Middle Market Digest: This Week in Southwest
Here’s a look at this week's trends, announcements and deals that you may have missed in Southern California, Utah, Arizona and Nevada.
BY THE NUMBERS
The Phoenix market posted a strong second quarter across asset classes. The office, industrial, retail and multifamily markets ended the quarter with a decrease in vacancy rates and an increase in rental rates. The office direct vacancy level of 13.28% marks the lowest vacancy recorded since the first quarter in 2008. Submarkets with the least vacant space include North Phoenix/Cave Creek at 5.0%, Tempe at 6.4%, and Mesa Downtown at 6.5%. Industrial vacancy rates hit an all-time low of 7.2%, a notable dip of over 14% from second quarter of last year which posted at 8.4%. The multifamily vacancy rate fell below 6% with average rental rates hitting $1,000 per unit on average. Retail vacancy now hovers just above 6% with rental rates above $15 per square foot.
(SOURCE: KIDDER MATTHEWS)
NEW & NOTABLE
SAN DIEGO, CA—The Heritage Group has changed its name to Intersection to align with their new brand identity, company culture, mission and vision. The Heritage Group, started by managing partners Mark Hoekstra and Rocco Cortese in 2007, has grown its leasing and management portfolio to approximately 2,800,000 square feet and expanded its offices from San Diego to Los Angeles and San Francisco. The company has also deployed more than $300 million in commercial real estate over its 11-year span.
IRVINE, CA—Landsea Homes has opened an Arizona division, and has named executive Peter Beucke as president of the Arizona division. Beucke has years of homebuilding experience serving various roles with Kaufman and Broad (KB Home) and Lennar Homes. Beucke has been managing Landsea Homes Northern California Division, and will expand his role with the company to also oversee the new Arizona Division. Beucke, a Phoenix resident and licensed architect, is well versed in high-performance renewable energy, spending the last decade with SunPower Corporation and as Chief Operating Officer at Phoenix Solar Inc., USA.
EL SEGUNDO—Paragon Commercial Group has hired Todd Huber senior investment manager for California. The newly created position underscores Paragon’s continued commitment to its growing retail portfolio. Huber’s responsibilities will include investing significant time in evaluating new retail acquisition opportunities, as well as managing the existing portfolio. Paragon is actively investing its joint venture with the Canyon Catalyst Fund (“CCF”), the CalPERS real estate emerging manager platform managed by Canyon Partners Real Estate. Huber’s appointment comes on the heels of Paragon’s recent addition of a new Director of Investment for Southern California, Brad Rable, as well as the opening of Paragon’s Northern California office.
LOS ANGELES—Silver Commercial Investment team EVP Kathleen A. Silver and SVP Kay Sasatomi, CCIM have joined NAI Capital. Silver brings more than 28 years commercial real estate experience focused in the West Los Angeles and Greater Los Angeles marketplace. She is recognized as one of the premier real estate advisors to sellers and investors. Kathleen formed Silver Commercial in 2012, where she grew her investment services platform into a woman-owned powerhouse with transaction volume in excess of $500M. Sasatomi specializes in the acquisition, disposition and leasing of office, retail and development properties. She is focused in Hollywood and the Greater Los Angeles area. Sasatomi has over 10 years of extensive experience advising investors in the acquisition of commercial properties as well as representing sellers.
LOS ANGELES—JLL has hired Greg Whitney to its West Coast Retail Development team as Senior Vice President of Retail Development. Whitney will be responsible for identifying development opportunities within the West Coast region, implementing ground-up and redevelopment strategies, and overseeing the successful completion of projects. Whitney has more than 25 years of experience in retail development including a background in asset advisory, acquisitions and brokerage. Throughout his career, he has been responsible for directing 37 major redevelopment projects, totaling more than 35 million square feet. Prior to joining JLL, Whitney was the Director of Development at Wilson Meany where he oversaw the positioning, planning, and development of the new Hollywood Park/Los Angeles Stadium Entertainment District. He brings with him diverse national and international experience.
WOODLAND HILLS, CA—NewMark Merrill Companies has hired Kassandra Bishop as VP of Marketing & Technology. Bishop will lead the company’s corporate and property marketing and technology efforts. Her role includes overseeing the overall strategy, implementation, budget, measurement, public relations and community involvement. Bishop brings 13 years of marketing experience, most recently serving as Director of Marketing & Business Development for Simon Property Group, where she lead the marketing department at several properties in Texas and California. She earned a Bachelor’s degree in Communications Studies from University of Minnesota and a Master’s degree in Organizational Management and Project Management from Ashford University.
DEALTRACKER
LAS VEGAS—Sephora has broken ground on a 714,000-square-foot facility at Tropical Distribution Center in North Las Vegas. Located on 120-acres in North Las Vegas near Las Vegas Motor Speedway, Tropical Distribution Center will soon be home to Sephora’s new 714,000-square-foot fulfillment and distribution facility situated on 45 acres. The facility, as well as the associated site work and adjacent public roadways, are being developed by VanTrust Real Estate. Sephora, recently named Retailer of the Year at the 2018 World Retail Congress, selected North Las Vegas for its western distribution center after a year-long search. Once completed in May 2019, Sephora’s facility will create up to 400 projected new jobs with the intention of filling nearly all positions with Nevada residents. As part of its hiring efforts, Sephora also plans to partner with the regional workforce centers to find qualified employees who may be disabled or veterans.
VICTORVILLE, CA—Stirling Development has executed a lease expansion with Newell Brands for an additional 466,255 square feet at Southern California Logistics Airport (SCLA), an 8,500-acre multimodal freight transportation hub, which includes a 2,500-acre commercial and industrial complex entitled for 60 million square feet of development. This is Newell’s second expansion since it signed its original lease for 407,600 square feet in 2006, bringing the newest building to total of 1,050,667 square feet. Stirling will break ground in July on the expansion at Distribution Centre 3 and expects Newell to take full occupancy in March 2019. Once complete, the building will feature 78 dock high doors with a 36-foot-clear height. Newell first expanded its footprint at SCLA in 2012, adding 176,800 square feet, for increased regional and national distribution of Newell products. Lease terms will have Newell in the new building through 2029.
SANTA MONICA—An affiliate of Vista Investment Group has acquired from Redwood Real Estate Partners the leasehold interest in Media Park Santa Monica, a 101,369-square-foot creative office campus in Santa Monica’s Media District. Located on a 5.22-acre site at 1813 Centinela Avenue, Media Park Santa Monica is the adaptive reuse of a former R&D facility built in 1978. The creative office campus comprises three renovated one- and two-story office buildings ranging in size from 10,246 to 59,254 square feet. The buildings feature ceiling heights up to 20 feet, expansive collaborative work areas, polished concrete floors, and roll up doors providing access to outdoor patios and wi-fi enabled courtyards. Common area amenities include EV charging stations, outdoor meeting areas and is surfaced parked at an above market rate of 4:1000. The acquisition was financed with a long-term loan through a national bank, which was arranged by Managing Director Marc Schillinger and associate Ryan Ash of HFF.
SANTA ANA, CA—Bristol Center in Orange County, California, a community center, 97% leased to high performing, national and regional credit tenants, has traded hands for $46.5 million. CBRE retail experts Preston Fetrow, Kirk Brummer, Megan Wood, Sean Heitzler and Phillip Voorhees represented the seller, Sarofim Realty Advisors, a Dallas-based investment advisor. The buyer, also represented by the NRP-West team, was JH Real Estate Partners, an Orange County-based real estate investment company who purchased the property as an addition to its portfolio. Built in 1974, Bristol Center is a 165,508-square-foot community shopping center, situated on 14.18 acres of leased-fee land at 3601-3825 S. Bristol Street in Santa Ana, directly across from South Coast Plaza.
PHOENIX—Plaza at Power Marketplace, a ±70,961-square-foot shopping center located at 7225 S. Power Road and 18490-18550 E. Rittenhouse Road in Queen Creek, Arizona, has traded hands for $16.6 million. The property is located near the Arizona State University Polytechnic Campus and the Phoenix-Mesa Gateway Airport. Philip Voorhees and Jimmy Slusher with CBRE National Retail Partners – West, based in Orange County, California, and Steve Julius with CBRE’s Phoenix office, arranged the sale on behalf of a private seller from New York and private buyer from California.
IRVINE, CA—Avison Young has brokered the $13.7 million sale of Montclair Business Center, a 96,363-square-foot, multi-tenant business park in Montclair, CA, a city in the Inland Empire region. Avison Young Principal Alan Pekarcik and senior associate Chris Smith who are both based in the Irvine office, represented the seller, Holualoa Montclair Business Center, LLC. The buyer, Trico Yale Business Park, LP, was self-represented and plans to continue utilizing the asset as a multi-tenant business park. Built in 1980, the property comprises seven buildings located on 6.02 acres at 4650 Arrow Highway and recently underwent several major upgrades, including new exterior paint, new landscaping and replacement of several roofs. Montclair Business Center offers abundant onsite parking, and features street exposure on the north side of Arrow Highway, a major thoroughfare of Montclair and neighboring cities.
LOS ANGELES—A modern office property in Altadena, CA, has traded hands for $11.5 million or approximately $209 per square foot. Mark Shaffer, Gary Stache, Anthony DeLorenzo, Doug Mack, Kevin Duffy and Natalie Bazarevitsch of CBRE represented the seller, J.L. Moseley Co, Inc. The buyer, First City Credit Union, was represented by an outside broker. Located at 500 West Woodbury, the 55,000-square foot building was vacant at the time of sale. The property, which sits in one the most fundamentally strong office markets in Los Angeles County, features two stories, an abundance of windows and updated landscaping. The building was also recently renovated, including a modernization and cosmetic upgrade of the lobby, common areas, communal space and suites.
Scottsdale—Land Advisors Capital successfully secured a lending commitment from Varde Partners in order to fuel the growth of Christopher Todd Communities. Part of the funding of Christopher Todd Communities begins with a new single-family home rental community in Peoria, near the master planned community of Vistancia. Christopher Todd Communities will be building an innovative rental community comprised of 222 one- and two-bedroom smart homes with private backyards and doggy doors. Each home comes equipped with high-speed internet, keyless door entry, doorbell cameras, and climate control via a smart phone or tablet, plus a smart gate at the front entry, pool and event lawn. Christopher Todd Communities’ first rental community opened in January 2018 in Surprise and was leased up in record time. The company has five more communities under construction and has aggressive expansion plans as this concept is resonating with the renter nation as an inspired alternative to traditional apartment living. This funding from Land Advisors Capital and Varde Partners is an important part of the company’s growth.
SAN DIEGO/LAS VEGAS—San Diego-based Tower 16 Capital Partners, in a joint venture with Henley USA, has acquired a 512-unit multifamily project in Spring Valley, one of Las Vegas’s top submarkets. The project was acquired on an off-market basis from a private seller in a deal valued at $50 million. Tower 16 will be overseeing close to $7 million in renovations and upgrades to the project including new outdoor amenities, gym, leasing office and interior renovations. The community is located close to I-15 and the Las Vegas Strip, allowing quick access to Summerlin, Henderson and McCarran International Airport. It includes 512 oversized one-, two- and three-bedroom apartments and townhomes with central air conditioning and individual electric metering. Community amenities include three swimming pools, two spas, two basketball courts, four laundry facilities, a business center, a large playground and dog runs.
BUILDING BLOCKS
PHOENIX—The Hampton Inn & Suites by Hilton has held its grand opening and held an official ribbon-cutting event. Key representatives from Apple Hospitality REIT, Inc., North Central Group, Visit Phoenix, and Mortenson each made remarks at the event. In addition, NCG hosted a raffle with proceeds benefitting UMOM New Day Centers, a non-profit organization based in Phoenix that supports struggling families across the Valley. Among others recognized at the grand opening were PK Architects for its design of the hotel, as well as Design Force for its interior design efforts in creating a hotel experience that is uniquely Arizona.