Globe Street Reports: Infrastructure Reigns at ULI’s 10^th Annual Trends Day

PHOENIX—Urban Land Institute Arizona Trends Day last week at The Phoenician in Scottsdale attracted 900 participants and covered a wide array of topics from “Reviving the Economy: Phoenix Open & Super Bowl,” to “Expanding Horizons: Land and Residential Market View.” The keynote speaker was sports writer Rick Reilly.

The panel, “Why Arizona? Employers and Site Selectors Perspectives,” was moderated by Ioanna Morfessis, president and chief strategist for IO, Inc. Joining her as panelists were Lawrence Mehren, president, CEO and director of Tucson-based Accelerate Diagnostics; Amy Gerber, executive vice president, business and economic incentives for Jones Lang LaSalle; and Michael Trout, vice president operations, human resources, State Farm.

Morfessis began by asking each of the panelists why their companies chose Arizona.

“We had 12 or 13 communities vying for us,” said Mehren. “Tucson had a great community development association and great job creation.”

Trout stated, “We looked at 60 locations. As far as Tempe, we knew the town. There was the weather and the reliability of the infrastructure was unparalleled. Being close to ASU was important to get that great labor pool.”

“The primary driver was the labor force, and the specific type of labor,” said Gerber.

The conversation quickly turned to some of Arizona’s lacks.

Mehren, who works in the biotech industry, said the state has a negative brand when it comes to attracting top level scientists. “When we pass certain laws, it confuses people. They see us as bigots and we need to rebrand.” This comment was met with resounding agreement from the audience.

“There is a war for talent,” said Gerber. “What should the state be concerned about for people they want to hire? There are third party drivers and one of them is education. Arizona communities are challenged with low high school and community college test scores. Education needs to be addressed, but this is not just Arizona by any means.”

Mehren added, “We need to start with having an infrastructure that values education like we haven’t seen in the past. We have to prime the pump somewhere.”

“Let’s not forget the middle income jobs,” said Trout, “or you’ll have a gap. Those jobs help bring people and families up. We need systems to educate everyone across the spectrum.”

“One benefit of Arizona is that it is still a place where communities interact. Here we have a melting pot and we should build on that strength,” said Mehren. “We should have the attitude, ‘come to us and make your fortune, regardless of your race or your socio-economic status.’”

“We have to stay on top of our game now and in the future and find out what businesses need,” said Gerber.

Mehren added, “We should define why we are better and make that clear.”

Gerber stated, “You can’t be everything to everybody. What are your strengths? Know them and go after them.”

“This state has been fantastic,” said Mehren. “My experience was great. This state executed really well. Going forward, the challenge is hiring and keeping talent in the state.”

“We form long-term relationships at State Farm,” said Trout. “We’re excited about Tempe. It has that live, work, play vibe that people in IT and high tech want. And we want people to choose to use public transportation. Can Tempe live up to a Dallas in terms of public transportation? I don’t know. But we believe the millennials will use the public transportation. We are working closely with ASU and Maricopa Community College to develop those 20 to 30-year employees that we’re known for.”

Morfessis asked what advice panelists would give recruiting municipalities.

“Be proactive about infrastructure,” said Gerber. “Don’t tell us what you plan on doing. And get your big companies into your schools to improve education.”

Mehren stated, “Choose growth. Southern Arizona has chosen anti-growth in many respects. Thirty years ago, Phoenix and Tucson looked much the same. Look at them now. Without growth you have no tax base. You’ve got to invest in growth.”

“Stay modern and attractive,” said Trout. “The workforce drives what you do. Update your infrastructure.”

Tucson, Ariz. – CBRE’s Multifamily Investment Group has announced the addition of John Ash in the company’s Tucson office. Mr. Ash will work in conjunction with Brian Smuckler and Jeff Seaman, who are based in company’s Phoenix office.

“We’re pleased to welcome John to the team,” said Senior Vice President Brian Smuckler. “We pride ourselves on the comprehensive, best-in-class transaction, valuation and underwriting services we offer our clients in the multifamily sector. With the addition of John, we will be better positioned to service clients located and interested in the Southern Arizona market.”

Ash will focus his attention on the Tucson multifamily market, working with clients looking to place capital in Southern Arizona. With the help of his Phoenix-based partners, he will leverage CBRE’s comprehensive Investment Properties Group platform in order to ensure his clients reach their real estate goals.

“I’m very proud of John. His extensive market knowledge and experience in investment transactions make him an excellent addition to CBRE’s Multifamily Investment Group,” said Ike Isaacson, managing director of CBRE’s Tucson office. “The greater Tucson market will greatly benefit from the highly specialized service John will provide. This will mean good things for our clients.”

Ash was promoted to Senior Associate in 2012 and over the last three years has been involved in multiple land transactions leading to the construction of nearly 2,000 beds of student housing. He is experienced in investment opportunities ranging from selling income streams of various types, directing and managing the full scope of CBRE’s brokerage services to achieve lease stabilization, infill repurposing and land acquisition and assemblage slated for development or investment.

Ash is a graduate of the University of Arizona in Tucson where he studied business administration and marketing. A varsity athlete while at UA, Ash was a member of the Wildcat men’s basketball program, including the 1997 NCAA National Championship and 2001 NCAA National Runner-Up Teams.

Mr. Smuckler and Mr. Seaman lead the Multifamily Investment Properties Group in Arizona. With over 33 years of combined experience, they provide comprehensive multifamily transaction experience to investors of B and C class multifamily properties throughout Arizona. To date, they have completed over 360 transactions accounting for more than 14,000 units and total consideration exceeding $660 million.

CBRE’s Investment Properties Group is part of CBRE Capital Markets. The platform offers customized investment sales, acquisition and recapitalization services, together with industry leading market intelligence, to provide unmatched exposure to buyers across the country. By utilizing market research, a seamless execution process and in-depth relationships, Investment Properties can anticipate trends and command capital globally.

Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz for the day will be.

On Monday, the Dow Jones industrial average added 196.09 points, or 1.1%, to 17,361.04. The S&P 500 rose 25.86 points, or 1.3%, to 2,020.85. The NASDAQ composite picked up 41.45 points, or 0.9%, to 4,676.69.

Benchmark U.S. crude rose $1.33 to close at $49.57 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $1.76 to close at $54.75 in London. Wholesale gasoline rose 6.6 cents to close at $1.545 a gallon. Heating oil rose 5.7 cents to close at $1.758 a gallon. Natural gas fell 1.1 cents to close at $2.680 per 1,000 cubic feet.

NEW PIMA COUNTY COURTHOUSE OPENED MONDAY
TUCSON – Pima County Consolidated Justice Court has moved to the Pima County Public Service Center at 240 N. Stone Ave. Monday’s ribbon cutting capped an 11-year process to open the facility. Despite lacking a firm commitment from the city, the county moved forward with construction in early 2012. Later that year, the county asked the city to pay its share of the cost overrides and even offered to lend the city $21 million. Since the city didn’t have money to pay for either a courthouse or a loan, it made one final offer to the county, to lease space in the building but not pay for any extra costs. The county rejected the offer in November 2012. Even though the city pulled out, the two sides never formalized a contract over the project, so the county doesn’t have a legal remedy to recapture its losses. In addition to quarreling with the city, the county encountered numerous unanticipated expenses, such as relocating 1,400 corpses, that ballooned the cost to about $143 million. The new building does brings with it modern security, technology, and accessibility that the historic Pima County Courthouse lacked. Construction has yet to be completed for a parking garage, retail shops, and plaza at the center. Visit the City’s Park Tucson website to find parking options downtown. https://1.usa.gov/1Dy12W5 Full story from the Arizona Daily Star: https://bit.ly/1zvxNTa

US FACTORIES GREW LAST MONTH AT SLOWEST PACE IN A YEAR
WASHINGTON (AP) — US factories expanded last month at the slowest pace in a year, as orders, production, and hiring all declined. The figures suggested manufacturing may not add much to growth in the first few months of 2015. The Institute for Supply Management, a trade group of purchasing managers, said Monday that its manufacturing index fell to 53.5 in January from 55.1 in December. That is the third straight drop and lowest since January 2014. Still, any reading above 50 signals expansion.

RADIO SHACK’S LARGEST SHAREHOLDER LEAD BIDDER FOR COMPANY
Hedge fund Standard General LP is in talks to serve as the lead bidder at a bankruptcy auction for struggling consumer-electronics retailer RadioShack Corp, according to people familiar with the matter. RadioShack, which is running out of cash after reporting losses in each of the last 11 quarters, was aiming to file for Chapter 11 protection as early as Monday, the people said. But as of Sunday afternoon, the company and its advisers were still working out the details of an agreement with Standard General to serve as the so-called stalking horse at a court-supervised auction for RadioShack’s assets, some of the people said. Standard General last year became the company’s largest shareholder and led a financing that helped RadioShack get through the holidays. One scenario under discussion would have Standard General bid to buy a RadioShack with far fewer stores, one of the people said. Workers at several RadioShack stores said the company has told them to help clear out many locations in February by shipping big-ticket smartphones to nearby stores and slashing prices on remaining inventory. The company operates roughly 4,300 stores in North America but has said it needs to close many of them. RadioShack last year announced plans to close as many as 1,100 stores, but Salus refused to sign off on the additional closings. RadioShack, which employed 24,000 people late last year, warned in a December securities filing that it could be forced into bankruptcy court if it couldn’t raise new funds or get relief from lenders that have blocked its store-closing efforts. The company said in the filing that it had $62.6 million on hand as of Nov. 1–$43.3 million in cash and $19.3 million in borrowing availability. On Friday, RadioShack shares closed at 27.7 cents each, down 10.7%.

EXXON, CHEVRON SET TO BOOST PRODUCTION JUST AS PRICES FALL
NEW YORK, N.Y. – Exxon Mobil has been working for years on a fleet of enormous new oil and gas projects designed to turn around what has been a slide in oil and gas production. A record eight of these mega-projects came online last year, Exxon said Monday — just as oil prices were falling by more than half. These enormous projects were conceived and started years ago, as prices were rising. Now they are starting to produce oil and gas at a time when the price of global crude has been eviscerated by rising supplies and weak growth in demand.

DEATH TOLL FROM GM IGNITION SWITCHES RISES TO AT LEAST 51
DETROIT (AP) — The families of 51 people who died in crashes caused by faulty ignition switches in small General Motors cars will get payments from a company fund, but others will have to wait months for decisions on thousands of new claims. Compensation expert Kenneth Feinberg has also deemed 77 people injured in crashes as eligible for payments from the fund, which received at least 4,180 claims by a Saturday deadline, including more than 1,100 in the past week. But attorneys, lawmakers and at least one family member say some were forced to settle with Feinberg rather than run the risk that they would not be able to sue GM because of its 2009 bankruptcy agreement.

HEY, (NOT-AS) BIG SPENDER! TECH FIRMS HINT AT MORE RESTRAINT
SAN FRANCISCO (AP) — Technology’s big-spending trio of Google, Facebook, and Amazon appear to be tightening their belts — at least a notch — in a concession to cost-conscious investors and a strong dollar that’s taking a bite out of their revenue. Hints of restraint were sprinkled throughout the companies’ latest quarterly reports released last week. Expenses at all three are still expected to rise faster than revenue this year, but Google, Facebook and Amazon signaled that spending increases might not be as dramatic as expected. The message boosted their stocks, which had been in Wall Street’s penalty box for the companies’ free-spending ways.

A GUIDE TO THE DEBT STANDOFF BETWEEN GREECE AND EUROZONE
FRANKFURT, Germany (AP) — Greece wants a break from the terms of its eurozone bailout loans, saying they’re suffocating its economy. Germany, the biggest backer of two bailouts worth 240 billion euros (currently $271 billion), says Athens must pay what it owes. The two sides, debtor and creditor, are dug in and posturing. Yet analysts think a negotiated compromise over the coming weeks is possible.

FOUNDER WILSON RESIGNS FROM LULULEMON BOARD
Chip Wilson, the founder of Lululemon who resigned as chairman last year after controversy about comments he made about customers’ body types, has stepped down from the yoga clothing company’s board. Wilson established the Canadian company in 1998. It has grown to more than 250 stores and has a loyal customer base. Lululemon has recently had its share of challenges, including complaints that some of its yoga pants, which can cost around $100, were see-through. And Wilson upset some customers when he said some of the pants problems were related to customers’ body types. Following that incident, he agreed to step down as chairman but had remained a board member.

US CONSUMER SPENDING SLIPS IN DECEMBER AS AUTO SALES WEAKEN
WASHINGTON (AP) — U.S. consumer spending slipped in December, as the pace of motor vehicle sales slowed and more Americans saved their money. The Commerce Department said Monday that consumer spending fell 0.3% in December, compared to a 0.5% increase in November. Cheaper gasoline and fewer auto sales accounted for most of the decline. Energy prices tumbled 5.2% in December for the sixth straight monthly decline. The falling oil and gas costs caused consumer spending — before adjusting for price changes — to record the largest monthly decrease since September 2009.

APPLE TURNING CLOSED ARIZONA FACILITY INTO DATA CENTER
PHOENIX (AP) — Apple said Monday it will invest $2 billion over 10 years to open a data center in the Phoenix suburb of Mesa that will be the company’s fifth in the U.S. and serve as a control facility for its global networks. The announcement comes four months after an earlier Apple plan for the 1.3 million-square-foot facility it bought in 2013 failed. The tech giant had a deal with Merrimack, New Hampshire-based GT Advanced to use the plant to make sapphire glass for its products, but the company declared bankruptcy in October after production issues developed. After the GT failure, Apple said it would work to find another use for the plant.

JEEP RECALLS 228K CHEROKEES FOR AIR BAG PROBLEM
DETROIT (AP) — Jeep is recalling more than 228,000 SUVs worldwide to fix a software problem that can cause side air bags to inflate for no reason. The recall, which covers Jeep Cherokees from the 2014 and 2015 model years, is the latest in a recent string of auto industry troubles with air bags that include deployment without a crash and inflation with so much force that the air bags spew shrapnel at drivers or passengers. Fiat Chrysler, which makes Jeeps, says there have been a small number of inadvertent air bag deployments in extreme manoeuvers when drivers dramatically change the angle of travel.

ANADARKO ARGUES AGAINST $1B PENALTY IN 2010 GULF OIL SPILL
NEW ORLEANS (AP) — A trial to determine how much BP should pay in Clean Water Act penalties for the 2010 Gulf of Mexico oil spill — which could reach $13.7 billion — has ended in New Orleans, but a decision from the judge is not expected for months. The trial closed Monday after two weeks of testimony and arguments by lawyers for the Justice Department, which is pushing for a high penalty, and BP, which wants a lower figure. Anadarko Petroleum Corp., a minority owner of the ill-fated well, was also part of the proceeding and is fighting the government’s push for more than $1 billion in penalties.