Tag Archives: real estate development

shopping

Economy’s Q3 Growth Boosts Local Businesses

The U.S. economy grew faster than expected in the third quarter as businesses restocked shelves, and Arizona businesses are noticing the uptick. A 2.8% boost from July to September has Valley business owners optimistic about the holiday season and the first quarter of 2014. Local restaurants, retail, real estate and even purveyors of luxury goods and services report a steady incline of consumer spending, some even reaching pre-economic downturn levels.

Dr. Daniel Shapiro, a Scottsdale-based plastic surgeon reports nearly 35% growth in 2013 over 2012. “As a board-certified sugeon that’s been practicing for 22 years, my schedule stayed busy despite the economic downturn…but over the last few months we’ve been forced to reinstate a waiting list that spans several months for surgery as well as a consult fee,” he said. “It’s evident that people have more money to spend now, and are more confident spending it,” he said.

Shapiro is just one Valley business owner that says the economy is on the upswing. Restaurant owners, many hit hard by the economic downturn are also saying that business is booming again. “Having owned restaurants in Arizona over the last 20 years, it’s easy to spot a trend when it’s happening,” said Dave Andrea, owner of Brat Haus in Old Town Scottsdale. “First it’s small things like patrons adding another round of drinks, or ordering dessert, when before they’d forgo those things in an effort to save money,” he said,

Both Andrea and Shapiro agree that people are splurging on themselves a little more now, whether it’s a long awaited nip and tuck or just a well-deserved dessert.

What’s fueling the Valley’s economic stability? The labor market continued to improve, but at a snail’s pace, government data showed. Across the country, gross domestic product expanded at a 2.8 percent annual rate, the quickest pace since the third quarter of 2012, the Commerce Department said on Thursday. It was an acceleration from a 2.5 percent clip in the second quarter and beat economists’ expectations for a 2.0 percent rate.

DECO Communities, a Scottsdale-based real estate development company just announced completion of two new urban renewal projects which transform infill properties into stylish and modern apartment homes called Cabana Modern Apartment Homes. With 4 properties completed in the last 16 months, the company says real estate is on the upswing as well. “There is a high demand for the kind of development we are doing,” said Rob Lyles, partner for DECO Communities, “And the outlook for real estate development and growth in Arizona next year is exceptionally promising,” he said.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, expanded at a 1.5 percent rate, slowest pace since the second quarter of 2011. It grew at a 1.8 percent rate in the April-June period.  With the news of economic growth at the start of the holiday season and the ‘high-season’ for Valley tourism, business owners are exceptionally optimistic about the Q1 2014 economic reports as well.

shopping

Economy's Q3 Growth Boosts Local Businesses

The U.S. economy grew faster than expected in the third quarter as businesses restocked shelves, and Arizona businesses are noticing the uptick. A 2.8% boost from July to September has Valley business owners optimistic about the holiday season and the first quarter of 2014. Local restaurants, retail, real estate and even purveyors of luxury goods and services report a steady incline of consumer spending, some even reaching pre-economic downturn levels.

Dr. Daniel Shapiro, a Scottsdale-based plastic surgeon reports nearly 35% growth in 2013 over 2012. “As a board-certified sugeon that’s been practicing for 22 years, my schedule stayed busy despite the economic downturn…but over the last few months we’ve been forced to reinstate a waiting list that spans several months for surgery as well as a consult fee,” he said. “It’s evident that people have more money to spend now, and are more confident spending it,” he said.

Shapiro is just one Valley business owner that says the economy is on the upswing. Restaurant owners, many hit hard by the economic downturn are also saying that business is booming again. “Having owned restaurants in Arizona over the last 20 years, it’s easy to spot a trend when it’s happening,” said Dave Andrea, owner of Brat Haus in Old Town Scottsdale. “First it’s small things like patrons adding another round of drinks, or ordering dessert, when before they’d forgo those things in an effort to save money,” he said,

Both Andrea and Shapiro agree that people are splurging on themselves a little more now, whether it’s a long awaited nip and tuck or just a well-deserved dessert.

What’s fueling the Valley’s economic stability? The labor market continued to improve, but at a snail’s pace, government data showed. Across the country, gross domestic product expanded at a 2.8 percent annual rate, the quickest pace since the third quarter of 2012, the Commerce Department said on Thursday. It was an acceleration from a 2.5 percent clip in the second quarter and beat economists’ expectations for a 2.0 percent rate.

DECO Communities, a Scottsdale-based real estate development company just announced completion of two new urban renewal projects which transform infill properties into stylish and modern apartment homes called Cabana Modern Apartment Homes. With 4 properties completed in the last 16 months, the company says real estate is on the upswing as well. “There is a high demand for the kind of development we are doing,” said Rob Lyles, partner for DECO Communities, “And the outlook for real estate development and growth in Arizona next year is exceptionally promising,” he said.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, expanded at a 1.5 percent rate, slowest pace since the second quarter of 2011. It grew at a 1.8 percent rate in the April-June period.  With the news of economic growth at the start of the holiday season and the ‘high-season’ for Valley tourism, business owners are exceptionally optimistic about the Q1 2014 economic reports as well.

real estate market

Real Estate Market Is Recovering, So What’s Next?

As job numbers and consumer spending begin to rise post-recession, the real estate market is also starting to recover. But will we see a repeat of massive growth, skyrocketing prices and cookie-cutter homes? One expert from the W. P. Carey School of Business at Arizona State University analyzes likely future trends.

“We have a lot of people looking at the same real estate data and making decisions at the same time,” explains Mark Stapp, the Fred E. Taylor Professor in Real Estate and director of the Master of Real Estate Development (MRED) program at the W. P. Carey School of Business. “This is how markets wind up with overbuilding and speculation, but I’m actually hopeful that won’t happen in the Phoenix metro area this time. After the recent bust, real estate professionals are paying more attention to differentiating projects and focusing more on users’ wants and values. Also, lenders are enforcing more discipline.”

Stapp says the Phoenix area is one of the markets with the most abundant real estate market data available. On the residential side, Stapp is seeing the emergence of different products to meet people’s changing needs.

“We’re watching the development of new luxury apartments that are big enough to comfortably house families,” says Stapp, who is both a real estate developer and who teaches real estate to mid-level professionals. “Many former homeowners have either decided to get out of the single-family home market because of their recent experiences or they simply can’t buy another home because of credit issues. Renting may be their best alternative.”

In addition, Stapp says it’s tough to get many existing homeowners to sell their houses with prices still down from the peak; they don’t want to lose money. Therefore, developers are introducing new alternatives that might be appealing. They’re integrating more sustainable, energy- and money-saving features. They’re also trying out new designs that appeal to changing lifestyles.

“Real estate is a service business, and developers have to deliver what the customers want,” says Stapp. “We’re already seeing more interest in new-home sales, and developers are getting creative. For example, there’s a very modern Dutch-designed model home from a major local builder. In the past, a risk like that would have been shunned in favor of more cookie-cutter homes that all look similar.”

Developers are also focusing on filling in desirable areas already close to roads and development, instead of building on the outskirts, where new homeowners may be reluctant to live. The median home price in the Phoenix area is already up 25 percent from this time last year, and new-home sales are up more than 40 percent. Plus, Stapp says it won’t be that long for many of those who filed for bankruptcy and/or lost their homes to foreclosure to get back into the real estate market.

“The Federal Housing Administration (FHA), Fannie Mae, Freddie Mac and the Department of Veterans Affairs (VA) all allow people who’ve filed for bankruptcy to get loans after several years,” explains Stapp. “Some developers are planning for that now, since it takes around two years from start to finish on these building projects.”

On the commercial side, Stapp says office-space needs have permanently changed. Thanks to advancements in technology and more forced productivity from fewer employees, more people and equipment can now fit into the same amount of office space. Also, some older buildings just don’t have the right configuration for modern equipment, and parking may be lacking. Therefore, Stapp thinks it will take longer for this sector to recover. However, he feels industrial space is already back in pretty good shape in the Phoenix area, though the situation is fragile.

“If they pull the trigger on too many projects, it will be like overgrazing,” says Stapp. “We don’t want to overbuild again, which would ruin the market for everyone.”

Stapp would like to see a little more regional development planning, plus a good look at the current property-tax structure. He also advocates more self-control.

“Hopefully, the recent fall has instilled a sense of discipline in the real estate community,” concludes Stapp. “Making money in real estate has always been about transactions – buying and selling. Banks make money when they loan; architects make money when they design; construction crews make money when they build. We all have to start putting more time into thinking and planning, even if that means postponing a pay day.”

Stapp is one of the industry experts teaching in the one-year Master of Real Estate Development program at the W. P. Carey School of Business. The program immerses students in the various facets of real estate development, including business, law, design and construction.

For more information about the MRED program and the real estate market, visit www.wpcarey.asu.edu/master-real-estate.

AZRE Magazine May/June 2011

Centennial Series: Most Influential People In Arizona Commercial Real Estate

As part of AZRE magazine’s Centennial Series, find out who made the list of the most influential people in Arizona Commercial Real Estate.

Most Influential People In Arizona Commercial Real Estate


Roy P. Drachman Sr. (1906 – 2002)
Roy Drachman Realty Company, Real Estate Development

Roy Drachman, AZRE Magazine May/June 2011Known as “Mr. Tucson,” Roy Drachman’s love for the city helped put Tucson on the map. A real estate tycoon who landed the Hughes Missile Systems Company site, Drachman also petitioned to build better streets, waterways and schools in his beloved city. He is responsible for bringing Major League Baseball teams to Arizona for spring training (the Cleveland Indians began training in Tucson in 1947). Throughout his career, Drachman donated generously to the University of Arizona, mostly for its cancer research. He funded a scholarship at the UA College of Architecture for upperclassmen who show proficiency in design. UA named its Institute for Land and Regional Development Studies after him. (Photo: Drachman family)


Grady Gammage, Jr.
Gammage & Burnham, Attorneys At Law, Real Estate Lawyer

Arizona Commercial Real Estate, AZRE Magazine May/June 2011For the past 20 years, Grady Gammage, Jr. has practiced law at Gammage & Burnham, taking on real estate projects such as redevelopment, high-rise buildings and planned communities. Gammage was a board member of the Central Arizona Project for two, six-year terms, beginning in 1996. Gammage’s urban mixed projects in Tempe won him three architectural awards. He is also affiliated with Arizona State University as an adjunct professor at the College of Law, the College of Architecture and Urban Design, as well as a Senior Fellow at the Morrison Institute. (Photo: Gammage & Burnham)


William Haug
Jennings Haug & Cunningham, Real Estate Lawyer

Arizona Commercial Real Estate, AZRE Magazine May/June 2011William Haug has dedicated much of his career to developing and establishing construction and surety law in Arizona. His leadership in the practice was recognized with his induction in the inaugural Maricopa County Bar Association Hall of Fame for his role in developing the practice of construction law. Haug developed his practice in complex dispute resolution in construction, fidelity and surety law. For more than 35 years, Haug has been an arbitrator and mediator. He joined the firm in 1981, became one of the original construction lawyers in Arizona, and paved the way for the practice to develop as construction across the state grew with its population. (Photo: Jennings Haug & Cunningham)


Sam Kitchell (1923 – 2006)
Kitchell Construction, General Contractor

Arizona Commercial Real Estate, AZRE Magazine May/June 2011Originally named Kitchell Phillips Contractors, Sam Kitchell started the company in 1950 with then partner James B. Phillips. Its construction of Safeway stores and local schools helped Kitchell evolve into one of the top 10 largest private companies in Arizona and one of the top 75 construction companies in the country. One of Kitchell’s main focuses included healthcare projects, which led to the construction of Good Samaritan Hospital in Phoenix, the Mayo Clinic of Scottsdale, Phoenix Children’s Hospital and Scripps Memorial Hospital in California, to name a few. (Photo: Kitchell Construction)


J. Daryl Lippincott (1924 – 2008)
CB Richard Ellis (CBRE), Real Estate Broker

Arizona Commercial Real Estate, AZRE Magazine May/June 2011Daryl Lippincott directed the CBRE Phoenix office from its opening in 1952. With retail stores such as Goldwater’s, Diamond’s, Leonard’s Luggage and Switzers, Lippincott helped build Arizona’s first shopping mall — Park Central. In 1957, Lippincott helped the Phoenix office expand to other services, including mortgage loans, property management and was later announced as the head of CBRE’s Southwest Division. Lippincott shaped both CBRE and the commercial real estate industry with his retail and commercial projects. (Photo: CBRE)


John F. Long (1920 – 2008)
John F. Long Properties, Homebuilder

Arizona Commercial Real Estate, AZRE Magazine May/June 2011John F. Long symbolizes the Phoenix transition from desert to urban city. His 1954 Maryvale project, named after his wife, established a base for all future affordable housing in the Valley. With an emphasis on quality, Long also built the Solar One housing development, getting a head start on sustainable practices. Long’s projects were built with everything in mind; hospitals, golf courses and shopping centers, giving homeowners whatever they needed within close reach. As one of Arizona’s most influential builders, Long is in the Arizona Business Hall of Fame and was awarded the first WESTMARC Lifetime Achievement Award, which has since been named after him. (Photo: John F. Long Properties)


Rusty Lyon
Westcor, Retail Development and Management

Arizona Commercial Real Estate, AZRE Magazine May/June 2011During his more than 40 years as CEO of Westcor, Rusty Lyon led the way in retail development and continues to contribute to the public’s shopping needs. Retailers have turned Westcor into the largest owner of commercial real estate properties, with projects such as Scottsdale Fashion Square, Chandler Fashion Center, San Tan Village, Flagstaff Mall & The Marketplace, Prescott Gateway Mall, Biltmore Fashion Park and The Boulders Resort. (Photo: Macerich)


M. M. Sundt (1863 – 1942)
Sundt Construction Co., General Contractor

Arizona Commercial Real Estate, AZRE Magazine May/June 2011Sundt Construction was founded in 1890 by Mauritz Martinsen Sundt, a Norwegian ship carpenter who immigrated to the U.S. as a teenager. The company’s early projects were homes and farm structures in northern New Mexico. In 1929, Sundt built a Methodist Church in Tucson. The project was directed by John Sundt, one of Mauritz’s 12 children. John liked Tucson, and decided to stay. Sundt‘s clients today are industrial, commercial and government projects, both nationally and internationally. In 1936 the company was awarded a contract for six projects, one of which was the expansion of the University of Arizona’s Tucson campus. In 1956, Sundt began construction on one of its biggest military projects, Davis-Monthan Air Force Base in Tucson. (Photo: Sundt Construction)


Frank Lloyd Wright (1867 – 1959)
Architect, Interior Designer

Arizona Commercial Real Estate, AZRE Magazine May/June 2011Frank Lloyd Wright spent most of his life designing homes, buildings and museums that changed the world of architecture. Wright designed more than 1,000 projects and more than 500 were actually built. Thirteen are in Arizona and are some of his most famous designs. Wright’s summer home, Taliesin West in Scottsdale, is also home to the Frank Lloyd Wright Foundation’s international headquarters, where an archive of all his sketches and projects is housed. ASU students have a constant reminder of Wright’s architectural genius with the Grady Gammage Memorial Auditorium, named after Dr. Grady Gammage, ASU’s president from 1933 to 1959. (Photo: Frank Lloyd Wright Foundation)

AZRE Magazine May/June 2011

 

Photo: www.valleymetro.org

Density: Our Ticket To The Green Express

Five years ago, Phoenix Mayor Phil Gordon courageously announced his intention to rehabilitate a dilapidated 12-mile stretch between the Arizona Capitol and Arizona State University in Tempe.

He appropriately branded the area along Washington Street the Opportunity Corridor and pledged to replace the shuttered businesses, vacant lots and dilapidated trailer parks with new office, biomedical, industrial and developments.

Unfortunately, the recession stepped in before the idea could fully take root and today the Opportunity Corridor is still packed with opportunity, but short on actual redevelopment projects.

That is, unless you take into consideration one major development that occurred in the interim: light rail.

Construction of a light rail line through parts of Tempe, Mesa and Phoenix – including in the Opportunity Corridor — raises critical questions about its potential effect on land use and urban development. But more importantly, light rail presents an enormous (and to date un-tapped) opportunity in Arizona for resident and community leaders to take their eyes off the sprawl ball and focus, instead, on how to build viable development along the track in order to sustain ridership.

Though it’s been considered a dirty word here for decades, density has a place in the Valley. That place is along the light rail.

Like the spine is to the human body, light rail is the backbone of a thriving urban scene. Density is the fuel that feeds the core. To flourish, density needs zoning code changes and public policies that encourage a vertical mix of commercial and residential projects.

In short: light rail begs for compact, sustainable, transit-oriented development (TOD) that promotes walkability and increases dependence on public transportation.

Cultivating density along transportation routes is nothing new. The growth patterns are a throwback to the turn of the century, when neighborhoods, homes and businesses cropped up along streetcar lines.  Post-World War II growth in Phoenix has seen this same pattern spring up along corridors where miles of freeway, parkways and loops were rolled out.  What’s new, at least for metro Phoenix this time around, is a concerted effort by the public and private sector to make it happen along the light rail corridor.

Said Phoenix Community Alliance President Don Keuth, speaking last year at a meeting of Arizona State University’s Stardust Center for Affordable Homes and the Family and HUD Deputy Secretary Ron Sims: “Different rules are going to come out of Washington that will make doing the ‘same old’ impossible, and if we don’t have a plan to meet these new objectives, then we will be left behind.”

Summing up, he added, “We need to instill ‘spinal courage’ to do something different because we have to. If we don’t, this community is not going to reach its potential.”

The Arizona chapter of the Urban Land Institute, LISC  Phoenix, ASU Stardust Center, and the City of Phoenix have been collaborating to aggressively pursue funding to promote transit oriented development along the Opportunity Corridor.  The recent launch of the amazingly interactive website www.connectingphoenix.com demonstrates the true opportunities that light rail presents for the metro Phoenix region.

These efforts and the efforts of other community leaders have the potential to lay the groundwork for truly sustainable transit oriented development in Phoenix.  It’s only a matter of time before we start benefiting from these efforts and enjoy our Phoenix urban lifestyle experience!

Sharon Harper, president and CEO, Plaza Companies - AZ Business Magazine February 2010

CEO Series: Sharon Harper

CEO Series: Sharon Harper


Sharon Harper
President and CEO, Plaza Companies


Assess the current state of commercial real estate development in the Valley.
The commercial office sector is being impacted significantly. Vacancies are on the rise, rental rates are going down. In addition to all those statistics there is also kind of a shadow vacancy factor in place, in that companies are downsizing and subleasing their space or not occupying that space. And so all of that does have impact. There’s been negative absorption for some seven quarters in our region and probably more to come. So it has forced the industry to do a number of things. First and foremost, there’s no new construction really underway, so that’s going to have some impact. Secondly, building and business owners have had to adjust the way that they do business, and certainly in the case of Plaza Companies we have so that we can maintain a competitive edge for our buildings, for our tenants, for our investors. An example of this is that we are very focused on maintaining our buildings; we want them to be in excellent condition. We want to make sure that we are doing everything we can to make our buildings competitive. We’re working with our tenants, making sure that the buildings are clean and safe and accessible and beautiful and wayfinding is well-organized, and doing what we can to enhance their businesses. We are an owner and a property manager who is so hands-on, really thinking about the tenant, how their business is doing, how they are faring, as well as how we are performing for our investors and our owners and the facility itself. That makes a difference. There’s a concerted focus and effort and it’s my thought with our company we go above and beyond in every way we can, and it’s made a difference. Our buildings are doing quite well because of it.

What do you foresee for commercial real estate in 2010?
I think 2010 is going to be another year of flat rates, if not a reduction in rental rates. I think there will be increased vacancies. I think that a number of building owners are having difficulties with their financing and with their loans. As these shorter-term loans come due, it’s going to have an impact on the marketplace. And finally and most important in this marketplace is the owner’s ability to provide tenant improvement dollars to attract a tenant. Many owners cannot do that. And so tenants are, I think for the first time in my history in this industry, tenants are looking to the credibility and the substance of the building owner. Can they keep the buildings up? Can they provide the tenant improvements? Can they keep the promises? Can they keep the lights on? Tenants care about that. And that’s very important right now, more so than ever … and the second part of it is that some substantial companies have had problems performing on their loans and on their buildings and that’s been very unnerving for tenants. They want to know that there are building owners and managers that have credibility, integrity and are going to see the project through, and that gives a competitive advantage and we’ve certainly seen that here at Plaza.
Plaza Companies specializes in health care construction.

What difference did that make during the recession when compared to other commercial real estate developers?
Plaza Companies actually is focused on three specific areas of business. One is medical office/health care, the other is seniors housing and the third is bioscience and biotechnology. And it was in 2005, in a company retreat with the top leaders here at Plaza, that we made a concerted effort to broaden the base of where we are involved in business. We wanted to have certain unique sectors that are related to one another, yet provide it a bit of diversification for us. In addition to that, on our service lines we have grown our facilities’ property-asset management divisions, our leasing department, and our construction division. So we have diversification at that line, as well. And I can tell you that diversification has made a significant difference, and I am most appreciative that several years ago, when no one would have projected what is going on now, our company set the stage for sustainability during these difficult times. And that has made a difference.
Secondly, the sectors that we are involved in have ridden the storm a little bit better than others. They’re very dependent upon demographics, and not just the growth of demographics but aging, as well, and also the whole notion of innovation, research and science. All of that ties together and these are growth, with a small ‘g,’ industries right now.

What strategies did Plaza Companies implement to ride out the recession and how is it repositioning itself for the recovery?

Once again, we readjusted and repositioned our company in 2005, and started to grow foundationally a diversification program and that has paid off significantly for the company. I think that our strategy has stayed the same, our focus is the same; we’ve never deviated from the core principles of our business. But we’ve all worked harder in this company, as well. People are stepping up in all of the divisions here at Plaza Companies, doing what they can because it is more difficult and it is harder to achieve the same goal than it was just a couple of years ago. And so we’re focused, we’re diligent, we’re careful, we’re all working harder, and we are in sync here jointly with the management and all of the employees of the company.

What skills do C-level executives in commercial real estate development need to acquire or cultivate in order to succeed in these difficult times?
I think the traits that a CEO needs to have in difficult times are the very same traits in all times. I think that it’s important to have a vision and to be able to articulate that vision and to inspire and excite people that are going to help carry that vision out, and that’s really what I’ve tried to do here at Plaza. And it’s not just me, but it’s other senior managers here at Plaza.We understand what we’re trying to accomplish. We are so committed to carry through and being accountable for what we commit to do, and we need to be inspired and we need to inspire others to do that.And we also need to be very realistic about the realities of the world, and we have to have high expectations for performance and for people. And more so than ever, the core values of the company need to be part and parcel to everything that we do.

Vital Stats

  • Co-founded the company in 1982 with Dr. Harold Gries
  • Recipient of the 2007 Sandra Day and John O’Connor Award for outstanding community service
  • Is a member of the board of trustees of the Virginia G. Piper Charitable Trust, the board of directors of the Arizona Community Foundation and the Banner Health Foundation, and past chairman of the Greater Phoenix Economic Council (GPEC)
  • Served on the finance committee of Arizona Sen. John McCain’s 2008 presidential campaign
  • Received a Bachelor’s of Arts in Journalism from Creighton University in Omaha
  • www.theplazaco.com

 

Arizona Business Magazine February 2010