Tag Archives: the alter group

Honorable Mention 2011: Polsinelli Shughart, RED Development

GlobalTranz Signs 34KSF Lease at Riverwalk Arizona

GlobalTranz Inc. will expand its operations in Scottsdale with a new 34,558SF sales and operations space at The Alter Group’s Riverwalk Arizona, a 187-acre mixed-use business park in Scottsdale. Kurt W. Rosene, Senior Vice President of the Chicago-based national corporate real estate development firm announced the transaction.

The new GlobalTranz office will be located at 7500 N. Dobson Rd., where it will occupy the entire third floor starting February 2014; GlobalTranz Inc. will employ approximately 250 people in the suite. The company will retain its existing corporate headquarters at 5415 E. High St. in Phoenix.

Founded in 2003, GlobalTranz is a technology based logistics company that provides innovative solutions enabling shippers to manage their logistics needs and access highly discounted rates. GlobalTranz has created a one-stop-shop for its customer base of over 18,000 shippers. As a Top 20 Freight Brokerage Firm, GlobalTranz has been recognized by Inc. 500 and was recently named by the Arizona Corporate Excellence (ACE) Awards as the 19th Largest Private Company in Arizona, rising 10 spots in the listing over the past three years.

We are extremely excited to be making the leap to this facility. We are currently hiring 36 representatives per month and the additional 34,000 square feet added to our already existing 24,000 square feet is necessary to implement our strategic plan,” said Michael Leto, President-Direct Sales for GlobalTranz.

We are excited to welcome GlobalTranz to Riverwalk,” said Justin J. Miller, Vice President of The Alter Group. “The Company has experienced tremendous growth in the past few years and the entrepreneurial spirit they exude makes them an ideal fit for Riverwalk. We are able to accommodate their current needs in our existing space and hope to build a long term relationship with them as they continue to grow in the Valley and State.”

One of the country’s largest developments on Native American land to date, Riverwalk Arizona will yield an estimated 1.5MSF of corporate office and retail space, and create up to 15,000 new jobs.

Riverwalk Arizona is set on prime land owned by the Salt River Pima-Maricopa Community, home to the Pima and Maricopa Indians, descendants of the ancient Hohokam Indians.

Rod Beach, Senior Vice President of Cresa, represented GlobalTranz. Justin Miller and Kurt Rosene represented The Alter Group.

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TopGolf At Riverwalk Breaks Ground In Scottsdale

 

Golf entertainment leader TopGolf officially broke ground on its first Arizona location at a special ceremony hosted recently at the Scottsdale construction site near Talking Stick Resort.

Approximately 80 people attended the groundbreaking, including Salt River Pima-Maricopa Indian Community (SRPMIC) President Diane Enos and Vice President Martin Harvier, in addition to various local business leaders and residents.

During the event, representatives from TopGolf, The Alter Group and SRPMIC donned TopGolf-branded hard hats while practicing their golf swings atop a green putting mat placed on the dirt at the future 9500 E. Indian Bend Rd. location.

The ceremony also featured a blessing, songs and dance performances by the SRPMIC traditional dancers. All attendees got out of their seats to join hands and participate in the final dance.

“The groundbreaking ceremony served to unite all of the people who are working on the TopGolf at Riverwalk project,” said Talking Stick Cultural and Entertainment Destination Project Manager Blessing McAnlis-Vasquez. “Our community is excited to welcome and partner with TopGolf to bring more entertainment options to our residents.”

The 58,580 SF TopGolf facility, which will feature 3,000 SF of event space and 102 hitting bays, is scheduled to open in the spring. The building is being constructed by ARCO/Murray within The Alter Group’s 176-acre mixed-use Riverwalk development located along the Loop 101 at Indian Bend Road.

TopGolf Real Estate Director Zach Shor estimates that TopGolf at Riverwalk will serve approximately 400,000-450,000 visitors its first year of operation.

“We want everyone in Scottsdale to know that TopGolf is committed to being a good neighbor,” Shor said. “We want to be at your Chamber of Commerce meetings. We want to visit your children’s schools and invite their golf teams to practice at TopGolf. We want to host fundraisers for your local charities and parties for your families and friends. We’re here not only to entertain you, but to serve you.”

Phoenix residents can track TopGolf at Riverwalk’s site progress at topgolf.com/riverwalk and facebook.com/topgolfriverwalkaz.

 

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TopGolf At Riverwalk Teeing Off In Scottsdale; Groundbreaking Later This Month

 

Golf entertainment company TopGolf unveiled its 12th location and first in Arizona and Metro Phoenix, TopGolf at Riverwalk in Scottsdale

The 13-acre property is part of the Salt River Pima-Maricopa Indian Community (SRPMIC). TopGolf will officially break ground on the facility, at 9500 E. Indian Bend Rd. across the street from Talking Stick Resort, during a ceremony on July 19.

General contractor for the project is ARCO/Murray Construction Company of Illinois. The site is expected to in spring 2014.

TopGolf offers competitive golfing games for all ages and skill levels and advanced technology to track every player’s shot. Those who just want to relax can enjoy the upscale, laid-back ambiance that boasts more than 230 high-definition flat-screen TVs and an extensive food and beverage menu crafted by executive chef Mark Boyton.

“TopGolf is honored to partner with the Salt River Pima-Maricopa Indian Community to bring a new kind of entertainment concept to an area that is already renowned as a top cultural tourism destination,” said TopGolf Chief Development Officer Randy Starr.

The July 19 groundbreaking ceremony will feature dancing and singing performances from the SRPMIC and remarks from TopGolf, The Alter Group (TopGolf’s landlord and a major developer in the region), and SRPMIC Council leaders.

“The Alter Group, along with our landowners, are very excited that TopGolf selected our Riverwalk development for its first facility in metropolitan Phoenix,” said Kurt Rosene, senior vice president, national development for The Alter Group.

“TopGolf is unique, bringing golf together with experiential retail to offer something fun for all ages and skill levels, from seasoned golfers to people being introduced to the game for the first time. This first-class operation will provide a wonderful destination and amenity for our Riverwalk tenants and visitors.”

The tri-level facility  will include up to 3,000 SF of private event space and 102 climate-controlled hitting bays that can host up to six players at one time. Starr estimates that TopGolf at Riverwalk will serve approximately 400,000 visitors in its first year of operation. Nearly half of all TopGolf guests describe themselves as “non-golfers.”

“We are thrilled that TopGolf has chosen the Talking Stick Cultural and Entertainment Destination (TSCED) for its new state-of-the-art facility,” said TSCED Project Manager Blessing McAnlis-Vasquez. “This complex will significantly expand tourism as well as job growth for our residents.”

Founded in 2000, TopGolf attracted 1.5M participants in 2012. Its economic impact in the community is significant, creating hundreds of jobs at each location and serving as an anchor tenant that tends to attract other popular franchises to the area.

Its economic output within the SRPMIC and greater Scottsdale alone is expected to exceed $264.5M over a 10-year period, according to a third-party audit.

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The Alter Group Completes Two Leases At Corridors — Phoenix

 

The Alter Group completed two leases at Corridors/2075 at The Alter Group’s 80-acre Corridors – Phoenix mixed-use park.

Michael J. Alter, president of the Chicago-based national corporate real estate development firm, announced the leases signed by Belcan Engineering and Kutta Technologies.

Belcan Engineering Corp. has leased 6,359 SF at Corridors. The company is a global provider of engineering services, specializing in design engineering, engineering analysis, computer modeling, and advanced manufacturing techniques.

Belcan supplies engineering and automation design/build services to industry leaders in the aviation, energy, marine propulsion, heavy equipment, and consumer product sectors. Founded in Cincinnati in 1958, Belcan has grown to more than 65 worldwide offices, 11,000-plus employees and more than $625M in annual sales.

Kutta Technologies has renewed and expanded at the park, leasing 12,049 SF. Kutta Technologies is a high-tech research and development, manufacturer and supplier of command-control-communications software applications, interconnects, components and subsystems for Department of Defense, Department of Homeland Security and National Institute of Occupational Safety and Health programs. The company will take occupancy of its expanded space Sept. 1.

Ryan Orton of Cresa Phoenix represented Belcan Engineering Group. Barbara Lloyd with NAI Horizon represented Kutta. Ashley Brooks of CBRE serves as exclusive leasing agent for The Alter Group on the Corridors property. Brooks and Kurt Rosene, Senior Vice President, National Development of The Alter Group represented the landlord.

“Phoenix is expected to add 53,000 jobs annually between now and 2016, driving demand for Class A office space in the strategic Deer Valley submarket,” Rosene said.

When completed, Corridors will contain approximately 1.5 MSF of single- and multi-story office buildings, as well as a 180-room Drury Inn. Located on the SEC of I-17 and Pinnacle Peak Rd., Corridors is two freeway exits north of the Loop 101 Freeway.

 

People to Know 2011 Reception & Awards Ceremony

People To Know 2011 Industry Leaders And Photos

AZRE Magazine’s People to Know 2011 reception and awards ceremony was held on November 10, 2011 at the Scottsdale Waterfront. In attendance was Arizona’s largest local and national real estate audience, including the following People to Know recipients: attorneys, accountants, city planners, property managers, economic developers and brokers.

Throughout the night, we also announced the top 11 industry leaders. Congratulations to our finalists and winners!

People to Know 2011 Industry Leaders

Architects & Engineers

Michael Medici, AIA
President

People to Know 2011 Industry LeadersSmithGroup
455 N. 3rd St., #250, Phoenix
www.smithgroup.com · (602) 265-2200

Responsibilities: Managing director and member of the firm’s board of directors, architectural management and design
Years at Company: 30
Years in CRE: 32
Accomplishments: Medici has been with SmithGroup since 1980 and has remained active in managing several of its key projects including TGen, Arizona Biomedical Collaborative, Freeport McMoRan Center, National Renewable Energy Laboratory’s Energy Systems Integration Facility, and the POW/MIA Forensic Laboratory at Hickam AFB in Honolulu. He is active in the the community and has served as event chairman of the Annual Cystic Fibrosis Stair Climb & Firefighter Challenge; as a member of St. Joseph’s Hospital Foundation Board; and as past president of ASU Council for Design Excellence. His leadership enables SmithGroup’s Phoenix office to achieve success in the Valley, Arizona and the Southwest.


Attorneys

Michael E. Tiffany
Managing Attorney

People to Know 2011 Industry LeadersTiffany & Bosco PA
2525 E. Camelback Rd., 3rd Floor, Phoenix
www.tblaw.com · (602) 255-6000

Responsibilities: Managing attorney and head of the real estate practice group
Years at Company: 40+
Years in CRE:
30+
Accomplishments: In addition to his duties as managing attorney, Tiffany concentrates in the area of commercial transactions, primarily in strategic planning, business solutions, real estate and finance. His accomplishments include closing HUD insured loans for more than 170 multi-family housing projects on behalf of borrowers, for an aggregate loan amount in excess of $2.2M; and preparing a development agreement between a landowner and the Town of Buckeye as a form for future development agreements. He is a member of the State Bar of Arizona and Maricopa County Bar Association. He is active in with the Thunderbirds and the Sheriff’s Mounted Posse of Maricopa County.

Don J. Miner
Director

People to Know 2011 Industry LeadersFennemore Craig PC
3003 N. Central Ave., #2600, Phoenix
www.fclaw.com · (602) 916-5000

Responsibilities: Focuses on various aspects of commercial real estate
Years at Company: 14
Years in CRE: 32
Accomplishments: Miner was the buyer’s counsel in sale of a portfolio of $101M of loans secured by residential real estate mortgages, and the seller’s counsel in the sale of an 832-acre farm for development of a master-planned community. He was the landlord’s counsel in negotiation and documentation of a 115,000 SF office lease, and tenant’s counsel in negotiation of a 130,000 SF office lease. He represented the ground lessee and developer in the negotiation and drafting of a 65-year ground lease covering 37.5 acres of Native American reservation land for purposes of the development of a commercial sea water aquarium, a butterfly pavilion and related entertainment and restaurant uses. Miner is listed in Best Lawyers in America, Real Estate Law, 2003-2011.


Brokers

Anthony J. Lydon
Managing Director – Industrial/Supply Chain Logistics Solution

People to Know 2011 Industry LeadersJones Lang LaSalle
3131 E. Camelback Rd., # 400, Phoenix
www.us.joneslanglasalle.com · (602) 282-6300

Responsibilities: Manages and directs the industrial supply chain marketing for institutional property owner clients and serves as an advocate for corporate occupiers of space
Years at Company: 1
Years in CRE: 30
Accomplishments: Lydon has spent his 30-year career focused on the industrial commercial real estate sector. In that time, he has become one of Phoenix’s most accomplished industrial brokers. In the last 18 months alone, Lydon has directed some of Phoenix’s top industrial transactions, bringing jobs and capital to the market via deals like the 1.4 MSF Amazon.com lease and the long-term, 153,000 SF Schoeller Arca Systems lease. Lydon has been recognized as a Top Industrial Broker by the Greater Phoenix Economic Council (GPEC), named a CoStar “Power Broker” and a NAIOP Industrial Broker of the Year. He is a 25-year SIOR Designee, as well as a member of the Jones Lang LaSalle Global Supply Chain Group. On a personal note, Lydon is part owner of a Michigan-based Class A minor league baseball team.


Developers

Kurt Rosene
Senior VP

People to Know 2011 Industry LeadersAlter Group
7500 N. Dobson Rd., #151, Scottsdale
www.altergroup.com · (480) 302-6600

Responsibilities: Manage development, leasing and acquisitions for the Western Region
Years at Company: 20
Years in CRE: 24
Accomplishments: Rosene has led The Alter Group to accomplish remarkable things in Phoenix during the past 10 years. After opening the office a decade ago, he has helped solidify the company as one of the premier developers in the Valley. Nationally, Rosene has been able to develop more than $1B worth of real estate in 24 states. His expertise and level of customer service have led to numerous repeat clients. He’s earned the respect of the entire industry and made friendships throughout the country. Recently The Alter Group and John F. Long Properties of Phoenix announced a joint development of three major business parks in the West Valley totaling in excess of 1,500 acres. It is expected to create an estimated 65,000 jobs.


Economic Developers

Christine Mackay
Economic Development Director

People to Know 2011 Industry LeadersCity of Chandler
P.O. Box 4008, Chandler
www.chandleraz.gov/ed · (480) 782-3030

Responsibilities: Directs economic development division, implementing programs to increase and diversify City’s economic base
Years at Company: 14
Years in CRE: 19
Accomplishments: Mackay has been with the City of Chandler for 14 years. During the past five years, she has helped locate or expand more than 145 companies in Chandler, and brought more than $8.9B in capital investment into the community. She was instrumental in helping land the $5B Intel Fab 42 chip manufacturing facility. In 2007, she was named the Economic Developer of the Year, Large Community, for the State of Arizona by the Arizona Association for Economic Development (AAED). In 2010, Mackay was named Leader of the Year in Economic Development-Public Policy by the Arizona Capital Times. She has spent most of her career in commercial real estate. Before coming to Chandler, she was in private sector commercial real estate where she was the research director for a commercial brokerage firm.


Financiers & Accountants

William L. Spart
Senior Vice President

People to Know 2011 Industry LeadersWells Fargo Bank – Real Estate
8601 N. Scottsdale Rd., #200, Phoenix
www.wellsfargo.com · (480) 348-5333

Responsibilities: Business development for Wells Fargo
Years at Company: 21
Years in CRE: 30
Accomplishments: Spart, a 30-year veteran of commercial real estate finance, has witnessed the ups and downs of the industry firsthand. Perhaps that’s why he has taken a leadership role. During his tenure at Wells Fargo, Spart has been active with NAIOP (as a board member), Valley Partnership, Urban Land Institute and the International Council of Shopping Centers (as a member). Spart is a regular speaker at public forums around the Valley and was a member of the 2010 NAIOP roundtable in AZRE Magazine. In his position at Wells Fargo, he manages a diverse portfolio of commercial real estate loans and lenders.


General Contractors

Hamilton Espinosa
National Healthcare Leader

People to Know 2011 Industry LeadersDPR Construction
222 N. 44th St., Phoenix
www.dpr.com · (602) 808-0500

Responsibilities: Developing DPR’s strategic healthcare vision
Years at Company: 13
Years in CRE: 21
Accomplishments: Espinosa, LEED AP, brings more than 20 years of construction industry experience to DPR. Based in Arizona, Espinosa is key to building the company’s healthcare experience locally and nationally. Instrumental in building more then $3B in healthcare projects, including the Banner MD Anderson Cancer Center in Gilbert, his reputation of producing results and developing long-term working partnerships is acknowledged throughout the industry. DPR is one the country’s top technical builders and has been ranked among the Top 50 general contractors in the U.S. for the past 10 years. Espinosa serves as vice chair of the St. Joseph’s Foundation board and is a member of the Arizona Diamondbacks Foundation board.


Property Managers

Mark Stromgren, RPA
Vice President, General Manager of Real Estate Services

People to Know 2011 Industry LeadersNorthMarq
1110 W. Washington St., #110, Phoenix
www.northmarq.com · (602) 254-5790

Responsibilities: Oversees 600,000 SF of Class A office space, including three buildings which are 100% occupied
Years at Company: 4
Years in CRE: 25
Accomplishments: Stromgren joined NorthMarq when the organization acquired his previous employer, Opus Property Services, a move that doubled its portfolio to 60 MSF. For nearly 10 years, Stromgren served as a senior property manager with Opus West Management. Prior to that, he was a general manager with LaSalle Partners. He is an active member of BOMA and NAIOP. He was recently elected to serve as president of BOMA Greater Phoenix for the 2011-2012 board year. He is also a past president of the chapter and has served on the board of directors for 13 years. In addition, he has earned the organization’s RPA designation. He is aso a LEED AP and holds real estate brokerage licenses in Arizona and Colorado. He earned a BS degree from UCLA.


Subcontractors

Daniel Puente
Founder & President

People to Know 2011 Industry LeadersD.P. Electric Inc.
6002 S. Ash Ave., Tempe
www.dpelectric.com · (480) 858-9070

Responsibilities: Provides the necessary planning, organization, direction, coordination and control to meet company growth
Years at Company: 20
Years in CRE: 30
Accomplishments: Big events lit up the offices at D.P. Electric. Puente, founder and president, was awarded the W.P. Carey Spirit of Enterprise Gary L. Trujillo Minority Enterprise Award, and the company celebrated its 20th Anniversary — growing from a firm with four electricians in a garage to a multi-million dollar local success story. Puente is a strong supporter of education and training aimed at fostering personal and professional growth within his organization. He acts as a mentor to educate small minority-owned businesses within the community. He oversees all aspects of the company, including profitability, staffing, marketing efforts, and customer and vendor relations.


Up and Comers

Kimberly Mickelson
Marketing Associate

People to Know 2011 Industry Leaders

Small Giants
4531 N 16th St #124, Phoenix
www.smallgiantsonline.com · (602) 314-5549

Responsibilities: Social media, proposal development and website management for clients
Years at Company: 2
Years in CRE: 8
Accomplishments: Not only is Mickelson one of just three Certified Social Marketing Specialists in the Arizona, she is also heavily involved in the commercial real estate industry. With SMPS Arizona, she is an active member, programs committee member, publicity committee member and social media chair. She is also moderator for the SMPS Twitter account and is in charge of blog submissions for the Building Arizona blog. She is an active affiliate member of AIA Arizona, and an active young leaders group member of ULI. She has coached and trained many organizations and individuals on valuable emerging marketing practices. She recently received the 2010 SMPS Arizona Chapter Rising Star Award. Her desire to make an impact goes beyond personal accomplishments or within her work with Small Giants.


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Construction Projects, AZRE Magazine March/April 2011

CRE Industry Gains Momentum Thanks To New Construction Projects

As 2010 ended, Arizona’s commercial real estate industry gained some much-needed momentum entering the new year, thanks to a slew of new construction projects just completed or scheduled for completion in 2011.

The much-anticipated opening of CityScape signaled a resurgence for Downtown Phoenix, and as the year ended, it boasted a 90% occupancy rate. Rising in the shadow of CityScape is the new Maricopa County Superior Court Tower, scheduled to open later this year.

Elsewhere, Fountainhead Office Plaza in Tempe (439,070 SF); Banner MD Anderson Cancer Center in Gilbert (130,000 SF); and the new FBI building in Phoenix (210,000 SF) are scheduled for completion this year. The new spring training facility in Scottsdale for the Arizona Diamondbacks and Colorado Rockies opened in February.

Although a few new high-rise offices buildings, a hospital and a federal building won’t cure the industry’s ills, still, there is optimism in 2011 that the markets will pick up. The keys, according to experts are business attraction, quality jobs and the loosening of capital.

“I’m really bullish on this year that equity is coming back,” says Barry Broome, president and CEO of the Greater Phoenix Economic Council. “If Arizona shows growth in the third and fourth quarters, it could be a great year for jobs. Once capital frees up, we can start going somewhere.”

Adds Barry Albrecht, CEO of the Central Arizona Regional Economic Development Foundation: “Once the lending marketplace returns to funding 75% projects, we will see new construction respond. When state leadership designs a meaningful and competitive tax base, existing Arizona companies will expand and occupy available properties.

Additionally, once the Arizona Commerce Authority develops incentive programs that compete with other states’ programs, we will see business attraction. When we, as a state, create a competitive operating environment for industry to prosper, we will see a commercial real estate recovery.”

Here’s the outlook for 2011 from industry experts:

ECONOMY

“By far the biggest influence on current conditions is the status of the national economy. The Arizona economy will improve as the U.S. economy improves and as people continue to get their financial houses in order. Even without action, Arizona will again lead the nation in growth before mid-decade. However, we want to create more than lower value added jobs in retail and real estate. We want to expand our deteriorated economic base with higher value added jobs and industries. Arizona no longer makes anything of higher value. This is critical to not only grow, but to grow well. While conditions will continue to improve in commercial real estate, Arizona is still two to three years away from normal vacancy rates. The good news though, things are not getting any worse and expect improvement in 2011 and 2012.

John Lenio, economist & managing director, CB Richard Ellis Economic Incentives Group
cbre.com

“Employment will drive the business expansion needed to create material positive absorption in the office markets and reduce existing supply (vacancy) and eventually have upward pressure on rents (both critical elements to increasing asset values). These newly created jobs will add disposable income to the local economy and will drive sales activity in both residential housing and disposable products. The retail industry will get the much needed boost in increased spending via this new addition to disposable income, which will in turn drive demand for retail space, reduce existing supply and increase rents and eventually asset values.”

Scott Holland, partner, Keystone Commercial Capital
keystonecommercialcapital.com

“2010 was our year for healing. 2011 will be our transition year. We’re moving in to full recovery mode. Our development cycle officially ended in 2010, which means that the landscape of our commercial market and inventory will, by-and-large, remain static the next two, three, even four years.”

Don Mudd, managing director, Jones Lang LaSalle
us.am.joneslanglasalle.com

INDUSTRIAL

“What’s not being talked about nationally is that Phoenix is a preferred strategic location for value-add industrial employers. Last year, the Phoenix industrial market topped 4 MSF of absorption. That puts us in at least the top five — and possibly higher — of all U.S. markets. We may even have a shortage of larger space beginning as early as the end of this year. Mid-size clients typically have two or three dozen options to choose from at very soft pricing, but larger clients are having a harder time. In December, for example, we had an industrial client looking for 500,000 to 630,000 SF and only had three possible local solutions. In the same time period, we had a client looking for 250,000 SF of industrial space and had nine solutions Valleywide.”

Tony Lydon, managing director, Jones Lang LaSalle
us.am.joneslanglasalle.com

OFFICE & RETAIL

“There still exists an over-supply of space in office and retail. The existing inventories will take several years to absorb prior to any major new development taking place. During any down real estate cycle, tenants take advantage of the ability to move up in class. We have seen that happen locally, which has had some effect on the Class A product. As things begin to gain momentum, we will experience a shortage of Class A product in core areas, which then leads to rental growth and eventually allows new development to once again be warranted. Multi-family is still a strong sector due to the economic downturn forcing many home owners out of their homes and into the rental market.”

Kurt Rosene, senior vice president, The Alter Group
altergroup.com

ARCHITECTURE

“The industry will begin to see a slow but steady climb out of the recession. Most of us have been bouncing along the bottom with good and not-so-good months. The thaw has begun for owners with capital and they are ready to enter the market cautiously. Deals on real estate are prevalent and owners are beginning to take advantage, which is great for architects.

“Lending will continue to be difficult, therefore cash is critical to any new project. Architects should be cautious and assess the level of risk when a project is dependent on bank financing.

“Medical facilities are still being developed due to aging baby boomers in tandem with technological advances. Physical facilities will either require renovations to accommodate the new technology or additions to accommodate the older population.

“Retail will be the last market to recover and will see a very slow start. There will be a balancing act between keeping rent rates low for recovering tenants and keeping retail centers attractive to tenants and visitors alike.”

Jill Hamblen, AIA, triARC Architecture & Design
triARCdesign.com

PROPERTY MANAGEMENT

“2011 is shaping up to be another year of great challenge to the commercial real estate industry. A sampling of BOMA Greater Phoenix property managers gave similar results to 2010. Some of their concerns:

“Vacancy rates are high, and competition for available tenants is serious. Deals are all over the map, and it is essential to make a building stand out in the market in order to be able to justify a lease at or above break-even. Keeping a building in Class A condition with the budget constraints from owners and lenders is extremely difficult. Negotiating with current vendors to lower contract costs and rebidding when contracts come up is absolutely essential.

“Banks are not working with owner on market rate and/or tenant improvement allowances as they have historically. Tenants’ businesses are vulnerable to market swings. Many tenants are asking for rent relief or not paying as they should, as well as just defaulting. This is another challenge that owners and managers need to work together to meet.
“Smart, energetic management is always important, but under current conditions is critical. A manager will need all of the tools available, and the knowledge to use them well, to successfully meet the new year.

Mark Covington, executive director, BOMA Greater Phoenix
www.bomaphoenix.org

TUCSON MARKET

There is also some momentum in the Tucson market entering 2011 as construction projects include the UniSource Energy Corporate Headquarters (200,000 SF) and a new FBI building (84,353 SF).

In the office market, Tucson experienced a slight, but noticeable, uptick in lease activity at year-end, largely attributed to a more pro-business sentiment and the extension of tax cuts, according to PICOR Commercial Real Estate Services. Following a 25% to 40% drop in rents since the market peak, landlords have been more creative in length of lease and structure of concessions. Renewal activity has, accordingly, been very high.

Office building sales activity remained low by historic standards, as 75% of 2010 sales were to users. The overall volume for 2010 totaled just 628,000 SF. The outlook for 2011 appears to mirror 2010. Expect similar activity and slightly negative absorption.

The Tucson industrial market showed a slow recovery, with positive absorption advancing at a very slow pace. Companies that delayed expansions and relocations during the past two years are now moving forward, however, this activity is limited. Rents are continuing to decline, according to PICOR, although many property owners are reluctant to recognize this and are losing deals as a result.

Land sales were at a standstill in 2010, with no demand for new construction. Lender requirements and restrictions stifled the sale of leased investments as well, and few owners wanted to sell into the current environment. It is likely to be an uneventful year in 2011, with the local economy limping along toward recovery.

AZRE Magazine March/April 2011

NAIOP, AZRE Magazine September/October 2010

NAIOP Roundtable 2010: Q&A With Members of NAIOP

NAIOP Roundtable 2010: Q&A With Members of NAIOP

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


NAIOP Roundtable 2010 NAIOP Roundtable 2010 Participants

NAIOP Roundtable 2010 Participants:

1 — DW: Deron Webb, Managing Principal, Wentworth Webb & Postal 5 — BM: Bob Mulhern, Managing Director Greater Phoenix, Colliers International

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

6 — KR: Kurt Rosene, Senior VP, The Alter Group
3 — WS: William L. Spart, Senior VP & Manager, Middle Market Real Estate, Wells Fargo Bank 7 — TH: Todd Holzer, VP of Development, Ryan Companies US
4 — MH: Mike Haenel, Executive VP, Industrial Group, Cassidy Turley/BRE Commercial 8 — JD: John DiVall, Senior VP, Liberty Property Trust

Economy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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