PROPERTY, GROWTH AND LOCATION
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Mohr Capital Develops Industrial Project in Surprise Mohr Capital, a Dallas-based privately held real estate investment firm, acquired 46.26 acres in one of Arizona’s fastest-growing cities to develop a Class A industrial business park in the West Valley. Breaking ground this month and slated for completion next summer, Summit Business Park will offer a combined space of
Photos courtesy of Private Label International (left), Ware Malcomb, IndiCap (right, top to bottom)
Speed-to-Market Design
High demand for rental units has contributed to the most stable supply-and-demand condition for any property type for the past several years. Multifamily properties are underbuilt and in high demand, and rental rates have increased in double-digit percentages based on that demand. Under these circumstances, we’ve seen a larger emphasis placed on speed-to-market design. Speed-to-market, in terms of design and construction, can refer to multiple scenarios. In this instance, we’re mainly referring to speed-to-market in terms of existing assets that are long-term holds. The properties have the goal of current cash flow, but also a focus on appreciation of returns over the next five to ten years. Under past market conditions, we saw more short-term holds than we are seeing now. With an increase in long-term holds, we also see an increasing need for capital improvements, either to keep a luxury rental property relevant to the large influx of new builds or to reposition an asset to allow it to be competitive. We offer a deliverable to our clients that are wanting to do just that. We refer to it as a Property Positioning Plan that assesses the property holistically, strategically lays out priorities for improvement based on the current market and the targeted demographic, and applies aesthetic and program trends to the property at hand. This plan has been used in conjunction with a developer or property manager’s business plan to finalize yearly budgets and determine the areas of attention for the most promising return on investment. The speed-to-market aspect comes into play when we address the property from the standpoint of quick updates with the most impact. By assessing the property as a whole, developers can prioritize funds based on market conditions and what will appeal the most to their prospective resident base. One thing to consider when making these decisions is the difference between capital improvements and perceived capital improvements. For example, we had a project several years back that we were repositioning and the client was holding a large budget number to completely replace the parking awnings. They were in good condition and mainly needed only new paint and signage. When we talked to them about prioritizing those funds somewhere else, it ended up making sense because the residents would not see that upgrade as an actual upgrade. When residents perceive it as an upgrade, they are willing to pay more in rent and it’s a higher return on investment. Not all improvements will do that. If there is a choice, it’s always beneficial to lean toward resident needs and wants to gain a higher return. We’ve also found that when it comes to residents, aesthetic holds a lot of weight and new furniture and finishes can have a huge impact. —Christina Johnson, the creative director of Phoenix- and San Francisco-based Private Label International (privatelabelintl.com), a full-service interior design studio that develops hospitality environments and lifestyle brand experiences for clients worldwide
704,472 square feet of leasable industrial space with 453,960 square feet in Building 1 and 250,512 square feet in Building 2. These state-of-the-art buildings will be ideal for distribution, manufacturing and logistics companies throughout the Southwest with capabilities to serve numerous large urban areas located within a one- or two-day delivery zone. mohrcap.com
New North Scottsdale Luxury Community from Camelot Homes Camelot Homes continues to expand its presence in North Scottsdale with the recent purchase of 77.5 acres, located east of the northeast corner of Lone Mountain Parkway and East Joy Ranch Road in Scottsdale. The family-owned luxury homebuilder plans to break ground on the new 52-home community called Joy Ranch in Q2 2023, offering floor plans from 4,500 to 6,500 square feet, with 4–6 bedrooms and 4.5–6.5 baths. camelothomes.com
IndiCap Bringing 110-Acre Industrial Park to Glendale Boutique commercial real estate company IndiCap continues its formidable Metro Phoenix industrial development push with Virgin Industrial Park, which it will develop in partnership with Invesco. Located on the northwest corner of Olive and Reems roads in Glendale, Arizona, within the nationally recognized Loop 303 industrial corridor, the two-phase, 110-acre Class A development will total more than 1.5 million square feet in five buildings at build-out. Construction on Phase I of Virgin Industrial Park begins November 2022, with completion expected by December 2023. Completion of Phase II is anticipated by Q1 2024. indicapinc.com
We are in a rather unique time for multifamily real estate. The high costs of materials and shipping, as well as supply delays make building from the ground up riskier than it would be under more predictable conditions. Current investment rates, cap rate compression and inflation also are key factors in assessing the risk level for multifamily investors.
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AUG. 2022
INBUSINESSPHX.COM
