Taking a cue from Ernest Hemingway,
Speaking last week to the Desert Mountain Chapter of CoreNet Global, a trade association for commercial real estate professionals, Toci said there is reason for hope in the current marketplace. The sun still shines brightly in
In fact, the metro area managed to attract an estimated 97,000 new residents in 2008, if numbers from the
Still, Toci is not jumping on the bandwagon with some prognosticators who are declaring the Valley’s housing market already has bottomed and is curving heavenward.
About $800 billion in adjustable-rate mortgages are scheduled to reset at higher interest rates through 2011. Even though the ARMs are not subprime, they could be vulnerable to default. The bottom may sink further in the months to come. All of this could delay recovery in the commercial real estate market.
There’s even more sobering data to consider, Toci said:
• By the end of 2009, the
• Vacant office space has been growing for the past two years. Now, several huge office projects are under construction. By Toci’s estimate, it will take between five and six years to absorb available office space.
“We just have a propensity to overbuild,” he said.
For more: www.corenetdesertmnt.org.
New brokerage opens
With the economy in a difficult way, it probably wouldn’t seem like an opportune time to start a commercial real estate firm — but don’t tell that to Patti Gentry and Gee Gee Entz. The two former
In a news release, ACA is described as “a unique boutique firm specializing in the office market, including tenant lease representation, office building acquisition or disposition and client build-to-suits.” Clients include such recognizable names as
Gentry and Entz have been friends for many years, dating back to the start of their careers as sales representatives for IBM Corp. They were partners at Coldwell Banker Commercial from 2003 to 2008.
Both are involved in various charitable causes and volunteer work, including the American Heart Association’s Heart Ball, Arizona Kidney Foundation,
For more: 602-799-3500 or 602-469-0234.
Apartment complex purchased
Multifamily sales transactions have slowed to a crawl. According to real estate data firm CoStar, only three transactions involving larger apartment complexes were completed in the Valley during the first quarter of 2009.
One recent deal of note, according to
The buyer, Stonecraft Homes Inc. of
For more: www.hendrickspartners.com.
Industrial buildings refinanced
Few banks are lending, but Minneapolis-based
Sheila Hamilton, president of statewide association management company Getting It Done, created a Web site that operates as a virtual calendar for Valley real estate meetings and other business organization gatherings.
Gocheckyourcalendar.com serves as a fresh, free way for members of the business community to follow the schedules of many of
Hamilton, who has created more than a dozen Web sites for clients in the past 15 years, said the idea for the calendar originated from Getting It Done. At the company, she and five team members manage membership, organize events and perform other administrative tasks primarily for nonprofit organizations in
“Different members of Getting It Done found out about my master calendar in Excel,” she said, and asked about the timing of certain events. “So I thought I should get this up online so people could see it for themselves.”
With more than $15,000 of her own money invested and some help from contacts, Gocheckyourcalendar.com was formed in November 2007. In January 2008, the Web site was relaunched with a new format and updated Trumba software.
Now the Web site offers visitors more than just a calendar of events. Hamilton and her team have incorporated areas for networking tips, a recruiting center and a classified section where patrons can post real estate available for sale or rent.
The site also allows visitors to subscribe for updates and event reminders. One feature exclusive to subscribers is a weekly e-mail sent out on Mondays with a list of events scheduled across the Valley for the next two weeks.
The calendar now has nearly 7,000 subscribers, and GID staffers estimate subscriptions are growing by about 20 a week.
For-profit businesses can opt for an annual partnership with Gocheckyourcalendar.com. A $500 membership fee gives companies access and visibility on the Web site and in the weekly subscriber e-mails. Through the partnership, each sponsor’s company logo is displayed, and sponsors may add events to the calendar at no charge.
Posting calendar events without partner status costs $30 per entry.
“It’s been a tool that I utilize internally with my staff, and it has become known in the business community,” she said. “I’d like it to become the place professionals go.”
“It has been really fun to launch and work on the site and share it with people,” she said. “And we are always looking for ways to improve it.”
At issue: What will happen to those properties in the long run, and how will it affect economic development in the area? Are surrounding property values being negatively impacted? And what about public safety?
“It’s all about public safety. That’s the main thing we’re concerned about,” said Michael Hammett, a spokesman for the city of
Hammett said city inspectors have been checking stalled projects frequently to make sure the responsible parties have installed adequate fencing. Many of those projects no longer have valid building permits, so very little can be done other than to protect the property from vandalism and protect the public from injury or harm.
Phoenix Mayor Phil Gordon said he’s well aware of the problems.
“We are working with the development community and neighborhoods to be mindful of projects that are under way and take care to maintain a well-kept appearance and monitor the site,” he said. “The city has a team ready to respond to reports of graffiti, trespassing or unkempt lots to limit blight in our community.”
One investor that decided not to take any chances is
So earlier this year, the company took the property off the market and decided to bulldoze it at a cost of $600,000. Safety issues were a top concern.
“They did not want anybody to die on the property and sue (them). That was their biggest fear,” said Bobby Bull, managing director of
Despite the cost of demolition, which was especially high in this case because of asbestos mitigation, Consolidated decided it was worthwhile. The company will hold on to the parcel until the market improves.
Making a decision to demolish often is not easy, according to Scott Macpherson, a principal of
Rider is often hired to estimate the comparative costs of reconfiguring a busted project. Some major criteria include the structural integrity of a development, current market conditions, availability of construction materials, pending liens or lawsuits, and the cost of hiring a new development and construction team. Another key factor is determining whether there have been significant building code changes that would deem the original project inadvisable.
Macpherson said one stalled Valley project may be particularly difficult to resurrect: Elevation Chandler.
The steel structure, built several years ago, has been exposed to the elements while the developer has been caught up in financial issues. The current owner, Point Center Financial of California, could not find a buyer at auction this month and now is left with the eyesore.
“A structural steel building is designed to be load-bearing, and when it doesn’t bear a load, there can be additional degradation,” Macpherson said.
Exposed rebar also is evident at the Elevation Chandler site.
“(Exposure) to the elements of weather can affect (rebar’s) ability to bond properly with concrete,” Macpherson said. “Increased exposure may increase chances that the material is a total loss.”
Depending on how long the recession lasts, some partially completed projects could be at risk structurally. For now, the public will have to get used to looking at the remnants of what might have been.
“This is really an unprecedented time,” Hammett said of the economy.
But there is one way the public can be proactive, he added: “The city wants to know if there are blight and safety issues that we still need to address.”
To report such issues, send information to email@example.com.
The number of hotel and resort foreclosures in the Valley continues to increase.
Four more large properties have been served with notices of trustee sale, and the venerable Camelback Inn, a JW Marriott Resort & Spa, has been notified of a $2.7 million mechanics lien, according to information provided by
Four properties are facing auctions:
• Xona Resort Suites in < ?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />
• Carefree Resort & Villas.
• Embassy Suites Phoenix-Airport.
• Crowne Plaza Phoenix in north
All four hotels remain open and are accepting reservations, but it’s unknown how foreclosure proceedings will affect their operations.
Spate of foreclosures
Since the first of the year, the Valley’s hospitality industry has been rocked with bad news.
The developers of the W Scottsdale hotel and the InterContinental Montelucia Resort & Spa in
The foreclosure sale for the Montelucia is scheduled for June 29, and the sale for the W is scheduled for July 2.
Also on tap is the auction of the historic Wigwam Resort & Spa in
Not so Carefree
The latest batch of foreclosures includes the Carefree Resort & Villas. Formerly the Carefree Inn, it was built in the 1960s.
For Carefree Mayor Dick Schwan, the resort’s financial situation reaches far beyond nostalgia.
“We’ve got about 10 providers that give us our sales tax and most of our (operating) revenue, so we’re very familiar with what’s going on,” he said.
He and other town officials have been aware of the problem for several months. The owner, Carefree Mule Train Ventures LLC, is in bankruptcy, he said.
“Within the last several days, we’ve learned that the Chapter 11 has been converted to Chapter 7. We understand the resort is now operating under a receivership,” Schwan said.
Chapter 11 allows a company to reorganize, while Chapter 7 involves liquidation of assets.
The LLC, which is identified in the trustee notice as a
“Our understanding is that the Carefree property has a positive cash flow … and that the receiver is looking for a buyer,” he said.
‘A double whammy’
Buyers are hard to find, but that doesn’t mean some aren’t standing by to take advantage of select distressed properties, according to Rod Apodaca, managing director of PKF Capital Markets in
Apodaca said plenty of money is waiting on the sidelines for the right time and the right property.
PKF specializes in the hospitality real estate industry and is familiar with the
Hotel developers from
In those cases, construction loans became due and the developers were unable to find permanent financing in the dwindling credit market.
Other hotel properties have become vulnerable as owners took on new debt in 2006 and 2007 and now are unable to service that debt because business travel and tourism have dropped dramatically during the recession, Apodaca said.
He said the combination of debt servicing costs and declining occupancy has created “a double whammy.”
That could be the issue for the Camelback Inn, which recently completed a $50 million renovation.
According to a mechanics lien filed June 10 in the Maricopa County Recorder’s Office, Graycor Construction Co. Inc. of
The lien is filed against the original contractor, Marriott International Design & Construction Services Inc., in association with the owners, Camelback Inn Associates Ltd. Partnership, Camelback Properties Inc. and Marriott Condominium Development Corp.
Clark Albright, marketing director of the Camelback Inn, said an audit is under way and he expects a resolution to the lien soon.
Ion Data: 480-831-6677
PKF Capital Markets: www.pkfcapital.com
Recent Hotel Foreclosures
Xona Resort Suites
Owner: W2005 RSI Realty LLC, New York
Address: 7677 E. Princess Blvd., Scottsdale
Original loan balance: $95 million
Notice filed: June 18
Auction scheduled: Sept. 18
Carefree Resort & Villas
Owner: Carefree Mule Train Ventures LLC, San Francisco
Address: 37220 N. Mule Train Road, Carefree
Original loan balance: $18 million
Notice filed: June 11
Auction scheduled: Sept. 18
Crowne Plaza Phoenix
Owner: CP Phoenix Holdings LLC, Chicago
Address: 2532 W. Peoria Ave., Phoenix
Original loan balance: $21.1 million
Notice filed: May 29
Auction scheduled: Aug. 31
Embassy Suites Phoenix-Airport
Owner: Saunders of Phoenix LLC, Tucson
Address: 1515 N. 44th St., Phoenix
Original loan balance: $26.5 million
Notice filed: April 21
Auction scheduled: July 28
Source: Ion Data, Mesa
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