General Phoenix Metro Discussion Thread

[Classical in Phoenix]

Agree on quality of build, but aesthetically I like it. That may change over time if it deteriorates.

[CrestedSaguaro]

Originally Posted by Classical in Phoenix

Agree on quality of build, but aesthetically I like it. That may change over time if it deteriorates.

I'm really hoping if they go for the 2nd phase, they do it right. Not sure how many projects change the build quality midway in a development though. I would like to see them alter the 2nd phase 10-15 floors with concrete construction. Wishful thinking I know.

[CrestedSaguaro]

Article from PBJ on the lack of office space in the West Valley and the push to improve the perception of the West Valley and to lure office development. Good read.

How the West Valley has fallen behind in office space development, and what it’s doing to try to stage a comeback

When it comes to finding a new office, there are many choices for businesses, providing they want to be in Phoenix, Scottsdale or the East Valley.

The East Valley has dominated for years in office construction and leasing, landing big insurance and professional services companies just during the past couple years. At the same time, the West Valley — or pretty much anything west of Interstate 17 — has battled misperceptions that have dogged it for years of an area dominated by retirement communities, inferior schools and a lack of suitable employees.

“We still fight the old perceptions,” said Sintra Hoffman, president and CEO of Westmarc, the West Valley’s economic development advocacy organization. “There is construction of spec manufacturing buildings here, and those buildings are built and immediately filled. Somebody had to pioneer manufacturing here, and we are trying to pitch that same argument with office.”

According to research done by Westmarc and CBRE, 69% of the West Valley’s workforce commutes east for work. While 34% of the Valley’s advanced business services workers live in the West Valley, only 11% of those jobs are located there. Westmarc defines the West Valley as anywhere west of Interstate 17, including portions of the city of Phoenix. The West Valley has a population of roughly 1.6 million people.

It could represent untapped potential for a developer willing to take a risk, West Valley leaders say.

“I look at it as an opportunity,” Hoffman said. “Companies are missing the boat to have the workforce here. The issue we are challenged with is we don’t have the [office] product. Companies today want to come in and have the building already there, and that’s what we don’t have.”

Signs of life
Office construction has concentrated heavily in the East Valley — especially in Tempe and Chandler — so companies often do not even stop in the West Valley to tour for office space, Hoffman said.

“Since we don’t have the physical product in place, the West Valley isn’t getting the looks that it should,” Hoffman said.

Such was the case last year when a major business services provider that stood to create thousands of jobs was looking closely at the West Valley. A source close to the deal said the company wanted office space to be ready long before something of an appropriate size would be built in the West Valley. That company ended up locating in the southeast Valley.

But the perception of lack of accessible office space in the West Valley may be changing. Earlier this year, the city of Goodyear and Globe Corp. announced plans for a public-private partnership that would develop 47 acres owned by Globe near 150th Drive and McDowell Road. The project’s first phase will include a 120,000-square-foot building housing the Goodyear City Hall and city departments, a 2-acre public park and 100,000 square feet of speculative Class A office space.

“This will be pretty much the only Class A office ever built on spec in Goodyear,” Mike Olsen, CFO of Globe Corp., said of the project. “We feel good about having the city as an anchor tenant.”

The city hall and private office building are scheduled to open in summer 2022. Olsen said it is too early to be in talks with potential tenants, but he expects the building will be popular with corporate clients.

“We think there’s huge demand for office,” Olsen said. “You’ve got to build what the market wants, and I think the market wants more Class A office in the West Valley.”

Olsen said he expects Globe’s project to be followed by other developers looking to build in the West Valley — once the market is proven.

“We are not normally significant risk takers, and the data here is so good. We don’t see it as a significant risk,” Olsen said. “It feels good, and we are excited about it.”

Right next door in Avondale, Venn Construction has begun working on two 70,000-square-foot Class A medical office buildings that will serve as the Akos Medical campus as well as have additional space for other tenants, said Stephanie Fogelson, vice president of project development for Venn Construction, the project’s general contractor.

“We have to be critical of the projects we align ourselves with, and that mindset is taking us to the West Valley,” Fogelson said, adding that companies can get a different “economic development experience” in the West Valley, where “cities are linking arms with us and with end users.”

Fogelson said Akos was searching for a West Valley site, even considering adaptive reuse, but did not find any existing buildings that would suit its needs, driving the company to develop its own campus. The buildings have seen interest from tenants looking to pre-lease space for higher-than-average rent, she said.

Barriers to building
Mike Hirth, a broker at Scottsdale-based Keyser, said most of his clients are zeroed in on Tempe, Scottsdale or downtown Phoenix and aren’t interested in giving the West Valley a look.

“The bigger issue I see as a broker is not a lot of the big office users want to locate in the West Valley,” he said. “Out in Glendale, Peoria or Surprise, where there’s been a lot of residential growth, you don’t see as many companies wanting to locate there.”

If a big employer were to choose to locate in the West Valley, it would likely be a “magnet” for employees tired of long commutes, but the challenge is getting employers willing to consider the area, Hirth said.

“A lot of times companies are attracted to other amenities of an area, hip environments like Tempe and Old Town,” Hirth said. “In the West Valley, after 9 p.m., there isn’t a lot going on.”

Still, in conversations with the development and brokerage communities, Fogelson, who is from the West Valley and involved with groups like Westmarc and Leadership West, said she learned perceptions about the West Valley are often incorrect or outdated.

“People don’t understand the quality of life, the quality of the schools and the quality of housing,” Fogelson said. “It was kind of an aha moment.”

Tenant representation brokers who have clients fly in from out of town likely don’t want to spend the time to drive clients out to the West Valley without any product to show them, so instead opt for already popular submarkets, Fogelson said.

Banks also are less likely to finance a project in the West Valley because there isn’t a proven market for speculative office, Hoffman said.

“No matter where, there is a financial risk for spec, it’s met with more scrutiny,” Hoffman said.

Globe Corp. has owned the land where it will build in Goodyear for decades, and the city will contribute the cost of its portion of the project, so the firm will only look at financing if there is an attractive option available, Olsen said. Otherwise, they will build with equity funding.

“To convince a bank to finance an office without pre-leasing, it’s hard to do,” Olsen said.

Developers building in the West Valley also risk the possibility tenants still might not be willing to locate there. But strong workforce data gives West Valley advocates optimism for the future of the area’s office market.

Pitching a partnership
Goodyear and Avondale aren’t the only West Valley cities aiming to add office space. In the northwest Valley, the city of Peoria recently released a request for proposals seeking a master developer to build a 17-acre mixed-use project called Stadium Point that includes a major office component to be built in what is currently the Peoria Sports Complex parking lot near Bell Road and 83rd Avenue.

The request calls for a total of more than 1 million square feet of commercial development, including 500,000 square feet of Class A office space, a full-service hotel, 250,000 square feet of multifamily residential and 100,000 square feet of retail, dining and entertainment.

“The Stadium Point project will stand out as being unique to the region and will serve as a key determinant attribute – setting Peoria apart and becoming known as the place to locate world-class, sustainable and future-ready businesses,” the RFP states. “Due to a lack of inventory, in the past three years, the city has been bypassed by at least 2.7 million square of qualified prospects seeking Class A office space.”

Rick Buss, Peoria’s economic development director, said the city has worked to target key industries to locate in Peoria, but more often than not users want something they can occupy quickly.

“If we have something in the works, then we at least have a time frame when companies can move in,” he said, adding that Peoria would “absolutely” be able to fill a spec building if a developer were to plant their flag there. “About every two weeks we have a prospect looking for Class A office and they want it now.”

Once people visit Peoria, the city’s amenities and quality of life are enough to get them interested, Buss said. As companies start to move into the city, it should slowly shift the perception of the West Valley.

Telling the west side story
Westmarc began collecting workforce data about the West Valley about three years ago, and it has worked to get the story out about the number of educated workers who commute from that area daily.

The research culminated in a forum Westmarc is planning to hold in February 2020 with brokers, developers, capital partners and others in the real estate industry to pitch the value that West Valley cities can offer.

Olsen from Globe Corp. and Fogelson of Venn Construction are involved in putting the forum together and pitching the West Valley for more commercial development.

“I think as a West Valley native, it’s a civic duty,” Fogelson said. “You want to see it better than what you had. If we can bring jobs to the West Valley, what does that do for the community?”

Hoffman said brokers know which companies are looking to expand or move to the Valley with a long horizon, and bringing them together with developers can show demand exists for new office space in the market.

“When you bring in the brokerage community, they have the knowledge of their tenant list, who will need space in the next three years,” Hoffman said. “That’s the opportunity. If we had the product, we would have no problem filling it.”

With very little West Valley office development until now, companies moving in can take advantage of the workforce that might be looking to shorten their commute, as opposed to locating in the East Valley where companies will have to compete for labor in a market that could be saturated, Hoffman said.

“If you’re going to continue developing, you have to start looking west,” Hoffman said. “Projections show 49.5% of the population growth in the next 25 years will be in the West Valley.”

Source: https://www.bizjournals.com/phoenix/...-the-wild.html

[combusean]

The West Valley has long had a reputation from Maryvale and wide swaths of Glendale as being run down and dangerous and this kind of legacy baggage takes a generation to get over--eg, look at Jim Waring who freaking attends office downtown and can't even see what's going on.

The smaller towns like Litchfield Park and Avondale and Peoria (while not really small these days), etc don't deserve the traditional reputation of the West Valley--they're safe suburbs that didn't start exploding until my adulthood and I'm in my late 30s now. When people my age start pulling the strings you'll see the sprawl of the valley get more office centers which in my mind is a good thing--you need bidirectional travel for mass transit to really become productive and not so cost-prohibitive. Caltrain between SF and SJ has some of the highest farebox recovery in the nation because trains aren't deadheading on the return.

[Phxguy]

So I just watched ‘Noelle,’ that Disney+ Christmas film set in Phoenix, so you guys don’t have to! The film itself is meh, your typical holiday flavor, but your average Phoenician will recognize most filming locations. Desert Ridge Marketplace has most of the film’s attention. There’s quite a few skyline establishing shots with Block 23 and the Link under construction, and the god-awful Hyatt paint-job half-way finished. The local connection is a private investigator living in Orpheum Lofts (money-shot of the exterior shows the light rail passing by). A yoga scene takes place at the Botanical Garden, the background in a driving scene is along 16th St north of McDowell passing by Casa Corazon and Barrio Cafe, and there’s some exterior shots of St. Luke’s Hospital. A few urban street-scenes definitely don’t take place in the Valley but everything is dressed up as if it is, from Az license plates to murals suspiciously reminding the viewer this is in fact Phx.

Overall, it’s a film bloated with Phx/Az marketing, which is nice for a change, and I’ll take a film that paints our town in a good light! Hope to see more representation!

[xymox]

Originally Posted by Phxguy

So I just watched ‘Noelle,’ that Disney+ Christmas film set in Phoenix, so you guys don’t have to! The film itself is meh, your typical holiday flavor, but your average Phoenician will recognize most filming locations. Desert Ridge Marketplace has most of the film’s attention. There’s quite a few skyline establishing shots with Block 23 and the Link under construction, and the god-awful Hyatt paint-job half-way finished. The local connection is a private investigator living in Orpheum Lofts (money-shot of the exterior shows the light rail passing by). A yoga scene takes place at the Botanical Garden, the background in a driving scene is along 16th St north of McDowell passing by Casa Corazon and Barrio Cafe, and there’s some exterior shots of St. Luke’s Hospital. A few urban street-scenes definitely don’t take place in the Valley but everything is dressed up as if it is, from Az license plates to murals suspiciously reminding the viewer this is in fact Phx.

Overall, it’s a film bloated with Phx/Az marketing, which is nice for a change, and I’ll take a film that paints our town in a good light! Hope to see more representation!

Unfortunately a lot of the 'Phoenix' shots were of Vancouver. The rest seemed to be all blue-screened in. Even about 75% of the Desert Ridge shots were not Desert Ridge - they were somewhere else (the Tanger Outlets?). It was fun to see even though the movie was highly predictable from the opening minute and not all that fun. And yes - they said 'Phoenix' and 'Desert Ridge Marketplace' about 100x in that film. Including a shot at Phoenix from the start 'Phoenix? Sounds dreadful.'

Maybe someday we'll get our film commission running again?

[exit2lef]

Anyone remember "Bad Santa?" That's a decidedly different Christmas movie that was set in Phoenix, but not filmed here at all. I think most of it was shot in Las Vegas. It didn't make Phoenix look particularly good, but I don't think any location would have shined in a bleak movie like that.

[biggus diggus]

My office to Fry's is 2.4 miles round trip.

There are SIX sections with lane closures on the trip. The direct route isn't available due to TWO full on road closures. Then there's the normal every day issues of drivers stopping in the middle of the road to figure out if they should turn, drivers making left turns out of the right lane of a one-way street and almost colliding with my vehicle, and people driving the wrong way on a one-way street.

My lease is up in April at this office. I'm done here. Downtown is a disaster to get around and will not get better for probably a couple more years. Anyone who thinks it's a good idea to remove the center lane on Roosevelt needs to spend a week in my shoes and see what it's like to live with this garbage every day.

[DesertRay]

Saw that they are putting the "Ted Head" building wrap on the 101 building on Roosevelt. Looks nice!

[ASU Diablo]

Originally Posted by biggus diggus

My office to Fry's is 2.4 miles round trip.

There are SIX sections with lane closures on the trip. The direct route isn't available due to TWO full on road closures. Then there's the normal every day issues of drivers stopping in the middle of the road to figure out if they should turn, drivers making left turns out of the right lane of a one-way street and almost colliding with my vehicle, and people driving the wrong way on a one-way street.

My lease is up in April at this office. I'm done here. Downtown is a disaster to get around and will not get better for probably a couple more years. Anyone who thinks it's a good idea to remove the center lane on Roosevelt needs to spend a week in my shoes and see what it's like to live with this garbage every day.

As the youngins would say..."OK Boomer". I think Biggus is turning into a NIMBY right in front of our eyes jk

All kidding aside, yes it's a headache but if we are all pushing for development, then this is what's expected. Isn't an increase in traffic and construction the rallying cry for NIMBYers? I fully support removing the center lane on Roosevelt and I have lived near Roosevelt since 2015. When I purchased here, I was fully aware of the boom downtown was currently experiencing and future development. I knew of all the construction on Roosevelt and the headache 3rd and 5th Aves would cause once they were turned into 2-way streets. I knew of pending construction of townhomes and apartments on 4th Ave and 3rd Ave.

It would be silly for me to complain about the traffic and construction noise now. It's like the Ahwatukee residents that bought homes along the 202 Freeway knowing damn well the freeway would eventually be built in their backyard. Besides, I'm enjoying downtown grow up right in front me (not to mention the killer appreciation in property value over the years). As a downtown resident and property owner, I say bring it on!

[combusean]

I don't think the NIMBY comparison is fair.

This scale of actual construction is unprecedented in Phoenix and would be annoying AF if you had to deal with it constantly. If you rented when it was sleepier before everything exploded, I think you have a right to gripe--i mean, it's pissing into the wind and venting, it's not going to affect anything like an actual cantankerous NIMBY at a zoning hearing that might have to be taken seriously or someone won't get re-elected.

The lane closure on Roosevelt, however, wouldn't make so much more of an impact but Downtown now is a zoo more than it will ever be with the construction. When this stuff wraps up, and downtown gets more organically busy, it'll make more sense to two-way those damn one-ways and build more signalized intersections to fix some of the general chaos biggus is talking about.

[biggus diggus]

Don't get me wrong, I encourage it. I just don't want to deal with it out of necessity. When we go downtown for recreation it doesn't bother me but when I just need to get in and out of the office and have time constraints it's sickening.

I agree with you about the appreciation. All of my rents are up dramatically over the past couple of years and ultimately downtown being a destination is good for business but it's not for me to be locked into personally. Felt like I should clear that up.

[Obadno]

Give it up Biggus,

Its happened, you have transcended the urban lifestyle and taken your place with suburbanites. Stop fighting it, its natural, let yourself go and fade into the blissful convenience of quiet Chandler.

It happens to the best of us.

[CrestedSaguaro]

Originally Posted by biggus diggus

My office to Fry's is 2.4 miles round trip.

There are SIX sections with lane closures on the trip. The direct route isn't available due to TWO full on road closures. Then there's the normal every day issues of drivers stopping in the middle of the road to figure out if they should turn, drivers making left turns out of the right lane of a one-way street and almost colliding with my vehicle, and people driving the wrong way on a one-way street.

My lease is up in April at this office. I'm done here. Downtown is a disaster to get around and will not get better for probably a couple more years. Anyone who thinks it's a good idea to remove the center lane on Roosevelt needs to spend a week in my shoes and see what it's like to live with this garbage every day.

Better get out now while you can still get a moving van through. Going to be much, much worse by April!

[TJPHXskyscraperfan]

Originally Posted by biggus diggus

Don't get me wrong, I encourage it. I just don't want to deal with it out of necessity. When we go downtown for recreation it doesn't bother me but when I just need to get in and out of the office and have time constraints it's sickening.

I agree with you about the appreciation. All of my rents are up dramatically over the past couple of years and ultimately downtown being a destination is good for business but it's not for me to be locked into personally. Felt like I should clear that up.

Why don’t you take Light Rain? In any major city during rush hour it becomes more time consuming to take mass transit. If you lived in NYC and worked downtown, it would make more sense for you to use the Subway instead of driving yourself to work from Midtown or the upper east side or wherever.

[biggus diggus]

Because I live at Central and orangewood, would have to drive to park and ride and leave a car sitting in the sun all day. It would require too much time and energy. Not to mention I would then be hostage, my business sometimes requires spur of the moment trips around town so I need a car with me.

[DesertRay]

Originally Posted by biggus diggus

Because I live at Central and orangewood, would have to drive to park and ride and leave a car sitting in the sun all day. It would require too much time and energy. Not to mention I would then be hostage, my business sometimes requires spur of the moment trips around town so I need a car with me.

Nice area to live in! What's it like living on the Bridle Path?

[biggus diggus]

I like it. It's a good value. I could have gone to PV or Arcadia and ended up in half the house.

[DesertRay]

Originally Posted by biggus diggus

I like it. It's a good value. I could have gone to PV or Arcadia and ended up in half the house.

Nice. I love doing my long runs there. I have to do a few up and backs, but the parking at the church, and a farmer's market there when I finish make it a great place to run. Bonus: the idea of Central Avenue being a running path still blows my mind.

[CrestedSaguaro]

Ouch. Suddenly UEB getting sold to Katerra wasn't such a great thing. Fortunately, it doesn't affect any current projects, but still 300 layoffs.

What Katerra's plant closures, layoffs in Phoenix mean for local building projects

By Angela Gonzales – Senior Reporter, Phoenix Business Journal
Dec 9, 2019, 2:05pm MST Updated Dec 9, 2019, 2:58pm MST

Despite the closure of a Katerra Inc. work site used in construction prefabrication, company officials and those in the industry say it isn't likely to hinder any current projects.

According to state filings, Menlo Park, California-based Katerra intends to lay off nearly 300 people in the Valley, more than the 200 or so first reported last week as it shifts production back to the West Coast and plans to build a huge factory near Austin, Texas.

The two notices filed with the Arizona Department of Economic Security indicate Katerra will cut 282 workers in metro Phoenix, including 221 at its facility at 624 N. 44th Ave. Separately, another 61 staffers are being let go from the company's Scottsdale executive offices at 9305 E. Via de Ventura. The company filed a Worker Adjustment and Retraining Notification Act, or WARN, notice, which requires employers to provide 60 days notice of covered mass layoffs.

Katerra, which manufactures prefabrication modules for multifamily housing and commercial projects, is closing its Phoenix production facility to move all building component production to its factory in Tracy, California, which is twice the size of the Valley facility and more technologically advanced, said JZ Rigney, spokesperson for Katerra.

What's more, the company sold its 150,000-square-foot plant at 8205 N. 67th Ave. in Glendale, to Killeen, Texas-based Foxworth-Galbraith Lumber Co. in November because the expanded operations in Tracy will handle those production efforts as well, Rigney said. That plant sits on 27 acres of land.

"This decision was difficult but aligned with our U.S. manufacturing growth plans, which includes a new, 600,000-square-foot factory in San Marcos, Texas, by 2021, to serve the South and Central U.S. markets," Rigney said.

In Arizona, Katerra has more than 10 projects in design and under construction, including X Phoenix, a $150 million, 19-story apartment tower in downtown Phoenix.

Noah Gottlieb, principal of Chicago-based Property Markets Group, the developer of X Phoenix, said he isn't concerned.

"Katerra has been and continues to be a great partner of ours," Gottlieb said. "I can't really speak to the specifics of the factory, but we still maintain a high level of confidence in their ability to deliver on our product in downtown Phoenix."

Even with the layoffs, Katerra still has hundreds of employees across its Arizona offices and multiple construction projects, Rigney said.

"While we have realigned resources in our company this year, overall, Katerra has grown," Rigney said. "We began the year with more than 6,000 global employees and today have 8,000 employees. To date, this realignment has impacted about 5% of our global employees.

"We look forward to our continued operational presence in Arizona with many employees and building projects in design and under construction," Rigney said.

RL Brown, publisher of the RL Brown Housing Reports, said Katerra's move to cut expenses is not likely a reflection on its long-term outlook.

"Aurtomation and modular/panelized housing construction is almost assured to become the wave of the future in markets like Phoenix as the processes are refined and become more widespread," Brown said. "Major national builders are already examining how these innovations and others like them can smooth production flows, address labor challenges and eventually save them money on both labor and materials."

It wasn't that long ago when trusses replaced conventional framing in Phoenix, Brown said.

While Cavco Industries Inc. (Nasdaq: CVCO) doesn't compete directly with Katerra, the Phoenix-based company also focuses on prefabricated housing products, focusing on detached, single-family residences.

Bill Boor, president and CEO of Cavco, told the Business Journal that he respects how Katerra is challenging the status quo in construction.

"In some ways, they are working at the intersection between conventional, or site built, and factory-built construction," Boor said. "We're going to see a lot of innovation in that space over the coming years because of what can be done in a factory setting to improve quality, efficiency and cost compared to conventional approaches. Katerra is definitely involved in pushing those developments."

Still, Boor said it was unfortunate to see the plant closure.

"To some extent, it seems to me to be the downside involved in aggressively pushing new markets, which I understand to be Katerra's business model as a technology-driven company working on new approaches," he said.

Source: https://www.bizjournals.com/phoenix/...n-phoenix.html