Increasing Client Budget Control and Accelerating Completions

PHOENIX, AZ  – In the 2.5 years since LGE Design Build launched its new in-house architectural division called LGE Design Group, the Phoenix-based general contractor has provided architectural services for more than 70 projects, encompassing 1 million square feet in the Phoenix metro area.

LGE Design Build is one of only a few design build firms in the western U.S. with its own architects.

Integrating architecture with construction provides a seamless experience in which LGE quickly updates plans based on the client’s evolving needs, providing more budget control for the client and an accelerated completion date.

“We are able to walk down the hall and talk with the construction team to immediately execute changes. The entire team is communicating frequently during each stage of the process,” said Vince Dalke, vice president/principal of LGE Design Group.

LGE provides services for the entire design and building process: site selection, architecture, entitlement, pre-construction, and construction.

“Integrating in-house architectural services reinforces the ‘design build’ mission of our company,” said David Sellers, president of LGE Design Build. “We’ve simplified and streamlined the entire construction process which creates a collaborative environment for all team members and a better outcome for clients.”

Launched in January 2014, LGE Design Group’s projects include Crown Castle’s 70,000-square-foot, two-story Class A office build to suit in Chandler, Video West Inc.’s new 40,000-square-foot office/warehouse headquarters in Phoenix, and Legacy Traditional Schools, a 78,000-square-foot K-8 school currently under construction in Chandler.

“LGE’s design build team has been fantastic in helping the design and approvals of our new Legacy campus move at an accelerated rate. Their ability to sketch site and floor plan changes on the fly, convert to detailed drawings, and then proceed to permitting and construction has made for a seamless process. We have truly enjoyed working with Vince and his design team,” said Brandon Jones, CEO of Legacy Traditional Schools.

Dalke, who has 26 years of architectural experience, worked on several LGE projects before leading LGE Design Group. He was previously a principal at Archicon, an architectural and interior design firm in Phoenix. He has experience with all building types such as office, industrial, retail, and medical. An Arizona native, Dalke earned a bachelor’s degree in architectural design at Arizona State University.

Dalke approaches architecture with the philosophy of advocating for the client.

“I like to think of myself as a therapist for clients. I listen to them describe their business goals, struggles and aspirations and then determine the best way to solve those issues,” Dalke said.

Dalke has expanded LGE Design Group to nine staff members who provide architecture, rendering, interior design and project management services.

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.

The Dow Jones industrial average gave up 27.73 points, or 0.2 per cent, to 18,404.51. The Standard & Poor’s 500 index 500 shed 2.76 points, or 0.1 per cent, to 2,170.84. The NASDAQ composite rose 22.06 points, or 0.4 per cent, to 5,184.20

Benchmark U.S. crude lost $1.54, or 3.7 per cent, to $40.06 a barrel in New York, while Brent crude, which is used to price international oils, gave up $1.39, or 3.2 per cent, to $42.14 a barrel in London. In other energy trading, wholesale gasoline fell 2 cents to $1.30 a gallon. Heating oil shed 5 cents, or 3.8 per cent, to $1.28 a gallon. Natural gas gave up 11 cents, or 3.7 per cent, to $2.77 per 1,000 cubic feet.

US stocks slip as falling oil prices punish energy companies — U.S. stocks wobbled and finished mostly lower Monday as the price of oil continued to nosedive thanks to the strong dollar. Energy companies took the biggest losses as U.S. crude hovered around $40 a barrel, its lowest price in almost four months, and materials companies also traded lower. Every oil, gas and pipeline company on the Standard & Poor’s 500 finished lower as a slump in the price of oil and other fuels extended into a third week. The losses for energy and mining, chemical and building companies cancelled out gains for technology and health care companies.

US construction spending drops 0.6 per cent in June — U.S. construction spending fell for a third straight month in June with spending on nonresidential construction dropping by the largest amount in six months. Construction spending fell 0.6 per cent in June following declines of 0.1 per cent in May and 2.9 per cent in April, the Commerce Department reported Monday. Nonresidential construction declined 1.3 per cent, the biggest setback since December, while residential activity was unchanged in June. Spending on government projects fell 0.6 per cent, the fourth straight decline, with both federal and state and local construction activity down.

Virgin Galactic gets space tourism rocket operating license — Virgin Galactic says it has received an operating license for its space tourism rocket from the Federal Aviation Administration. Virgin Galactic says the operating license will ultimately permit commercial operations. The company said Monday the licensing process involved a review of the system’s design, safety analysis and flight trajectory analysis. Virgin Galatic’s first spaceship broke apart in 2014 during its fourth rocket-powered test flight when the co-pilot prematurely unlocked a key system. The second version of the company’s SpaceShipTwo was unveiled in February.

Verizon to buy Fleetmatics for about $2.4 billion — Verizon said Monday that it plans to pay about $2.4 billion to buy Fleetmatics, which makes software used by cable companies, energy providers and others to manage their fleets of vehicles. Verizon will pay $60 for each share of Fleetmatics, a nearly 40 per cent premium of the stock’s closing price of $42.96 Friday. Fleetmatics, based in Dublin, said it has more than 37,000 customers that use its software to track the location of vehicles driven by workers. Verizon, which provides cellphone and internet service, said the deal will boost its workforce management business.

Spiking Data Center Demand Driven by Exploding Cloud Services, Digital Content “According to JLL’s latest data center report, unprecedented demand for online content such as movies, videos, apps, social media and photos have become a staple part of the digital diet. Because of such, the adoption of cloud services to store all this content is expected to double the size of the North American data center industry by 2021…With a spike in protective data sovereignty laws enacted this year, JLL’s annual North America Data Center report also observes that countries are beginning to regulate where the cloud ‘lives.’ Data sovereignty means that digital data is subject to the laws or legal jurisdiction of the country in which it is stored. With this some of the industry’s biggest players are expanding globally faster than ever to meet growing demand and regulatory compliance requirements.” (World Property Journal)

Five things about commercial real estate at midyear “The Association for Commercial Real Estate’s Sacramento chapter met Thursday for a midyear luncheon to assess the state of the market. Here are five points gleaned from a panel discussion that involved brokers from CBRE, JLL, Kennedy Wilson and Gallelli Real Estate’s local offices. Job growth is the limiting factor for most sectors’ continued expansion. Kevin Soares of Gallelli said job growth leads to housing, and housing leads to new retail development. Similarly, Marc Ross of CBRE said multifamily property investors are getting more leery when rents are rising much faster than incomes are. Renewals are the major source of activity for the office market. JLL’s Greg Levi said many of the available office buildings are obsolete, too small or both. So tenants are opting to stay more often, which helps drive rents up. Eventually, rents will justify new construction. Development fees also have a negative effect.” (Sacramento Business Journal)

US economy: Is the worst over? “[Video] Richard Martin of IMA Asia explains why he’s anticipating a 25 basis point interest rake hike in December.” (CNBC)

Beyond the Bank: Financing Commercial Real Estate in Nevada “Commercial real estate means office buildings, retail and industrial properties, multi-family projects and the raw land that eventually becomes all of the above. Commercial real estate financing is equally varied and includes everything from traditional bank-backed loans to newer twists such as crowdfunding. There are a variety of sources of lending, particularly for borrowers or projects that wouldn’t qualify for traditional bank loans. Some of those are institutional lenders such as hedge funds, life insurance companies and pension funds. There are funds that work with distressed properties, such as those properties that lost significant value during the economic downturn, and there are private lenders, sometimes referred to as hard money, according to Jackie DeLaney, president and COO, Atalyst Commercial Mortgage. Reasons for finding nontraditional funding are as varied as the types of nontraditional funding. Risk is one, speculation is another. Banks aren’t allowed to speculate but individual investors can.” (Nevada Business Journal)

Lowe’s to open Nashville distribution hub “Lowe’s is amping up its distribution game with a new direct fulfillment center near Nashville. At a square footage of 1.1 million, the facility will be a Lowe’s first in that it will ship packages directly to customers. ‘We’re continually working to make doing business with Lowe’s easier for customers. Investing to build a new direct fulfillment center – the first of its kind for Lowe’s – allows us to offer customers more products online, consolidate multiple parcel shipments and ship purchases directly to customers faster and more efficiently,’ said Brent Kirby, Lowe’s chief supply chain officer. ‘The Nashville area was chosen due to its existing large shipping hubs, access to interstate roadways and well-skilled workforce.’ The $100 million investment will also create as many as 600 jobs in Coopertown, with 400 positions to open immediately upon open, and another 200 added over the next four years.” (Chain Store Age)

Mercedes-Benz Breaks Ground on SC Sprinter Plant “Mercedes-Benz Vans has broken ground on its new Sprinter plant for the North American market, in North Charleston, S.C., the company announced last week. The new plant is an expansion of the existing van assembly plant in North Charleston and reportedly represents an investment of approximately $500 million. The plant itself will create as many as 1,300 jobs, according to Mercedes-Benz Vans, which estimates that suppliers will create about a further 400 new jobs in and around North Charleston. Currently, Sprinter vans for the U.S. market are produced at German plants, but, because of high import tariffs, they are partially dismantled and later reassembled at the North Charleston plant. The new plant will let Mercedes manufacture “Made in USA” Sprinters, enabling the company to more economically meet the growing demand and considerably reduce delivery time to the U.S. market. The new plant’s body shop will be constructed first, followed by the paint shop and the assembly lines. Production of the next-generation Sprinter is planned to begin before the end of the decade. The current production area and administration building comprise 409,000 square feet. By comparison, the new facility will cover around 1.1 million square feet, plus a 2.8 million-square-foot marshaling yard for finished vehicles.” (Commercial Property Executive)

Number of Multifamily Permits Drops in New York “The number of residential permits issued by the New York City Department of Buildings (DOB) dropped by more than half in the 12 months after the demise of the 421-a program, according to a New York Building Congress analysis of U.S. Census data. The program gave developers a 10-year tax exemption for building a multi-unit residential project on vacant land. During the 12-month period running from the expiration of the program (July 1, 2015) through June 30 of this year, the DOB authorized construction of 20,144 new units of housing in the five boroughs, a drop of 62 percent from the 52,618 residential permits that were issued between July 1, 2014 and June 30, 2015. That said, the 20,144 permitted units is right in line with the average of 19,928 residential permits that were authorized annually between 2005 and 2014.” (MultiHousing News)

The majority of the world’s billionaires are in NYC: Report “NYC boasts $537 billion, or 7.6 percent, of all global billionaire wealth. It’s not just Billionaire’s Row and Belgravia. A new study conducted by Richard Florida and the Martin Prosperity Institute’s Charlotta Mellander sets out to map this global geography of the super-rich — whose combined wealth exceeded $7 trillion in 2015.” (The Real Deal)

Frank Gehry’s Sunset Strip project is approved — ‘I will do my best to make you proud’ “Celebrity architect Frank Gehry’s big residential and retail project on the Sunset Strip is a go. The city’s planning commission on Thursday voted unanimously to give final approval to a cluster of Gehry-designed buildings at 8150 Sunset Boulevard. Its location at Crescent Heights, directly across from favorite celebrity-haunt Chateau Marmont, is prime, and the developer, Townscape Partners, says it’s an iconic design that will serve as the ‘eastern gateway’ to the strip. The five buildings with varying heights from three to 15 stories will hold 249 residential units, 15 percent of which will be rented below market rate to tenants with lower incomes. That percentage is an increase from what was initially proposed, a request made by commissioners. Plans also call for a market, restaurant, stores, and new bank. There’s also public space and a public plaza, landscaped with jacaranda and palm trees, plus about 800 parking spaces.” (Los Angeles Curbed)

Court supports real estate developer’s right to keep hikers off his land “The fight continues. An appellate court last week sided with a Los Angeles real estate developer who has been embroiled in a legal battle for years with a group of activists over their right to use a popular hiking trail that cuts across his property, which he is seeking to develop. The court’s decision is ‘a relief,’ said Mohamed Hadid, who has developed buildings all over the world, including more than a dozen Ritz-Carlton hotels. ‘This has been very costly for me, mentally and financially over the years,” he said. “Now I can continue the process of development.’ But the battle isn’t over for the group of passionate nature-lovers who filed the original lawsuit against Hadid four years ago. They plan to seek a rehearing. And if that doesn’t work, they will petition the California Supreme Court.  (Los Angeles Times)

The following commercial leases were reported to the Real Estate Daily News for the Tucson Lease Report from July 25 thru 29, 2016.

INDUSTRIAL – 3990 S. EVANS BLVD., TUCSON
Delta Airlines, Inc. extended a lease by one of their interior refinishers for 16,176-square-feet at 3990 S. Evans Blvd. in Tucson from Big Y, LLC.  Stephen D. Cohen and Russell W. Hall, SIOR, GSCS, Industrial Specialists with Cushman & Wakefield | PICOR, represented both parties in this transaction.

INDUSTRIAL – 1881 E. 18^th ST., TUCSON
FWC Supply, LLC, dba Farnsworth Wholesale Company, leased 5,000-square-feet at 1881 E. 18^th St. in Tucson from Campbell 18, LLC.  Ron Zimmerman, Commercial Specialist with Cushman & Wakefield | PICOR, represented the tenant and Tim Healy with CBRE, Inc., represented the landlord in this transaction. [mepr-show rules=”58038″]Asking lease rate: $0.58 SF/MO NNN; Tenant Phone: 520.806.5300[/mepr-show]

INDUSTRIAL – 720 E 46^th ST., TUCSON
Network Hardware Supply Distribution, LLC leased 4,070-square-feet at 720 E. 46^th St. in Tucson from El Gato Investment Two, LLC.   Jeff Zellet, Commercial Specialist with Cushman & Wakefield | PICOR, handled this transaction. [mepr-show rules=”58038″]Tenant Phone: 520.770.7811[/mepr-show]

OFFICE – 2424 E BROADWAY BLVD., TUCSON
Correctional Healthcare Companies, LLC has leased 3,613-square-feet at 2424 E. Broadway Blvd., Suite 100, from 2424 E. Broadway Ltd. Chris Tsighis of Coldwell Banker represented the Tenant and Andrew Sternberg and Robert Nolan of Oxford Realty Advisors represented the Landlord in the transaction. [mepr-show rules=”58038″]Asking lease rate: $10.00 -$12.00 SF/YR Modified Gross; Tenant Phone: 480.949.8817[/mepr-show]

INDUSTRIAL – 3640 S. CAMPBELL AVE., TUCSON
Swisher Hygiene USA Operations, Inc. leased 2,500-square-feet at 3640 S. Campbell Ave., Unit 2 in Tucson from Strauss Revocable Living Trust.  Paul Hooker, Industrial Specialist with Cushman & Wakefield | PICOR, represented the landlord.  Edie Hartman with Grant Street Associates, Pittsburgh, PA., represented the tenant in this transaction. [mepr-show rules=”58038″]Tenant Phone: 520.624.4580[/mepr-show]

OFFICE – 5151 E. BROADWAY BLVD., TUCSON
CIGNA Health and Life Insurance Company leased 2,287-square-feet in 5151 E. Broadway, Tucson. The location of the property is at the northeast corner of Broadway and Rosemont in Tucson, Arizona. The owner of the property is Tucson 5151 Investments, LLC. Sandy Alter of Rein & Grossoehme Commercial Real Estate represented the landlord in the transaction. The tenant was represented by Dave Montijo of CBRE in Tucson. [mepr-show rules=”58038″]Asking lease rate: $18.00 – $21.00 SF/YR Full Service; Tenant Phone: 800.244.6224[/mepr-show]