Phoenix, AZ – The Galleria, the most sought after office address in Downtown Scottsdale, just got a little roomier. The property has newly available space that will offer relief to an office market that is currently the tightest in the metro Phoenix area.

Galleria can now accommodate users with requirements greater than 50,000-square-feet. This new availability at the office project marks the first time in more than eight years that Downtown Scottsdale has had an available contiguous block of space larger than 50,000 sq. ft.  Formerly home to Le Cordon Bleu culinary school, the 52,000-square-foot area has been reimagined as high-end office space, which is sure to attract more tech-centric companies hungry to expand or land in Downtown Scottsdale.

Additionally, with one of its largest tenants, McKesson, announcing plans for a new suburban build-to-suit project to accommodate the company’s major growth plans, by November 2017 Galleria will be able to offer another large block of space – nearly 100,000-square-feet – to office users looking to break into Downtown Scottsdale.

“McKesson and Le Cordon Bleu were two of the first tenants to locate to the project in the early 2000’s well before the transformation of the surrounding area,” said Dan Michaels, managing director at Stockdale Capital Partners, which owns the Galleria. “Downtown Scottsdale has become a hot bed for companies looking to attract the most talented millennial workforce and Galleria is right in the center of it all.”

Michaels points to drivers like the thousands of urban multi-family units and dozens of restaurants and bars that have been added in the last few years, as well as downtown’s proximity to ASU, a leader in producing the area’s highly sought after workforce.

“We’ve been anticipating this day for quite awhile, and we’re excited about the opportunity this new availability brings,” continued Michaels. “We have seen a lot of users over the last couple of years want to locate in the project and we have been unable to accommodate them until now. We continue to drive our modernization initiatives and remain focused on targeting those growing organizations who enjoy high employee retention rates given all the amenities Galleria’s location offers.”

The Galleria is currently 100 percent leased, but by the end of 2017 the project will be able to accommodate users up to 200,000-square-feet.  The adjacent 210,000-square-foot planned Marquee at The District also provides tenants with additional expansion opportunities.

No matter a user’s requirement, the one constant of a Galleria tenancy is a highly amenitized environment both on-site and in the immediate area. Ownership has invested nearly $7 million in significant renovations to the lobby and common areas, as well as a state-of-the-art conference center. What’s more, Southern California eatery Comoncy recently took up residency as well, offering tenants a unique hand-made menu steps from their office doors.

According to CBRE Research, South Scottsdale remains the tightest office market in metropolitan Phoenix. Overall, the submarket’s vacancy rate stands at 8.3 percent, with class A and B space at 8.5 and 5.9 percent, respectively.

“Office tenants want to be in Downtown Scottsdale, but until recently quality available space has been hard to come by,” said CBRE’s Bryan Taute, who along with Krystal Dill, oversees leasing and marketing for the property. “The Galleria’s newly available space should absorb much of that demand and offer great opportunities for the next wave of office users looking to relocate and expand in the Valley.”

Old Town Scottsdale’s emergence as a tech-hub in recent years is a key factor driving vacancy rates down and rental rates up. However, Taute points out that for those tech companies looking to expand in the Valley, Old Town represents a significant value alternative to the high-cost of hiring and growing in Silicon Valley.

“The Valley is one of the most cost-effective markets for tech companies to operate in and their employees to live,” said Taute. “Companies like Weebly, Yelp, and, most recently ClearLink, have already recognized the value of growing in Old Town and specifically at the Galleria.”

CBRE’s annual report scoring tech talent markets ranks the Valley 26^th in an analysis of estimated one-year costs in terms of wage and rent obligation for a sample tech firm with 500 employees and 75,000 sq. ft. of office space. This makes metro Phoenix a cheaper alternative to markets like Seattle, Denver and Austin, among others. Additionally, the Valley’s wage-to-apartment ratio is just 12.8 percent, making it the fifth most affordable tech talent market for employees.

According to Danielle Casey with Scottsdale’s enonomic development office, inquiries from office tenants are at an all-time high.

“We’ve seen a tremendous amount of activity and desire from office users who want to be in Downtown Scottsdale, but haven’t had any options for the larger users. This new opportunity at the Galleria is an exciting chance to grow our employer base.”

Scottsdale Galleria’s current tenant roll is highly concentrated with tech firms, and Taute expects the newly available space in the property to attract a similar profile and therefore lease quickly.

“There has been a lot of pent up demand in the South Scottsdale area for the last several quarters, and the Galleria’s new space should absorb much of that demand and offer great opportunities for the next wave of tech companies looking to relocate and expand in the Valley.”

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 of the day will be.

Friday, the Dow Jones industrial average jumped 164.70 points, or 0.9 per cent, to 18,308.15. The Standard & Poor’s 500 index rose 17.14 points, or 0.8 per cent, to 2,168.27. The Nasdaq composite rose 42.85 points, or 0.8 per cent, to 5,312.

Benchmark U.S. crude oil rose 41 cents to $48.24 a barrel in New York. Brent crude, the international standard, slipped 18 cents to $49.06 a barrel in London. In other energy trading, wholesale gasoline picked up 2 cents to $1.49 a gallon. Heating oil rose 2 cents to $1.53 a gallon. Natural gas slipped 5 cents to $2.91 per 1,000 cubic feet.

Stocks say ‘never mind’; reverse recent losses as banks jump — U.S. stocks climbed Friday as banks made a rapid recovery following a steep fall a day ago. Investors hoped Deutsche Bank and the financial system in general were in better shape than they had feared. Banks made the biggest gains Friday as Germany’s largest bank tried to reassure investors about its financial health. Investors hope Deutsche Bank will be able to negotiate down the massive cost of settling a U.S. investigation into mortgage securities. Energy companies rose as the price of oil continued to move higher, and strong earnings from Costco sent consumer stocks higher. Deutsche Bank is the largest lender in Germany, and investors are concerned about not only its plunging stock price, but the potential effect on the financial system if Deutsche Bank gets into serious trouble and the German government does not help it. Those fears faded on Friday.

US consumer spending at weakest pace in 5 months — U.S. consumers scaled back their spending in August to its weakest pace in five months, reflecting a drop in spending on autos. Income growth also decelerated as wages and salary gains slowed following four strong months. Consumer spending was unchanged last month after solid gains of 0.4 per cent in July and 0.3 per cent in June, the Commerce Department reported Friday. It was the poorest showing since a similar flat reading in March. (AP)

EB-5 program extended with no reforms to December “Congress passed a continuing resolution, which included EB-5, to avoid a government shutdown before the end of the fiscal year. It was passed with no reforms, which many say it strongly needs. Congress kept the bill afloat in a similar situation last September at the end of the government’s fiscal year, and gave it two extensions before Wednesday’s vote. President Barack Obama signed the bill containing the continuing resolution into law Thursday – just about 36 hours before the end of fiscal 2016. Ronnie Fieldstone, an Arnstein & Lehr attorney who represents developers and EB-5 regional centers, expects the new bill to raise the minimum investment requirement from $500,000 to $800,000 in high unemployment areas and from $1 million to $1.2 million for low unemployment areas. The minimum investment hasn’t changed since 1992.” (The Real Deal Miami)

No slowdown seen in commercial real estate “The commercial real estate market outlook for Miami-Dade: Sunny, as long as more mass transit is on the horizon, said industry experts on Thursday at the Building Owners and Managers Association of Miami-Dade’s 2017 Commercial Real Estate Outlook event. In the office market, rents are at an all-time high in certain sub-markets, said Brian Gale, Cushman & Wakefield’s vice chairman of Brokerage Services who represents nearly 5 million square feet of office space in South Florida. On Brickell, office space is hitting around $60 a square foot for Class A space; back in 2008 the high was in the upper $40s, said Gale, during the panel discussion at the East Miami in Brickell. Downtown Miami is just behind it, and Aventura and Airport West have also hit all-time highs, too, he said.” (Miami Herald)

Walgreens struggling to sell stores “Walgreens is ready to shutter up to 1,000 stores, but no one is biting. In accordance with the closing of its deal to purchase Rite Aid, the Walgreens Boots Alliance must sell or close between 500 and 1,000 of its stores. However, there is a lack of interest among private equity firms, according to an Investopedia article. Walgreens still expects to move forward with the Rite Aid acquisition, which is slated to close in the second half of this year, the article said.” (Chain Store Age)

Germany Says No Bailouts for Deutsche Bank or Any Other Struggling Lenders “Germany will not help ailing lenders such as Deutsche Bank, a senior lawmaker in Chancellor Angela Merkel’s conservative bloc said on Thursday, as resistance grew to any possibility of staging a rescue. With Merkel meeting European Central Bank chief Mario Draghi on Thursday, Berlin has already flatly denied it is planning any repeat of the taxpayer-funded bailouts that Germany and other Western countries mounted during the global financial crisis. This followed a newspaper report earlier in the week that the German government had made provisional plans to rescue Deutsche, which is fighting a fine of up to $14 billion from the U.S. Department of Justice.” (Fortune)

West Elm fine-tuning its stores for sound “Shoppers at select West Elm stores will soon have their very own listening rooms — with state-of-the art sound speakers. The home furnishings retailer announced a partnership with Sonos to sell the company’s sound speakers and components in its U.S. stores and website, and to install ‘Sonos listening labs’ in 16 West Elm stores. The listening rooms will be outfitted with West Elm’s signature modern furnishings and accessories and Sonos home sound system products. Sonos, a maker of high-quality “smart” home sound systems, recently opened its first store, in Manhattan. West Elm unveiled the prototype “listening lab” at its store on the Upper Westside of Manhattan, with others planned for select locations in Atlanta, Boston, Chicago, Miami and Seattle. The rooms will be tailored to provide custom, high-fidelity listening environments and built to accommodate each store’s varied and unique floorplan.” (Chain Store Age)

SL Green Lands $1.5B Financing for One Vanderbilt “The final piece has fallen into place for SL Green’s One Vanderbilt, a 1.6 million-square-foot trophy office project that will sprout up just a stone’s throw from Grand Central Terminal in Midtown Manhattan. The REIT just secured construction financing to the tune of $1.5 billion for the project, which has a development price of approximately $3.1 billion. This isn’t just any Class A office development. ‘One Vanderbilt is the most significant urban infill office building built in this country in the last 50 years,’ John Guinee III, managing director with brokerage and investment banking firm Stifel Nicolaus, told Commercial Property Executive. ‘Assembling a full city block adjacent to Grand Central Terminal is a fairly astounding feat.’ More than a few members of the lending community agree, apparently. A consortium of financial institutions provided SL Green with the billion-five boost, with Wells Fargo N.A. leading the pack as administrative agent.” (Commercial Property Executive)

Developer buys sprawling LA Times plant near Arts District for $120M “The Tribune Company-owned printing plant south of the Arts District is now the property of a partnership lead by Harridge Development Group. The Real Deal reports Harridge spent $120 million to acquire the 26-acre property, which prints the Los Angeles Times. It sits between Eighth Street and Olympic Boulevard off of Alameda Street, and it came on the market in November of last year. Seven acres on the site are ‘immediately developable,’ says The Real Deal, which also reports that Harridge aims to use some of that space to put up some retail, including a ‘mid-level’ grocery store. (Does mid-level include Whole Foods?) Harridge is betting that in a sea of high-end residential projects and expensive shops, a nice, reasonable grocery store will pay off. Tribune’s media arm (tronc) still holds leases on four of the building on-site, and those leases are good until 2023. What’s coming after that is still undecided, though Harridge isn’t considering residential for that area either.” (Los Angeles Curbed)

West Elm expands at Brooklyn complex as part of its hotel brand launch “The furniture and home decor chain West Elm has expanded at Industry City, in part to add design studios to create a new hotel brand. The Dumbo-based company has added about 40,000 square feet at the Sunset Park, Brooklyn, complex, nearly doubling its space to more than 100,000 square feet. West Elm has used Industry City as a warehouse for storage for several years, but more recently has expanded its operations there to include a photography studio and a workshop where designers create prototype furniture and other products. The additional space allows room for those operations to grow while providing the company with space in which to design its recently-unveiled hotel concept. West Elm will use the space to build mock-up guest rooms and common areas for the hotel and shape the new chain’s decor and furnishings. Last week, West Elm announced it was launching a hotel brand in partnership with hospitality management and development firm DDK. The retailer will design, furnish and market the boutique hotels in a move to expand beyond brick and mortar shops. Hotel guests will be able to buy furniture from the hotels online. The properties are expected to open in 2018 in Savannah, Charlotte, Detroit, Minneapolis and Indianapolis. West Elm said it plans to open more locations, though it declined to specify whether it would open a hotel in New York.” (Crain’s New York Business)

Tishman Speyer files plans for $3.2B Hudson Yards tower “The developer officially filed plans Thursday for the Spiral, an office skyscraper that is slated to cost $3.2 billion. Plans filed with the city’s Department of Buildings call for a 2.2 million-square-foot tower, but Tishman Speyer is marketing the property at 2.85 million square feet.  The Spiral, named after its design feature of a continuous band of terraces that wrap around the building, will rise 65 stories to a height of 1,005 feet, and has an alternate address of 509 West 34th Street. In 2014, Tishman Speyer, headed by Rob Speyer, paid about $438 million for the parcels that make up the site. Later that year, it applied for a $170 million, 25-year tax break at the project. According to the DOB plans, the ground floor will have retail space — Tishman Speyer has said in marketing materials there will be about 27,000 square feet of retail — while the second through 62nd floors of the building will be office space.” (The Real Deal)

Inside the biggest new office building to go up in the suburbs in years “Welcome to the future,” Schaumburg Mayor Al Larson said as he greeted a gathering at yesterday’s ribbon-cutting ceremony for the new Zurich North America Headquarters in his suburb. But is the future, embodied in the 11-story-tall, 783,800-square-foot complex at the northwest corner of Meacham Road and Interstate 90 all that different from the recent past? On a stretch of well-traveled and much-reconstructed roadway between such distinctive architectural landmarks as the kitschy Medieval Times and the bright neon-blue-and-yellow big box of Ikea, Chicago-based Goettsch Partners has produced a shiny new corporate retreat with offices and related amenities for almost 3,000 employees of the insurance company that’s been in the same northwest suburb since 1980. The Switzerland-based insurer chose to eschew the recent trend to downtown headquarters, and its architects tried to capture a bit of that intent in their design…The building’s overall 11-story height is generally consistent with the taller buildings scattered throughout the nearby suburbs, but its composition of three interlocked horizontal volumes wrapped in a glimmering glass skin give it a distinctive presence. It doesn’t read as particularly tall, since its tallest volume is only six stories.” (Crain’s Chicago Business)

Malls, stores consider new ways to protect shoppers — More sophisticated cameras. Security robots. Customers feeling shaken by recent attacks at U.S. malls may not notice huge changes — but mall operators are testing and putting in place new technologies and other measures to offer people more protection without intruding too much on their shopping time. Mall executives say shoppers have been adamantly opposed to airport security tactics like metal detectors. So they’re trying other things, and increasingly using mass notifications that let them send text and email alerts to tenants within seconds in case of a crisis. (AP)

SCOTTSDALE, AZ – The Fincham Dempsey Team at Lee & Associates sold the Sonora Village retail shopping center for $72.5 ($269 PSF). The property is located at the SWC of Frank Lloyd Wright Blvd. and Loop 101 in North Scottsdale.

The team, led by Principals Jan Fincham and Pat Dempsey, facilitated the transaction on behalf of both the buyer, Sonora Village LLC, controlled by YAM Special Holdings and the sellers, Sonora Village Investors, LLC, a company controlled by Ryan Denk and Bob Mariash and SimonCRE ABBIE II, LLC, a company controlled by Josh Simon of SimonCRE and Ryan Denk.

“The property is attractive because of the strategic location in the affl uent North Scottsdale trade area as well as the customer draw from the dynamic tenant mix which includes major anchor tenants and multiple entertainment venues. The property benefi ts signifi cantly from the proximity to Scottsdale Airpark and the 50,000-plus daily employees in the area who shop and dine at the property,” said Fincham and Dempsey.

Sonora Village is a Class A regional power and entertainment center built in 1986. The sale consists of 269,369-square-feet which includes the newly developed 6,000-square-foot Zen Asian Kitchen, Advanced Auto, El Pollo Loco and Chase Bank.

Notable tenants also include Best Buy, Staples, Party City, Pearle Vision, Aaron Rents, Mattress Firm and Wildfl ower Bakery. Sonora Village also features an entertainment component with Studio Movie Grill, O.H.S.O. Brewery, Four Peaks Brewery, Peter Piper Pizza, Skeptical Chemist, Potbelly Sandwich Shop and Rubio’s Mexican Grill.

For more information, Dempsey should be reached at 602.954.3772, Fincham can be contacted at 602.954.375, or Andrew Lundahl is at 602.385.3799.