Middle Market Digest: This Week in Southwest

LOS ANGELES—From a new hotel in Phoenix to massive industrial properties in the Inland Empire, development projects throughout the Southwest haven't stopped breaking ground. There were also loads of deals, data and new hires announced this week. Read on to see some of the highlights.

BY THE NUMBERS

TUSCON, AZ—Vacancy rates in Tucson finished the year at 6.9%, a full 90 basis points lower than year-end 2015. This marks the fourth straight year that metro-wide vacancy has dropped. New units are being leased at a healthy pace, and construction of new units was steady for most of 2016, however, it is poised to slow down in the months ahead. Developers have delivered an average of 950 units to the Tucson market each year since 2012. Permitting slowed in the second half of 2016 with only 110 multifamily permits issued. This is down from 275 permits in the first six months of last year. Total multifamily permit issuance in 2016 dropped more than 60 percent from the 2015 total. Rental rates in Metro Tucson rose during the final months of the year, which completes six quarters of increasing rents. Asking rents increased by 4.7 percent in 2016, ending the year at $688 per month. Sales of multifamily properties slowed slightly at the end of the year, but 2016 sales outpaced 2015. The median price spiked nearly 30 percent during 2016 and reached more $41,500 per unit. Cap rates compressed to the mid-six percent range with fundamentals indicating a strong investment climate for 2017.

(SOURCE: COLLIERS INTERNATIONAL)

NEW & NOTABLE

LOS ANGELES—iBorrow has hired Jeanna Sterman as an Investment Associate. Sterman has several years of experience in the real estate industry, and is well versed in underwriting transactions and managing the closing process. In her new role, she will be responsible for coordinating the loan origination, and underwriting and managing the closing. She will also have an integral role in guiding funds and investors through deal terms and diligence materials relating to each loan.

NEWPORT BEACH, CA—Newmeyer & Dillion LLP has elected Ben Ammerman, Anne Kelley and Rondi Walsh to partnership. Ammerman focuses his practice in the areas of business, real estate, and tort litigation; Kelley concentrates primarily in construction litigation and insurance coverage matters. She has over 12 years of experience working closely with builders, developers, contractors and subcontractors throughout Northern California developing legal strategies specific to the needs of each matter and the client's business and goals, and has litigated a wide variety of complex insurance coverage disputes. Walsh has incorporated into her practice the representation of policyholders in first and third-party insurance coverage, and business lawsuits involving contracts, property disputes, products liability and construction defect issues. She also has litigated numerous political and election law matters and has worked both professionally and as a volunteer on numerous political campaigns.

LOS ANGELES—The brokerage team of Warren Noack, Kimberly Noack, and Travis Noack has joined The Klabin Company/CORFAC International, adding a combined 66 years of real estate expertise to the firm's Southern California office. The team joins the firm at an exciting time for the market, and will will focus on serving their clients throughout Southern California and the South Bay area.

DEALTRACKER

LOS ANGELES—Avison Young has brokered the acquisition of Legends at Rancho Belago, a 206-unit apartment property in Moreno Valley, CA, for $33.8 million between Cherry Heights and The Reliant Group. The seller had recently renovated a number of the units and completed an extensive renovation and expansion of the clubhouse. The buyer plans to improve upon the level of current renovations to meet the tenant demand for quality rental residences in the market. Located at 13292 Lasselle Street, Legends was originally built as a 40-unit for-sale condominium property in 1993, while the remaining 166 apartment units were built in 2006. Avison Young Principal Peter Sherman represented the buyer, while Institutional Property Advisors represented the seller.

SAN DIEGO—Trigild has brokered the receivership sale of the Encino Corporate Plaza for $35.5 million. Located at 16661 Ventura Boulevard in Encino, the nine-story, 126,275-square-foot office complex was sold to an undisclosed investor through receivership. Encino Corporate Center houses a high-end mix of medical and professional services tenants and is ideally located on Ventura Blvd. with easy access to Hollywood, downtown LA, Beverly Hills, Santa Monica and Sherman Oaks. Trigild's director of real estate Nancy Daniels represented the seller in the deal, and will remain on board as property manager, overseeing all day-to-day operations of the complex, which is currently 76% leased.

SAN DIEGO—CBRE brokered the sale of Structure Lofts, an award winning 25-luxury unit apartment complex in San Diego's Hillcrest submarket, for $14.75 million to Structure, L.P. Structure Lofts, located at 440 Upas Street, is a four-story building, including 2,475 square feet of ground floor retail. The property spans 32,545 gross square feet and features studios, one-, and two-bedroom units, with an average floorplan of 1,014 square feet. Unit interiors include 13-foot ceilings, floor-to-ceiling glass, quartz countertops, stainless steel appliances, oversized bathtubs and in-unit washer/dryers. CBRE multifamily experts Eric Comer, Jim Neil, and Merrick Matricardi represented the seller, Balboa Phase I, LLC, with Hammer Commercial Ventures LLC as a managing member.  The seller is a local real estate development and investment firm.  The San Diego-based buyer, Structure, L.P., represented itself.

LOS ANGELES—CBRE has brokered the sale of a 24,575-square-foot, single-tenant, retail building occupied by Numero Uno Markets for $17.9 million to an unidentified local private investor. The deal closed at a capitalization rate of 3.99%, one of the lowest for a single-tenant grocery box. Numero Uno Markets is on a long-term, triple-net corporate lease. The retailer has been reporting exceptional sales at this location at the northwest corner of 3rd Street and Burlington Avenue near Downtown Los Angeles. The property is situated on one parcel of land totaling 2.76 acres and consists of multiple zonings, offering potential for future development at the expiration of the existing lease. CBRE First Vice President Arthur R. Flores represented the seller, an Orange County-based family partnership. The buyer was a Los Angeles-based private investor who purchased the asset as an addition to his real estate portfolio.

BUILDING BLOCKS

SCOTTSDALE, AZ— Scottsdale-based 1784 Capital Holdings LLC has announced the acquisition of 2.52 acres near Scottsdale Road and Frank Lloyd Wright Blvd. for development of Scottsdale Promenade Self Storage. The property, located at 7550 E. Paradise Ln., is situated immediately to the south of Promenade Power Center within the master-planned Scottsdale Promenade development. The site is adjacent to retail, Class-A office buildings, high-end multi-family housing, resorts, restaurants and auto dealerships. 1784 Capital Holdings will develop a multi-story, fully air conditioned self-storage building of institutional quality. Access to the development will be available from both Paradise Lane and 76 th Street.

ANAHEIM, CA—Shopoff Realty Investments has acquired a 20.5-acre property in Anaheim, Calif. for redevelopment to residential use. This is the third land development opportunity that Shopoff has undertaken in the City of Anaheim. The property is currently improved with a 356,187-square-foot distribution warehouse and office space.  The corporate seller has been retained as a tenant and will lease the property for the next 15 months. The property is located at 901 E. South Street in the Anaheim Colony area of Anaheim within walking distance of the Anaheim Packing District, the area's popular, artisan-based multi-eatery dining establishment.

RIVERSIDE, CA—Trammell Crow Co. has started construction on Columbia Business Park, a new Class A, 1.46-million-square-foot speculative industrial development located in the City of Riverside, CA. TCC was selected in by Washington Capital Management Inc. (WCM), advisor to property owner Operating Engineers Pension Trust, Local 12 (Operating Engineers), as the master developer for the 72-acre project. Construction of the 3-building industrial park will be phased to provide ultimate flexibility. The first phase includes: the construction of a 1-million-square-foot distribution center (Building 1) on 46 acres and grading, site work, and design of a 371,229-square-foot distribution center (Building 2) on the adjacent 19 acres. The phased construction of Building 2 provides the flexibility to develop additional parking or trailer storage for Building 1, which will feature 37-foot clear height, 8-inch concrete “level” floor slab, 185-foot deep secured truck courts, ESFR, designated truck queuing lanes, and offices to suit. The second phase includes the development of the adjacent 7-acre parcel, which could provide additional parking, trailer storage, or accommodate a planned 86,853-square-foot building (Building 3).

PHOENIX—Mortenson today broke ground on a Hampton Inn & Suites by Hilton at the intersection of N. 1st Street and E. Polk Street, immediately south of the downtown campus of Arizona State University (ASU). It will be the first Hampton Inn & Suites in downtown Phoenix. Construction on the 11-story, 210-key hotel begins this month and is scheduled for completion in summer 2018. The hotel is being designed by PK Architects and Design Force. This is the second Hampton Inn & Suites that Mortenson has developed in the past three years. The hospitality market in Phoenix continues to strengthen with the growing demand in the area.

LOS ANGELES—From a new hotel in Phoenix to massive industrial properties in the Inland Empire, development projects throughout the Southwest haven't stopped breaking ground. There were also loads of deals, data and new hires announced this week. Read on to see some of the highlights.

BY THE NUMBERS

TUSCON, AZ—Vacancy rates in Tucson finished the year at 6.9%, a full 90 basis points lower than year-end 2015. This marks the fourth straight year that metro-wide vacancy has dropped. New units are being leased at a healthy pace, and construction of new units was steady for most of 2016, however, it is poised to slow down in the months ahead. Developers have delivered an average of 950 units to the Tucson market each year since 2012. Permitting slowed in the second half of 2016 with only 110 multifamily permits issued. This is down from 275 permits in the first six months of last year. Total multifamily permit issuance in 2016 dropped more than 60 percent from the 2015 total. Rental rates in Metro Tucson rose during the final months of the year, which completes six quarters of increasing rents. Asking rents increased by 4.7 percent in 2016, ending the year at $688 per month. Sales of multifamily properties slowed slightly at the end of the year, but 2016 sales outpaced 2015. The median price spiked nearly 30 percent during 2016 and reached more $41,500 per unit. Cap rates compressed to the mid-six percent range with fundamentals indicating a strong investment climate for 2017.

(SOURCE: COLLIERS INTERNATIONAL)

NEW & NOTABLE

LOS ANGELES—iBorrow has hired Jeanna Sterman as an Investment Associate. Sterman has several years of experience in the real estate industry, and is well versed in underwriting transactions and managing the closing process. In her new role, she will be responsible for coordinating the loan origination, and underwriting and managing the closing. She will also have an integral role in guiding funds and investors through deal terms and diligence materials relating to each loan.

NEWPORT BEACH, CA—Newmeyer & Dillion LLP has elected Ben Ammerman, Anne Kelley and Rondi Walsh to partnership. Ammerman focuses his practice in the areas of business, real estate, and tort litigation; Kelley concentrates primarily in construction litigation and insurance coverage matters. She has over 12 years of experience working closely with builders, developers, contractors and subcontractors throughout Northern California developing legal strategies specific to the needs of each matter and the client's business and goals, and has litigated a wide variety of complex insurance coverage disputes. Walsh has incorporated into her practice the representation of policyholders in first and third-party insurance coverage, and business lawsuits involving contracts, property disputes, products liability and construction defect issues. She also has litigated numerous political and election law matters and has worked both professionally and as a volunteer on numerous political campaigns.

LOS ANGELES—The brokerage team of Warren Noack, Kimberly Noack, and Travis Noack has joined The Klabin Company/CORFAC International, adding a combined 66 years of real estate expertise to the firm's Southern California office. The team joins the firm at an exciting time for the market, and will will focus on serving their clients throughout Southern California and the South Bay area.

DEALTRACKER

LOS ANGELES—Avison Young has brokered the acquisition of Legends at Rancho Belago, a 206-unit apartment property in Moreno Valley, CA, for $33.8 million between Cherry Heights and The Reliant Group. The seller had recently renovated a number of the units and completed an extensive renovation and expansion of the clubhouse. The buyer plans to improve upon the level of current renovations to meet the tenant demand for quality rental residences in the market. Located at 13292 Lasselle Street, Legends was originally built as a 40-unit for-sale condominium property in 1993, while the remaining 166 apartment units were built in 2006. Avison Young Principal Peter Sherman represented the buyer, while Institutional Property Advisors represented the seller.

SAN DIEGO—Trigild has brokered the receivership sale of the Encino Corporate Plaza for $35.5 million. Located at 16661 Ventura Boulevard in Encino, the nine-story, 126,275-square-foot office complex was sold to an undisclosed investor through receivership. Encino Corporate Center houses a high-end mix of medical and professional services tenants and is ideally located on Ventura Blvd. with easy access to Hollywood, downtown LA, Beverly Hills, Santa Monica and Sherman Oaks. Trigild's director of real estate Nancy Daniels represented the seller in the deal, and will remain on board as property manager, overseeing all day-to-day operations of the complex, which is currently 76% leased.

SAN DIEGO—CBRE brokered the sale of Structure Lofts, an award winning 25-luxury unit apartment complex in San Diego's Hillcrest submarket, for $14.75 million to Structure, L.P. Structure Lofts, located at 440 Upas Street, is a four-story building, including 2,475 square feet of ground floor retail. The property spans 32,545 gross square feet and features studios, one-, and two-bedroom units, with an average floorplan of 1,014 square feet. Unit interiors include 13-foot ceilings, floor-to-ceiling glass, quartz countertops, stainless steel appliances, oversized bathtubs and in-unit washer/dryers. CBRE multifamily experts Eric Comer, Jim Neil, and Merrick Matricardi represented the seller, Balboa Phase I, LLC, with Hammer Commercial Ventures LLC as a managing member.  The seller is a local real estate development and investment firm.  The San Diego-based buyer, Structure, L.P., represented itself.

LOS ANGELES—CBRE has brokered the sale of a 24,575-square-foot, single-tenant, retail building occupied by Numero Uno Markets for $17.9 million to an unidentified local private investor. The deal closed at a capitalization rate of 3.99%, one of the lowest for a single-tenant grocery box. Numero Uno Markets is on a long-term, triple-net corporate lease. The retailer has been reporting exceptional sales at this location at the northwest corner of 3rd Street and Burlington Avenue near Downtown Los Angeles. The property is situated on one parcel of land totaling 2.76 acres and consists of multiple zonings, offering potential for future development at the expiration of the existing lease. CBRE First Vice President Arthur R. Flores represented the seller, an Orange County-based family partnership. The buyer was a Los Angeles-based private investor who purchased the asset as an addition to his real estate portfolio.

BUILDING BLOCKS

SCOTTSDALE, AZ— Scottsdale-based 1784 Capital Holdings LLC has announced the acquisition of 2.52 acres near Scottsdale Road and Frank Lloyd Wright Blvd. for development of Scottsdale Promenade Self Storage. The property, located at 7550 E. Paradise Ln., is situated immediately to the south of Promenade Power Center within the master-planned Scottsdale Promenade development. The site is adjacent to retail, Class-A office buildings, high-end multi-family housing, resorts, restaurants and auto dealerships. 1784 Capital Holdings will develop a multi-story, fully air conditioned self-storage building of institutional quality. Access to the development will be available from both Paradise Lane and 76 th Street.

ANAHEIM, CA—Shopoff Realty Investments has acquired a 20.5-acre property in Anaheim, Calif. for redevelopment to residential use. This is the third land development opportunity that Shopoff has undertaken in the City of Anaheim. The property is currently improved with a 356,187-square-foot distribution warehouse and office space.  The corporate seller has been retained as a tenant and will lease the property for the next 15 months. The property is located at 901 E. South Street in the Anaheim Colony area of Anaheim within walking distance of the Anaheim Packing District, the area's popular, artisan-based multi-eatery dining establishment.

RIVERSIDE, CA—Trammell Crow Co. has started construction on Columbia Business Park, a new Class A, 1.46-million-square-foot speculative industrial development located in the City of Riverside, CA. TCC was selected in by Washington Capital Management Inc. (WCM), advisor to property owner Operating Engineers Pension Trust, Local 12 (Operating Engineers), as the master developer for the 72-acre project. Construction of the 3-building industrial park will be phased to provide ultimate flexibility. The first phase includes: the construction of a 1-million-square-foot distribution center (Building 1) on 46 acres and grading, site work, and design of a 371,229-square-foot distribution center (Building 2) on the adjacent 19 acres. The phased construction of Building 2 provides the flexibility to develop additional parking or trailer storage for Building 1, which will feature 37-foot clear height, 8-inch concrete “level” floor slab, 185-foot deep secured truck courts, ESFR, designated truck queuing lanes, and offices to suit. The second phase includes the development of the adjacent 7-acre parcel, which could provide additional parking, trailer storage, or accommodate a planned 86,853-square-foot building (Building 3).

PHOENIX—Mortenson today broke ground on a Hampton Inn & Suites by Hilton at the intersection of N. 1st Street and E. Polk Street, immediately south of the downtown campus of Arizona State University (ASU). It will be the first Hampton Inn & Suites in downtown Phoenix. Construction on the 11-story, 210-key hotel begins this month and is scheduled for completion in summer 2018. The hotel is being designed by PK Architects and Design Force. This is the second Hampton Inn & Suites that Mortenson has developed in the past three years. The hospitality market in Phoenix continues to strengthen with the growing demand in the area.