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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Campus Acquisitions Tops Up $25M Hi-Rise Near Univ. of Arizona

By Camelia Bulea, Associate Editor

The $25 million student housing that Chicago-based Campus Acquisitions is developing near the University of Arizona has recently topped out at 14 stories high. Expected to open in late summer of 2013, the 300,000 square-foot upscale project will include 176 units and house about 550 students.

Dubbed Level, the project represents Phase I of two student housing projects that Campus Acquisitions plans to develop adjacent to the University of Arizona in Tucson. The property will feature 93 parking spaces, and amenities on levels 2, 13, and 14, including a rooftop pool, tanning beds, sauna, steam room, outdoor grilling stations, meditation areas and fitness center with views of Tucson, according to Student Housing Business Magazine.

Units will feature floor-to-ceiling windows, balconies, stainless steel appliances, quartz countertops, hardwood floors, modern furnishings and flat-screen TVs. The exterior of the building will feature brick and modern materials such as metal, glass and aluminum. Phoenix-based Shepley Bulfinch served as the architects of the two student properties, while UEB of Scottsdale is the general contractor for both projects.

The project is only the first phase of a greater redevelopment plan near the UA campus. The second phase includes a 13-story student housing tower at 1031 N. Park Ave. Construction on that phase is planned to start in early 2013 with an opening date settled for the fall of 2014, according to the developer’s website.

Photos courtesy of Campus Acquisitions

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$52M Hospital Project in Green Valley Meets Community Opposition

By Camelia Bulea, Associate Editor

Green Valley’s first emergency room hospital, about 25 miles south of Tucson, could be blocked due to objections from a homeowners association.

In October 2012 news broke that Tucson Medical Center would develop and operate the $52 million hospital and emergency room project with Scottsdale-based McDowell Enterprises. Two months later the project ran into a snag when nearby residents opposed the height and size of the project and feared that the two-story hospital could damage their property values, according to the Arizona Daily Star. A letter from the homeowners association, which represents over 440 homes, said that residents are also worried about round-the-clock traffic and light pollution.

The Green Valley News and Sun nevertheless reports the sale of the 22-acre site closed on Nov. 30 between landowner Fairfield Homes and developer McDowell Enterprises.

The new hospital would serve about 50,000 people who live in Green Valley. These people now have to travel about 30 minutes to an emergency room, noted the Daily Star publication. According to initial plans, the hospital could open in 2014.

Initial plans called for a 100,000 square-foot hospital, but McDowell Enterprises has recently asked the county for a few modifications, including expanding the hospital’s surface to 138,533 square feet and for the potential to expand from 32 beds to 50 beds. Other construction plans include: a rehabilitation center, medical offices, cardiac catheterization lab, four operating rooms, on-site radiological imaging labs, 26 inpatient private rooms, a six-bed intensive-care unit and a helipad.

Photo rendering of the proposed Green Valley Medical Center, courtesy of Swaim Associates LTD

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Aris Integration Picks Tucson for Corporate HQ and Plant

By Camelia Bulea, Associate Editor

Aris Integration has announced its intention to move its corporate headquarters to Tucson.

The Scottsdale-based company plans to build a facility that will manufacture a new type of modular energy-efficient building panel, and hire about 600 people by 2017. Positions at the office will include ones in executive management, sales & marketing, quality control, HR, and manufacturing.

Aris plans to develop five more regional manufacturing sites in the country. Although no other specific location was made public, company officials plan to finalize a deal before the end of December 2012. The Tucson facility should be fully operational by the third quarter of next year, according to the Inside Tucson Business.

Duane Armijo, CEO and founder of Aris, said Tucson was chosen as a location mainly for its pool of skilled construction workers, coordinated public-private support and focus on sustainable technologies, according to the Arizona Daily Star. The company also looked at cities including Albuquerque, Las Vegas and El Paso before deciding upon The Old Pueblo.

The publication added that Aris was looking for a facility of about 300,000 square feet, with high ceilings and office space. The company had reportedly been looking at sites near Tucson International Airport, among others. Building its own plant, which is still an option, would cost upwards of $30 million, Armijo said.

Photo courtesy of PR Newswire

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Freeport-McMoRan Buys and Occupies 85,000SF American Airlines Building

By Camelia Bulea, Associate Editor

Phoenix-based Freeport-McMoRan Copper & Gold, a global mining company, has purchased the American Airlines building in Tucson for $5.2 million.

The 85,000-square-foot call center building, located at 3350 E. Valencia Road, was closed in August and has been vacant ever since, reports the Inside Tucson Business. The new owner intends to leave its current office at 6840 N. Oracle Road, which is currently listed as being available for lease.

Russ Hall and Steve Cohen with Picor Commercial Real Estate Services represented American Airlines in the transaction. The buyer was represented by Los Angeles-based Stewart Niles with Travers Realty, adds the Tucson publication.

Built in 2004, the building sits on 14.5 acres of land northeast of Tucson International Airport. The property was listed at $7.3 million.

Freeport-McMoRan Copper & Gold Inc. is the world’s largest publicly traded copper company. The company operates five mines in Arizona at Safford, Morenci, Bagdad, Sierrita and Miami, according to its website.

A market report regarding the Tucson office market in the third quarter of 2012 illustrates that demand for office space continued to decline as the overall market vacancy rate finished the third quarter at 14.6 percent, up from 14.4 percent in the previous quarter.

Cushman & Wakefield analysts report that three significant distressed buys occurred in the analyzed period in Tucson. The acquisitions include the Corporate Center Brodway and the County’s purchase of 160 N. Stone, with an investor buying Southwest Professional Plaza at auction.

Chart courtesy of Cushman & Wakefield Alliance Research

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CareMore Medical to Open Fourth Medical Facility in Tucson

By Camelia Bulea, Associate Editor

CareMore Medical Enterprises announced plans to open its fourth medical facility in Tucson near the Carondelet Heart & Vascular Institute. The new facility will occupy a vacant retail space at 4881 N. Stone Avenue, a former Cost Plus retail center, according to Inside Tucson Business. The building’s landlord is Brixmor Property Group of New York City.

Cerritos, California-based CareMore Medical, which provides healthcare services to senior patients, operates in Arizona, California, Nevada, New York and Virginia. The company also offers personalized health planning and medical supervision.

The landlord of the 18,229-square-foot facility at Northmall Center was represented by Nancy McClure, first vice president with CBRE, in this transaction. Retail health clinics and urgent care facilities are active in the local market, according to McClure as quoted by the Inside Tucson Business. Additionally, facilities such as the ones CareMore operates in Tucson are welcome in a market affected by the lack of hospital emergency rooms, reports the Tucson publication.

In other news, three large industrial properties are expected to close by the end of this year in Tucson. Currently in escrow, the properties total 365,980 square feet of industrial space. According to Inside Tucson Business, the three properties are:

• A 261,000 square-foot manufacturing/warehouse property at 6700 S. Pella Drive
• An 85,000 square-foot call center at 3350 E. Valencia Road
• A 19,980 square-foot manufacturing building at 6393 S. Campbell Ave.

If all three sales are completed in the last quarter of 2012, the transactions will more than double the industrial space absorbed in the first three quarters of this year. According to a CBRE report, the Tucson market recorded 329,079 square feet of positive absorption year-to-date.

Chart courtesy of CBRE

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