Concurrent sessions covered the latest in multifamily trends,identifying opportunities in an extraordinarily active market andupdates in office leasing and capital availability. Meanwhile atrend-oriented town hall meeting explored facts and fiction aboutthe market, with a focus on the West Valley. RealShare Phoenix,along with other RealShare events nationwide, is produced byReal EstateMedia, publishers of GlobeSt.com, GlobeSt.RETAIL, RealEstate Forum magazine and other print and online publicationsdevoted to commercial real estate.

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The conference opened with a "fact or fiction" session,answering questions about if $45-plus per sf leases will emerge inthe Camelback submarket and if the new Arizona State Universitycampus and planned light rail would revitalize the CBD. LincolnProperty Co. executive vice president David Krumwiede and AlterGroup senior vice president Kurt Rosene took different sides on theissue that Phoenix was on a fast track to becoming the next InlandEmpire. Neither denied that, for various reasons, the industrialmarket is enjoying a boom.

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Krumwiede pointed out that Phoenix's positioning just a handfulof hours from the ports of Long Beach and California makes it anatural progression for companies shipping cargo east. "The fact isthe Inland Empire is built out and it's full. People are looking toPhoenix," he said. "It's less expensive here. And there'sspace."

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Rosene believes Phoenix is too far from the ports tolegitimately be considered a logistical alternative to the InlandEmpire. Nonetheless, he pointed out that the metro is playing hostto companies unable to develop in Southern California. "The pricingis crazy in Southern California," he added, "and they're fastrunning out of parcels to buy and develop out there."

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Whether or not Phoenix could become the second Inland Empirealso was explored in a break-out session. "We're beautifullypositioned as an alternative to the Inland Empire," said JonathanTratt, principal with KT Riverside LLC. "The prospects here arephenomenal. Add to that it's only a one-day truck ride between hereand Los Angeles. Even if the driver is only that of overflow, it'sstill a huge driver."

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Pat Gallagher, senior vice president with the Alter Group, saidthat, because they're closer to Los Angeles and the ports, the westsubmarkets are gaining in popularity among many tenants. But, hecautioned the metro area shouldn't be considered a step-child ofthe Inland Empire, Ontario or any Southern California submarket."The Phoenix market has matured," he added. "Several years ago, wewouldn't be considered in this light. Users coming to the areathese days are consumer product companies actually serving the areaand the region rather than satellite offices of Los Angelescompanies."

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The problem the industrial market continues to struggle with isnot much supply and increasing demand. Tony Lydon, senior vicepresident, Grubb & Ellis/BRE Commercal LLC, pointed outvacancies area-wide are hovering between 6% and 7% in the250-million-sf inventory. Although seven to eight million sf willdeliver this year, there are barriers to development: shrinkingland base, ever-expanding entitlement process and risingconstruction costs.

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But, the panelists agreed that the challenges had a positiveimpact because they prevent overbuilding. "In the short term, yeah,we could see some overbuilding and increasing inventory," Gallaghersaid. "But if it gets overbuilt, it all stops until inventory getsabsorbed."

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Lydon explained the main challenge to any development isinfrastructure, or rather, lack of it. "If an investor has anopportunity to get land with utilities, he needs to think aboutit," he said. Another obstacle in some area markets is lack oflabor, which also could present a development challenge.

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The industrial market also took center stage during the townhall meeting: "Has the red-hot Phoenix and national commercial realestate market reached its peak." The participants acknowledgedthere is still room for growth in Phoenix, plenty of room. But thatgrowth is attracting more national and international investors anddevelopers with deep pockets. And like their peers in theindustrial session, they spoke about tightening supply andoverwhelming demand. "In spite of the industrial activity, a numberof users who couldn't find a home in Phoenix went elsewhere," saidJim Wentworth, principal of Wentworth Property Co.

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Infrastructure also was an issue for a session entitled "Willthe West Valley be the next boom market." The majority of thepanelists were extraordinarily positive about the West Valley,claiming it is a boom that will likely go on for two decades ormore. But the boom, which is mainly residential and retail, won'tattract much in the way of office development unless transportationinfrastructure--specifically east-west roads--is improved. "If wedon't provide a better east-west corridor through White Tank Park,there'll be difficulties," predicted Jack Lundsford, president andCEO with Westmarc.

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Grubb & Ellis/BRE's senior vice president Brent Moserpointed out that some east-west roads are on the drawing boards,mainly Loop 303. "There needs to be an exploration of alternativemechanisms to funnel traffic," he added.

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Panelists suggested municipalities should band together tofigure out infrastructure and other needs because growth isdefinitely coming to the West Valley. John Schottenstein, CEO anddesignated broker with NAI Horizon, independent broker Dan Colton,Don Shilkes, senior sales associate with Coldwell BankerCommercial, and Rick Burton, president and CEO of RightpathDevelopment pointed out that if the municipalities in the WestValley did nothing, they could be caught short with the growth."The market is emerging right now," Burton added. "Municipalitiesdon't want to be caught unaware by the coming wave."

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