land for sale - loopnet · 2018-09-19 · seller is considering proposals for 50 - 120 acre parcel....

Land for Sale NWC Loop 202 and Elliot Road

Offering Memorandum

executive summary1 pg. 3

property overview2 pg. 4

market overview3 pg. 6

points of contact4 pg. 20

table of contents

executive summarythe opportunity ±120 acres

for sale

Seller is considering proposals for 50 - 120 acre Parcel.

Investment Highlights ± The 120 acre Parcel is located at the NWC of Loop 202 Freeway at

Elliot Road, Mesa, AZ.

± Full Diamond Freeway Access via Loop 202 and Elliot Road.

± Located in close proximity to Eastmark, ranked #6 among the Nation’s top-selling master planned communities

± Loop 202 is a partial beltway looping around the eastern Phoenix Metropolitan area. It travels the eastern cities of Phoenix, Tempe, Mesa, Chandler annd Gilbert, making it a vital connector.

± The Parcel is located in the Elliot Technology Corridor. The Elliot Technology Corridor runs along Elliot Road from Hawes Road to the west and Signal Butte on the east.

± The Elliot Technology Corridor provides the following:

± Proximity to Mesa Gateway is 4 miles

± Flexible zoning and multiple uses

Mesa Gateway International

Airport

Subject Parcel±120 Acres

APP

LE

• Streamlined Entitlement Process • Large, Affordable, Redundant Power

Capacity, • Robust Fiber Network• Available Natural Gas• Abundant Water and Waste Water

Capacity • Mesa’s Foreign Trade Zone

• Convenient Freeway Access & Airport Access

• Elliot Road Streetscope Improvements

• Low Risk of National Disasters,• Proximity to both ASU and

Chandler Gilbert Community College.

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The ParcelThe Parcel is an approximately 120-acre parcel provided ±2,771 feet of Elliot Road Frontage and ±2,811 feet of Loop 202 Frontage.

Ownership InformationSeller is the fee owner of the Parcel.

Utilities/AccessThe Parcel is located in the East Mesa submarket. It is accessible from Loop 202 and Elliot Road.

TaxesCity of Mesa and County of Maricopa.

ServicesThe site is serviced by Southwest Gas for Natural Gas. SRP for electric power, and City of Mesa for water and sewar.

Conceptual Development Plan with Future Offsite Improvements

± Seller is fee owner

± Site is fully entitled and approved

SubjectParcel

property overview


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property overviewsubmarket industrial overview

Source: CBRE 2018


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market overview

Demographics

3 Miles 5 Miles

HOUSEHOLDS

2017 Households - Current Year Estimate 20,241 64,855

HOUSEHOLD INCOME

2017 Average Household Income $78,554 $74,918

2017 POPULATION - CURRENT YEAR EST.

57,1603 MILES

177,7415 MILES

2022 POPULATION - 5 YEAR PROJECTION

63,1043 MILES

197,3975 MILES

2017-2022 ANNUAL POPULATION GROWTH RATE

2.00%3 MILES

5 MILES 2.12%

2017 DAYTIME POPULATION

39,9443 MILES

149,4285 MILES

Source: ESRI

6

market overview

Traffic Counts

STREET NAME TYPE TRAFFIC COUNT CROSS STREET

E Elliot Rd AWDT 26,800 S Ellsworth Rd

Loop 202 AADT 32,500 E Elliot Rd

E Elliot Rd AWDT 5,000 S Hawes Rd

S Ellsworth Rd AWDT 13,600 E Posada Ave

S Ellsworth Rd ADT 12,152 E Elliot Rd

S Hawes Rd AWDT 1,100 E Paloma Ave

Loop 202 AADT 34,500 E Warner Rd

E Elliot Rd AWDT 11,000 S Ellsworth Rd

Source: ESRI

7

industrial market overview

Key indicators in the Phoenix industrial market continued to reflect steady growth and a healthy economy during the fourth quarter of 2017. On a marketwide basis, net absorption remained strong at 2,883,749 sq. ft. Overall vacancy decreased from 7.3% to 6.8% during Q4 2017 (its lowest level since 2006). The market’s average asking lease rate is $0.64 NNN per sq. ft. (monthly) quarter-over-quarter. In terms of new supply, there was an increase in development from 4,805,979 sq. ft. at the end of Q3 2017 to 6,559,152 sq. ft. at the end of Q4 2017.

The Phoenix industrial market generated strong demand in the fourth quarter of 2017. Demand gained momentum and net absorption increased 22.9% quarter-over-quarter. Tenant demand was healthy across the Valley and most notable in the Southeast Valley and Phoenix Airport Area submarkets. The most active users in the market consisted of manufacturing, e-commerce and housing-related users (specifically solar manufacturing users). Many of these users have started looking for space in the Southwest Valley due to lower lease rates.

Industrial Marketview

Source: CBRE Research, Q4 2017.

Q4 2017 CBRE Research © 2018 CBRE, Inc. | 2

MARKETVIEW PHOENIX INDUSTRIAL & LOGISTICS

NET ABSORPTION

During the fourth quarter of 2017, the Phoenix

absorption. Almost 58% of this net absorption occurred in the Southeast Valley and Phoenix Airport Area submarkets. All but two of the top

occurred in the Southeast Valley and Phoenix Airport submarkets. Footprint Manufacturing and Benchmark Electronics were the largest leased spaces in the Southeast Valley and Phoenix

leased, respectively.

VACANCY

Strong demand in the Phoenix industrial market caused vacancy to fall to 6.8%—the lowest level since 2006. This represented a decrease of 50 basis points (bps) quarter-over-quarter and a decrease of 120 bps year-over-year. Positive net absorption was reported in 20 out of the 28 submarkets, which caused vacancy to fall in the correlating areas. Out of all the major regions in the Phoenix metropolitan area, the Southeast Valley had the largest vacancy decline at 130 bps quarter-over-quarter.

ASKING LEASE RATES

The marketwide average asking lease rate decreased

quarter-over-quarter. Out of the 28 submarkets, 11 reported higher rental rates, seven remained the same and 10 reported lower lease rates on a quarter-over-quarter basis at the end of Q4 2017. Rent growth was especially notable in the East Tempe (37% year-over-year) and Southwest Phoenix (28% year-over-year) submarkets due to a lack of space available and an increase in tenant improvement costs, respectively. Annual reductions in rental rates

and the East Gilbert (down 16.0%) submarkets due to availability of older product and motivated landlords seeking to quickly lease up space.

Figure 2: Vacancy & Net Absorption YTD


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Absorption 9,898,883 Sq. Ft. Vacancy 6.8%

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2011 2012 2013 2014 2015 2016 2017

Figure 2: Vacancy & Net Absorption Demand % Vacancy

Figure 3: Vacancy vs. Lease Rate


2011 2012 2013 2014 2015 2016 2017

Vacancy Rate 6.8% Lease Rate $0.64 Per Sq. Ft.

18%

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Figure 3: Vacancy vs. Lease Rate % Vacancy Lease Rate


Figure 4: Asking Rental Rate

2011 2012 2013 2014 2015 2016 2017

NNN Average Asking Lease Rates $0.64 Per Sq. Ft.

Price

Per S

q. Ft.

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8

Construction

Source: CBRE Research, Q4 2017

Vacancy, Availability & Absorption

Strong demand in the Phoenix industrial market caused vacancy to fall to 6.8%—the lowest level since 2006. This represented a decrease of 50 basis points (bps) quarter-over-quarter and a decrease of 120 bps year-over-year. Positive net absorption was reported in 20 out of the 28 submarkets, which caused vacancy to fall in the correlating areas. Out of all the major regions in the Phoenix metropolitan area, the Southeast Valley had the largest vacancy decline at 130 bps quarter-over-quarter.

During the fourth quarter of 2017, the Phoenix market recorded 2,883,749 sq. ft. of net absorption. Almost 58% of this net absorption occurred in the Southeast Valley and Phoenix Airport Area submarkets. All but two of the top transactions—all greater than 100,000 sq. ft.— occurred in the Southeast Valley and Phoenix Airport submarkets. Footprint Manufacturing and Benchmark Electronics were the largest leased spaces in the Southeast Valley and Phoenix Airport Area with 131,796 sq. ft. and 121,731 sq. ft. leased, respectively.

At the end of the fourth quarter of 2017, there was 6,559,152 sq. ft. of industrial space under construction. This represented a 27% percent increase quarter-over-quarter and a 22% percent rise year-over-year. The significant amount of industrial space under construction is due to larger sized buildings being constructed and a healthy economy. Notably, 64% of industrial construction took place in the Southwest Valley area, which also can be attributed to tenants and owners seeking larger spaces. Moreover, at the end of the quarter, 1,554,955 sq. ft. of space was completed, with speculative development accounting for 93.7% of new deliveries.


9

The marketwide average asking lease rate decreased from $0.65 to $0.64 NNN per sq. ft. (monthly) quarter-over-quarter. Out of the 28 submarkets, 11 reported higher rental rates, seven remained the same and 10 reported lower lease rates on a quarter-over-quarter basis at the end of Q4 2017. Rent growth was especially notable in the East Tempe (37% year-over-year) and Southwest Phoenix (28% year-over-year) submarkets due to a lack of space available and an increase in tenant improvement costs, respectively. Annual reductions in rental rates were significant in the Southwest Tempe (down 19%) and the East Gilbert (down 16.0%) submarkets due to availability of older product and motivated landlords seeking to quickly lease up space.

Average Asking Lease Rates 4Q 2017 Industrial Market Overview

Population and economic dynamics propped up industrial demand in 2017. Direct vacancy decreased by decreased 47 basis points from 7.31% to 6.84% in Q4 2017.

Positive net absorption of 375,509 sq. ft. was recorded as many fitness, entertainment and discount retailers opened new stores.

The average NNN asking lease rate was $0.64/mo.

There was 1,554,955 SF of completed industrial space brought online over 4Q17.

There is currently 6,559,152 SF of industrial space under construction with SPEC buildings accounting for approximately 60% of the projects.

During 4Q17, the Phoenix industrial market experienced 2,409,667 SF of net absorption and 4,168,488 SF of gross absorption.



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The Phoenix metro economy is expected to grow at a healthy rate during 2018, which will support demand for industrial space. An increase in speculative construction will meet strong tenant demand, providing users with more quality options in the market. Additionally, increasing lease rates, land prices and transactions will support a positive outlook for the local industrial market. Manufacturing, e-commerce, and housing related users are all expected to remain active. Additionally, the metropolitan area is well-positioned to continue expanding as a major hub for manufacturing and distribution. All of these factors underpin a positive outlook for 2018.

Phoenix Industrial Market Outlook

Market Totals Rentable AreaSF

Vacancy Rate %

Net AbsorptionSF

Under ConstructionSF

Avg. Lease Rate$/SF/YR

NNN

Availability Rate%

Northwest 49,856,726 6.36 682,097 498,455 0.72 8.2

Southwest 99,554,180 7.08 6,377,230 4,116,203 0.47 8.8

Airport 75,470,452 7.55 949,303 300,168 0.75 9.2

Northeast 13,369,804 5.57 307,086 0 0.99 9.4

Southeast 70,957,719 6.31 1,583,167 1,644,326 0.79 7.7

Metro Phoenix 309,208,881 6.84 9,898,883 6,559,152 0.64 8.6

Q4 2017 Industrial Market Statistics



11

office market overview

The Phoenix office market closed 2017 with a strong quarter. Substantial activity in the tech and healthcare industries coupled with improving economic fundamentals drove demand for office space. This was reflected in a significant amount of net absorption. Healthy tenant demand combined with a limited amount of completed construction supported a decline in vacancy, allowing for rent growth.

The Phoenix office market’s net absorption totaled 1,020,484 sq. ft. during Q4 2017, marking the fourth-highest level of quarterly net absorption in the past decade. This brought year-to-date net absorption to 2.8 million sq. ft. Healthy leasing activity was bolstered by demand for large blocks of space, as 11 deals over 40,000 sq. ft. were executed during the quarter. Yet, demand was concentrated in five submarkets (South Scottsdale, Deer Valley, South Airport, Midtown and Tempe) that accounted for more than 80% of the market’s total net absorption during the quarter.

The overall vacancy rate for metropolitan Phoenix ended Q4 2017 at 16.4%. This is 40 basis points (bps) lower than the previous quarter and a 100-bps decrease year-over-year. Simultaneously, the full-service gross (FSG) average asking lease rate for existing product continued to rise ending 2017 at $25.49 per sq. ft. (annual). On a year-over-year basis, the marketwide average asking lease rate was up 4.9%.

Office Marketview



MARKETVIEW PHOENIX OFFICE

NET ABSORPTION The fourth quarter marked the 30th consecutive quarter of positive net absorption. During 2017, net

absorption in the fourth quarter alone. Additionally, gross activity reached a market record high—totaling

period, tech and healthcare company expansions propelled net absorption across the market. Notably,

Deer Valley and Envision Healthcare leased 58,000 sq.

Midtown experienced strong activity as companies -

ket. Additionally, Tempe continued to attract occupiers due to its ideal location, walkable ameni-ties and proximity to Arizona State University. VACANCY RATE Vacancy continued to trend downward, especially in the most popular submarkets (Tempe and South Scotts-dale). The marketwide vacancy rate fell 40 bps quar-ter-over-quarter to 16.4% during Q4 2017. This is the

vacancy is partially due to the execution of nine deals

decrease in vacancy as the rate plummeted more than 600 bps in 2017. These submarkets have attracted users due to their ability to draw from large labor pools in the Northwest and Southeast valleys. ASKING RENTAL RATES

(FSG-annual) at the end of Q4 2017, representing a 4.9% annual increase. At quarter-end, the Class A

same period, the Class B and Class C average asking

respectively. The limited amount of available and quality blocks of space has given landlords leverage to push rents, even as lease rates approach historical highs in many submarkets. Rents will continue to grow in high-demand areas with walkable amenities such as the Tempe and Scottsdale submarkets.

Figure 2: Net Absorption

2011 2012 2013 2014 2015 2016 2017

Total

Sq. F

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CBD 240,597 Sq. Ft Suburban 2,598,962 Sq. Ft

Market 2,839,559 Sq. Ft4.0

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CBD $25.06 Per Sq. Ft.Suburban $25.65 Per Sq. Ft.

Market $25.49 Per Sq. Ft.$30.00

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Figure 3: Vacancy Rate

Source: CBRE Research, Q4 2017. 2011 2012 2013 2014 2015 2016 2017

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Market 16.39%

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12

Construction



Vacancy continued to trend downward, especially in the most popular submarkets (Tempe and South Scottsdale). The marketwide vacancy rate fell 40 bps quarter- over-quarter to 16.4% during Q4 2017. This is the lowest rate since Q2 2008. The significant decrease in vacancy is partially due to the execution of nine deals over 100,000 sq. ft. in the market. The Deer Valley and Chandler submarkets posted the most significant decrease in vacancy as the rate plummeted more than 600 bps in 2017. These submarkets have attracted users due to their ability to draw from large labor pools in the Northwest and Southeast valleys.

The fourth quarter marked the 30th consecutive quarter of positive net absorption. During 2017, net absorption in the Phoenix office market surpassed 2.8 million sq. ft., with 1,020,484 sq. ft. of positive net absorption in the fourth quarter alone. Additionally, gross activity reached a market record high—totaling more than seven million sq. ft. South Scottsdale led all submarkets with 260,591 sq. ft. of net absorption, followed by Deer Valley (185,017 sq. ft.) and South Airport (146,508 sq. ft.) in Q4 2017. Over the same period, tech and healthcare company expansions propelled net absorption across the market. Notably, an IT division of USAA signed for 150,000 sq. ft. in Deer Valley and Envision Healthcare leased 58,000 sq. ft. in the Piestewa Peak submarket. Meanwhile, Midtown experienced strong activity as companiestook advantage of cost effective rates in the submarket. Additionally, Tempe continued to attract occupiers due to its ideal location, walkable amenities and proximity to Arizona State University.

During the fourth quarter, 722,903 sq. ft. of office space was delivered. The only new office project completed was the McKesson Corporate Campus—a 270,000 sq. ft. build-to-suit (BTS)—in South Scottsdale. The remainder of completions, approximately 450,000 sq. ft., was due to renovation completions. This brought year-end 2017 completions to 2.4 million sq. ft. During 2017, only four speculative projects were brought online.

At the end of Q4 2017, approximately 1.8 million sq. ft. of office space was under construction— 44% of which is pre-leased. Though developers remain focused on BTS, the outlook for speculative projects is positive due to the scarcity of large blocks of Class A space in the market. One new office project broke ground during the quarter—a 65,000-sq. ft. BTS for Benchmark Electronics in the Tempe submarket.

New construction aside, there was also a notable amount of space repositioned to office in the past 12 months. Roughly 640,000 sq. ft. was converted to office from former back office/flex space during 2017. This recent trend is due to the lack of available land for development in tight submarkets. As a result, many developers have opted to purchase outdated buildings with high parking ratios and convert them into dedicated office projects. Similarly, landlords seeking a competitive advantage for their properties have adjusted their strategy to new buildouts focused on tech-oriented users as tenants are increasingly opting for open, collaborative floor plans.


13

The average asking lease rate for the Phoenix office market was $25.49 per sq. ft. full service gross (FSG-annual) at the end of Q4 2017, representing a 4.9% annual increase. At quarter-end, the Class A average asking rate was $34.30 per sq. ft. Over the same period, the Class B and Class C average asking rate was $25.17 per sq. ft. and $18.65 per sq. ft., respectively. The limited amount of available and quality blocks of space has given landlords leverage to push rents, even as lease rates approach historical highs in many submarkets. Rents will continue to grow in high-demand areas with walkable amenities such as the Tempe and Scottsdale submarkets.

Average Asking Lease Rates 4Q 2017 Office Market Overview

The Phoenix office market’s vacancy decreased from 16.79% at the end of the 3rd quarter to its current rate of 16.39%.

The 4th quarter saw a $0.30 increase in average FSG asking lease rates, from $25.19 at the end of the 3rd quarter to current average FSG asking lease rates of $25.49.

There is currently 1.8 million SF under construction in 13 multi-tenant leased buildings. 43.5% of the square feet under construction at the end of the 4th quarter is pre-leased. While, there is 86,000 SF under construction in two single-tenant owner user building.

Of the roughly 2.4 million SF brought online during 2017, there were only four new speculative buildings completed for a total of 550,000 SF. (See below for the square foot breakdown of completions).

During 4Q17, the Phoenix office market experienced 1.0 million SF of positive net absorption and 2.1 million SF of gross activity. The 4th quarter marked the 30th quarter in a row of positive net absorption. The Metro Phoenix office market recorded over 2.8 million SF of positive net absorption during 2017.



14

The Phoenix metro economy is expected to remain healthy in 2018. An improving labor market underpins this outlook and barring any major external shock, job growth is projected to continue. Local experts project Metro Phoenix employment to grow between 2.0%-2.5% in 2018. Employment growth will fuel demand for office space as employers capitalize on a skilled and cost-effective workforce. Although the broad outlook is favorable across metro Phoenix, the Tempe and Scottsdale submarkets are expected to generate the highest levels of activity. These areas remain desirable due to walkability and an abundance of restaurants and retailers, which helps occupiers attract and retain top talent. Overall, the supply-demand outlook for Phoenix remains favorable and should allow for improving market fundamentals in the near-term.

Phoenix Office Market Outlook


Vacancy Rate %

Net AbsorptionSF



FSG

Tempe 8,692,956 4.1 981,788 870,000 27.53

Central / South Scottsdale 9,517,656 14.1 405,639 - 30.37

Southeast Valley 10,688,508 14.4 603,971 539,000 22.46

Scottsdale Airpark/Desert Ridge 10,836,650 14.3 68,370 - 28.69

Central Business District 16,329,732 20.0 240,597 206,250 25.06

East Phoenix 9,811,476 25.5 (191,255) 80,000 23.46

Camelback/Piestewa Peak 9,512,319 17.5 160,110 115,381 28.68

West/Northwest Phoenix 12,701,390 17.5 570,339 - 20.66

Metro Phoenix 88,090,687 16.4 2,839,559 1,810,631 25.49

Q4 2017 Office Market Statistics



15

Following rather stagnant activity last quarter, Phoenix retail metrics accelerated in Q4 2017 to close out the year on a positive note. Year-end net absorption was 1,601,498 sq. ft., causing marketwide vacancy to decrease 80 basis points (bps) year-over-year to 8.1%.

Positive demand-side drivers in the Phoenix market bolstered retail activity this quarter. One of the most important demand generators of retail is employment growth, which leads to increased consumer spending. Phoenix job growth was healthy, increasing 2.2% in 2017 with the addition of 45,200 jobs.1 Additionally, the local housing market continues to strengthen as housing starts in the Valley were up nearly 11%2 year-over-year and annual new home closings increased 17%3 Nearby retailers continue to benefit from increased housing activity as homeowners spend on housing-related goods and necessity items.

Meanwhile, new supply continues to stay well below prerecession levels, bolstering market fundamentals. The combination of significant preleased construction and the repurposing of outdated retail space has pulled down the vacancy rate in the fourth quarter of 2017 to its lowest level since 2008. Despite concerns surrounding brick-and-mortar retail, the Phoenix retail market steadily improved due to a balance between healthy tenant demand and sustainable levels of supply.

Retail Marketview


retail market overview


MARKETVIEW PHOENIX RETAIL

VACANCY

In the fourth quarter of 2017, the marketwide vacancy rate fell 20 basis points (bps) quarter-over-quarter and 80 bps year-over-year to 8.1%. Notably, this marks the sixth consecutive quarterly decrease in the marketwide vacancy rate. On an annual basis,

was in the North Bell Road submarket where vacancy plummeted 180 bps. Strong demand among big box users, high percentages of preleased construction, and repurposing of outmoded retail space will continue to drive down the marketwide vacancy rate.

ASKING RENTAL RATE

The Phoenix retail market’s average asking lease

Over the past 12-month period, average asking rent edged up 1.0%. Notably, the average asking lease rate is 14.1% above the recessionary low in 2013. The Scottsdale, North Scottsdale, and East Phoenix submarkets continued to lead the market with the highest asking rents due to below market vacancy rates and supportive demographics.

NET ABSORPTION

absorption in the fourth quarter. Notably, all submarkets posted positive net absorption in the quarter. North Bell Road led the market for net absorption in the fourth quarter and year-end

respectively. The most active users this quarter

retailers. Collectively, these types of users accounted for more than 75% of big box absorption in the fourth quarter. EoS Fitness and Planet Fitness continued to expand, while Crunch Fitness entered the Phoenix market with plans to open

Meanwhile, K-Mart closed two Valley locations in the fourth quarter. These spaces were located at the NWC of Northern Ave. and I-17 and SEC of Southern Ave. and Power Rd., totaling 92,676 and

location in the Valley is set to close in April 2018.

Figure 2: Net Absorption

2012 2013 2014 2015 2016 2017

YTD Net Absorption 1,601,498 Sq. Ft.

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Value 1

Figure 3: Vacancy

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% Va

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Vacancy

Figure 4: Asking Rental Rate

2012 2013 2014 2015 2016 2017

NNN Average Asking Lease Rates $17.31 Per Sq. Ft.

Price

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16

Construction



In the fourth quarter of 2017, the marketwide vacancy rate fell 20 basis points (bps) quarter-overquarter and 80 bps year-over-year to 8.1%. Notably, this marks the sixth consecutive quarterly decrease in the marketwide vacancy rate. On an annual basis, vacancy fell more than 100 basis points in five of 12 submarkets. The most significant annual decrease was in the North Bell Road submarket where vacancy plummeted 180 bps. Strong demand among big box users, high percentages of preleased construction, and repurposing of outmoded retail space will continue to drive down the marketwide vacancy rate.

The Phoenix retail market registered 561,509 sq. ft. of net absorption and 1,285,870 sq. ft. of gross absorption in the fourth quarter. Notably, all submarkets posted positive net absorption in the quarter. North Bell Road led the market for net absorption in the fourth quarter and year-end 2017, at 127,784 sq. ft. and 435,908 sq. ft., respectively. The most active users this quarter were fitness, grocery, and homegoods/furniture retailers. Collectively, these types of users accounted for more than 75% of big box absorption in the fourth quarter. EoS Fitness and Planet Fitness continued to expand, while Crunch Fitness entered the Phoenix market with plans to open their first location in January 2018.

Meanwhile, K-Mart closed two Valley locations in the fourth quarter. These spaces were located at the NWC of Northern Ave. and I-17 and SEC of Southern Ave. and Power Rd., totaling 92,676 and 114,500 sq. ft., respectively. A third and final location in the Valley is set to close in April 2018.

Approximately 490,600 sq. ft. of new retail space was delivered in the fourth quarter of 2017. This included Walmart Supercenter near Metrocenter Mall, Fry’s Marketplace in Apache Junction, At Home in Gilbert, El Super in Phoenix, and Ashley Homestore in Tempe. Year-end completions reached 1,059,762 sq. ft.—the second consecutive year completed construction in the Valley surpassed one million sq. ft.

Additionally, 940,687 sq. ft. of retail space is in the construction pipeline. Two noteworthy projects broke ground in Q4 2017—Nordstrom Rack, Homegoods, and shop space near SanTan Village Mall (61,000 sq. ft.), and a Planet Fitness-anchored center in Queen Creek (47,500 sq. ft.). These projects are expected to deliver in Fall 2018, and Summer 2018, respectively.


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The Phoenix retail market’s average asking lease rate ended Q4 2017 at $17.31 per sq. ft. (NNN). Over the past 12-month period, average asking rent edged up 1.0%. Notably, the average asking lease rate is 14.1% above the recessionary low in 2013. The Scottsdale, North Scottsdale, and East Phoenix submarkets continued to lead the market with the highest asking rents due to below market vacancy rates and supportive demographics.

Average Asking Lease Rates 4Q 2017 Retail Market Overview

The Phoenix retail market vacancy rate was 19 basis points quarter-over-quarter and 75 basis points year-over-year, settling at 8.14%.

Positive net absorption of 375,509 sq. ft. was recorded as many fitness, entertainment and discount retailers opened new stores.

The average NNN asking lease rate increased year-over-year settling at $17.31 PSF. .

There is currently 940,687 SF of retail space under construction.

During the 4th quarter, there was 561,509 of net absorption and 1,285,870 SF of total gross absorption.



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The Phoenix retail market ended 2017 on a high note and momentum is expected to continue into 2018. Big box users were particularly active at the end of 2017 and this demand will allow for vacant big box space to fill throughout 2018. Steady population and employment growth will boost consumer spending, which will attract retailers and bolster demand for space. Despite an optimistic economic outlook, some drawbacks will delay more notable growth in the retail market. E-commerce growth will continue to pose issues for brick-and-mortar retailers; e-commerce sales as a percentage of total retail sales are expected to increase 100 bps in 2018. Retailers will have to adapt to a changing retail market to succeed. Additionally, the closures of K-Mart, Sears, and other big box retailers will leave behind vacant retail space throughout the Valley. Larger vacant floor plans will likely be split into multiple spaces to fit retailer demand or will be repurposed into alternative uses other than retail. Still, food users—in particular fast-casual restaurants—will continue to fuel retail demand in infill locations, as well as areas with strong household growth such as the Southeast and West Valley. Additionally, grocers are expected to drive retail demand in 2018—both in new developments and second-generation space. Aldi—a German grocer focused on discount pricing—is expected to enter the Phoenix market in 2018 with multiple locations. Finally, fitness, homegoods/furniture, and entertainment retailers are expected to drive absorption as they have in recent years.

Phoenix Retail Market Outlook


Vacancy Rate %

Net AbsorptionSF



NNN

Sun City 9,365,599 7.0 98,496 15,000 $18.32

North Bell Road 15,710,162 8.5 435,908 - $14.52

Northwest Phoenix 12,487,094 14.2 177,067 - $14.42

West/Southwest Phoenix 19,665,342 6.6 146,940 203,999 $16.23

Paradise Valley 8,056,807 5.7 55,640 - $19.01

North Scottsdale 15,311,030 8.0 110,737 92,968 $23.77

East Phoenix 3,511,001 5.2 35,599 45,000 $21.83

Scottsdale 4,546,789 4.2 (5,490) - $30.68

Tempe/Ahwatukee 18,019,999 6.7 180,727 89,500 $19.10

Mesa/Chandler/Gilbert 38,271,304 9.6 281,437 365,489 $15.10

Apache Junction 5,315,395 5.4 79,699 - $21.67

Maricopa 491,778 1.8 4,738 128,731 $21.25

Metropolitan Phoenix 150,752,300 8.1 1,601,498 940,687 $17.31

Q4 2017 Retail Market Statistics



19

points of contactoffering

memorandum

Frank KelleySenior Vice President

T +1 720 528 [email protected]

Pete WentisSenior Vice President


Kevin CoscaSenior Vice President


Alex WentisAssociate


20

Affiliated Business Disclosure

CBRE, Inc. operates within a global family of companies with many subsidiaries and related entities (each an “Affiliate”) engaging in a broad range of commercial real estate businesses including, but not limited to, brokerage services, property and facilities management, valuation, investment fund management and development. At times different Affiliates, including CBRE Global Investors, Inc. or Trammell Crow Company, may have or represent clients who have competing interests in the same transaction. For example, Affiliates or their clients may have or express an interest in the property described in this Memorandum (the “Property”), and may be the successful bidder for the Property. Your receipt of this Memorandum constitutes your acknowledgement of that possibility and your agreement that neither CBRE, Inc. nor any Affiliate has an obligation to disclose to you such Affiliates’ interest or involvement in the sale or purchase of the Property. In all instances, however, CBRE, Inc. and its Affiliates will act in the best interest of their respective client(s), at arms’ length, not in concert, or in a manner detrimental to any third party. CBRE, Inc. and its Affiliates will conduct their respective businesses in a manner consistent with the law and all fiduciary duties owed to their respective client(s).

Confidentiality Agreement

Your receipt of this Memorandum constitutes your acknowledgement that (i) it is a confidential Memorandum solely for your limited use and benefit in determining whether you desire to express further interest in the acquisition of the Property, (ii) you will hold it in the strictest confidence, (iii) you will not disclose it or its contents to any third party without the prior written authorization of the owner of the Property (“Owner”) or CBRE, Inc., and (iv) you will not use any part of this Memorandum in any manner detrimental to the Owner or CBRE, Inc.

If after reviewing this Memorandum, you have no further interest in purchasing the Property, kindly return it to CBRE, Inc.

Disclaimer

This Memorandum contains select information pertaining to the Property and the Owner, and does not purport to be all-inclusive or contain all or part of the information which prospective investors may require to evaluate a purchase of the Property. The information contained in this Memorandum has been obtained from sources believed to be reliable, but has not been verified for accuracy, completeness, or fitness for any particular purpose. All information is presented “as is” without representation or warranty of any kind. Such information includes estimates based on forward-looking assumptions relating to the general economy, market conditions, competition and other factors which are subject to uncertainty and may not represent the current or future performance of the Property. All references to acreages, square footages, and other measurements are approximations. This Memorandum describes certain documents, including leases and other materials, in summary form. These summaries may not be complete nor accurate descriptions of the full agreements referenced. Additional information and an opportunity to inspect the Property may be made available to qualified prospective purchasers. You are advised to independently verify the accuracy and completeness of all summaries and information contained herein, to consult with independent legal and financial advisors, and carefully investigate the economics of this transaction and Property’s suitability for your needs. ANY RELIANCE ON THE CONTENT OF THIS MEMORANDUM IS SOLELY AT YOUR OWN RISK.

The Owner expressly reserves the right, at its sole discretion, to reject any or all expressions of interest or offers to purchase the Property, and/or to terminate discussions at any time with or without notice to you. All offers, counteroffers, and negotiations shall be non-binding and neither CBRE, Inc. nor the Owner shall have any legal commitment or obligation except as set forth in a fully executed, definitive purchase and sale agreement delivered by the Owner.

land for sale - loopnet · 2018-09-19 · seller is considering proposals for 50 - 120 acre parcel....

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