June 12, 2016

The struggles of Gap Inc. may ripple beyond either the retailer’s investors or its landlords. Morningstar Credit Ratings LLC said Thursday it had identified 231 securitized commercial mortgages, with an allocated property balance of $13.89 billion, with exposure to various Gap brands. Of those loans, more than half are backed by collateral where leases with Gap expire in the next two years.

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June 10, 2016

When millennials began entering the rental pool en masse, the multifamily industry couldn’t have been happier. After all, the recession—brought on by the single-family mortgage meltdown—had pulled down the for-rent side of the industry as well, and the idea of a burgeoning “renter nation” was more than welcome news. The stars had aligned. After a few years of underbuilding, a voluminous new demographic dramatically emerged from the shadows and formed a line at the door of your friendly local leasing office.

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So far this year, U.S. real estate investment trusts are handily beating the Standard & Poor’s 500 stock index, as income-oriented investors remain drawn to the trusts’ often-juicy yield. Two factors are driving the performance: continued low interest rates and a rebound in the physical real estate market, whether residential or commercial. The MSCI US REIT Index Total Return is up 4.17 percent as of mid-May, versus the S&P 500 year-to-date return of 0.41 percent.

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Park at Deer Valley LLC in Chandler (Nasim Sikder, principal) paid $33 million($75,688 per unit) to acquire a 436-unit apartment complex at 17425 N. 19th Avenue in Phoenix called The Park at Deer Valley. The seller was Synergy 19th Ave (US) LP, a limited partnership formed by investors Myles Bruckal and Steven Bruckal in Phoenix.

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Phoenix is a town built on real estate, and what nearly died during the Great Recession finally is starting to reboot. In all corners of the region, construction on various commercial real estate projects is in full bloom with plenty more in the pipeline. We know it’s often hard for readers to keep track of all that’s happening on that front.

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June 9, 2016

Pending home sales in the US rose for the third consecutive month in April and reached their highest level in over a decade, according to the latest index data to be published.

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Foreclosures low, home building high, prices affordable and buyers are moving to the area. April just might have been the best month for metro Phoenix’s housing market in a decade.

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Metro Phoenix is often considered among the more-affordable places to live in the U.S., but a recent flurry of luxury-apartment construction in Scottsdale bucks that trend, with rent in some cases approaching Manhattan prices.

A studio at one of Scottsdale’s priciest new complexes might cost $1,300 to $1,700 a month, while a two-bedroom apartment can fetch $3,500 to $4,000 — the same price as a modest two- or three-bedroom unit in New York City’s SoHo or Greenwich Village neighborhoods.

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May’s increase in nonresidential building projects suggests further growth in construction activity in 2016 despite first-quarter market volatility. The Dodge Momentum Index rose 2.4 percent in May to 119.4 from its revised April reading of 116.6 (2000 = 100).

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As first reported by GlobeSt.com sister publication, ALM’s ThinkAdvisor.com, this was an 11.6% increase from $1.48 trillion issued in the fourth quarter of 2015 but a 5.4% decline year over year from $1.75 trillion in the first quarter of 2015, according to the report.

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June 8, 2016

The Town of Gilbert Design Review Commission will consider at its June 9 meeting a developer’s request to build a Main Event entertainment complex, like two other Arizona locations previously opened in Tempe in 2013 and in Avondale earlier this year. Developer LeSueur Investments seeks to build the 50KSF facility on 5.9 acres of vacant farmland at the SEC of East Ray Road and Santan Village Parkway just west of the Loop 202 Santan Freeway.

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Central Phoenix’s building boom is spreading north. Developers are planning hundreds of new houses and apartments in the North Mountain and Deer Valley areas, including a 31-acre community full of restaurants and retail. A few projects broke ground in May with more slated for the summer. Stretching from Northern Avenue past Happy Valley Road, the zones are seeing some of the same building trends as the central city, said Alan Stephenson, Phoenix Planning and Development director. Projects are filling in vacant parcels among existing development, or clearing land for new uses.

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Tempe Town Lake’s first hotel will open this week. The AC Hotel Tempe, part of Marriott International, will open on Wednesday, June 10. The European-style hotel will be the first in the western U.S. It will be the eighth in the U.S.

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West Valley residents will soon realize the pleasures of one-stop-healthcare, a new development trend, with Dr. John Simon’s latest project: Westgate Healthcare Campus. The first phase of the 250,000-square-foot, $30 million campus is expected to be finished at the end of the year, with the remainder of the project looking to come online within the next five years. Once finished, the campus seeks to be a one-stop-shop for anyone’s healthcare needs, hoping to provide everything from lab work and routine check-ups, all the way to dental exams. Simon also hopes to add research components to the campus.

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ColRich Multifamily purchased two adjacent Scottsdale apartment complexes yesterday from NorthStar Realty Finance for a total of $67.5 million, or $108,000 per unit. Each sale was funded by an assumption of the seller’s prior loans with US Bank, as well as new notes with Freddie Mac.

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June 7, 2016

With approval of the amended PAD (which was initially approved in 2013), developer Newland Communities plans to add a new spine road, up to 1,250 homes of four different types, and a new welcome center on a 287-acre portion of the parcels located in a 617-acre area. The development is located east of Cotton Lane and northwest of South Estrella Parkway. The new subdivision, to be called Lucero, will add to the 20,000-acre Estrella community, which was started in 1986 and is already home to more than 12,000 residents…

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Once one of the nation’s premier shopping malls, Phoenix’s Metrocenter could finally get a much-needed makeover that would double its size and include buildings as tall as 15 stories. The Phoenix City Council unanimously approved a new zoning plan last week for the 130 acres in and around the struggling shopping center. The mall, which is almost 45 years old, is in the middle of a designated blight area near Interstate 17 and Dunlap Road…

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Though the May jobs report from the Bureau of Labor Statistics was a disappointment overall (up only 38,000 jobs), one month is only one month, and strong years can have weak months. In any case, the construction industry in most parts of the country is still growing, according to a separate recent report by the Associated General Contractors of America…

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It’s well known that the United States has the largest economy in the world. In reality, however, the U.S. is made up of many much smaller economies, each with unique inputs, advantages and challenges. You see this diversity in the way changing fortunes in one industry can boost or bust an individual state, in the way regions vote in presidential elections and even in the type of home you can get for a in one place versus another…

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Downtown is currently experiencing more growth than in its entire history, with $500 million in construction projects and more than $4 billion in total investments since 2008. This year, it ranked 11th on Forbes’ list of fastest-growing cities in America and is projected to be the fourth largest US city by 2020…

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June 6, 2016

Consumer spending has accelerated at its fastest lick in almost seven years, with personal spending increasing 1 percent in April over March, the Commerce Department announced Tuesday. The performance is markedly better than March, when consumption was flat, and February, when it rose just 0.2 percent. The impact of this increase on the economy will be profound, given that consumer spending accounts for over two-thirds of economic output. The rise in spending outperformed analysts’ predictions of a 0.7 percent increase.

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Only five years after the last recession, industrial construction has hit unprecedented levels, and many experts believe supply will still take another year or two to meet demand. Industrial completions in the first quarter hit 60.1 million sq. ft., the highest quarterly volume on record, according to a recent report by real estate services firm Colliers International. Even with a national vacancy rate that has dropped to 6.3 percent, supply is outpaced by demand, with more than 63.8 million sq. ft. absorbed in the first quarter, almost 10 percent more than the amount absorbed in the first quarter of 2015.

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The economy created a net of only 38,000 jobs in May, with a number of downward pressures on employment coming to the fore, especially the drop in energy employment (a longer-term factor) and the Verizon strike (a shorter-term factor), according to the Bureau of Labor Statistics on Friday. The separate survey that determines the headline unemployment rate dropped it to 4.7 percent.

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The master developer of the 330-acre Arizona State University Athletics Facilities District in Tempe is finalizing plans for the initial phase of the mixed-use project, which will include office, apartment and retail components at the northwest corner of University Drive and Rural Road. After being selected in October of 2014 to oversee the development of the prime acreage at the northeast end of the ASU campus, Catellus Development Corp. in Oakland, Calif. (Ted Antenucci, CEO) is in negotiations with potential developers that will kick off construction in what could be a 20-year build out.

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The City of Scottsdale has approved an ordinance to develop a 2.5-acre site at the SEC of Scottsdale Road and Shoeman Lane for the construction of a 204KSF mixed-use office and retail building. It has not yet been submitted to the Development Review Board. The property is located at 4419 N. Scottsdale Road, just north of the Galleria Corporate Centre office complex and is positioned for Class A office use. The office component consists of 190KSF of leasable space placed above the retail and a level of parking. Roughly 3,000SF of ground floor office foyer and lobby space is also provided. The floor plates are 37KSF, ideally sized to attract quality tenants and major employers.

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