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The medical / administrative building at 4881 E Grant Road in Tucson was purchased by Hazen Enterprises through affiliates for[mepr-show rules=”58038″]$4.3 million ($284 PSF) from BP Crossroads Investors, LLC (Don Bourn, managing member). The two-story, 15,000 sq. ft. building is located on just under an acre in The Crossroads Festival Center, at the northeast corner of Swan and Grant Roads.

The seller, an affiliate of Bourn Partners, developed the property in 2008 as a build-to-suit and sold it fully occupied to Genesis OB/GYN, the parent company of Crossroads OB/GYN. The second floor serves as administrative headquarters for Genesis with medical space for seven OB/GYN doctors on the ground floor.

Genesis is the parent company to over a dozen OB/GYN, Diagnostic Imaging and Maternal Fetal Medicine centers in the region.

Tucson-based Hazen Enterprises began as Hazen Brothers Construction in 1981, a family owned and operated enterprise, the construction company built townhomes. In 1986, that portion of the business was halted when tax laws changed and Hazen Enterprise continued its property management and commercial real estate investments in the community. Brandt Hazen, son of Paul Hazen and nephew to Steve and Jeff Hazen the company founders, took over the business about 12 years ago. Hazen currently manages 426 townhomes in 30 locations and approximately 200,000 sq. ft. of office space.

The investor recently sold another office building at 3160 E Transcon Way in Tucson to Infinity Insurance for its new Tucson location. This transaction was the buyer’s up-leg in a 1031 exchange. Additional information on this prior sale is available to subscribers here.

Hazen pointed out that there was more involved than just doing a tax deferred exchange when deciding to purchase a property. Hazen explained, “It’s about relationships and that means the people involved, not just the property. We look for relationships, not just properties. It’s more than a leased building to us, it’s a new partnership with Genesis.” Hazen takes as much pride in the relationships as the townhomes his company has built in Tucson.

Genesis is the parent company to over a dozen OB/GYN, Diagnostic Imaging and Maternal Fetal Medicine centers in the region.

Michael Sandahl, Senior Vice President of Investment Properties and David Montijo, First Vice President, at CBRE in Tucson handled the transaction for both parties.

Hazen can be reached at (520) 795-8429. Bourn is at (520) 323-1005. Sandahl can be contacted at (520) 323-5115 and Montijo is at (520) 323-5136.[/mepr-show]

[ismember]The precise sale price was $4,265,000. Property sold at a reported 9.14% cap rate, a lease rate of $26 PSF/ NNN. There was a 30-day look and 30-day close. The building SF was reported by the buyer per appraisal survey at time of sale as 15,000 SF, this differs slightly from the County Assessor number of 14,771 SF. Broker reported that the property was off-market when it sold. Land area is 43,180 SF, or .99 acre.[/ismember]

While most of the media is focused on the Supreme Court’s rulings on voters’ rights and affirmative action, yesterday in a 5-4 vote, the U.S. Supreme Court (“SCOTUS”) issued its opinion in Koonz v. St. Johns River Water Management District, No. 11-1447, slip op., 570 U.S. ___ (2013).  Koontz, a victory for the property owner, is an important property rights case affecting the government’s ability to impose monetary conditions on the approval of land use permits. 

The case arose when Coy Koontz sought permits to build on approximately four of his nearly 15 acres in Florida, much of which Florida classified as wetlands.  Koontz needed special permits from Florida’s water management district (“WMD”) in order to build, which could include conditions to mitigate the impact on the wetlands.  When Mr. Koontz applied, he offered to give the WMD a conservation easement over the remaining 11 acres of his property to restrict their development.  The WMD, rejecting his offer, gave him two options: (i) reduce the size of his development to one acre and give the WMD a conservation easement over the remaining 14 acres; or (ii) pay the costs of construction improvements, including replacing drainage culverts and filling ditches, to the WMD’s off-site wetlands several miles from Koontz’s property.  The WMD denied his permit when Koontz refused these options.

The Koontz case raises two important legal issues under the so-called “unconstitutional conditions” corner of regulatory takings law: 1) whether the Nollan/Dolan standard, which requires that government-imposed project conditions have a nexus to and rough proportionality with the projected effects of a proposed project, applies to project denials as well as project approvals; and 2) if the Nollan/Dolan test applies to monetary exactions as well as government’s compelled dedications of real property.

Koontz answered two questions.  First, the Supreme Court held the Nollan and Dolan analysis applies whether the government approves a permit with the unconstitutional condition or denies the permit because an applicant refuses to accept the unconstitutional condition.  This holding gives landowners bargaining power, because property owners do not need to accept “extortionist” conditions before they can challenge their validity and seek just compensation.  Second, the Supreme Court held that “‘monetary exactions’ must satisfy the nexus and rough proportionality requirements of Nollan and Dolan.”  In this sense, monetary exactions from landowners are treated no differently than conditions requiring a landowner to give the government an interest in their land.  Unless the requirement to pay money has a nexus with property and is roughly proportional to the development’s expected impacts, the requirement will be found unconstitutional.

To view the entire case go to https://www.supremecourt.gov/opinions/12pdf/11-1447_6j37.pdf

Michael Laatsch comes to CBRE after being at Holualoa Companies for many years as an analyst and asset manager overseeing property leasing and performance. Michael is new to CBRE, but not new to the world of commercial real estate.

Laatsch will be joining the retail brokerage division at CBRE, working closely with First Vice President, Nancy McClure.

McClure said in an email message, “I am really excited to have Michael Laatsch join me and wanted to ensure everyone knows he is here and we are getting synched. We look forward to broadening our scope of work in the Southern Arizona market.”

McClure should be reached at (520) 323-51117 and Laatsch can be contacted at (520) 323-5191.