Arizona Commerical Real Estate Services

Acquisition of NAI Global by C-III Capital Partners is Complete

January 27th, 2012 | Posted by Matt DePinto, Research Manager

PHOENIX, ARIZONA, January 26, 2012 — NAI Global, the largest network of independent commercial real estate firms worldwide, announced today that its previously reported acquisition by C-III Capital Partners LLC (C-III) has been completed. The transaction will help create a leading fully integrated commercial property services company that will operate in markets around the world. Locally based NAI Horizon is the Greater Phoenix, Arizona area representative of NAI Global.

C-III is a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, title services and multifamily property management. C-III is led by CEO Andrew L. Farkas, who founded and was Chairman and CEO of Insignia Financial Group, Inc. (NYSE:IFS). Its principal place of business is located in Irving, TX, and it has additional offices in New York, New York; Greenville, South Carolina; McLean, Virginia; Chicago, Illinois; Dallas, Texas and Nashville, Tennessee.

NAI Global will continue to operate as a separate company under its current management. C-III will accelerate NAI Global’s growth by exploring business development opportunities in strategic locations, including New York, London, Singapore and other primary global business centers. It will also invest in the growth of the corporate solutions and capital markets offering, expanding asset/property management, project/facilities management and valuation services worldwide.

“The completion of this transaction represents a significant step forward in our strategy to build a fully diversified commercial real estate services company,” said Mr. Farkas. “With the NAI Global acquisition, we are gaining the world’s leading commercial real estate network and a tremendous foundation for future growth. As we begin a new year, we look forward to partnering with the NAI team to provide enhanced services to the commercial and institutional real estate markets they serve as well as continuing to take advantage of other opportunities to grow and expand our platform.” 

“We are thrilled to be joining forces with C-III and excited about the opportunity to deliver an even broader range of services to our members and add greater value to our collective corporate and investment clients. We look forward to tapping into their extensive resources and expertise to assist all of our clients in strategically optimizing their commercial real estate assets,” said Jeffrey M. Finn, President and CEO of NAI Global.

“The benefits to our clients as result of this acquisition by C-III Capital Partners are immeasurable. This opens the door to services and relationships that we have not had such complete access to in the past,” said Thad Seligman, President and CEO of NAI Horizon in Phoenix. “Our affiliation with C-III and its parent Island Capital Group gives NAI Horizon a platform to continue our growth and allow us to expand our service lines at an even faster pace,” continued Seligman. 

Founded in 1977 by Gerald Finn, NAI Global has grown from covering 15 countries in 1999 to offering a full, collaborative platform of services to clients in over 350 offices in 55 countries, with over 300 million square feet of commercial space under management. 

C-III commenced operations with the purchase of Centerline Capital Group’s institutional real estate debt fund management and commercial mortgage loan servicing businesses in March 2010. Since that time, C-III has successfully launched mortgage origination, investment sales and title insurance businesses, and expanded its principal investment, loan origination, fund management and primary and special loan servicing businesses, including acquiring the special servicing and CDO management businesses of JER Partners in August 2011.

Financial terms of the NAI Global acquisition were not disclosed.

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NAI Global (www.naiglobal.com) is the largest network of independent commercial real estate firms worldwide, comprised of over 5,000 professionals in 55 countries with more than 350 offices. NAI advisors work in tandem with our global management team to ensure our clients strategically optimize their real estate assets. NAI offices complete over $45 billion in combined transactions annually and manage 300+ million square feet of commercial space.

Established in 1992, NAI Horizon (www.naihorizon.com) is a full-service commercial real estate company located in Phoenix, Arizona. NAI Horizon offers a full range of comprehensive real estate services including property management; brokerage and appraisal services to local, national and international clients. 

Category: NAI Global, Press Release, Updates | Comments (0)

Phoenix Retail Absorption Rises Dramatically

January 25th, 2012 | Posted by Matt DePinto, Research Manager

The Phoenix retail sector seems to have broken through the holding pattern that has consumed it for most of 2010 and 2011. In the final quarter of this year, absorption numbers were the highest in some time and overall momentum seems to be shifting in the right direction. Pent up demand for goods has driven sales numbers higher and consumer confidence is up. Record-breaking holiday sales figures, rising automobile sales and a feeling that the economy is improving have all contributed to this upward trend. As a word of caution, the doors can swing shut again if gasoline prices shoot up or other bad economic issues come to light.

 One noticeable trend in retail is the rebranding that shopping centers and retail destinations are pursuing in response to changing urban trends. Two examples of this rebranding are Mill Avenue in Tempe and Metrocenter in Phoenix.

Mill Avenue’s rise as a prominent retail destination started in the 1980s as downtown Tempe began to reinvent itself.  Large national retailers replaced pool halls and head shops driving rents up and driving out many independent businesses.  With the fall of the economy beginning in late 2007 and the construction of Tempe Marketplace just 2 miles east many of those large retailers either moved or closed due to economic challenges such as bankruptcy. During the past year, Mill Avenue has returned to its roots by working with local businesses to promote new shops on the funky thoroughfare. After sitting vacant for two years, Centerpoint Towers (currently, West 6th) has been purchased and is leasing up quickly adding hundreds of captive shoppers to the area. Mill Avenue no longer competes with Tempe Marketplace for customers; instead it offers a unique destination with local merchants.

Metrocenter mall was opened in 1973 as the largest regional mall in the Western U.S. With five anchor stores and over 275 stores, it was a force to be reckoned with. During the past 40 years, the continual movement to the outer fringes of the Valley and the construction of newer malls, proved too much for Metrocenter and it fell into rapid decay. Macerich purchased Metrocenter in 2005 and began significant renovations. Now Metrocenter caters to a growing Hispanic population and offers more varied shopping experiences. The surrounding shopping areas are also undergoing transformation to align with the mall’s efforts and remain viable. Metrocenter’s location next to I-17 and regional transit hub and a future light rail station secures its future on the retail scene.

 The Phoenix retail sector posted a vacancy of 11.9% which is 50 basis points lower than last quarter’s 12.4%. Retail vacancy rates have been stagnant for most of 2010 and 2011. This drop signals a healthy return of absorption as retailers respond to growing consumer confidence and pent up demand. Total absorption was a healthy 909,759 square feet; a sharp uptick from last quarter’s adjusted 144,730 square feet. This is the highest absorption rate since third quarter 2009. The East Valley showed the most increase with 328,513 square feet while Central Phoenix showed the smallest gain with 4,834 square feet.

 Average rental rates continue to suffer because of elevated vacancy rates. Shopping center vacancies are still high and pushed overall rates down again this quarter to $14.73. Construction activity rose this quarter to 215,844 square feet, up from last quarter but still way down from the 6-10 million square feet of building per quarter during the last economic boom of 2006-2007. Only 20,643 square feet of retail space was delivered this quarter.

 Overall leasing activity was down slightly this quarter in total transactions as well as square feet leased but not far off historic levels. Sales activity showed a slight increase in the number of deals however total dollar volume was down. Average price per square foot was posted at $121.18 per square foot.

 In the largest retail lease transaction of the quarter, Savers Discount leased a total of 34,277 square feet at Northsight Village, 15090 N Northsight Blvd. in Scottsdale. There was no price estimate for this transaction. In the largest sale transaction of the quarter, Kimco Realty Corporation purchased the North Valley Power Center, 8215 W Bell Rd. in Peoria for $23,394,000. Total square feet was calculated at 167,997 sf. The price per square foot was calculated at $139.26.

Category: Inside Perspectives, Market Trends, Retail | Comments (0)

Phoenix Office Sector Recovery an Arduous Process

January 20th, 2012 | Posted by Matt DePinto, Research Manager

The Valley’s office sector continued to pace along the bottom over the past year.  As we enter 2012 a new attitude is taking hold.  Though conditions remain weak, 2011 saw an increase in in-migration population and new job creation, creating optimism about improvement in this sector.

Phoenix’s office inventory is still struggling along with other hard hit markets such as Las Vegas, Sacramento and Atlanta. A three year run of increased unemployment, corporate contractions (i.e. less space needed) and the flight to quality (with no one to fill the old space) left the Phoenix office market battered. This quarter, there have been some modest gains in occupancy and absorption numbers; both moving in the right direction. More activity is needed for Phoenix to move into full recovery. Leasing activity dropped by nearly 200 transactions this quarter from last to less than 500.  

Sales transaction volume in Phoenix dipped this quarter to just 83 market transactions totaling $124.2 million. Price per square foot, however, increased to $109.78 per square foot. Transaction volume has remained low with only a few large investors making purchases in this market.  REITs have taken notice of the very limited inventory of high quality properties and are scouting the market as pricing remains at bargain levels. Many realize that low commercial real estate values today provide the best return on investment long term.

Vacancy rates for the Phoenix office market dropped a modest 40 basis points to 20.7% from last quarter’s 21.5% last quarter. This quarter, the highest vacancy rate remains in the Central Phoenix submarket cluster with 23.4% and the lowest reported was in the Sky Harbor Airport cluster at 17.4%. Absorption was up by 437,738 square feet with most coming from the East Valley at 267,812 SF and 207,843 SF in Sky Harbor. Four of eight submarkets did experience negative absorption. An extremely low 21,145 square feet was delivered this quarter. It is the second lowest delivery in a quarter since local records of delivery data have been kept.

Rental rates dropped again this quarter to $20.29 per square foot, down from an adjusted $20.54 last quarter. A total of 388,327 square feet was under construction during this quarter encompassing five built-to-suit Class B office buildings. Construction totals in this suppressed sector are in line with current conditions but are down severely from a consistent 8-9 million square feet under construction during the boom years from 2005 to late 2007.

The largest office building sale of the quarter was the purchase of the 3 building Phoenix Gateway Center at 410-432 N 44th St in Phoenix for $43 million ($99.40 psf). Oaktree Capital Management of Los Angeles was the buyer. The largest lease transaction for the quarter was US Foods lease for 133,225 square feet ($22.50 est. psf) at River Corporate Center/ASU Research Park at 8075 S. River Pkwy in Tempe.

 At the close of 2011, experts expect that commercial real estate will accelerate more. Various worldwide factors can change predictions in an instant; however, better times are expected in 2012.

Category: Inside Perspectives, Investment, Market Trends, Office, Press Release | Comments (0)
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