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. 

 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 6^th) 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.

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 44^th 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.

One of the more stubborn indicators, the creation of jobs, has been showing signs of positive movement over the past several months. The U.S. unemployment rate has dropped to 8.6 percent, the lowest since March of 2009. Experts had hoped for a much quicker drop in unemployment. They had not anticipated such a reluctance to hire again by small businesses. This modest increase in employment has fueled other indicators that have remained dormant for some time. This positive trend is expected to continue and perhaps accelerate as we move into 2012. Greater hiring will help struggling commercial sectors.

Manufacturing output has increased in the U.S. despite falling sharply in Europe and China. The pent up demand for durable goods such as automobiles has fueled growth.  American car companies are exceeding expectations on output and could post double digit gains this year. Another area of growth is in petroleum products such as jet fuel, heating oil and gasoline according to Bloomberg News. For the first time since 1949, the U.S. is exporting more oil-based fuels than it imports. This also creates an environment where gasoline prices decline making other industries such as steel, more competitive abroad.

The U.S. Gross Domestic Product percentage continues to grow despite a dip earlier in the year. Moody’s Analytics expects the U.S. GDP to rise by 2.6% next year with the caveat that government policymakers move to enact strong fiscal measures. With stubborn unemployment rates still higher than expected, interest rates and inflation will remain low for the foreseeable future. Property and Property Research, PPR, reports that business investment and consumer consumption are the two biggest drivers of GDP growth which was near zero in the first quarter of 2011. The trajectory is expected to be strong into 2012.

Consumer confidence has seen the largest single monthly increase in more than eight years. The Conference Board’s index rose to 56 from 40.9 in November. Higher holiday shopping numbers, auto sales and home purchases in many markets have pushed the index into positive territory. Gasoline prices and low inflation have given consumers some confidence and a feeling they have money to spend for the holiday season.

Of course, any of these situations can be undermined by political grandstanding, the Euro crisis, the still weak housing sector or international political or environmental catastrophes. It seems that momentum is building toward greater expansion of the U.S. economy and the benefits of this expansion will begin to dominate the discussion going forward. Recent events in North Korea could create instability for China which could translate into increased demand for American-made goods and resources.

Phoenix, AZ (Dec. 6, 2011) NAI Horizon, one of Arizona’s oldest full service Commercial Real Estate Companies, has selected Barry Bartle as President, to lead the strategic re-positioning of it’s Property Management Division. “Barry will also have an ownership interest in our Property Management company” according to Thad Seligman, President and CEO of Horizon Real Estate Group. “Our goal over the next several years is to grow the NAI Horizon Management portfolio to 10 million square feet of Office, Retail and Industrial properties and Barry deserves to have ownership in what he builds”.

With an impressive track record in Institutional Property Management spanning over thirty years, Bartle has led property management divisions for such firms as RREEF, Pacific Office Properties and Cushman and Wakefield. His extensive background in Asset Management and Commercial Property Services includes the supervision and direction of over $2 billion dollars in real estate investments for more than 100 clients. Barry has been the recipient of numerous Property Management Service Awards and Letters of Recognition within the industry.

“NAI Horizon has served clients in Arizona and Nevada through its Property Management, Brokerage and Appraisal Divisions for over 20 years.” according to Bartle. “This alignment of all the Horizon operating Divisions will create efficiencies in the delivery of NAI’s extensive menu of services to better serve NAI Horizon’s clients.” Bartle also points out that; “The NAI Global Management Group manages over 300 million square feet nationally. NAI Horizon will expand its current managed portfolio by leveraging these national platform relationships.”

“Barry has been chosen to participate in the NAI Global Strategic Planning Symposium in 2012, designed to define and develop NAI’s worldwide Property Management Strategies”, added Seligman. “This is an important role for Barry and one which evidences his experience, knowledge and reputation as a Property Management Executive. We are confident that under Barry’s leadership as President of the Property Management Division we will achieve our goal to be the leading property management company in Arizona.”

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About NAI Horizon
Established in 1992, NAI Horizon 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. Serving the greater Phoenix metropolitan area, NAI Horizon is a member of the NAI Global commercial real estate network providing real estate solutions to 350 offices in 55 countries worldwide. For more information visit www.naihorizon.com or www.naiglobal.com.

The multifamily market was the only sector to have come back so strong from the economic troubles in the past few years. For a time, investors had eyes only for apartments as other commercial property sectors struggled. However, in the past year, other sectors such as industrial are also beginning to be an attractive alternative. Still, investors remain bullish on multifamily. Large investors such as Weidner Investments, Cornerstone RE Advisors and AREA Property Partners continue to acquire large apartment communities for their portfolios. And, as the only commercial sector with new product coming to market over the next few years, quality units will be coming on line at just the right time. Investment experts expect multifamily to continue to be strong for the next few years nationally.

According to PPR, Property and Portfolio Research, the pent up demand in the Phoenix multifamily sector is helped by the still suffering single family home market and decline in home ownership trends puts this sector on a winning path. The continuation of housing problems in the Phoenix market is expected to keep the apartment sector strong through 2015.

Vacancy rates for stabilized apartments dropped to 8.8% from 9.3% last quarter. The drop in vacancy was welcome as last quarter’s small uptick gave pause to industry observers. Vacancy levels are below 6% in seven submarkets. Overall, 18 submarkets improved this quarter with the greatest coming in the Northeast Central Phoenix and West Central Phoenix sectors. Absorption posted a net increase of 1,854 units compared with a small 248 unit increase from last quarter. Overall absorption recorded eleven straight positive quarters. The greatest increase was seen in the North Tempe submarket, mostly due to the 100% lease up of 6 West, a 22-story high rise. A second, 30-story building will be coming on line in the 3rd quarter. Prelease estimates on that building are nearing 50%. After the initial condo project (Centerpointe) went bust, the two buildings stood empty and unfinished for two years before Chicago developer Zaremba Group purchased the project. The decision to make them rental apartments instead of condominiums was dictated by market conditions.

New unit construction stands at 8 properties totaling 1,261 units. Another 157 units were delivered this quarter. A total of 25 properties with 7,800 units are currently in the development process. In the largest apartment property sales transaction of the quarter, the 360-unit Windsor at Mountain Park Ranch at 13820 S 44th Street in Phoenix sold for $44.5 million. Price per foot was listed at $102.22 and a per unit price of $123,750.

Sales indicators have improved significantly each quarter this year. Total sales volume this quarter was 82 transactions totaling $460 million. Average price per square foot is up to $75.40 per square foot, up from $68.50 last quarter where a greater portion of properties were distressed. Cap rates have dropped from 6.58% in the first quarter to 6.15% this quarter.

Multifamily will remain strong for investors for the next few years. The Phoenix area will continue to thrive as new market drivers such as young demographic inflow, mass transpiration and hopeful hiring in local industry fuels the apartment sector. Over the next few years, increased new construction units added to the market will satisfy growing demands, although near term will remain tight.

The strongest indicator that retail is experiencing an upswing is the attention to infill and redevelopment opportunities. For years, especially in Phoenix, the urban core was ignored for greener pastures in the suburbs where cheap land and strong demographics lured retail to the fringes. The trend in retail is rediscovering the value of infill development of aging shopping centers. The Town & Country Shoppes at 20th Street & Camelback is redeveloping its property to accommodate new tenants such as Nordstrom Rack by razing several buildings to accommodate other trade area focused retailers. The intersection of 7th Avenue and McDowell Road is experiencing a renaissance as two adjacent, long dormant shopping centers are bustling with redevelopment. Across the Valley, from Phoenix to Tempe to Glendale, city’s downtown cores are attracting new retailers wanting to capitalize on the growing urban dweller. Most notably, Downtown Tempe along Mill Avenue is seeing growing success with leasing. Just a few years ago rampant vacancies fueled by national chains leaving for the newer Tempe Marketplace left Mill Avenue standing as a shell of it’s former self. Now, with more local tenants and a newly filled high rise, the historic street is experiencing a renaissance.

The Phoenix retail sector posted a vacancy of 12.3 %, the same as last quarter. Total absorption was positive at 119,831 square feet; a sharp decline from last quarter’s 412,000 square feet. Average rental rates were down to $15.06 per square foot compared to last quarter’s $15.37 psf. Construction activity declined this quarter to 88,012 square feet remaining at a low historic level. A sum of 76,200 square feet of retail space was delivered this quarter.

In the largest retail lease transactions of the quarter, Shoppers Supply leased a total of 48,573 square feet at 3003 W Apache Trail in Apache Junction. In the largest sale transaction of the quarter, Karlin Scottsdale Shea LLC purchased two shopping centers (10 buildings) for $110,000,000. Total square feet was calculated at 443,018 sf. The price per square foot was $248.30.

As the Valley’s retail picture continues to develop, new opportunities for old space will dominate the market rather than newly built product. Until the overall economy returns, the old model of retail following new housing developments in newly constructed retail centers has been replaced with smart retailers refocusing on long standing, well established neighborhoods.

Companies are not expanding, rather contracting their space once their current leases expire. Many have made the move to a higher class space at the same or less than their current lease. This activity, though normal for a market such as this, is a majority of the transactions. The space left behind does nothing to improve conditions, other than leave lesser quality space in its wake and keep vacancy rates flat from quarter to quarter. Leasing activity has slowed to just 600 total transactions in the third quarter. This is the lowest amount since fourth quarter 2008. This has also put enormous downward pressure on market rents which are down yet again. The last time rates were this low was first quarter 2005.

Overall sales transaction volume does remain strong with 126 market transactions in the third quarter. However, total dollar volume at $145.5 million is half what is what last quarter. In a sign of good things to come, this quarter produced a $300 + per square foot transaction and one just under that amount. This is welcome news where price per square foot transactions have been depressed for some time. High value properties with strong income continue to lure astute investors. The market is somewhat limited in its A+ buildings for sale so demand is strong for this select inventory.

Overall vacancy rates for the Phoenix office market dropped slightly from last quarter to 21.1% from 21.5% last quarter (based on adjusted quarterly figures). The highest vacancy rate was reported in the Central Phoenix submarket cluster with 24.2% and the lowest reported was in the Sky Harbor Airport cluster at 18.9%. Absorption was up by 514, 237 square feet; however deliveries to the market were posted at 327,037 square feet which makes for little movement in vacancy rates.

Rental rates dropped slightly this quarter to $20.57 per square foot, down from an adjusted $20.87 last quarter. A total of 388,327 square feet was under construction during this quarter. A total of 327,037 square feet was delivered this quarter; the largest, a 273,780 square foot, Class A building for University of Phoenix was brought on line in July. The building is located at 1625 W. Fountainhead Parkway in Tempe. This is the second building delivered to the market by the University of Phoenix this year.

Consequently, the largest office building sale of the quarter was the 2 building Fountainhead Office Plaza in Tempe for $137 million. KBS Realty Advisors LLC of Newport Beach, CA, was the buyer of this Class A, 439,070 square foot pair of buildings. The office project commanded a hefty $312.02 per square foot price. In the largest lease transaction of the quarter, Fennemore Craig renewed for 121,000 square feet of Class A space at Biltmore Financial Center III, 2394 E. Camelback Rd. No public lease rate information was available.

The Phoenix office market continues to drag along the bottom as it has for the past two years. Steady sales activity levels and a tightening of large contiguous A+ space are the few bright spots in this sector. The pace of recovery will strongly mirror the overall economy as jobs, business confidence and loan availabilities all continue to bear weight on the office market. Once these restrictions lessen, momentum will build and there’s no stopping a strong rebound. Patience is the key.

In several submarkets, large big box warehouse and distribution facilities are becoming scarce. Sales and leasing has been brisk in 100,000+ square foot properties. Several large investors including Cole Real Estate Investments are investing heavily in the market and continue to search for more opportunities. The lack of available large space has fueled build-to-suit construction. If this pattern continues, speculative building will also gain momentum as investors take advantage of construction costs that are significantly lower than they were at the peak of the market.

Institutional buyers have replaced owner/users in many of the larger transactions. Low prices and net operating income (NOI) based decisions are driving deals forward. The flight to quality has already taken place in this sector. Now deals are specifically price and income driven. On the flip side, leasing activity remains sluggish for smaller properties. Rental rates continue to hover around historic lows but are no longer falling. Rates have moved up about 10 basis points per quarter this year, small growth, but in stark contrast to the declining rates of 2009 and 2010.
The Phoenix Industrial market vacancy rate has improved to 14.7%, down from 15.2% last quarter. Absorption rates are up again for the sixth consecutive quarter with a total gain of 1,606,924 square feet. The Northwest and Southwest Valley submarket clusters led the way with 566,493 square feet and 770,910 square feet, respectively. Construction is rebounding strongly and has posted over 3.2 million square feet. That’s nearly one million square feet more than last quarter. A 226,000 square foot Flex building for a telecom hotel/data hosting center in Chandler was the only industrial building delivered this quarter (It was reported as delivered last quarter in error.).

Overall annual rental rates remained steady at an annual rate of $6.24 per square foot ($0.52 per month). Prices continue to stabilize across the Valley, although exceptions remain. The Northeast Valley continues to have the highest rents while the Southwest Valley has the lowest.

The largest lease transaction posted this quarter was Home Depot’s lease of 400,000 square feet of distribution space at 7200 W Buckeye Road in Phoenix. In the top sales transaction for the quarter, CBRE Investors of Los Angeles purchased a 583,000 square foot Flex Telecom Hotel at 1820 E. Sky Harbor Circle, adjacent to Phoenix Sky Harbor International Airport in Phoenix. The transaction was listed for $53.5 million. The cost per square foot was $91.77.