Middle Market Digest: This Week in Southwest
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
PHOENIX—The Greater Phoenix retail market posted an unusually strong first quarter. The past three months marked the strongest first quarter performance since 2008 as retailers ramped up activity in response to continued economic growth and an accelerating housing industry. Toys R Us announced its demise, which will impact the Greater Phoenix market. Most of the store closures will take place early in second quarter, impacting statistics for the next report. Net absorption for the first quarter totaled more than 593,000 square feet. Vacancy in the metro area dipped 20 basis points in the first quarter of 2018, falling to 8.1 percent. The vacancy rate has declined five of the past six quarters and now sits at 110 basis points below one year ago. Vacancy in the East Valley fell to a 10-year low, 7.8% during first quarter Rent growth has varied, but generally is rising. Asking rents have risen 4.3% year-over-year and reached $14.65 per square foot. Asking rents in North Scottsdale rose more than 14% year over year, surging to $22 per square foot during first quarter. Investment sales of retail centers slowed during the first quarter, lagging behind the pace posted during the same period of 2017. While sales were curtailed, prices spiked and cap rates averaged in the low seven-percent range. The slowdown in sales was felt most significantly in product ranging between $5 and $10 million. The pace of transactions remained steady in smaller properties commanding between $1 million and $5 million. The Greater Phoenix retail climate is improving and shopping centers are becoming more popular as an asset class. The median price rose to $193 per square foot in the first quarter, which is more than a 60% increase from the median price of 2017.
(SOURCE: COLLIERS INTERNATIONAL)
NEW & NOTABLE
PHOENIX—Office tenant-representation specialist Wally Hale has joined Avison Young as a principal. He will continue to focus on representing his occupier clientele and expanding on the footprint that he has established over many years. He will also work closely with Avison Young Principal Mark Seale, who directs local brokerage operations, to expand the company’s institutional tenant-representation advisory services and market share across the Phoenix region. Hale was most recently Managing Director for JLL in Phoenix. Hale brings 35 years of commercial real estate experience to Avison Young. During his career, he has negotiated lease and sale transactions covering nearly 10 million square feet. In addition to acting for tenants, he has represented several large landlords and developers in significant office leasing transactions. He has significant experience in strategy implementation, financial analysis and all other types of real estate transactions. His notable clients include MFS Investment Management Services, UPS, Zurich Insurance and TATA Consultancy Services. Prior to joining JLL, Hale held senior management and broker positions with Insignia, Koll Company and CBS Property Services. He has been named a Co-Star Power Broker five times.
LONG BEACH, CA—The Long Beach Board of Harbor Commissioners has promoted Marlene Dupras, a longtime Port civil engineer and manager, to serve as the Harbor Department’s new Director of Project Controls. The Project Controls Division provides service to all divisions within the Harbor Department’s Engineering Services Bureau. Project Controls helps other divisions manage and oversee the scope, schedule and budget for the Port’s capital improvement projects. Dupras began her career with the Port in 2001 when she joined the Construction Management Division as a civil engineer and managed the construction of various projects including the early phases of the Middle Harbor Terminal Redevelopment. She was promoted to Deputy Chief Harbor Engineer in the Program Management Division in 2012.
DEALTRACKER LOS ANGELES—Construction is complete on the $125 million redevelopment the Chadmar Group and Rolling Hills Country Club, located at 1 Chandler Ranch Road in Rolling Hills Estates, California. The 160-acre development includes an 18-hole golf course and 75,000-square-foot clubhouse. Rolling Hills Country Club is a private club owned by its members and run by a board of directors. Designed by well-known Scottish golf architect David McLay Kidd, the 18-hole course was “Scottish links-inspired,” free of trees and fun and challenging for all golf handicaps while overlooking the Los Angeles basin and San Gabriel Mountains. Club amenities include a 400 yard double-sided driving range, golf academy, including state-of-the-art technology including Trackman, Boditrak, and SAM Putt Lab, tennis courts, athletic facility, aquatic center, kids club, elegant spa, dining, banquet event spaces, conference rooms and locker rooms. JLL’s Project & Development Services group, led by Greg Holcomb, oversaw project management of the redevelopment. The project team also included Bruce Steckel, President of the Board of Directors for Rolling Hills Country Club and Sullivan.
TUSTIN, CA—A class-A, multi-tenant, industrial/R&D flex project with an added single-building retail pad in Tustin has sold to Laskeshore Enterprises for $8.5 million. Colliers International SVP Chuck Wilson and Jon Thys represented Lakeshore. Wilson and Colliers first VP Brian Chastain represented the undisclosed seller. All are based in the firm’s Orange County office in Irvine. Located at 1421-1481 Edinger Ave. at the signalized corner of Edinger and Red Hill Avenues, the 69,930-square-foot Pacific Tustin Commercenter features an exterior glass line, 24-foot minimum warehouse ceilings, with approximately half of the individual units reserved for office space on its second level.
PHOENIX—NAI Horizon SVP Denise Nunez represented the seller and the buyer in the $10.76 million sale of a 638-unit self-storage facility at 24901 W. Yuma Rd., in Buckeye, Arizona. Storage America DBA Store-All America RV and Self-Storage sold the 107,130 SF net-rentable facility, Store-All America RV and Self Storage, to a California buyer. Store-All America RV and Self Storage sits on 9.11 acres in Buckeye. It comprises 638 drive-up units plus 240 outdoor RV parking spaces. The sale also included a U-Haul moving truck business.
LOS ANGELES, CA—9171 Wilshire Drive, a 106,890-square-foot office building in Beverly Hills, California, has traded hands for $69.25 million. A joint venture between Cruzan and Cigna Investment Management purchased the property, and secured $51.5 million in financing for the deal. HFF represented the seller and procured the buyer. Additionally, the HFF team worked on behalf of the buyer to secure the acquisition loan through Mesa West Capital. 9171 Wilshire is located along one of the city’s busiest thoroughfares centrally located between Downtown LA, Hollywood, Century City and West Los Angeles. The six-story office building is 83 percent leased to a mix of entertainment, financial, legal and real estate tenants, including Avalon Holdings, Kaplan Perrone Entertainment and Mejia & Kaplan. Cruzan plans to substantially renovate the entire building with the hope of capitalizing on the strength of the Beverly Hills office submarket. The HFF investment advisory team representing the seller consisted of managing director Andrew Harper, associate Matthew Fisher and Ryan Gallagher. HFF’s debt placement team representing the borrower included senior managing director Paul Brindley, managing director Todd Sugimoto, director Steven Paskover and associate Ryan Ash.
LOS ANGELES—A 173,056-square-foot distribution/manufacturing facility in Valencia, has traded hands for $20.7 million. Executive managing director Chris Jackson and EVP Todd Lorber, with NAI Capital’s Investment Services Group represented the seller, a private investor, and the buyer Chicago-based First Industrial Realty Trust, Inc. The building is located at 28545 Livingston Avenue within the Valencia Commerce Center in North Los Angeles. Built in 1999, the single-story building is a state-of-the-art, 173,056 square foot, free-standing, high image, corporate headquarters facility. It has 14,320 square feet of office space and the entire building is air conditioned. It has an excellent distribution functionality, with 22 dock high doors and 4 ground level loading doors. In addition, it boasts heavy 4000 Amps of power, which also makes the property a great manufacturing facility. The project was 100% vacant at the time of the sale. Jackson and Lorber are currently marketing the property for lease for the new owner.
SCOTTSDALE, AZ—LevRose Commercial Real Estate has closed a $7.23 million deal on Bell Park Plaza. The 33,480 square-foot shopping center located at the northeast corner of 43rd Avenue and Bell Road was purchased by Calgary-based Triumph Real Estate Investment Fund from Hanley V Properties, LLC. Jon Rosenberg and Keri Davies of Levrose Commercial Real Estate/TCN Worldwide negotiated the deal on behalf of Triumph. Greg Abbott of CBRE represented the Seller on the transaction. The location had a 93% occupancy rate upon closing, and Danielle Davis of LevRose Commercial Real Estate/TCN Worldwide will handle the leasing of the last vacancy at the center, with MODE Commercial Property Management managing the property.
RANCHO CUCAMONGA—Avana Collection, a 16 single-family-lot subdivision on 8.3 acres located in the desirable historic Etiwanda neighborhood of Rancho Cucamonga, has traded hands to a private homebuilder. This sale is the final chapter in the development process for Storm, starting with an all-cash purchase of excess land from Cross & Crown Church. Storm Properties handled the entitlement work. Terms were not disclosed. The new community will boast 16 estate homes located in the highly regarded historic Etiwanda neighborhood, served by the prestigious Etiwanda School District, nearby shops, dining, outdoor activities, and entertainment. Future residents will enjoy spacious, open floor plans which feature one and two-stories with four or five bedrooms and 3½ or 4½ baths. The residences will range in size from 3,657 to 4,550 square feet, and are expected to be delivered in late 2018.
SAN DIEGO—Eric Flyckt, senior vice president and Wyatt Campbell, vice president of NorthMarq Capital’s San Diego office, have arranged a $32.6 million construction loan and $13.5 million in mezzanine equity investment for a class-A spec office project located in Chandler, Arizona. The development comprises two, three-story, buildings totaling 270,000 square feet. The non-recourse loan was provided by a bank and the mezzanine equity was funded by an insurance company for whom NorthMarq is a correspondent. Park Place is a ±180-acre business park assembled and developed by the Douglas Allred Company beginning in 2007. It is located at the intersection of the 101 and 202 Freeways in one of the fastest growing employment corridors in Metropolitan Phoenix. In addition to Class A office buildings, this master-planned park includes restaurants and hotels. These two buildings will offer 10-foot to 12-foot ceiling heights and 6/1,000 parking. To date, the Douglas Allred Company has completed eight class-A, spec, office buildings in the park totaling over 635,000 sq. ft. which are 100 percent leased. Douglas Allred Company, based in San Diego, is a full-service real estate firm with projects in office, industrial, retail and residential sectors. The 37-year-old firm is a recognized leader in both real estate development and asset management.
LOS ANGELES—Rexford Industrial Realty has acquired two industrial properties for a total investment of $127.1 million and the disposition of two properties for $9.1 million. The acquisitions were funded through a combination of cash on hand, disposition proceeds and use of Rexford’s existing line of credit. In an off-market acquisition, the Company acquired 5300 Sheila Street, located in Commerce, within the Los Angeles – Central submarket, for $121.0 million or $174 per square foot. This exceptional infill property contains a 100% leased, 695,120 square foot industrial building situated on 35.83 acres of land. The building comprises 36′ maximum clear heights, 118 cross-dock loading positions, and nearly 4 acres of excess land accommodating storage of up to 435 trailer / containers. The property is leased at a below-market rent on a long-term triple-net lease to a high-quality, credit tenant. The site features immediate access to eight Southern California freeways and to the two largest intermodal train facilities in Southern California. The property represents a highly desirable first-mile and last-mile logistics solution positioned less than 5 miles from Downtown Los Angeles, less than 15 miles from Los Angeles International Airport and less than 20 miles from the Ports of Long Beach and Los Angeles.
LOS ANGELES—Positive Investments Inc. has acquired a vacant 10-building, multifamily property at 1515 E Rosecrans Ave. in Compton for $12.5 million, according to Henry Garcia of Keller Williams Commercial Studio City who represented the buyer in the off-market transaction. Built in 1986, the 79,373-square-foot property spans nearly one city block and consists of 86 units that are a mixture of one-bedroom, two-bedroom, three-bedroom townhouse, and four-bedroom townhouse floor plans. The seller, a community-based 501(c)3 non-profit, sold the asset to gain capital to buy another property. With Positive Investments already owning a 70-unit property across the street, acquiring another property fit well with the company’s investment strategy to build scale in the area and to fill the need for the broad array of housing needs for those living in South Los Angeles, according to Garcia.
PHOENIX—Tropicana Marketplace, a Smith’s anchored shopping center located at 6120-6180 W. Tropicana Avenue in Las Vegas, has traded hands for $15 million. Tropicana Square LLC purchased the property from Houston-based Weingarten Realty. Executive managing directors Michael Hackett and Ryan Schubert of Cushman & Wakefield Phoenix represented the seller. This is the second sale the team has completed on behalf of Weingarten Realty in the last two months. John Weisler of JW Michaels Realty Services represented the buyer. Anchored by Smith’s Food & Drug, Tropicana Marketplace is a 69,430-square-foot neighborhood shopping center spanning 6.77 acres. Built in 1989, the property is currently 86.2% leased to a diverse tenant roster including Family Dollar, Chase Bank, Pacific Dental, Supercuts and Pearle Vision.
BUILDING BLOCKS
SANTA ANA, CA—SVA Architects has completed phase one of the redesigned Lemonwood Elementary in Oxnard School District. Located at 2200 Carnegie Court, the $31.4 million new Lemonwood Elementary was made possible through the voter-approved Measure R. In addition to Lemonwood Elementary, SVA Architects also redesigned OSD’s Elm Elementary, which is currently under construction. The new Lemonwood Elementary campus will house 900 K-8 students. The project has been strategically developed on a fully occupied campus with minimal disturbance and no interim housing. The completed first phase includes the main classroom and multipurpose buildings. Phase two, currently underway, will include new kindergarten classrooms and administration buildings, and will be completed in 2019. Additionally, Building 3 of the original campus will be repurposed to provide “flex rooms” for enhanced kindergarten, transitional kindergarten, or preschool programs. When complete, the new 9.9-acre campus will feature 28 general purpose classrooms, four kindergarten classrooms, three science/flex lab classrooms, two special education classrooms, administration areas, a media center, food service, multipurpose room, and physical education spaces. The original campus was constructed in 1981 and it was last modernized in 2004. The project was built by Swinerton Builders and with program manager Caldwell Flores Winters, Inc.
LOS ANGELES, CA—Klorman Construction has been selected to construct a three-level parking garage that provides a podium for the 48-unit Mercy Housing Pico-Robertson Affordable Senior Housing Complex in Los Angeles. The 68-stall garage will primarily serve residents of the mostly one-bedroom units, as well as some studios and a two-bedroom manager’s residence, which is owned by Mercy Housing of California. The project, located at 8862-8876 W. Pico Boulevard, will cater to mostly 62-years-old and above seniors as well as homeless senior veterans. The public garage, which may also be utilized by some local businesses, consists of three levels above ground, with one subterranean level.