Core Campus Tucson II, LLC an affiliate of Chicago-based Core Campus, purchased the 8,045-square-foot office building at 1001 N Alvernon Way in Tucson for $1.45 million ($180 PSF). The property was multi-tenant (built 2003) and was purchased to accommodate a single tenant, DIRECT Center for Independence (DIRECT).

DIRECT is a consumer-directed, community-based advocacy organization that promotes independent living, and offers a variety of programs for people with disabilities, encouraging them to achieve their full potential and participation in the community.

DIRECT was the first agency of its kind in Arizona serving as a non-residential, independent living center operated by and for persons with disabilities. In 1980, DIRECT began operations under the name Metro Independent Living Center (MILC) through the efforts of dedicated volunteers. A year later, MILC joined with Catholic Community Services of Southern Arizona, Inc. to obtain its first government funding to support agency programs. At this time, the name was changed to Disability Resource Center of Tucson (DIRECT). It soon became apparent that the word “resource” confused consumers in relation to the services that the agency provided, so the name was changed to DIRECT Independent Living Center. In November 1994, DIRECT became a separate, incorporated entity from Catholic Community Services of Southern Arizona, Inc., and had to again change the agency name to what it is currently DIRECT Center for Independence, Inc.

Core developed The Hub, an upscale 13-story student high-rise community, at 1011 N Tyndall, near the U of A with its ground-floor retail. Debbie Heslop, CCIM, with the Volk Company in Tucson represents Core in the retail leasing at The Hub and also represented the company in the purchase of the building at 1001 N Alvernon Way.

Heslop told us the 7,000 square-feet of retail at The Hub has either been leased or has leases out on it waiting completion. Tenants include a Sushi restaurant to go in and other eateries for the students’ convenience.

Buzz Isaacson of CBRE in Tucson represented the seller, Prestige One, LLC (Robert Lara and Thomas Sayler-Brown, members) of Tucson.

Isaacson can be reached at (520) 323-5151 and Heslop is at (520) 326-3200 for more information.

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[mepr-show rules=”58038″]Sale date: 4/25/2014. All cash deal. APN: 125-1-055A. Market Time: Property was not on the market at time of sale. Second leg of this transaction is purchasing the property at 1023 N Tyndall Ave that is occupied by the tenant. This second transaction is in escrow but had not closed yet with City of Tucson as seller.[/mepr-show]

Bob Kaplan and Allen Mendelsberg, multifamily specialists with Cushman & Wakefield | Picor  report on the Tucson region for third quarter. Operating fundamentals continued to slowly improve in Tucson with modest decreases in vacancy, positive absorption, a small increase in rental rates and some continued decline in rental concessions. Average vacancy dropped from 9.4% to 9.3% and the average rental rate essentially held steady, averaging $635. In a continuation of a four-year trend, higher occupancies and stronger increases in rental rates occurred in submarkets with higher-grade properties. The Northwest, Catalina Foothills, and Northeast submarkets, which have the strongest demographics in the region, had the lowest submarket vacancies in Tucson.

No investment sales (over 40 units) activity occurred in the third quarter, following a very modest second quarter of just five property sales over 40 units. Sale prices averaged $55,575 per unit, or $76.99 per square foot. New construction ranged from $144,706 per unit for the Aerie at Tanque Verde to $19,500 per unit for Kelso Vista. Total market sales have been low throughout the year with little expectation of change in the fourth quarter.

STUDENT HOUSING
Four new student housing developments came online in August for the current school year adding new product to a rapidly changing student housing market at the University of Arizona. The new properties are The Level on Tyndall Avenue, The Retreat on 22nd Street, and Cadence North, and Cadence South on Congress Street downtown.

Combined, these properties add 553 units and over 1,800 beds to the student housing market. Three properties currently under construction, the HUB and Level 2 on North Tyndall Avenue and Junction at Iron Horse near 4th Avenue and 10th Street, will add approximately 400 more units for the 2014-2015 school year.

The addition of the new student housing units softened occupancy and rental rates at older properties that are not located near campus or the modern street car line. Four of the properties west of campus near West Broadway and Silverbell and Northpointe on 1st Avenue at Wetmore have vacancy rates exceeding 24.0%. Stress will increase next year with additional new properties coming to market and only moderate increases in the student population.

NEW CONSTRUCTION
As of fourth quarter 2013, eight properties totaling 1,569 units were under construction, and eleven properties totaling 2,448 units were planned with construction start dates on or before first quarter 2015. The new construction fills a void in A-quality product and generally is very well received by the market, with strong lease up and rental rates averaging around $1.15 per square foot.

Vacancy rates for properties built since 2010 was 6.0%, well below the market-wide average of 9.3% vacancy and 9.4% for properties built in the 1980s. After decades of under-investment in multifamily, the new construction is a welcome addition to the marketplace and the community, demonstrated by the low vacancy rates among these newer developments. For full market report click here.

Bob Kaplan joined Cushman & Wakefield | PICOR in October 2006 after five years with Bourn Partners LLC, where he earned the top sales producer position in 2004 and 2005. Bob focuses his work on the brokerage of multifamily investments serving the needs of local, regional, and national apartment owners and investors. He can be reached at (520) 546.2737 or via email at bkaplan@picor.com.

Allan Mendelsberg, a Denver native, launched his commercial real estate brokerage career in Tucson in 2004. Previously with Marcus & Millichap, Allan joined Cushman & Wakefield | PICOR to specialize in manufactured housing parks in the southwestern U.S., where he also brokers apartment complexes in greater Tucson for private investors as well as REITs. He can be reached at (520) 546-2721 or via email at amendelsberg@picor.com