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.
NEW & NOTABLE
PHOENIX—Lou Newman has joined the valuation and advisory services team at JLL as SVP. He will be based in the firm’s Phoenix office and is a nationally recognized expert in the field of property tax. Newman will provide JLL’s clients with full service property tax consulting including due diligence, tax liability forecasting, proactive engagement with taxing authorities, administrative challenges, litigation, compliance, and guidance on exemptions, parcel reconfiguration, proposed construction, and transactions. Before joining JLL, Newman was a Senior Tax Manager for a leading retailer where he represented the company throughout the United States, led regional practices, managed tax policy related to legislation, and chaired training for the company’s Global Tax Controversy Center for Expertise. Prior to that, Newman was a national practice consultant. He also has leadership experience in the public sector. As the Supervising Appraiser in the Major Properties Division of the Office of the Maricopa County Assessor in Phoenix, Newman led the team in the management of administrative challenges and litigation.
NEWPORT BEACH, CA—Tangram Interiors has hired Hope Ramirez as new business developer in the firm’s Newport Beach, office and showroom serving Tangram customers throughout Orange County. Ramirez most recently served as Territory Manager covering Orange County and the Inland Empire for Milliken & Company, a diversified provider of specialty chemicals, floor coverings and performance materials. She previously worked in business development in Orange County for Exemplis, a made-to-order seating manufacturer.
TEMPE—James Geer has joined Sundt Construction as SVP and public-private partnership (P3) group manager. Geer has more than 25 years of construction industry experience and has been a recognized P3 expert since the mid-1990s. He was formerly a Senior Vice President at Kiewit, where he led the successful pursuit of a series of P3 projects throughout the United States. Geer will be responsible for growing P3 opportunities for Sundt by working closely with the company’s Transportation, Industrial and Building Groups on project pursuit and delivery. His responsibilities will also include working with governments, private sector investors and financial institutions to establish key partnerships as well as advocating for policies and practices that strengthen and serve the construction industry.
LOS ANGELES—CBRE has hired SVP Ryan Sullivan and Jeff Nichols to add to its retail practice in Southern California. The team will be based in Newport Beach, CA. The retail-leasing experts join CBRE from Western Retail Advisors, a leading full-service retail brokerage firm the duo built together with an emphasis on tenant representation. Joining them are Eric Whitmer and Carla Alvear. The team’s primary focus will be on the retail occupier business throughout Southern California and Hawaii. Sullivan and Nichols, one of the premier retail leasing teams on the West Coast, have represented several of the best national retail brands in the country, including Nordstrom Rack, Burlington Stores, Sprouts Farmers Market, LA Fitness, ULTA Beauty, Floor & Décor, Orchard Supply Hardware, Kirkland’s, PGA Superstore and Nike, among others.
DEALTRACKER
PHOENIX—Fairways at Cave Creek, a 376-unit value-add multifamily community in Phoenix, has traded hands. Tyler Anderson, Sean Cunningham, Asher Gunter and Matt Pesch with CBRE’s Phoenix office represented the seller in the transaction. The buyer is Los Angeles, California-based Tides Equities, a commercial real estate investment firm specializing in class-B and core plus multifamily properties located across the western U.S. Built in 1981, Fairways at Cave Creek features a desirable low-density site plan with abundant common area amenities including two swimming pools and spas, fitness center, resident clubhouse, picnic areas with barbeque grills, and an onsite laundry facility. Studio, one-, two- and three-bedroom floor plans have well-appointed kitchens, walk-in closets and private patios/balconies.
SAN DIEGO—Harbor Associates and Ascentris have partnered to acquire The Pinnacle, a 110,110 square foot, five-story class-A office building located in the north San Diego submarket of Rancho Bernardo. The Pinnacle represents Harbor’s third office acquisition in San Diego, following the acquisition of The Bungalows at Del Mar in May 2018. Located just 25 miles north of downtown San Diego, Rancho Bernardo is currently experiencing significant tenant demand due in large part to its access and affordability. Completed in 2007 and currently 93% leased, The Pinnacle is the submarket’s newest office building and is the only property able to offer tenants subterranean parking. Harbor and Ascentris will execute a capital improvement plan to enhance the tenant experience, including creating new outdoor covered seating and collaborative workspace with canyon views, modernizing the bike storage and locker room areas, and refreshing the ground floor lobby.
CARLSBAD, CA—The 86-room West Inn & Suites in Carlsbad has traded hands for an undisclosed price. Bob Kaplan and Rod Apodaca of CBRE Hotels acted as exclusive agents for the sellers, West Real Estate LLC, who had developed the hotel along with the West Steak & Seafood Restaurant, Bistro West Restaurant, and a gas station/minimart at Cannon Road and Interstate 5 in 2006. The buyer was an affiliate of San Diego-based Pacifica Companies. The three-story upscale boutique hotel features high-end finishes and focuses on detail serving both the leisure and corporate markets. The proximity to LEGOLAND, Palomar Corporate Center, Palomar Airport, Carlsbad beaches and the Pacific Ocean make this property the go-to location in north-coastal San Diego.
Los Angeles, CA—A two-building multitenant retail center in Seal Beach, CA, has traded hands. Sheri McCanless with NAI Capital’s Pasadena Office completed represented the seller, Rodi Properties and Zoeter Place. The buildings sold for $12 million or $529 per square foot. The sale included two multi-tenant retail buildings located at 1190 and 1198 Pacific Coast Hwy. The property is in a central location, with ample parking, and great visibility on PCH. At the time of the sale the project was 98% leased.
LOS ANGELES—501 Deep Valley Drive, a fully occupied, 33,770-square-foot four-story medical office building located in Palos Verdes Peninsula, CA, has traded hands for $12.7 million. Sean Fulp, Ken White, Michael Moore and Kevin Shannon of NKF Capital Markets represented the seller, Deep Valley Drive, LLC. The buyer, Beverly Hills-based Dayani Partners, was self-represented. The seller recently expanded the building’s largest tenant, UCLA Health, into two additional floors taking three of the four floors and 77 percent of the entire property with a 10-year lease. Both the seller and UCLA Health have invested millions of dollars in the asset, which UCLA uses for on-site MRI and other imaging services. NKF Executive Managing Directors Eric Lastition and Geoff Ludwig were responsible for leasing the space on behalf of the seller.
PHOENIX—iStar has completed the repositioning and sale of the Westgate Entertainment District, Arizona’s premier sports and entertainment destination, to YAM Properties LLC for $133 million. The transaction is the culmination of iStar’s long-term vision to transform a struggling retail center in the Phoenix metropolitan area surrounded by 70-plus acres of undeveloped land and empty parking lots into one of the most successful mixed-use entertainment destinations in the Southwest region. Since 2012, iStar has executed over 50 retail and office leases totaling in excess of 260,000 square feet, converted two floors of vacant office space into 76 luxury loft-style residential units, and brought to the district multiple new entertainment options including Dave & Busters and Tavern+Bowl. Additionally, iStar partnered with Tanger Factory Outlet Centers, Inc. to build the successful 400,000 square foot Tanger Outlets Westgate, in which iStar subsequently sold its interest in 2016.
PHOENIX—Akara Partners has completed the purchase of 355 North Central Avenue in the heart of downtown Phoenix. The site will be home to Kenect Phoenix, a mixed-use residential and retail property. The Phoenix project is one of many new Kenect developments under way around the country. Designed by RSP Architects of Tempe, Arizona and the Chicago office of Perkins + Will, the modern, 23-story building will entail 320 residential apartment units and approximately 8,000 square feet of ground floor retail space. The property is adjacent to Arizona State University’s downtown campus and Civic Space Park, one block away from the city’s busiest light rail station, and at the center of numerous dining, entertainment and employment options. Kenect is designed to appeal to millennial residents who rent by choice, preferably in live-work-play neighborhoods. Residents of Kenect will enjoy a lifestyle of convenience and connectivity, supported by on-site amenities, shared social spaces, and many curated experiences and services.
LOS ANGELES—Rexford Industrial Realty has acquired two single-tenant industrial properties for $42 million. The acquisitions were funded through a combination of cash on hand and draws on the company’s line of credit. The company acquired 1420 N. McKinley Avenue located in Compton within the L.A. South Bay submarket through an off-market transaction for $30 million or $219 per square foot. The newly constructed, high-image property contains 136,685 square feet on 6.70 acres of land and was recently leased to a single tenant providing logistics and freight-forwarding services. The building features 27 dock-high loading positions, 165′ all concrete secured yard, 32-foot clear height, ESFR fire sprinklers and is well-located off a major thoroughfare in close proximity to the ports of Los Angeles and Long Beach as well as Los Angeles Airport. According to CBRE, the vacancy rate in the 223 million square foot L.A. South Bay submarket was 0.8% at the end of the first quarter 2018. The second property is 4416 Azusa Canyon Road, located in Irwindale within the L.A. San Gabriel Valley submarket, through an off-market transaction for $12 million or $170 per square foot. The site contains 70,510 square feet on 5.89 acres, including excess land. The building is currently 100% leased on a short-term basis with options to redevelop the existing structure or entitle for new development upon lease expiration. According to CBRE, the vacancy rate in the 152 million square foot L.A. San Gabriel Valley submarket was 1.7% at the end of the first quarter 2018.
COSTA MESA, CA—Vio Costa Mesa, an 84-unit multifamily property in Costa Mesa, has traded hands for $28 million. Tyler Leeson, Kurt Hediger, senior associate and Matt Kipp, vice president investments, represented the buyer and arranged the sale of a 54-unit apartment asset in Westminster, California in phase one of the exchange. Michael Derk, senior managing director capital markets and Nick Gray, associate director, both with Marcus & Millichap Capital Corp. (MMCC), arranged $14.7 million in acquisition financing for the purchase of Vio Costa Mesa. The debt placement was structured on a nonrecourse basis with four years of interest only and a $2 million post-closing earnout.
SOCTTSDALE, AZ—The Pinnacle at Desert Cove, a medical office building, has traded hands for $8.6 million. The property is located at 9097 E Desert Cove Drive, just east of the Loop 101 Freeway and north of Shea Boulevard in Scottsdale, Arizona. The building is approximately ±31,509 square feet and is located 1.5 blocks from Scottsdale Shea Medical Center. The property was built in 2004 and offers numerous retail amenities within walking distance for tenants. Ken Elmer, SVP at CPI along with SVP Ron Schooler and VP Scott Nelson of CPI’s Office Team represented the seller, TKK LLC.
PASADENA—Bluebeam has acquired substantially all of the assets of privately held Project Atlas. Founded in 2017 by construction industry veterans Todd Wynne and Joe Williams, Project Atlas created a digital mapping engine that uses geo-location instead of traditional folder structures to organize and visualize 2D plans and construction data. This location-based orientation allows design and construction professionals to create and search a seamless digital map of their project that contains plans, people, material, site photos and drone imagery, all within highly detailed, zoomable layers.
PHOENIX—Cushman & Wakefield announces the sale of Tempe City Center, a 162,640 square foot office building located at 1400-1470 East Southern Avenue, between Rural Road and McClintock Drive in Tempe. The asset is comprised of an eleven-story office tower, three single-story office buildings, and two single-story retail buildings situated on approximately 10.75 acres. Tempe CC Hui, LLC purchased the asset from Tempe City Center Limited Partnership for an undisclosed price. Cushman & Wakefield’s Chris Toci and Chad Littell arranged the transaction on behalf of the seller. The members of the acquisition group, who are principally from Hong Kong and Honolulu, were introduced to the asset by Brandon Holdings, Inc., the investment’s sponsor, and IX Advisors LLC, an investment advisory based in Seattle.
LOS ANGELES—6725 Sunset Boulevard, a 73,835-square-foot office building located in Los Angeles’ burgeoning Hollywood submarket, has traded hands for $37.8 million. The property includes a five-story multi-tenanted office building featuring creative tenant build outs and an adjacent three level parking structure. NKF Capital Markets co-head of U.S. Capital Markets Kevin Shannon, executive managing directors Rob Hannan and Ken White, and senior managing director Michael Moll represented the seller Crown Realty & Development, along with local market leasing expert, John Tronson, principal at Avison Young. Crown Realty & Development’s chief operating officer Kreg Groat also represented the company in the transaction. The buyer, Vanbarton Group, a New York-based real estate investment and advisor firm, was self-represented.
PHOENIX—24th at Camelback, a 302,209-square-foot class-A trophy office tower in metro Phoenix’s Camelback Corridor has traded hands for $100 million. This high-profile transaction represents the largest office sale in metro Phoenix so far in 2018, both by dollar volume and price per square foot. At the time of sale, the property was 94% leased to a prominent tenant roster, which includes Greenberg Traurig, AAA, RSM, Cisco Systems, USI and Regus. Barry Gabel, Will Mast and Chris Marchildon with CBRE capital markets, Institutional Properties in Phoenix represented the seller, an affiliate of Houston based Hines in the transaction. Jim Fijan, with Fijan Advisors, acted as an advisor to the seller. New York Life Real Estate Investors acquired the property. Hines, who developed the property in 2000 and has managed the asset since it was delivered, will continue to manage the property under its new ownership.
BUILDING BLOCKS
LA PUENTE, CA—Brandywine Homes has opened Bradbury, a new infill community in La Puente offering 45 single-family detached homes on 3.87 acres. First phase release prices range from $650,000-$700,000. La Puente, an up-and-coming city with a population of about 40,000, has very limited housing stock. The last new home housing tract was built almost 40 years ago, according to city officials. Bradbury is located at 747 Del Valle Avenue. The gated community, which includes a community recreation area, is offering two-story homes with three bedrooms and three bathrooms. These stylish residences are designed with Spanish, Craftsman and Farmhouse architecture, and range in size from1,843 to 2,087 square feet on 2,500-square-foot lots. The homes have great rooms, lofts, private yards, patios and two-car garages. The gourmet kitchens feature large islands with breakfast bars, and spacious master suites include large soaking tubs and walk-in closets.
LOS ANGELES—Meta Housing Corporation has broken ground on Whittier & Downey SE, a 71-unit affordable housing community that will be developed with permanent supportive housing and 3,400 square feet of community serving retail. Whitter & Downey SE will reserve 35 of the 71 affordable units as permanent supportive housing to address this growing need within the local community. Financing for the $38.6 million project is provided by the California Tax Credit Allocation Committee, California Housing Finance Agency, Community Development Commission of the County of Los Angeles, Los Angeles County Departments of Health Services and Mental Health, Brilliant Corners and Bank of America Merrill Lynch. The apartment community will be located at 4200-4224 Whittier Boulevard in Unincorporated Los Angeles County and will feature a mix of one-, two-, and three-bedroom floorplans. The project is anticipated to be completed in Fall 2019. The new development is a part of a two-phase project. The second phase will be located across the street on the northeast corner of Whitter Boulevard and Downey Road, which is planned to begin construction in Spring 2019.
COMPTON, CA—In an off-market transaction, Westcore Properties has purchased a 4.37-acre industrial site at 126 East Ortis Street in Compton, Calif. with the intent to build a 95,000-square-foot distribution facility. The class-A, 32-foot clear height distribution facility will be built on an all-concrete site and feature an ESFR system and 15 to 18 dock doors. In order to accommodate most user requirements immediately upon completion, Westcore will finish approximately 3,000 square feet of speculative office space as part of the shell building construction. Groundbreaking is scheduled for September 2018, and completion is slated for second quarter of 2019. Currently, the industrial vacancy rate in the area stands below one percent, and the pipeline of new industrial development is less than a half percent of existing supply. Industrial tenants are further challenged by a lack of land available for development.