LOS ANGELES—While there have been many reports out of the southwest about lenders tightening the purse strings on construction lending, development is still active. This week several projects started construction, developers purchased new land sites, or new projects completed construction and are preparing to come to market. Additionally, trade and capital markets activity remained healthy and new quarterly reports are rolling in. Here's a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.

BY THE NUMBERS

LOS ANGELES—The U.S. suburban market strengthening in comparison to downtowns. While the downtown market is still out-performing the suburbs by some metrics, the gap in vacancy is shrinking in many markets across the country; the suburban vacancy rate is still 340 basis points (bps) more than the downtown vacancy rate, but it's a significant improvement over the long-run average gap of 430 bps since 2000. The suburban vacancy rate has not increased for 27 consecutive quarters through Q4 2016 and stands at 14.1 percent—450 bps below the cyclical peak of 18.6 percent in Q2 2010. The vacancy rate is now just 20 bps above the previous low of 13.9 percent in Q2 2007. The suburban market has registered positive absorption for 27 consecutive quarters as well, underscoring its consistent improvement since early 2010.

(SOURCE: CBRE)

PHOENIX—The Phoenix multifamily market performed well in 1Q17 with average rents up $52 and vacancy rates up a modest 1.5% over last year, but still at a healthy 95.6%. The market continues to have good fundamentals, with population growth up 1.5%, employment growth up 4.4% and income growth up 1%. Transaction volumes for properties with 100 or more units were up 34.5%, but transaction volumes for apartment buildings with 10 to 99 units were down 5.7% over last year. However, the average sales price from larger properties, above 100 units, was down for the quarter, 6.6% over last year, and the average sales price for the smaller properties was up 34.4% over last year.

(SOURCE: ABI Multifamily)

NEW & NOTABLE
LAS VEGAS—Chris Mundweil has joined design firm Gensler as a senior architect. He brings 18 years of experience to the firm with a special focus in hospitality and integrated resort design. In this new role, he will provide design and development leadership on several large-scale hospitality projects. He joins the from Bergman, Walls & Associates.

LOS ANGELES—William Whitney has joined Coretrust Capital Partners in Los Angeles to lead the firm's Asset Management Division. In this role, Whitney will work with the principals to implement financial, business and management strategies to maximize the value of the firm's assets in its Coretrust Value Funds. Responsibilities will include execution of property-level business plans, financing matters, disposition activities and owner/investor communications. A CPA, Whitney started his career with Deloitte & Touche in its real estate group working with both public and private companies in the industry. For the past five years, Whitney has been a senior executive at CommonWealth Partners, and he most recently led that firm's West Los Angeles and San Diego office investments. He has been responsible for that portfolio's strategic investment plans, overseeing capital improvement projects, negotiating leases and coordinating marketing decisions. He was involved in firm acquisitions and served in an investment fiduciary capacity including acquisition underwriting, due diligence and disposition execution.

IRVINE, CA—Jamboree Housing Corporation has hired Michael Massie SVP of finance. In this newly created position, Massie will be charged with identifying and securing new sources of capital and revenue including alternative funding and financial services businesses to support Jamboree's mission to provide a diversity of high quality affordable housing and services that transform lives and strengthen communities.

DEALTRACKER

SAN DIEGO, CA— Bixby Land Company has signed a new lease at The Oberlin, a redesigned three-building office campus geared toward technology companies and progressive-minded firms in San Diego's Sorrento Mesa submarket. Verimatrix, a specialist in securing and enhancing revenue for digital TV services, will occupy approximately 21,000 square feet in a two-story building at 5897 Oberlin Drive. Lease terms were not disclosed. Mike Hoeck and Ryan Egli of CBRE represented Bixby in the deal, while David Marino of Hughes Marino represented the tenant. Bixby recently renovated the property, making significant that included major upgrades to the building elevations, sleek aluminum louvres, new window glazing, and a bright signage plan that heightens building identity. Tenant interiors were completely redone, some featuring the creative use of mezzanine space that adds a high-volume atrium element to work areas.

SAN DIEGO—A10 Capital on behalf of Gemini Rosemont has closed a $33 million loan to refinance a 19-story office property in the Little Italy neighborhood of San Diego. The 177,400-square foot property is located at 610 West Ash and it the only office tower in San Diego's Little Italy area, which is a popular destination for residents and tourists. The building is 97% occupied with 13 tenants, including an international cyber security firm and the General Services Administration.
A10 Capital is refinancing a short-term loan that funded the Gemini Rosemont acquisition in 2016. A10 structured its financing with a 10-year maturity including a $2 million rollover reserve for tenant improvements.

INDIO, CA—Mountain View Cottages, a 311-unit community that is located on Arabia Street in Indio, CA, has traded hands $15.5 million between the private investors. The Mogharebi Group's Alex Mogharebi and Otto Ozen represented the seller and the buyer in the deal. Built on a 12.42-acre site in 1965, Mountain View Cottages is located at 46289 & 46299 Arabia Street in Indio. The community is near to the Indio Fairgrounds and the Larson Justice Center. It is minutes to the Empire Polo Club which is the site of renowned festivals including Coachella, Desert Trip, and Stagecoach.

PHOENIX—Montecito Medical has purchased the Thunderbird Square Medical I, a fully-leased medical office building at 13640 N. 99th Ave. in Sun City, from AIP TB Plaza I LLC for an undisclosed amount. Korth and Kirk Kuller of Colliers International in Greater Phoenix negotiated the transaction. The seller is a joint venture formed by Colin Brown, Principal of Whiteboard Development Company, which purchased the property in 2011. Originally built in 1974 by Del Webb as a retail center, the seller extensively repositioned the property in 2012, including the conversion of a large portion of the center to medical offices that were developed in two phases. After this sale, the partners continue to own, debt-free, Thunderbird Square Medical II and Thunderbird Square Retail, comprised of 40,000 square feet of income producing space.

GLENDALE, AZ—Indigo Creek, a 408-unit multifamily community in Glendale, Arizona, has traded hands for $55.2 million. Marcus & Millichap's Steve Gebing, IPA senior director, and Cliff David, a senior director represented the seller, Bascom Arizona Ventures and procured the buyer, Resource Real Estate. Developed in 1998 by Gray Development Group, the property is located on more than 19 acres in the Arrowhead region of Greater Phoenix, three miles from the Bell Road Retail Corridor, which features more than 5.6 million square feet of retail space. Banner Thunderbird Medical Center and Arizona State University are less than one mile away. The interior amenities include ceramic tile entries, full-size washers and dryers and oval, Roman-style soaking tubs. Community amenities include three resort-inspired swimming pools and two spas accented by gas burning fire pits with group seating.

HAWTHORN, CA—KeyBank Real Estate Capital has secured a $14 million CMBS, first mortgage loan for US Storage South Bay, a 118,465-square foot storage facility located in Hawthorne, CA. The property consists of four, two-story buildings containing 700 traditional units and 214 climate controlled units. John Loshbaugh of Key's Commercial Mortgage Group arranged the nonrecourse financing with a 10-year term and 30-year amortization schedule. The loan was used to refinance existing debt.

WOODLAND HILLS, CA—NewMark Merrill Companies has completed a recapitalization totaling $26.6 million of two of its retail centers. Bristol Warner Village, located in Santa Ana, CA, underwent a $19.1 million refinance, and Fort Collins Marketplace, located in Fort Collins, CO underwent a $7.5 million refinance. On the Bristol Warner Village transaction, NewMark Merrill's Sandy Sigal, Chairman and CEO, Susan Rorison, COO, James Patton, SVP of Leasing and Acquisitions, Sandra Kist, CFO, served as the finance team. On the Fort Collins transaction, the team along with Allen Ginsborg, managing director and principal of NewMark Merrill-Mountain States handled the transaction, while William McPadden, Jeffrey Packard, Tom Treacy and Chris Bingham of John Hancock arranged the financing, and Kostas Kavayiotidis of Pacific Southwest Realty was the broker.

LOS ANGELES—PSRS has closed a $11.25M loan for a 90,626-squar-foot grocery anchored shopping center in Phoenix, Arizona. A regional Hispanic grocer, El Super, which makes up approximately 50% of the center, anchors the center. Originally built in 1979, and renovated in 2006, the center is in a densely Hispanic market, with a huge consumer base in the area. The other tenants in the property include Walgreens, Payless Shoe Source, H&R Block, Subway Sandwiches, Hollywood Beauty, Rent-A-Center, and ACE hardware. PSRS Principal, Kostas Kavayiotidis, closed the fifteen-year non-recourse loan with a long time correspondent life company. The borrower is Red Mountain Retail Group, whose portfolio encompasses 87 shopping centers with nearly 4 million square feet of commercial retail development.

BUILDING BLOCKS

GLENDORA, CA—Champion Real Estate has started construction on a new Sprouts Farmers Market located at 655 S. Grand Avenue in Glendora. The grand opening of the 30,000-square-foot Sprouts is scheduled for May 18, 2017. The developer acquired the freestanding and vacant former grocery store in 2016, and is investing $32 million in the reconfiguration and repositioning of the existing 85,615 square foot property into a smaller 70,500 square feet grocery-anchored neighborhood shopping center. There are also two new retail pads in the existing parking field, plus additional supporting retail to expand the tenant base and meet community needs. Completion is planned for July 2017. The redeveloped center will include several national, credit tenants and be anchored by Sprouts Farmers Market. Thus far, the center has received commitments for 93% of the space including Marshalls, Coffee Bean and Tea Leaf. 655 S. Grand Avenue has space available to accommodate food and specialty retailers in need of 2,500 square feet of space. JLL's Shauna Mattis, Elizabeth Hewson and Blake Kaplan are handling leasing at the center.

HENDERSON, NV—Construction of ASCAYA, a residential development outside of Las Vegas, is complete. The 6,641-square-foot estate was designed by SB Architects, and includes four bedrooms, six and a half baths, an office and entertainment room. Six of the country's leading architects were commissioned to design one-of-a-kind homes to showcase to prospective buyers the unique sites available at ASCAYA. In an exercise of collective creativity, each home introduces a different interpretation of contemporary design. Four additional inspiration homes are currently under construction, with the final home scheduled to start construction later this year.

SAN DIEGO—Ware Malcomb has completed construction of the first phase of the new Atlas at Carlsbad campus. The property includes a trophy steel and glass two-story office building and an ideal single story 135,000 square feet R&D/creative building located at 5909 Sea Otter Place in Carlsbad, California. Ware Malcomb provided architectural design services for the project and collaborated with another architect to transform the existing 260,000 square foot building into two separate buildings totaling 235,000 square feet of office and R&D space. The beams of the original building were kept intact to allow the transfer of lateral loads from the new offices to the warehouse building and diaphragm. The office building utilized metal stud framing while the warehouse employed a concrete tilt-up design. Moment frames were also used in the office building to create large openings into the Paseo.

LOS ANGELES—R.D. Olson Construction has completed renovating the Kimpton Hotel Palomar Los Angeles Beverly Hills, on behalf of owner Pebblebrook Hotel Trust. Located in Westwood, the hotel has a renovated lobby, bar, ballroom, patio and on-site artisan restaurant, Double Take.

RIVERSIDE, CA—CalAtlantic Homes and KB Home are the latest builders to purchase parcels at Terramor, a master-planned community being developed in Riverside County. The property has neighborhoods for all-age buyers and options exclusively for 55+ buyers, the amenity-rich community is nestled along the hillsides of the Temescal Valley just south of Corona. CalAtlantic Homes and KB Home, along with Del Webb, will build the first five neighborhoods at Terramor. KB Home will build two all-age neighborhoods, Sorrel and Caraway, totaling 170 two-story homes that will range from approximately 2,200 to 2,700 square feet. The neighborhoods are anticipated to open this summer. CalAtlantic Homes will build an active adult neighborhood of 105 home sites called Sterling. The neighborhood will offer four new, one- and two-story home designs that will range in size from approximately 2,200 to 2,500 square feet. Sterling is expected to open in the winter.

BY THE NUMBERS

(SOURCE: CBRE)

(SOURCE: ABI Multifamily)

DEALTRACKER

BUILDING BLOCKS

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Middle Market Digest: This Week in Southwest

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