Westin Hospitality Property Undergoes $30M Renovations

By Amalia Otet, Associate Editor

The Westin La Paloma Resort & Spa, a 250-acre hospitality property nestled in the foothills of the Santa Catalina Mountains, is currently undergoing a $30 million renovation that began in the spring of 2012. Each of the resort’s 487 guest rooms (including 25 suites) and 60,000 square feet of ballroom/function space has been revamped as part of the extensive makeover.

In its final phase, with only the reception and lobby areas and the Azul restaurant patio left to revitalize, the project is expected to be complete in October 2013.

The resort has recently finished a complete remodeling of its five pools according to the Arizona Daily Star, as well as a major upgrade of its guest rooms. Room enhancements include installation of Radio Frequency ID (RFID) key card lock system; 42” HD-TVs; headboards incorporated with LED technology, adjustable reading lights; and executive desks with power outlets and strong Wi-Fi signal.

Additionally, all meeting spaces and ballrooms have been reinvented and now benefit from state-of-the-art audio/visual equipment; the 27 hole Jack Nicklaus Signature golf course bunkers and greens have been refreshed and resurfaced; the Westin WORKOUT Fitness Center has been remodeled and equipped with modern equipment; La Paloma Country Club tennis courts have received new surfaces and fencing; and new locally- sourced ground cover, indigenous vegetation, and lighting systems have been installed throughout the property, according to company statements.

In other hospitality news, the Arizona Daily Star reports that Lodge on the Desert has filed for Chapter 11 bankruptcy reorganization, listing a $11.58 million construction loan from Wells Fargo as its largest unsecured claim.

The 77-year-old Tucson hotel located on North Alvernon Way just north of Broadway had recently completed a $15 million rejuvenation project which expanded the outfit from 35 to 103 rooms.

Photo credits: The Westin La Paloma Resort & Spa

Campus Acquisitions Breaks Ground on Second Student Housing Complex West of UA

By Amalia Otet, Associate Editor

Chicago-based Campus Acquisitions has broken ground on a new student housing complex near the University of Arizona in Tucson, which will be built by Beal Derkenne Construction. The 13-story high-rise is slated for completion in August 2014.

Dubbed Park Avenue, the mixed-use development will comprise 165 units, 393 beds, 8,000 square feet of ground floor retail and 25,000 square feet of underground parking.

To be located at 1031 N. Park Ave., the tower will feature extensive conveniences, modern interiors, exercise rooms, private and collaborative study and technology rooms as well as a rooftop pool and outdoor terraces. Additional amenities include exclusive access to a tanning salon, sauna, clubroom and cyber cafe.

Campus Acquisitions is also developing a neighboring student housing complex called LEVEL, which broke ground in May 2012 at 1020 N. Tyndall Ave, as reported by the Arizona Daily Star. With full occupancy planned for August 2013, LEVEL will be a 14-story, 176-unit, 586-bed, upscale building, complete with modern amenities including a swimming pool, study and technology rooms, and on-site management by CA’s full service staff.

As one of the nation’s fastest growing developers, owners, and managers of student housing, with over 8,000 beds delivered in twelve university markets, Campus Acquisitions expects both Tucson projects to continue the company’s legacy and provide the best located, best furnished, best value, and best managed housing for today’s college students.

In other news, Variant Commercial Real Estate L.L.C., a private real estate investment firm focused on opportunistic commercial acquisitions in multifamily, self-storage, hospitality assets, and offices, announced acquisition of an off-market, Comfort Suites flagged hotel in Tucson.

Built in 1998, the three-story hotel enjoys a prime location in close proximity to the Tucson Mall and features 87 guestroom-suites covering 40,427 square feet.

Additionally, Variant is currently negotiating the purchase of five other hotels in the state of Arizona, according to company statements.

Photo credits: Campus Acquisitions

Tucson Medical Center Unveils $134M Orthopaedic and Surgical Tower

By Amalia Otet, Associate Editor

Tucson Medical Center (TMC), the leading provider of comprehensive healthcare services to greater Tucson and the Southern Arizona region, announced the opening of its new state-of-the-art surgical and orthopaedic tower that has been in the works since 2009.

Built on TMC campus, the facility went through a series of major improvements that resulted in a $134 million investment accomplished through a blend of fundraising, savings and borrowing.

According to the Arizona Daily Star, the 200,000-square-foot building will include medical offices and clinics on the first floor; the second floor will hold 14 operating rooms with integrated technology, dedicated cardiac, interventional, cystoscopy rooms, as well as a dedicated pediatric surgery area; the third and fourth floors will be occupied by the orthopaedic unit, with 10 hi-tech orthopaedic surgical suites, a new education conference center and meeting room, as well as 40 private patient rooms, designed for post-surgical care for the orthopaedic patients.

In an effort to ensure world-class women’s and children’s health care, the center had previously completed a renovation of their Pediatrics wing which resulted in a new Identifiable Children’s Hospital with its own entrance, patient and family focused activity center.

In addition, TMC added more than 600 parking spaces in the West Campus Parking Garage, as part of the same redevelopment project.

Located adjacent to the historic Fort Lowell neighborhood, the four-story tower was designed as an extension of the surrounding neighborhood by incorporating the use of native stone, copper and Sonoran desert colors, as well as several green features such as high insulated windows and high efficiency lighting inside and out.

Image courtesy of tmcaz.com

New Housing Complex to Revitalize Tucson’s South Side

By Amalia Otet, Associate Editor

Tucson’s multifamily market continues to show signs of improvement, driven by steady job growth and an increasing student population. Investor interest in apartment assets remains strong. Larger real estate companies are targeting luxury properties, especially developments close to the University of Arizona and major employment hubs.

Prompted by a lack of available units and a slowdown in construction, rents are projected to climb 3.7 percent to $696 per month and effective rents to jump 4.4 percent to $668 per month, according to data from Marcus & Millichap.

Amidst a series of multi-housing projects aimed at revitalizing the housing sector, La Frontera Arizona recently celebrated the grand opening of Sunnyside Pointe Villas, an affordable senior citizen housing community in Tucson’s south side. The new complex has already supported the creation of 120 new jobs and is expected to continue acting as a catalyst for new developments and attract new businesses to the area.

The project includes 90 energy-efficient homes and received LEED Platinum Certification by the U.S. Green Building Council (USGBC), according to a KVOA.com story.

In addition to displaying eco-friendly construction materials and efficient energy performance, the development was also an infill project built using existing infrastructure. The complex is close to several community resources and public transportation, allowing residents to enjoy an urban lifestyle that’s both sustainable and green.

The affordable apartment complex was designed and built for those age 62 or better, offering one- and two- bedroom rental homes with a variety of special features including a fully appointed kitchen, washer and dryer, decorative color schemes, individually controlled heating and cooling, attached garage, and a private backyard. Other amenities include a large multi-purpose community center, social events and activities and a resident lounge.

Charts courtesy of Marcus&Millichap.

Rio Nuevo Asked to Provide Loan for $22M Downtown Hotel Project

By Camelia Bulea, Associate Editor

Downtown Tucson Skyline

The 135-room hotel that developer Scott Stiteler is planning at the intersection of Fifth Avenue and Congress Street was missing a final link. That last piece of the puzzle will now be supplied by a $2.5 million loan from  Rio Nuevo board.

The public loan would cover the funding gap left after $15 million in conventional loans and about $5 million in private money are factored into the hotel financing, reported the Arizona Daily Star.  Stiteler wants to repay the loan from taxes owed to Rio Nuevo rather than from hotel profits over a period of 10 years. Therefore, Rio Nuevo will net $3.3 million over 10 years from the hotel according to Stiteler’s repayment documents.

Although the downtown hotel project has the support of the Rio Nuevo board members, the board is currently considering all legal implications of such a loan before agreeing to finance the development. The board hopes to have an answer within the next 30 days.

The manager of Tucson Urban LLC is imagining a downtown entertainment district in downtown Tucson with the six-story hotel as the centerpiece of the ambitious project. He believes that such a project could help revitalize downtown Tucson.

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Tangerine Corridor in Tucson Sees Residential Building Boom

By Camelia Bulea, Associate Editor

Accounting for nearly two thirds of new home construction in northwest Pima County, the Tangerine Road corridor has recently become the “place to be” for homebuilders. Not only will the area dominate Tucson’s residential market this year, but it will also attract even more investors and homebuilders in the next years.

The first month of 2013 saw the issuing of 189 single-family permits in the region, according to Inside Tucson Business. Meritage Homes, Pulte Homes and Lennar have already opened six communities in the Tucson submarket, while the latter also pulled 31 permits to build new homes in the area in January. D.R. Horton Homes will be joining the list of active homebuilders in the Tangerine corridor, with 35 permits pulled.

Meritage Homes is one of the most active builders in the far northwest side, with three new communities opened, as reported by the Arizona Daily Star. One of its communities, called Tangerine North, features energy-efficient homes, ranging from 1,967 to 3,561 square feet. Prices for these residential properties range from $242,900 to $311,900, according to the builder’s website.

Another company building in the area is Pulte Homes, which has recently purchased 170 lots in Dove Mountain in order to build a housing community. Depending on the demand for housing units in future years, the homebuilder plans to purchase even more land, 650 lots more exactly, and to develop the community in phases. Their home prices range from $169,990 to $216,990.

Photo rendering of a home plan in Tangerine North, courtesy of Meritage Homes

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Plans to Upgrade Tucson Convention Center, Build New Convention Hotel

By Camelia Bulea, Associate Editor

The City of Tucson and the Rio Nuevo Multipurpose Facilities District have reached an agreement that would bring a new convention center hotel to downtown Tucson.

According to the long-awaited settlement, Rio Nuevo will invest $6 million in upgrading the Tucson Convention Center, a multi-purpose property built in 1971 boasting a 9,275-seat indoor arena, two performing arts venues, and 205,000 square feet of meeting space.

Additionally, Rio Nuevo will invest $1.1 million in the Mission gardens project, and spend $750,000 on downtown streetscape improvements, according to a news release by the Rio Nuevo Board.

The news release also states that Rio Nuevo will be reimbursed over $16 million for the Depot Garage and will be transferred ownership of the Heritage Park property.

As far as the new hotel project is concerned, plans call for a facility with about 500 rooms and 50,000 square feet of meeting space, said Brent DeRaad, president and CEO of the Metropolitan Tucson Convention and Visitors Bureau, as quoted by the Inside Tucson Business.

In 2009 there were plans for a major Tucson Hotel and Convention Center project, designed by DLR Group, as part of a private-public investment. The project included a 400-foot Sheraton Hotel tower featuring 525 guest rooms and 50,000 square feet of meeting space, according to Wikipedia.org.

The city of Tucson did not go through with the investment, because the city would have had to assume much of the financial burden to build the $190 million hospitality project, noted the Tucson publication.

Image of the Tucson Convention Center, via www.facebook.com/tucson.ctr

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NY Developer Acquires Last Lots in Master-Planned Community from Forest City

By Camelia Bulea, Associate Editor

New York-based Petrus Partners Ltd. recently announced the acquisition of the last undeveloped lots remaining in Gladden Farms, a 1,350-acre master-planned community in Marana. This is Petrus’ 13th residential land acquisition in Arizona since 2008.

“We plan to be the new master developer of the community,” said Dean Wingert, the new top local executive for Petrus. The new owner bought:

• 500 undeveloped residential lots in Gladden Farms Phase I;
• 370 acres of entitled residential land and 123 acres of commercial property in the Phase II section.

The seller was the Forest City Land Group, a subsidiary of Cleveland-based Forest City Enterprises, Inc. The company launched Gladden Farms in 2003 and developed the master-plan community, which also includes a 58-acre hospital campus site sold to Community Health Systems Inc. in 2007, according to an official statement of Petrus Partners.

Circa 1,100 homes have been built on the site in the past 10 years by national builders like Pulte Homes, Lennar Homes and MDC-Richmond American Homes. The single-family homes at Gladden Farms are priced from $175,000 to $250,000, according to the community’s website.

Marana, located 24 miles northwest of the Tucson central business district, has been among Tucson’s best-performing submarkets in recent years. Together with Town of Oro Valley, it represents about one-third of Tucson’s new home sales.

Meanwhile, other big land parcels were sold in recent weeks in master-planned communities in the Tucson area.

According to Inside Tucson Business, a partnership of Lennar and Richmond American purchased 165 lots at Mountain Vail Estates, a 135-acre master-planned community in Vail, for $4.3 million. Additionally, Vistoso Holdings Two LLC bought a 26-acre infill parcel at Rancho Vistoso for $3.4 million.

Photo via www.gladdenfarms.com

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Two Local Retail Centers Change Hands for $42.6M

By Camelia Bulea, Associate Editor

The local real estate market started the year with two retail centers being sold to investors in January for a total of $42.6 million.

Campbell Plaza, a 190,000 square-foot retail center was sold to Irvine, Calif.-based Krausz Puente LLC and Krausz RC Properties One for $32.3 million. The seller was Camelback Corporate Center Joint Venture LLC, controlled by Tucson-based Holualoa Companies. Holualoa had purchased the property in 1998 for $15.5 million.

Built in 1960, the retail property was 95 percent occupied at the time of the sale, noted the Inside Tucson Business publication. The list of tenants includes T-Mobile, Old Chicago Restaurant, Ace Hardware, Panda Express, Rubio’s Fresh Mexican Grill, Jamba Juice, GameStop, and Sauce Pizza and Wine. Renovated in 1994, the retail center was redeveloped and repositioned by Holualoa in 1998 to attract national big box retailers such as Staples and Ross Dress for Less.

“Investors are attracted to these properties because of their strong, stable income stream and prime location,” said Mike Sandahl with CBRE, who represented the seller together with colleagues Nancy McClure and Bob Young.

The second transaction was the sale of the Swanway Plaza, a 60,000-square-foot shopping center on Tucson’s east side. The new owner of the retail property is Las Vegas-based Nevada Equity Partners.

According to  the Arizona Daily Star, the shopping center was 100 percent leased at the time of the sale, being anchored by brands such as Walgreens, Ace Hardware and Anna’s Linens. The purchase price was $10.3 million.

Image courtesy of Holualoa Companies

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Single-Tenant Office Complex in Tucson’s East Side Sells for $17.8M

By Camelia Bulea, Associate Editor

A California non-profit group paid $17.85 million for an office complex located near east Speedway and north Kolb Road, on Tucson’s east side. The buyer is the H.N. and Frances C. Berger Foundation, based in Palm Desert. Bob Young of CBRE helped broker the sale.

The 129,117-square-foot office complex includes three, two-story Class A office buildings sitting on a 9.43-acre parcel. Also included in the transaction are a total of 630 parking spaces.

The campus at 930, 940 and 950 N. Finance Center Drive is 100 percent occupied by a single tenant, GEICO Insurance, one of the nation’s leading providers of affordable automobile insurance. In 2003 the company leased 15,000 square feet of space in one of the buildings and since then it has expanded its leasable space twice, having now more than 1,000 employees in the office complex. Arizona Commercial Real Estate reports that GEICO has another five-and-a-half years remaining on its lease.

“We are seeing increased investor interest in single-tenant deals. The attractive yield provided on this deal compared very favorably to alternative fixed-income instruments and the buyer also received an investment-grade credit tenant,” said Kevin Shannon, vice chairman /managing director at CBRE.

According to CBRE Global Research and Consulting, Tucson’s Northwest office submarket saw positive absorption in the third quarter of 2012, while the Downtown and central submarkets recorded a low tenant activity. Additionally, the market saw more space vacated than absorbed for two consecutive quarters: Tucson office properties reported 45,865 square feet of negative absorption for the year.

Photo courtesy of CBRE, via Arizona Daily Star

Chart courtesy of CBRE Global Research and Consulting

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