Friday, April 29, 2011
Thursday, April 28, 2011
CoStar Selects Tucson's Top Office Sales for Q1 2011
The following is an account of the Tucson market’s select top five office sale transactions for first quarter 2011.
American Recovery Capital NY recover REIT, Inc. purchased the 125,000-square-foot building at 5411 E Williams Blvd. in Tucson for $32 million, or $256 per square foot. Phillip Skillings of Bourn Advisory Services represented the seller, Bourn Companies LLC. Mark Palmer of The Palmer Team, Inc. represented the buyer.
Nova Financial & Investment Corporation acquired the 10,472-square-foot property at 6893 N Oracle Road in Tucson for $1.75 million, or approximately $167 per square foot. Ken Schlachta and John Yarborough of Romano Real Estate represented the seller, Monte Sherrill. Mark Irvin of Mark Irvin Commercial Real Estate Services LLC represented the buyer.
Jerry Soneblick purchased the 14,784-square-foot building at 1735 E Fort Lowell Road in Tucson for $900,000, or roughly $61 per square foot. Tari Auletta of Grubb & Ellis represented the seller, Shanahan Mechanical & Electrical. Larry Paul of Realty Executives Tucson represented the buyer.
Robert Snyder acquired the 3,681-square-foot property at 4711 E Camp Lowell Drive in Tucson for $830,000, or about $225 per square foot. Jon O’Shea and Rob Fischrup of VAST Commercial Real Estate Solutions LLC represented the sellers, Mark Goldberg & Antonio Esquibel. The buyer did not use a broker for this transaction.
Assurance Home Care, Inc. purchased the 5,107-square-foot building at 2312 N Rosemont Blvd. for $600,000, or approximately $117 per square foot. Thomas Nieman of PICOR Commercial Real Estate Services represented the seller, Del Sol Enterprises. The buyer did not use a broker for this transaction.
Tucson's Select Top Office Leases for Q1 2011
The following is an account of the Tucson market's select top 10 office lease transactions for first quarter 2011.
La Frontera leased the entire 22,090-square-foot building at 4891 E Grant Road in Tucson. Buzz Isaacson and Ike Isaacson of CB Richard Ellis represented the landlord, Commission of Accreditation of Rehabilitation Facilities. Tom Knox of PICOR Commercial Real Estate Services represented the tenant.
Ridgetop Engineering leased 11,743 square feet at 3580 W Ina Road in Tucson. Tari Auletta of Grubb & Ellis represented the tenant. The landlord, Diamond Ventures, handled the negotiations in-house.
Cox Communications leased 6,615 square feet at 1640 E River Road in Tucson. Buzz Isaacson and Ike Isaacson of CB Richard Ellis represented the landlord, IEA LLC. The tenant did not use a broker for this transaction.
ESDI leased 6,500 square feet at 110-150 N Tucson Blvd. in Tucson. Gary Best of KW Commercial represented the tenant and the landlord, Engineering & Research Associates.
Bank of America Home Loans signed a lease renewal for 4,204 square feet at 6875 N Oracle Road in Tucson. Tari Auletta of Grubb & Ellis represented the tenant. John Yarborough of Romano Real Estate represented the landlord, Plaza Campana TIC 1 LLC.
Community Archives leased the entire 4,204-square-foot building at 6861 N Oracle Road in Tucson. John Yarborough and Ken Slachta of Romano Real Estate represented the landlord, Plaza Campana TIC 1 LLC.
SimonMed Imaging, Inc. leased 3,858 square feet at 310 N Wilmot Road in Tucson. Roy Grinnell and Eric Campos of Benchmark Commercial LLC represented the tenant. Laura Abbinate of The Plaza Companies represented the landlord, Healthcare Trust of America, Inc.
Bayada leased 3,734 square feet at 1055 La Canada Drive in Green Valley. Thomas Nieman of PICOR Commercial Real Estate Services represented the landlord, HR Acquisition I Corp. The tenant did not use a broker for this transaction.
The Center for Life Skills Development leased 3,552 square feet at 5700 E Pima St. in Tucson. John Hamner of KW Commercial represented the tenant. Andrew Sternberg and Robert Nolan of Oxford Realty Advisors represented the landlord, Hamilton-East Pima LLC.
Dr. Pimienta leased 3,031 square feet at 2330 N Rosemont Blvd. in Tucson. Thomas Nieman of PICOR Commercial Real Estate Services represented the landlord, Clyde M. Robinson III. The tenant did not use a broker for this transaction.
CoStar Lists Tucson's Select Top Industrial Leases for Q1 2011
The following is an account of the Tucson market's select top 10 industrial lease transactions for first quarter 2011.
Bridgestone Tire signed a three-year lease for 10,800 square feet at 1861 W Grant Road in Tucson. Darrell Deshaw of NAI Horizon represented the tenant. Rob Glaser of PICOR Commercial Real Estate Services represented the landlord, Walker Tucson Property LLC.
T & S Transport signed a one-year deal for 8,400 square feet at 3579 E Golf Links Road in Tucson. Paul Siskind of Long Realty Company represented the landlord in-house. The tenant represented itself.
Huddleston Trucking signed a one-year lease for 6,134 square feet at 2800 E Airport Drive in Tucson. Ronald Zimmerman of Grubb & Ellis represented the tenant and the landlord, City of Tucson.
Battery Systems leased 5,787 square feet at 2801 N Flowing Wells Road in Tucson. George Hayduke of Westar Mortgage & Realty Corporation represented the tenant. Gary Emerson of GRE Partners LLC represented the landlord, Keenan Investment Co.
ISS Janitorial leased 5,400 square feet at 3860 S Palo Verde Road in Tucson. Paul Hooker and Rob Glaser of PICOR Commercial Real Estate Services represented the landlord, Presson Corporation. The tenant represented itself.
Master Auto Parts signed a five-year deal for 5,000 square feet at 1671 S Research Loop in Tucson. Ronald Zimmerman of Grubb & Ellis represented the landlord, Jeffco Plaza LLC. The tenant represented itself.
Optical Support, Inc. signed a three-year lease for 5,000 square feet at 1671 S Research Loop in Tucson. Ronald Zimmerman of Grubb & Ellis represented the tenant and the landlord, Jeffco Plaza LLC.
Chopstix Asian Dinner leased 4,500 square feet at 3820 S Palo Verde Road in Tucson. Rob Glaser and Paul Hooker of PICOR Commercial Real Estate Services represented the landlord, Presson Corporation. The tenant represented itself.
Mastek-Innerstep, Inc. leased 4,410 square feet at 3280 E Hemisphere Loop in Tucson. Pat Welchert of PICOR Commercial Estate Services represented the landlord, Tucson Property Investors. The tenant represented itself.
Interior Logics leased 4,246 square feet at 3845 N Business Center Drive in Tucson. Paul Hooker and Rob Glaser of PICOR Commercial Real Estate Services represented the landlord, Presson Corporation. The tenant represented itself.
First Quarter 2011 National Logistics Market Does Not Disappoint
April 27, 2011
Nationwide, nearly 18 million square feet of logistics space was absorbed in the first quarter. Although the logistics market did not see the same acceleration of demand we reported for the overall industrial sector, the logistics segment consistently outperformed the other property types throughout the downturn and recovery. New completions totaled 3 million square feet for the fifth consecutive quarter, and just 23 projects totaling 10 million square feet remained under construction across the country. Most of the projects currently under construction are build-to-suit projects, with preleasing averaging 89 percent. Construction on the largest speculative building started during the first quarter, a 616,000-square-foot distribution warehouse located in the fast-rebounding Inland Empire market. This market has seen its supply of available, large blocks of space go from 17 to seven over the course of one year. At least two more buildings will break ground in the Inland Empire market this year. Measured by net absorption, Inland Empire was the best performing market during the first quarter, with approximately 25 percent of total demand occurring in the market.
Other large logistics markets also performed well, with 88 percent of total demand occurring in the nation's top six logistics markets: Southern California, Atlanta, Chicago, Central Pennsylvania, Dallas and Northern New Jersey. Strong demand and minimal new deliveries continue to drive vacancy downward. During the quarter, vacancy dropped 40 basis points to 12.2 percent, while availability declined 50 basis points to 15.9 percent. Asking net rents grew 3.2 percent on an annualized basis. The first quarter Grubb & Ellis Industrial Broker Market Sentiment survey identified third-party logistics providers as the most active industry across the nation. This market-level intelligence coupled with economic indicators paint a continuously brighter picture for the national logistics market. Source: Grubb & Ellis
Wednesday, April 27, 2011
Tech Firms Leading the Commercial Real Estate Recovery
By Robert Bach, Senior Vice President, Chief Economist and
Dick Scott, Managing Director, San Jose, Leader, Technology Practice Group
Technology stocks have posted impressive gains in recent periods. According to Morningstar Inc., these stocks witnessed an average gain of 20.75 percent over the past year, an average gain of 12.39 percent annually over the past three years (leading all other sectors), and an average 10.09 percent gain annually over the past five years (trailing only basic materials). But has a strong stock market performance translated into demand for commercial real estate? In the following report, Grubb & Ellis examines five office markets with strong technology components to answer this question: Silicon Valley, San Francisco, Boston, New York City and Austin, Texas.
In the Silicon Valley and San Francisco, tech firms are leading the commercial real estate recovery, while in New York City, Boston and Austin, Texas, they are instrumental to the market’s rise in activity. In the Bay Area and New York City, Google, Facebook and LinkedIn are among the most active firms, while in Austin, SunPower Corp., Samsung and Apple Inc. have been prominent. Microsoft, IBM and Oracle have been significant market participants in Boston as well. These firms are largely focused on clustering their offices near each other, as well as tapping into a higher concentration of technology-skilled employees, a number of highly ranked universities and the metropolitan vibe these cities give that is current and hip.
Impact on Speculative Construction
The activity by tech firms has created momentum and a spike in the absorption level of large blocks of space in some areas. The majority of technology companies require more than 100,000 square feet of space for their corporate headquarters and other company consolidations. As depicted in the following graph, there are few large blocks of Class A office space sized 100,000 square feet and above available for rent in each metropolitan area. This has led to the question of whether the markets will see an increase in speculative construction in these tech-heavy markets.
Grubb & Ellis does not expect the recent positive absorption levels for large blocks of space to turn into an increase in major speculative construction in the Bay Area immediately. What the company does expect to see in the Silicon Valley, however, is additional company consolidations, which have been occurring more frequently, large redevelopments and the acquisition of strategically located buildings and land parcels.In Austin, two noteworthy projects recently broke ground in the Southeast region, including Data Foundry’s 250,000-square-foot data center and CyrusOne’s 72,000-square-foot data center. Beyond these projects, extensive development of new office and flex space is believed to be unlikely in the near-term. New York City is similar, in that with the completion of construction for 11 Times Square, no new significant office construction is expected to be finished for at least two years.
Boston tells a more unique story, with the Cambridge market being the hot spot for technology companies.
Due to the city’s high barriers to entry and the lack of large blocks of space that come on to the market, Cambridge will likely see construction sooner. Alexandria Real Estate Equities is planning a $1 billion, 1.5-million-square-foot office/laboratory complex in East Cambridge. Additionally, the master-planned Cambridge Discovery Park is currently being marketed with permits in place allowing for the development of more than 800,000 square feet of space. Beyond Cambridge, Grubb & Ellis expects additional construction to take the form of a build-to-suit.
Time to Invest
Technology corporations flush with cash are showing signs that it’s time to invest in Silicon Valley’s commercial real estate market. Microsoft, Dell, Qualcomm and Google are making large leasing commitments in the Silicon Valley. Brocade, Yahoo, Apple, Google and Facebook are just a few of the firms that are in the process or have purchased land near a building or project they plan to lease or redevelop. In San Francisco, Salesforce.com recently purchased 14 acres of land to potentially build a 2-million-square-foot campus and Zynga leased 270,000 square feet of space. By acquiring land, companies have the option to expand right next to their headquarters location when the time is right, eliminating the need for a corporate relocation. With the banking of this land, however, developers can’t compete with the users, creating a barrier to construction in the Silicon Valley. Additionally, the current income from leasing space does not outweigh the cost to build it, making the only construction to take place mostly build-to-suit projects.
In New York City, Google recently purchased 111 Eighth Ave. for $1.8 billion, ensuring their future growth in the market. The company currently occupies more than 500,000 square feet of the 2.9-million-square-foot building.
Austin has more than 90,000 professionals employed by technology firms. Intel Corp. invested $39.8 million into the market by acquiring a 388,000-square-foot office building located at 1300 S. Mopac Expressway. SunPower Corp. is currently searching for space in the market and is expected to bring 450 jobs; the company has invested $10 million in capital into Austin’s economy through the expenses of opening a new operation. Cirrus Logic Inc. announced a $30 million headquarters building to be built in downtown Austin that will house more than 550 employees and is expected to be completed in summer 2012.
Aces and Spaces
To borrow a term used in the game of Bridge, several technology-rich markets are seeing “aces and spaces,” where companies are moving into large, Class A buildings in prominent locations (the aces), while leaving spaces behind in the buildings they previously occupied (the spaces). In the Silicon Valley, there are a number of Class A office lease transactions closing in and around the larger existing projects in the market. Since these transactions often are a consolidation of operations and/or a flight to quality, they leave behind a number of smaller, typically older spaces, which generally take longer to be absorbed. Large firms such as IBM, Microsoft, Texas Instruments, Symantec and Oracle continue to acquire smaller companies in the area, often consolidating these new groups into their existing Silicon Valley campus locations or moving them to more visible, strategic locations.
Surrounding Boston, Acme Packet recently consolidated three offices into one location in Bedford, with additional expansion plans expected to occur within a few years. IBM and Oracle have also been active in acquiring companies, like Netezza Corporation and Art Technology Group, and moving them near their existing locations in Littleton and Burlington.
In the Long Run
The U.S. continues to lead the global technology industry from both an innovation and market share perspective. It’s important to note that although Grubb & Ellis does not expect speculative construction to return to the Bay Area and Austin immediately, construction should return within the next few years, and new buildings will get a lot of attention then.
Tuesday, April 26, 2011
2010 CoStar Power Brokers: And the winners are...
The market was tough. The economy was hard. And our top dealmakers, well, they stood tall, brave and faced the market like true power brokers. They put in long hours, sacrificed weekends and the results are proof of their incredible dedication and talent.
Grubb & Ellis/Tucson has been recognized by CoStar in the 2010 Power Broker Awards as one of the Top Leasing and Top Sales Firm in the Tucson market.
Bob Davis, Bill DiVito, Howard Kong and Ron Zimmerman of Grubb & Ellis/Tucson were also listed as recipients of the Top Industrial Leasing Brokers award in Tucson.
Monday, April 25, 2011
McGuire Center for Entrepreneurship Hosts Year-End Showcase
April 14, 2011
Bob Davis introduces John Bardis (in photo below) at the Year-End Entrepreneurship Showcase and Celebration. John who is the Chairman, President and Chief Executive Officer of MedAssets was honored as a new McGuire Entrepreneurship Fellow.
Every year, the McGuire Center for Entrepreneurship hosts the Year-End Entrepreneurship Showcase and Celebration, during which student teams pitch their ventures in judged presentations and the Center recognizes the entrepreneurial achievements and outstanding contributions of business leaders, collegiate innovators, community members and alumni.
You can watch John’s remarks at event on YouTube:
Bob Davis, Grubb & Ellis/Innovation Park; Sherry Hoskinsons, Director McGuire Center for Entrepreneurship; John Bardis, President & CEO of MedAssets
Thursday, April 21, 2011
Industrial Real Estate and Containerized Trade
Over the past 10 years, international trade and outsourcing have become the primary drivers of demand for industrial space. Of course, total domestic sales and production, the final consumers of imports, drive the aggregate demand, but international trade drives demand on a market and submarket level. The Inland Empire submarket of the greater Los Angeles market is the best example. Over the past ten years, the national warehouse market has grown by about 20 percent, while the Inland Empire market has doubled in size, grown to the seventh largest warehouse market in the country and become considered its own market instead of just a submarket of Los Angeles. Proximity to the Ports of Los Angeles and Long Beach and a similar rate of growth in containerized traffic, measured by twenty-foot equivalent units – TEUs, were the underlying drivers. However, when discussing TEUs, it is important to look beyond the headlines and focus on the true driver of industrial demand: imports. In March 2011, the Port of Los Angeles reported total volume of 600,796 TEUs. Of these, 110,923 were empty and 192,849 were loaded outbound – exports. The remaining 297,023 were loaded inbound – imports. Year-over-year growth was 10.2 percent for imports, 19.2 percent for exports and -6.6 percent in empties, blending to a total growth of 9.2 percent. The accompanying chart shows 2010 and 2009 volumes of only loaded, inbound TEUs. These numbers will appear smaller than what market participants are used to seeing, but these are the volumes impacting the local industrial real estate markets. The growth, 16.3 percent, and the overall story remain intact; the purpose here is to capture and track the underlying driver that is impacted by constantly changing macroeconomic variables such as the strength of the U.S. dollar. Source: Grubb & Ellis, Zepal
Need more information? Contact:
Rene Circ
National Director of Research, Industrial
312.224.3962
Wednesday, April 20, 2011
Bryan Hague Joins Grubb & Ellis Tucson
as Associate Vice President, Retail Group
“Bryan is a seasoned commercial real estate professional who has built an impressive track record representing clients in transactions valued in excess of $250 million over his 13-year career. He is an excellent addition to our office and we are pleased to have him on board,” said Howard Kong, vice president and managing broker of Grubb & Ellis’ Tucson office.
Prior to joining Grubb & Ellis, Hague spent four years as president of River Rock Investments LLC, a locally based commercial real estate investment and development company. While with River Rock, he syndicated the acquisition and development of land, hotel, retail and office properties with an aggregate value in excess of $30 million. Previously, Hague spent seven years with Bourn Partners LLC, where he was responsible for numerous lease, disposition and acquisition transactions valued in excess of $150 million. Hague began his career with Grubb & Ellis in 1997.
Clients he has represented include The Home Depot Inc., Well Fargo Bank N.A., Metro Fitness, Goodwill Industries International Inc. and Pizza Hut Inc.
Hague holds a bachelor’s degree from Brigham Young University. He is a member of the International Council of Shopping Centers and serves on the executive board of directors of the Boy Scouts of America, Catalina Council.
Land Purchase for New Church in Green Valley
Grubb & Ellis Company Represents Corporation of Presiding Bishop of the Latter-day Saints in Land Purchase for New Church
TUCSON, Ariz. (April 20, 2011) – Grubb & Ellis Company (NYSE: GBE), a leading real estate services and investment firm, today announced that Jeff Utsch, vice president, Investment Services, represented the Corporation of the Presiding Bishop of the Latter-day Saints in its purchase of 5.4 acres of land located at the northwest corner of Desert Bell and La Canada in Green Valley, for $1.3 million.
The land will be used for the construction of a church, which will commence later this year. According to Utsch, the land was chosen for its central location at a prominent intersection with close access to Interstate 19.
The seller, WLC Green Valley Ltd. Partnership, represented itself in the transaction.
Tuesday, April 19, 2011
Broad Dollar Index; Dollar vs. Currencies of Broad Group of Trading Partners
Broad Dollar Index; Dollar vs. Currencies of Broad Group of Trading Partners
After a multi-decade run of appreciation, the U.S. dollar has fallen in value by some 26 percent since 2002 against the currencies of a large group of major U.S. trading partners. The dollar spiked during the credit crisis of late 2008 and early 2009 as investors piled into safe U.S. Treasuries, only to resume its decline when the worst of the crisis passed. The weak dollar reflects the U.S. economy’s sluggish growth prospects relative to other countries where interest rates are higher. It also reflects expansionary monetary policies pursued by the Federal Reserve to stimulate the economy, i.e. policies to keep interest rates low, and it may reflect negative investor sentiment over high levels of deficit spending by the federal government. The weak dollar benefits U.S. exporters by making their wares cheaper for overseas buyers, but on the negative side, it contributes to inflationary pressures in markets that import U.S. goods, and it could be a harbinger of inflation in the U.S., already evident in gas and food prices. For commercial real estate, the weak dollar has stimulated demand for industrial properties by exporters, but if gas and food prices continue to rise, the weak dollar is likely to dampen core retail sales (which exclude gas and food) and, by extension, leasing activity in shopping centers. The weak dollar makes U.S. properties more affordable for overseas investors, which could add to the already-strong demand for Class A properties in primary, supply constrained markets – the niche most favored by these investors.
Robert Bach, Senior Vice President, Chief Economist, has 30 years of professional experience in real estate market research, consulting and city planning. His commentary on the real estate markets is provided here on a weekly basis.
Need more information?
Contact:
Robert Bach Senior Vice President, Chief Economist
312.698.6754
Thursday, April 14, 2011
First Quarter 2011 Industrial Market Statistics Point to Accelerating Recovery
First Quarter 2011 Industrial Market Statistics Point to Accelerating Recovery
April 14, 2011
The national industrial market definitely met and potentially exceeded expectations during the first quarter. Based on preliminary results, approximately 31 million square feet were absorbed, the strongest quarterly performance since the fourth quarter of 2007, while construction has remained muted – only 5 million square feet was delivered during the quarter, and 13 million square feet remains under construction across the country. Improving demand and minimal new construction deliveries drove the national vacancy rate down 20 basis points to 10.2 percent from the fourth quarter 2010, 70 basis points down from its recent peak of 10.9 year over year. Asking rental rates have bottomed, with preliminary numbers showing an increase of nearly 2.4 percent from the previous quarter, translating into 9.9 percent annualized growth.
Overall, we are very encouraged by the recovery in the broader industrial market. While delivery of new construction will delay the return to pre-recession levels, local market conditions are getting closer and closer to experiencing sustained and meaningful net effective rent growth.
Stay tuned for the full national report, which is scheduled to be released later this month. Local reports should be available over the course of the next week. Source: Grubb & Ellis
Grubb & Ellis Delivers at Christmas for Diamond's Children
Article from the UMC Foundation Spring/Summer 2011 issue:
Wednesday, April 13, 2011
U.S. Office Market First Look: 2011-Q1
U.S. Office Market First Look: 2011-Q1
· The first quarter brought further improvement in some leasing market metrics, but the rate of improvement is disappointing.
· The vacancy rate was stable at 17.7 percent, no change from the fourth quarter and down by a slim 20 basis points from the cyclical peak recorded in the first and second quarters of 2010. Vacancy remains well above the equilibrium level of 12-14 percent where landlords and tenants negotiate on an even playing field.
· Absorption was low but positive, ending the quarter at 5.0 million square feet. During the 2005-2007 expansion, by comparison, the quarterly average was 18 million square feet.
· Absorption barely outpaced completions, which totaled 4.7 million square feet for the quarter. Projects left in the construction pipeline totaled 16.4 million square feet, the lowest level in nearly two decades. Two towers under construction on the World Trade Center site account for more than one-third of the space still under construction.
· The average Class A asking rental rate for space available at the end of the first quarter was $31.59 per square foot per year, full service gross, a surprising increase of 1.3 percent from the fourth quarter. This was the first increase since the second quarter of 2008. The average Class B rate of $23.22 was 0.8 percent above the fourth quarter. The gains were paced by selected CBD markets on the East and West coasts.
· Sublease space hit a three-year low of 84.4 million square feet.
Forecast
The office leasing market just completed its fourth consecutive quarter in the recovery cycle, but the pace of recovery is sluggish. The vacancy rate has declined by 20 basis points from the peak compared with a normal recovery where the decline should be more like 200 basis points by now, i.e. 50 basis points per quarter. Corporate profits and cash reserves are high, and companies are starting to hire at a faster pace. But the backlog of shadow space – cubes, wings and floors emptied by layoffs while still under lease – is a significant drag on new demand for space. With oil prices continuing to escalate, many economists have backed off their aggressive forecasts for GDP growth this year. A near-term recession is unlikely, but the pace of economic recovery looks less certain than it did one quarter ago. There is little on the horizon to suggest that the office market recovery is about to pick up the pace.
To view more graphs depicting the nation's office market, click here to open an Excel file and then click through the worksheet tabs at the bottom of the page.
Do not hesitate to contact me if you have any questions or comments.
Best regards,
Bob
Robert Bach
SVP, Chief Economist
Grubb & Ellis Company
Phone: 312.698.6754
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