AZRE November/December 2014

NOVEMBER-DECEMBER 2014

Can Phoenix become a Walkable

City?

Inside:Land ahoy p. 30

Trusting a legacy

Money Makers p. 49AAED celebrates 40 years

young at heart p. 22Senior living gets fun

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In Arizona, please contact

Paul M. Weiser, Esq.480.383.1823

[email protected] North Scottsdale Road, Suite 440

Scottsdale, Arizona 85254-1754

www.buchalter.com

WhenYouNeedDirection

Today’s dynamic commercial real estate environment presents real estate owners, managers, developers, lenders and investors with exciting opportunities. Buchalter Nemer real estate attorneys offer sound professional advice and

guidance, when you need direction.

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2 | November-December 2014

Footloose

W hen people hear I survived in Phoenix without

a car during college, their reaction is universal. How did I get anywhere? You walked. It helped that I actually lived in Tempe. All the essentials to a balanced life were within reasonable distance of my front doors over the years. But, everything changed when I moved to downtown Phoenix last year. From the quality of sidewalks to the distance between my mailbox and the nearest grocery store, it’s a harder city to navigate by foot. Sure, tripping over a jagged sidewalk on my morning runs is a drag and sometimes makes me miss Tempe. But I’ve enjoyed watching this city change in little ways. Widening the sidewalks in the Phoenix Arts District or infill projects are the baby steps toward a more walkable city. Though Phoenix was recently ranked No. 29 of 30 major cities in the U.S. for walkability, the community is laying the foundation for change. Read more about these initiatives in the Urban Land Institute-Arizona’s supplement (p. 33).

In this issue, you’ll also find stories about best practices (p. 65) and modern assisted living facilities (p. 22). Additionally, we recognized the Arizona Association for Economic Development’s 40th anniversary (p. 49). After a year at the helm of AZRE, I am amazed I get to share what makes this state fantastic with the people who work hard to make such statements possible. Sure, it will be decades before I can stop using my car to commute a few miles to work. But I have hope. Every time I hit the red light at McDowell Road and Central Avenue, I watch the digital art installed on the side of the Phoenix Art Museum. It’s two figures leisurely walking on a perpetual loop across the top of the wall. And, when the light does change, I find myself at my desk once again, listening to the light rail, watching the skyline change and eagerly reporting the next step in Phoenix’s own loop of improvement.

At the end of the day, it’s good to remember, one small step for man is one giant leap for Phoenix.

AZRE: Arizona Commercial Real Estate is published bi-monthly by AZ BIG Media, 3101 N. Central Ave., Suite 1070, Phoenix, Arizona 85012, (602) 277-6045. The publisher accepts no responsibility for unsolicited manuscripts, photographs or artwork. Submissions will not be returned unless accompanied by a SASE. Single copy price $3.95. Bulk rates available. ©2014 by AZ BIG Media. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without permission in writing from AZ BIG Media.

President and CEO: Michael Atkinson Publisher: Cheryl GreenVice president of operations: Audrey Webb

EDITORIALEditor in chief: Michael GossieEditor: Amanda VenturaInterns: Clarissa Cooper, Brittany Dierken, Alisa Stone

Az BUSINESS MAGAzINESenior account manager: David Harken Account managers: Ann McSherry | Shannon Spigelman

ARTArt director: Mike MertesGraphic designer: Shavon ThompsonIntern: Robin Sendele

DIGITAL MEDIA Web developer: Eric Shepperd Digital manager: Jason LeonardyInterns: Ashley Incardone, Tia Richardson, Robin Sendele

MARKETING/EVENTSManager: Angela VaughnIntern: Lea Martin

OFFICESpecial projects manager: Sara FregapaneExecutive assistant: Mayra RiveraDatabase solutions manager: Cindy Johnson

AzRE | ARIzONA COMMERCIAL REAL ESTATEDirector of sales: Steve Koslowski

Az BUSINESS LEADERSDirector of sales: Mark Blum

RANKING ARIzONA Director of sales: Sheri King

EXPERIENCE ARIzONA | PLAy BALLDirector of sales: Carla Baran

Az BIG MEDIA HOME SHOWSSCOTTSDALE HOME & TRAVEL SHOWExhibit directors: Kerri Blumsack | Tina Robinson

Amanda VenturaEditor, [email protected]

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3101 N. Central Avenue Suite 1070Phoenix, Arizona 85012(602) 277-6045azBIGmedia.com

02 Editor’s Letter06 New to Market08 After Hours 10 Project News14 Big Deals 18 Legislative Update 23 Healthcare Putting the “living” in assisted living 30 Western States Land Commissioners Association Overview of current, impending land issues 33 Urban Land Institute Urbanization, starting at the sidewalks 49 Arizona Association for Economic Development A look at 40 years of educating, advocating and collaborating 65 Valley Partnership Responsible development and best practices

CONTENTS

FEATURES

30 YEARS OF EXCELLENCE

49

30

65

33

23

On the Cover:Downtown Phoenix aerial courtesy of Downtown Phoenix, Inc.

CORRECTIONSIn Constructing a Competitive Edge,” Dave Calcaterra of Deutsch Architecture Group was misidentified as the architect of the Central Arizona College student center. That project was designed by Richärd+Bauer. Deutsch Architecture designed the Glendale Community College Technology 1 building renovated by Adolfson & Peterson. In Big Deals, the landlord brokerage team for the industrial lease of 4707 W. Van Buren St. was from Cassidy Turley.

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REDEVELOPMENT


New to Market

| Building 313developer: Brad Smith & Lynne King Smithgeneral contractor: LGE Design Buildarchitect: LGE (Vince Dalke) / Dina Rosas (interior) location: 313 N. Gilbert Rd., Gilbert, Ariz.Size: 13KSFvalue: $3.2MStart/completion: January to fall 2015

The mixed-use building will be divided into three stories and will only house local Arizona businesses. The building will offer a historic-meets-modern style. The ground floor will offer retail and restaurant space, with a two-story patio and greenery. The second floor will house TicketForce’s office and offer a street-facing flex space that will be leased for special events, receptions, meeting space or pop-up yoga classes. The third floor will host a 2KSF women’s co-working space and will also boast Gilbert’s first rooftop bar.

| 230 W. 5th St.developer: JAH Ventures, LLPgeneral contractor: TBDarchitect: DPA Architects, Inc.location: NEC of 5th Street and Ash Avenue, Tempe, Ariz.Size: 26 Story / 534,250 SFBrokerage Firm: CBRE, Inc.value: WNDStart/completion: Currently in design

A 26-story, mixed-use development including class-A residential, office and retail.

| uptoWn plazadeveloper: Vintage Partners for Uptown Plaza, LLCgeneral contractor: Kitchellarchitect: Nelsen Partnerslocation: 5017 N. Central Ave., PhoenixSize: 11.89 acres (gross site area) | 120,451 SF (leaseable building area)leaSing Firm: Corritorevalue: WND/Multi-million dollar projectStart/completion: Aug. 25, 2014; 2Q 2015

Created by the Del E. Webb Construction Co. (famed developers of Sun City and The Flamingo Casino & Resort in Las Vegas), the Uptown Plaza shopping center was an instant Valley landmark when it opened on Sept. 25, 1955. Created in partnership with International Council of Shopping Centers co-founder Roy Drachman, Uptown Plaza included then-cutting-edge amenities such as 650 complimentary on-site parking spaces, air-conditioned and glass-fronted retail spaces tucked behind expansive overhangs, and matching neon-lit cursive-style signage above each store that stayed lit until 11 p.m. nightly. As the first shopping center located outside of the historic downtown core, Uptown Plaza set the stage for the Valley’s future suburban development, with strip centers and regional malls extending outward to serve ever-more-distant residential developments. Ironically, as the Valley continued expanding ever outward, the once distant Uptown Plaza is now considered a part of the city’s central urban core. Today, the shopping center is partly occupied and overdue for mechanical and aesthetic overhauls. As part of Vintage Partners’ commitment to successful urban infill and thoughtful adaptive reuse, Uptown Plaza will start a wall-to-wall remodel and refresh. Not only will this restore the plaza’s brick-lined façade and mid-century modern style, but developers hope it will re-attract the combination of iconic local, regional and national tenants that helped make the historic development in the heart of central Phoenix such a success in previous decades.

MIXED USE

MIXED USE© AZBIGMEDIA 2014

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| alta Steelyard loFtSdeveloper: Wood Partnersgeneral contractor: Wood Partnersarchitect: Biltform Architecturelocation: 353 S. Washington St., Chandler, Ariz.Size: 6.4 acres, 297 unitsvalue: WNDStart/completion: October 2014 to September 2015

Wood Partners broke ground in October on Alta Steelyard Lofts, a 301-unit luxury apartment community in downtown Chandler that will add distinctive rental units to the employment-dense, rapidly developing “Silicon Desert” core. Alta Steelyard Lofts will include five buildings on 6.4 acres with 195 one-bedroom, 102 two-bedroom and four three-bedroom loft-style units and 468 parking spaces. Units will include luxury finishes, such as granite countertops, stainless steel appliances and high-tech entertainment packages. Common amenities will include a cyber-café, theater, fitness center, outdoor lounge areas with grilling stations, resort-style pool and deck area and community-wide Wi-Fi.

| ShopS at Fountainheaddeveloper: Birtcher Anderson Realty, LLCoWner’S repreSentative: Foursite Consultinggeneral contractor: TBDarchitect: Vertical Design Studioslocation: SEC 55th Street & Broadway Road, Tempe, Ariz.Size: 10,750 SFBrokerage Firm: Strategic Retail Groupvalue: $3MStart/completion: Q4 2014 to Q2 2015

The Shops at Fountainhead is a 10,750 SF multi-tenant retail building in Tempe, Ariz. The infill retail project is within the Fountainhead Corporate Park, with more than 1MSF of class-A office space, 600 multifamily units and a 270-room hotel and conference center.

| Saltdeveloper: OliverMcMillangeneral contractor: Adolfson & Peterson Constructionarchitect: Pappageorge/Haymes (Chicago); Of record: Todd & Associates (Phoenix)location: 260 E. Rio Salado Pkwy., Tempe, Ariz.Size: 274KSF (rentable)value: $60MStart/completion: Q3 2014 to Q1 2016

SALT is a four-story, 265-unit, class-A apartment community in Tempe, Ariz. The development will feature studio, one-, two- and three-bedroom living spaces. Residents have access to boutique resort style amenities with two pools, spa, yoga lawn, poolside cabanas, multiple outdoor barbecue areas, lush landscaping and direct frontage on Tempe Town Lake. The community also includes a large gym, a media room and a spacious social room. SALT (formerly the Lofts@Hayden Ferry) is slated to open in early 2016. The 3.7-acre project site is part of the Hayden Ferry Lakeside mixed-use master plan, which includes residential, retail, hotel and office uses. The site is nearby to Arizona State University Campus and the Mill Avenue Entertainment District. It is next door to the State Farm campus, which is currently under construction.

RETAIL

MULTIFAMILY MULTIFAMILY

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Eric ForshEEExEcutivE Managing DirEctor,nEwMark grubb knight FrankYEars at Grubb & Ellis: 8YEars at NGKF: 3

Eric Forshee runs NGKF’s national business development, client relationship management and marketing for property services. He also oversees property management operations in Arizona, Texas and Colorado. In his first five years with Grubb & Ellis, Forshee helped win more than 50MSF of new property assignments. A team player at the office as well as from 30,000 feet above ground, Forshee participated on a competitive skydiving team for about a decade.

Describe your first sky Dive. I took my first jump in Delmarva, Md., in 1991. I was working in Washington, D.C., and realized that I was terrified to go anywhere near the edge of the roof. A friend was going skydiving for the third time and invited me to participate. Friday night before I went, I realized I was terrified. The drive was two hours, and I was nauseated the way there and felt sick all the way up to altitude. The jump master was about four inches shorter and 50 pounds lighter than me, and he told me not to put my feet down until we landed.

At the door, he asked if I was ready and all I could do was nod yes. We went out the door and tumbled three times and then stabilized. Once we were stable, I was calm and excited and loved the feeling of flying free. Upon landing, I stood up and realized he was hanging on my back, so I dropped to my knees to let him down. It was exhilarating and I decided right there to do two static line jumps that day.

How many Dives Have you completeD? It took me 10 years to get my first 100 jumps, but when I moved to Arizona in 2001, I made a lot of friends and eventually was asked to join a team. When I am competing, I get about 250 training jumps a year. Today, I have 2,756 jumps and three cutaways.

wHen DiD you start Diving competitively? I started competing in four-way in 2002. We were pretty bad at the beginning, but we stuck with it and eventually hired a professional to train us. We won several gold, silver and bronze medals in local competitions and we competed in United States Parachute Association national competitions in 2003 through 2008, when our team stopped jumping. I competed on an eight-way team in 2011 and 2012. Since then, I have jumped with the team in training a few times and hope to get back to full-time competition in 2015.

wHat’s your most interesting Dive story? I had about 175 jumps, and I went to a national skydiving event in Rantoul, Ill. We had been jumping a couple days and decided to do an early morning jump the next day. We were on the first load of the day with a group of 10 jumpers. As we were breaking away from each other, one of the less experienced jumpers dove straight down and deployed his parachute beneath me, which forced me to roll away and deploy my parachute lower than normal (I usually deploy around 3,000 feet and I was at 2,000 feet when I deployed.) When my parachute came out, it was a tangled mess and I immediately cut it away and reached for my reserve. My automatic activation device beat me and we both pulled just below 1,000 feet. I was shaking so hard by the time my parachute opened at about 600 feet that I could barely steer and land. Everything worked as designed and I landed safely and was repacked and back in the air within about four hours.

Do you still Have a Dive acHievement on your to-Do list? My next goal is to learn to fly wingsuits. They can extend your skydive free-fall time almost twice as long and you can cover tremendous geography on a single skydive. It is exhilarating and probably the closest you can get to actually flying instead of falling.

Read more online at azbigmedia.com/azre

PHOTO BY MARK WALCK

AFTER HOURS

THE HIGHFLIER

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Ćity oF Casa Grande The Arizona Department of Transportation (ADOT) continues with its ongoing study of the proposed Interstate 11. The primary aim of the study was to propose and plan a high-priority link between Phoenix and Las Vegas, but ADOT recently indicated that the I-11 planners are considering extending the range of the interstate from Mexico to Canada. This extended transportation corridor could enhance commerce, international trade, tourism and create a border-to-border manufacturing corridor. The southern segment of the corridor would link Nogales with Tucson, then Phoenix, and, potentially, be routed through Casa Grande. This could put Casa Grande in the center of a significant commerce, manufacturing and tourist corridor, linking it to vast numbers of communities to the south and north. Currently, there is just the study, which is very important in the initiation of the planning process. That would include additional studies, such as environmental, engineering and routing studies. Funding is not yet available for the project, which will cost billions of dollars, and could be years if not decades away.

Ćity oF CoolidGe Recently, the Coolidge City Council approved changes to its general plan that would allow for the future economic development and planning of approximately 11,500 acres of land that is mostly owned by Pinal Land Holdings (PLH) and has been known for many years as the “Mesa Water Farm Property.” The City of Mesa purchased the property for future preservation of its water rights but sold much of the land to PLH this past year. PLH is now in the process of rezoning the property for various uses. Coolidge leaders have expressed excitement about the potential for growth and development of this property resulting from the general plan changes and are proposing to annex the area by the end of the year.

Ćity oF Phoenix The Phoenix City Council recently gave tentative approval to the city’s proposed impact fee structure for 2015. Impact fees are developer-paid fees used by the city to deliver services to new development. They are used by the city to pay for development improvements such as streets, drainage infrastructure, water and sewer facilities, and to fund fire and police, library and park facilities. The new fees are proposed to be increased by approximately 4.6 percent to 43.1 percent, depending on which impact fee zone is addressed. The northwest impact fee zone has the highest current fees but is proposed for the lowest increase of 4.6 percent, while the Ahwatukee zone has the lowest current fees but is proposed for the highest increase of 43.1 percent. The new fee proposal is available for public review and comment before final action is taken.

Ćity oF temPe Charged by the Tempe City Council with finding ways to improve the development and home improvement process, Tempe’s public works, engineering and community development staff have reorganized to improve service. Most questions about residential or business projects on private property and parcels of land may now be answered at the community development front counter. Issues involving city right-of-way on major arterials, capital improvement projects and bid openings will be addressed through public works or engineering. Community development front counter staff can assist residents with permitting (except utility permits for utility companies), property information, plats, underground utility information, right-of-way and haul permits, floodplain information, address assignments and inquiries. From residents who want to add a pool or garage to contractors, land use attorneys and developers, these changes will streamline processes. After months of meetings and planning, the drafts for Tempe’s first character area plans are ready for review and comments. Hundreds of Tempe residents have participated in a series of public meetings and surveys to come up with the elements that define their character areas as well as the desired conditions that they would like to see embraced in the future. Character areas recognize groups of neighborhoods that contain common design, land use and commercial characteristics distinct from neighboring areas. Similarities in age of housing, styles of architecture, patterns of development, land use or street patterns and landscaping form some of the recognizable differences. Meetings to review the drafts for character areas 7, Corona/South Tempe, and 8, Kiwanis/The Lakes, have already taken place. However, each section of the city will have an opportunity to participate in the character area process for their neighborhood at future meetings.

City oF sCottsdaleScottsdale is preparing a zoning ordinance text amendment to the service residential district of the zoning ordinance. This effort will include revisions to all sections of the district, including, but not limited to, a purpose statement, use provisions and development standards. The proposal may include revisions to definitions, conditional-use criteria and administrative requirements, general provisions, signs, parking and landscaping. As part of a citywide outreach on this proposal, the community is invited for review and comment.

The P&Z column is compiled by Dave Coble and George Cannataro with Coe & Van Loo Consultants, cvlci.com

Planning and Zoning

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PROJECT NEWS

proJect newsPROJECT NEWS➤ Play it aGain, mCC!Layton Construction and Jones Studio have completed the Mesa Community College Performing Arts Center — a renovation of a former movie theater into a practice and performance space for one of the largest community college music departments in the country. Interior and exterior design elements are inspired by the cadences of George Gershwin’s “Rhapsody in Blue.” The hallmark of the center is its innovative uses of masonry in the concert hall and exterior walls.

➤ toUChdoWn For the distriCtAfter two years of vetting candidates, Arizona State University has selected Catellus Development Corporation as master developer for the ASU Athletic Facilities District, a 330-acre mixed-use (multifamily, commercial and service retail) development at the northeast end of the Tempe campus. Public planning and permitting will take the next nine months and development will potentially stretch over 10 to 20 years.

➤ Class-a oFFiCe matesWentworth Property Company and Northwood Investors have purchased a 234KSF office in Phoenix for $13.83M with the intention of investing between $20M and $25M in renovations to make the space more appealing to large tenants in need of trendy, class-A office space. Gensler has been selected as the architect, Kennedy Design Build as general contractor and Cassidy Turley has the leasing assignment. The building is located at 1665 W. Alameda Dr.

➤ CUe the Water WorKsIn January 2015, McCarthy Building Companies and Sundt Construction will begin a joint venture as general contractor for a $120M expansion and process improvement projects, $100M and $20 M, respectively, for Chandler’s Ocotillo Water Reclamation Facility.

➤ roll CallSundt Construction has been tapped for new housing at Luke AFB and to renovate facilities at Fort Story in Virginia Beach, Virginia.

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Left: Mesa Community College Performing Arts Center. Right, top to bottom, lef t to right: Waypoint, 1665 W. Alameda Dr., Chandler Viridian and Fort Story’s Bachelor Enlisted Quarters.

➤ CominG roUnd the moUntainThe City of Phoenix has received a $1.6M grant toward a five-mile extension of the Valley Metro light rail to South Phoenix.

➤ PhasinG inNationwide Realty Investors broke ground Nov. 12 on the 250-acre Rivulon development in Gilbert, Ariz. Phase one of this mixed use project will include a four-story, 120KSF office building and a 45KSF L.A. Fitness.

➤ CrosstoWn traFFiCHarvard Investments, Lincoln Property Company (LPC) and American Traffic Solutions (ATS) announced that ATS will relocate more than 600 employees to Waypoint, a new class-A office campus located in Mesa, Ariz. ATS’s lease includes total occupancy of one of two new buildings planned by owner Harvard Investments and development partner LPC.

➤ Prime ViridianIn October, Hines closed on the purchase of the 20.5-acre site for Chandler Viridian. The mixed-use project is coming to fruition, following two years of legal complications regarding the unfinished Elevation Chandler project. Hines intends to demolish and remove the Elevation Chandler structure by December. Alliance Residential is building a class-A multifamily property in Q1 2015. Additional plans include a hotel, 250KSF of class-A office and retail.

➤ Worldly WorKsPaCeRyan Companies US, Inc. and PHArchitecture completed the $27M, two-story, 150KSF global technology center in Tempe, Ariz., for web hosting company GoDaddy. The space includes outdoor sand volleyball and basketball courts, among other work-play design elements.

© AZBIGMEDIA 2014


EXECUTIVE VOICES

Flight riSk

equipped with a high-tech camera that takes photos and shoots aerial footage, Unmanned Aerial Vehicles

(UAV) might seem appealing to local real estate companies, but the legality of their use remains up in the air.

Motorized aircrafts are traditionally used for leisure activities, but UAVs are increasingly taking flight to accelerated heights. Based on Federal Aviation Administration (FAA) regulations, there are many variables to be taken into consideration when using drones for anything other than private purposes.

“The cons are pretty substantial,” says Elisabeth Martini, associate attorney at Resnick and Louis Attorneys at Law. “The biggest one being the concerns for privacy and second, the concerns about safety. Because there is a wide range of the types of drones, the safety mechanisms in them range drastically.”

The privacy of residents in close-knit neighborhoods has become a concern with the UAVs crossing property lines into another backyard. Trespassing, nuisance and spying are all examples of invasion of privacy that leave many residents concerned.

“Compared with the general public, I think the concern with drone use is more along the lines of privacy, rather than safety,” Martini says. “Generally, we’re not really worried that something is going to fall from the sky onto our property and damage it. We are thinking, ‘I don’t want

somebody to be able to fly a drone over my property and see into my house.’”

Public entities, such as the government, municipalities, towns and police, can obtain a waiver from the FAA and operate UAVs for approved purposes.

“They can do border patrol sweeps, search over people’s properties for drugs or take a type of census,” says Martini. “Mainly for research, not for prosecution purposes. It is carved out for public entities rather than commercial entities.”

In 2007, the FAA reserved the right to fine, send out warning letters, issue a cease and desist order and verbally warn someone who is using a drone. Martini expresses her concerns on whether the FAA actually has the ability to fine someone for using a drone pertaining to commercial purposes.

Entering a buyer’s market, real estate has been booming, and the use of drones are a catalyst to market property at all angles. From an aerial view, buyers can get a perspective of a building’s surroundings and structure.

“It’s a great marketing tool,” says Court Rich, Senior Partner at Rose Law Group. “Showing different views of the home, land and the context of where it is. You have the opportunity of taking flattering photos or to show context, that Google Earth or walking around the house won’t get you.”

Dave Cheatham, president of Velocity Retail Group and a commercial real

estate broker, incorporates the use of drones into his practice by having two drone pilots maneuver the UAVs over commercial properties. Videographers turn the aerial footage into useable marketing for the properties.

“[A drone] gives you context you cannot get from being on the ground,” he says. “You can use photography to get an oblique, angled view, to understand things such as, ingress and egress. You can see access to roads, freeways, and where the residential is. That is a real advantage. The video portion of it, gives you a virtual tour from the air.”

The cutting-edge technology has evolved at a rapid pace that the FAA is striving to develop standards and regulations for quickly. Real estate is booming and so is the use of the advanced UAVs. The National Association of Realtors has advised drones to not be used because the law is in flux, according to Martini.

Recently, Congress instructed the FAA in The Modernization of Reform Act 2012, which exempts model aircrafts, to develop a safety plan and standards in accordance with the national airspace system, according to Martini.

“The FAA has a lot of work to do in the coming months to make sure they are ready to issue these deregulations by the end of the year. There will probably be some growing pains once those come out and people try to figure out what it means to them and how to safely operate the drones for commercial purposes,” Martini said.

By BRITTANY DIERKEN

the legality of drones in commercial real estate

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Building Successful Arizona Projects for 27 Years

480.497.2300 • fax: 480.497.9610 • www.bjerkbuilders.comLicense B1-088897

ReputationA contractor’s reputation for excellence builds by completing projects on time, within budget, and by continually exceeding expectations.

Reputation-HalfPg-112213_Layout 1 11/22/13 2:13 PM Page 1

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1. RYAN WEST BUSINESS PARk, TOLLESON242,863 SF; $14,591,460BuYER: Cohen Asset Management, Inc.SELLER: EG Properties LLCLISTING BROKERS: Will Strong, Mike Haenel and Andy Markham, Cassidy Turley

2. 317 S. 48Th ST., PhOENIX113,827 SF; $9.2MBuYER: Road Machinery LLCSELLER: DriveTime Automotive Group, Inc.LISTING BROKERS: CBRE

3. 2021 S. 51ST AVE., PhOENIX69,842 SF; $8.85MBuYER: Duke Realty CorporationSELLER: NATMI Truck Terminal LLCLISTING BROKERAGE: Duke Realty Corporation

4. FREEPORT DISTRIBUTION CENTER,PhOENIX135,114 SF; $7,500,170BuYER: Lincoln Property CompanySELLER: Brookfield Asset Management, Inc.LISTING BROKERAGE: HFF

5. 7848-7850 E. REDFIELD RD., SCOTTSDALE38KSF; $4.95MBuYER: Robertson Scottsdale 7848 LLCSELLER: 7848 Cimarron LLCLISTING BROKERAGE: Shell Commercial


TOP 5 NOTABLE LEASES AND SALES(AuG. 1 TO SEPT. 31, 2014)SOuRCE: CASSIDY TuRLEY RESEARCH DEPARTMENT, COLLIERS INTERNATIONAL AND COSTAR

InDUstRIAl/sAles

1. CITIZENShIP & IMMIGRATION SERVICES, PhOENIX53,314 SF; $17.6MBuYER: Washington Alliance Capital, LLCSELLER: Wilco Strategic Partners, LLCLISTING BROKERAGE: Cushman & Wakefield

2. 16001 N. 28Th AVE., PhOENIX106,397 SF; $15.1MBuYER: Sabal Financial Group LPSELLER: CWCapital Asset Management LLCLISTING BROKERAGE: CBRE

3. ARIZONA BUSINESS PARk, PhOENIX66,724 SF; $13MBuYER: Government Properties Income TrustSELLER: Crown West Realty, LLCLISTING BROKERAGE: Crown West Realty LCC

4. ANASAZI PLAZA OFFICE PARk, PhOENIX109,961 SF; $10.85MBuYER: HighBrook Investment Advisors, LLCSELLER: Lone Star Funds

5. 20410 N. 19Th AVE., PhOENIX107,156 SF; $9,949,179BuYER: Sabal Financial Group LPSELLER: CWCapital Asset Management LLCLISTING BROKERAGE: CBRE

OffIce/sAles

There’s no such thing as a “small” deal in this industry, coming out of a recession. However, it’s the big deals, and the brokers who make them, that make the market an interesting one to watch.

In every issue, AZRE publishes the top five notable sales and leases that have occurred one month out from publication based on research compiled by Cassidy Turley and Colliers International with CoStar.

BIG DEALS IS SPONSORED BY SkySong 3Firm: Arizona State University Foundation, Plaza Companies, and Holualoa CompaniesBuild: SkySong 3 – a 145,000 sq. ft., 3 story office building and adjacent 5 story parking structureLoan: $17.8 million construction loan, financed by Alliance Bank of Arizona

Will Strong

Mike Haenel

Andy Markha© AZBIGMEDIA 2014

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1. VILLAGE CENTER, PhOENIX171,129 SF; $22,836,349BuYER: NewQuest Epic Investments SELLER: Phillips Edison Fund IVLISTING BROKERS: Jesse Goldsmith and Steve Julius, CBRE

2. hAYDEN CROSSING ShOPPING CENTER, SCOTTSDALE63,446 SF; $14.046MBuYER: Transpacific Development Company SELLER: Jay C Evans & Karen D EvansLISTING BROKERAGE: Cassidy Turley

3. AIRPARk DESIGN CENTER, SCOTTSDALE92,001 SF; $13,856,783BuYER: Kootenay Holdings, Ltd. SELLER: John D. WrightLISTING BROKERAGE: Shell Commercial

4. 7141 E. LINCOLN, PARADISE VALLEY30,220 SF; $11,378,506BuYER: RN Properties South Mountain LLC SELLER: McCarthy Lincoln Plaza LPLISTING BROKERAGE: Lee & Associates

5. MARLEY PARk PLAZA, SURPRISE71,307 SF; $10,758,810BuYER: IMAN Enterprises, LLC SELLER: Donahue Schriber Commercial Real EstateLISTING BROKERAGES: Cassidy Turley

1. ThE DISTRICT ON APAChE, TEMPE223,200 SF; 281 units; $89.9MBuYER: Education Realty Trust, Inc. SELLER: The Ecclestone Organization, Inc.LISTING AND BuYING BROKERS: Peter Katz, Brian Abernathy and Justin Britto, Education Realty Trust, Inc. - REIT

2. LAkEVIEW AT SUPERSTITION SPRINGS, MESA680,718 SF; 676 uNITS; $66.6MBuYER: Fairfield Residential SELLER: Heitman Capital Management Corp.LISTING BROKERAGE: CBRE

3. SIERRA RANCh, PhOENIX584,641 SF; 582 uNITS; $48MBuYER: Phoenix uprising, LLC SELLER: FSC Realty, LLCLISTING BROKERAGE: Berkadia

4. GRIGIO METRO, TEMPE584,641 SF; 408 units; $47.05MBuYER: Crow Holdings SELLER: Canyon-Johnson urban FundsLISTING BROKERAGE: JLL

5. SONORAN VISTA, SCOTTSDALE271,112 SF; 246 units; $43MBuYER: Aukum Group LLC SELLER: Security PropertiesLISTING BROKERAGE: CBRE

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Jesse Goldsmith

Steve Julius

1. 7845 W. BROADWAY RD., PhOENIX872 acres; $33,808,200BuYER: Vulcan Materials Company SELLER: Edw. C. Levy Co.

2. SOUTh POWER ROAD, GILBERT100 acres; $22,905,900BuYER: Fulton Homes Corporation SELLER: Poco Ranch, Inc.

3. NE GERMANN AND LINDSAY ROADS, GILBERT90 acres; $13,745,794BuYER: DT Acceptance Corporation SELLER: The Lamoreaux Family, LLC

4. SPECTRUM ASTRO, GILBERT63 acres; $12MBuYER: SunCap Property Group SELLER: LNR Property CorporationLISTING BROKERAGE: CBRE

5. EL PASO NATURAL GAS, GLENDALE395 acres; $11.7MBuYER: Marbella Ranch LLC SELLER: El Paso Natural Gas CompanyLISTING BROKERAGE: Cassidy Turley

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1. PEORIA TOWNE CENTER, PEORIA56,875 SFLANDLORD: State Trailer Supply TENANT: State Trailer RV & Outdoor SupplyLANDLORD AND TENANT BROKER: Jake Ertle, Rein & Grossoehme

2. MAjOR A/B & ShOPS A, ChANDLER27,600 SFLANDLORD: Arizona Partners Retail Investment Group LLCTENANT: GoodwillLANDLORD BROKERAGE: Arizona Partners Retail Investment Group LLC

3. ShEA SCOTTSDALE CENTER, SCOTTSDALE22,450 SFLANDLORD: Karlin Real EstateTENANT: LA FitnessLANDLORD BROKERAGE: Arizona Partners Retail Investment Group LLC

4. TRI-VALLEY PLAZA, CASA GRANDE20,500 SFLANDLORD: Larsen BakerTENANT: Planet FitnessLANDLORD BROKERAGE: Larsen BakerTENANT BROKERAGE: NAI Horizon

5. RIVER POINT PhASE II, MESA110KSFLANDLORD: Kimco Realty CorporationTENANT: Tuesday MorningLANDLORD BROKERAGE: Kimco Realty Corporation

1. FOUNTAINhEAD BUSINESS PARk, TEMPE101,803 SFLANDLORD: KBS Realty AdvisorsSuBLANDLORD: university of PhoenixSuBTENANT: Concentrix CorporationSuBLANDLORD BROKERS: John Bonnell, Karsten Peterson, Brett Abramson and Dave Seeger, JLLSuBTENANT BROKER: Curtis Brown, Ross Brown Partners

2. 2700 CORPORATE CENTER, ChANDLER65,860 SFLANDLORD: W. P. Carey & CompanyTENANT: Apria HealthcareLANDLORD BROKERAGE: JLL

3. EAST GATEWAY CENTER PhASE I, PhOENIX50,341 SFLANDLORD: Pacifica Real Estate Group, LLCTENANT: Mobile MiniLANDLORD BROKERAGE: CBRETENANT BROKERAGE: CBRE

4. PhOENIX GATEWAY CENTER, PhOENIX45,863 SFLANDLORD: Oaktree Capital ManagementTENANT: Health Choice ArizonaLANDLORD BROKERAGE: TranswesternTENANT BROKERAGE: CBRE

5. COLLIER CENTER 1, PhOENIX24,441 SFLANDLORD: GE Asset ManagementTENANT: GannettLANDLORD BROKERAGE: CBRETENANT BROKERAGE: CBRE

1. CANAL CROSSING LOGISTICS CENTER, PhOENIX109KSFLANDLORD: Conor Commercial Real Estate and Globe Corporation TENANT: LKQ CorporationLANDLORD BROKERS: Jeff Conrad and Allen Lowe, Lee & AssociatesTENANT BROKERS: Mike Parker and Evan Koplan, CBRE

2. LIBERTY TOLLESON CENTER PhASE II, TOLLESON73,781 SFLANDLORD: Liberty Property TrustTENANT: Green Light Direct ServicesLANDLORD BROKERAGE: JLLTENANT BROKERAGE: CD Commercial Advisors

3. AIRPORT I-10 BUSINESS PARk PhASE I, BLDG. E, PhOENIX63KSFLANDLORD: Wentworth Property CompanyTENANT: Anixter International, Inc.LANDLORD BROKERAGE: JLLTENANT BROKERAGE: CBRE

4. 1720 W. BROADWAY RD., MESA46KSFLANDLORD: Zimmerman Commons LLCTENANT: united Subcontractors Inc.LANDLORD BROKERAGE: Cutler CommercialTENANT BROKERAGE: Cassidy Turley

5. GOLD CANYON CANDLES, INC., ChANDLER42KSFLANDLORD: Twenty Square Holdings, LLCTENANT: Barlow Company, Inc.LANDLORD BROKERAGE: Lee & AssociatesTENANT BROKERAGE: Cassidy Turley


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LegisLative Update


DECODING ENERGY STANDARDS

remember what it was like to rely on Phoenix public transit last century? Not in the early part of the last

hundred years, but as recent as the 1990s. Phoenix had limited bus service and no service after midnight or Sundays. It was not the best system for a rapidly growing city.

At that time, the city created The Transit 2000 Plan. The plan focused on expanding bus service, building the light rail and creating public transit infrastructure. The plan was designed to create a new public transit system for the sixth largestU.S. city.

Public outreach was significant. There were numerous public meetings on the plan and surveys on the plan were sent to Phoenix households. The plan, and its funding source, four-tenths of a cent sales tax was overwhelmingly approved by the voters in March 2000. The tax would expire in 2020.

The successes of the plan are evident. Light rail is more popular than predicted and bus service has been expanded. However, what the city did not count on in 2000 when projecting the revenue from the tax, was two economic crises, the Sept. 11, 2011, downturn and the Great Recession of 2008. The money generated is less than projected. Consequently, many projects in the plan, such as light rail expansion, remain unfinished. More importantly, the funding source expires in 2020. In effect, all that has been

achieved could shut down.The city remains committed to public

transit and is not going to wait until the money runs out to address the situation. Phoenix is also facing a funding shortage with respect to traditional road and freeway transportation. Combining transit and transportation, the city created the “Citizens Committee on the Future of Phoenix Transportation,” a group of 30-plus individuals with diverse interests and expertise, who are assessing the current transit/transportation status and the looming expiration of the funding source.

The committee is thoroughly reviewing all aspects of Phoenix transit/transportation and will report to the mayor and city council before the end of the year. Public input is accessible at talktransportation.org.

ricHarD r. HubbarDPresident and CEO,Valley Partnership

Last year, SB 1133 (striker amendment of SB 1227) was introduced to restrict the ability of cities to update energy codes and standards.

It would have prohibited cities from adopting current energy codes, setting cities back three to four years while allowing new buildings to be constructed under outdated codes. The bill was shortsighted and would have been a major setback for energy savings, occupant comfort and building performance.

The u.S. Department of Energy (DOE) recently determined that commercial

buildings built to the 2013 edition of the ANSI/ASHRAE/IES 90.1 energy standard would result in national source energy savings of approximately 8.5 percent and site energy savings of approximately 7.6 percent, as compared with buildings built to the 2010 edition. upon this determination, states will be required to certify that they have reviewed the provisions of their commercial building code and, as necessary, update their codes to meet or exceed standard 90.1-2013.

For low-rise residential buildings, DOE has preliminarily determined that the low-residential buildings built to the 2015 edition of the International Energy Conservation Code (IECC) would result in national source energy savings of approximately 1.03 percent and site energy savings of approximately 1.12 percent as compared with buildings meeting the 2012 IEC. If this determination is finalized, each state will be required by statute to certify that it has reviewed the provisions of its current residential building

codes and, as necessary, update their code to meet or exceed the 2015 IECC.

Arizona Revised Statute 9-461.05 requires that each city adopt a comprehensive, long range general plan that serves as the city’s guide for long range growth and development. The general plan must include energy, conservation and environmental planning. Cities around the state are setting long-term energy goals including the adoption of the International Energy Conservation Code, ASHRAE 90.1 and Energy Star certification programs.

There must be long-term thinking in the interest of consumers, residents and business owners. Any proposed state legislation designed to preclude local governments from adopting national vetted energy codes/standards and energy/environmental planning initiatives will violate both federal directives and state statutes while only serving the short-term interest of a selected few.

antHony floyDScottsdale GreenBuilding Program,Office ofEnvironmental InitiativesMember, AmericanInstitute of Architects (AIA)

on tHe rigHt trackPhoenix tackles transit,transportation head on

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19

Anti-prop 480

Prop 480

the NAIOP Arizona board of directors has unanimously opposed Prop 480, an item on the Nov. 4 general election

ballot that asks Maricopa County voters to approve a $1.6 billion general obligation bond over 27 years for the Maricopa Integrated Health System (MIHS).

If passed, Prop 480 would be the third largest bond in Arizona history, according to the Arizona Tax Research Association (ATRA), the group spearheading the

effort to defeat the proposition.

The NAIOP board could have supported a narrower bond request

focused more on the behavioral health component and replacement of the Level One Trauma Center and Arizona Burn Center. However, it is opposed to the bond issuance, which would pit a taxpayer supported institution against a number of private healthcare systems where there is much duplication of services and excess hospital beds that private payers must support within a relatively small

geographic radius of about five miles.The NAIOP Arizona board members are

especially concerned about duplication and unfair competition with taxpayer money. While the proponents claim there are three discrete funding components, the wording of the ballot proposal seems far more open-ended regarding the purposes the monies can be used.

The timing of the bond issuance is also troubling as there was a massive property tax shift from residents to businesses during the Great Recession and these same businesses are still struggling to recover.

From fiscal years 2010 to 2014, there was a 30 percent increase in property tax rates for businesses. If the bond passes, a typical small business with assessed valuation of $1 million will be paying $7,800 more over time in property taxes.

The NAIOP board says it needs the Affordable Care Act provisions to be understood with all of the attendant costs associated with its implementation before Arizona embarks on the bond issuance where a new hospital and multiple clinics financed by taxpayer money are constructed only to compete against private hospital systems in an area that already has excess bed capacity and duplication of services.

T he Board of Directors of the Arizona Builders’ Alliance (ABA) voted to unanimously to endorse the passage of Proposition 480 to

provide funding for expansion of the Maricopa Integrated Health System.

This proposal would provide funding for nearly $1 billion of new construction and would support and expand activities at the Maricopa Medical Center, the Arizona Burn Center and facilities in Avondale, Chandler, El Mirage, Glendale, Guadalupe and Maryvale. The MIHS is the

county’s only teaching hospital and Arizona Burn Center is the major facility in the state for treating burn victims.

LOOKING FORWARD:Much of the political focus in the state is

currently directed to the November general election. However, the ABA is preparing for the 2015 legislative session beginning the second Monday in January. Arizona will have 100 percent turnover for all major statewide offices and the legislature will typically have about 33 percent turnover. The ABA has a Legislative Committee made up of active and involved members of the association and the industry. That committee meets throughout the year to analyze legislation and its impact on commercial contractors. The Legislative Committee makes policy recommendations to the ABA’s board that become the association’s legislative priorities.

Items under consideration for next year include amendments to the Transaction Privilege Tax law effecting prime contracting, adoption of a web-based portal for filing preliminary lien notices, lien priority issues affecting commercial contractors and new funding for research facilities at the three state universities.

mark minterExecutive director, Arizona Builders’ Alliance

POINT/COUNTERPOINT:FunDing to ExPanD MaricoPa intEgratED hEaLth SYStEM

tim lawlessPresident, NAIOP,Commercial Real Estate Development Association, Arizona

© AZBIGMEDIA 2014


Have you ever reflected upon your adolescent years and recalled how dynamic and confusing life

and the world could be? For many, it was a challenging time with a mix of emotions and experiences as they learned to balance the social, emotional and physical changes endured as they evolved from children into adults.

Life was complex, unpredictable, rich with highs and lows as one transformed into their changing bodies and more complex social systems. At times it was scary and uncomfortable, yet with the discovery of new possibilities, it could also be exciting and exhilarating.

Similarly, Phoenix

is a community in the midst of an awkward, yet exciting urban evolution. Responding to market forces and an emerging generation’s desire for a more vibrant, walkable city, Phoenix is transitioning from a suburban town into a next generation, urban city. Trying to define its new identity in the world, Phoenix and its residents must navigate many fundamental challenges. As Metro Phoenix continues to grow in popularity and population, neighborhoods throughout the region will grapple with intensification and densification as infill development, adaptive reuse and redevelopment takes place. Established Central Phoenix neighborhoods struggle with issues such as balancing parking requirements and traffic patterns, innovative indoor/outdoor urban restaurants and gathering places. Increasingly, these scenarios are spurring debates between neighbors, business owners and city staff. For

example, who should have access to public streets for parking or traffic?

The conversation is not limited to Phoenix, nor is parking and traffic the only concern relative to infill, adaptive reuse and redevelopment. It’s a Pandora’s box that includes discussions about higher density residential development, adequate infrastructure to support greater intensity, alternative public transportation and multimodal systems. More importantly, who is going to pay for it?

Regardless of topic, the key to successfully integrating new land uses into the established community fabric – especially those that are innovative and creative - is a clear vision for what the city wants to become, followed by a paradigm of open communication, collaboration and a flexible regulatory environment that facilitates a balanced conversation between all stakeholders involved…the municipalities, neighbors, businesses and developers.

lorenzo perezCo-Founder & Principal, Venue Projects– Inspired RedevelopmentMember, urban Land Institute (uLI) Arizona District CouncilAdvisory Board

STREET APPEALPhoenix’s awkward, exciting urban evolution

LegisLative Update

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HEALTHCARE

remember when grandparents used to consider nursing homes some kind of punishment akin to

abandonment? There’s a good chance that reference has seen the last of its days. The senior living industry is seeing a huge transformation from “hospital mentality” to “hospitality.” Or, as one expert put it, developers are putting the “living” in “senior living.”

With the addition of more than 40 million seniors 65+ over the next 35 years, America will need to doubling

its number of caregivers. Since that population isn’t growing as quickly, there will be more need for assisted living facilities.

“At the present time, neither the training programs nor the pay scales are ready to attract the workforce that will be needed,” says Paul Schoeffler, senior pre-construction manager at Adolfson & Peterson Construction.

The Weitz Company has worked in the senior care market since the 1960s. Based on its research, the senior

living trend is leaning “overwhelming” toward stand-alone assisted living, says Brendan Morrow, Weitz’s director of senior living.

“It seems to be what everyone is building,” he says. “The current market size is about 50,000 units for all services. We project that to grow to 180,000 by 2030. Between now and 2030, the population of people 65 and older is projected to grow by 257 percent.”

There are 76.4 million Americans who were born between 1946 and

ARReSTedDeVeLOPMeNTAssisted living facilities anticipate the demand for senior care in coming decades

By AMANDA VENTuRA

The Weitz Company will begin construction on Watermark Retirement Communities, Inc.’s Hacienda at the River project, designed by The Freshwater Group, in Tucson. Construction on the 6.5-acre site begins in December. Features include a 70KSF, two-story healthcare center, 62 residences that offer assisted living and memory care in a 41KSF village. (Courtesy of The Freshwater Group)

November-December 2014 | 23

© AZBIGMEDIA 2014


HEALTHCARE

1964 — the affectionately named Baby Boomer generation. The oldest Boomers are about 68 years old, points out Morrow. This means they’re 13 years younger than the average occupant of a senior care facility, he says. Currently, about 12 percent of individuals who are age and income qualified for senior care facilities are residents. With the projected growth of population, demand will increase. However, Morrow says there’s still “some time before that explosion starts.”

“The facilities that are being built are nicer, more luxurious with many amenities and people are more willing to leave their homes,” he says.

This is the generation that followed those who were hardened by WWII. For Jan Wiggins, sales director at assisted living facility Vi at Grayhawk, this means a generation of arrested development.

“They’re buying the lifestyle [of an assisted living facility],” says Wiggins. “They’re spoiled already. They’re not like the people who are 90 and live here and went through the wars. They were more thrifty. They saved. The people coming in now like the idea that somebody is always going to be taking care of them.”

This is what Wiggins says gives a place like Vi at Grayhawk a competitive edge in the market — its large care center. Residents who buy into the lifestyle also buy into the care plan, which guarantees that they never have to leave the property or be, “farmed out,” she says, to another care facility.

“I question that about the new developments,” she says. “A large care center makes all the difference in the world.”

Adolfson & Peterson Construction’s Schoeffler has worked on multiple assisted living facilities and says healthcare integration begins on “day one” when planning a new development.

“Today’s new facilities need to include not only a robust special system infrastructure, but the flexibility to upgrade the infrastructure as the facility ages,” he says.

The level of caregiver services required in each type of assisted living area — memory care, skilled nursing, hospice — and how many rooms and how much space is dedicated to each assisted living type are “critical for plan development.”

“Many older facilities still focus

on the aging aspect of assisted living rather than the living aspect of assisted living,” he says. “Caregiver training will be needed to change these attitudes.”

a cHoice lifestyleThough Wiggins has observed that

generations are staying independent longer, the average age of residents in Vi at Grayhawk’s community is dropped. Since January 2013, 72 homes have sold. Many new residents are couples in their 70s, she says. However, she has seen some people as young as 59 join the community.

“Now it’s a choice, not an obligation,” she says.

Choices is the operative word, according to Schoeffler.

“Baby Boomer expectations are almost unlimited and always have been. I know because I am one,” says Schoeffler. “No sitting around for us after retirement. Many of us look to reinvent ourselves on a regular basis. We expect any place we live to offer all the services we have had for years — internet, TV, activities, fitness centers, yoga classes, dining options, outing options and choices — lots of choices.”

Vi at Grayhawk has seen the average age of its community member drop over the

last few years. With that, there has been an increase in the type of amenities and

lifestyle choices available to residents.

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25

© AZBIGMEDIA 2014


HEALTHCARE

About one million Americans live among an estimated 30,000 senior care facilities, reports the Small Business Development Center Network. Assisted living facility industries are part of a $259B industry, according to data reported by healthcare research firm Kalorama Information. Vi at Grayhawk, for instance, accepts outpatients and private pay patients from Mayo Clinic and Scottsdale Healthcare facilities to offset its fees.

The number of seniors are expected to double by 2030, but the caregiving generation is not growing as quickly. The need is increasing, many elderly may be postponing retirement due to housing market slumps.

Baby Boomers represent more

than 70 percent of the country’s financial assets and more than half of discretionary spending, according to the SBDC.

baby (boomer) stepsHealthcare real estate has been

progressively moving toward a more campus-like environment. However, as Wiggins mentioned earlier, senior care facilities that can curb the need to outsource its patients have an advantage for securing residents.

Morrow cites Denver, Texas cities and others in the Midwest as hot spots for senior living.

Arizona ranks in the top 10 states for rental assisted living, rental memory care, rental independent living and entry level fee CCRC. Another thing it has going for it is outdated facilities.

“A good sign for Arizona is we have a lot of aging facilities and a lot of investors looking to get their hands on those. Many of these facilities built in the ‘70s and ‘80s are now ready for a facelift,” he says, adding the weather and golf courses accessibility don’t hurt the state’s draw.

What can also draw more attention is technology — be it TeleMedicine suites, preventive monitoring systems or offering more memory care options.

“On the memory care side of things, there is a real need for facilities that can handle Alzheimer’s patients,” says Morrow. “As a country, the main focus has been on eliminating other diseases and less on the Alzheimer’s and dementia. As people live longer their likelihood of showing signs of these ailments increases substantially.”

The most notable trend, Morrow says, is “the change from a hospital mentality to a hospitality mentality.”

“We have three product lines colliding: healthcare, housing and hospitality,” he says. “Some of the facilities are over-the-top nice, but the facility doesn’t have to do all the work. The concierge service, room service, wellness coaches and things of that nature are taking senior care service to a new level. In the right facility, you can really get pampered physically and mentally. It’s not your old nursing home picture in your mind, that is for sure.”

65+ age groupto double over next 40 years

75+ age groupto double in 25 years

85+ age groupto triple in 40 years

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© AZBIGMEDIA 2014


HEALTHCARE

healthcare in America is changing and bringing real estate with it.

Healthcare networks are growing their market shares, and healthcare mergers and acquisitions have been on the rise in the first half of 2014, according to an August report by Berkery Noyes. Deal volume increased during that time by 18 percent, to the tune of $5.45B, according to the report. This is something Arizona has a front row seat to. In July 2013, Tenant Healthcare bought Vanguard Health Systems, which operates Abrazo Health Care, the second-largest health care delivery system in Arizona. Last October, Scottsdale Healthcare and John C. Lincoln Health Network finalized its system-wide affiliation. In August, Banner Health announced it acquisition of University of Arizona’s medical facilities and programs. Scottsdale-based Healthcare Trust of America, Inc. (HTA) acquired six

medical office buildings (MOBs), outside of Arizona, from ProMed Properties for $200M, the largest MOB acquisition of the first half of 2014.

“Most medical real estate in the Valley has been built around a hospital trying to draw patients into their beds,” says Ensemble Real Estate CEO Randy McGrane. “They’ve invested capital into them, and that’s how they get a return.”

However, that idea, catalyzed by the Affordable Care Act, technological advances and general market conditions, is becoming outdated, says McGrane. It’s more profitable for networks to have out-patient care spread within communities, away from the hospital and closer to patients. This is evidenced by the dozens of ambulatory care facilities Banner Health has constructed throughout regions.

“Health systems and physician groups have been forced to compete for

market share in the pursuit of volume and reduced overhead expenses,” says HTA’s Executive Vice President, CFO, Treasurer and Secretary Robert Milligan. “From a medical office perspective, this has resulted in tenants that are better credits, looking for larger blocks of space and focused on key locations that will help their practices generate volume. Locations that can offer these features have and will continue to benefit from this consolidation trend.”

As a result, there are more off-campus development happening. The one exception, McGrane notes, may be one at Banner Estrella, for which the medical network recently placed and RFP.

Existing on-campus buildings, therefore, are suffering vacancies higher than 25 percent in some cases. Highest and best use for these buildings over time, McGrane says, includes facilities that support a hospital’s known specialties or encourage post-acute care and rehabs, which are more cost-effective to invest in, given the reimbursement systems established by the ACA.

“It’s a painful change,” McGrane says. “Ultimately, it will end up being a better system…We have so much clinical advancement, but we haven’t developed the underlying system to go with it.”

“The great thing about these larger tenants is that they are focused primarily on driving volume into their practices,” Milligan says. “This means that they are focused on office space that allows the physician to utilize the infrastructure of a hospital or surgery center and also provides for an efficient patient experience. Cost, while important, is becoming a secondary factor. We are actively investing in our buildings to attract these larger tenants who will be the long term providers of healthcare in this country.”

By AMANDA VENTuRA

university of Arizona’s medical school now has more means to practice what it teaches. In August, Banner Health and university of Arizona announced a Principles of Agreement document. In 2015, Banner will acquire university of Arizona Health Network, its two hospitals, 6,300 employees, health plan and medical group. At the time, uAHN’s debt was estimated to be $146M. Banner will provide improved hospital infrastructure and purchase the land currently leased by the university of Arizona Medical Center for $21M.

university of Arizona broke ground on the 10-story, 245KSF Biosciences Partnership Building in downtown Phoenix on Oct. 16.

The $136M research building, located on the Phoenix Biomedical Campus, will take two years to construct. The campus currently hosts four university of Arizona health science colleges, three Northern Arizona university programs and the Arizona State university School of Nutrition and Health Innovation.

In September, it was announced about 24 acres of State Trust land were re-designated near Mayo Clinic Hospital in Desert Ridge. ASu plans to build educational and research facilities near the clinic in an effort to continue a decade-long partnership between the two entities.

ModEl rxPhoenix Children’s Hospital’s

Southwest Valley Center, a $14.7M, 35,355 SF

specialty and urgent care center in Avondale, was developed by Ensemble.

© AZBIGMEDIA 2014

29

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Western states Land Commissioners assoCiation

in land We truSt

arizona State Land Commissioner Vanessa Hickman manages the leasing, sale and highest use of

roughly 9.2 million acres of Arizona State Trust land, a huge portion of which is meant for K-12 education. As the president of the Western States Land Commissioners Association, to which Phoenix is the winter conference host Jan. 4 through 8 at the Arizona Biltmore Resort and Spa, Hickman answered questions about important land issues.

How Do proposeD cHanges to tHe clean water anD enDangereD species acts affect arizona Development anD long-term lanD value?

The effects of these acts, as they continue and are expanded, could have major impacts on State Trust Lands and other lands across the state. They have the potential to severely restrict

development opportunities, require additional off-sets and set-asides and subsequently lower land values for most types of urban and rural lands. The ultimate impacts could severely hinder economic development and land values in Arizona for years to come.

wHat solution Do you suggest to avoiD or prepare for tHese potential issues?

The most important thing land management agencies, private development entities and all interested parties can do is engage. We need to study and understand the proposals, such as the new CWA rule regarding Army Corps 404 jurisdiction, and make comments to the appropriate federal agencies regarding out findings and opinions. We need to understand the type, number and extent of new species being proposed to the U.S. Fish and Wildlife Service for listing as endangered species and be prepared to make our comments and opinions known. We need to question all new actions, be proactive to every degree possible and be prepared to deal with possible listings

By AMANDA VENTuRA

IN lanD WE trust

sales in past two years:

$100sales proposals in the pipeline:

$1BCommercial ground leases being

negotiated in urban areas:

$1B over term

asld has negotiated and approved:3 solar leases and

3 wind farmson state trust land

vanessa Hickman

© AZBIGMEDIA 2014

31

of proposed threatened or endangered species through responding with sound science, exploring available options, including candidate conservation agreements with assurances, habitat conservation plans and any other means to limit the ultimate impacts of exiting of proposed endangered species. We need to collaborate — public and private sector — as interested and impacted parties and work together and with the federal agencies to make our positions known and work toward equitable solutions.

one tHing i founD very interesting about tHe way state trust lanD is useD is for conservation. can you eXplain How Developers “lease” lanD tHey aren’t actually going to Develop on anD wHat tHeir motives woulD be?

The land department has historically sold and leased land for conservation purposes. One example would be the long-term ground lease of state land for mitigation due to development impacting habitat of a threatened or endangered species. The state could also enter into agreements for mitigation banks, a partnership where a state land lessee could pay for and provide for conservation of state lands, receive credits for impacted 404 washes in order to develop other state or private lands, or sell credits to other parties generation additional compensation for the trust. The motivation of a developer would be to generate revenue for the sale of credits or to have a reliable and secure source of mitigation or conservation lands, which they would need to secure

in order to allow their project to go forward, pursuant to requirements of federal law.

tHe arizona state lanD Department’s (aslD) urban lanDs lease anD sale program is tHe largest revenue proDucer for tHe trust. How mucH revenue Has tHat brougHt to tHe trust?

Monies generated from the permanent trust fund, and expendable revenues generated from things such as leases and permits are distributed directly to the trust beneficiaries. The permanent trust fun now totals $4.5B, which is twice what it was only five years ago. Sales and commercial leases account for the majority of revenue generated by the ASLD and average about 80 percent of our revenues.

ARIZONA STATE TRUST LANDBENEFICIARIES BY ACREAGE

BeneFiciary FY2008/acres

common Schools (k-12) 8,098,658

Legislative, Executive & Judicial buildings 64,257

State hospital grant 71,248

Miners’ hospital* 95,429

State charitable, Penal & reformatory institutions 76,818

Penitentiary grant 76,111

normal Schools grant 174,798

agricultural & Mechanical colleges 124,944

Military institutes grant 80,168

School of Mines grant 123,254

university Land code 137,907

university of arizona (act of 2-18-1881) 54,101

School for the Deaf & blind 82,560

total 9,260,253

* Miners’ Hospital and Miners’ 1929 combined source: arizona state land department

When Arizona became a state in 1912, it was endowed with 10 million acres of land to be held in trust and to benefit public institutions, most of which is dedicated to K-12 education. Today, there are about 9.26 million acres still held in trust. Here is where they fall.

Mining is an important component of the Arizona State Land Department’s (ASLD) land and resource management portfolio. The ASLD manages mining and mineral activity by authorizing mineral exploration, production, aggregate development, oil and gas leases, and Special Land use Permits for a variety of other revenue-producing, mining-related activities. Income to the Trust from mining and mineral activity is generated primarily from royalties paid on mineral production. Total income to the Trust during fiscal year 2014 was more than $16 million. Well over half of that revenue was generated by copper production.

Interest in mining exploration has remained constant throughout the years and is spread throughout the Trust land portfolio. Over the past three fiscal years, the ASLD has processed thousands of mineral-related applications with two-thirds of those for mineral exploration. Mining activity on State Trust lands are important economic drivers to local communities by generating jobs and supporting local and regional businesses. Mining production contributes important resources and economic benefits to our state and national manufacturing needs. — richard thompson, director, natural resource division, asld

Occasionally, land owners and managers are faced with situations that have a negative effect on the value and use of their property. For example, one landowner may find the economic value of his parcel of land is diminished because it is trapped within the boundaries of another land owner where it lacks physical, feasible or legal access of any kind. When that trapped land is located within the boundaries of federally owned land, such as a military reservation or national monument, the solution can become very complex. A tool of land owners and managers that is thought to have value in solving such ownership problems is the “land exchange.”

The Arizona State Land Commissioner may now conduct land exchanges following a 2012 amendment to the State Constitution, as referred by the legislature and approved by the voters. Proposed land exchanges will take time to complete and will be subject to many procedural requirements. Final approval is conditioned upon a favorable, statewide vote. The Arizona State Land Department is now implementing this program.

— richard thompson, director, natural resource division, asld

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As we climb the hill leaving the city behind, the Sonoran Desert opens to reveal beautiful

lakes and lush grass lined with palm trees—all framed by the Sierra Estrella Mountains.

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Access to, and use of, The Golf Club of Estrella is not included in the purchase of homes or homesites unless special arrangements have been made. • Certain properties may be registered with HUD, or may have registered components in the future as required pursuant to the Interstate Land Sales Full Disclosure Act. If such registration occurs, obtain the HUD Property Report, or its equivalent, required by Federal law and read it before signing anything. No Federal agency has judged the merits or value, if any, of this property. • WARNING: THE CALIFORNIA DEPARTMENT OF REAL ESTATE HAS NOT INSPECTED, EXAMINED, OR QUALIFIED THIS OFFERING. NNP III-Estrella Mountain Ranch, LLC is the owner of the Estrella Community (‘Community’). Certain homebuilders unaffiliated with the owner or its affiliates (collectively ‘Owner Companies’) are building homes in the Community. Owner Companies are not co-developing, co-building, or otherwise responsible for any of the obligations or representations of any of the Builders. Owner Companies are in no way responsible for any obligations or representations of any of the Builders to third parties and/or home buyers, and Owner Companies shall incur no liability whatsoever nor have any obligations or liability to any home buyer regarding a home purchase from a Builder. Buyers of homes from any of the Builders waive, to the fullest extent permitted by law, any and all rights, claims, causes of action and other rights whatsoever against Owner Companies arising out of their purchase transaction with the Builders. Newland Communities solely acts as the property manager for the Community. The California Public Employees Retirement System (“CalPERS”) has an indirect interest in one of the members in Owner. Newland Communities and CalPERS are not a guarantor or party to any agreement and shall have no liability to the development or selling of homes or responsibility for any claims, issues. A complete list of disclaimers can be found

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URBAN LAND INSTITUTE

In 1903, Ford began mass-producing its automobiles in America. It would take a few decades before cars, in turn,

became affordable for the masses. And, in the thick of this evolution, Arizona became a state.

This is one reason a recent study on walkability landed Phoenix in the gutters of New York City and Boston. George Washington University’s School of Business’ report, “Foot Traffic Ahead: Ranking Walkable Urbanism in America’s Largest Metros,” listed Phoenix No. 29 of

30 major metros for walkability. Despite Phoenix being established in 1861, years before the advent of the automobile, its development is arguably decades behind cities that were developed to accommodate a less mobile society.

“Study resource constraints like [the ones for the study] typically undervalue the many improvements that the City of Phoenix completed in the past decade,” says Ray Dovalina, Phoenix’s assistant street transportation director, who nods at the city’s T2000 Plan, which passed

A SOLE CONNECTION

By AmANDA VeNturA

Phoenix community, organizations band together for more walkable city, urbanization

MEMBER SPOTLIGHTBrian DalkeCity manager, City of GoodyearuLI member: Four yearsIn development-related government roles: 20+ years

WHAT ROLE HAS ULI PLAYED IN YOUR PROFESSIONAL SUCCESS?

uLI has provided great opportunities in building relationships within the private sector development community. As a result, I can pick up the phone and reach out to industry experts.

uLI has also been a valuable source of forward thinking ideas that expand the vision of our community.

WAS THERE AN “AHA” MOMENT WHEN YOU REALIZED THE VALUE OF BEING A ULI MEMBER? I was sitting in a uLI Advisory Board meeting listening to updates from committee chairs. When Lance ross talked about the success of uLI Arizona’s Arizona technical Assistance Panel (AztAP) activities, I quickly realized how valuable this program is for local government. I immediately requested that Goodyear be considered to participate.

WHAT HAS BEEN THE MOST SURPRISING

OUTCOME OF YOUR MEMBERSHIP?the top outcomes for Goodyear: 1) Our elected officials have attended trends Day events, which assisted in building their knowledge of current markets, factors affecting development and interacting with industry experts; and, 2) We had an amazing panel of experts for our AztAP that challenged, stretched and/or validated our thinking.

ANYTHING ELSE YOU’D LIKE TO ADD ABOUT ULI-ARIZONA?my goal is to assist uLI-AZ in building stronger connections between private sector and local government. Cities can learn from uLI’s great resources.

© AZBIGMEDIA 2014

37

with a 65 percent majority vote, and the light rail that connected Phoenix, Tempe and Mesa.

Dave Wetta, founder of Wetta Ventures, still agrees with the GWU assessment.

“[Phoenix] is not even walkable outside the urban core of Midtown or the Camelback Corridor,” he says.

The fix is “easy,” Wetta says. “We need real sidewalks,” he says. “And that begs the question: will office absorption follow or lead sidewalks/walkability?”

The city has also initiated “Guiding Principles for Complete Streets,” for which the city council has formed an advisory board that will address policy, design guidelines and standards for the city’s transportation network. This, Dovalina

says, will include current and future public and private development projects.

The City of Phoenix encompasses more than 520 square miles and what Dovalina refers to as 15 villages of varying suburban and urban communities.

“Our goal, as a city, is to provide transportation choices to all Phoenicians,” he says.

The report also doesn’t surprise Vintage Partners Principal David Scholl.

“Other than downtown Phoenix, most of the metropolitan area’s built environment was constructed during the past 60 years when U.S. suburbanization was in its heyday,” he says.

Brokerage CBRE predicts in three to four decades, Phoenix, currently the sixth

A SOLE CONNECTION WHAT IS ONE URBANIZATION PROJECT YOU’D LIKE TO SEE PHOENIX ADOPT?“I think the Salt River Project canal system remains an amazing opportunity to create a more urban/walkable network throughout the metro area. The Waterfront in Scottsdale and Tempe Town Lake have both contributed to new urban environments, and I believe they serve as a great model for other communities.”

- David Scholl, Vintage Partners

MEMBER SPOTLIGHTHeidi KimballSenior Vice President, Sunbelt HoldingsuLI member: Seven yearsIn commercial real estate: 32 years

DO YOU HAVE A FAVORITE ULI PROGRAM?Of course, I love trends Day. trends

is a fabulous one-day opportunity to provide insight and inspiration to attendees and is probably our best advertisement for the benefits and advantages membership can provide. It really is the one industry program of the year that I find

consistently rewarding. In addition, the Women’s Leadership Initiative (WLI) is providing numerous ways to encourage women’s participation in uLI, but perhaps equally important, WLI will encourage diversity within member organizations, which is sorely needed in this male-dominated industry. WLI is providing compelling content in our programs for all Arizona District Council members – not just women!

WAS THERE AN “AHA” MOMENT WHENYOU REALIZED THE VALUE OF BEING AULI MEMBER? In 2009 and 2010, I mentored a group of young leaders enrolled in the Partnership Forum program, which teams veteran members of the uLI development community with

industry up-and-comers to provide on-going mentorship, guidance and encouragement. I’m sure I gained as much, if not more, from that experience than my mentees, and it was an inspiration to see how many seasoned members of our community are willing to give up their valuable time to mentor these future leaders. I know that program has also provided valuable experiences to some of my Sunbelt colleagues as well.

WHAT HAS BEEN THE MOST SURPRISING OUTCOMEOF YOUR MEMBERSHIP?I continue to be surprised at the accessibility and generosity of the iconic leaders within the uLI community. It is rare to hear a “no” from any of them, in spite of the demands placed upon their time. I also am grateful for the opportunity to serve in a variety of capacities.

© AZBIGMEDIA 2014


ULI

largest city in the country, will remain just out of reach of the top 10 at No. 12. Factors that played into this estimate included office absorption, light rail development and revitalization efforts in downtown Phoenix and Tempe.

“I’m not convinced that light rail and walkability are so closely connected in urban Phoenix,” says Wetta, who does support light rail.

“We need to make sure that we allow market forces to organically influence our efforts. If we try to legislate every new idea, I am afraid that we will end up with a contrived environment that will not be successful,” Scholl says, adding that the ReinventPHX effort — a partnership between the city, ULI, U.S. Department of Housing and Urban Development, ASU, St. Luke’s Health Initiatives and many other organizations dedicated to developing a walkable community, with a focus on five districts, near the light rail — and a new Walkable Urban Code are good initiatives. Wetta agrees, but is concerned that ReinventPHX may not capture the necessary momentum.

Dovalina maintains that ASU’s downtown campus has been a catalyst for bringing 10,000 students to the city, 3,000 of whom, he says, live downtown in dorms or apartments new to the campus. Phoenix Community Alliance President Don Keuth calls the expected delivery of multifamily units over

the next few years one of “the most important items moving forward.” This, he says, will bring a wide cross section of people, age and income downtown.

With the influx of multifamily in the pipeline, CBRE Senior Vice President Bryan Taute believes the demand is coming, although it may be paradoxical.

“The demand is pushing [Phoenix] to be more urban,” says Taute. “Demand is where people want to live. That circle is where people want to live.”

However, he says, amenities tend to respond to where people want to live.

“It’s hard to build something and attract the people,” he says.

Millennials are comprise the workforce and lifeblood of urbanization. Therefore, developers are looking closely at where Millennials are moving, which includes Austin and many California cities, Taute says.

Phoenix will not be L.A., San Francisco or Denver, Wetta says, but it needs to be understood as unique.

That’s one of the reasons in 2013, the City of Phoenix commissioned the Adams Street Activation Study by Gensler that appraised the pedestrian-value of the street.

“One of the goals is for visitors to our downtown core to have an authentic Phoenix experience as a modern desert city, as a means of differentiating downtown Phoenix from other urban

MOST WALKABLE CITIES1. Washington, D.C.2. New York City

3. Boston4. San Francisco

5. Chicago

LEAST WALKABLE CITIES26. Las Vegas

27. San Antonio28. Tampa

29. Phoenix30. Orlando

Source: Foot Traffic Ahead:Ranking Walkable Urbanism in America’s Largest Metros. The George Washington

University School of Business, 2014.

“Did You Know? Urban Land Institute conducted the ReinventPHX kick-off event at the historic A.E. England building to an audience of more than 200 community members and leaders. The institute hosted strategic convenings and focus groups to ensure a

private sector, development perspective was represented throughout the project.”

MEMBER SPOTLIGHTHeather PersonnePrincipal, evergreen Devco, Inc.uLI member: One yearIn commercial real estate: 19 years

WHAT ROLE HAS ULI PLAYED IN YOUR PROFESSIONAL SUCCESS?

my involvement with uLI has allowed me to build relationships with high-caliber thought leaders in the industry who willingly share their expertise and experience for the greater good. even after a decent amount of time in this business, there are still new things to learn, and I am getting

a chance to learn from some really great people.

DO YOU HAVE A FAVORITE ULI PROGRAM? trends Day presents a unique opportunity to hear from the best and the brightest in our industry about the trends ahead of us and how we can collaborate to move forward in an impactful way.

WAS THERE AN “AHA” MOMENT WHEN YOU REALIZED THE VALUE OF BEING AULI MEMBER?I was flattered to be asked to participate as a founding member of the uLI Arizona’s Women’s Leadership Initiative. As a female in a traditionally male-dominant industry, I

feel strongly about giving back to younger women who are just starting their careers and am grateful to uLI for providing the platform to make a difference.

WHAT HAS BEEN THE MOST SURPRISING OUTCOME OF YOUR MEMBERSHIP?the uLI members share a common passion to make our community a great place so much so that they set aside competing interests in the spirit of collaborating, knowing that approach will pay dividends for them personally and professionally. While this concept itself is not surprising, the level of commitment to this common goal is more intense than I realized and is extremely inspiring.

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ULI

locations,” says Beth Harmon-Vaughan, principal at Gensler Phoenix. “Sense of place is an important attribute of social sustainability because it uniquely connects people to specific places and locations. The authenticity of attributes celebrates those features that are unique to each place and specifically differentiates one place from another – for example, Phoenix from Anaheim or San Francisco from Denver.”

Adams Street connects the light rail station from the airport to two downtown Phoenix hotels and the front door of the city’s Convention Center. It’s within walking distance of museums, restaurants, cultural attractions and sports venues.

A significant portion of the Adams Street Activation Study looked at the visitors’ experiences through “pedestrian connectors,” defined by Harmon-Vaughan as attributes and amenities that deliver comfort and interest to the pedestrian experience.

“Experiences are understood through our senses. One of the key findings was to activate the street to enhance the pedestrian experience,” she says.

In order to enhance a pedestrian’s experience on Adams Street day, night, weekday and evening, Gensler suggested the addition of shade structures, canopies or trees, more seating, calm traffic conditions, public art, multi-modal transportation access and lighting structures for safety, as well as comfort. To activate the city, Gensler suggested more clear glass windows or spaces like

restaurants or shops that make interiors of buildings open to the street. A good mix of these entertainment accents, she says, will make this a destination for residents as well as visitors.

“We were pleased that there was so much interest from business owners, city officials, community leaders, residents, students and citizens in the study,” she says. “Their participation was truly remarkable.”

Public-private ventures are key,says Taute.

“In some of these areas, it’s tough to make the numbers work,” he says. Financing has been negatively impacted

by vacancy rates inflated by obsolete buildings. As reported in AZRE in September, obsolete space in the office sector (which is seeing the worst vacancy rates in the Midtown Phoenix submarket) is seeing adaptive reuses to keep spaces active.

“The owners of [the Phoenix warehouse district buildings] don’t seem willing to put the capital in and are not realistic on value expectations and rents to allow for that revitalization,” he says, adding, “I’m not a big incentives person, but in downtown Phoenix, it’s crucial and can be used in the right way.”

Adaptive reuse of under-utilized or vacant parcels is one of many keys to improving the walkability of Phoenix.

Keuth says infill is key to unlocking Phoenix’s walkability. “As we get these vacant lots filled, the buildings themselves will create a better shade environment. The complete street program (recently adopted by the city council) will help to create better shade on the sidewalks. Making sure we plant the right type of trees can also help.”

As more infill projects get completed, we will see a spike in urbanization, he says.

“This effort is making it easier to fill in the gaps in the urban fabric,” says Dovalina. “The Downtown Comprehensive Transportation Plan adopted by the city council in Julyis a three-tiered approach to improvements to the downtown transportation network. Improvements focus on the movement of people and economic development.”

Stanton A. ShaferCOO, Holualoa Capital managementuLI member: 22 yearsIn commercial real estate: 35 years

WAS THERE AN “AHA” MOMENT WHEN YOU REALIZED THE VALUE OF BEING A ULI MEMBER? my “aha” moment came at the first national Fall meeting I attended in San Diego in the early 1990s. the speakers, sessions and networking opportunities just blew me away. At that time, I realized that uLI offered the best bang for the buck as an organization to advance me in my professional development.WHAT HAS BEEN THE MOST SURPRISING OUTCOME OF YOUR MEMBERSHIP?I do not think that anything really surprises me about uLI. As an industry organization, it is always at the top of its game with the industry’s best and brightest providing superb programs, ideas and market analysis.

INITIATIVES INTENDED TO INCREASE WALKABILITY IN PHOENIX:1. General Plan update that calls for creating a more vibrant downtown.2. ReinventPHX planning study that is modifying development requirements along the light rail line to create a more walkable environment.3. Infill development that focuses on adaptive reuse of existing buildings, along with underutilized or vacant parcels.4. Complete streets planning effort strives to transform appropriate street right-of-ways with more walkable amenities like shade canopies and trees.5. Bicycle pedestrian master plan will make it easier to bike to destinations throughout city.

— Ray Dovalina, City of Phoenix

MEMBER SPOTLIGHT

© AZBIGMEDIA 2014

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ULI

Deb Sydenham joined ULI Arizona as executive director in September 2010 after nearly 20 years with

the State of Arizona and nine years in the private sector. She is a graduate of Michigan State University and a member of the College of Fellows for the American Institute of Certified Planners (FAICP). In 2012, she was named as one of the 25 Most Admired CEOs in the Phoenix Metropolitan Area and in 2014 was included in the inaugural group of the 20 Most Influential Women in commercial real estate. Her experience with local, regional and state governments and tribal communities serves as a solid foundation to moving the ULI mission forward.

Trends Day in Arizona will celebrate its 10-year anniversary this year. What is your fondest memory?As a ULI member, I attended a number of Trends Days and was continually amazed by the substantive content brought forth. As executive director, I have the incredible opportunity to work alongside vastly talented member volunteers in developing the Trends Day program ... ULI Arizona’s Trends Committee is invitation-only and represents a cross-section of land use and real estate interests. The overwhelming success of Trends Day 2014 posed an interesting challenge to the group: How do we top Trends 2014, deemed by all to have been the best Trends Day ever? You’ll have to join us on Jan. 28, as I have no doubt that the compelling program developed by this team is going to do just that!

What role will ULI take in solving one of the most important issues facing Arizona’s land use in 2015? It is clear we are surrounded by wholesale change. Several critical issues headline this change, but one in particular

is far-reaching — infrastructure. Infrastructure can be defined in a variety of ways – transportation, technology, utility, social, and so on – and leadership and implementation of new infrastructure frameworks can reposition communities not only from a competitive standpoint, but also how they enhance the quality of life for residents ... This vast infrastructure conundrum must be addressed and executed in the context of a multi-generational marketplace and changing demographic scenarios. ULI’s legacy is rooted in the sharing of best practices. The institute is widely-acclaimed as a neutral convener and safe haven where individuals engage in dialogue, analysis, and debate to review market trends, best practices and future challenges faced by communities globally. Facilitating collaborative conversations that result in teamwork and strategic action is a cornerstone of ULI Arizona and one of the spaces in which we continue to be most effective. The ULI Arizona Community Initiatives Committee ... has been exploring the unique facets and nuances of infrastructure within the Phoenix Metropolitan region ... There are no quick fixes to issues of this magnitude. Patience and deliberate action will enable business and community leaders to craft insightful and future-oriented strategies to forge better places. ULI will be the organization convening the conversation where this transformation takes place.

How is ULI sharing best practices between public and private sectors?After decades of what felt like infinite resources, we now face a mind set of shortages – especially financial ones. In the world of land use and real estate investment, the continual challenge is to understand new trends, capitalize on

new market opportunities and direct investment funds in strategic ways. Local governments and development interests are seeking ways to embrace flexibility – in regulatory environments, floor plates, target market demographics and location ... A strong public-private partnership goes well beyond the financial considerations of leveraging resources. This partnership must also involve open communication and collaboration – both of which are essential in today’s economy ... Communities statewide have reached out to ULI as a partner in convening meaningful dialogue and seeking solutions to local land use and development challenges ... ULI Arizona’s member and institute resources are positioned to navigate the transformational momentum being experienced throughout the Valley and form the partnerships that are a prerequisite for progress.

What’s a development issue you’d like to see discussed more in 2015?Leadership. Catalyzing the changes necessary to create vibrant and resilient communities is not for the weak at heart, especially as we continue to forge through uncertain markets.

Read elaborations on Deb's responses at azBIGmedia.com/azre

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© AZBIGMEDIA 2014

43

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4 4 | November-December 2014

ULI

Jim Belfiore, CEO and President of Belfiore Real Estate Consulting, has spent nearly a decade volunteering

to help high school students enrolled in economics classes understand the nuances of urban planning and development. In schools where UrbanPlan has been offered, enrollment in the class has “skyrocketed,” he says.

Of ULI’s 52 district councils, 15 have UrbanPlan programs. With the exception of a few councils with higher education partnerships, UrbanPlan is exclusively offered in high school curricula. Schools that offer the UrbanPlan program in their economics classes are Desert Vista and, most recently, Brophy Prep.

To put the impact into perspective, Desert Vista High School instructor Shannon Corcoran teaches the UrbanPlan curriculum to 250 students every semester. During the program, students work with classmates to create a redevelopment plan in response to an RFP and receive live feedback from a mock city council comprised of industry experts, such as Brett Heron, executive vice president of finance at RED Development. Heron is a seven-year volunteer.

“Growing up, none of my friends or family were in real estate, so I didn’t have much exposure to it,” he says. “I became interested when I took a class in college.”

He says a program like UrbanPlan

would have given him a better idea of different real estate disciplines and may have allowed him to focus more deeply on those areas during college.

“We continually receive feedback from the hundreds of Arizona students who have taken the program,” says Belfiore. “UrbanPlan changes their perception of the community they live in, increases their confidence, gets them involved in real estate and their communities, and many have told us the program was ‘the’ single-most valuable experience they have had in their years within the educational system.” ULI selects schools that have reputations for being high performing, says Jeff Mongan, senior vice president of The Athens Group, who has been with the program since it started and currently chairs the UrbanPlan Committee.

“This interaction provides the future leaders of our community an opportunity to gain a better understanding that high quality sustainable economic development and the built environment don’t happen by accident,” says Mongan. “Instead, it requires a team working together, collaborating with the local community to achieve a win-win result and enhance the community they live in.”

Last year, Mongan received a letter

from a college graduate who had participated in UrbanPlan six years earlier.

“He mentioned that participating in UrbanPlan … had a transformational effect on his thinking about his future and that it was foundational in terms of preparing him for the challenges of college and his ultimate career choice. That was special,” he says.

Shannon Corcoran, an economics instructor at Desert Vista High School, gets to hear about the program’s effect first-hand. She has seen students take what they learn in her class to careers in economics, marketing and business. Some have gone on to become city planners, involved in real estate, sales and design, she adds.

“I always tell my students UrbanPlan is the best practice for an interview they will ever have,” she says, adding, “Whether or not they end up in the field as a land use professional, they still have a greater understanding and willingness to participate in decisions within their own communities that impact land use decisions around them.”

Like Belfiore, Corcoran also gets goosebumps talking about UrbanPlan.

“One [moment] in particular was when I had a student who had no real plan for the future say to me ... I love this and I want to do this for my job,” she says. “That student is now at ASU getting a master's in real estate development.”

Live and Learn

By AmANDA VeNturA

Above: Jim Belfiore still gets goosebumps when he describes uLI Arizona’s urbanPlan to his peers.

© AZBIGMEDIA 2014


ULI

Some professional organizations have the foresight to funnel resources into mentoring young leaders for

the sake of grooming the next generation of their respective industry as well as securing future involvement in the organization. According to ULI Arizona members, few organizations do it as well as the Partnership Forum. ULI Arizona's Partnership Forum pairs a mentor with about 10 professionals under the age of 35 and is one of the highly touted programs of its kind in the Valley with more than 120 participants.

Mentors commit three years to the program, receiving a new “class” of professionals each of those years. The young professionals, led by a group leader charged with coordinating meetings and project tours, meet at the beginning of the year to discuss industry and career issues they’d like to address. Monthly meetings and the program is largely led by each group’s collective goals.

Brian Rosella, vice president of Land Services at Cassidy Turley, has co-chaired ULI Arizona’s Partnership Forum for

eight years. Speaking from personal experience, he refers to the program as the “ jewel” for ULI and leadership in other facets of the organization. Since joining ULI and the Partnership Forum, he has traveled all over the country and to Canada for ULI-related meetings.

“I think it fills the need for young professionals in the land use and real estate industry who don’t have a mechanism or person in their organization who will give them training or mentorship, formally or informally,” says Rosella.

“The ULI Partnership Forum is the real deal, the mentors commit to really being there 24/7 for these younger leaders,” says Jordan Rose, the president and founder of Rose Law Group, who is in her second year of mentoring. She compares the program to Young Presidents’ Organization, calling it “the most successful peer leadership program in the world.”

“Arizona is the capital of real estate development and there are so many paths a hard-charging bright person can take to success,” Rose says. “The

mentorship program gives these emerging superstars the chance to really vet the various options that present themselves in a totally confidential setting with both the mentor and their peers, which leads to life-changing and, I hope, good decision making.”

Rose says the groups become close during their monthly meetings. Mentees in her group changed jobs, got married and had kids. When it came time for Rose to purchase the office building that houses her law firm, she hired one of her mentees, a financial analyst, to aid in the process. Rosella, too, has been mentored by clients, such as Everest Holding’s Joe Blackbourn and Paradigm Private Equity Holdings’ Steve LaTerra.

“I was also surprised by how open and honest my groups have been and how long-lasting friendships and business associations can be formed sometimes by and between competitors,” notes third-year mentor and Steve LaTerra.

As tends to be the case, the distinction between student and teacher can be a two-way street.

tHe extra milePartnership forum is not just another young leaders group

By AmANDA VeNturA

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Partnership Forum members, guests and mentor, John Graham,

visit the Palo Verde Nuclear Generating Station. Pictured, lef t

to right: John “Boots” Dunlap, rrA Companies; Chris Hundelt, Wespac Construction; erin mcInerney, reD

Development; Carl Perrone, Sunbelt Holdings; Stacey Haggerson, uLI;

todd Severson, Walton Development and management; Joe Compagno, CBre; C.e. Kaiser, ViaWest Group;

John Graham, Sunbelt Holdings; John Drowns, CBre; Justin

Goldblat t, midFirst Bank; Brendan mcCarthy, PS Business Parks.

When cities face complex land use and real estate issues amidst a

multitude of opinions and interests, ULI Arizona helps make experts in the industry available to provide strategic advice. Amy Malloy, senior development manager at Macerich, joined ULI Arizona’s Technical Assistance Panel (AzTAP) committee eight years ago after receiving AzTAP assistance for downtown redevelopment while working in Apache Junction.

Now, she’s on the other side of the program as the ULI Arizona AzTAP committee vice-chair and, along with other AzTAP committee members, works closely with different sponsor communities to coordinate one- to two-day panel programs that provide objective, nonpartisan guidance to local jurisdictions on specific development challenges. Interdisciplinary panel teams are chosen for their specific knowledge and the holistic examination that they provide to help resolve local issues.

“This is a rewarding program to be involved in giving back to Arizona municipalities,” Malloy says, adding, “I think ULI is just such a valuable organization to look critically and

intuitively at smart land use.”For the past four years, the Union

Pacific Building America Foundation has helped underwrite AzTAP costs enabling smaller communities to benefit for this resource. Interest for this program is souring statewide, ranging from rural counties dealing with open space preservation issues to small town central business districts and main street revitalization.

Malloy says it takes several months to prepare for an AzTAP, from developing briefing materials to picking the right panel of industry experts and working with local officials and stakeholders to define the scope of questions that will frame the panel discussion. The sponsor community prepares a briefing book of local economic and demographic information and often arranges a site tour to provide panelists on-the-ground perspective into local conditions.

“AzTAP panels are able to look critically at community problems,” she says. “Sometimes a panel offers back to basics strategies which can be a wake-up call, because we offer external perspectives that aren’t mired in local politics, the guidance can be

particularly effective.”This was evident in the Town of

Carefree. The day after the panel, the town formed a steering committee to begin implementing suggested changes.

“People sitting separately at the beginning of the day were now sitting together,” says Malloy. “The town manager was the unsung hero in all of this. He was trying his hardest to get these divergent interests in one direction. Fortunately, the AzTAP was the tool that helped bring people in line. The light bulb had gone off.”

Carefree Mayor David Schwan agrees.“The AzTAP program created energy

in both the town staff and the economic stakeholders in Carefree,” says Schwan. “Building owners, landlords, merchants and restaurant operators were all enthusiastic about the process of the AzTAP. The recommendations of the meeting are being used in a full-scale economic study of Carefree possibilities. In my view, the AzTAP was a critical first step to move forward with a sound plan for economic development in Carefree.”

—Amanda Ventura

TAPPED FOR SUCCESS

“Every year, I learn as much as the members, or more,” says DMB President and Partnership Forum mentor Charley Freericks. “The other benefit for me is the connection to our next generation of leaders. They are learning to work in a much different environment than the world that we grew up in and it’s an opportunity for me to learn about the tools they are using to be successful.”

Reflecting on one of the more surprising moments during his tenure as a mentor, Freericks says, “One of my favorites was when we had a group of Baby Boomers to the group and we had a great discussion on work ethics, habits, definitions of success, etc. It was the first time I saw the generational divide live.”

“I was thoroughly inspired by so many of the mentees’ drive to excellence,” says Rose. “Watching that reminded me that each day I can do better than the day before.”

Walton Development and Management Planning and Development Manager, Todd Severson, a second-year mentee and group leader, says the willingness of mentors to share their failings as openly as their successes has been surprising.

“Many elements of real estate cannot be taught in a classroom, but are better

learned through life experience,” says Severson, adding later, “[Mentors’ ups and downs of their personal careers and real estate ventures] are a reminder to us young professionals that a career is built out of successes and failures, giving us confidence to pursue all aspects of real estate.”

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2014

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ARIZONA ASSOCIATION FOR ECONOMIC DEVELOPMENT

Arizona has a lot of reputations. It’s a land of lush golf courses installed among desertscapes, a

call center and distribution hub, home to the largest university in the country or some of the less appealing facets that make an economic developer cringe to hear. One organization that has worked for decades to educate Arizonans and the rest of the country about what makes this state great — and what can be done legally to make it better — is the Arizona Association for Economic Development (AAED).

Outside of the AAED, there are a handful of economic development

organizations in Arizona — the Arizona Commerce Authority (ACA), Greater Phoenix Economic Council (GPEC) and Tucson Regional Economic Opportunities (TREO).

The ACA was founded in 2010 by Gov. Jan Brewer. TREO was formed in 2005. GPEC just celebrated its 25th anniversary.

Founded 40 years ago as the Arizona Association for Industrial Development (AAID), AAED is the most established, organized group of economic developers in the state. In 1991, it changed its name to the Arizona Association for Economic Development to reflect its broader focus

AAED turns 40, focuses on putting Arizona ‘On the Map’

By AmANDA VeNturA

Branding arizona

AAED ADVOCATES FOR:-Property tax reduction for companies that “make new and substantial investments in assets and human capital in Arizona”

-Infrastructure development/improvement program throughtax revenue

-Enhanced access to capital, extend Angel Investment Tax

Source: "2014 Legislative Session" at aaed.com

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In 1974, the Arizona Association for Industrial Development was formed by like-minded individuals who saw the potential for economic development and growth in Arizona. From attracting notable businesses to the state to putting Arizona on the map for future growth, the renamed Arizona Association for Economic

Development has grown nearly five times its original membership.

this infographic shows a number of ways AAeD has become more inclusive in membership and mission and contributed to the development of Arizona over the years.

Betty Niles (AAED president in 1996) uncovered a copy of the first printed AAID/AAED membership directory dated 1975. That year, there were 86 members drawn from the sectors to the right. There

was also only one woman at the time, Donna Ellsworth.

AAED has 480 Members AAED’s membership

AAED is credited with helping in the location of these present day Arizona companies:

96 Rural

Development Organizations51 percent or more of the industrial development program regularly financed through membership, dues or other means of support from private or

civic sources

FinancialBanks, insurance, business

development corporations and other financing agencies

Land DevelopmentRealtors, private development

companies

UtilitiesGas, electric, other

TransportationAll modes, plus port

authorities

Research/Educations/ConsultantsPrivate, civic and public

33 Tucson Metro

346 Phoenix Metro

5 Out of State72% 20% 7% 1% Male v. Female

<1974100% Men

2014 >56% Men; 44% Women

Womenin AAED

First woman president Judie Scalise, 1989

Women currently comprise more than50 percent of AAED’s executive team

First woman memberDonna Ellsworth Bolen, 1975➧ ➧ ➧

86The First

MembersDevelopment Agencies

51 percent or more of the industrial development program regularly financed through appropriations, grants or loans of public funds)

of economic development

Motorola

American Express

GTE

Ford Motor Company

Digital Equipment

Honeywell

Ingersoll-Rand

Intel

Sperry

40YEARS

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AAED

AAED’s 2014 Member of the Year, Susan Hyatt, has chaired the organization’s Professional Education Committee for the last two years, during which more than 600 people have participated in educational programs offered by AAED. For the last four years, she has worked with the committee to bring classes from the International Economic Development Council (IEDC) to Arizona. After facilitating six classes through the IEDC, Hyatt and AAED Executive Director Joyce Grossman brought the Certified Economic Developer (CEcD) exam to the state in December.

It’s safe to say the Arizona Commerce Authority’s vice president of business expansion knows a thing or two or 10 about educating the state’s economic developers. She and a handful of other top-notch economic developers can now also boast being a part of the inaugural graduating class of Arizona Economic Development Professionals (AZED Pros).

The AZED Pro certification will be the first time the IEDC has held an exam separate from one of its conferences.

“I took the courses because I believe in the benefits of life-long learning,” she says. “As we grow professionally, we certainly become more knowledgeable and some of us may even be considered experts. However, there are always opportunities to learn more or gain a deeper, nuanced understanding of some facet of economic development. Also, economic development encompasses such a variety of topics and requires a broad skillset. Takingthese courses helped to strengthen my knowledge in topic areas that I don’t cover inmy day-to-day work.”

To become an AZED Pro, a professional must take two courses in four modules: Arizona’s Economy; Incentives and Business Assistance Programs;

Arizona Taxation; and Marketing and Business Development. The courses can last anywhere between a half and full day and cost up to $150.

“One of the key components of all the courses are case studies, which provide participants real-life, often Arizona-specific, examples of the concepts discussed,” says Hyatt.

Hyatt calls AAED’s education opportunities one of the organization’s greatest contributions.

“The committee has done some great work and increased professional development opportunities in Arizona, especially during a time period when budgets, in both public and private organizations, have been tight and the ability to travel outside of the state to receive training has been extremely limited,” says Hyatt.

Caption: Left to right: Past AAeD President Chris Camacho

with graduates Curt Woody, town of marana; robert Ito,

City of Goodyear; Susan Hyatt, ACA; Jill Buschbacher,City of Phoenix; Joyce Grossman, AAeD; and

2013-14 Presidenteric Larson.

AAED BRINGS TOP ECONOMIC DEVELOPMENT CERTIFICATIONTO ARIZONA

and mission statement, which is to “serve as Arizona’s unified voice advocating for responsible economic development.” AAED’s membership is indeed a unified voice, including economic developers and staff from tribal communities, southern and northern Arizona cities as well as many public and private sector members, even members of the aforementioned economic development groups.

The association, just like the state, has spent some time this year reflecting on imagery and whether or not the three

pillars — professional education, public policy and collaboration — actually hold up to its mission.

“We have transformed from an organization feeling the hit of the recession along with so many others to one that is now thinking about its long-term goals and impacts on a daily basis,” says 2014 President Danielle Casey, director of economic development for the City of Scottsdale.

UNITING ARIZONAEconomic development is a team sport,

says APS’ Statewide Communications and Economic Development Manager David Bentler. APS has been an AAED member since its inception, and Bentler says AAED is the way he stays in touch with the many players working on projects that land jobs in Arizona.

“AAED provides the atmosphere to create a statewide effort that works as a team to bring quality projects to

THOUGHTS FROM PAST PRESIDENTS“AAED has always been my resource for potential buyers who are not familiar with Arizona or the city in which they are looking to purchase. There is no better way to familiarize clients with what is going on in the area and the activities that can improve their business and the leasing of their property. I have found the economic development professionals to be an invaluable resource and they are always willing to assist.”

— Kim Soule, vice president, office and industrial properties, Colliers International Advisors(AAED President 2000)

“We have transformed from an organization feeling the hit of the recession along with so many others to one that is now thinking about its long-term goals and impacts on a daily basis.”— 2014 President Danielle Casey, director of economic development for the City of Scottsdale

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AAED

Arizona,” Bentler says. “While some states are divided in this effort, AAED has helped instill a professional work ethic and respect among our economic developers that collaborate on projects for mutual success.”

Before any change can happen, AAED needed to realign as an organization. So, last year, it looked critically at how to reinforce its three-pillared mission statement. Casey calls the level of commitment from the board of directors and AAED members to the “strategic plan” over the last year “exciting.”

“Collaboration is the pillar where AAED’s greatness awaits,” says two-year member Marcelino Flores, Pascua Yaqui Council Member. “I have learned that community, workforce and economic development come together at AAED among the many proactive committees.”

Economic development, in broader strokes, also appears to be a matter of unifying the different organizations. When it comes to AAED’s role in diversifying Arizona’s economy, Casey says she has seen tremendous focus placed on business retention and expansion.

“The Arizona Commerce Authority has launched a division focusing specifically on serving the needs of existing businesses and their expansion

efforts, and I have seen positive results firsthand in my own community,” she says. “The Greater Phoenix Economic Council has begun working with its member organizations to help gather market research and intelligence so we can better serve our existing firms. Small communities across the state are thinking of ever more creative ways to encourage entrepreneurship and innovation through partnerships with the (ASU) Alexandria Co-working Network at local libraries, shop local initiatives, and small business training programs and incubators. We are learning to grow our own firms with a focus on quality, high-wage jobs that generate new wealth for Arizona. AAED is helping to facilitate this through its quality educational programming to help teach practitioners and community leaders about the importance of a diverse economy and related strategies, and is creating connectivity among the practitioner community like never before so we can share ideas and learn from each others’ successes.”

EDUCATING ARIZONAAAED made huge strides in

professional education with the implementation of classes from the

Danielle Casey, CEcD, EDFPPresident of AAeDeconomic development director,City of ScottsdaleAAeD member for eight yearsHas worked in economicdevelopment since 2005 WHAT HAS BEEN AAED’S PROFESSIONAL OR PERSONAL EFFECT ON YOU?AAeD has been my singular greatest source of strong professional relationships which has directly impacted my career in a positive manner. You get back what you give to an organization, so it has also been an area where I have found distinct satisfaction from involvement and participation and working to elevate the profession and industry. WHAT IS ONE OF THE MOST SURPRISING

THINGS TO COME OUT OF YOUR AAED MEMBERSHIP?I am surprised at the vast amount of work the AAeD staff and volunteers execute every day, and their collective level of commitment to our pillars: advocacy, education and collaboration. WHAT IS ONE THING YOU’D LIKE TO SEE IMPROVED IN ARIZONA OVER THE NEXT YEAR?I would like to see Arizona do a better job of working on improving its external business brand on a national scale. there are a number of inaccurate perceptions of our state, and it is important that we work in unison across all of Arizona to help raise our profile. DESCRIBE ARIZONA’S DEVELOPMENT CLIMATE IN THREE WORDS: emerging. Careful. Strategic.

Courtney Dunbar, CEcD, EDFP, AICPeconomic development leader, Olsson AssociatesAAeD member for two yearsHas worked in economic development for 18 years WHAT HAS BEEN AAED’S PROFESSIONAL OR PERSONAL EFFECT ON YOU?AAeD plays an integral role in increasing economic development competitiveness throughout Arizona. economic development success requires an understanding of market trends and development best practices. AAeD’s innovative training offerings, educational series, workshops and mixers allow the development community to effectively engage to increase capital investment and promote job creation in their respective local communities. WHAT IS ONE OF THE MOST SURPRISING THINGS TO COME OUT OF YOUR AAED MEMBERSHIP?I anticipated educational and mixer activities when joining AAeD, but I have been pleasantly surprised by the volume of events and robust attendance at events. I am also incredibly impressed with the amount of professional friendships and camaraderie I have gained through involvement in this organization. WHAT IS ONE THING YOU’D LIKE TOSEE IMPROVED IN ARIZONA OVER THENEXT YEAR?Arizona has phenomenal opportunities to attract primary development. However, there appears to be a significant lack of industrial and primary development sites that are prepared adequately to host these opportunities. I believe both the rural and urban markets would benefit from understanding the target primary markets within their areas, investigating attractive tracts of ground locally, and then planning these sites to create a business case to new primary development. effective risk mitigation for end-users begins with a well-understood site option. DESCRIBE ARIZONA’S DEVELOPMENT CLIMATE IN THREE WORDS: Arizona’s development climate is progressive in seeking new and innovative market segments, reactive to market volatility and too often overlooked due to a lack of available primary development sites.

MEMBER SPOTLIGHT

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AAED

Micah Miranda, CEcDeconomic development director, City of maricopaAAeD member for 12 yearsHas worked in economic development since 2002 WHAT HAS BEEN AAED’S PROFESSIONAL OR PERSONAL EFFECTON YOU?membership in AAeD has had a profound effect in both my professional and personal life. the relationships built over a decade of active membership have created a network of trusted mentors, lifelong friends and great memories. WHAT IS ONE OF THE MOST SURPRISING THINGS TO COME OUT OF YOUR AAED MEMBERSHIP?the most surprising thing about AAeD membership is the opportunity to engage. No matter where your interests may lie, AAeD will absolutely provide an opportunity for your talents to be expressed and utilized. If you are unfamiliar with, but interested in, a particular topic you will be welcomed to participate and learn while on a committee. WHAT IS ONE THING YOU’D LIKE TO SEE IMPROVED IN ARIZONA OVER THE NEXT YEAR?the one thing I would like to see significantly improve in Arizona over the next would be year personal income growth. DESCRIBE ARIZONA’S DEVELOPMENT CLIMATE IN THREE WORDS: Dynamic. evolving. renaissance.

Kirk McClureDirector of business development, mcCarthy Building CompaniesAAeD member for five yearsHas worked in commercial real estate for 15 years WHAT HAS BEEN AAED’S PROFESSIONAL OR PERSONAL EFFECT ON YOU AND YOUR COMPANY?Personally, getting the opportunity to chair great committees and serve on a board that is not stagnant and wants to improve the organization for the future has been rewarding. Professionally, it gives mcCarthy recognition in the community and it shows that we are more than a builder. We are part of the community, which is important to our overall mission. WHAT IS ONE OF THE MOST SURPRISING THINGS TO COME OUT OF YOUR AAED MEMBERSHIP?the most surprising thing to come out of AAeD is the network of really top-notch professionals from around the

state in both practitioner roles, working with the cities and towns as well as the providers like myself. Working for the Arizona Commerce Authority while being a member of AAeD has given me a nice perspective of both sides, and I value what both bring to the table. WHAT IS ONE THING YOU’D LIKE TOSEE IMPROVED IN ARIZONA OVER THENEXT YEAR?I want to see Arizona take education more seriously. From K-12 through all forms of higher education, including community college, trade school and the four-year institutions. Wearing my economic development hat, in order to attract and retain quality companies we need to support funding for education at all levels. Companies look critically at a state’s education infrastructure from a perspective of being able to hire quality employees as well as having good schools for their employees’ children to attend.

DESCRIBE ARIZONA’S DEVELOPMENT CLIMATE IN THREE WORDS: Possibility, Opportunity. Prospering.

International Economic Development Council (IEDC) to Arizona. AAED hosted two IEDC courses in 2010, which resulted in the highest-attended non-conference courses IEDC had seen in years. Over the next year, AAED established The Economic Development Academy of Arizona that launched in January 2012. The course sold out in weeks, says Town of Gilbert’s Business Retention and Expansion Administrator Jennifer Graves, CEcD, a 10-year member and former Professional Education Committee chair. The largest stride thus far happened when the AAED Executive Director Joyce Grossman and Professional Education Committee Chair Susan Hyatt facilitated the Arizona Economic Development (AZED) Pro designation. This marks the first time the IEDC has held an exam separate from one of its conferences. AAED also graduated its inaugural class of AZED Pros earlier this year.

“As one of AAED’s three core focus areas, education plays a critical role in strengthening the organizations position as the leading advocate for economic

development in the state,” says Graves. “If AAED continues to raise the bar and provide meaningful programming for its members and practitioners across Arizona, I believe the organization will continue to see growth in both membership and prominence.”

“One element of AAED’s future that I am very excited to be part of is an initiative to increase the number of aspiring or emerging economic development professionals,” says Hyatt, Arizona Commerce Authority’s vice president of business expansion. “We are not only working to increase the number of emerging economic development professionals in our organization, but we are also developing some programs to provide those individuals ongoing support through mentorship and educational opportunities.”

Education is the basis of professionalism, the beginning of advocacy and the best way to understand values key to collaboration, says Flores.

“This [AZED Pro] designation shows the proactive recognition of a need to do things a little differently in Arizona,” he

THOUGHTS FROM PAST PRESIDENTS“I have been a member since the beginning and AAED is stronger today than 40 years ago! AAED is important to me personally for the statewide contacts and as a tremendous source of support for me at work.”

— Rick Ireland, business development manager, Arrington Watkins Architects (AAED President 1975)

MEMBER SPOTLIGHT

MEMBER SPOTLIGHT

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AAED

Kim ShapiroSenior director, business development, SkanskaAAeD member for eight yearsHas worked in the designand construction industryfor 17 years WHAT HAS BEEN AAED’S PROFESSIONAL OR PERSONAL EFFECT ON YOU?AAeD has been a great platform to showcase Skanska and our Arizona team to the Valley. the organization has a diverse membership of practitioners and providers who have been supportive on both the professional and personal front. the members are truly approachable, whether you’ve been around for years or are a new member to the organization. WHAT IS ONE OF THE MOST SURPRISING THINGS TO COME OUT OF YOUR AAED MEMBERSHIP?the foundation of AAeD has three solid pillars of the organization: education, advocacy and collaboration. I am continuingly learning about all three areas on the public and private economic development trends, policy changes, continuing education and best practices in our state. In regards to AAeD’s collaboration pillar, I have found AAeD’s membership to not only have a networking component, but AAeD has had a role for me in developing and growing strong relationships that have laid a foundation for building friendships, which have turned into building trust and opportunities that turn into business. WHAT IS ONE THING YOU’D LIKE TOSEE IMPROVED IN ARIZONA OVER THENEXT YEAR?two things come to mind: for Arizona to have a national, recognizable brand for our state and a solidified plan for long-term infrastructure investment to help build the state’s economy. We need to be able to have honest conversations about how we can support our state’s growth so that we have the facilities and infrastructure to ensure long-term success. DESCRIBE ARIZONA’S DEVELOPMENT CLIMATE IN THREE WORDS: Cautious. Constrained. Collaborative.

says. “Some tools practitioners rely on are not available in Arizona. Similarly, some resources, land, people and bio diversity, are treasures the AZED Pros become aware of and use to the advantage of high quality, sustained economic development.”

PUTTING AAED ‘ON THE MAP’Collaboration between the different

regions of Arizona has been a direct interest for many members this year.

“Putting AAED and Arizona ‘on the map’ is a big goal, and after the first year of our strategic plan implementation, I believe it is on track,” says Casey, calling AAED “the leading organization in the state for provision of economic development training for practitioners.”

The organization has also increased its investment in advocacy year-over-year to ensure it becomes a go-to for legislative information that can impact economic development.

“Aligning professionals from rural and urban environments to improve the economic health of our communities” is AAED’s greatest contribution to Arizona, says Jacqui Sabo, sales manager of Goodmans Interior Structures and AAED member since 2008. Sabo has been involved with five of AAED’s 14 committees, including chairing the tribal committee and education efforts.

“This year, I am working on a special education task force to encourage students and mid-career professionals to consider economic development as a career path,” Sabo says. “As a result, we are collaborating within our organization, and it’s been fantastic.”

Moving forward, Sabo says she’d like

the organization to “make sure we have congruency on what our brand is and should be.” Likewise, Flores says Arizona needs to “put its resources where its mouth is” — particularly in education and business opportunities.

“Arizona needs to be ‘top of mind’ for the site selectors and decision makers to consider the great potential of locating projects with quality jobs in Arizona,” says APS’ Bentler. “As the statewide economic development organization, AAED helps bring all of these wonderful partners such as the ACA, GPEC, TREO, community economic development organizations, utilities and many others to help unify and set professional standards to ensure the economic development success in Arizona.”

“I believe that AAED’s commitment to advocacy, education and collaboration and related achievements are equally commendable, but its ability to maintain an overall strong membership base year after year through commitment and reaffirmation of member value is what makes it an organization to emulate,” Casey says.

THOUGHTS FROM PAST PRESIDENTS“AAED has always been for me a networking organization and a resource for state-wide discussion and interaction within economic development. For this reason it has survived and thrived. More recently it has become a respected voice on economic development issues in the political arena.”

— Michael S. Hammond, SIOR, CRE, President/CEO Cushman & Wakefield | PICOR (AAED President 1998)

“This [AZED Pro] designation shows the proactive recognition of a need to do things a little differently in Arizona.”— Marcelino Flores, Pascua Yaqui Council Member

MEMBER SPOTLIGHT

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Congratulations to AAED on their 40th Anniversary and the

Town of Youngtown on their 60th Anniversary.

Thank you for the contributions that you both have made to the

regional economy.

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AAED

Joyce Grossman became executive director of AAED in 2011. She has a B.A. from the University of California-

Davis and a M.P.A. from California State University-Sacramento. Prior to joining AAED, Grossman was a deputy director with the City of Phoenix and helped attract the International Genomics Consortium/Translational Genomics Research Institute.

WHAT ARE ECONOMIC DEVELOPERS SAYING ABOUT ARIZONA’S ECONOMY?Our growth is uneven, reflecting different economic drivers. As the geography of Arizona is varied, so is the economic climate of the state. While economic forecasters have noted a “softening” in our recovery this past spring, economic developers are reporting they are busy fielding calls and following up on leads. The Phoenix metro area is leading the state’s recovery. Last year, Forbes magazine ranked the metro area No. 1 for financial services employment. Other areas of the state

with a greater dependence on federal funding are recovering more slowly. There are pockets of rural Arizona being proactive by finding ways to use their natural assets to create economic opportunities while others are finding an economic return from the revitalizing of their main streets.

ARIZONA HAS A HANDFUL OF ECONOMIC DEVELOPMENT GROUPS. HOW IS AAED UNIQUE?AAED is the only association in Arizona that provides professional economic development training for practitioners and service providers. We do this through our Economic Development Academy of Arizona, Arizona Basic Economic Development Course (BEDC), and the sponsored International Economic Development Council (IEDC) and Council of Development Finance Agencies (CDFA)courses brought to Arizona. Our academy provides courses on key issues related to the profession in Arizona. Participants who complete eight courses in required modules will receive an Arizona Economic

Development Professionals (AZED Pro) designation. AAED also hosts a four-and-a-half-day Arizona Basic Economic Development Course that is accredited by the IEDC. It is a required course for those seeking a Certified Economic Developer (CEcD). This class, held in January, is open to anyone who wants to learn more about the profession. Finally, AAED partners with the IEDC and the CDFA to bring their advance trainings to Arizona.

WHAT ARE THE MOST INFLUENTIAL BUSINESSES AAED HAS ATTRACTED TO THE STATE?When AAED started in 1974 as the Arizona Association for Industrial Development (AAID), there were only two committees (Spring/Fall Conferences and Business Prospecting). Today, there are 12. AAID, made up of private-public partners, promoted the state of Arizona on prospecting trips. In digging through AAID archives, the association was credited with helping companies locate or expand in Arizona, most notably Motorola, Intel and Honeywell. As economic development departments/agencies came into being, the AAED prospecting missions were replaced by professional education and more stepped up advocacy for economic development tools at the Arizona State Capitol.

AAED'S LUNCHES ARE POPULAR PROGRAMS AND OFTEN SOLD OUT. WHAT IS CONTRIBUTING TO AN INCREASED INTEREST IN ECONOMIC DEVELOPMENT? Timely topics and an invigorating slate of speakers are the reasons! We seek value in the luncheons, with such popular topics as high quality economic/real estate forecasts, future of water, sports, town and gown discussions, workforce development and retail trends. We have sponsors from all aspects of the economic spectrum—private, public, utilities—because we provide a buffet of knowledge and some pretty good meals, too. You never know who will be at your table, possibly a collaborator for a future project.

WHAT IS IMPORTANT DIALOGUE YOU WANT TO SEE HAPPENING GOING INTO 2015?Areas we have focused on in the past and will continue the dialogue into 2015 include infrastructure development and improvement programs and access to capital.

THE POWER OF ATTRACTIONBy AmANDA VeNturA

PHOtO BY SHAVON rOSe, AZ BIG meDIA

Q & A withJoyce Grossman

© AZBIGMEDIA 2014

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© AZBIGMEDIA 2014

The defi nitive resource for hard-hitting news about commercial real estate in Arizona.

Print | Digital | Online

In print or on-line at azbigmedia.com/azre

Sign up for the AZRE weekly newsletter

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VALLEY PARTNERSHIP

That is the mission statement of the organization for which I work – Valley Partnership.

We are a partnership that represents and protects the commercial development industry.

Our members are the most diverse representation of the industry. Our leadership is a combination of established high level executives. Our young partners comprise the best up-and-coming professionals in the development community. Those are pretty solid credentials for an organization that has been around for a little more than 27 years.

The mission statement is simple. How does it play out, day to day, in the professional life of the commercial real estate professional? Just take a look at the four pillars of Valley Partnership.

>> ADVOCACY: Valley Partnership is a lobbyist for the commercial development industry to protect our partners from over regulation of business and encourage pro development incentives, policies and law interpretation. This activity occurs at the federal, state, county and municipal levels throughout Arizona, with an emphasis on Maricopa County. Valley Partnership engages and creates professional relationships with elected officials, regulators and development

staff to ensure that the government entity watching over the commercial real estate industry is promoting efficient practices and pro growth policies.

>> EDUCATION: Everyone knows that, on the fourth Friday of each month, you need to be at the Valley Partnership breakfast. With 200 to 300 of your closest professional friends in attendance, you will hear from the highest level of executives, elected leaders and international experts on the current issues affecting commercial real estate in the Valley. Valley Partnership works diligently to provide the most up-to-date information for

“THE VALLEY OF THE SUN’S PREMIER ADVOCACY GROUP FOR RESPONSIBLE DEVELOPMENT.”

The four pillarsof Valley PartNershiP

Valley Partnership Board of Directors, back row: left to right, Vanessa hickman, Jeff Chaves, Chapin Bell, eric sloan, Doug leventhal, richard hubbard, steve hoover, tim Brislin, Brian frakes, scott Nelson. front row: left to right, Mike atkinson, Brett hopper, Ben shunk, Chris anaradian, Molly ryan Carson, John Krueger, Carolyn oberholtzer, Jay Kramer. Not pictured: Karrin taylor, roger Baele, ryan Cochran, Molly Greene, John Creer, heidi Kimball, Bryce llyod, rusty Mitchell and Derek sorenson.

Richard R. HubbardValley Partnership

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our partners about current issues and, more importantly, access to the experts and influential professionals on the subject.

>> BUSINESS DEVELOPMENT:Valley Partnership is not afraid of promoting “business to business” between and among partners. However, it is not simply showing up to a Valley Partnership breakfast or happy hour (although those are good ideas, especially the happy hours), and handing out business cards. Through the committees, our partners are able to meet and engage one another on issues affecting the industry and the organization while engaging with real estate professionals of every level. Valley Partnership affords every partner the opportunity to interact with developers, municipal officials, and those in all areas of real estate to work together on issues affecting us all. Through this work, there is no better way to display your expertise, promote yourself and create lasting business development relationships.

>> THE COMMUNITY PROJECT: No professional organization can succeed without giving back. I am proud to say that in our illustrious history, Valley Partnership and our partners have excelled at giving back to the community. There are many initiatives Valley Partnership undertakes for charities, but nothing compares to the annual community project. It is a year-long labor of love by our committee that begins with the selection of a charity with a physical location that needs renovation. Over a year, the committee designs a plan for rehabilitation of the facility, raises money, solicits materials and services from our partners, and raises awareness of the importance of the charity, their mission and, most importantly, the community project.

Since inception, Valley Partnership has raised more than $3.5 million of cash and materials to contribute to community projects. In addition, there are thousands of hours of manual labor that have been put into these projects. A short list of the beneficiaries includes the Boys & Girls Clubs, Salvation Army, Arizona Foundation for the Blind, Maggie’s Place and this year’s recipient, Arizona Foundation for the Handicap.

We truly are the “Valley of the Sun’s premier advocacy group for responsible development” and plan to be around for another 27 years.

Richard R.Hubbard is the President & CEO of Valley Partnership

Volunteers work on the 2013 community project for save the family foundation of arizona's escobedo facility in Mesa, ariz.

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Block by block, the Phoenix Metro is seeing reinvestment, redevelopment and repositioning of land, existing

buildings and infrastructure. It may not be high tide across the submarkets and sectors, but a rising tide somewhere can still lift a decent number of ships.

The Great Recession has left its mark on the Metro, tasking developers and public entities to do whatever is necessary to meet the demands of Arizona’s present and foreseeable future. Whether that means looking at the Millennial workforce, the K-12 and higher education system, urbanization or infill or attracting large businesses to the state, one thing remains constant — Arizona needs to have a sense of “place.”

Right now, that place is being largely defined by submarkets in the Phoenix Metro. From the largest office development in the Valley — the 2MSF Marina Heights in Tempe — to the comparatively small infill and adaptive reuse projects coming into downtown Phoenix, the commercial real estate industry is developing job corridors, cultural hubs and the multifamily living and transit to connect it all.

A sentiment for responsible development

runs through the projects in Arizona’s pipeline; More projects than Ryan Companies Vice President of Development Molly Ryan Carson can reference.

“Responsible development to me is a project that is self sustaining and provides positive attributes to the community in which it resides (employment opportunities, gathering space or amenities that fill a void in that area, green aspects in both the construction/redevelopment and management),” she says.

Industrial and office sectors are seeing large speculative developments come online and multifamily opportunities continue to wait in the wings while thousands of units make their way through the pipeline. One of the leading trends out of nowhereville is adaptive reuse and infill.

Scott Nelson, vice chair of Valley Partnership and vice president of development for Westcor, rattles off a list of projects revitalizing established neighborhoods — Vintage Partners’ redevelopment of Uptown Plaza, Sam Fox’s Yard Concept, Upward Project’s Central Corridor restaurant cluster and similar efforts in downtown Chandler and Gilbert.

He calls these catalysts for growth.“I firmly believe infill development

and redevelopment will be a big part of the Valley’s development activity in the coming decades,” says Nelson. “The reinventing and repurposing of land and buildings throughout the region will be an important element to the evolution and maturation of Metropolitan Phoenix. Leveraging and reinvesting in our existing infrastructure – whether it be freeways, light rail, water, waste water, fiber, etc. – along with strategic investment in new and in-place infrastructure will help to ensure smart growth, sustainable economic development, and quality of life.”

Areas where this is taking place, Nelson notes, is downtown Phoenix — through CityScape, the BioSciences Campus — and Tempe — with Discovery Business Campus and Marina Heights.

Phoenix Market President for FirstBank Bryce Lloyd notes that, while this is nothing new, the money will always favor well-located projects, regardless of sector.

“There has been a move toward infill projects, which is a healthy development for the Metro area,” he says. “Everyone

MetroPolis:By aMaNDa VeNtura

Arizona economy demands a new sense of place in Phoenix Metro

Molly Ryan CaRson DoUG lEVEnTHal BRyCE lloyD sCoTT nElson KaRRIn TayloR

Cityscape — Phoenix, ariz.Developer: reD DevelopmentGeneral Contractor: hunt Constructionarchitect: smithGroupJJr

“the reinventing and repurposing of land and buildings throughout the region will be an important element to the evolution and maturation of Metropolitan Phoenix.” — scott Nelson, Vice President of Development, Westcor

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VALLEY PARTNERSHIP

can look around and see the success of several of the infill retail/restaurant developments. These projects are having a positive impact on investment and redevelopment activities in the surrounding neighborhoods.”

There is an empty side of infill, though.While municipalities look at ways to

reel back unnecessary spending, roads, sewer and water lines have not had the kind of financing and building at pre-recession levels.

“One of the most challenging aspects of development today is the creation and maintenance of infrastructure,” says Nelson, adding, “This can be complicated further as we start to see more ‘infill ’ developments.”

For infill, developers are reinvesting in existing infrastructure to build a new project. That can be especially expensive, he notes, adding, “I would encourage the state and municipalities to consider alternative financing mechanisms, such as tax increment financing, to be able to successfully maintain existing infrastructure and build new public assets.”

THE GooD nEIGHBoRsThe future of Arizona’s economic

recovery is less ephemeral than first believed. In 2013, economists touted 2015 as a year for recovery. Now, they’re saying 2017.

There are a few strains on recovery for Arizona, including a less than favorable

reputation, slumping housing market and a strong need for Millennial attraction. Economic development departments are tasked with attracting new businesses to the state and helping existing ones to expand into new spaces. However, even this has been affected by a changing attitude among new and expanding companies, notes Valley Partnership’s Immediate Past Chair and DMB Associates’ Executive Vice President and Chief Entitlements Officer, Karrin Taylor.

“Companies don’t build new offices or lease larger space when they are planning for growth anymore,” she says. “The economic climate has forced businesses to wait until they need the space to make a move. Then, landowners, brokers and

cities have to move quickly to respond and take advantage of opportunities.”

When a handful of developers were asked which sectors would see the largest growth over the next 12 months, their answers spanned from medical office buildings to class-A and -B office buildings, low price-point retail, fast-casual restaurants, multifamily, assisted living and industrial.

“As long as there is uncertainty and a sluggish national economy, Arizona’s growth will be restrained,” says Lloyd. “We will probably need to remain patient.”

Lloyd mentions, then, that FirstBank recently closed one of its largest loans to date with fellow Valley Partnership member P.B. Bell on a multifamily property.

Verrado — Buckeye, ariz.Developer: DMB associates

“it’s the epitome of small town america with commercial businesses including retail, office and restaurants all in walking distance to apartments and single-family homes.” — Karrin taylor, executive Vice President and Chief entitlements officer, DMB associates

tempe Marketplace — tempe, ariz.Developer: VestarGeneral Contractor: frontera Building Companyarchitect: Butler Design Group

“taking a former landfill site, Vestar completed extensive environmental re-mediation and built a successful retail power center to serve the east Valley. With unprecedented freeway access and a mission to interact with the surrounding community, Vestar has one of the most popular and occupied developments. the project has entertainment more than 300 days a year and has embraced the new Chicago Cubs spring training stadium by allowing parking and providing shuttle service to games. Compared to other power centers in the area, tempe Marketplace is a distinguishable success story.” — richard hubbard, Ceo and President, Valley PartnershipPhoto By roBiN seNDele, aZ BiG MeDia

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“It has taken a little longer than some expected to absorb the commercial space that was overbuilt during the years leading up to the pre-recession, but things are steadily improving,” says Nelson. “The recovery cannot come fast enough for all of us.”

“The slower than anticipated rebound in new home construction permits, a perceived stalling out of the housing recovery and net-new job creation” are strains on Arizona’s economy, says Valley Partnership Board Chair and Evergreen Devco Principal and Chief Operating Officer Doug Leventhal. “Commercial development, particularly retail, lags behind residential growth, so once housing gets back on solid footing, look for an overall improvement in the volume of new commercial development projects.”

So, how do you make Arizona look attractive in a residential slouch?

Make a place appeal to a younger workforce that’s buying into multifamily. That can mean attracting companies where Millennials would like to work, as well as having urban cores that cater to popular and versatile lifestyles.

“The psychological shift of younger workers toward apartment living and renting will continue to impact Phoenix’s market for a while,” adds Taylor. “There’s a generation who saw their friends and parents lose their homes in the downturn and it’s affected their buying decisions. Those multifamily communities are bringing renewed life to downtowns and urban areas around the Valley, especially those areas with a higher concentration of retail and restaurants.”

THE REsPonsIBlE onEsThe bones of Arizona’s recovery are jobs.“Community wide, our No. 1 focus

should be employment,” says Nelson. Employment bases are what drive the

need for housing, office and industrial facilities and bring more income to support retail.

“If we are unable to support additional employment and are not competitive to bring additional companies to the state, we are missing a significant pillar to support additional commercial development,” Nelson says.

Broader than employment, Carson adds, Arizona’s economy and the commercial real estate industry is being held back by bad branding.

“Negative press has seemed to rear its head all too frequently in Arizona,” she says. “Any aspect of the economy that is not functioning with all cylinders is at risk for slowing growth; this is the

time to band further together and unite around our state's strengths, and focus on improving in the areas of greatest need.”

DMB Associates’ Taylor agrees.“Arizona must improve its image

nationally to attract and retain businesses. Younger tech workers, engineers, and entrepreneurs want to live in a state where all people are respected and the state projects a positive image,” she says. “As a parent, I want my kids to stay in Arizona and that means that we have great jobs for them when they graduate college and that this is a thriving place of culture and opportunity. Changing our education system requires everyone pulling in the same direction. No more politicizing the process or the conversation; we need to demand results and hold our legislators, teachers, administrators and parents accountable for Arizona’s future.”

Marina heights — tempe, ariz.Developer: ryan Companies us, inc./sunbelt holdingsGeneral Contractor: ryan Companies us, inc.architect: the Davis experience“it represents a high level of new jobs to the Valley. it is infill, and it has great access to transportation, including light rail.” — Bryce lloyd, firstBank

“a massive project and economic development engine that was imagined, designed and is being built by a combination of diverse interest: Private Developers (sunbelt/ryan); tenant (state farm); Government land owner (asu) and Municipal regulator (City of tempe). the project is designed to complement the waterfront amenity, handle traffic and congestion issues, promote pedestrian and bike transportation and to blend seamlessly into the campus environment.” — Karrin taylor, DMB associatesPhoto By MiKe Mertes, aZ BiG MeDia

town & Country shopping Center — PhoenixDeveloper: reD DevelopmentGeneral Contractor: Chasse Building teamarchitect: Butler Design Group

“the partnership of Macerich and reD Development looked at one of the oldest shopping centers in the Valley and asked whether to scrap and rebuild or rehabilitate. they chose the latter and while preserving the pedestrian friendly/shaded interior of the complex, through intense tenant recruitment, they refilled vacant 'big boxes' and found local merchants to fill spaces where other tenants failed.” — richard hubbard, Ceo and President, Valley Partnership© AZBIGMEDIA 2014


VALLEY PARTNERSHIP

It’s a story everyone has experienced to some degree since 2007: When the economy was healthy, cities were

doing everything possible to keep up with the growth. When the recession hit, everything slowed — some projects were stopped in their tracks. Cities were no longer able to build the infrastructure necessary for rapid growth due to the slowdown as well as restrictions on impact fee-related funding. Belts tightened on public and private sectors alike.

As the recovery shakes its way fully to the surface over the next few years, cities are beginning to see dirt pushed around, projects come off drawing boards and economic development efforts in full force. Communities are waking up, stretching for their full potential.

“Every city wants to see healthy development, wants to create a welcoming community and wants to meet the demands of its residents. The private partners are essential in building those beautiful communities,” says Ken Strobeck, executive director of the League of Arizona Cities and Towns. That said, there is no one size fits all approach to development. The only common denominator is the importance of communication.

“Arizona is full of cities that have decades of growth ahead of them,” says Strobeck. “In order for us to continue growing and build sustainable communities, it is essential that developers and cities work very closely together to be creative, form partnerships and

find ways to meet the needs of growth, while not creating an extreme burden on existing residents.” These partnerships are something Curt Johnson, senior vice president at CVL Consultants, helps facilitate on a daily basis between his clients and the public sector.

“A lot of cities have the same passion as we do when it comes to design,” he says, noting that while it sometimes takes “trial and error” to figure out what makes a city tick, it’s ultimately about a balance of needs.

FIRsT IMPREssIons“Private developers don’t like

surprises, so having things approved or mocked up with city’s conditions is starting on the right footing,” says

the Flex Space

By aMaNDa VeNtura

Public, private sectors bend challenges with communication

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Johnson. Developers “owe the public sector the details they need to make a decision,” he says, adding that the city should return that courtesy. He notes one example of when communication between parties broke down. In Buckeye, he says, fire trucks require larger cul-de-sac loops with a 60-foot radius to

accommodate their size. However, this fact wasn’t brought up by the city to one of his clients until late in the design process. Other things, like city street and sidewalk width restrictions can sometimes be changed to lower overall construction price as well as reduce heat island effects. It’s a city’s openness to these types of changes that can bring balance to developers and the public sector alike.

That said, all it takes is enough residents to file a legal protest at the city council level for a project to be stalled for about a year unless a super majority vote is reached. A recent example happened last May, when Mesa property owners near the location of a proposed medical marijuana dispensary development triggered a failed majority vote to rezone the property, despite the General Plan approval.

“Some owners may never be satisfied, as I have encountered adjacent owners that do not want any development on the privately owned land next to them,” he says. “This puts a tremendous burden on the land owner, who may not be able to entitle their land appropriately and for the developer, who may not have the time or financial resources to fund a long drawn out entitlement process. In that case, the developer would move on to another project someplace else.”

Often, developers have thrown so much money at a project they won’t just pack up and leave if it’s protested. One such developer and client who wishes to remain anonymous, he notes, was working on a five-acre infill piece in Scottsdale. Infill is particularly difficult as it usually has neighbors on multiple sides that must be appeased. It took the developer more than two years to get the design approved by council and even then the developer had to compromise a

design of 22 housing units per acre to 10 units per acre.

“Most of my clients are gritty and willing to stick it out and do what they need to develop that piece,” Johnson says.

Since the downturn, he adds, the mood toward development has changed.

“We need each other,” he says.According to Strobeck, for city growth

to come into fruition, zoning and general plans may need to see minor changes or amendments. City leaders. Strobeck adds, always need to consider economic conditions and market needs as they grow.

“Whether it is a recession or economic boom, sometimes the initial zoning is a hindrance to growth and needs to be adjusted. This is common and healthy exercise,” says Strobeck, adding it’s important for residents and developers alike to pay attention to public rezoning hearings so all parties can voice concerns and stay in touch with what the other wants.

When Bell Lexus wanted to move into a space among the core of auto dealerships along north Scottsdale Road, the City of Scottsdale and Arizona State Land Department (ASLD) had to reevaluate the existing zoning to the Crossroads East Planned Community District. The partnership turned into a win for the respective parties. The dealership was able to relocate to one of the highest traffic intersections in the city, the land reaped the highest value achieved for State Trust Land at auction and the sale also resolved long-standing drainage and infrastructure repayment issues while ensuring Scottsdale received high-value sales tax revenue.

“The successful development of Bell Lexus not only was an example of a productive private-public partnership, but will pave the way for additional

BIll JaBJInIaK CURT JoHnson KEn sTRoBECK CHRIsTInE ZIElonKaVanEssa HICKMan CaRolyn oBERHolTZER

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success stories on the hundreds of remaining undeveloped Trust acres adjacent and proximate to the dealership,” says Arizona State Land Commissioner Vanessa Hickman.

Cities are responsible for regulating the general plan, even if it is beyond their direct control. Many development regulations are imposed on cities by state and federal laws. Cities are also obligated to its residents.

“Each city has its own unique character and wants to form a community that is responsive to its local residents,” says Strobeck. “When approving plans, cities want to make sure that development plans fall in line with that vision.”

If residents feel a development plan doesn’t align with the city’s character or their lifestyle, they can stall or block plans from being approved at council. The most important thing a land owner and developer can do is work with the city staff, educate residents and make sure all respective voices are heard, recommends Strobeck.

“Early and constant communications with the planning department and the

office of economic development helps lead to success for both the developer and the city,” says Strobeck. “Many items can be resolved when more time is spent with residents and there is lots of communication. Residents have great investments in their communities and they take their pride of ownership seriously.”

BlURRED lInEsThe approach in some cities is to do

less regulating and more facilitating in order to help developers’ plans meet the vision of the city.

One such city is Mesa.Whether holding special zoning

meetings to accommodate developer’s timelines or developing a new zoning code, as the city did for DMB Associates’ 3200-acre, master planned development of Eastmark, Mesa has made a conscious push to go the extra mile with developers who return the favor. For the First Solar building acquisition by Apple and GTAT in the city, staff sat down with Apple and discussed the timeline and expectations. What would normally require 18-day turnarounds were whittled down to five,

says Mesa’s Director of Development and Sustainability Department, Christine Zielonka.

“We flexed the system to allow for a rapid development,” she says.

This is a trend Carolyn Oberholtzer, attorney at Bergin, Frakes, Smalley & Oberholtzer, PLLC, has also observed.

“Some municipalities are trending toward flexibility in an effort to be nimble enough to capture development/end user opportunities and avoid their communities getting skipped over in favor of a neighboring city that can accelerate the speed to market,” says Oberholtzer. “‘Time is money’ is especially applicable in the development business. Recognizing that, we have seen some municipalities even initiate zoning cases on their own accord to help the process along.”

But this all started with DMB Associates, which City of Mesa Economic Development Director Bill Jabjiniak says went “out of its way to make sure it met with all the right people to make Eastmark a good fit for southeast Mesa and the Gateway area.”

Mesa and DMB associates worked closely on the eastmark master planned community. it now has its own zoning code.

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Benedictine university developers and Mesa collaborated closely to turn a historical hospital into a higher education facility.

“They worked closely with our planning department to put together a plan that would give them the flexibility they needed, yet adhered closely to the vision and guidelines the city has for the Gateway area,” says Jabjiniak. “The perfect success story is the new Apple/GTAT manufacturing facility. Because of the flexible approval process developed with DMB, we were able to bring the facility to the Tech Corridor within Eastmark in record time.”

In order to facilitate a strong partnership between Mesa and the private sector, Jabjiniak says, the city has invested heavily in infrastructure and cut development risk by facilitating entitlements. Recently, Mesa’s Planning Board approved an overlay zone for the Elliot Road Technology Corridor.

“This zoning overlay will allow private landowners in the Tech Corridor the opportunity to opt-in to the overlay zone when they have a high-tech company that is interested in building a facility on their property,” he says. “When developers are ready to build, all they need to do is submit the necessary paperwork to the planning department for administrative approval. The overlay zone will cut the entitlement process from several months down to a matter of a few weeks.”

However, when developers don’t pull their weight in communication projects tend to see delays. If developers don’t

also consider off-site costs, such as city infrastructure installs or improvements they have a high hurdle to clear through an appeal to the city manager.

“Community Facilities Districts are a critical tool in the public-private partnership tool box that enable a developer to finance large public infrastructure projects,” says Oberholtzer. “Communities that lack facilities in their growth areas will have a difficult time capturing development if they do not allow Community Facilities Districts.”

Any time legislation has cropped up that could potentially put the two entities at odds organizations such as Valley Partnership have worked to broker compromise.

“You saw that in the last session with the Transaction Privilege Tax changes and proposed legislation that could have jeopardized Community Facilities Districts,” says Oberholtzer.

Zielonka says the first time she looked at Mesa’s General Plan map, it looked like a zoning map with small areas. Since 2002, the city has started to loosen its zoning to accommodate more creative causes for density and growth.

“It’s the private sector that has to come in and say this is no longer the best use [for a building],” Zielonka says, noting that this long-term thinking of building uses over time began with Eastmark, two days before the recession hit.

“The recession didn’t inform that alternative approach,” she says. “It’s saying [the general plan] is more of a high level, inspirational document, not a detailed document. [Mesa] spent years working through that philosophy internally.”

The same goes for development in Mesa. “We’re trying to push Mesa forward,”

says Zielonka. “We don’t want to allow mediocre development. One of the outcomes of the recession is money is tougher to get. Purse strings have tightened. One thing we’re constantly pushing on is high-quality development…one of our current challenges is we’re not allowing development that won’t hold up in the short-term or long-term.”

From a napkin sketch to something more advanced, Zielonka says starting conversations as early as possible is key to success. For instance - a project doesn’t have to be the size of Eastmark or involve a company like Apple to get special attention. Benedictine University, which now occupies the building of a former hospital in downtown Mesa, was what Zielonka calls a very close collaboration.

“The state and federal government can pass laws and discuss policy but at the end of the day, the partnerships between local communities and their development partners are what will generate job growth, healthy communities and continued economic growth,” says Strobeck.

© AZBIGMEDIA 2014

sECToR salEs aMoUnT(In MIllIons) aMoUnT PER sF

offiCe 66 $896 $135

reTail 62 $528 $123

iNDusTrial 108 $690 $80


VALLEY PARTNERSHIP

Friday Morning Breakfasts, or FMBs, are monthly meetings held by Valley Partnership in downtown Phoenix. Each breakfast features a “Mayor’s Minute,” which is a brief update by a municipality, followed by a moderated panel discussing pertinent issues in the commercial real estate industry. Looking back on a year of sold-out breakfasts, former panelists and moderators provided AZRE with updates on their topics.

January: “Breaking Ground: Commercial Real Estate Market Preview From the Experts”Panel: Mindy Korth, Colliers International; Larry Downey, Cushman & Wakefield; and Matt Milinovich, Strategic Retail Group; Moderator: Richard Hubbard, Valley Partnership

“There is no longer doubt that the metro Phoenix office market is experiencing a slow but steady recovery, but it has been, and will continue to be, an arduous climb. Annual net absorption has once again reached pre-recession levels of 2MSF. We had some sizable tenant announcements in 2014, but the fact remains, our market vacancy still hovers around 22 percent. However, when you drill deeper into the vacancy, you will find large blocks of quality office space is limited – leading to 'build-to-suit' activity.

Medical, insurance, financial and tech tenants lead the pack, but geography-based absorption has not been “fair and balanced.” Some submarkets are considerably tighter than others. The East Valley and Scottsdale submarkets continue to do well, while Northwest Phoenix and the CBD have yet to attract significant leasing momentum.

Rental rates in the best performing submarkets are on the rise, especially in class-A product.

As we move into 2015, we expect more good news as our job market improves and corporate occupiers (although cautious) become more confident in their expansions.” — Larry Downey, Vice Chairman, Cushman & Wakefield of Arizona, Inc.

“Through August 2014, investment sales for office, industrial and retail sales are performing well. Office sales PSF are 3 percent higher, industrial PSF sales are 4 percent higher and retail PSF sales are 42 percent higher than through August 2013. Office and retail volumes

were higher than mid-year 2013, with industrial lagging. There was no usual summer lull this year. With the current deals and those coming to market, prices and volumes will pick

up even further during the remainder of the year. Our forecasts that we described at January’s Friday Morning Breakfast are coming to fruition.” — Mindy Korth, Colliers International

April: "Residential Development inthe Valley"Panel: Jeff Gunderson, Lennar Homes; Michael Jesberger, Terrawest Communities; Moderator: Jim Belfiore, Belfiore Real Estate Consulting

“The homebuilding industry continues to rapidly change gears, going from rapid recovery 30 months ago to a slow

but steady growth 18 months ago to deteriorating conditions throughout most of the last 12 months. The fall and winter outlook is not a good one, but positives — big positives — lurk behind the scenes, including relatively strong sales, office traffic levels, healthy employment growth, the prospect of growing population, and an imbalance between rental prices and the cost of owning — a hard-to-ignore reality.

The forecast is for brighter days for homebuilders, as 2014 nears a close and spring 2015 approaches.” — Jim Belfiore, Belfiore Real Estate Consulting

May: "Lifestyle Trends of the 50+ Consumer and Their Impact on Real Estate Development"Panel: Nick Taratsas, DMB Associates; Margaret Wylde, ProMatura Group; Brendan Morrow, The Weitz Company; Moderator: Jeff Chaves, then at The Weitz Company

“While people 55+ make up about 25 percent of the total population, they have a homeownership rate of more than 75 percent, according to John Burns Real Estate Consulting. To create a high-quality community experience for this important market, development for the Victory District of Verrado, DMB’s first 55+ community, is on the fast track. Four homebuilders will offer 406 new homes in phase one. Construction has begun of the Big Patio, Victory’s exclusive event and community space and gateway to the models. With interest strong in Victory, DMB is planning a special preview event in January 2015.” — Nick Taratsas, Senior Vice President and General Manager of Verrado ARC, DMB Associates, Inc.

BreaKfast

CluBBy aMaNDa VeNtura

source: Colliers international© AZBIGMEDIA 2014

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AZRE November/December 2014

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Transcript of AZRE November/December 2014