TUCSON, ARIZONA — Pacific Acquisitions, LLC an affiliate of Bond Commercial Properties purchased a 57,000-square-foot industrial building from Davis Selected Advisors located at 3601 East Britannia Drive in Tucson Arizona for $12.45 million ($218. PSF).

The property was fully occupied by a defense related tenant and sold in for investment.

The investor is based in Anchorage, Alaska.  Bond Commercial Properties, acquires, sells, and manages commercial real estate properties in Alaska, Arizona, New Mexico, Nevada, and Utah. The company manages various commercial properties, including warehouses, secure facilities, office buildings, and land leases for government and private corporations. It also guides customers in selling or purchasing commercial properties.

This was the third acquisition for the investor in the Tucson market.

Jesse Blum, Senior Associate, of CBRE’s Tucson office and Bill Divito, who passed away recently before the closing, represented the seller in the transaction.

For more information, Blum should be reached at 520.321.3335.

To learn more, see RED Comp #6498.

Demand in 2018 Outpaced New Construction While Economy Brought Job Growth

Phoenix, Arizona – Greater Phoenix had a banner 2018 in the office market sector, according to a report released by Colliers International in Arizona.  A strong economy brought nearly 80,000 new jobs, which spurred demand for office space that outpaced new construction.

The estimated 79,700 net new jobs mark a 3.9 percent increase over 2017, making 2018 the strongest job growth for the metro in more than a decade.  More than 24,000 of these jobs were white-collar positions that fuel demand for office space. The growth has positioned Greater Phoenix in fourth position of the top 36 major employment markets in the country, up from fifth in 2017.

Net absorption of office space increased 106 percent in 2018, totaling an impressive 3.53 million square feet.  Fourth quarter brought a decline in net absorption that appears to have stemmed from limited supply of large spaces in desirable submarkets.  Completion of new projects during 2019 should alleviate this problem.

Despite the fourth quarter dip in net absorption, move-ins far outpaced new construction.  This brought vacancy of office space down to 13.9 percent, 200 basis points below year-end 2017.  Declines in vacancy were experienced in all classes of office space.  Tempe ended the year with the lowest vacancy rate at six percent, followed by Deer Valley Airport with 10.7 percent.  The top five strongest submarkets in terms of vacancy include 44^th Street Corridor, Scottsdale Central and Scottsdale South.  Vacancy is expected to edge higher in 2019 as speculative development projects come online, adding new inventory to the market.  Colliers International forecasts the office market will finish 2019 with approximately 14.5 percent vacancy.

The largest leases signed during 2018 were for buildings in the Airport Area, Tempe, Chandler and Northwest Phoenix.  One of the most notable was WeWork’s lease for 54,000-square- feet at Camelback Esplanade, 2425 E. Camelback Rd.

The decline in vacancy has pressured rental rates upward, though at a more modest pace than in previous years.  Asking rents at the end of 2018 averaged $24.81 per-square-foot, which is a 2.6 percent increase from year-end 2017.  Rate increases have moderated in the Class A sector, while Class B and C rent escalations have been stronger. Asking rental rates are expected to continue rising in 2019, though at very moderate levels.

Deliveries of new buildings were modest during fourth quarter with approximately 355,000 square feet coming online.  During 2018 the market added slightly more than 1.2 million- square-feet of new office space.  Recent deliveries have been minimal, but the pipeline of new projects is filling.  Currently, an estimated 3.4 million-square-feet are under construction, compared to a year ago when we had just 1.7 million-square-feet underway.

Investment sales volume declined a minimal five percent year-over-year during 2018.  A total of $2.47 billion of office space traded hands last year.  While the total value of assets sold dropped, the number of transactions completed was higher during 2018.  Transaction numbers rose 25 percent to 184 during 2018.  The median price per square foot rose 17 percent to $176 per-square-foot with cap rates averaging 6.9 percent. Interest rate increases have not significantly impacted cap rates.

The Greater Phoenix office market is expected to remain strong throughout 2019.  During last year, approximately a dozen companies announced plans to add workers in the marketplace.  IT consulting company Infosys plans to more than double its Arizona workforce, adding 1,000 white-collar jobs during the next five years.  Other companies with big announcements included Nationwide Insurance’s North Scottsdale regional campus and Deloitte’s new Gilbert operations center, all of which will bring thousands of new jobs over the next few years.

PIMA COUNTY — The Pima County Safety and Justice Challenge is the recipient of a $1.8 million grant by the John D. and Catherine T. MacArthur Foundation to continue building on efforts to advance local criminal justice system reform and safely reduce Pima County’s jail population, bringing the Foundation’s total investment in Pima County to $3.3 million to date. The grant is part of the Safety and Justice Challenge, a $157 million national initiative to reduce over-incarceration by changing the way America thinks about and uses jails.

The Safety and Justice Challenge is supporting local leaders in Pima County and across the country determined to tackle one of the greatest drivers of over-incarceration in America – the misuse and overuse of jails. Pima County was first selected to join the collaborative Safety and Justice Challenge Network in 2015 and has since used the resources and funding provided by the Challenge to implement bold reforms, including Warrant Resolution Courts on nights and weekends; pre-trial screenings; an automated call, text and email court-date reminder system; creation of a multi-disciplinary criminal justice jail population review committee and probation jail reduction committee, creation of a “data team” focusing specifically on criminal justice issues; enhanced case processing; increased community engagement including listening sessions with regional tribal nations and improved job training and workforce development for inmates.

Today, Pima County was one of six jurisdictions selected for additional funding based on the promise and progress of work to date. This new round of funding will provide Pima County and partners with additional support and continued expert technical assistance to strengthen and expand strategies that address the main drivers of local jail incarceration, with the goal of finding appropriate alternatives to incarceration, such as treatment and counseling and further reducing Pima County’s average daily jail population from a jail capacity of 2377 to a 1574 average daily population by 2021.

“It has been very gratifying, but not surprising, to see the remarkable level of cooperation and collaboration between the MacArthur Foundation, Pima County and our partners from all aspects of the criminal justice system and the community as a whole,” County Administrator Chuck Huckelberry said. “There’s been a real leadership at all levels and real commitment to find solutions and, when necessary, make tough choices.”

In partnership with local law enforcement, the courts, prosecutors and defense attorneys, the treatment community, tribal nations, religious leaders and concerned members of the community, including formerly incarcerated individuals, Pima County has developed a comprehensive plan for additional reform strategies over the next two years. Key strategies and initiatives to achieve this goal and create a safer, more effective system include:

• Improving court processing to increase efficiency
• Reducing racial and ethnic disparities

Three years after its public launch, the Challenge Network has grown into a collaborative of 52 counties, cities, and states modeling and inspiring reforms to create fairer, more effective local justice systems across the country.

“There is a growing demand for criminal justice reform to bend the curve of incarceration in the United States and achieve fairer, more equitable outcomes for our families and communities,” said Laurie Garduque, MacArthur’s Director of Justice Reform. “While progress is not always easy, jurisdictions across the country are proving it is possible to rethink local justice systems from the ground up with forward-looking, smart solutions that address racial and ethnic disparities while engaging communities in reform efforts. MacArthur is increasing our investment in these cities and counties because we are seeing promising results and an appetite for more reform as evidenced by the diversity and creativity of the solutions implemented and tested across the Challenge Network.”

“We all share the same goals: keep people out of jail who don’t belong there or who can be meaningfully rehabilitated through alternatives to incarceration” Assistant County Administrator Wendy Petersen said. “This helps both individuals dealing with substance abuse and mental health issues, and benefits the entire community by making them productive member and easing the strain on public resources.”

Several of the nation’s leading criminal justice organizations will continue to provide technical assistance and counsel to the Pima County Safety and Justice Challenge, Pima County partners, and the other jurisdictions involved in the Challenge: the Center for Court Innovation, the Institute for State and Local Governance at the City University of New York, the Justice Management Institute, Justice System Partners, the Pretrial Justice Institute, the Vera Institute of Justice, Policy Research, Inc., and the W. Haywood Burns Institute.

More information about the work underway in Pima County can be found on Pima County’s Safety and Justice Challenge webpage as well as on the Safety and Justice Challenge website.