Tag Archives: september-october 2011

Tim Lawless Discusses HB 2001 - AZRE Magazine September/October 2011

Q&A With NAIOP-AZ President Tim Lawless: The Impact Of HB 2001

Q&A with NAIOP-AZ President Tim Lawless who discusses HB 2001,  commercial property tax and how the commercial real estate industry is affected by these tax cuts

Recently, the Arizona State Legislature passed the most sweeping economic development/job recovery bill in years (HB 2001). It included a number of phased tax cuts and tax credits for businesses along with a deal-closing fund to attract high wage firms to Arizona.

Q: WHAT WERE THE SPECIFICS?

Specifically, the corporate assessment ratio used to calculate commercial property taxes will be reduced from 20% to 19.5% in 2013, 19% in 2014, 18.5% in 2015, and 18% in 2016. Moreover, the current corporate income tax rate of 6.968% will be reduced over four years to 4.9%. The $25M “deal-closing fund” (the Arizona Competes Fund) partially derived from lottery revenues will also give the privatized Arizona Commerce Authority (ACA) a key tool in landing firms that may need a nudge in deciding between finalist states for relocation or regional expansion decisions.

Q: WHAT DOES IT MEAN FOR THE COMMERCIAL REAL ESTATE INDUSTRY?

Significantly, NAIOP-AZ’s top three priorities to: 1) reform our uncompetitive commercial property tax system; 2) to lower our corporate income tax rate; and 3) to enact a deal-closing fund to attract new firms to the state are all contained in the law. This is a remarkable turn of events for our industry. NAIOP-AZ helped lead the fight six years ago to begin lowering the property tax assessment ratio from 25% to 20%, which resulted in more than a billion dollars in property tax savings to businesses over this time. More needs to be done but we have successfully addressed the single biggest impediment to job creation in our state — high uncompetitive property taxes for commercial real estate.

Q: WHERE WILL WE RANK NOW COMPARED TO OTHER STATES?

The corporate income tax rate reduction down to 4.9% will bring us more in line with our Western state competitors (some of whom who do not have a corporate income tax) and give us the fifth lowest rate in the nation. We also are now seeing the fruits of our labor as we have moved from having among the top five worst business property tax burdens in the U.S. to currently 15th and with these changes we expect to move to the middle of the pack by 2016, which is more where we should have been all along.

Q: WON’T THE DECREASE IN BUSINESS PROPERTY TAXES BE SHIFTED TO HOMEOWNERS?

No, this was not the intent of the legislation. In order to address the issue of perceived shifts in taxation to residents, legislators agreed to toggle the “Homeowners Rebate” upward in the future per calculations from the Dept. of Revenue and to help finance this impact to the State General Fund by reforming the Homeowners Rebate for those that illegally take it on multiple homes that are not their primary residence and those homes that are vacant and in foreclosure. In short, those who are most deserving get a bump and those that are abusing the credit get dumped.

Q: WHAT BIG ISSUES ARE ON THE HORIZON FOR COMMERCIAL REAL ESTATE?”

The eventual sunset of the recent sales tax increase will exacerbate a structural budget deficit for our state should it prove politically untenable to cut base spending levels more than they have already. As a result, the spending lobby will be looking to raise almost a billion dollars, especially for K-12 education, at the ballot next year. Initial ideas are to either make permanent the temporary sales tax rate increase; to increase the sales tax to currently exempt goods and services; and/or to institute a new statewide property tax. Because commercial property tax rates are still considerably more than what residents pay, NAIOP-AZ would certainly fight the specific alternative to raise a new statewide property tax. This would erase all the progress we have made the last six years in making our state more competitive for job creation. The proposed expansion of the sales tax base to exempt goods and services would also bear close watching as some proposals may make commercial lease sales subject to state taxation again which would be a hindrance to economic recovery for our industry and in turn for the state.

Q: HOW WOULD YOU SUM UP THE ACCOMPLISHMENTS THIS SESSION?

Hopefully, the measures passed in the recent “Jobs Bill” will give your readers, our members and businesses in general the confidence that Arizona is a great state to locate, invest, and expand.

AZRE Magazine September/October 2011

 

 

NAIOP Arizona's Developing Leaders - AZRE Magazine September/October 2011

NAIOP Arizona’s Developing Leaders Pairs Veterans With Young Professionals

NAIOP Arizona’s Developing Leaders mentoring program designed to pair veteran and young CRE professionals to bolster the industry

For a group that has yet to commemorate its first class, NAIOP Arizona’s Developing Leaders mentoring program has some fairly heady goals.

That’s evident by its mission statement:

* To Improve the communities in which we develop, build, and broker commercial real estate;

* To Impact the careers of young real estate professionals through educational development, and exposure to pertinent topics;

* To Instill the knowledge, values, and expertise of today’s industry leaders in developing leaders;

* To Influence the professional growth of developing leaders by fostering valuable long-term relationships with industry peers.

NAIOP Arizona’s Developing Leaders mentoring program is relatively new to the Arizona chapter, although it’s been around for awhile nationally — where it has been successful.

“It was a natural evolution,” Clay Wells, a co-liaison on the NAIOP Arizona board of directors and director of business development at McShane Construction Company, says about implementing a mentoring program. “The first year we were involved with getting our feet wet. The second year we tried to make it grow by working on charitable events.”
Now in its third year, it’s time to get the ball rolling.

“The program will bring the best elements of the entire membership together,” says NAIOP Arizona president and CEO Tim Lawless. “It will create synergy with older more experienced people and younger up-and-coming members.”

The goal is for those in the commercial real estate industry to help provide protégés with insight on how to become successful, says Nate Goldfarb, an associate at CBRE and co-chair of the mentoring program.

The program will be comprised of 10 highly experienced industry professionals as mentors, each paired with two protégés who are existing developing leaders under the age of 35.

Other chapters have had mentoring programs for several years, with those in San Diego and Colorado boasting some of the strongest programs, according to Wells.  “We looked at other chapters and tried to steal the best details,” he says.

Lawless will be involved in the final mentor screening process and says he will be looking for the best and brightest people who are experts in their niche and would bring the most to the table.

Protégés will be selected based on application information and not on personality, says Wells, who is part of the selection committee that is made up of five to six board members.
Initially an email survey was sent out to all developing leader candidates to probe interest and to determine which industries members would like mentors from, Goldfarb says.

“There was a strong response from potential protégés and response from prospective mentors was phenomenal, particularly senior members,” Goldfarb says.

“We’re looking for an Icon,” says Lawless, adding that NAIOP Arizona’s membership has an excellent crop of mentor candidates such as Keith Earnest from RED Development and NAIOP chairman Mike Haenel of Cassidy Turley BRE Commercial.

When protégé and mentor are paired they will meet at least once a month for 10 months.
“There will be a lot of active listening to the mentor who has already walked the path,” Goldfarb says.

The inaugural class function will be held this fall and will be a black tie event, according to Goldfarb.

“We want to make events special for protégés so that they are impressed by the mentor, the program and the events.”

[stextbox id=”grey”]For more information about the NAIOP Arizona’s Developing Leaders mentoring program, visit www.naiopaz.org/dl.[/stextbox]

AZRE Magazine September/October 2011

 

Mike Haenel, Chairman, NAIOP - AZRE Magazine September/October 2011

NAIOP-AZ Mike Haenel A Major Player In Future Of State's CRE Industry

NAIOP-AZ chairman Mike Haenel a major player in the organization and in the future of state’s CRE industry

For 26 years, Mike Haenel, executive vice president for Cassidy Turley/BRE Commercial Industrial Group, has been successful marketing industrial and back-office land and building space in Arizona.

In the early 1990s, he even did a brief stint in the development side of the business.
Since 2003, Haenel has completed 300-plus deals worth a combined $740M. He also has collected several industry awards along the way.

But Haenel said he couldn’t have achieved these significant accomplishments without his partner, Andy Markham, and the support of Cassidy Turley.

They have been able to close transactions during the good and bad times.

So for more than two decades, he has been an active member of NAIOP — the organization he considers a must for anyone hoping to be a major player in Arizona’s commercial real estate future.

Now as NAIOP Arizona chairman, Haenel gets to set the course for the organization.

It’s a challenging time to be at the helm.

Arizona’s commercial real estate industry, like that of much of the country, is adrift in turbulent waters.

In Arizona, the industrial segment has hit bottom and is slowly heading back into better times, Haenel said.

The Phoenix metro area absorbed 3 MSF of industrial space in 2010, and, with the new Amazon warehouse deal, already surpassed 4 MSF by mid-year 2011.

“There are several large build-to-suits looking in the marketplace, and we expect to exceed 5.5 million square feet (absorbed by year-end),” he says.

But the office market, NAIOP’s other purview, is still foundering with too-high vacancy rates and too low rents.

Still, Haenel offers tempered optimism for that segment going forward.

Office rental rates “showed some stabilization” in second quarter, he says, and that is a hopeful sign.

“If we continue to absorb industrial space as we have for the last 18 months, I see speculative development again within the next three years,” Haenel says. “Clearly, office would be longer.”

NAIOP will be essential for charting a clear course through the still-choppy seas ahead, he adds.

Industry professionals banding together, exercising their combined clout and sharing knowledge and experience, helps them survive the difficult times and prosper when the storm clouds dissipate, Haenel says.

“NAIOP is such a great networking organization,” Haenel says. “It shows how important relationships are especially in a period like this. The relationships you create, nurture and foster help as the market recovers, but help (especially) when the market is as tough as it’s been.”

Haenel said while it’s a rough time for Arizona’s commercial real estate industry, it’s really not so bad sitting in NAIOP’s pilot seat.

The previous chairman, Todd Holzer of Ryan Companies US, and NAIOP Arizona president Tim Lawless, have set so many fruitful programs in motion, Haenel just has to hold the wheel steady, he says.

“I am grateful for the past chairmen and current/past board members who have built the organization to what it is today,” Haenel says.

But he has his own pet programs, too.

Member education, developing the industry’s future leaders and fostering positive public policy, are top focuses for the new chairman. He sees them as the keys not just for his organization, but for the future of Arizona’s commercial real estate industry.

Providing networking events, information sessions, and education opportunities for more than 540 members is so important for fostering relationships and keeping industry pros abreast of issues and concerns that impact their business, he says.

The Arizona chapter’s Market Leader Series, quarterly events that feature small panels of experts on such important local topics as job growth, distressed real estate and the like, has garnered standing- room-only attendance, he says.

This year, local members also get to share with their peers from around the country and showcase their own state’s attributes as Phoenix hosts NAIOP’s annual meeting in October.

Other key strategies for Haenel as he steers the NAIOP ship forward are mentoring and encouraging the next generation of local commercial real estate leaders to ensure the industry remains vital for the short- and long-term future.

“As we continue to get older, we are blessed to have some great young people coming up in the ranks,” he says. And Haenel is determined to indoctrinate them with the importance of his “build relationships” mantra.

He is a big backer of NAIOP’s Developing Leaders program, aimed at the under-35 up-and-comers, and the Arizona chapter’s DL Mentor Program, a new initiative that has been a year in development and has just launched.

Along with continuing education for all members and developing and nurturing the young members, the third leg of Haenel’s stool of NAIOP initiatives aimed at nursing the state’s commercial real estate industry back to health, is influencing public policy.

The group lobbied hard for HB2001, dubbed “the jobs bill,” which has several elements including tax incentives and the new Arizona Commerce Authority to proffer those enticements to businesses looking to expand or relocate. Haenel hopes the new legislation will reinforce Arizona’s image as business-friendly and provide a big lure for new or growing businesses and their commercial real estate needs.

Haenel says NAIOP will continue to pressure the legislature on issues that the organization feels could make Arizona more competitive for any type of businesses, and to educate members on the legal ramifications of any new or proposed bills and clarify why they should care.

His assessment of the local commercial real estate industry’s short-term future is that Arizona has all the right elements to take advantage of the recovery as it gains ground, and, long-term, to grow and prosper.

“Arizona is considered a top-tier commercial real estate community,” Haenel says. “We are so lucky to have the quality of professionals in Arizona to create and develop first-class commercial real estate projects. And that allows us to attract, compete and win high quality jobs.”NAIOP-AZ Chairman Mike Haenel

For more information about NAIOP-AZ and chairman Mike Haenel, visit www.naiop-az.org.

AZRE Magazine September/October 2011

 

MD Anderson Cancer Center Lantern of Hope - AZRE Magazine September/October 2011

Banner MD Anderson Cancer Center Brings Hope, Treatment To Arizona

The MD Anderson Cancer Center on the Banner Gateway campus in Gilbert represents a new era of hope, treatment and care for cancer patients and their families.

And like many Banner Health facilities, the MD Anderson Cancer Center was designed and built with patient care in mind. Using the proven model called “evidence based design,” the center’s design is specifically built with healing and comfort in mind. Features such as a healing garden, a bistro-style café, a community learning center and even a boutique offering wigs and other personal items all work in concert to provide the best possible experience for cancer patients and their families. The facility, which opens Sept. 26, was designed by Cannon Design and built by DPR Construction — both leading firms with significant experience designing and building health care facilities.

The design also seamlessly merges the “high-tech” world of medicine with the “high touch” needs of cancer patients to provide care in a holistic way. Natural light, art work, water features and views of nature all work in harmony at the center. In addition, patients receiving chemotherapy and other infusion treatments will get this care in a bright, open environment with floor-to-ceiling windows that provide mountain views — patients can even receive treatments on outdoor balconies while enjoying the Arizona weather.

“We are here to offer hope, comfort and industry-leading care to cancer patients and their families,” said Pam Nenaber, CEO of Banner Gateway Medical Center and the Banner MD Anderson Cancer Center. “The design of our facility will enable us to serve the community well.”

A Medical and Architectural Marvel

Several years in the making, the 133,000 SF, $109M state-of-the-art facility will deliver an unprecedented level of cancer care in Arizona. The center is a collaboration between Phoenix-based Banner Health and the University of Texas MD Anderson Cancer Center in Houston. The center is MD Anderson’s first full clinical extension outside of Houston and will support the multi-disciplinary care approach pioneered at MD Anderson, continually ranked as a leading provider of cancer care.

“Building on an existing occupied campus can be challenging,” said Hamilton Espinosa, national healthcare specialist for DPR Construction. “With all projects, we work through phasing and logistics plans to ensure that construction does not impact operations, paying special attention to traffic and emergency vehicle operations.

“One of the unique elements of the building is what we call ‘the Lantern of Hope,’ a three-and-a-half story architectural feature at the main entrance. Made of Gore Tenara architectural fabric, which is the same fabric used for the retractable roof over Centre Court at Wimbledon, and cut aluminum panel, the feature lights up akin to a ‘beacon of hope’ and includes a water feature underneath to serve as a place for reflection.MD Anderson Cancer Center - AZRE Magazine September/October 2011

The Lantern of Hope was built by Chandler-based Kovach Inc., a nationwide exterior cladding contractor. Kovach provided the aluminum panels that make up the lantern’s distinctive silhouette. Starting with 30,000 pounds of raw aluminum, the panels took shape in Pennsylvania where they were milled into 38 massive plates. They were then transported to Minnesota where each one was cut into a unique pattern using a computer controlled high pressure water jet cutting tool.

Upon arrival in the Valley, each panel received structural fixtures necessary to mount them onto the lantern’s framework. As a final step, the panels were finished with a copper slag blast treatment to give them their final appearance, each weighing more than 700 pounds. The structure, which mirrors branch patterns found on the palo verde tree, rises nearly 60 feet above the center’s open-air entry area.

The design also presented an opportunity for Cannon to showcase its expertise in the project.

“Designing for a cancer patient varies quite a bit from designing for other typical healthcare patients,” said David Polzin, one of the design and planning leaders. “A cancer patient can access care over 100 times during the first year following diagnosis for surgery, radiation treatment, chemotherapy, physician visits, imaging scans, etc.

“When we first started this project, the client team was considering locating the cancer center on one of their downtown urban hospital campuses which would have been challenging for patients to access. During project, the client agreed that locating the cancer center on the Banner Gateway campus in Gilbert would provide better access for patients.”

The cancer center is sited and designed as a standalone building on the campus to provide convenience for patient access, Polzin said. A guiding principle for the building design was to merge the “high tech” with the “high touch” needs of cancer patients and their families. The building design includes simple wayfinding on each of the three floors, along with orientation to the desert landscape. For radiation patients who come for treatment over the course of 30 days in a row, convenient parking is located directly outside the center.

For infusion/chemotherapy patients whose treatment can last anywhere from two hours up to eight hours, the infusion center is located on the top floor with views to the mountains.

The Future is Now

The Banner MD Anderson Cancer Center will also inject some economic muscle into the state. Besides employing hundreds in well-paying health care jobs, the center is already attracting other health care and related industries.

A major hotel chain is planning to open a hotel nearby and other retail spaces are planned and in the works. The cancer center adds to a growing bio-medical cluster in Gilbert while town officials have been busy pushing the synergies health care operators bring to the region.

“The new Banner MD Anderson Cancer Center represents a major milestone towards our strategic goal of becoming a regional and national leader within the rapidly advancing life science industry,” Gilbert Mayor John Lewis said. “We’ve established new services, resources, and incentives to enhance our life science and business environment and attract organizations that will have a positive impact on our future economic growth.”

The Banner MD Anderson Cancer Center’s three-story outpatient facility will employ roughly 250 staff and 70 specially trained physicians. There are 30 multi-specialty clinic exam rooms, nine radiation oncology exam rooms and 40 infusion therapy stations. In addition, 76 inpatient rooms at Banner Gateway will be dedicated to cancer patient care. The center is the first of three phases — later plans call for an additional 200 SF expansion.

For more information about the Banner MD Anderson Cancer Center, visit MD Anderson Cancer Center’s website.

AZRE Magazine September/October 2011

 

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:

www.lrlaw.com
www.swlaw.com
www.ssd.com

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AZRE Magazine September/October 2011

 

Best Public, Commercial Buildings - AZRE Magazine September/October 2011

Arizona's Biggest, Best And Most Memorable Public And Commercial Buildings

Steel, Glass and Marvelous: A look at the biggest, best and most recognizable public and commercial buildings in Arizona

OK, so we don’t have the skylines of L.A., New York or Chicago. But for a state barely celebrating its first centennial, Arizona — Metro Phoenix in particular — is home to some fairly impressive commercial and public buildings.

Arizona doesn’t have the 110-story Chicago Sears Tower (now called the Willis Tower) … but the Chase Tower in Downtown Phoenix looms as the tallest building in Arizona at 40 stories.

We don’t have New York’s swanky Plaza Hotel … but the Arizona Biltmore Resort & Spa — The Jewel of the Desert — is a world-famous travel destination.

The Los Angeles Coliseum? … Nope, we don’t have that either. But University of Phoenix Stadium in Glendale already has played host to one Super Bowl and two BCS National Championship Games.

As part of AZRE’s Arizona Centennial Series, a look at the biggest, best and most recognizable public and commercial buildings in the state.

Best Sports Venue

University of Phoenix Stadium, Glendale
Contractor: Hunt Construction
Architect: Peter Eisenman
Year built: 2006

University of Phoenix Stadium, Glendale - AZRE September/October 2011One might say that the Arizona Cardinals scored when they found their new home in $455M University of Phoenix Stadium. With a multi-purpose design, the 63,400-seat stadium is host to not only football and soccer games, but to an array of events including motor sports competitions, trade shows and concerts. While the stadium may pride itself on its innovative versatility, the building’s design is equally as impressive. The exterior of the stadium, with alternating reflective metal panels and the iconic “Bird-Air” retractable fabric roof, was designed to replicate a barrel cactus. The interior features artistic elements including nostalgic photos and a series of murals representative of Arizona.


Tallest Building

Chase Tower - AZRE Magazine September/October 2011Chase Tower, Phoenix
Contractor: Henry C. Beck Co.
Architect: Welton Becket & Associates
Year built: 1972

Chase Tower certainly stands out in the Phoenix skyline with its modern use of glass, steel and concrete. This 40-story financial establishment was originally constructed for Valley National Bank, which after a series of mergers is today Chase Bank. In addition to its contemporary style, the tower strays from tradition with its underground, retail entry level, as opposed to the traditional commercial lobby space used in other buildings of its type. Aside from the tower’s primary use as an office space, Chase Tower offers restaurants, retail and, of course, banking services.


Oldest Commercial Building

Orpheum Theatre, Phoenix
Contractor: J.E. Rickards and Harry Nace (renovation Orpheum Theatre, Phoenix - AZRE Magazine September/October 2011by Huntcor, phases 1 and 2; Joe E. Woods, Inc., phase 3)
Architect: Lescher & Mahoney
Year built: 1929

As the only designated historic theater and last remaining example of theater palace architecture in the Valley, the fully restored Orpheum Theatre leaves little to the imagination when it comes to envisioning the grandeur of drama and cinema in America’s Golden Age. The original Spanish Baroque style theater was built by J.E. Rickards and Harry Nace as the final major construction project before the Great Depression. Once dubbed the “Grand Dame of Movie Theaters,” the Orpheum was originally intended for film and vaudeville performances. Though ownership of the theater has been passed down from Paramount to cinema aficionado James Nederlander to the City of Phoenix in 1984, its elegant, 1,364-seat Lewis Auditorium and glamorous marquee at Second and Adams prove that the “Grand
Dame” status has survived.


Best Hospitality Property

Arizona Biltmore Resort & Spa, Phoenix
Arizona Biltmore Resort & Spa - AZRE Magazine September/October 2011Architect and builder: Albert Chase McArthur
Year built: 1929

Albert Chase McArthur certainly called upon the teachings of his former instructor, Frank Lloyd Wright, when he designed “The Jewel of the Desert,” The Arizona Biltmore Resort & Spa. The resort’s construction features McArthur’s signature concrete “Biltmore Block,” whose geometry mimics the surrounding palm trees. In its early days as the preferred resort of celebrities and heads of state, the Biltmore was owned by William Wrigley Jr. With expansions and renovations including two golf courses, a spa, the Paradise Guest Wing and Pool, ballrooms and additional meeting spaces, the resort retains its status of elite hospitality and one of the largest hotels in Arizona.


Phoenix City Hall - AZRE Magazine September/October 2011Best Government Building

Phoenix City Hall
Contractor: Hunt Construction Group
Architect: Langdon Wilson
Year built: 1993

In relation to its surroundings, and rising up 22 stories, Phoenix City Hall can be classified as one of the Valley’s few skyscrapers. The building, also called the Phoenix Municipal Building, replaced the Old City Hall, which was located in the Calvin C. Goode Municipal Building. The building is home the City of Phoenix and the origin of legislation regarding public safety, transportation, recreation and sustainability. Phoenix City Hall is the common stomping ground for the governments of the city’s eight districts.


Most Expensive Commercial Building

Most Expensive Commercial Building - AZRE Magazine September/October 2011CityScape, Phoenix
Contractors: The Weitz Company and Hunt Construction
Architect: Callison Architecture
Year built: 2010

The phrase “never a dull moment” is often reserved for people and places that provide some source of endless entertainment—and that’s exactly what CityScape offers. The $900M, mixed-use development hits the perfect balance of work and play with its collection of commercial towers, entertainment venues, retail and restaurants spanning two city blocks. The mixed-use facility may be one of the few places Valley residents and tourists can exercise, have a relaxing morning in Patriot’s Park, grab sushi or burgers for lunch, grocery shop, buy that new dress, attend a baseball game and finish the day off at a swanky restaurant or bar—all without getting in a car.


Best Medical Facility

Phoenix Children’s Hospital
Contractor: Kitchell
Architect: HKS
Year built: 2011

TPhoenix Children's Hospital - AZRE Magazine September/October 2011he visual spectacle that is now the Phoenix Children’s Hospital’s new main building impacts countless drivers on State Route 51 with its lights and seamless architecture. And with the 11-story tower capable of serving 425 patients, the hospital hopes to impact equally as many children. With the new tower comes additional clinic space and operating rooms, a new Pediatric Intensive Care Unit and a separate Cardiovascular Intensive Care Unit in response to the hospital’s successful Children’s Heart Center. The hospital’s recent makeover was not limited to the construction of the new tower, but included renovations to the existing buildings and new of satellite centers.


Best Public Building

Musical Instrument Museum, Phoenix
Contractor: Ryan Companies US
Architect: RSP Architects
Musical Instrument Museum - AZRE Magazine September/October 2011Year built: 2010

Former Target CEO and African art collector, Robert J. Ulrich, was inspired to found the Musical Instrument Museum after visiting a similar museum in Belgium. The museum’s modern design is meant to compliment its surrounding desert landscape. MIM’s interior features a tile path, “El Río,” that flows to connect each of the museum’s galleries, as well as structural lines designed to echo those of common musical instruments. The museum boasts a unique collection of 14,000 musical instruments from 200 countries, with an emphasis on those of Western origin and includes pieces which once belonged to music legends including John Lennon and Eric Clapton.


Biggest Commercial Building

Phoenix Convention Center
Contractor: Hunt-Russell-Alvarado
Phoenix Convention Center - AZRE Magazine September/October 2011Architect: HOK Venue
Year built: 2008 (final phase)

Home to countless trade shows, conventions and formal events and weighing in at 1.9 MSF, the Phoenix Convention Center is among one of the largest of its kind. The many structures of the convention center are built with stones and materials native to Arizona and designed to emulate our southwestern landscape and culture. Each building combines innovation and tradition with state-of-the-art technology services for vendor presentations and art from nationally recognized artists that highlight Arizona’s cultural identity.


Most Recognizable Building

Biosphere 2, Tucson
Builder: Space Biosphere Ventures
Architect: Phil Hawes
Year built: 1987, 1991

Biosphere Tucson - AZRE Magazine September/October 2011Biosphere 2 is the much-anticipated sequel to the original biosphere made famous by years of evolution—Earth. The facility functions as a world within a world, separated from the outside by a 500-ton steel liner. Under its 6,500 windows and 7.2M cubic feet of sealed glass, self-sufficient ocean, wetland, grassland, desert and rainforest ecosystems thrive. In addition to the awe-inspiring glass dome structure, it includes the Technosphere basement floor and the Energy Center with electrical and plumbing services to maintain climate and living conditions within the dome. Biosphere 2, originally  funded by a $30M gift from the Philecology Foundation, is now managed by the science program at the University of Arizona.

AZRE Magazine September/October 2011

 

Local Initiatives Support Corp. - AZRE Magazine September/October 2011

Local Initiatives Support Corp., Raza Development Fund Capitalize $20M Loan Fund

Cities along the light rail to benefit from $20M development loan fund, capitalized by Local Initiatives Support Corp. and the Raza Development Fund, to build affordable housing and other sustainable amenities.

Picture this:
You get on Metro light rail at your workplace in Phoenix and disembark in Mesa in front of your favorite organic grocery store. A shaded pedestrian path allows you to walk to your home on the 10th floor of a new apartment tower, which is populated by other working families. On the way you pick up your child at a local charter school.

There’s no car, no gas burned, no miles of driving on asphalt freeways.

Pipe dream? Perhaps not.

This type of urban development — denser, pedestrian-oriented, close to public transportation — may be more possible than you think.

A $20M loan fund for developers aiming to build affordable housing and other amenities along the Metro light rail line should spark activity in the Valley’s nascent urban development market.

Right now, says Mesa Mayor Scott Smith, that market is relatively immature and doesn’t have a critical mass of developers who are willing to risk financing urban projects.

Smith recently joined Tempe Mayor Hugh Hallman and Phoenix Mayor Phil Gordon — both of who have worked to promote transit-oriented development in their light rail cities — to tout the importance of the Sustainable Communities Development Fund.

Capitalized jointly by the Phoenix office of the Local Initiatives Support Corp. and the Raza Development Fund, the fund is expected to grow, hopefully reaching an eventual goal of $50M, says Shannon Scutari, who has been hired as a consultant by Local Initiatives Support Corp.

Scutari is coordinating efforts of the Sustainable Communities Working Group, a coalition of state, local, regional and non-profit organizations that are working to make equitable transit-oriented development a reality.

The coalition is a “signature effort,” Scutari says, a broad-based, intergovernmental, public/private partnership of people who share a goal: fostering sustainable, affordable urban neighborhoods near mass-transit corridors.

It’s new territory, far different than the development that spawned suburban sprawl, with far-flung housing developments connected not by a sense of community or shared-purpose, but by asphalt.

“This is not business as usual,” says Teresa Brice, director of Local Initiatives Support’s Arizona office, “This is something that will require (developers) to do something a little different than build three units per acre.”

Local Initiatives Support Corp. has hired a consultant to do a feasibility study to determine the affordable housing needs along the light rail line.

The study will attempt to determine the capital needs of the development community, assess what each jurisdiction will be able to bring to the table, and determine what the philanthropic sector can contribute.

Finally, Brice says the study will recommend how to structure the fund and create joint underwriting standards to govern it.

But, Brice and Scutari say they already are considering five or six proposals and may go ahead with one or more even if the study is not finished.

The fund will provide seed money or bridge funds that allow a developer to get started on a project.

Funding will not be limited to federal or local definitions of low-income housing. Coalition members will have discretion to examine each neighborhood to determine its needs, she says, whether that is affordable housing, a charter school, a community health center, or a small business.

A proposal submitted by developer Eric Brown seeks funding for a small apartment complex — perhaps nine to 12 units—at Fifth and Roosevelt streets.

Details are still in flux, but Brown says he envisions each unit costing between $600 to $950 a month in rent — well within reach of the commuters, ASU students and other downtown dwellers who use the light rail.

“There’s a lot of positive buzz about urban housing and living in the downtown right now,” says Brown, who is known for his urban developments Artisan Lofts, Artisan Village and Artisan Parkview by Chase Field.

“It takes some expertise — it’s not brain surgery but it does require a developer to understand how an urban person wants to live and what they will need,” Brown says.
And that is a process that is well underway, thanks to the light rail, Mesa’s Smith says.
“This could set the stage and create a foundation for private investors to come in and for the capital markets to adjust and recognize they should cut a check for the types of investment I think will pay off,” Smith says.

Currently the rail line extends only one mile into Mesa, ending just east of Dobson Road. But an extension is planned that will traverse downtown Mesa and end just east of Mesa Drive.

Then, Smith says Mesa hopes to spur the type of redevelopment that Tempe and Phoenix have witnessed along portions of the line. Hallman has credited the light rail for spurring $2.5B in redevelopment along Apache Boulevard.

“Individual projects in individual cities create a patchwork quilt of development,” Scutari says. “This is really a push for a regional policy approach” to development along the light rail. “This is the connective tissue for the corridor.”

For more information about the Local Initiatives Support Corp. and the Raza Development Fund, visit www.lisc.org or www.razafund.org.

 

AZRE Magazine September/October 2011

 

Don Cardon, Arizona Commerce Authority

Don Cardon: The Driving Force Behind The Arizona Commerce Authority

A political appointee with a successful track record in the private sector, Don Cardon has become the face of the new and innovating Arizona Commerce Authority. While Gov. Jan Brewer is chair of the public/private economic development agency and sports mogul Jerry Colangelo serves as co-chair, it is Cardon, as president and CEO, who has his hands on the reins.

Leaders who have gotten to know Cardon better during the process of creating the Arizona Commerce Authority say he keeps his cool at all times, in good days and bad, is respectful of all points of view, is thoughtful, and someone who projects an element of stability for the state of Arizona.

But even more importantly, according to Roy Vallee, outgoing chairman and CEO of Avnet, are Cardon’s financial skills.

“Not only does he have numeric literacy, (he also has an)  understanding of financing, how to pull deals together and how to interact with banks and other sources of capital,” Vallee says.

Cardon began his employment with state government in March 2009 as director of the Arizona Department of Housing, and just a couple of months later Brewer appointed him director of the Arizona Department of Commerce, predecessor of the ACA. Before joining the state, Cardon was president and CEO of Cardon Development Group, creating low-income workforce housing projects in Phoenix, Gilbert, Eloy and Winslow, and was the visionary behind the group that helped create CityScape, a mixed-use development in Downtown Phoenix.

Cardon’s stated intention was to see the ACA through its formative stage until a permanent president and CEO could be brought onboard, enabling him to return to the more lucrative private sector. But as the ACA board of directors took shape, comprising the cream of Arizona’s business and community leaders, Cardon was urged by Brewer, Colangelo and board member Michael Manson to remain.

“We sat him down and said you can’t create vision and hope with no structure or follow through,” says Manson, co-founder/executive chairman of Motor Excellence in Flagstaff. “That’s the worst kind of leadership. He realized that was true. We identified him as one of the few people in the state who had the political connections, the Commerce Department background and the business connections to make this work.”

Manson, who has founded several other companies, including PETsMART, says Cardon brings enthusiasm, energy and integrity to the ACA.

“He’s eternally optimistic and politically sensitive,” Manson says. “It takes a unique person to be politically rooted, but business oriented, and to be able to handle all of the political and business entities and very strong personalities it requires. He is truly focused on doing the right things for this organization.”

Indeed, focus is a key word in Cardon’s vocabulary. In guiding the ACA, the focus is attracting and retaining businesses in science and technology, aerospace/defense, renewable energy, and small business/entrepreneurship. He once told an interviewer: “You can’t just kind of throw a line in water and say whatever fish comes along you’ll take, which isn’t to say we won’t respond to any other opportunities. But you have to know what you’re trying to go after.”

At the Commerce Department, economic development was “a shotgun approach,” Cardon says. It was an approach he intends to avoid.
“There was no focus within the department,” he says. “Because of the lack of focus, I don’t believe the Legislature has had a great deal of confidence in our efficiency, our ability to accomplish what we set out to do. It was an agency that has really lost touch with what it’s really supposed to be about.”

Another ACA board member, Mary Peters, president of a consulting group bearing her name, touts Cardon’s private-sector background.
“Don understands what it takes to attract and retain businesses in Arizona,” says Peters, whose resume includes stints as federal highway administrator of the U.S. Department of Transportation in President George W. Bush’s administration from 2006-2009, and director of the Arizona Department of Transportation from 1998 to 2001.

“He knows how to put projects together and how to manage,” Peters says. “That’s the value I see in Don and what he brings in the transition from the Commerce Department, having that continuity. Having spent most of my professional career in the public sector, it’s helpful for me to have someone with that private-sector experience to realize what businesses are looking for. I have a different perspective. I know very well the regulatory side of government. I know what it’s like to work through issues with government agencies so those issues aren’t barriers to companies that would like to come into Arizona.”

When Vallee of Avnet, also on the ACA board, heard about a move to encourage Cardon to accept the top ACA job, even after a search firm had been hired and specs of the job had been outlined, his instant reaction was, “That’s fantastic.”

The reasons: Cardon had a good track record at the Commerce Department and had been intimately involved in the creation of the Commerce Authority.

“He understands the history and the purpose of what we’re trying to accomplish,” Vallee says. “This was a brand new entity, and if we recruit someone who had not been involved in creating it, that person would flounder for a while trying to figure out what the job is all about.”

Because the ACA is a public/private partnership, having a CEO with experience and expertise in both areas is considered a huge benefit.

“He is better able to manage that environment very, very well — better than anyone with one viewpoint or the other,” Vallee says.

Vallee mentions Cardon’s core values, especially integrity.

“We all want someone in that role we can trust,” he says. “People are going to want to do business with someone they can trust, whether it’s investment coming from within state or from outside. As people get to know Don and develop that trust, it’s going to be beneficial to economic development.”

Vallee pauses and adds, “Don is a good man and a good executive, which makes him a really great fit for this job.”

[stextbox id=”grey”]For more information about the Arizona Commerce Authority, visit www.azcommerce.com.[/stextbox]

Arizona Business Magazine September/October 2011

 

Salt River Devco, Courtyard by Marriott - AZRE Magazine September/October 2011

Salt River Devco, Ak-Chin Indian Community And Tribes Diversifying Their Holdings

Salt River Devco, Ak-Chin Indian Community And Arizona’s Native American tribes are diversifying their holdings through added infrastructure, business parks and development partners

When it comes to large construction projects on Indian lands, casinos and the hospitality industry supporting them generally dominate the public’s consciousness on the subject.
Powerhouse revenue generators such as Talking Stick Casino and Resort, Wild Horse Pass Hotel & Casino and the plethora of other gaming-related projects completed in recent years support the notion.

But even those welcomed construction projects during an otherwise bleak period in the state’s commercial construction history should be viewed as the end of the boom period for casino projects, some observers say.

“A lot of tribes started in gaming and that’s consumed their focus,” says Vince Lujan, president of Salt River Devco, an entity of the Salt River Pima-Maricopa Indian Community. Salt River Devco’s charge is to attract non-gaming related development to Indian community lands. “Now they want to diversify their holdings.”

Developing a game plan

If the build-out of casinos and their ancillary projects has indeed begun, as some suggest, Arizona tribes have already recognized the need to broaden their holdings. Several have launched into non-gaming development with little fanfare — but with the belief those projects will either keep generating revenue for the tribe and/or provide a higher quality of life for their members.

In many instances such projects are underway. The Ak-Chin Indian Community’s waste reclamation facility already is making life easier for tribal members. In other cases, tribes, such as the SRP-MIC, are aggressively adding tenants to their business park.

In addition to the spectacular Fields at Talking Stick spring training baseball facility that the SRP-MIC added to its holdings last year, it has also been ambitious in trying to grow its industrial park with tenants. Chaparral Business Center sits off Loop 101 in an area considered geographically prime because of its proximity to Scottsdale.

The 55-acre park is only partially developed, but Salt River Devco is working hard to change that.

“We want to help the community develop a general land use plan for the 101 corridor,” says Jeff Roberts, Salt River Devco’s asset manager.

That plan calls for medical, retail and light industrial and Salt River Devco is touting its build-to-suit plans to prospective tenants.

In the buildings currently completed, occupancy runs at about 90%, Roberts says. Fender Musical Instruments, William Lyon Homes, Arthur J. Gallagher Risk Management and Insurance Co. are among the current tenants.

The tribe’s biggest commercial project currently underway is the $22M Scottsdale 101 Courtyard by Marriott on the NEC of Pima and Vista Drive, just south of McDowell Ave. When completed in January, it will feature 158 rooms, a 3,000 SF conference center and will be pursuing LEED certification.

Catering to business travelers and spring training guests, the hotel (Marriott’s first on tribal land) is just the kind of project that will boost the industrial park’s attractiveness in addition to supporting the casino and resort,  Roberts says.

“What the 101 corridor has it lots of available land in a desirable locations,” he says. “We want to position ourselves to propose new development to users.”

Because tribes generally don’t have a property tax base to help generate revenue, they are always on the lookout about how to generate revenue through sales taxes or other types of taxes, Lujan says.

Upgrading infrastructure

At Ak-Chin Indian Community in Pinal County, it is just wrapping up construction of a new water reclamation project and breaking ground on another surface water treatment plant.

The water reclamation facility is a $43M project that had been underway since September 2009. With 13 miles of new pipelines and pumping structures along with a 28,000 SF operations facility, the project  has received several awards for its architects, Carollo Engineers, and general contractor, MGC Contractors.

In June, the tribe started construction on the surface water treatment plant. That $18M project being built by PCL Construction is expected to be completed in July 2012.

“In order to support future growth and expansion, we realized there was a need to upgrade our infrastructure,” says Jayne Long, Ak-Chin capital projects manager.

Other Ak-Chin projects include the recent completion of a white shell building in May at its 110-acre industrial park. They are also planning for a second building at the Santa Cruz Commerce Center. Current tenants include Hickman’s Eggs, M&S Machinery, Hit & Pitch and Crossfit Battlefit. The tribe also owns a golf course and regional airport. At both sites, they plan to make improvements.

And in July, it began construction on a 6,500 SF grocery store within the reservation. The Vekol Market will be completed in November, giving tribal members a true grocery store shopping experience.

“The Community has gotten bonding or bank financing on some of these projects,” Long says. “But this community was self sufficient before they had casino operations from its agricultural interests.”

Still, the tribe’s 16-year affiliation with Harrah’s has been a major impetus behind its ability to take on so many projects. It continues to build homes for its members and just completed a new fire station. It is currently in the design stage for a justice complex that will include a police station, detention facility and court. That 50,000 SF project could break ground in 1Q 2012.

It also plans to make improvements to the Ak-Chin Southern Dunes Golf Club, which it acquired last year, and the Phoenix Regional Airport, which it owns.

That’s in addition to the recently completed expansion project at Harrah’s Casino, which doubled its room capacity with the opneing of a five-story addition. The $20M project was financed by the tribe. Harrah’s manages all aspects of the gaming operation and the hotel.

Looking to the future

Casino Del Sol Hotel Lobby, Pascua Yaqui TribeStill, the recession has hurt tribal development just as it has all development.

“The boom years are over,” says Dan Lewis, a Native American market sector leader in the Phoenix office for Leo A Daly, an international architectural, engineering, planning and interior design firm. “Now the focus is on maintaining casino competitiveness and meeting the needs of its members.”

Lewis’ firm just wrapped up design additions to the Pascua Yaqui Tribe’s Casino Del Sol in Tucson. The project included the addition of a hotel, conference center, parking garage, laundry facility and warehouse to the existing 213,000 SF casino.

Peridot Healthcare Center - AZRE Magazine September/October 2011

In Peridot, the $80.2M San Carlos Apache Healthcare Center is scheduled to open in 4Q 2013. The 184,000 SF facility will be a replacement hospital campus for the San Carlos Apache Tribe. It will consist of five buildings on a 50-acre site. The buildings include an ambulatory hospital, behavioral health building, dentistry building, public health building and EMS building.

At the Gila River Indian Community, an upscale premium outlet mall is the latest addition the tribe’s portfolio. The project is expected to break ground in 1Q 2012. It will eventually reach 360,000 SF and feature 90 designer name-brand outlets stores. Plans call for the mall to cover 45 acres.

“The conception for this came quite a few years ago,” says Alia Maisonet, director of communications and public affairs for the tribe. “Then the recession hit and slowed down plans.”

But the tribe recently received word from Simon Premium Outlets that it wanted to move forward. The mall will be next to Wild Horse Pass Hotel & Casino on land previously designated for economic development. The project is expected to generate at least $2.6M in sales taxes.

[stextbox id=”grey”]

For more information about Salt River Devco, Ak-Chin and others mentioned in this story, visit the following links:

www.ak-chin.nsn.us
www.leoadaly.com
www.gilariver.org
www.saltriverdevco.com
www.sancarlosapache.com
www.srpmic-nsn.gov

[/stextbox]

AZRE Magazine September/October 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
President
Bjerk Builders, Inc.

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

8 — JD: John DiVall
Senior VP
Liberty Property Trust

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

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

5 — KM: Keaton Merrell
Principal
Legacy Capital Advisors

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Women in Construction AZ - AZ Business Magazine September/October 2011

Women in Construction AZ Provides A Women-Only Environment To Network

Women in Construction AZ provides a women-only environment to congregate, relate concerns and network

The blueprint for success in the construction industry is no longer signed with ink and set in stone. It’s going through a few revisions, redrafting from a predominately male world to a more level, coed playing field.

Women are throwing on their hard hats and utilizing their unique strengths, too, to gain opportunity and improve the business aspect of the industry.

However, with their unique strengths come unique problems and concerns, and Nate Sachs, founder of Blueprints for Tomorrow, is recognizing such.

In fact, Sachs is digging into his own wallet and providing an environment and outlet strictly for women owners within the construction world to congregate — Women in Construction AZ.

Women in Construction AZ is an organization that provides free monthly luncheons where women can share ideas, listen to keynote speakers and network. The idea was inspired from a Wall Street Journal article Sachs read that stated a high percentage of construction companies are either being owned by women or run by women. This got Sachs thinking.

“Women are very different,” Sachs says. “They’re very nurturing; they’re caring, and those aren’t actually conducive traits to running a company in the construction industry. Their needs are very different; there really wasn’t a forum that was catering to those needs.”

Women run business differently, according to Sachs, by thinking as a tradesman, a businessman — unlike many of their male counterparts.
“The women come in a different angle,” Sachs says. “They were never on the job site for the most part. They look at it as a business, and they run it as a business. They’re more business oriented.”

Thus, Women in Construction AZ was formed, and each month the event attracts about 200 attendees.

The first Women in Construction AZ luncheon held in October last year featured the senior vice president of National Bank of Arizona, Deborah Bateman, as the keynote speaker. All speakers are women as well.

“There are different organizations in the Valley that are specific to your trade, but this is the only one specific to women,” says Colleen Hammond, co-owner of Creative Environments. “With some of the issues we deal with, we’re provided good information, and it’s very apropos for this time.”

Since the first luncheon, attendance continues to increase, from 63 to more than 200 attendees every month.

While the speakers and their respective topics — ranging from HR issues, social networking, and how to evaluate your business properly, to insurances and exit strategies — are relevant and a hit with the attendees, it’s the networking aspect that has proven to not only help the women find business and gain exposure, but bond with one another as well.

“They talk about what’s happening in their world, and I see a lot of business cards exchanged,” Sachs says. “A lot of people are receiving work from one another. They’re meeting people they didn’t know were in the industry, so it has become a real camaraderie.”

Carla Brandt, CEO and founder of Cobra Stucco, agrees and says Women in Construction AZ provides a forum where women can collaborate on the challenges they face in business and their personal lives.

“Women tend to be very competent with communication and, typically, strive to be correctly understood,” Brandt says. “It doesn’t always feel like a wise thing for women in construction to share their fears and perceived foibles with men because of some of the lingering prejudices that still exist in the industry.”

While Brandt says women are still under-represented in the industry, Hammond says their presence is becoming more widely accepted, with more women playing a primary role. Because it’s such a niche market, meeting other women in construction has proven to be beneficial to improve business.

“It helps to share some of the problems we struggle with as well as some of the successes we and they have had and point each other in the right direction,” Hammond says. “It has also definitely helped to make contacts with certain vendors.”

With the industry beginning to turn around with more available jobs and projects, according to Sachs, women want to help one another and show their support. The luncheons provide such an outlet. Not only that, but more jobs means more opportunities for the construction industry becoming more female friendly, expanding the talent pool from which to draw, according to Brandt.

“As women continue to enter the construction field with good results, attitudes begin to change,” Brandt says, “and more and more women continue to enter the arena, bringing fresh talent, new ideas and, oftentimes, better ways to do things.”

[stextbox id=”grey”]For more information about Women in Construction AZ, call (480) 596-1525.[/stextbox]

Arizona Business Magazine September/October 2011

Rochell Planty - president of AzMPI - AZ Business Magazine September/October 2011

Q&A With Rochell Planty, AzMPI President

Rochell Planty, AzMPI President, discusses her role in the Arizona Sunbelt Chapter of Meeting Professionals International, its goals and more.

Q: Tell us a little bit about your professional background.

I have more than 18 years of experience in the industry. My scope of expertise includes public relations, meeting planning and special event coordination, and trade show management. I have served as the director of public relations for the Arizona National Livestock Show which also encompassed event planning and after some years of expanding my experience we launched Rockin R Meetings & Events, LLC, in 2004.

Q: What motivated you at the start of your career? What motivates you now?

I have always been involved in coordinating events since youth. Today, the passion to be a part of the hospitality industry coordinating events is still alive. What continues to motivate me today are the wonderful clients I work with and drive to create an amazing event.

Q: How did you first get involved with the Arizona Sunbelt Chapter?

I became a member of the Arizona Sunbelt Chapter of MPI in August of 2001. I jumped right in feet first and joined the Holiday Party Committee. After that, I had the pleasure of chairing the education forum for five years and was on several other committees.

Q: What are your present goals for the Chapter?

Elevating the value of meetings; Increase the awareness of the Arizona Sunbelt Chapter of MPI throughout the hospitality industry, local media, business community and Arizona Government; Engaging our members through the education, certification and business opportunities AzMPI offers; Increase our membership in the Chapter and their level of satisfaction; and Continue to increase the awareness and participation in the Global Community Challenge which has already exceeded over $1.3 million dollars in referral business between AzMPI members.

For more information about Rochell Planty and the Arizona Sunbelt Chapter of MPI, visit www.azmpi.org.

 

Arizona Business Magazine September/October 2011

 

Credit Unions Big Boose to Small Business - AZ Business Magazine September/October 2011

Credit Unions Could Be A Big Boost To Small Business

Every week while driving to work I notice an increasing number of empty store fronts. A local restaurant, boutique or consulting firm that was there last week, is no longer there today. It makes me wonder how many of those local small businesses could have survived had they applied and been approved for a small business loan at credit unions.

According to the Arizona Small Business Association, there were just about 381,000 small businesses in Arizona in 2008. Think about how many more small businesses there could be if Arizona’s 49 credit unions had the ability to increase their business lending and offer new business loans.

Think about how many jobs that could create. Now think about the potential positive impact that could have on our economy.

Eighteen Arizona credit unions, about a third in the state, provide member business loans.

However, the current statutory cap is set at 12.25 percent of assets.

Many credit unions have refrained from entering the business lending arena because the 12.25 percent cap prevents them from earning sufficient income to cover the cost of starting up and maintaining a business lending portfolio.

Legislation in the Senate, S 509, has been introduced by Sens. Mark Udall  (D-Colo.), Olympia Snowe (R-Maine) and Charles Schumer (D-N.Y.);  and on the House side, HR 1418 introduced by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.). If passed, both bills would increase the business lending cap to 27.5 percent of current assets.

If enacted, legislation raising the current statutory cap of credit union small business lending (from the current 12.25 percent of assets to 27.5 percent of assets) could result in $13 billion in new lending and 140,000 new jobs in just the first year nationwide and $144 million in new lending and 1,600 new jobs in Arizona, according to Credit Union National Association estimates.

“We hear from business owners all the time that have solid plans and want to grow, but the big banks won’t even talk to them,” says Paul B. Stull, senior vice president Strategy & Brand for Arizona State Credit Union. “Increasing credit unions ability to lend to these businesses is needed now more than ever. We can get the economy moving again, but the current economic gridlock is holding us back.

“Local financial institutions, like credit unions, know our markets very well. We understand Arizona and we know how to make Arizona loans for Arizona people.”

The unique benefit to this legislation is no U.S. taxpayer dollars would be needed; nor would any new government programs need to be created.

When other lenders pulled back during the financial crisis, credit unions stepped up to the plate and continued to lend. And even though credit unions are the only financial institution imposed with a statutory cap, member business loans have grown 3 percent in Arizona over the past year, compared with other financial institutions which have decreased an average of 7 percent. Many credit unions, however, may soon be approaching the statutory cap of 12.25 percent of current assets.

The average credit union small business loan in Arizona is $220,000; these are indeed loans to small businesses. With so many local small businesses struggling, these loans are increasingly necessary to support our local economy so it can once again thrive.

With less than 2 percent of the market, it’s important to note that credit unions pose no threat to commercial banks. Small businesses are often turned away from commercial banks because they are too small. This is where credit unions have the ability to fill in the gap.

Credit unions have a long history and good track record with their members of making small business loans, and making them prudently.

Since 1997 the net charge off rate for credit union small business loans in Arizona has been roughly one-fourth the average of other financial institutions (0.23 percent vs. 0.93 percent), and in 2011 averaged 70 percent of other financial institutions (0.91 percent vs. 1.29 percent).

Treasury, Obama Administration and our federal regulator, the National Credit Union Administration, are all in favor of this legislation.  Those standing in the way are only impeding a path to sustain the growth of local economies by supporting small businesses and the jobs that they bring to our communities.

“Arizona needs jobs, businesses need loans to grow and now is the time for Congress to increase credit unions ability to meet those needs,” Stull says. “This is a quick fix to create jobs at no cost to the taxpayer. We are asking Congress to prove their commitment to growing jobs and this is one piece of legislation that does just that.”

For more information about credit unions, visit www.azstcu.org.

 

Arizona Business Magazine September/October 2011

Deliver on Your ROI, Business Meetings

Deliver On Your ROI With Proper Business Meeting Practices

With economic recovery plodding along over the past four years, what is giving businesses the biggest return on investment (ROI) with meetings today? We asked five experts in their fields for a thought on what works in the 2011 marketplace.

Delivering on ROI, MPI, Jim Fausel

Jim Fausel, president and COO, meetGCA

“The best business meeting practices from the past, still apply today. To say that meeting ROI initiatives are any fundamentally different detracts from the sole purpose of meetings — to engage others for information sharing, thought-provoking exchanges and reaping productive outcomes. Ten years ago those fundamentals still applied and were the cornerstone of why organizations and people decided to meet. Although we’ve seen many changes in the past several years in terms of technology and the fine-tuning of why meetings occur and the objectives necessary to achieve meeting success, businesses still should realize that focusing on engaging in meetings with their stakeholders is paramount to the bottom-line of the organization. It’s the human connections and the relationships garnered that matter. Whether it’s for a one-on-one business meeting or a conference of many attendees, continuing to provide stimulating content for the attendees will ensure ROI.”

Delivering on ROI, MPI, Tara Thain

Tara Thain, director of sales, SuperShuttle

“In regard to best practices, we keep it simple. We build a relationship with the client or individual traveler to ensure their transportation needs are met. Through technology and social media, we provide information to our customers regarding our reliable services. For groups and conventions, we provide documents to help them determine their transportation needs, such as proposals, service agreements, manifest arrangements. Educate your customer on your services + Provide the appropriate documents and options to your customer = Have their trust and repeat business.”

Delivering on ROI, MPI, Karolyn Kiburz

Karolyn Kiburz, president, Meetings and Concierges Source, LLC

“Formerly, it was evaluating if the guests enjoyed the conference, had a good experience, etc. (Now it’s) measuring the value of education, and how they are implementing it once they return to the workplace. They need to have their time/money translate into dollars for them once they get back to the office. Networking events are also key as so much business is done during that time. It used to be ‘have a cocktail and relax’ events. Now it’s ‘who can I meet to help me in my business and how can I help them’ events.

Pam Williams, meetings development manager, Visit Mesa:

“Providing good service and valuable resources has meant the most to our clients in the past. What’s important today are unique venues that set the stage to deliver savings and ROI. Additionally, we are working on programs to assist in promoting our clients meetings and events through social networking efforts and event landing pages that list opportunities and discounts for their attendees.”

Stephanie Wynn, principal executive, Eventify:

“Prior to 2008, business leaders in the meetings community use to be a little more lenient and flexible with business practices that delivered ROI. I think ROI was more of a goal and something of an after-thought, but since the economic decline, it’s become more of a way of life. Supplier quotes, client pricing, meetings packages, etc., used to be geared towards goodwill or with the thought that if you gave a little in terms of negotiation, it would lead to repeat business or brand loyalty. That’s no longer the case today. Today, suppliers, planners, clients, employees, and employers alike are asking what delivers ROI before planning or servicing even commences. Simply using the same tactic across the board will not work. Each case is unique and needs to be tailored to the organization or client’s needs. Things have become more streamlined, products have been eliminated, packages reduced, incentives have gone away, bare bones is the new norm. I wouldn’t say that today’s practices work — they are only temporary fixes to address the current economic climate.”

[stextbox id=”grey”]For more information on ROI or MPI (Meeting Professionals International), visit www.mpiweb.org.[/stextbox]

 

Top Arizona Legal Cases - AZ Business Magazine September/October 2011

Centennial Series: Top 10 Arizona Legal Cases

ASU law professor and dean emeritus names top Arizona legal cases

Arizona has grown in the past 100 years from a territory formerly part of the wild, wild West to a state with a rich history of legal cases affecting either local residents or residents along with the rest of the nation. Based on my own views as an attorney, educator and author, as well as consultation with a few people who know the legal history of the state a lot better than I do, I’ve compiled two such lists. Each is in chronological order and each case name is followed by the court that decided it, the date of the decision, and a sentence explaining the importance of the case.

The first contains three Arizona legal cases of national importance that arose in Arizona and that had a national impact, but that had no special impact on Arizona different from the impact on the rest of the country.

A. Cases of National Importance:

Top Arizona Legal Cases, Miranda v. Arizona, U.S. Supreme Court1. Miranda v. Arizona. U.S. Supreme Court (1966).

Requires police to give “Miranda warnings” prior to questioning a suspect in custody, in order to be able to use a confession obtained through the interrogation at trial.

2. In re Gault. U.S. Sup. Ct. (1967).

Requires that juveniles be given due process protections in juvenile delinquency proceedings.

3. Bates v. State Bar of Arizona. U.S. Sup. Ct. (1977).

Holds that lawyer advertising is protected by the First Amendment.

B. Cases of Arizona Importance:

1. State v. Tucson Gas, Elec. Light & Power Co. Az Sup Ct. (1914).

Holds that the Arizona Corporation Commission, rather than the state Legislature, has the exclusive power to regulate utility rates.

2. Orme v. Salt River Valley Water Users’ Ass’n.  Az Sup. Ct. (1923).

Holds that the Legislature, if it can get a two-thirds vote in each House, can prevent voters from subjecting new legislation to a voter referendum by declaring an emergency, whether an emergency actually exists.

3. Williams v. Lee.  U.S. Sup. Ct. (1959).

Holds that state courts have no jurisdiction over civil cases that arise on Indian Reservations, even if the dispute is between an Indian and a non-Indian.

4. Arizona v. California. U.S. Sup. Ct. (1963).

Establishes the extent of Arizona’s right to water from the Colorado River.

5. Kenyon v. Hammer. Az Sup. Ct. (1984).

Holds that the right to recover damages for personal injury is a fundamental right in Arizona that cannot be abrogated by the Legislature.

Arizona Legal Cases, Mecham v. Gordon6. Mecham v. Gordon. Az Sup Ct. (1988).

Because of Gov. Evan Mecham’s impeachment conviction, cancelled a recall election that had been scheduled on the basis of voter recall petitions, thus permitting Secretary of State Rose Mofford to serve out the remainder of Mecham’s term.

7. Roosevelt Elementary School District v. Bishop. Az Sup. Ct. (1994).

Requires substantial equalization of state funding for public school districts in Arizona.

[stextbox id=”grey”]Paul Bender teaches courses on U.S. and Arizona constitutional law. He has written extensively about constitutional law, intellectual property and Indian law, and is coauthor of the two-volume casebook/treatise, Political and Civil Rights in the United States. Professor Bender has argued more than 20 cases before the U.S. Supreme Court, and actively participates in constitutional litigation in federal and state courts.[/stextbox]

Arizona Commerce Authority - AZ Business Magazine September/October 2011

Arizona Commerce Authority Aims To Bolster The Business Environment

The new kid on Arizona’s economic development scene is poised to shake things up. The Arizona Commerce Authority (ACA), a public/private entity, is not merely a name change, a rebranding of the Arizona Department of Commerce that over the years received its share of praise and an increasing level of criticism. And it’s not just a committee of top-shelf business leaders.

“It’s more than that,” says Don Cardon, president and CEO of the Arizona Commerce Authority. “It’s really a call to arms.”

Created by Gov. Jan Brewer through an executive order a year ago, and formally established by the Arizona Legislature early this year, the Arizona Commerce Authority is the cornerstone of the Arizona Competitiveness Package, a mix of tax benefits and incentives targeting quality job growth. The Arizona Commerce Authority’s leadership board consists of 17 of Arizona’s top CEOs who provide oversight and valuable input, with House Speaker Andy Tobin and Senate President Russell Pearce as ex officio members. Brewer chairs the Arizona Commerce Authority, and sports entrepreneur Jerry Colangelo serves as co-chairman.

The state’s university president, chair of the Rural Business Advisory Council and other committee chairs round out the balance of the 31-member ACA board.

The leadership board’s focus is on growing and diversifying Arizona’s economy and creating quality jobs throughout the state. The ACA works closely with such key partners as the Science Foundation Arizona, the three state universities, regional economic development groups and local communities.

The ACA is targeting these key base industries — aerospace and defense, renewable energy, science-technology, and small business and entrepreneurship. It is funded through existing payroll withholdings under an annual operating budget of $10 million, plus a so-called deal-closing fund of $25 million, some of which will be allocated for job training.

Michael Manson, an ACA board member and founder/executive chairman of Motor Excellence in Flagstaff, says he thinks the quasi-public agency will produce results for a number of reasons.

“By involving business leaders as we have and funding it by government we are removing some of the politics, enabling more performance and quicker response to commercial opportunities,” says Manson, who also founded PETsMART. “The pendulum swung a little far before the recession toward government regulations, but we need to get back to being more oriented toward entrepreneurial commercial opportunities.”

Mary Peters, president of Mary E. Peters Consulting Group, says the ACA draws from the successful endeavors of other states.

“We now have a mindset that Arizona is open for business,” says Peters, a former federal highway administrator with the U.S. Department of Transportation and former director of the Arizona Department of Transportation. “We’ll do what we can, especially in the aerospace and defense industries. If we’re not out there working to bring them to Arizona, other states will.”

Under the deal-closing Arizona Competes Fund, a company will need to achieve certain performance measures including average employees’ wages above the county’s average wage, health insurance coverage minimums and other requirements similar to the state’s existing job-training program. Backers say the fund will spur investment in projects in the targeted industries.

It replaced the inactive Commerce and Economic Development Council deal-closing fund, is controlled by CEO Cardon, and puts Arizona among the top one-third of states with aggressive economic development programs, supporters say.

Funds provided to growth projects must result in a net benefit to the state, consistent with the Arizona Constitution’s gift clause. In addition, an economic impact analysis by an independent third party will be conducted on all projects to determine potential return on investment benefits to the state. Furthermore, funding will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects.

The Competitiveness Package extends the existing job-training program, a reimbursable grant program for job-specific training plans for employers creating new jobs or increasing the skill and wage levels of current employees.

Arizona’s Enterprise Zone Program is replaced with a new Quality Jobs Tax Credit for new job creation statewide. This tax credit is performance based on net new job creation and capital investment with specific eligibility qualifications for urban and rural businesses.

The tax credit for each new quality job created is $3,000 per year for three years and is limited to 400 new jobs per employer, per year. The program is capped at 10,000 new jobs per year. Experts say the program will increase Arizona’s competitiveness ranking to No. 3 from No. 9 in the Mountain West.

On the tax side of the equation, the electable sales factor for multistate corporations increases to 100 percent from 80 percent in equal increments from 2014 to 2017. A corporation that conducts business both in-state and out-of-state must apportion its income from business activity based on the ratio of property, payroll and sales in

Arizona compared to the corporation’s property, payroll and sales everywhere.

The corporate income tax rate is reduced by 30 percent to 4.9 percent from 6.97 percent in equal increments from 2014 to 2017. The change is expected to improve Arizona’s national ranking from 24th to No. 5, and from No. 6 to No. 3 in the Mountain West.

Arizona Commerce Authority

Under personal property, depreciation schedules are further enhanced for prospective acquisitions of commercial personal property on or after 2012.
Colangelo, partner of JDM Partners, explains his determination in agreeing to serve as co-chairman of the Arizona Commerce Authority.

“We will eliminate all distractions in pursuit of the ultimate goal — restoring economic vitality and stability to our state,” says Colangelo, former top executive of the Phoenix Suns and Arizona Diamondbacks. “Our new structure automatically eliminates the agency’s culture of entitlement and political sloth, and we have introduced what I believe to be a ferocious approach to both retaining and attracting business for the benefit of Arizonans, their families and our children.”

For more information about the Arizona Commerce Authority visit www.azcommerce.com.

Pop-Up Stores, Oei Designs - AZ Business Magazine September/October 2011

Pop-Up Stores Have Businesses, Consumers Rethinking Retail

The concept of “Pop-Up Stores” has a long history in the retail world.  Years ago apparel retailers traveled to different cities displaying their merchandise in trunks.

After World War II, discount chain stores soon appeared as manufacturers set up pop-up stores to sell their excess merchandise.Oei Design, Pop-Up Stores

Today, pop-up stores are popular holiday season destinations, particularly during Halloween and Christmas. These two retail concepts have been in the marketplace for about 15 years and in the parlance of the specialty leasing professionals, they have been referred to as temporary stores.

But as retailers continue to face challenging economic conditions, the pop-up store concept could be the perfect bridge which keeps commerce energized until long-term commitments are once again the norm.

Pop-up stores offer existing retailers a more attractive opportunity to expand their business, experiment with new locations and/or concepts. Pop-up stores offer the start-up entrepreneur a less expensive way to get up and running without the psychological road block of a traditional 5- or 10-year lease in the current economy.

“It’s Americans being creative,” says Kim Kunasek, CEO of Oei Design, an Arizona company that along with the Ridemakerz team, was the two-time winner of “Pop-Up Store of the Year,” 2009 at Downtown Disney Anaheim and 2010 at Downtown Disney Orlando.
The competition is sponsored by Chain Store Age magazine.

Oei Design has been designing stores for Build-A-Bear Workshop since its first store in 1995. In 2010 Oei designed a pop-up store for BAB at Freehold Raceway Mall in New Jersey. LittleMissMatched, an East Coast retailer that does not yet have a presence in Arizona, had Oei Design do a pop-up store at Water Tower in Chicago.

“Retailers everywhere that are weathering the tough economy as well as entrepreneurs that have a great new concept might be experiencing a kind of paralysis,” says Rizal Oei director of design. “Pop-up stores give them the opportunity to think outside the box to get their product to the marketplace quickly, without the long-term lease, and with design that is more cost effective and sustainable.”

The approach to designing a successful is pop-up store is different than the traditional process. As time is of is of the essence, having an experienced team in place is critical.

A specialty leasing expert can help to identify locations that a particular product, service, event or marketing campaign could be the most successful. The designer would make a thorough inventory of existing assets so as to resurface or reuse without compromising on the client’s brand.

The fixturing would be chosen not only for cost but for its ability to be taken down and reused at another location if the client chose to relocate.

California firm Image 4 has a wall system that can be considered a fixture yet built off site. This process can shorten the lead time and  limit the number of permits to just the electrical. Design is crucial. The  goal is to make a pop-up store look permanent. A pop-up store can go up in less than 60 days. If funding is required the time frame could be longer.

Pop-up stores also are used for marketing campaigns by national brands. Kellogg’s Pop Tart pop-up stores have generated revenue, making everyone look at their marketing budgets differently.  Companies that are Web-based (no physical building in a mall or outlet) are using pop-ups to gain attention to their products. Even big-name retail chains are finding pop-ups vital to their sales. Those include Nike, Puma, and ToysRUs.

In an article in USA Today, John Challenger of outplacement consulting firm Challenger, Gray and Christmas, says he sees pop-ups as a reflection of our changing times. “Retailers,” he says, “are simply taking their best-selling merchandise and plunking it down in smaller stores. They’re shifting because it’s a new world, one with smarter shoppers’.”

“The pop-up store concept may be a result of the challenges in our economy,” Kunasek says, “but it could stay as a desired option even as the economy recovers.”

She says a recent trip to China to learn about design and retail industry opportunities and her observation of the effect the fast pace of developments in technology is having on the consumer in general, might make the pop-up store the desired option for many retailers.

For more information about pop-up stores or Oei Design, visit www.Oei-Design.com.

[stextbox id=”grey”]Oei Design
(480) 947-5888
www.Oei-Design.com[/stextbox]

Arizona Business Magazine September/October 2011

 

The Mercado - Implied Covenant Claims - AZ Business Magazine September/October 2011

Implied Covenant Claims And How Wells Fargo Changed Them

In this article, Peter Moolenar, a partner at Dioguardi Flynn LLP, explains how Wells Fargo changed the way we look at implied covenant claims in Arizona law.

The Arizona Supreme Court’s opinion in Wells Fargo Bank v. Arizona Laborers, Teamsters and Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474 (2002), and its progeny have substantially impacted commercial litigation by expanding the implied covenant of good faith and fair dealing (“implied covenant”). In contrast to a written, agreed upon term, Arizona law implies this covenant in every contract.

However, rather than eviscerating parties’ right to negotiate and enter into contracts on express terms, as some naysayers originally prophesied, its largest impact may be more economic than substantive.

Implied covenant claims are exceedingly prevalent in commercial litigation. Indeed, they are present more often than not. Due to the expansion of the implied covenant in Wells Fargo and its progeny, these claims are less likely to be resolved by early motions — resulting in longer, and often more expensive litigation. Without question, this result has only fanned the popularity of these claims.

Wells Fargo arose from a Tri-party Agreement between the Mercado Developers (a partnership headed by Arizona’s former Governor, J. Fife Symington, III) (“Symington”), First Interstate Bank (Wells Fargo’s predecessor) (the “Bank”), and various union pension funds (the “Funds”). The Bank agreed to provide temporary construction financing if Symington was able to secure permanent financing from another lender. The Funds agreed to be that lender.

The Funds took out the Bank’s construction loan and Symington eventually defaulted on the permanent loan. The Funds ultimately claimed, among other things, that the Bank breached the implied covenant by failing to disclose Symington’s deteriorating financial condition to the Funds.

Although the Bank was not expressly required to make such disclosures to the Funds, the Supreme Court found that a jury might reasonably conclude that the Bank’s actions were inconsistent with the Funds’ “justified expectations” under the Tri-party Agreement.

As a result of Wells Fargo and its progeny, a party may breach the implied covenant without actually breaching an express term of the contract. Courts must make a factual determination whether a party acted in a manner inconsistent with the other party’s reasonable or justified expectations. However, these factual questions typically require the parties to undertake costly and time consuming discovery, and make it very challenging for either party to prevail on an implied covenant claim in the early stages of litigation. Therefore, the unintended consequence of the Wells Fargo decision is often longer, more costly litigation.

Arizona Business Magazine September-October 2011

MPI Awards Gala - AZ Business Magazine September-October 2011

MPI Awards Gala – Meet 2011’s Winners

The MPI Awards Gala was held on June 9, 2011. Here, you can meet the people who won awards that night, and what they’ve done to deserve those awards.

Planner of the Year

Mary Young, CMP, M.Y. Events

Throughout Mary Young’s 25 years as an industry leader, she has been consistently named one of the Top 25 Meeting Planners in the Valley by the Phoenix Business Journal because of her demonstration of leadership and her dedication to make an impact on MPI and the meeting’s industry. She successfully owns a full-service meeting planning company that she opened in 1997. In addition to that, she has served on the board of directors and other committees for the chapter.

Supplier of the Year

Gordon Murray, Super PhotoVideo

Gordon Murray, a nine-year member, has always supported the chapter by providing his photography services for meetings and events, and has also served on many committees. He has photographed two monthly programs and the BUY MPI Trade Show. Murray was also the photographer at Leadership Retreat.

Rising Star Award

Amy Miranda, Tourism Office

Amy Miranda wasted no time and created a new committee as chair of fundraisers the minute she rejoined last year. She is a true asset to her employer and always shows her strong dedication and support to the chapter.

James A. Fausel Student of the Year Award (two winners)

MPI Awards Gala - AZ Business Magazine September/October 2011

— Heather Luvisi is a student at ASU studying Business with a minor in Tourism, Development, and Management. She started as a key volunteer for the Student Run program, while being part of the Education Committee. She is president of the MPI Student Club.

— David Borsheim promotes AzMPI and the industry as a whole to rally students in the hospitality sector. He made himself known throughout the chapter and has become the face of AzMPI while serving as Student Relations chair. He graduates in December and has landed an internship with Enterprise Holdings, which he has already begun.

Special Recognition

Angela Prestinario, Stratum Laser Tag

Angela Prestinario shows her loyalty by attending almost all meetings and events. She also is a committee chair and gives to the chapter and donates to its raffles. Prestinario also sponsors members for the Chapter Fun Event at her family venue, Stratum Laser Tag.

Committee of the Year Award

2010 Summer Education Forum, Rochell Planty, CMP, CTA Chair and Tiffany Higgins, Co-Chair

The 2010 Summer Education Forum Committee came together and put team effort into creating outstanding educational programs such as the one held last August in Tucson. It held up to its theme, “Tucson Will Surprise You.” It was also awarded an “Award of Excellence in Association Management” by the Arizona Society of Association Executives for its exceptional location, effort and style.

Host Property/Venue of the Year

Wild Horse Pass Hotel & Casino  

Wild Horse Pass Hotel & Casino hosted the November Monthly Educational Program. It went above and beyond to make a memorable event for all members by adding a special honor to Veteran’s Day. It also hosted the VIP reception along with providing accommodations and private airport transportation for MPI International Chair, Eric Rozenberg. It will also host the Leadership Retreat.

Sponsor of the Year

Mark Anderson, Southwest Scenic Group

This eight-year MPI member has consistently shown dedication through his contribution of goods and services. He never says “no” to an event request and his contributions have been described as crucial to the success of BUY MPI Tradeshows, Annual Awards Galas, Monthly Programs and the ummer Education Forum. He served as co-chair of the BUY MPI Committee and will be serving as co-chair of the 2012 Education Forum.

Member of the Year Award

Margie Long, Hot Air Expeditions

Margie Long has been a part of MPI for 16 years and has been a great example of an outstanding member. In 2010, she served as a sponsor for one of the monthly programs and has always worked behind the scenes. Long is generous with raffle donations and she co-chaired the Host & Hospitality Committee for two years.

Edward E. Scannell Award

Pamela Traficanti, CTA, Metropolitan Tucson Convention & Visitors Bureau

Pamela Traficanti is a 21-year MPI member with more accomplishments than can be named. She devoted her time and services to MPI and several other industry associations including AzSAE and HSMAI. Traficanti also is involved in Arizona Children’s Association as a board member, and Up with People reunions.

President’s Achievement Award

Jamie Cook, CMP Strategic Meetings & Incentives

Coming up on 20 years as an MPI member, Jamie Cook is a past president who runs an extremely successful meeting planning company. Cook is respected among her peers and clients.

 

MPI Gala sponsors:

PHXproductionsCort Furniture

Strategic Meetings & Incentives

Southwest Scenic Group

PSAV

Hilton Hotels

US Airways

Tempe Tourism Office

Super PhotoVideo

McDonald Floral & GiftsTucson Convention and Visitors Bureau

Lisa Pressman Ensemble

Swank Audio Visuals

Meetings & Concierge Source

Dave & Buster’s

Hawaii Convention & Visitors Bureau

SuperShuttle/ExecuCar

Khani Cole

[stextbox id=”grey”]For more information on the MPI Awards Gala or the Arizona branch of MPI, visit www.azmpi.org.[/stextbox]

Arizona Business Magazine September/October 2011

Jonas McCormick, Deloitte - AZ Business Magazine September/October 2011

Jonas McCormick, Managing Partner, Deloitte

Jonas McCormick is a managing partner at Deloitte, the world’s largest private professional services organization in the world. McCormick discus