Goodbye, Recessionary Doldrums
Hey Phoenix, The Rockefeller Group's Mark Singerman has something to say to you: Snap out of it!
Mark told the crowd of 200 during yesterday's Bisnow Phoenix State of the Market event at the Omni Montelucia in Scottdale that the Valley needs to get out of the psychological doldrums resulting from the recession. (Like after our high school break up.) That's because things here are very good: A growing university system, the in-migration of up to 100,000 people a year, and the ongoing Loop 202 project are all huge drivers for the economy.
We snapped Mark with Cresa's Scott Maxwell, who also spoke at the event. “I've done business in seven different states," Mark tells us. "To the rest of the country, we're a 10. Or an 11. I can't think of a better place, frankly.” So that means it's time to get rid of the inferiority complex.
Mark's company is putting its money where his mouth is. (Figuratively, money is astonishingly filthy.) Mark (a former concert promoter) told our audience of more than 200 commercial real estate pros at the Montelucia hotel yesterday morning that part of the reason to move forward on spec is because there are few blocks of contiguous office space more than 50k SF in the area. And what's available may be obsolete for many tenants. That's why it's building more spec office at its Chandler Corporate Center (above); the 82k SF building is well underway and has its first lease proposal (mum's the word on whom though).
Greater Phoenix Economic Council's Chris Camacho (who admitted to following the band Phish around during his college years) says we're definitely in recovery. “The markets are steadily coming back... it's just an entirely different market than Phoenix is used to seeing,” he says. While the job recovery is slower than previous recoveries—and we still haven't recovered all the jobs lost during recession—more financial companies are eying Phoenix for expansion than we've seen in the past six years. The negative: getting past our negative press regarding immigration.
What makes office space obsolete? Cresa's Scott (a fan of the hip-hop band G-Easy) says the answer has more to do with parking ratios than actual building space. With companies stuffing more employees in less space as they reconfigure, ample parking is becoming critical. (The only reasonable excuse for not having enough parking is if you put in a basketball court in the lot for some lunchtime half-court.) “If you have a 30%-occupied building and 75% of the parking is taken by 9am, you can just automatically knock that building off the list,” Scott says. “You're going to lose tenants over it."
During our coffee and breakfast schmooze, we chatted with McShane Construction's Ed Ledger and Nextgen Apartments' Doug Walton. Doug tells us his firm just finished Avenue 25, a 254-unit apartment building on North 25th Avenue, and under construction with Seven Apartments, a 216-unit complex on 7th Street and 101 Freeway. And the firm isn't done: It's eyeing nearly half a dozen other Phoenix sites for new apartment projects. But that's hard to get since “zoned land is gone.”
We also sipped java with Colliers International's Paul Holland, Arizona Business Park's Paul Pickett, Macerich's Robert Switzer, and ELAN Multifamily Investments' Christie Johnson. Paul Pickett just returned from running this year's Boston Marathon after vowing to run it again a year after the terrorist attack. He says his friends knew they had to run this year “otherwise the terrorists win.” Luckily, neither Paul nor his friends were hurt in the 2013 blast. Stay tuned for more coverage from the event tomorrow.
