2030 REPORT 2021 Brought Infrastructure and Apartment Projects to Submarket

SCOTTSDALE, ARIZONA  –  Despite pandemic conditions, 2021 brought new development projects and relocating companies to the growing Scottsdale Airpark submarket.  This, according to a report released by Colliers in Arizona, included infrastructure projects by the City of Scottsdale and new apartment buildings.

Towards the end of 2021, the City of Scottsdale began new roundabouts at 76^th Street and Raintree Drive and 76^th Street and Redfield Road.  This is the start of infrastructure plans being installed throughout the Scottsdale Airpark area.

Additional construction in the area included construction of new apartment projects in the submarket.  Many owners of properties in the area took advantage of the COVID-19 slowdown to renovate or update existing buildings in preparation for the return to normalcy.

During 2021, some new companies moved into the Scottdale Airpark.  Vincit USA acquired Vuria, a software development company.  This is just one example of technology companies seeking space in the submarket.

Ravenscroft, a new 30,000-square-foot music venu and multi-use space was created during 2021.  The company purchased a building in Perimeter Center and performed a significant remodeling and re-purposing of the property.

On the land front, the State of Arizona continues auctioning property in the area.  During December 2021 the Mayo Clinic successfully bid on 228 acres at the southwest corner of Loop 101 and 64^th Street for creation of a patient care expansion and development of a biotech center.  During the first quarter of 2022 two sites are scheduled for sale; a 51-acre site at the southeast corner of Loop 101 and 64^th Street, as well as a 124-acre site at the northeast corner of Bell Road and Loop 101.

Commercial space is increasingly being used for auto related purposes in the Scottsdale Airpark.  Recognized for its collectible car auctions, Scottsdale has become a year-round hub for collectors.  It is now estimated that 45 privately owned collection are housed in the Scottsdale Airpark.  These car owners are occupying space in hangers or warehouses, both rented facilities and owner-occupied.  Building remdeled for this use tend to feature 80 percent showroom and 20 percent office configurations.  It is estimated that more than $85 million of clasic and exotic cars are now located in the Scottsdale Airpark.

The Scottsdale Airpark submarket is expected to remain active during 2022.  Ilume, the former Henkel headquarters property at Loop 101 and Scottsdale Road, is expected to attract new biotechnology tenants to the area, which will enhance this employment base.  Additionally, Axis Raintree will complete its new 175,110-square-foot office building at Raintree Drive west of the Loop 101.  This completion will coincide with construction of two apartment projects located near the Axis building.

The submarket is expected to expand its already robust collection of companies and employees during the upcoming year.  Currently, the Scottsdale Airpark contains more than 46 million square feet of commercial space housing 3,339 companies.  These firms employ in excess of 63,500 people within the submarket.  Colliers in Arizona estimates that by 2030 these figures will grow to 53 milllion square feet of space and upwards of 4,200 companies employing 82,000 people.

Read the 2030 Report here.

PHOENIX, ARIZONA – Although the past two years have been challenging for most business sectors in Arizona, the state’s commercial real estate community – and the self-storage industry in particular – fared better than expected and in some cases even flourished.

“This is not the first time that the self-storage industry has shown exceptional strength in a downturn,” said John Chang, Senior Vice President, National Director Research

Services with Marcus & Millichap Real Estate Investment Services, in the opening discussion, “Can the Worst of Times Deliver the Best of Times?”

“During the Great Recession, self-storage outperformed other types of real estate. More capital is coming into self-storage as major institutions see it performing well when things are not going well in the economy. This has also been true during good times,” Chang added.

The keynote speech and other topics highlighted the 22nd Annual Arizona Self-Storage Association Conference & Trade Show held recently at We-Ko-Pa Casino Resort in Fort McDowell, Arizona. The Arizona Self-Storage Association (AZSA) is the trade association that represents the self-storage industry in Arizona.

Chang said there was an upside to Arizona’s self-storage industry during the pandemic; an industry that continues to grow as U.S. businesses are coming to grips with high inflation rates.

“Self-storage has tremendous inflation resistance,” Chang said. “Self-storage has the advantage that it can adapt quickly to rolling lease costs. While rising construction costs are affecting other types of commercial real estate, self-storage is flourishing.”

With the self-storage vacancy rate 4.6 percent in Metro Phoenix, Chang said he expects it to increase slightly. However, Phoenix continues to outpace the national average when it comes to transaction activity with Arizona sales seeing greater growth.

“The past year (2021) was the most active in Arizona for commercial real estate deals,” Chang said. “All activity was up 35 percent; the number of self-storage properties that traded was up 19 percent. The market for self-storage in Arizona is delivering strong appreciation and carries momentum.”

Delving into the economics of the self-storage industry, Chris Sonne of Newmark Valuation & Advisory, said on an institutional level self-storage is no longer considered an alternative asset class.

“Self-storage is a core asset class,” Sonne said. “The underwriting is beginning to fundamentally change. Valuation has risen dramatically. What has changed? Properties are more sophisticated, but self-storage has always been on the forefront of technology. In 2021, $20 billion was invested in the sector, $11 billion in self-storage portfolios alone.”

The conference comprised an Owners and Investors Summit and an Operational Symposium. The annual golf tournament preceded the conference at We-Ko-Pa Golf Club.

AZSA and The BSC Group kicked off the conference with the Owners and Investors Summit with host Adam Karnes. Other presentations on the first day included “Understanding the Legalities of the New Normal,” by Scott Zucker of Weissman/Zucker; and the Legislative Forecast by Lourdes Pena with Triadvocates.

The Operational Symposium kicked off with “Why? Understanding Management Summary Reports, Revenue Management and More” by John Manes of Pinnacle Storage Properties and Pinnacle Storage Managers. The final presentation is “My Lost Brothers: The Untold Story by the Yarnell Fire’s Lone Survivor” by Brendan McDonough.

Poppy Behrens, Executive Editor of MiniCo, Inc., was presented with the Pioneer Award for her years of service with AZSA. The golf tournament benefited Homes For Our Troops.

TUCSON, Arizona — Vertical Street Ventures (VSV) has acquired the Redondo Tower Apartments, a downtown High Rise apartment building at 425 W Paseo Redondo in Tucson. VSV teamed up with Ral West and John Hardwick of Hardwick Apartment Homes, Ashok Patil and Mohit Bansal of Prime Investment LLC, and Louie Caumban and Rosalind Caumban of Fastpath Capital Group LLC.

The asset sold for $27 million ($281,250 per unit).

This marks VSV’s 5^th property purchased in the Tucson, AZ market and 12^th property acquired in the Arizona Market. Arbor Realty Trust provided the debt on the project. MEB Management will manage the property. Design and Construction will be managed by Gia Venturi.

Additional properties owned previously by VSV in Tucson include:

• Indi Tucson with 93 units
• Midtown on Seneca with 176 units
• Seneca Terrace with 109 units
• Midtown on 2^nd with 42 units

“When we discovered Redondo Tower was available for purchase, we immediately jumped on the opportunity,” said Ronnie Gou, a Managing Partner for VSV. “We’ve invested in Tucson for several years now and Redondo Tower has always been a fixture in the downtown area. We’re thrilled and honored to take on this project for the City of Tucson. We’ll take it through a major renovation and add to the fabric of downtown’s revitalization.”

A 96-unit, 9-story high rise apartment building, Redondo Tower is a key part of downtown Tucson, which will be rebranded Vertical Heights. Residents of the property will enjoy many new amenities, including adding a new rooftop lounge, a new gym and yoga studio, a state-of-the-art co-working lounge, and modernizing the existing pool. Its interior units will undergo extension renovation with brand new kitchens, bathrooms, and newly added Washer/Dryers in each unit. Located centrally right off the 10 freeway, a 5-minute walk to anywhere downtown, and a 10-minute drive to the University of Arizona campus, this is a prime location for many job sectors.

With Tucson market vacancy at 4%, Tucson residents continue to look for great places to live. VSV will continue its strategy of finding communities to improve in high growth markets residing in excellent locations throughout the Arizona and Texas Markets.

Vertical Street Ventures (also known as VSV) is a commercial real estate private equity firm, led by Managing Partners Steven Louie, Jenny Gou, Kyle Mitchell, and Ronnie Gou. With a mission to improve communities nationally, VSV has grown substantially in the last year, growing its current portfolio of assets to $182 Million this year across the Arizona and Texas markets. VSV helps busy professionals build passive income through investing in real estate syndications.

Tyler Anderson, Sean Cunningham, Asher Gunter, Matt Pesch and Jeff Casper of CBRE Phoenix / Tucson Multifamily Institutional Properties represented the seller, Redondo Tower Apartments of Scottsdale.

To learn more, see RED Comp #9674.