mid 1980s, when up to 35,000 units a year were built. Yet the problem now doesn’t stem from an oversupply of multi-family, Anderson explains, but from a glut in supply of single-family homes. Currently, few multi-family properties are seeing any rental growth, other than senior housing. Yet senior housing has felt the pinch too, with one distressed senior housing property in Phoenix and another in bankruptcy in Tucson, says David Rothschild, a CBRE executive vice president and leader of the national senior housing services group.

“Phoenix and Tucson are not unlike other places in the U.S. that have been impacted by the real estate market” Rothschild says. “No. 1, it’s difficult to get financing. No. 2, the lease up of facilities is difficult.”

Many seniors who are interested in multi-family senior housing can’t access the equity in their homes because of the economy, Rothschild says. “It’s difficult for them to sell their homes; 401Ks are moving down — many people are delaying because of the market. And not only does it directly affect the 75 to 80 year olds, but also their children. People are putting off that decision, and Mom and Dad are moving in with the kids.”

Bright Spots

The news isn’t bad for everyone. Opportunities exist to purchase properties for 30% to 50% of peak pricing, Anderson says. “There’s not a lack of money out there to buy these properties. There’s plenty of capital out there — 25 to 30 offers on a sale is not unusual.”
And those deals will probably be around for some time.

“You’re going to see more properties available at these corrected prices. I think the challenge is in the next 12 months for the rental market,” he says. “Operations will continue to struggle. But struggling operations make it a great opportunity to buy today, because the market will not remain this soft forever. When job growth returns, rent rates will return quickly.”

Senior Housing – Waiting for the Boom(ers)

Rothschild predicts that within the next 2 years, things will start to come back for senior housing, because “demographic forces are pushing it.”

In the short term there are problems, Rothschild says, but there is a huge bubble of demand in the next 20 years as baby boomers retire.

Baby boomers are loosely defined as those who were born between 1946 and 1964. U.S. Census data indicates that in 2000, 12.8% of the U.S. population was 65 years of age or older — about 1 in 8 Americans. By the time all of the surviving boomers reach 65, there will be 80 million Americans who are 65 years of age or older. By 2030, the U.S. looks a lot grayer — 1 in 5 Americans will be aged 65 years and older.

“There aren’t enough facilities for this generation,” Rothschild says. “When the bubble breaks, it will be very good for current operations; occupancies will be very strong — it will raise rents dramatically.”

Projects like Classic Residence at Silverstone, a Scottsdale project due to be completed in early 2010, will be in high demand. Silverstone is a joint project of Classic Residence by Hyatt in Chicago and Plaza Companies, located in Peoria. The developers have combined a targeted mix of healthcare levels and individual living spaces to fit the lifestyle of just about any retiree.

Silverstone’s developers used their first project, Classic Residence at Grayhawk in Scottsdale built in 1999, as a pattern for their continuing success. “We’re excited about how it’s being received,” says Sharon Harper, Plaza Companies’ CEO. “We were very innovative 12 years ago when we built Grayhawk, and we are very attentive to how residents’ needs evolve. That’s really been the secret of our success.” Grayhawk currently has a waiting list, and interest is spilling over to Silverstone as well, Harper says.

Currently, Arizona has a robust aging population with more than 180 nursing homes, 1,700 assisted living facilities and more than 500 independent-living communities. By the end of 2009, an additional 2,300 units and 8 senior housing projects will be completed.

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AZRE Magazine November/December 2009

Aurora Tempe Psychiatric Hospital - AZRE Magazine November/December 2011

Medical: Aurora Tempe Psychiatric Hospital

Aurora Tempe Psychiatric Hospital

Aurora Tempe Psychiatric Hospital - AZRE Magazine November/December 2009Owner: Signature Healthcare Services
Contractor: UEB Medical Builders
Architect: Morse Boudreaux Architects, Partnership
Size: 11,000 SF addition; 52,000 SF remodel
Location: 6350 S. Maple Ave., Tempe

Total construction cost for the project — scheduled to finish in January — is $6.1M. The addition and 52,000 SF adaptive re-use of existing office space will become the 68-bed Behavioral Health Hospital. Broker is Thad Kowalik.

CREST - AZRE Magazine November/December 2009

Education: Center for Research in Engineering, Science & Technology – CREST

Center for Research in Engineering, Science & Technology (CREST)

CREST - AZRE Magazine November/December 2009Owner: Paradise Valley Unified School District
Contractor: Adolfson & Peterson Construction
Architect: DLR Group
Size: 16,500 SF
Location: 3950 E. Bell Rd., Phoenix

The $3.8M project consists of a small specialty high school addition to the Paradise Valley High School campus. Estimated to finish in January 2010, the CREST facility will house a technology lab, biolab, restrooms, offices and support rooms.