Daily Archives: August 4, 2009
[Source: Kellie Hwang, Arizona Republic] — On a typical blisteringly hot Friday afternoon in downtown Phoenix, most people are trying to escape from the workweek, heading to their air-conditioned cars and home for the weekend. But inside the seemingly abandoned brick building at 821 N. Third St., behind the windows covered with parchment paper, two young men are hard at work. Kyle Simone and Jeff Mann are putting together their store and gallery, Phoenicia Association, in time for a grand-opening party on August’s First Friday.
The shop will be split into two sections, one that sells young men’s clothing and the other that will house a gallery with monthly rotating artists. “We think downtown (Phoenix) is going to really see some growth in the next five to 10 years, and we really wanted to be a part of that,” Mann said. “There are a lot of things going on down here, with ASU and new businesses coming.”
Although many businesses are closing their doors in this slumping economy, Mann and Simone saw an opportunity. “We are privately funded and have been working on this idea for a long time,” Mann said. “We thought this would be a good time to catch the economy on an upswing. People look at us like we’re crazy, but we feel like we are in the right place at the right time to do this.” [Note: Read the full article at In downtown Phoenix, new Phoenicia Association mixes art, men’s fashions.]
[Source: J. Craig Anderson, Arizona Republic] — More than 2,000 commercial properties in Maricopa County have received 90-day foreclosure notices since Jan. 1, representing $6.3 billion in real-estate loans on which the borrowers have failed to make payments. That number is staggering when placed in contrast with the average commercial foreclosure rate over the past decade, which has been practically zero.
The problem, sparked by property-value declines and a paucity of refinancing options, has produced a steady flow of distressed commercial properties onto the market, with a heavy emphasis on small and midsize office and retail centers. Industrial and warehouse properties also have suffered tremendously, due in large part to disappearing jobs. More than 1 million square feet of previously occupied industrial and warehouse space was vacated in the second quarter.
Commercial-real-estate broker Bret Isbel has been tracking actual foreclosure sales in Maricopa County, which can take several months to occur following the issuance of a foreclosure or trustee’s sale notice. The number of notices issued has been holding steady at between 300 and 400 a month since January, but actual foreclosures vary more widely, because it can take months — potentially even years — for a property in default to be repossessed by the lender or sold to a third party. In Arizona, a lender can foreclose in either of two ways: It can take the borrower to court via foreclosure, or it can bypass the court system and call for a trustee’s sale, which is quicker and less expensive but requires the lender to waive certain legal rights.
Isbel said there’s no indication that the pace of commercial foreclosures is about to taper off. If anything, it’s still building momentum. “We’re at the tip of the iceberg, there’s no doubt,” said Isbel, of Scottsdale-based GPE Commercial Advisors. “It’s just a question of how big it is underneath.”
The inescapable problem for many commercial developers is that they’ve had to maintain the same construction loan payments while lowering rents because of dwindling demand for leased commercial space. While the federal government has created programs to help homeowners in danger of foreclosure negotiate lower mortgage payments, no such program exists for commercial-property owners, and none is expected.
By and large, commercial-mortgage lenders are not modifying commercial-real-estate loans, even as commercial-lease rates have plummeted as much as 75 percent in some areas. Isbel said county records show more than 50 commercial foreclosure sales in June, the most recent full month available, with a total mortgage value of about $54 million. Geographically, they’re all over the map, including the East Valley, West Valley, Scottsdale, and downtown Phoenix. [Note: Read the full article at Metro Phoenix commercial foreclosures rocket.]
[Source: Jan Buchholz, Phoenix Business Journal] — The Phoenix Suns and Arizona Diamondbacks ball clubs jointly have acquired the Jefferson Street Parking Garage from the city of Phoenix. A legal entity representing both major league teams is now operating the 1,456-space parking garage at 333 E. Jefferson St. The Phoenix Business Journal reported in April 2008 that the city council had approved a $20 million lease-purchase agreement with the teams after a year of negotiations.
It took another 15 months to close the deal, but according to the city’s interim Finance Director Jeff DeWitt, the added hold time benefited the city. “We wanted to hold it as long as possible to receive revenue,” DeWitt said.
The change of ownership officially took place July 31. DeWitt confirmed that the ball clubs paid $20 million for the garage. The city will need the $20 million to reimburse RED Development Co. for renovating and adding public parking at the site of the CityScape development at Jefferson Street and Central Avenue. But there are conditions to that payment, according to DeWitt.
RED must meet the terms of its agreement with the city, including receiving a certificate of occupancy from the city certifying that its underground parking area is fully completed. DeWitt said officials at RED have projected a completion in early 2010. In the meantime, the city will earn interest on the $20 million, he said. [Note: Read the full article at Suns, Diamondbacks acquire downtown Phoenix garage.]
[Source: Chris Casacchia, Phoenix Business Journal] — KTVK-TV Channel 3 is devoting much more coverage to local crimes on the air and on its Web site as it tries to strengthen market share and move toward harder news angles. That strategy comes on the heels of a partneship extended by its parent, Belo Corp., and Baltimore-based SpotCrime, a data and news gatherer that maps crime around the world. “With our information, citizens’ awareness of their surroundings will increase, and subsequently they will be able to make safer decisions,” said SpotCrime founder and President Colin Drane.
Belo stations in Charlotte, N.C., and Dallas-Fort Worth already use the company’s crime data. SpotCrime works with more than 50 media companies across the country to make such information more readily available. [Note: Read the full article at KTVK parent Belo partners with SpotCrime for metro Phoenix coverage.]