At the end of the second quarter the vacancy rate in office space was 12.2 percent and in industrial space it was 10 percent.
In industrial space, volume is still far below average or “healthy standards,” according to Picor. The most active industry sectors in the lease market include logistics, health care and education. Those still hurting the most are construction-related firms and small businesses.
  
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• Vacancy rates had been increasing steadily, and while up in the third quarter, absorption seems to have slowed the velocity considerably. Vacancies climbed the most this quarter in smaller bay spaces, due in large part to the toll the economy has taken on small businesses.
• As for sales, activity for both user and investor sales has been anemic, and land sales have been virtually non-existent.
As for office space, Picor says anecdotal information suggests market activity increased during the third quarter, but the statistics show otherwise.
• Despite what the banking community says, local owner user office building sales have ground to a halt due to more stringent underwriting and appraisal standards.
• Investment activity is nil in a market that was already thin and, again, financing is the major deterrent. Buyers and sellers are agreeing on seller financings for short-term loans get through the drought in the conventional credit market.
• There is little new construction activity for office space in the market. Several small projects will deliver space in the fourth quarter, but no new projects are planned in a market that demands advance sales or pre-leasing.
“We believe that time is still 12-18 months out, but unlike larger markets, Tucson does not suffer from a large overhang of empty, recently completed projects,” according to Picor.
TCC, hotel open house The City of Tucson and the Rio Nuevo Multipurpose Facilities District are holding a construction open house today (Oct. 19) for the new primary entrance to the Tucson Convention Center, 260 S. Church Ave. It will be from 4 p.m. to 6 p.m.
The first phase of the overall project is the new entrance to the convention center, which will be followed by continued design development for the center’s expansion and a hotel. The west side entrance demolition and the beginning of the tower construction are scheduled to start in spring 2010.
Groundbreakings for the convention center expansion, hotel and the parking structure are expected in summer 2010, with the hotel opening in summer 2012. The construction schedule intentionally waits until after the gem and mineral shows that are scheduled from February.
New KB president Ben Redman, new Arizona president for KB Home, said he believes the company is doing some great things in Tucson and is planning to take at least one of them back to Phoenix.
likes what he sees
“Before I rejoined KB I heard about the Open Series in the papers and the home building circles,” Redman said. “The first time I went down to Tucson and took a look at it, I was very pleasantly surprised. It is such an open feeling product when you walk in there. I think the company has done a great job of designing homes that really take advantage of space planning.”
Introduced in the Tucson market in April, the Open Series is a line of affordable, flexible and energy-efficient homes offering buyers a choice in design. Priced to compete with resale and foreclosures, they start at about $90,000.
“We are in the process right now of getting this series up into our new communities in Phoenix, similar to how we rolled them out in Tucson,” Redman said. “I am very happy to see that and I think our buyers have responded favorably, we’ve had a great response to those in Tucson.”
As for the general economy, Redman says his optimism is starting to grow but it’s far from a turnaround.
“It feels more positive than it did a year ago or so,” he said. “While the current resale and new home figures we are seeing now are encouraging the timing of recovery here remains uncertain for us like it does for most people.”
Canoa Ranch hurdlesA 1,200-home Canoa Ranch South project is running in to some issues that may delay it. After hearing a presentation, the Green Valley Community Coordinating Council expressed concerns about the project, arguing that only two points of access along the frontage road would congest the road and pose a danger to residents in the event of a brush fire or other emergency.
Also, Deputy Fire Marshal Mark Stonestreet of the Green Valley Fire District has also written to Pima County explaining that most homes in the proposed Canoa South development would have to be equipped with automatic sprinklers to adhere to fire code regulations because many of them rely on only one road within the development and any subdivision with more than 30 lots that has only one way in or out is required to have sprinklers.
According to a tentative plat, the development would have two entrances off the West Frontage Road and would link to other Canoa subdivisions by a 20-foot-wide golf cart/hiking path. The wash prevents construction of a connecting roadway unless a bridge is built, Roll said.
The plans were submitted to the Pima County Development Service Department in late August, and Roll hopes to get the plat approved by the county by December. The development will likely see construction begin on its first homes by 2012.
New MLK apartmentsThe steel frame is going up for the six-story Martin Luther King Apartment Building at Depot Plaza downtown.
The mixed-use project site at North Fifth Avenue and East Congress Street has been under development since July 2007, when the City and Rio Nuevo broke ground on the 285-stall subterranean parking garage that will serve as the building platform for the new apartments.
This 68-unit public housing building for seniors and persons with disabilities residents is a key milestone in the City’s third HOPE VI Project.
The 2004 City of Tucson HOPE VI Martin Luther King Revitalization Plan received $9.85 million in a national competition funded by the U.S. Department of Housing and Urban Development. An additional $60 million from other public and private sources is expected to be leveraged to complete all six phases of the Plan. This mixed-use, transit-oriented development will contain market rate and affordable housing, ground-floor retail, a public plaza, and streetscape improvements adjacent to the modern street car line on east Congress. The total project cost is $23 million.
This new MLK building replaces 68 of the 96 public units that were taken out of service when the (adjacent) old MLK building was sold to the private sector and converted into market rate apartments, now known as One North Fifth.
The new MLK Apartment building will be under construction for approximately one year. Residents will begin to occupy the building in late 2010. Nelsen Partners Architects and Lloyd Construction are the team hired to complete the new building with the City.
$3M YMCA renovation
The 40-year old eastside Ott Family YMCA, 401 S. Prudence Road, began a planned $3 million of renovation last week with a groundbreaking on Oct. 16.
This renovation includes a new look, 10,000 square feet of additional space, a gymnasium and cardio-pulmonary exercise and member gathering areas.
The project will also result in new accommodations for those with disabilities. The Ott YMCA is the first in a comprehensive plan to upgrade all YMCA facilities in metropolitan Tucson before the YMCA of Southern Arizona’s 100th anniversary in 2014.
Project architect Susan Schaefer Kliman of Klimatic Architecture went to the Ott Family YMCA as a youngster and now brings her son there.
The Ott YMCA will remain open during construction. Completion is planned for June 2010.
Long streamlines mortgagesLong Mortgage Company has introduced MyTransactionNow.com to help its associates wade through the changing laws regarding mortgage lending.
This secure, interactive website provides loan officers, real estate agents and their clients the ability to access their loan transactions around the clock.
“In today’s environment with increased government regulations it is very important to keep everyone updated on the progress of the loan. MyTransactionNow is the solution. This system keeps all parties informed on the major steps of the transaction,” said Lee Flenard, president of Long Mortgage Company.
MyTransactionNow.com helps to streamline the loan process by centralizing information about the status of loans. Clients and agents are notified instantly about the progress of their loan as it happens, reducing the need to call or e-mail to check loan or appraisal status.
New veterans home fundingThe funding sources are in place for a new long-term care veterans home to be located adjacent to the Southern Arizona VA Health Care System at 3601 S. Sixth Ave.
About 65 percent of the cost will be paid for with $18.5 million of federal stimulus money, with the remainder, $10 million, coming for the State of Arizona.
Planning for the facility has been underway for five years.
Work is scheduled to start on the facility in February. Its four, 30-bed, long-term-care units should open by September 2011.
Sales and leasesleased a 15,268 square foot of retail space at 4082 E. 22nd St. in Randolph Plaza Shopping Center from Arizona Partners Retail Investment Group. Goodwill intends to use the space as a donation and collection facility. David Blanchette of Bourn Partners LLC represented the tenant.
• Goodwill Industries
• Montano’s Communications Inc. leased 1,244 square feet of retail space at Buena Vista Plaza, at the southwest corner of Interstate 10 and Cortaro Road, Marana, from Vail Building Arts Associates Ltd. Nancy McClure of CB Richard Ellis represented the tenant. Dave Hammack of the Volk Company represented the landlord.
• CareMore Medical Enterprises leased 4,265 square feet located at 305 W. Irvington Road, from Liberty-Irvington LLC for a new medical facility. Rob Tomlinson with Picor Commercial Real Estate Services handled the transaction.
• C&S Communities LLC leased 789 square feet at 3444 N. Country Club Road, Suite 113, from 3438-3444 CC LLC. Thomas J. Nieman with Picor Commercial Real Estate Services handled the transaction.
• PrimaScript LLC leased 630 square feet at 1661 N. Swan Road, Suite 138 from DHS Property Investments. Rajan Lal with Picor Commercial Real Estate Services handled the transaction.
E-mail items for this column to jpangburn@azbiz.com. Real Estate and Construction appears weekly. Jaime Richardson of the Green Valley News contributed to this report.
Comments
Hector wrote on Oct 27, 2009 5:55 PM: