May 18, 2016

Commercial real estate executives appear relatively optimistic about the general state of
 the market in 2016, with many predicting higher than average deal volumes for their firms. When considering the adoption of new technology, most believe that the influx of CRE tech companies is revolutionizing the industry. These executives recognize that while the U.S. CRE market is recovering, there are still certain segments that are poised for significant decline…

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New investors with little or no experience in operating affordable housing are bidding high for aging rental housing communities built with affordable housing programs. “Affordable housing has become a commodity that is traded through brokers,” says Scott Kline, vice president for the National Housing Trust (NHT). “And there are a lot of bidders.” These deals can make sense for for-profit investors, at least in the short term…

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May 17, 2016

Commercial real estate leaders are confident in the strength of the commercial real estate market. But they’re also realistic enough to recognize that all commercial sectors will face their own challenges in the coming months. And they’re especially worried that rising interest rates could put the brakes on what has been such steady commercial real estate activity during the last two-plus years. That’s the result from a May survey from CIT Group, in partnership with Forbes Insight…

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With recovery well underway in the Phoenix metro, commercial real estate activity is matching the level of the rebound. Office, flex and warehouse property types seem particularly in demand for one investment venture. Three business parks totaling 312,193 square feet have been acquired by a venture of San Juan Capistrano, CA-based Birtcher Anderson Realty in conjunction with JCR Capital of Denver. The joint venture acquired the parks from Presson Properties for approximately 26.5 Million.

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Grocery store chain Smart & Final Stores Inc. said it has converted all 33 stores it bought from Haggen in December to Smart & Final Extra! stores. The store openings were part of an aggressive growth plan for the Commerce-based retailer, which plans to open 100 new stores over the next four years and hire at least 5,000 employees to staff those stores.

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Vancouver, BC-based Macdonald Development Corporation (MDC) is expanding its Arizona presence with the purchase of 0.403 acres of CC-zoned land, which is located at 6th Street and College Avenue in a premier downtown location. MDC purchased a 50% interest in the land parcel from property owner, Spike Lawrence, co-founder of Tempe-based Lawrence & Geyser Development Corp. Lawrence will maintain 50% ownership in the land, and work with MDC…

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San Francisco-based real estate company Hamilton Zanze (HZ) announced the recent acquisition of Tresa at Arrowhead for $47,000,000 ($130,556/unit). The 360unit Class B+ apartment community is located in Glendale, AZ, approximately 10 miles northwest of Downtown Phoenix. Tresa at Arrowhead was built in 1998 and is 0.5 miles from the Arrowhead Towne Center and 1 mile from the vibrant P83 Entertainment District…

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May 16, 2016

The price for restaurant and retail space in downtown Phoenix is up 14.5 percent compared to a year ago, according to first-quarter rental data from Colliers International. That compares to a much slower 3.2 percent growth for retail and restaurant rents region wide, according to the commercial real estate company.

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A Tempe apartment proposal that was pulled by the developer after strong objections from residents and City Council members has been scaled down and resubmitted to the city. The project, located west of downtown, is one of two recent proposals that raise questions of whether larger apartment buildings should be allowed outside of downtown Tempe’s urban core and closer to traditional neighborhoods.

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Though demand for office space continues to improve, industry experts say it’s still too early to expect a surge in speculative construction in the sector. Office developers are watching constructions costs rise and sensing some lingering caution from corporate executive teams, leaving them reluctant to build on a speculative basis.

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Sundt Construction has promoted Ryan Abbott to senior vice president and southwest district manager. In his new role, Abbott provides direction to the district’s leadership team and is responsible for overall performance of construction, including acquiring and executing projects in Arizona, New Mexico and western Texas. Abbott recently discussed the Phoenix economy, construction best practices, major university construction projects and other Sundt projects.

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May 13, 2016

The Bureau of Economic Analysis reported on Wednesday that investment in non-residential structures decreased at a 10.7 percent annualized rate in the first quarter of 2016. That wasn’t a reflection on the health of commercial real estate, though it sounds like it should be. In fact, investment in most CRE sectors is still edging up.

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The presidential election primary season has highlighted the theme of the angry voter, which has the effect of overstating the U.S. economy’s weak points while failing to notice the remarkable consistency in job creation that has underpinned the recovery. Through April, the private sector has added jobs for 73 consecutive months—the longest such streak on record—encompassing 14.4 million new jobs, or a shade under 200,000 per month.

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Apartment property performance in 2015 continued to outperform even the strong performance seen in 2014 and 2013, according to the latest financial data collected on thousands of multifamily complexes. And the net operating income performance for the property sector may still head higher. The combined 2015 net operating income at nearly 5,900 conventional multifamily complexes reporting year-end numbers totaled $8.16 billion, according to Fannie Mae and Freddie Mac data collected through April and analyzed by CoStar Group. Those complexes contained 1.16 million apartment units — consequently representing NOI per unit of $7,044.

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Vancouver, BC-based Macdonald Development Corporation (MDC) is expanding its Arizona presence with the purchase of 0.403 acres of CC-zoned land, which is located at 6th Street and College Avenue in a premier downtown location. MDC purchased a 50% interest in the land parcel from property owner, Spike Lawrence, co-founder of Tempe-based Lawrence & Geyser Development Corp. Lawrence will maintain 50% ownership in the land, and work with MDC and Bill Borders of Phoenix-based ARC Construction to create the vision for the development.

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May 12, 2016

While real estate sales across all major property types dropped 20 percent in the first quarter, apartments were the only sector that reported a year-over-year increase. U.S. apartment sales surged 33 percent last year to $151.8 billion, and that momentum has carried over into first quarter of this year with another $38.6 billion in sales, according a recent report by apartment listing and data specialist Abodo, citing Real Capital Analytics data.

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The U.S. retail real estate market recorded 11 million square feet of net absorption in the first quarter of 2016, causing the nation’s average vacancy rate to tick down to 6%, the lowest quarterly level since the Great Recession. Despite a new wave of store closings and weaker-than-expected retail sales in the first quarter, solid U.S. job growth and wage gains suggest that retail demand should rebound over the remainder of 2016, said Suzanne Mulvee, CoStar Portfolio Strategy director of U.S. research, retail, during CoStar’s first-quarter State of the U.S. Retail Market Review and Forecast. Mulvee noted that a similarly weak first quarter occurred in 2015, followed by accelerated activity in the second half of the year.

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For most of this cycle, luxury apartments have been opening in gateway markets, like San Francisco and Washington, D.C. But RentCafe’s Nadia Balint says this luxury trend is spreading to under-the-radar locales, like Kansas City and Milwaukee too. Ultimately, that just shifts the scales even further in favor of luxury.

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Whether it seems like it or not, Arizona’s economy is doing well for now and is expected to post its best year in a decade, state economists said Wednesday. Jobs, wages and population should continue to set new post-recession marks for Arizona, which has seen a burst of growth in industries such as finance and health care, as well as construction and service-sector work, said Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W.P. Carey School of Business at Arizona State University.

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Looking for a great place to conduct business? Well, look no further: Arizona has been ranked one of the best places in the country to do business, according to a recent survey. Chief Executive Magazine’s annual “Best & Worst States for Business” found that Arizona ranked No. 6 in the country for business, climbing three spots from last year.

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May 11, 2016

Cushman & Wakefield announced today the sale of the Presson Portfolio, a 312,155 square foot (sf), three property portfolio in Tempe and Mesa, Ariz. Birtcher Anderson Realty, based out of San Juan Capistrano, Calif., purchased the portfolio for $26.57 million from Presson Companies.

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The City of Scottsdale Development Review Board will consider a new mixed-use project, which will bring a five-story, 77-unit apartment complex to the NWC of Scottsdale Road and Earll Drive. Developer Cypress Developments, LLC seeks to rezone a pair of commercial parcels and raze three rundown commercial buildings to make way for the new development, to be called L’Esperance. In addition to 107KSF of residential space, the complex will include a 5,225SF commercial/retail space along Scottsdale Road.

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Preliminary construction work on the next leg of Mesa’s light rail line could begin as soon as August, according to city transportation officials. Engineers are expected to have a detailed design for the $153M, 1.9-mile addition — which would extend tracks east along Main Street from Mesa Drive to Gilbert Road — nearly finished by July. The extension would add two stations and a park-and-ride to the line.

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Net lease retail investment is hitting new lows, but that’s a sign of its high esteem among investors. During the first quarter, median cap rates for single-tenant retail properties dropped to 6.18 percent, setting a record, according to a report published in April by The Boulder Group. That represents a decline of 7 basis points from the previous quarter and a 22-basis-point decline year over year.

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May 10, 2016

The economic data released last week was mixed but mostly positive. The growth in employment for April was a disappointment compared to the trend of the last 12 months and bears watching. Labor force participation also dipped slightly, reversing gains from prior months.

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