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FEBRUARY Friday Morning Breakfast

Posted By Heather Garbarino, Monday, March 2, 2020


Trends, tools for Valley’s growth


Panel of economic development experts look to the future

 

With plenty of sunshine, new residents pouring into the state every day and the Great Recession clearly in the rearview mirror, it’s no secret that the Valley boasts a robust tool kit when it comes to economic development.

 

With all this momentum, panelists at the February Friday Morning Breakfast agreed, now is the time for the Valley to take advantage of the latest trends including international commerce and development, opportunity zones, community facilities districts, GPLETs and the future for TIF.

 

“2019 was a record year for Mesa,” said panelist Bill Jabjiniak, Economic Development Director for the City of Mesa. “ASU and St. Augustine University were game changers for downtown Mesa. Plus, we had Waymo, Google and SkyBridge make huge economic impacts. We have the workforce. There are now 1.4 million residents in Mesa. And we have the facilities.

 

“It’s not just us (Mesa). There is a great story to tell what’s going on in the East Valley as a whole,” he added.

From the East Valley to the West Valley, the story is same, said Kevin Phelps, City Manager, City of Glendale.

 

“It’s no secret that we’ve been incredibly busy in the West Valley,” Phelps said proudly. “The economy and growth of our cities is being managed intelligently. The 303 corridor has continued to be a major economic driver. We’re learning more about annexation by leading a series of workshops. We have to use our land correctly and find the best areas for development.

 

“In Glendale, we want to totally reshape the view of the Westgate area,” he said.

 

So, what are some of the tools in the toolbox? Zach Sakas, Bond Counsel, Sherman & Howard, shared his thoughts on the Government Property Lease Excise Tax (GPLET), opportunity ones and Community Facilities Districts (CFP).

 

“These are basically three tools whose benefits are mutual,” Sakas said. “But the key for each of them to really work is putting the right team together. It’s the approach everyone concerned takes. My advice is to use the resources that are available to you.”

 

Our trade partners to the North and South also play big roles in the Valley’s economic muscle. Top of mind was the new USMCA, a free trade agreement between the United States, Mexico and Canada that replaces NAFTA.

Glenn Williamson, CEO/Founder, Canada Business Council, said the foreign direct investment (FDI) between Canada and Arizona is a huge boon to both economies.

 

“With Arizona being such a pro-business state and hundreds of days of sunshine, why would investors from Canada not want to come here,” Williamson said. “There is a lot of interest in Arizona. Turnaround time and speed …  a passion for getting things done, all of this is not lost on these FDIs. Word gets around fast.

 

“This includes residential real estate. Back in the day, a third of Scottsdale was built by a Canadian company. Fifty percent of the residents in Yuma are Canadian. There is truly a welcome mat out.”

 

Moderator Kelly Patton, Senior Economic Development Director, APS, asked each panelist for a take-away to share with the audience. Jabjiniak summed up the breakfast the best.

 

“Invest in the future. Invest in education. Invest in infrastructure. Protect exploited areas,” he said.

 

To which Patton responded:

“We are state 48; we are toddlers. Thinking big; that’s our next step.”

 

 

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JANUARY Friday Morning Breakfast 2020

Posted By Heather Garbarino, Thursday, January 30, 2020

 

 

 

‘The Arizona Way’

 

Gov. Ducey shares successes, future with Valley Partnership

 

Education. Jobs. Water. Transportation.

 

Each represent a success by the administration of Arizona Gov. Doug Ducey, but also present a challenge for the state in the future. Gov. Ducey shared his thoughts before a packed house at Valley Partnership’s January Friday Morning Breakfast.

 

Valley President President/CEO Cheryl Lombard moderated the Q&A session.

 

>> Calling on leaders to build the Arizona way

“The ‘Arizona Way’ is the reason people are fleeing places and California. Arizona is the No. 1 inbound state in the country. Maricopa County is the fastest growing in the country the last 3 years. This is not happening by accident. Arizona is winning. Lower taxes and lighter regulations benefit us. People in my business and influencers measure progress by how much a state is spending. I measure progress by how much a state is growing.”

 

>> Education is important to attract and retain new residents

“Education is something we can’t blame Washington, D.C., for. We are in charge of our state education. It’s almost hard to believe that at one point we had a $1 billion deficit. At the same time, education was mired in Iawsuits. Fast forward to today and we have a $1 billion surplus. We now focus on outcome and results. This goes for K-12, colleges and vocational schools and the trades. Funding will always be a part of the issue.”

 

>> Increasing taxes is a bad idea

“There is a lot of misinformation out there. The ground has softened for so long and there was not enough funding in education at the time of the Great Recession. Times have changed. People want to see more spending in education. Right now, we have $1 million sitting in the general fund; we have a booming economy. The last thing we should be doing is raising taxes and taking a page out of the California playbook.”

 

>> Water: Another economic driver for the state

“Water is a very heavy lift. The last big reform was 40 years ago. It brought together homebuilders, the business community, the construction industry. What’s amazing is we are in the middle of a desert and having this kind of growth. We planned ahead. We have excelled on this issue. These are things we need to be working on decades ahead. There was some pressure in that first year to change the policy and stunt the grow. We have to keep that kind of discipline, but also make sure it is focused and ongoing. We use less water today in Arizona than we did in 1959.”

 

>> Transportation: Focusing on future investment

“In 2015 when we had the budget deficit, I knew that the most important thinking to do was to make the tough decisions. I have lived through a couple of downturns and also come out of them. I wish I would have acted faster, but I didn’t use any tricks. There was real pain and political unpopularity. But it allowed us to clear the decks and make the tough decisions. The economy came back in 2016 and put us in position we’re in now. We are expanding I-17, widening I-10. We have the dollars to do some of these multi-million-dollar projects. The state is in position to address our infrastructure needs.”

 

Gov. Ducey also touted the success of the USMCA, developing state land and protecting the culture when it comes to tribal gaming compacts.

 

“… Go out and have tremendous success,” Gov. Ducey concluded.

 

Photos courtesy of SRP

 

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NOVEMBER Friday Morning Breakfast

Posted By Heather Garbarino, Thursday, November 21, 2019

 

‘Go West, Young Developers!’

West Valley development corridors driving huge opportunities 

An analogy can be made between the popular movie “Field of Dreams” and what is happening in Metro Phoenix’s West Valley – at least in the eyes of developers.

A corn farmer in Iowa hears a voice telling him: "If you build it, he will come." It’s to be interpreted as instructions to build a baseball diamond in his fields. In the expanses of the West Valley, developers are finding their diamonds in the rough.

When Maricopa County approved a Regional Transportation Plan in 1985, not even the most optimistic Arizonan would have predicted the population boom to arrive in the Valley over the next three decades.

The Loop 303 was a critical part of its passage at the time. While it took longer than initially planned, the West Valley freeway's expansion is now playing a crucial role in bringing new development and attracting world-class businesses like Red Bull, Nike, Sub-Zero, REI, Dick’s Sporting Goods and many others to the area.

With the completion of the Loop 202 South Mountain Freeway connecting the East Valley to West Phoenix, business leaders, real estate experts and developers throughout Arizona are projecting another wave of smart development around the new transportation corridor to continue the region's strong economic growth.

November’s Friday Morning Breakfast brought together development leaders who are extolling the virtues of the “Go West” mantra.

Panelists included Don Bessler, Chief Capital Investment Officer, City of Glendale; Nic Fischer, Vice President, Merit Partners, Inc.; David Krumwiede, Executive Vice President, Lincoln Property Company; and Kelly Patton, Senior Economic Development Consultant, APS. Moderating the breakfast was Rusty Kennedy, Senior Vice President, Industrial, CBRE.

“With the arrival of the 303 and PV303, you saw a cross section of many things giving the West Valley an edge,” Fischer said. “Infrastructure. An employment base. Transportation. You can see where the population has shifted. This presents a real opportunity to answer the question: ‘Is this a place where you want to work and also live?’ Also, the availability of infrastructure has been the key to the West Valley’s success.”

According to Bessler, it’s all about “connectivity and labor.”

“Our market features the third-largest labor pool behind Los Angeles and San Francisco,” Bessler said. “Everything is about attraction and retention. Back in the day, a company’s HR person came to the site visit on the last day. Now, the HR person is on all the tours. They’re not just moving location. These are all new hires. With connectivity, you’re a day’s truck drive from 65 million people in the West.”

To prepare for all these new residents and development, energy is a vital commodity. APS is very aware of this, Patton said.

“There is so much activity in the West Valley, and that’s great to see,” she said. “When a company comes into our service area, we can offer a generational mix of coal, nuclear and natural gas. So we don’t put all our eggs in one basket, we can shift our power from one source to another to offset liability and cost. Companies like Nike, Microsoft and REI want their own (carbon free) footprint. We help them get there.”

With major development comes the fear of overdevelopment, which some economists say hurt the Valley during the Great Recession. Patton said infrastructure capacity is a major priority in this cycle.

“The question is how much capacity can we have and still stay ahead,” she said. “You have to remember this is growth not just in the business sector but in the residential sector as well. We are working with these two entities on the development side. It takes about 18 months to build a substation.

“We have to identify where are those areas growing. Where is the best location? We have to make sure we are prepared for that growth. That will make us much more competitive. To have the ability to plan and bring business here. The West Valley presents that opportunity,” Patton said.

Available amenities are also helping drive the West Valley’s momentum. Bessler says he wants to see Westgate become “the downtown of the West Valley.”

“We had 10.2 million visitors to Westgate last year,” he said proudly. “There is so much excitement there. We have a millennial workforce that resides in the community. The West Valley has raised the live-work-play desire greatly.”

The panel also discussed the role the Loop 303 has played and the development boom the West Valley has enjoyed around that transportation corridor.

“Major tenants are out there and want to come to the West Valley,” Krumwiede said. “They are driven by common factors, and one is access to transportation. The freeway had a big part in a company like Sub-Zero locating a facility out here.”

Fischer said the second piece is that the West Valley has room to grow.

“In a traditional industrial market, land constraints are an issue. Sometimes there is no sizable land available. The users along the 303 each bought their building. These are not lease transactions. They are making a long-term commitment. It’s pretty exciting that they want to plant their flag here.”

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OCTOBER Friday Morning Breakfast

Posted By Heather Garbarino, Friday, November 1, 2019

 

Trading Spaces


Valley enjoying robust industrial, office activity

 

The saying used to be: “Location, location, location.”

 

With industrial space leading a surge in commercial real estate activity in the Valley (along with office), the saying now goes: “Logistics, logistics, logistics.”

 

As the Valley’s economy continues to remain strong post-Great Recession, the need for industrial and office space to attract quality companies and high-level talent continues to play a significant role for developers and investors.

 

With a record amount of industrial and office space currently available in the Metro Phoenix market, some of that remains vacant with development continuing based on the positive trends the state has seen over the past half-decade in the job market.

 

The October Friday Morning Breakfast brought together a group of panelists whose respective companies are among the most active in both industrial and office markets in the Valley.

 

Moderating the panel was John DiVall, Principal Regional Head, Mountain Region, with Exeter Property Group. The panel comprised Keith Earnest, Executive Vice President, VanTrust Real Estate; Jeff Foster, Vice President/Market Officer, Prologis; and Cathy Thuringer, Principal, Trammell Crow.

 

“We have $13 billion worth of work in the process or in the pipeline,” Thuringer said. “That’s the highest level ever. They are primarily office and industrial as we’ve been extremely active the last quarter. We’re busy as long as the market allows us.”

 

Trammell Crow’s projects include Axis Raintree in Scottsdale, a 175,000 SF spec office building; Gilbert Gateway, a 420,000 SF industrial project totaling three buildings; and Park Aldea in Glendale, a 356,000 SF industrial project totaling four buildings.

 

Prologis has perhaps one of the largest footprints in the Valley with 46 buildings totaling 6.8 MSF. It recently completed a 136,000 SF facility for Sun State Builders in Phoenix. It currently is getting drawings done for Prologis Commerce Park in Goodyear.

 

“We missed out on some of the bigger deals in the market,” Foster said. “This is our opportunity to build 2.3 million square feet.”

 

Earnest said that while his firm is a “small family company,” it is also pursuing the same property types as Trammell Crow and Prologis. Two of its office projects include Chandler Corporate Center, 120,000 SF, and Chandler 101, 200,000 SF.

Talking about the Valley’s growth and demand for office and industrial product, Earnest said: “Now the (Loop) 303 seems like the I-17 or the 101.”

 

As with any property type, hurdles exist, the panel agreed. Some included:

>> Infrastructure and water: who is paying for it and how much is it?

>> Construction and land costs: how much is too much?

 

“We’re seeing people move here,” Foster said. “People who are seeing this as fastest growing county in the country. Infill is now Southwest Phoenix. Developers are out there pushing towards Goodyear, Glendale and Buckeye.”

Said DiVall: “There are now more manufacturing jobs that construction jobs in Arizona.”

 

So, what other things keep them up at night?

 

>> Foster: “Growing rents. Access to labor. We boast the third-fastest growing market in the U.S. Site selectors are choosing Phoenix for a reason. That’s the big story right there.”

 

>> Thuringer: “The elections. We saw that in 2016. I don’t know what the outcome will be. And TI costs.”

 

>> Earnest: “It’s not the when for me, it’s the what. Sublime lending crushed us the last time. If the what stays away, it’s a good thing. I like the discipline we have now. There is good competition. It feels healthier. I’m sleeping better.”

 

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SEPTMEBER Friday Morning Breakfast

Posted By Heather Garbarino, Friday, October 4, 2019


Rising Demand, Soaring Costs

 

The next wave of Valley homebuilding will be a wild ride

 

Constructions costs. Labor issues. Tariffs. Impact fees. Land costs.

 

The demand for housing in the Valley isn't the only thing that has changed since Arizona came out of the Great Recession. It’s been a “perfect storm” and combination of rising material costs to labor shortages to plan review fees increase.

 

It’s no secret that the costs of development and homebuilding have steadily grown and impacted the overall cost of housing in Arizona. With 200 new residents moving to Valley each day, experts have expressed concern with the ability of homebuilders to combat hyper-inflation and supply enough affordable housing options as the industry deals with these ever-increasing costs.

 

The September Friday Morning Breakfast brought together an expert-driven discussion on the rising demand and soaring costs that are impacting development and homebuilding in the Valley.

 

Moderating the panel was Jim Belfiore, Founder & President, Belfiore Real Estate Consulting. Panelists included Susan Demmitt, Partner, Gammage & Burnham; Jeff Gunderson, Sr. Vice President, Lennar; Ron Hilgart, Land Managing Principal, HilgartWilson; and Jeremy Ramsdell, VP Land, Ashton Woods.

 

Belfiore led off the discussion detailing the bump in interest rates and housing demand post-Great Recession. As one was high and the lower, single-digit growth resulted. It’s a different story now.

 

“Demand is very healthy today,” Belfiore said. “Lower interest rates have opened the market and made it (home buying) accessible to more. However, we’re not seeing the discounted lots anymore. During this period of time we have seen increases in homebuilding costs and land development, construction and labor. The issue is, ‘who is going to afford housing in the next coming year.’”

With the cost of underwriting deals increasing, developers are beginning to feel the pinch as well.

 

“Deals are harder to underwrite; that’s no secret,” Gunderson said. “We're still experiencing a lot of upward cost pressure on the vertical side. The land development side had been relatively unaffected until two years ago. Land deals have been scary the last 10 to 14 months.”

From his perspective, Hilgart said the biggest issue is labor.

 

“There was a time when contractors weren’t making. Guess what? They are now going to make money. That’s to be expected. But a shortage of labor is a huge problem right now. It’s being felt by both the contractor and the homebuilder.

“Some contractors are forced to hire an employee they wouldn’t have hired before and keep them on. Production rates are down. A lot of them are not that worker that’s been sit out in the hot sun and producing. That person with 5 to 10 years of experience still capable of working through the hot day is gone,” Hilgart said.

 

Demmitt, who works with the various Valley municipalities, said her clients are experiencing another side of the homebuilding issues.

“There is so much that requires us to change. Delays. Negotiating. Across the board amenities,” she said. “Open spaces. On the architectural side … a detail here or there. Twelve elevations for every floor plan.”

 

Ramsdell pointed out how tariffs are having an effect on his customers in the design center by driving up final costs.

“We have a perfect storm,” Belfiore said.

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AUGUST Friday Morning Breakfast

Posted By Heather Garbarino, Tuesday, September 3, 2019

 

A Higher Level of Higher Education

 

Arizona’s universities are crucial to the state’s future growth

 

 

One thing is clear when it comes to the future of Arizona’s economy – its three major universities are and will be playing a key role in its growth.

 

That was very evident at Valley Partnership’s August Friday Morning Breakfast.

 

Arizona State University President Dr. Michael Crow addressed a full house at Phoenix Country Club, explaining how he has transformed the school into a landmark example of how a university can look beyond its past and set a new standard for excellence in the future.

 

Dr. Crow has been at ASU for 17 years and said he believes there is plenty of untapped potential at ASU and the other two state universities. To him, it’s all about creating a highly-trained, educated workforce. This, in turn, will spur the state's economy, and wisely using development of university assets to attract more opportunities for Valley residents. 

 

“We found open-mindedness and we found ways to move the university forward other than as a government bureaucracy university,” Dr. Crow said. “We made a fundamental shift in thinking that we couldn’t do in other states.”

Dr. Crow delivered the keynote address on how ASU, the University of Arizona and Northern Arizona University have handled the state's transforming economy, the funding battles waged with the Legislature and how they plan to take higher education in Arizona to a higher level.

 

The August panel consisted of John Arnold, Executive Director, Arizona Board of Regents; John Creer, Associate Vice President, Real Estate Department, ASU; Alan Maguire, Maguire Company; and Rick Shangraw, CEO, ASU Enterprise Partners. Moderating was John Graham, Chairman and CEO, Sunbelt Holdings.

 

Dr. Crow identified anti-fragile economies that create new industries (Seattle) and resilient economies that adapt to change (Pittsburgh). Arizona’s economy, he said, is fragile.

“It’s (a fragile economy) a function of adaptation to change,” Dr. Crow said. “We went through a recession and made a slow comeback and we do not yet have a highly adaptive, self-created, regional economy.”

Being innovative is important as well, Dr. Crow said. He pointed out how ASU’s engineering programs have ballooned from 8,000 students in 2009 to more than 19,000 now.

“That’s a function of being allowed to innovate,” he said.

While Arizona’s top schools are outperforming the rest of the nation in terms of college graduation rates, students in lower-income brackets and younger students, namely Hispanics, are not there yet. Latinos are the fastest-growing demographic in Arizona but their college attainment rate is a paltry 9 percent.

“We don’t have enough kids graduating from high school,” Dr. Crow said. “We don’t have enough going on to college. We don’t have enough people with college degrees who are staying.”

What the panelists had to say:

>> Maguire, on producing an educated workforce: “Workforce is knowledge, skills and culture. That’s the most important things that the universities do,”

>> Arnold, on how attracting out-of-state students increased revenue during the recession when state funds dried up: “We’re charging them market price for a degree. Turns out our degrees have a great deal of value. There’s a coming reduction in the number of young people. It will hit not only university enrollments but employment markets.”

>> Creer, on projects such as SkySong, Novus of the downtown biomedical campus: “They are rooted deeply in the university’s mission. It’s taken us 30 years to develop our research park in south Tempe. We call that a success.  “It’s something we can do patiently and deliberately.”

>> Shangraw, on ASU raising more than $400 million from donations in 2018: “We’re not only asking people to provide resources to ASU because they’re affiliated. We have a lot of causes that prompt people to be active in what we’re doing with the university.”

At the end of the day, Dr. Crow said, Arizona must embrace innovation, open-mindedness and flexibility.

“We find other ways to move forward than running a simple-minded, simple government-funded government bureaucracy university. We have abandoned that. That is gone.”

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JULY Friday Morning Breakfast

Posted By Administration, Wednesday, July 31, 2019

 

All Aboard!


The future of public transit in the Valley drives July FMB panel


An election to determine the future of light rail in the Valley looms on the horizon.

 

 A yes vote on Prop. 105 is a vote in favor of amending the City of Phoenix charter to end construction of light rail extensions and direct funds to other transportation improvements in Phoenix.

 

A not vote on Prop. 105 is a vote against amending the city charter, leaving funds allocated to light rail expansion.

 

Since the passages of Prop. 400 in 2004 and Prop. 104 in 2015, the Valley's public transportation system has evolved to meet the demands of booming population growth and economic development. As a result, new development has energized both the region and the debate over what the future holds for this mode of public transit.

 

“The topic of public transportation is near and dear to my heart,” said Scott Smith, CEO of Valley Metro and moderator for July’s Valley Partnership Friday Morning Breakfast. “I lived through it during my development days, as an elected official and now as a CEO.”

As the light rail celebrates its 10th year of operation, business, transportation and real estate leaders are now planning out where it will head next. The August 27 election will affect the future of real estate, development and investments.

 

Joining Scott were panelists John Giles, Mayor, City of Mesa; Shannon Scutari, President, Scutari & Co., LLC.; and Eric Anderson, Executive Director, Maricopa Association of Governments. Smith is also the former mayor of Mesa.

 

“Light rail helped revitalize Mesa’s urban core,” Scott said. “A $500 million investment translated into connectivity and thousands of jobs. Those were federal dollars that would have some elsewhere.”

 

The sticking point is light rail construction that could affect businesses along the line. Grass roots organizations and small business groups have echoed their concerns.  Giles said those were the same concerns of businesses in downtown Mesa when light rail construction began.

 

“Small business owners thought this was their death sentence,” Giles recalled. “As we well know now, the net loss of business was zero. Valley Metro and the city worked very hard to accommodate folks. They helped nurture their livelihood during construction. We doubled down on all those efforts.

 

“The Valley has evolved and matured, as has Mesa. I have never been more happy being wrong in this situation,” Giles said.

Scutari touched on the impact the light rail has had on three communities: Phoenix, Mesa and Tempe.

“Light rail is good for generations of people in the Valley,” she said. “You want communities that are walkable, bikeable, connected. Something for all generations.”

 

On the other side, Smith said, there are those who “the streets suck” and “fix the potholes.”

 

But if wasn’t for the Valley’s transportation system and its myriad freeways, where would it be today?

 

“A couple of days ago I did a podcast for AZCentral,” Anderson said. “Part of what came out was that in the 70s the Republic came out against freeways. It’s more than just getting from point A to point B. Long-term, it’s pretty important where we go. Who knows, maybe commuter rail could be the next evolution.”

 

The benefits of light rail’s first decade are palpable, the panelists agreed.

 

“Downtown Phoenix has a vibrant 24/7 population,” Anderson said. “That didn’t happen overnight. Chase Field. The science museum. Arizona State University. The light rail happened to downtown.”

 

In Mesa, Giles said, affordable housing projects along the light rail have been developed.

 

“Light rail changes the dynamic of a community,” Smith said. “That shows you just how fragile transportation is.”

 

 

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JUNE Friday Morning Breakfast

Posted By Heather Garbarino, Thursday, July 18, 2019

 

Looking back, looking forward



Numbers tell the story at the 2019 mid-year review of real estate development,
growth in the Valley

 

 

Numbers don’t lie. Actually, they tell a pretty good story.

Economic momentum. Employment growth. Population growth. Personal income growth.

 

“In my opinion, getting knocked out during the downturn gave us the opportunity to get back up. Obviously, we’re doing something right. Look at the numbers. They tell the story. We are consistently seeing things headed in the right direction.”

Jim Rounds, President of Round Consulting Group, painted a positive picture as moderator of Valley Partnership’s June Friday Morning Breakfast at Phoenix Country Club.

And why not.

 

 The economies of Arizona and the U.S. have been buoyed by low employment and new highs for consumer confidence. The real estate and development markets in Arizona have been equally impressive in the first half of the year.

As the Valley approached the halfway point of 2019, June’s Friday Morning Breakfast featured a conversation hosted by Rounds, a renowned economist, on what we've seen so far in 2019 and where investors should expect we'll go for the remainder of the year.

 

“The market has been incredibly frothy for some time,” said panelist Ryan Sarbinoff, Vice President/Regional Manager Phoenix, Marcus & Millichap. “A big driving force is foreign investment. There is still safety and security in the U.S.”

Joining Rounds and Sarbinoff were Jessica Morin, Director of Market Analytics, CoStar Group; Pete Wentis, Senior Vice President, CBRE; and Micah Miranda, Economic Development Director, City of Chandler.

What can slow down the train that’s driving the Valley’s economic engine? A lack of new and existing office and industrial space could present a challenge, Morin said.

“During the Great Recession we were one of the hardest hit markets in the country,” she said. “We lost 300,000 jobs, about a quarter of that were construction jobs. Since then, we have shown steady growth. Are we building enough space now?

 

“Some of our markets are showing incredible growth,” Morin said. “The East Valley. Tempe. Chandler. There is a large labor pool of quality talent in those markets. ASU has also been a significant catalyst for the growth.”

While the Southeast Valley’s office market is booming, Morin said Downtown Phoenix hasn’t caught up just yet. However, she said she expects that to change in the next few years.

 

With Chandler becoming one of the top submarkets in the Valley for financial service and technology companies, Miranda said, “Product wins projects. Unless we have the products, companies will skip over us.

“In Chandler, preserving the Price Corridor and other employment corridors is key as we create the right environment for growth,” he said. “My perspective is that education is also key to business attraction. Education is critical.”

On the industrial side, Wentis said the cost of development of that product type presents an advantage for the Valley over competitors in Southern California. He said the West Valley will benefit greatly when the Loop 202 South Mountain Freeway bypass opens later this year.

 

“We are at historically low vacancy numbers in the industrial market,” Wentis said. “This is a sign we have a very healthy market (in the Valley). Two of biggest challenges are the net cost of tenant improvements and lack of labor.

“Developers are trying to be creative,” he added. “And with better corridors such as the 202 South Mountain Freeway, there will be a huge impact on our transportation of goods and services.”

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MAY Friday Morning Breakfast

Posted By Heather Garbarino, Thursday, May 23, 2019

 

Adaptive Reuse

 

Repurposing our history to create news spaces for the future

 

 

The development world defines adaptive reuse as “the process of taking an old building or site, and reusing it for a purpose other than it was designed. It is closely related to historic preservation or conservation around cities with rich history.”

 

The Valley has established itself as a leader when it comes to adaptive reuse. Evident throughout Metro Phoenix are buildings that are given a second life through adaptive reuse. Now, a new generation of Arizonans gets to experience these structures with a new vision for the future.

 

The conversation was lively at the May 17 Friday Morning Breakfast as the panel dug into the topic of adaptive reuse. The highlighted projects and their representative: Papago Plaza in Scottsdale, Lee Mashburn, President, Pivot Development; ARRIVE Phoenix, Lorenzo Perez, Co-Founder, Venue Projects; and Park Central, Stan Shafer, Principal and CEO, Holualoa Companies.

 

“I was in Los Angeles talking to 12 different institutional investors and one thing we heard was the traditional suburban office product is a bit out of favor,” said moderator Chris Toci, Executive Managing Director, Cushman & Wakefield. “What’s in favor is creative, adaptive open architecture. Investors can’t get enough of it.”

 

A look at the projects:

>> Park Central: This iconic shopping center has been the buzz of the development community and Midtown Phoenix neighborhood for the past year. The former site of a dairy farm was once the shopping destination of Phoenix residents. It featured some of the Valley’s big-name department stores such Goldwater’s and Diamond’s.

 

As other malls cropped up around the Valley, Park Central began to decline as major tenants moved out. It was sold to a special servicer who didn’t have much luck with it, according to Shafer. In 2016, Holualoa Companies and Plaza Companies came to the rescue.

 

“My inspiration was the Warehouse District,” Shafer said. “It had light rail access, surface parking and onsite amenities. It presented us with a great adaptive reuse opportunity. We were able to unlock the ability to develop the entire project.”

When all the phases are complete, Park Central will feature new retail and dining destinations, a multifamily project, a new parking garage, and Creighton University’s Health Sciences Campus.  

 

“This project is the collaboration of many stakeholders,” Shafer said. “By 2021 it will be a dynamic location and will revitalize downtown Phoenix.”

 

>> ARRIVE Phoenix: A stone’s throw from the Newton, one of Venue Projects’ signature adaptive reuse collaborations, is ARRIVE Phoenix. The innovative project features a 79-room boutique hotel that includes a rooftop cocktail lounge, a tropical-shaded pool, coffee shop and popsicle shop (where guests check in).

 

The project will occupy a pair of obsolete office buildings at 400 and 444 Central Avenue.

 

“This project opened doors for us,” Perez said. “We are bringing a sense of place and preservation of our heritage. We found a creative opportunity and solution. Our plan with this project is create, not compete.”

 

With a focus on urban infill, Perez said, Venue Projects pursues transportation-oriented development. Its other signature adaptive reuse projects are The Orchard and Windsor and Churn in Phoenix.

 

>> Papago Plaza: This aging retail property presented a big challenge to the developer. At the corner of Scottsdale and McDowell roads, it sits pretty much as a diagonal on the side. Walking from one end of the plaza to the other, Mashburn said, is the equivalent of crossing three and half football fields.

 

A re-imagined Papago Plaza will feature a grocery anchor, a hotel, a four-story apartment building, a four-story parking garage and restaurants and retail shops. Another great Scottsdale landmark, SkySong, sits across the street.

“We looked at all the options here and think we’ve come up with a great solution,” Mashburn said. “We will do something with this project that they didn’t do in the 80s.”

 

 

 

 

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APRIL Friday Morning Breakfast

Posted By Heather Garbarino, Monday, May 13, 2019

Under The Sun

Learn what’s next for Desert Ridge

 

Phoenix Mayor, Kate Gallego, opened April’s Friday Morning Breakfast by expressing her wishes and sharing her plans for Phoenix and the surrounding suburbs. With an emphasis on planning and preparing for water-related issues, and a desire to infuse the city with more transportation options, jobs, and healthcare options, Mayor Gallego’s plan for the city — simply stated — is one that is forward-looking and future-focused.

“We want to create great places for families in every corner of our community”

 

Her simple statement perfectly led into the panel discussion about the progress and the projections for Desert Ridge — a location that will soon become a great place for not only families but businesses and students as well.

 

April’s panel was comprised of Desert Ridge experts who are actively involved in the planning and development of this blossoming community. Moderated by Christine Mackay, Community and Economic Development Director with the city of Phoenix, the panel discussed in detail some of the exciting plans in the works for Desert Ridge.

 

Panelists included: Rick Carpenelli — Vice President Acquisition Development at Crown Realty

& Development, Rick Hearn — Vice President of Leasing at Vestar, Rick Naimark — Vice President for Program Development Planning at Arizona State University, and David Schwartz — Business Development and Site Planning Administrator for Mayo Clinic of Arizona.

 

A medical center partnership between ASU and the Mayo Clinic, the update of Desert Ridge Market Place, and Crown Development's plans as master developer for 5,700 acres at Desert Ridge were all topics of discussion. The growth and further development of Desert Ridge comes with the promise of more than just new buildings and infrastructures. Carpenelli stated that as the Master Developers they envision this city as a “job generating,” area with, “commercial office and health care spaces”.

 

Though the original plans for Desert Ridge were crafted in the early 90s, the Desert Ridge of today will pay homage to those plans, but bring them past the present day and straight into the future of community development. Carpenelli and his team foresee Desert ridge as “a city of the future,” and with property that is shovel ready and the ability to bring 5G to the area — the future is closer than we think.

 

In addition to the forward-thinking plans taking place in Desert Ridge, the community can expect to see a revitalization of the Desert Ridge Market Place. In hopes of marrying working spaces, living areas, entertainment, shopping, and transportation, the plans for Desert Ridge are mindful of working singles, families, businesses, and the needs and wants of the millennial workforce. “Workforce is key in everything we do,” stated Hearn, and that emphasis is at the epicenter of the Desert Ridge plans.

 

Also shaping the future of Desert Ridge is a medical center partnership between ASU and the Mayo Clinic. ASU and the Mayo Clinic have a long-standing, reputable relationship and with the construction of a new medical center in Desert Ridge, that relationship continues to grow and strengthen the medical community.

 

Naimark relayed that for this partnership, research dollars are growing. Bringing this medical center partnership to fruition has been nothing short of “a herculean task,” but Naimark and Schwartz are excited by the “opportunity to design the healthcare of the future.” The ASU, Mayo Clinic partnership is predicted to be a pillar of the community and a great benefit to the medical world.

 

Carpinelli relayed that, “in short, what we are building here is a small city.” As the plans for Desert Ridge continue to come to life, it is expected that this “small city” will be a booming, thriving community.

 

 

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