CB Richard Ellis’ Phoenix office has seven of the national company’s 2008 winners

Posted By Mike Padgett

Feb. 4, 2009

PHOENIX, Ariz. – Seven real estate professionals from the Phoenix office of CB Richard Ellis are ranked among the company’s top 225 producers nationwide. 

Tom Adelson, Tyler Anderson, Mark Bauer, Sean Cunningham, Jim Fijan, Mark Krison and Chuck Nixon are on the company’s 2008 list of exceptional performers. They also earned recognition as members of the prestigious Colbert Coldwell Circle.

“In what was undoubtedly the most difficult market environment in years, these seven individuals persevered, exceeding all expectations,” said Craig Henig, senior managing director of CBRE’s Phoenix office. “They worked extremely hard to bring buyer and seller and landlord and tenant together, nurturing their business relationships and becoming a valued partner to their clients.  We couldn’t be more proud of their accomplishments and successes.”

Adelson, a corporate services/tenant representation specialist, and Fijan, an office specialist, are perennial members of the Circle, each having been included for the past 22 years.

Anderson and Cunningham are specialists in multi-family property sales.  They have also achieved membership in the Colbert Coldwell Circle on numerous occasions – Anderson 15 times and Cunningham nine times.

Bauer is an office specialist and a leader for CB Richard Ellis’ Technology Practice Group, representing data center and telecommunications firms with their real estate planning. This is his first time in the Colbert Coldwell Circle.

Krison specializes in industrial properties, working with landlords, tenants and developers. This marks his fourth time in the Colbert Coldwell Circle.

Nixon is a corporate services/tenant representation specialist and a member of the company’s Law Firm Practice Group.  This is also his first time in the Circle.


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Feb 4th, 2009
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New project first high-rise office building in downtown Phoenix since 2001

Posted By Mike Padgett

Feb. 2, 2009

PHOENIX, Ariz. – Several new megabucks real estate projects have starred on downtown Phoenix’s redevelopment stage in recent years, but a new high-rise office building now is in the spotlight.

The One Central Park East building, with 485,000 square feet of office space, is 100 percent speculative. Its addition to the downtown skyline comes at a time of challenging economics nationwide, but it offers several advantages. The 26-story building’s large floor plates, which are preferred by major corporate users, offer nearly panoramic views of the Valley. It is next to Arizona State University’s downtown campus. It is adjacent to the new Metro light rail system. It is a short walk to the expanded Phoenix Convention Center, the new, 1,000-room Sheraton Phoenix Downtown hotel, the downtown sports arenas and a variety of restaurants and cultural sites.

“We’re almost redefining Main and Main,” says Todd Kindberg, senior vice president of Mesirow Financial, a development partner in the new building with National Electrical Benefit Fund. “This is where all the growth’s been downtown.”

The $175-million building at the northeast corner of Central Avenue and Van Buren Street will be finished late this year. Work on the newest skyscraper in Phoenix started in October 2007. I joined Kindberg and lead architect Mark Roddy of SmithGroup’s Phoenix office for a recent tour of the building. We stopped at Holder Construction Co.’s office at the site to pick up our required hard hats and safety vests. Then we boarded the construction elevator attached to the north face of the 26-story building.

The new building’s topping-out ceremony was on the 18th floor Jan. 27. The ground floor has a lobby and 8,500 square feet of space for retail businesses. The building will have 600 parking spaces on floors two through 10. The top 16 floors offer 485,000 square feet for offices. The building has a total of 700,000 square feet of space, including the parking levels camouflaged from view by perforated aluminum panels.

Roddy says the building has the largest office floor plates in a high-rise building in Phoenix. Each of the office floors, with slightly more than 30,000 square feet, is more than half the size of a football field, which has 57,600 square feet.

As the elevator took us higher, stopping to let construction workers on or off, we received an expanding view of Phoenix north of downtown. Through the elevator’s perforated metal sides, we first could see over the tops of buildings. Then, Camelback Mountain and Piestewa Peak came into view. Finally, about 12 miles in the distance, we could see the Arizona Cardinals football arena in west Glendale near Glendale Avenue and Loop 101.

After we reached the top floor and the elevator door was raised, we stepped off and turned left. We walked around workers and between stacked building materials, headed for the east end of the building. There, we saw airliners landing and lining up to take off at Sky Harbor International Airport. Below us, to the south a few blocks, is Chase Field.

The 26-story project is the first high-rise office building added to the downtown real estate palette since the 1 North Central building was completed in 2001 at the northeast corner of Central and Washington Street. SmithGroup designed that building, too, as well as Arizona State University’s new Taylor Place dormitories at Taylor and First streets. SmithGroup also designed ASU’s College of Nursing and Healthcare Design, which is under construction at Fillmore and Third streets.

One of the unusual design elements of One Central Park East is its corner supports. They are set in a few feet, creating column-free corner offices. The design allows the addition of corner balconies on the top floor for a cantilevered effect.

The building’s south façade will have two horizontal shade fins per floor to minimize heat gain from exposure to the sun. The east and west facades will have vertical shade fins on five-foot centers. Shade fins will not be added to the building’s north façade, since it will receive little direct exposure to the sun. And to further reduce sun exposure, the tops and bottoms of the floor-to-ceiling glass are coated with tiny dots that block 15 percent of the sunlight, yet do not interfere with the views.

CB Richard Ellis’ Phoenix office has been chosen to find tenants for the building. Kindberg says law firms, banks and other large corporate users are likely tenants. Those companies prefer to have all their employees on one floor.

“We have several prospects, lead tenants we’re working with at this point, but not that we’re in a position to announce,” Kindberg says. “The larger tenants need to make decisions soon because they have the fewest choices, so we’re working diligently with them.”

Roddy adds: “This is the type of product that can attract tenants from a national perspective, not just from a local perspective.”

The building occupies one third of the block between Central and Van Buren, Fillmore and First streets. Mesirow officials have been talking with hotel companies about adding a major hotel on the property’s northwest corner, Kindberg says.

“We’re in discussions with one (hotel company) in particular for the corner here,” Kindberg says. “It’s all contingent on their financing.”

Originally, the master plan in 2006 included a 34-story residential condo tower, a 330,000-square-foot office building, and ASU’s new journalism school. But when the residential market softened and the prices of construction materials increased, the plan was reconfigured to its current status. The 330,000 square feet of office space was increased to 485,000 square feet, the condo was erased from the plan, and ASU relocated its new journalism school one block north to its current site, Kindberg says.


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Feb 2nd, 2009
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Arizona contractors, architects seeking state help in public-private partnerships

Posted By Mike Padgett

Jan. 28, 2009

PHOENIX, Ariz. – Although it’s a handsome source of federal dollars, the $825 billion federal economic stimulus proposal discussed earlier this month by hundreds of Arizona contractors, architects and city planners is beginning to resemble a package with too many strings attached.

That’s why the state’s construction and design industry is seeking help from the Arizona Legislature. The goal is public-private partnerships to construct public projects, such as highways, schools, airport expansions and water treatment plants. One new state proposal, Senate Bill 1261, is designed to allow the state and its counties and cities to enter partnerships with the private sector. Typically, such public-private partnerships involve using private money to finance buildings or other projects that are leased to public agencies.

“By teaming the public sector and private sector together, we can fund public sector needs,” says Gary Aller, director of the Alliance for Construction Excellence at Arizona State University.

Recent examples of public-private projects include Arizona State University’s student housing in downtown Phoenix and the Arizona Department of Administration and Arizona Department of Environmental Quality buildings.

Despite the short time in which to apply for and commit the federal dollars, America’s suburbs stand to gain, says Douglas McCoach, vice president of planning and urban design at RTKL Associates, an international design and architecture firm in Baltimore, Md.

McCoach applauded the efforts of the more than 400 Arizona contractors, architects and city planners who met for a half-day conference Jan. 8 at the Airport Marriott hotel to discuss how to apply for the federal aid.

“I was actually impressed by the initiative there (in Arizona) to get folks together in a forum,” McCoach says. “That’s a good move. You have to assume that every single state in the union, and territories as well, is trying to figure out how they can secure funds. And what would really be interesting would be to compare agendas between states.”

McCoach, after 23 years with RTKL, accepted an invitation two years ago to join the planning staff at the City of Baltimore. At the end of last summer, he returned to RTKL. In his column in Forbes magazine last month, McCoach, wrote that America’s “edge cities” – of which more than 20 surround the City of Phoenix – stand to gain much from federal spending for infrastructure improvements.

“The scale of Obama’s planned infrastructure projects is grand, and the cost will be high,” McCoach wrote. “The time is right for this federal funding to help local municipalities take advantage of this rising cultural momentum. As their budgets become increasingly strained under the struggling economy, local officials do not have the funds available to maintain their current transportation systems, much less undertake sweeping new projects.”

“Unless funding is made available,” McCoach continues, “mass transit in America’s suburban communities may actually suffer as a result. It would be scaled back – just when, culturally, we are finally ready to embrace mass transit in a suburban setting.”

The federal stimulus measure, called American Recovery and Reinvestment Plan, is the topic de tour in Washington D.C. The goal is passage of an economic bill by mid-February. However, the spending and tax-cut proposal from President Barack Obama and Democrats is facing stiff opposition from Republicans, and the current guidelines could make it difficult to qualify for the proposal’s public works dollars, Aller says.

“I have been following the changes to the stimulus package and have become somewhat discouraged,” Aller says.

Changes to the $825 billion federal proposal have reduced the infrastructure component to about $149 billion. Under the current rules, Aller says the proposal requires applicants for the federal money “to be under contract within 120 days from the date the funds become available.” That can be insufficient time for state, county or city agencies to discuss whether to apply for the money, invite public comment and then invite and review bids from contractors.

“That (restricted time process) requires us to apply the dollars to existing projects which means we will have no real opportunity to leverage this money,” Aller says. “If we cannot leverage what little we get, it will be a flash in the pan.”

About 60 percent of the federal proposal is planned for new spending on education, Medicaid costs, increases in unemployment benefits, and expanding and repairing the nation’s infrastructure, including streets, highways, airports and utility systems. The remainder of the package, nearly 40 percent, consists of tax decreases.

Aller says the federal proposal is only one of several measures needed to end the current recession.

“We need to rally our great minds to find creative ways to grow, and we must grow,” he says. “We need to find ways to use every dollar to its best ‘leveraged’ advantage. We need a plan, a road map, to tomorrow – invest here for growth, cut there to fix the budget and borrow to fill in the gap. It seems all we are doing is cutting and expecting that to solve the problem.”

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Jan 28th, 2009
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Arizona Notes: Companies improving medical office efficiencies

Posted By Mike Padgett

Jan. 24, 2009

PHOENIX, Ariz. – In a recent venture in north Phoenix, a partnership of The Plaza Cos., USAA and Cardiovascular Consultants has improved corporate efficiencies in medical offices.

Cardiovascular Consultants, one of Arizona’s largest medical groups, hired The Plaza Cos. to help the medical group design and build its new and larger corporate headquarters on the campus of Paradise Valley Hospital. The CVC project’s development, leasing and management services were provided by Plaza. USAA was Plaza’s capital partner for Paradise Valley Medical Plaza, 3805 E. Bell Road.

One of CVC’s goals for the medical office building was trimming its operating costs by consolidating its billing, technology and human resources services. Other efficiencies in the new building include lowering partitions of office cubicles to lessen employee isolation and improve collaboration, answering most phone calls by the third ring, consolidating training for CVC’s 13 locations in Arizona and handling all of the company’s human resources functions.

“CVC is a large service organization that is in the practice of medicine,” CEO Jim Chisholm says in a prepared statement. “The more centralized functions we can utilize, the more efficient our practices can be.”

The Paradise Valley Medical Plaza is a five-story, Class A medical office building with 106,000 square feet. Each of the five floors was designed to accommodate a surgery center, if needed. The building design included sufficient engineering for heavy imaging equipment on the second floor and a nuclear camera on the third floor. CVC occupies the third floor. Nearby is a multilevel parking structure.

Tenants in the building include Cigna, Desert Canyon Pediatrics, Valley Surgical Clinics, and Central Arizona Urology.

Work on the new medical office building started in late 2006, and it was completed in early 2008. The building is 65 percent occupied, but a master lease accounts for 85 percent of the building, says Peter Spier, vice president of development at The Plaza Cos.

The Plaza Cos. and CVC negotiated a ground lease for the new building with Paradise Valley Hospital’s owner, Abrazo Health Care, the Arizona subsidiary of Vanguard Health Systems.

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Jan 24th, 2009
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Inauguration 2009: Mingling in a party of 1.8 million

Posted By Mike Padgett

Jan. 21, 2009

WASHINGTON, D.C. – This morning, less than 24 hours after Barack Obama and Joseph Biden took their oaths as the President and Vice President, the rising sun over the nation’s capitol was a deep orange-red through the haze. Lacy ice covered ponds outside my hotel in Alexandria, Va., as well as parts of the Potomac River.

Today’s temperature in the low 20s was slightly colder than when the first of an estimated 1.8 million people began gathering 24 hours ago on the National Mall to witness the official transfer of power from President George W. Bush and Vice President Richard Cheney.

On Martin Luther King Day, the day before the inauguration of the nation’s first African-American president, the mood was upbeat at a private party in Washington. Guests chatted in threes and fours in the kitchen, in the foyer and in the dining room. A mountain of winter coats covered the bed upstairs. The guests expressed hope and excitement over the incoming administration. One guest said, “I’m glad I voted for change.” Another, anticipating his trek to Inauguration 2009, said to his new friends, “Good luck tomorrow. Hope to see you there.”

The private home is several blocks from downtown Washington, which was filled with traffic five hours after the usual business day ended. Pedicabs carried passengers dressed formally and with lap blankets. Clothing stores and souvenir shops were open, some with their wares on racks and tables on the sidewalk.

Not far away, vendors in their white tents close to the National Mall were preparing for a busy Jan. 20. They were stacking and opening boxes of baseball caps, T-shirts, tote bags, sweatshirts, posters, postcards, bookmarks and other souvenirs emblazoned with Obama’s likeness or words. City crews were erecting steel fences and concrete barricades closing streets along the National Mall to private vehicles. Police officers from cities across the nation were part of the security force. The Metro rail system was anticipating a crush-level load of passengers.

Police conducted a final security sweep of the National Mall at 3 a.m. on Inauguration Day. Visitors began arriving an hour later. By 6 a.m., about six hours before the official event, more than 930,000 people had ridden the Metro. By 6:15 a.m., according to a television reporter, most of the good spots along the parade route were occupied.

“My feet are cold but my heart is warm,” a woman told a television crew trolling the crowd for comment.

“I’ve been out here six-and-a-half hours, but it doesn’t matter,” a man told the TV crew.

The people pouring onto the streets from the Metro stations and trains and chartered buses represented America’s ethnic diversity. They arrived in waves, creating a sea of humanity over the two miles between the Lincoln Memorial and the U.S. Capitol. There were tense moments when paramedics had difficulty edging their ambulances through curb-to-curb crowds. Members of a youth group from Michigan wore lime-colored caps to help adults keep track of everyone. In many places, the people stood shoulder to shoulder. Those not close to the historic proceedings saw the events on giant TV screens and heard the solemn oaths on echoing loudspeakers.

A brave few watched from perches in the forks of trees. Others full of exuberance climbed onto the roofs of portable toilets, occupied or not, near 14th Street and Independence Avenue. They only smiled at warnings from the crowd that they would regret falling through the toilet roofs.

In the final hours leading up to Obama and Biden taking their oaths of office, cheers (mostly) rolled across the mall. The sparkle in the eyes of the crowd matched the brilliance of the flashes of their cameras. Though shivering on this sunny day with its subfreezing weather, they cheered or clapped or waved American flags when Obama’s name was mentioned. They spelled Obama’s name in a group cheer. They greeted Bush’s name with boos. After Obama finished his oath of office, becoming the new commander in chief, some in the crowd shed tears. Many clapped. Others shared kisses or hugs. One could almost feel a wave of relief sweep away the brisk January temperature.

The crowd bundled against the cold with layers of clothing had hopes in their hearts. Their dreams have been the focus of countless news reports in recent years. They are tired of war, of careers and pensions cut short by layoffs, of vanishing investments and of the pain of an economy run aground. They are tired of the lack of civility in partisan politics, of political leaders demonizing the opposition.

Voters are anxious for new beginnings, positive changes and cooperation in politics, a message of optimism heard many times during the campaign that led to the Nov. 4th election of Obama and Biden.


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Jan 21st, 2009
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ASU’s 13-story downtown Phoenix dorms six months ahead of schedule

Posted By Mike Padgett

Jan. 16, 2009

The second phase of Arizona State University’s 13-story dormitory project in downtown Phoenix is within days of completion, which is six months ahead of schedule.

The upper-classmen building of the Taylor Place dorms was to be complete in mid-2009. But general contractor Austin Commercial accelerated that date by six months by streamlining its construction schedule, says Chad Izmirian, senior vice president of Capstone Development. The twin building next door for freshmen students opened in August 2008, about 18 months after work started.

Capstone is an Alabama-based company that “has partnered with 55 colleges or universities to develop 31,000 beds of on-campus housing” as well as providing management services for 15,000 beds of on-campus housing on 19 campuses, according to Capstone’s Web site.

Taylor Place, at 13 stories, dominates the skyline at Taylor and First streets in downtown Phoenix. The high-rise dorms are owned by Downtown Phoenix Student Housing LLC, a not-for-profit company that sold bonds to pay for the $120 million development. Capstone was hired to develop and manage the project until the debt is repaid. At that time, ASU becomes the owner. Management of the dorms is a collaboration between ASU and Capstone.

Freshmen students started moving into Taylor Place’s first building in August, when the fall semester started. It has 744 beds, with two beds per room. Although the second building will be finished around the end of this month, it will remain vacant until the start of the fall semester. It has 540 beds in two-bedroom suites.

“Student housing really only has one move-in period, which is the beginning of the fall semester,” Izmirian says. “Therefore, T2 (the second dorm) will sit idle until there is demand or need, which will be fall 2009.”

Izmirian adds that leasing activity for the second dorm is under way “as a number of (freshmen) students have indicated their desire to return for next year.” Also popular is the cafeteria, which is open to the public during the school year.

The Taylor Place development, which is one block east of the new light rail line, consists of two buildings with 352,000 square feet. That includes 11,000 square feet of street-level retail space, in which are a Starbucks and a convenience store. Two more spaces are vacant, and Capstone is “close to finalizing a lease contract for a restaurant” in one of those spaces, Izmirian says.

Taylor Place’s architect is SmithGroup’s Phoenix office. The lead designer is Mark Kranz at SmithGroup. The general contractor is Austin Commercial, also in Phoenix. Austin Commercial deserves credit for trimming six months from the construction schedule, says Eddie Garcia, SmithGroup’s principal-in-charge of the project.

Garcia says Taylor Place’s overall design and amenities make it look like something other than a dormitory or a low-income housing project. He says its exterior design, its landscaping, the street-level retail space and the shade garden facing First Street produce an environment friendly to student residents as well as visitors and passersby.

“The composition of the building doesn’t make it your typical student housing project that you’d see on a campus,” Garcia says. “This is an urban infill project for a campus that’s emerging in this new downtown dialogue. It has ground-floor retail, it has shade elements for the pedestrians, and then it has the identity of the tower itself, by using these colored metal panels and overhangs on the windows and these outdoor spaces so that students can gather and be part of adding to this 24/7 lifestyle.”

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Jan 16th, 2009
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Retiring home builder sees new era for Arizona’s housing industry

Posted By Mike Padgett

Jan. 15, 2009

A new career for the new year is how homebuilder Dave Bessey started 2009. The day before, Dec. 31, he was cleaning out his desk. Bessey’s shift as president of Maracay Homes was over, and he was leaving his office for the last time. He even took home the desktop glass globe filled with water and occupied by two shrimp and their tiny food plant.

Bessey’s departure from Maracay Homes at the end of 2008 was part of the deal he and his five partners negotiated in 2006 when Weyerhaeuser Real Estate Co., a subsidiary of Weyerhaeuser Co. in Seattle, bought Maracay, a privately-held company with headquarters in the Scottsdale Airpark.

Details about the sale of the private company were not disclosed when the deal was announced in 2006. Bessey declined to discuss the sale’s financial details, citing a confidentiality agreement. Weyerhaeuser is conducting a national search for Bessey’s replacement. In the meantime, Maracay’s interim president is Dale Sowell, who could become Bessey’s replacement.

Bessey said that after the no-compete clause in his contract expires at the end of 2009, he might return to building new homes in Arizona. But for the next 12 months, look for Bessey to focus on his investments in Canada and Central America.

Bessey was a partner, president or owner of construction companies in Canada before he moved to Arizona in 1991 to help incorporate and launch Maracay Homes. He was one of its founding partners, and in 1996 he became its president. Since its inception nearly 18 years ago, Maracay has added more than 6,000 new houses to the Arizona landscape.

During his last interview on his last day as Maracay president, Bessey shared his thoughts about his future as well as the future of homebuilding in Arizona. He was adamant that he will never retire. He plans to remain active in business, which involves his investments in two resorts in British Columbia and Ontario, and investments in land in Costa Rica and Panama.

Bessey sees the Flex Design concept as one of the company’s most important achievements. In 1997, Maracay spent about $150,000 on market research that showed prospective buyers wanted more choices of house designs. That led to Maracay’s creation of the Flex Design, which allows buyers to make modifications in the company’s house designs to fit their lifestyles.

Most homebuilders offer small changes allowing them to enclose a den to create a bedroom, or convert the garage into a bonus room. Maracay took that flexibility in design to the next level. It led to “this free-flowing idea of how we could take a basic floor plan and morph it into a totally different house inside,” Bessey said.

The Flex Design enables buyers to choose two large bedrooms, or convert that space into three small bedrooms, or into two regular bedrooms and a small media room nearby. Other options included expanding the footprint of the house by two feet or so, adding basements or a second floor.

Critical issues facing homebuilders

Homebuilders in Arizona are facing several challenging issues that Bessey says will change the industry. They include the current decline in Arizona’s population growth, a growing concern about urban sprawl, and the impact of rising fuel prices on commuters’ budgets. Builders also are seeing less interest in retirement communities and more interest in working past retirement age.

Starting in the early 1990s, “a lot of what was driving the Arizona economy was people moving into the state,” Bessey said. “At one point a couple of years ago, it was up to 150,000 people a year moving into the state. That drove the need for housing, whether resale or new. It was a huge need.”

That enormous annual wave of new residents carried with it many new jobs. But as the economy lost strength, Arizona’s population growth stalled, as did jobs growth and the sales of homes, whether new or resale.

“In-migration has slowed to a trickle,” Bessey said. “Part of that is, I think, people can’t sell their home where they are, their exit home, to be able to move to Arizona, even though they probably would like to. That’s a big factor that’s going to affect homebuilding.”

Bessey adds that other negative factors hurting home sales include changes in mortgage regulations, the subprime meltdown, and the disappearance of seller-assisted down payment programs.

On the other hand, for first-time buyers with cash and good credit, “it’s the perfect time to buy,” Bessey continued. “Interest rates are low, and prices haven’t been this low in 10 years. “So it’s a great time to buy, but there are no buyers.”

Also suffering are those homeowners who in recent years converted their homes’ rising equity into cash through second mortages or home equity loans. Today, because home prices have dropped significantly, those homeowners are “under water” or “upside down” because they owe more on their loans than the market value of their homes.

“You may still be working, you can make your mortgage payment, you can make your second mortgage payment or your home equity loan payment, but how do you sell your home to buy a new one when you’re upside down?” Bessey said.

Maracay’s team concept

Bessey added that Maracay’s achievements while he was president were a team effort. “I didn’t do this myself,” he said of the company’s success. “I had great people working with me. If you have the right people, then you can create the right deal. And if you have the right deal and the right people, you can find the money. But the people are still the most important part.”

While he was a partner and later the president, Bessey could be found almost every day in the Maracay offices in Scottdale Airpark. “This has been a huge part of my life that I’m going to step away from,” he said, “and the question is, how do I fill that void with all that time.”

His investments in Canada and Central America will require some of his attention, he added, “but I’m worried they won’t be as fulfilling as what this (Maracay Homes) business has been.”

Retirement ranks low on Bessey’s priority list. In addition to his investments, he plans to look for more opportunities. That search could involve another homebuilding company in Arizona, starting in 2010.

“I’m only retiring from Maracay because my contract (related to the 2006 sale of the company) terminated,,” he said. “I can’t picture myself retiring. I always said I would never retire.”

Bessey can be contacted through his e-mail, dbessey@dwbinvestments.com.


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Jan 15th, 2009

Commercial real estate’s rocky road in metro Phoenix to continue in 2009

Posted By Mike Padgett

Jan. 13, 2009

For the first time in many years, the office market in metro Phoenix is losing traction to challenging economic conditions unseen in the region for many years, according to new reports about the 2008 market.

The metro Phoenix office market posted negative direct net absorption of 641,450 square feet during 2008, compared to positive direct net absorption of more than 1.3 million square feet in 2007, according to a year-end report from Cushman & Wakefield of Arizona Inc.

At CB Richard Ellis’ Phoenix office, the analysis of 2008 showed a negative absorption of 603,112 square feet. The differences between the two companies’ numbers reflect their different market boundaries.

“This past year, in response to slower national economic conditions, the Phoenix market experienced higher vacancy, lower demand and lower effective lease rates,” Tom Johnston, senior managing director of Cushman & Wakefield of Arizona Inc., said in a prepared statement.

“Further softening is expected throughout 2009 as more new space is completed and demand flounders,” Johnston added.

More than 2.7 million square feet of new office space are under construction and expected to be completed in 2009, adding more pressure to the Valley’s vacancy rate.

The Cushman & Wakefield report for 2008 shows only two areas posting positive direct net absorption – Scottsdale and Southeast Valley.

Negative absorption is the difference between the amount of space leased and the larger amount of space vacated during a specific time period.

Johnston expects the region’s office market downturn will hit bottom in mid-2009. He blames much of the office market’s rising vacancy rates on the national housing crisis and the credit crunch. He says predicting recovery is difficult “as the entire country awaits results of a new administration’s economic policy.”

“Our research indicates that 2009 will be similar to 2008 in terms of negative net absorption and increasing vacancies,” Johnston says. “However, we continue to attract new residents and are poised to recover quickly as the economy turns around.”

CB Richard Ellis’ 2008 analysis of the metro Phoenix office market shows that its vacancy rate increased for a fifth consecutive quarter to 19.1 percent. That is up 5.2 percent from one year ago.

The CBRE analysis also shows that the region’s industrial space was in positive territory, but barely. It shows that absorption for 2008 was 629,838 square feet, the lowest in many years and substantially less than the 8.4 million square feet of absorption in 2007.

Industrial space vacancy for 2008 reached 12.5 percent, up from 8.5 percent at the end of 2007. The CBRE report says the jump in vacancies and the drop in absorption are blamed for a significant decrease in construction.

Finally, in the retail sector, the CBRE report says vacancies in 2008 climbed to 7.5 percent, up from 6.1 percent a year ago. Construction declined significantly in 2008, delivering only 5.9 million square feet, compared to 11.5 million square feet in 2007. It adds that big box retail vacancies increased to 6.8 million square feet at the end of 2008, up from 3.9 million square feet a year earlier.


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Jan 13th, 2009
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Scottsdale company sees decline in auto sales as boost for service, repair industry

Posted By Mike Padgett

Jan. 11, 2009

The freefall of U.S. auto sales combined with last summer’s soaring fuel prices, while bad for carmakers and the overall national economy, are creating greater opportunities for the auto service and repair industry, say officials at a company new to Scottsdale Airpark.

They say it’s a no-brainer that the current economic recession and concerns about layoffs caused many motorists to delay plans to buy new cars, the second-most costly expense in their budgets, behind mortgages or rent payments. And in keeping their old cars, they want to squeeze as much mileage out of whatever they drive, whether it’s a thirsty SUV or a fuel-efficient small car, say officials at Honest-1 Auto Care, a national franchise company that recently opened its offices at 7430 E. Butherus Drive., Suite B.

“People are shying away from purchasing new vehicles, which makes the need to maintain their current car’s performance all the more important,” Honest-1 President and Chief Executive Jack Keilt says in a prepared statement.

Honest-1 has 19 franchises in 10 states – seven in Nevada, three in Oregon, two in Utah and one each in New Mexico, Iowa, Minnesota, Pennsylvania, South Carolina, New Jersey and Florida.

“Everybody is looking for what is going to give them better gas mileage with their existing cars,” says Rissy Sutherland, Honest-1’s senior vice president of operations. “People are a lot more concerned about taking care of their car and not having to replace the transmission or other major components. If you do maintenance on them, they should last 200,000 miles.”

Sutherland adds that she drives her personal vehicles “until they die.” She’s been driving for about 19 years, and she’s currently on her third car, which is a late 1990s Toyota 4Runner. She says studies recommend that until the cost of repairs exceeds the value of the vehicle, “you’re better off driving your car and getting repairs just because it’s so cost effective.”

“Until I know it’s time to replace them, I keep driving them,” she says. “The way they’re built now, they last 300,000 and 400,000 miles.”

Sutherland says that by the end of 2009, the company plans to have about 40 franchises, including at least one in metro Phoenix. The company was formed in Nevada in June 2007.

Last year was brutal in the automotive world – auto sales entered a historical nosedive, causing manufacturers to seek federal loans, and fuel prices in Arizona passed the $4-a-gallon mark. Although fuel dropped to about $1.60 a gallon, consumers are fearful last summer’s high prices will return.

In December, when financing for new businesses remained tight, Honest-1 announced that franchise applicants may qualify for a program that draws on their 401(k) or IRA retirement accounts. The process is called the Retirement to Franchise Transfer plan, which allows franchisees to use their retirement funds to buy stock in their new business without suffering taxes or penalties for early distribution.

In other words, the franchisee is allowed to transfer his or her retirement account from one investment to another. That allows the franchisee, according to Honest-1 information, to use the money to pay for all expenses related to startup, expansion, fees and salaries. If the franchise is successful and grows, so does the franchisee’s retirement savings.

Honest-1 franchise owner Ransom Towsley in Bridgeville, Pa., quoted in a company press release, sees himself as a better investment than anything on Wall Street.

“When I sell my franchise at retirement, the proceeds will go tax-free into my 401(k),” Towsley says. “Today, I would much rather invest in myself than in the stock market.”

Tapping into retirement accounts, instead of using loans or home equity, is a concept that has been used to finance the startup of small businesses for years, says Tim McCarthy, vice president of franchise development at Honest-1.

Sutherland adds that the franchise operations are family friendly. They offer HDTV, leather furniture, complimentary coffee and other beverages, play areas for children and Internet cafes where adults can keep up with work. She says franchisees receive weeks of training in administration and accounting, Occupational Safety and Health Administration rules, and U.S. Department of Labor requirements.

The startup costs vary, based on the costs of real estate, the size of the franchise, market population density and building improvements. With the basic franchise fee of $25,000, the total startup costs could range from nearly $200,000 to about $290,000, according to Honest-1 information.


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Jan 11th, 2009
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Arizona’s housing crisis to be spotlighted in statewide public forums

Posted By Mike Padgett

Jan. 10, 2009

Arizonans’ thoughts and opinions about the state’s housing crisis will be welcome during a series of public meetings across the state over the next three months.

Arizona Town Hall is hosting nine community outreach programs in metro Phoenix, Tucson, Flagstaff, Kingman, Sierra Vista and Douglas. The discussions will focus on the recommendations hammered out during the 93rd Arizona Town Hall in November at the Grand Canyon. The Town Hall participants at the Nov. 2-5 conference totaled about 130 representatives of city councils, counties, development and contracting companies and Native American communities. Others included educators, attorneys, local housing officials, real estate agents, retirees and community volunteers.

Details about the community outreach presentations are as follows:

• Mesa: Jan. 21, noon to 1 p.m. at Mesa Community College in Paul Elsner Library, 1833 W. Southern Ave., Mesa. Lunch: $20. Host is MCC President Shouan Pan. Speakers include Jim Holway, professor of Practice, Civil and Environmental Engineering and School Sustainability at Arizona State University; Tara Jackson, president of Arizona Town Hall; and Devan Wastchuk, managing partner at VIVO Business Partners.

• Phoenix: Jan. 22, 7:30 to 9 a.m. at University Club, 39 E. Monte Vista Road, Phoenix. Breakfast: $20. The host is Jim Condo, Arizona Town Hall board chairman and attorney and partner at Snell & Wilmer. Speakers include Tara Jackson, president of Arizona Town Hall; Fred Karnas, director of Arizona Department of Housing; and Kellie Manthe, senior vice president and market development manager of Bank of America.

• Flagstaff: Feb. 3, noon to 1:30 p.m., Northern Arizona University, University Union, Havasupai Room, Flagstaff.

• El Mirage and Surprise: Feb. 19, 8 to 9:30 a.m. at Rio Salado Lifelong Learning Center, 12535 Smokey Drive, Surprise. Complimentary breakfast. The hosts are the cities of  El Mirage and Surprise and the learning center. Speakers include Sherry Ahrentzen, associate director of research, Policy and Strategic Initiatives at Arizona State University; Scott Chesney, director of economic development at El Mirage; Sheila Harris, senior vice president for development at The Molera Alvarez Group; Tara Jackson, president of Arizona Town Hall; Surprise Mayor Lyn Truitt; and El Mirage Mayor Fred Waterman.

• Kingman: Feb. 25, 11:30 a.m. to 1 p.m., Mohave County Administration Building, 700 W. Beale St.

• Phoenix: March 11, noon to 1:30 p.m. at NAU North Valley Distance Learning Facility, 15601 N. 28th Ave., Room 104/106. Lunch: $15. The host is Denny Mitchem, director of corporate relations at Northern Arizona University. Speakers include Paul Harris, program office at Local Initiatives Support Corp.; Roger Hughes, executive director of St. Luke’s Health Initiatives; Tara Jackson, president of Arizona Town Hall; and Linda Thor, president of Rio Salado College.

• Tucson: March 18. Lunch presentation at Pima Community College’s downtown campus, 1255 N. Stone Ave., Amethyst Room. Lunch: $25.

• Sierra Vista: March 19. Breakfast presentation, 7:30-9 a.m., Cochise College, 901 N. Columbo Ave., Andre Cracchiolo Library, Room 900.

• Douglas: March 19. Lunch program. Location: To be announced.

For details or more information about the upcoming public forums, call 602-262-9600 or visit www.aztownhall.org or send an email to townhall@aztownhall.org.


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Jan 10th, 2009
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