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 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)

Phoenix Industrial Sector Builds on Recent Successes

January 17th, 2012 | Posted by Matt DePinto, Research Manager

The Phoenix Industrial Market continues to build on last quarter’s success as figures show a strong reduction in overall vacancy and a strong rise in absorption. Rental rates have rebounded slightly from their low point in the second quarter of 2011. Along with this good news are a few sobering facts which still point to a sector that continues to struggle to return to historic norms.

Lease transaction volume is off pace by half from last quarter in the number of deals and in total square feet. The majority of space being leased is for larger, corporate users. Owner/user deals are still off from historic highs due to tight credit and lack of startup capital. Sales transactions improved this quarter in total dollar volume to $249.2 million compared with last year’s $164.4 million, however, the number of sales transactions is the lowest since third quarter of 2009. This shows that investors are still focused on large, premium properties to build their portfolios. Investors remain relatively risk adverse and are still focused on easily structured transactions. Cap rates for this quarter have posted at 7.91%.

The Phoenix Industrial vacancy rate continues to improve and now stands at 13.9% compared with 14.8% last quarter. Absorption rates are up again for the seventh consecutive quarter with a substantial gain of 2,868,909 square feet (SF). This is over 1.2 million more SF absorbed this quarter compared with the last. The Southwest submarket had the vast majority of absorption while the Sky Harbor submarket was the only one with negative absorption at (163,915) SF.

The big news is that overall absorption is up over 6.66 million square feet (MSF) for 2011. This is a strong indicator of healthy activity and modest demand. With very little new product delivered in the previous six quarters, this quarter showed a strong 570,673 SF of build-to-suit activity. Construction posted 2.8 MSF for the fourth quarter; however, two enormous manufacturing projects for Intel and First Solar make up 2.2 million of that total.

Overall annual rental rates are rising incrementally each quarter and currently stand at $6.36 PSF ($0.53 per month). Rental rates are still depressed from historic levels and are expected to remain comparatively low throughout 2012. However, for the past few quarters, market activity is up and momentum is beginning to head in the right direction.

The largest lease transaction posted this quarter was the Cornerstone Services lease of 337,897 SF of distribution space at 7210 W Buckeye Road in Phoenix. In the top sales transaction for the quarter, NY-based REIT Crexus Investment Corporation spent $33.25 million for 3 distribution buildings totaling 629,764 SF at Papago West Industrial Park. The cost PSF was $52.80.

 The ever resilient Industrial sector marches steadily forward, albeit slower, as the health of the overall economy continues to improve slightly. As consumers begin spending again, inventories will need to be replenished and products will need distribution. These conditions are already beginning to take shape and should expand as we move through 2012. A national move by U.S. companies to onshore some operations previously moved overseas will also increase demand on existing building inventories.

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