Market Analysis: Phoenix Real Estate Tour - YouTube

So today we're in Phoenix, it's about 105 but it's only the morning time, so I

think it's going to get up to 108. I'm with Tom Briney who covers the West for

Origin as well as Dave Welk who's flown in from his Charlotte office, and

obviously I came in from Chicago. Really excited about Phoenix; growing city

net added 40, 50,000 people last year (metro area) Lots of new jobs, they're laying new

train line you can see here. They've set up a temporary memorial for 9/11 since

it is 9/11 today, 17 years later. And so we're near downtown, really close to the airport.

You can see planes flying over probably five minutes from the airport at this

point. Arizona State University is a big driver here they've expanded to over 70,000

students and we're going to take a look at some projects both here but also in

the downtown core where they have 12,000 of their students now. Office and

multi-family, and then we're going to tour another multi-family later in the

day and potentially a recapitalization opportunity later.

(Tom) That's Sun Devil Stadium where Arizona State plays too right there...

(Dave) And that's us running a red light (Tom) that was yellow

(Dave) It was deep yellow. (Tom) Pull up the camera, we've got footage.

The northeast and the southwest of town are all surrounded by Native American

tribal lands which cannot be built on so although it looks like there's a

tremendous amount of land to build on you can't actually build on it. Unless

they ground lease it to you - they can't sell it, they'll ground lease.

Any development you see is going to be commercial of some kind because even

with a ground lease they're not allowed to build residential so you get resorts,

you get commercial, you'll get office buildings. This site that we're going up

to see right now is a ground lease site. We had a opportunity to build spec

office on it, again not resi, but numbers didn't pencil out but there's

now a value-add opportunity in the same micro pocket which I wasn't terribly

interested at first until I heard what they're projecting as returns, so we'll see.

(Dave) Tom I'm rolling up my sleeves. (Tom) I like it we're getting into it now

tomorrow I'm wearing short sleeves

There's not a lot to do here. There's not like a bunch of capital

to spend now so is it just you're buying a high cap rate you're trying to lease it up?

(Tom) Yeah and so right now you're in the mid-seventies percent occupied you're

not gonna put a ton of money into it you're gonna kind of work with what you

have here and lease it up to the low 90s. You know, what's consistent with the

rest of the park, and that's where you're generating your return is through

lease up and cash flow.

We are leaving Pima Center area right

now. We're headed to a project that's on the market right now

It's a multi-family deal that looks interesting. It's a light value add in a really high

demographic high barrier to entry location in McCormick Ranch.

So this is a multi-family we're touring in Phoenix today, originally it was built in 1980

What we like about this asset is if you look at the density

you've got office across the street, retail across the street, bars,

restaurants etc. This is in the high demographic of Phoenix Scottsdale and

you've got really close access to the highway, to Highway 101.

We just finished the tour. All in I would say this asset is extraordinarily well located

real barriers to entry meaning you can't build multifamily in this neighborhood

which is positive, but on the negative side I don't think this property is ever

going to truly hit the demand set which is a higher end consumer who wants

really nice stuff. I really feel like this property is sort of destined to

never achieve a high enough quality due to the limitations it has. So we're

going to go next door now to tour a competitive site that's 14 years newer

but my hunch is this site has the bones, the actual ceiling heights, walls,

amenities, even the exterior you can see with the Spanish tile roofs. Much more

interesting that we have on the other side here and when you drive up you're

going to feel visually much more that it's a home and a community than maybe

this one.

(Tom) We're not truly competing against these guys locationally competing, totally fine

with that, but in terms of trying to compete on a finish level and a feel

we need to be below that.

(Dave) So the 80s were all about racquetball courts

that never get used. The 90s were all about volleyball courts that never get used.

(Tom) Top Gun did that to us

(Tom) We're in the retail across the street from the subject property which is

substantially more extensive than we expected it to be when you just drive by

both in quality and quantity. (Dave) We talked a lot about where to eat and my question

was who serves the biggest dishes, I was told that this is buffet-style

huge. I haven't eaten in eight hours let's do this.

So we just wrapped up lunch Dave is finally satisfied again. We are headed

from central Scottsdale west over to North Phoenix, we're going to look at a

property that has potential recap opportunity meaning we're gonna take out

one partnership group and replace their position with new cash and continue a

renovation process, so we're gonna go check out now and see if the area is

something that we're interested in. (Dave) We're in North Phoenix now this is an example

of an asset that we're trying to purchase for eighty thousand eighty five thousand

dollars a unit the last multifamily we we're looking at was roughly two and a half

times that it was more like two hundred thousand a unit. We have a lot of

experience in this property type as well. We've done thousands of units in this

demographic. So what you try to do here is when you rehab the units you try to

do it in a value oriented way where you can

provide a clean safe place for the renter to live.

(Tom) We just came from the property in North Phoenix, we're on Central Boulevard now,

headed south towards downtown Phoenix. Central is kind of the dividing line

between east and west Phoenix, running north and south all the way from

downtown up to the north side of Phoenix. This deal is interesting for a couple of

reasons the first is the path of growth that it sits in right now. So as you

mentioned downtown which is having a huge revitalization from Arizona State

and some redevelopment sort of occurred down there and it's really moving up

central that we've just drove down because of the light rail and so we're

(Dave) The light rail is right here. (Tom) Light rail is right here, and you can see

as a result of the light rail you've got new construction multifamily right here

and new construction across the street. So you're really in the path of growth

right now. (Dave) We just finished our tour of the building. Big picture: we're four

blocks from downtown Phoenix. There's clear growth in this direction you can

actually see right across the street is the new multifamily rental just got

built the scaffolding still up. Right across the rail on the other side is

another product so clearly the city's growing this direction. This is a

35 year old building but we're also able to buy it at a good price and we see a

lot of problems that we've fixed in the past and we think we can probably fix

them here too. So we're going to roll up our sleeves on this deal. Tom is going to

take a hard look at the numbers and we'll get back to you if we make

progress on it. And now we're going to the Smoothie King

because this camper right here needs to eat five meals a day and I'm only on two.

Now we're gonna say goodbye from Phoenix and hopefully we shared a little bit

about what we do on the road