The rise of empirical retail development continues to emerge in the Arizona commercial markets.   A distant memory of land-filled dirt, deserted streets, and minimal economy will now just be another page in the Arizona history books.  It will illustrate how developers, property owners, and commercial real estate brokers met the demands for demographically driven consumers to create a new metropolis for urban city life.   Although e-commerce has gained significant momentum in recent years, industry professionals have used their expert knowledge in the market by building desirable lifestyle and trendy entertainment retail centers all across the valley.

The restaurant and retail industry is an unremitting evolution as we continue to observe the innovative and unique culinary enterprises opening in the valley.  Phoenix was listed in the Top 10 “Rising Star” Foodie Destinations with the likes of Chris Bianco’s, Pizzeria Bianco in Phoenix, known to foodies to have the best pizza in the U.S.; Taco Guild’s unique location in an old church and Sam Fox’s creation of True Food Kitchen for clean and healthy options.  In addition, more out-of-state restaurant concepts are making their way to Arizona for expansion because lease rates are steady and timing is imminent.

The bottom line is e-commerce will fall short to the dining and entertainment experiences that consumers tend to physically enjoy.  As a result, the economic and cultural centers for retail development have been profoundly influenced by “The Experience.”  SVN’s, Desert Commercial Advisors and the Director’s of Retail Leasing & Investment Sales, Rommie Mojahed and Mary Nollenberger have been detrimental to the growing developments across the valley, including the locally owned and nationally recognized, Blue 32 Sports Grill by CNN as the “Top 101 of the best sports bar in the U.S.”  The directors of the SVN retail team just leased their 4^th location in the 4,800 square-foot space at the new upscale lifestyle & entertainment retail center, Chandler Crossings.

Meeting the Economic Demands for Commercial Development
The biggest challenge retail developers and property owners are faced with is determining the tenant mix that would be more attractive to the community.  They also have to consider the building design and space requirements that create an effervescent venue appealing to the millennial shoppers.  Most importantly, economic leaders work strongly on creating an environment that shapes the community.

SVN Advisors, Mojahed and Nollenberger have been working with James Smith, the Economic Development Program Manager for the City of Chandler for over eight years now.   The City of Chandler works very hard in building a team to help and maintain the award winning lifestyle that Chandler has been acknowledged for.   Smith stated, “A well-planned community has set aside space for a balanced quality of life, including land for employment, quality residential development, open space for parks and recreation, a good mix of retail, and entertainment and restaurant options.”

With all of those key elements in mind, commercial real estate brokers have to weigh in all the demographic variables that developers and landowners must consider before investing capital.  This is about building relationships and creating trustworthy connections between the developers, the economic leaders, and the commercial advisors that are responsible for finding the best mix of tenants in any development.  The Shoppes of Chandler Heights was notably recognized as was one the biggest eye-soars in Chandler.  It was a partially constructed retail development that was surrounded by acres of dirt.  “We always knew that this property had the potential of becoming a viable investment property simply due to the location and its surrounding, but we just had to find the right developer to believe in it as much as we did,” Nollenberger stated.

The Shoppes at Chandler Heights sat partially-constructed for years and new owner, Jim Horvath and the SVN advisors, Mojahed and Nollenberger have already begun adding a new tenant mix to the upscale lifestyle + entertainment development now called Chandler Crossings.

Back in to 2014, Rommie Mojahed stated, “It will be something very complementary to the residential area….. that will be very exciting if it gets done.”  After a few deals fell through and a little over one year later, Jim Horvath with The Shoppes at Chandler Heights, LLC/ABT., Inc. purchased the multimillion properties in the beginning of January 2016. It is now referred to as Chandler Crossings.

The upscale lifestyle + entertainment development, Chandler Crossings is believed to be one of the greatest Cinderella stories of retail development in Chandler.  A property that was the complaint of many Chandler residents will soon have the option to take a seat at Blue 32 Sports Grill to watch football on Sundays. Nearby residents and millennial shoppers will also get to enjoy some of the other retailers moving in this mixed-use space totaling approximately 74,000 SF.  This includes retail offerings ranging from 1,440 SF of space for Jenny’s Nails & Spa and another for Berkshire Hathaway Residential Real Estate, a 4,800 square-foot music school called East Valley School of Music to an 8,700 square-foot space for Synergy Personal Training facility. Austin-based company, Alamo Cinema Draft House will take up 35,000 SF for entertainment theater space and when the movie is over, you can drop in to Dairy Queen, adding another 3,000 SF.  Commercial real estate advisors, Rommie Mojahed and Mary Nollenberger were the primary brokers who put all the leasing deals together for the new tenants.

Basis Charter Schools just recently opened up for the fall school year.  SVN Advisors sold the multimillion properties to the charter school back in January of 2016.  The school enrollment offers Grades 5-12 and currently has 905 students and is “expected to have another 100 or so,” said Katie Perry, the Communications Director for BASIS School. This 2-story school has approximately 70,000 square foot at this location and will have plenty space for adding more educational programs to their current curriculum.  Perry stated, “The new location is closer to where our families live and our building is a welcome help to our growing population.”

“This is an area with excellent demographics.  There has been and continues to be significant residential development as the economy continues to recover.  We believe that the residents of this area will welcome and support the amenities to be provided at Chandler Crossings,” Smith is optimistic and believes the developers and property owners look at Chandler because of the demographics, high household incomes, highly-educated workforce, great school system and overall excellent quality of life.

Clear across the valley in Surprise is another promising development that just broke ground on July 5^th.  Greenway Marketplace developers Bill Sladek and Pete Simms also purchased the property at the beginning of the year.  “We have been searching high and low all over the valley for the last several years for our Dairy Queen business,” Simms said.  “There are seniors, young families, professionals at lunchtime, teens after school (and as employees).”

Shoppers are looking for the most convenient shopping experiences.  Health, beauty, and fitness are the largest growing types for new business in traditional shopping centers.  That means health care centers, medical offices, gyms, and hair salons are usually in a plaza anchored by a grocery shopping plaza.  The Greenway Marketplace location sits directly across a neighborhood market Walmart, surrounded by a dance studio, nail salon, Farmers Insurance agency, Barro’s Pizza and a Rivas Mexican food restaurant.  The new Dairy Queen is slated to be opened by December of this year.

This signalized street corner location is in a prime area surrounded by four large high schools and the Surprise Tennis & Racquet Complex that hosts a stop on the Champions Tour, attracting tennis legends John McEnroe, Andre Agassi, Anna Kournikorva, and more. This 25 court venue is also open for tennis players of all skill sets.  Greenway Marketplace is also within 2 miles of the Surprise Stadium which hosts many events from Movie Night in the Park, teen Dodge ball tournaments, soccer tournaments, haunted mazes, recreational nights and let’s not forget the stadium is the spring training home of the Kansas City Royals, Texas Rangers, and the Arizona Fall League’s Surprise Saguaros.  With all this in mind, shop owners and retailers should not waste any time in joining the Dairy Queen at Greenway Marketplace.

Owner Pete Simms said, “Our goals for the future are to have a thriving shopping center with strong players to serve this growing community.”

Grocery-anchored shopping centers provide convenience and satisfy the demands of increasingly busy patrons.  They adapt to cater to the everyday needs of the community, so when you have a major grocery retailer, service-related businesses, and a variety of dining options all located within the same shopping plaza investors believe this is the best way to capitalize on their return of investment.

“The Experience”
E-commerce purchases may be the most simplified and time-effective way to acquire what you need, but in this day and age retailers are building aesthetically pleasing developments and bringing on unique retailers that engages the customer’s social experience.  A wide-ranging of personal services such as nail and beauty salons, health and fitness centers, restaurants, and cinemas and theaters make up the entirety of the retail shopping plazas.  Grocery stores are not just grocery stores anymore, as developers are incorporating wine bars and coffee shops, sushi stations, and juice bars that provide an interactive experience for their customers.  Chandler Crossings in Chandler, Arizona and Greenway Marketplace in Surprise, AZ have all of the retailers combined.

Developments that Jim Horvath from Chandler Crossings and the Dairy Queen owners Bill Sladek and Pete Simms are creating real world shopping experiences that are personalized and appealing.  Emerging restaurant concepts such as Slim Chickens, Jack’s Urban Eats, Tokyo Joe’s, Burger Lounge, Café Yumm, Banzai Bowl, SunLife Organics, Sweetfin, or Salata’s are just several unique restaurants that bring unique flare, juicy bites, and natural health foods to mind that fit the Arizona mold for new restaurants.  The Arizona market is an open door of opportunity for investors and by bringing such original eateries and the newest trends to the Arizona valley, consumers will be lining up at the door for “the experience.” The time is now!

The Brokers – The Relationship
Let’s agree that the most important part of any commercial real estate project is the site data and the bottom line.  This is a business after all.  The investors want to make sure their sales investments are viable and/or their lease rates are agreeable. PERIOD!  However, the second most important factor when dealing with commercial real estate is the relationship between the investor, the commercial broker, the developers, the economic leaders, and the financial institution.  Most often, you can’t have one without the other.  The investors must rely on the experts in the commercial real estate industry to be trustworthy, knowledgeable, and they must always look out for the client’s best interest.   The Directors of Retail Leasing and Investment Sales, Rommie Mojahed and Mary Nollenberger (L-R inset below) have been detrimental in the research and development for retail developments across the valley.

“I have worked with Mary and Rommie for more than eight years now, and I consider them to true partners in helping to develop Chandler,” Smith stated.  As the Economic Development Program Manager in the City of Chandler, Smith said the city has been very aggressive in assisting with the redevelopment of the areas and they will continue to develop new initiatives.  Smith warmly stated, “We greatly value our relationship with SVN and Mary and Rommie, in particular.”

For the investors at Greenway Marketplace, finding just the right market for them was their biggest challenge.  They needed to find a financial partner that could help them put the deal together and they did so right here in Arizona with Horizon Community Bank. “It was refreshing to do business with real people who felt like they were on our team,” Pete Simms stated.  That relationship coupled with working with Mary and Rommie for the last 5 years have made it easy to do business in Arizona.  “They have become like family.  Nobody works with more energy, integrity, and positive attitude than these two.”

The Future
E-commerce will continue to transform the landscape for trending retailers with real social experiences versus shopping on line as a convenient option.  Consumers will continue to shop and explore multi-tenant shopping plazas that create interactive & energetic atmospheres.  The new metropolis will explode economically by building and creating work/live/play environments in an urban setting.  With all that in mind, the economic growth in the valley in commercial real estate will initiate the interest in capital investments.  More and more investors will realize they should have domestic and international portfolios that create more viable opportunity within populated demographics.

Additionally, we can anticipate the millennial will move into trendy and urban areas to seek enhanced access to job and amenities – from shopping to entertainment to healthcare.  The mixed-use developments will be surrounded by residential communities, entertainment life all within walking distance or short drive away. Retailers will be ramping up for the holiday season and new grocery centers will be thriving.  In short, with over 68 million people living in Arizona, both local and out-of-state retailers should consider expansion in Arizona because the demand for trendy lifestyle and entertainment developments is right now.  SVN Desert Commercial Advisors is right now.

Dairy Queen owner, Pete Simms said, “Rommie and Mary make things happen.”

Some Recent Deals in 2016
Village Grove Plaza | $7,000,000 – Sale
BASIS School | $2,625,000 – Sale
Power & Elliot PADS | $648,000 – Sale
Greenway Marketplace PAD | $635,000 – Sale
Chandler Crossings | Alamo Draft House | $14,615,305 – Lease
Chandler Crossings | Dairy Queen | $1,567,500 – Lease
Chandler Crossings | Smart Gym | $1,537,023 – Lease
Chandler Crossings | Blue 32 Sports Bar | $1,369,648 – Lease
Chandler Crossings | East Valley School of Music | $1,240,951 – Lease
Practice Management Specialists | $2,409,907 – Lease

Urban Apartment Community Will Feature 204 Luxury Residences

PHOENIX, AZ – P.B. Bell, a leader in multifamily housing development, management and acquisitions, has begun construction on The Curve at Melrose, a new luxury apartment community positioned within the desirable Melrose District in downtown Phoenix. Located at the northeast corner of Glenrosa Avenue and 6th Drive, The Curve at Melrose will offer 204 luxury apartment homes in a vibrant and eclectic urban neighborhood positioned within walking distance of numerous locally owned shops and restaurants.

P.B. Bell celebrated the ground breaking with a ceremony on Aug. 23. Construction is expected to be complete by early 2018. A mid-rise, mid-century modern community, The Curve at Melrose will include studio, one-and two-bedroom residences in a variety of floor plans.

“Excitement about this project has been building for quite some time,” R. Chapin Bell, P.B. Bell CEO, said. “With The Curve, we see an opportunity to develop a new kind of community, with highly attractive amenities and luxurious features, and rental rates that are competitive.”

The Curve at Melrose will feature a number of luxury amenities, several of which were chosen by public vote in 2015. Amenities include a resort-style pool and spa accented by an outdoor kitchen and gas grills. Residents will also have access to a gas fire pit, an outdoor pool table, an expansive fitness center with city, courtyard and pool views, and an elevated lounge that features game tables, an outdoor patio, a kitchen and a TV.

Beyond its on-site amenities, The Curve at Melrose will afford its residents easy access to the Valley Metro light rail line and Steele Indian School Park, a 75-acre public park that includes a dog park, a memorial hall, an American Indian Veterans Memorial site, an amphitheater and lake, and acres of rolling, grassy terrain.

“I’m very excited for The Curve at Melrose development,” said Phoenix Councilwoman Laura Pastor, who represents the Melrose District. “The area it will be joining is one of the most lively, exciting, and fast-emerging communities in our city, and The Curve promises to not only add to its already colorful character, but reinforce the importance of the entrepreneurial spirit and effect that small businesses have on the local economy.”

As part of its commitment to and appreciation for the surrounding neighborhood, P.B. Bell has been working with the Seventh Avenue Merchants Association throughout the development process and plans to reserve three display windows at the property to spotlight community-curated work and displays.

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.

Wednesday, the Dow Jones industrial dropped 11.98 points, or 0.1 per cent, to 18,526.14. The S&P 500 index slipped 0.32 points, or 0.01 per cent, to 2,186.16. The NASDAQ gained 8.02 points, or 0.2 per cent, to 5,283.93.

Benchmark U.S. crude oil futures rose 67 cents, or 1.5 per cent, to close at $45.50 a barrel in New York. Brent crude, the benchmark for international oil prices, added 72 cents, or 1.5 per cent, to close at $47.98 a barrel in London. Wholesale gasoline rose 3 cents to $1.35 a gallon. Heating oil added 2 cents to $1.43 a gallon. Natural gas slid 4 cents to $2.68 per 1,000 cubic feet.

US job openings jump to record high in mixed signal to Fed — American employers advertised a record number of open jobs in July, a sign hiring may stay healthy despite a slowdown last month. Job openings jumped 4 per cent to 5.87 million, the Labor Department said Wednesday, slightly above the previous peak reached in April. The data dates back to December 2000. (AP)

Britain’s economy is stable — and people are surprised — Fear of an economic meltdown was the biggest weapon in the campaign to stop Britain from leaving the European Union. Economic and financial experts in the City of London, which has a lot to lose from an EU exit, warned that a decision to leave would hit business so hard as to put the country in or close to recession this year. Ten weeks after the vote, though, some say the fearmongering was overdone. Though the pound has fallen to a 30-year low, as predicted, people continue to spend and activity in manufacturing and services rebounded last month from a sharp contraction in July. House prices have held up. (AP)

US growth weakened slightly this summer, Fed report shows — The economy grew at a moderate or modest pace this summer in eight of the Federal Reserve’s 12 U.S. districts, a slowdown from previous reports that may make Fed policymakers more cautious about an interest rate hike. The Fed’s “Beige Book” survey of business conditions, released Wednesday, found that growth weakened in two districts — Philadelphia and Richmond. The economy was unchanged in New York and Kansas City. In its last report in July, growth was modest or moderate in 11 of 12 districts. The report comes after Friday’s jobs figures showed that hiring slowed in August to half the pace seen in June and July. And a business survey found that manufacturing activity actually shrank last month. Such readings may darken the outlook for many Fed officials. (AP)

TIF Bond Issues Last Year Hit Highest Level Since 2006 “Tax-increment financing began in 1952 in California as a way to jump-start development in blighted areas. Since then it has spread to nearly every state. Typically new property tax revenue generated by development in a TIF district is pledged to pay for public infrastructure within the district. Laws in some states also allow sales tax to be diverted and some permit TIF funds to be spent on private development costs. New TIF bond issues in 2015 totaled nearly $700 million, according to data analyzed by Elise Lomel of the financial advisory firm PFM Group in Atlanta. That total, which excludes refinancings, was the highest yearly total since 2006, excluding California, which largely exited the TIF sector by 2012. Not all TIF projects involve the issuance of debt. However, the numbers have bounced around in recent years, and the total in the first half of 2016 came to just $77 million, her analysis found. Counting California, the peak for non-refinancing TIF bonds since 2000 occurred in 2006, at about $3 billion.” (The Wall Street Journal)

Lower Manhattan population more than doubles since 9/11, report says “The number of residents and new apartments in lower Manhattan has skyrocketed since 2000, while the number of jobs remains below pre-9/11 levels, according to a report Tuesday. The report, released by state Comptroller Thomas DiNapoli, painted lower Manhattan as a burgeoning residential neighborhood that is far less reliant on the financial sector years after the 9/11 terror attacks. In 2014, there were nearly 50,000 people living in the area, for example, more than double the population in 2000. That influx coincided with a similar increase in housing units, which numbered 30,000 in 2015. ‘Lower Manhattan is doing more than rebuilding; it is transforming and moving forward with resilience and hope,’ said DiNapoli in a statement. Private-sector employment has steadily grown as well, with the number of jobs reaching 228,300 in 2015, the highest level since the terror attacks, according to the report. However, the number is below pre-9/11 employment levels. And the majority of jobs are no longer in the financial sector. Instead, other industries such as business services and hospitality now make up a bigger slice of the pie.” (Crain’s New York Business)

Gas/Convenience Stores Go Glam with Guess Corp. “The notion of gassing up and grabbing something on the go is about to be re-envisioned through diamond-encrusted glasses. Via its Guess Petroleum unit, The Guess Corp. will introduce an exclusive chain of über-upscale gas station/convenience stores designed to transform a couple of typically mundane tasks into a ritzy experience. Target market: those with a net worth exceeding $50 million. GP Club won’t be the kind of gas-and-go or stop-and-shop that attracts the average Joe; this will be something entirely different. Presented in four-story structures designed by architectural firm Scott+Cormia, GP Club is a concept whose time has come, according to Guess, which operated primarily as a diamond trading concern before commencing its expansion into new businesses in 2012. ‘The economy is doing well and the affluent consumer is enjoying more disposable income than before,’ Tiffany Taylor, corporate vice president with The Guess Corp., told Commercial Property Executive. ‘Our research and experience shows that the ultra-affluent want more exclusive products and services, and the gas/convenience store space has not responded to this, so with GP Club, we are.’” (Commercial Property Executive)

Economy Watch: Overeseas Investment in US CRE Still Strong “Direct foreign investment in U.S. commercial real estate totaled 17 percent of all real estate investment by dollar volume in 2015, making that a record year. This year is on track to see a lower share of overseas investment in domestic CRE—mainly due to the impact of the stronger dollar—but even so, foreign investors still represent a significant slice of the pie, according to a recent report by Marcus & Millichap. The reasons for that include global financial market volatility, weak foreign economies, low alternative investment yields and other factors creating uncertainty, which reinforce the advantages of U.S. commercial real estate, the report says. Many foreign investors are still looking for capital preservation and asset stability on American shores, rather than yield. In any case, historically, international investment in the U.S. has averaged 9 percent of total investment. This year might not reach the highs of 2015, Marcus & Millchap said, but international investors still accounted for about 11 percent of the dollar volume of all U.S. properties sold in the first half of 2016.” (MultiHousing News)

The ‘closed’ fund conundrum “When news broke earlier this summer that the Blackstone Group was planning to take its rental-home company, Invitation Homes, public by the first half of 2017, it came as little surprise. The private equity giant bought up 50,000 rental homes nationwide in the aftermath of the most recent financial crisis, with the intention of flipping them for a profit — either by selling them individually, unloading them in bulk or taking the portfolio public. It didn’t have a choice, since the fund that bought the homes — Blackstone Real Estate Partners VII — has a contractual obligation to sell its properties and return its investors’ money within a decade. But the deal did shine a light on so-called “closed-end” funds, which have a fixed life span and don’t sell new shares once an initial fund-raising period is over. These funds played a big role in helping the New York real estate market recover from its 2009 slump by buying up office and retail properties and bankrolling many of the latest condo towers.” (The Real Deal)

Perot’s development firm plans Texas-sized warehouse “The Perot family’s real estate development firm plans to begin construction this week on a nearly 1 million-square-foot spec warehouse in Joliet, the largest such project underway in the Chicago area. Hillwood said it is set to build a 992,640-square-foot facility on speculation, or without any leases signed, on an 85-acre site it recently bought near interstates 55 and 80. The building can be expanded to as much as 1.5 million total square feet. Dallas-based Hillwood, led by Ross Perot Jr., is counting on continued strong demand for industrial space in the Chicago area after overall vacancy in the second quarter fell below 7 percent for the first time since 2001. Hillwood is emboldened after e-commerce giant Amazon recently leased a 746,772-square-foot warehouse the firm built on spec in the Laraway Crossings industrial park in Joliet. That had been Hillwood’s largest project to date in the Chicago area. In addition to that warehouse, its second in Joliet, Amazon also has signed recent deals for large distribution centers in Romeoville and Monee. Home furnishings retailer Ikea and electronics maker Samsung also have recently leased large spaces near Joliet.” (Crain’s Chicago Business)

European investors want to buy Jungle Island. What’s next for troubled park? “The parrots of Jungle Island could soon squawk the name of a new owner. Investors are working on a deal to take over the lease for Miami’s historically under-performing aviary and tourist attraction — and they may ask voters for the right to build a hotel and other improvements on city-owned land. Aventura-based ESJ Capital Partners is negotiating with a group led by Bern Levine, a veterinarian who bought the wildlife park in 1988 when it was called Parrot Jungle and located in what is now Pinecrest. Levine later won voter approval to move the attraction to Watson Island along the MacArthur Causeway, where it reopened in 2003.” (Miami Herald)

Economy Watch: Residential Construction Spending Up in July “U.S. construction spending during July 2016 came in at an annualized rate of $1,153.2 billion, nearly the same as the revised June estimate, which was $1,153.5 billion, the Census Bureau reported ahead of the Labor Day holiday. Even so, the July 2016 figure is 1.5 percent higher than the July 2015 construction spending total. Such growth as there was in July was due to spending on private construction projects, which was up 1 percent compared to the revised June total. Public construction spending, by contrast, was down for the month by 3.1 percent. For the year, private construction spending gained 4.4 percent, while public spending dropped 6.5 percent.” (MultiHousing News)

Silicon Valley Office Campus to Add Retail, Hotel “Washington Holdings, a Seattle-based institutional commercial real estate investment firm, is revamping its 46-acre Mission Park office campus in Santa Clara by adding 24,000 square feet of retail and a five-story, 175-room extended-stay hotel to the property. The firm, which also has offices in Santa Clara and Los Angeles, has received approval from the City of Santa Clara for the addition to the site, located about one mile from Levi’s Stadium. Mission Park, near Highway 101, spans a large stretch of Montague Expressway and is bordered by Mission College Boulevard and Lafayette Street. Washington Holdings, which acquires, develops, manages and invests in real estate assets within the western United States, bought Mission Park three years ago and has invested about $20 million in upgrades to building facades, common areas and adding new outdoor amenity spaces and sidewalks to create a more modern, pedestrian-friendly environment. The firm said leasing has already increased by more than 350,000 square feet.” (Commercial Property Executive)

Big expansion planned for Westside shopping center “A decades-old shopping center in Marina del Rey might be getting some major updates and several hundred units of housing, according to plans filed with the city last week. The project would transform the Marina del Rey-adjacent Marina Marketplace, which, right now, is home to a Barnes and Noble and DSW shoe store, among other shops. Plans call for 27,300 square feet of new retail space, along with 658 units of housing—66 of those units will be deemed affordable, which is nice considering the rapidly price of rent in the area. It’s not clear how many of the businesses currently located within the marketplace will be displaced by the new project. As Urbanize LA reports, the 6.8-acre complex was developed in the 1970s and acquired by RREEF Real Estate in 2006. Renovation plans for the marketplace, along with the neighboring Villa Marina shopping center, were first reported in 2008.” (Curbed Los Angeles)