In the News—Week of December 27, 2022
Deal of the Week
A Texas-based real estate investment firm recently sold a Maricopa County property to another, Texas-based development firm for $12+ million for future development. Bryan Selna, Vice President and Senior Escrow Officer, in our Scottsdale office added this closing to the list of successful transactions with this exceptional client.
House from ‘A Christmas Story’ up for sale — unless you are Grover Dill
It is Christmas time and this year for the holidays, Ralphie Parker’s house was put up for sale. Fans of the 1983 movie “A Christmas Story” know that the story was set in the 1940s in Northwest Indiana. Super fans know the movie was shot in Toronto and in the Tremont neighborhood of Cleveland. One of those super fans was Brian Jones, who in the 2000s bought the house that was used as Ralphie’s home in the movie and another structure across the street. Jones restored Ralphie’s cinematic residence and opened a museum across the street. The restoration cost about $250,000. Jones decided to put the Parker residence up for sale in November, Cleveland.com reports. Jones has not listed a price and says he wants to find the right person to buy the property. Who is the right person? Well, we don’t know that. But we know who is not. Shortly after the news broke that the Parker home was on the market, TMZ reported that Yano Anaya, who played Grover Dill, a character who helped Scott Farkus torment Ralphie, and other cast members, wanted to buy the property. Jones adamantly denied the report, and a video surfaced of Jones cursing out Anaya.
Conversions to apartments have taken off in the past two years
There has been a 25% increase in apartment conversions from office buildings and other uses in the past two years, Rent Cafe reports. There were 28,000 new rentals created through adaptive reuse in 2020-2021, compared to the 22,300 apartments in 2018-2019. The cities of Washington, D.C., Philadelphia and Chicago saw particularly high levels of adaptive reuse, accounting for 15% of total apartment conversions nationwide. “The residential market needs significantly more density in the areas of the largest cities, where the demand is greatest and where the tallest office buildings are located,” says Doug Ressler, manager of business intelligence at Yardi Matrix. “Existing building architecture is the critical starting point. Not all buildings are equally threatened by the work-from-home revolution. Larger office buildings in abandoned central business districts are better suited to conversion than the often-smaller office complexes distributed around the suburbs.”
San Francisco’s downtown is largely empty, and its recovery is in doubt
The mutually beneficial relationship between high-tech companies and restaurants, coffee shops and other small businesses in downtown San Francisco has withered, The New York Times reports. “This area was always packed with people,” recalled Maria Cerros-Mercado, a manager at Mixt, a salad store near Yelp’s headquarters. “People would get off the BART, buy coffee, buy this, buy that. There was always just so much walking.” When the pandemic hit, big tech companies switched to a work-from-home model, and workers and companies seem to be continuing with that arrangement. The venerable newspaper says San Francisco may have the emptiest downtown in the country with few signs of a comeback.
Tempe board gives OK for plans to build warehouses on Big Surf
A city of Tempe panel approved plans for the redevelopment of pioneering water park Big Surf, 12News reports. Overton Moore Properties plans to build three warehouses — with a total of 600,000 square feet — on the Big Surf property, which the Development Review Commission approved. Big Surf first opened in the late 1960s and remained in operation for the next five decades. The park introduced wave-making technology, which is now common in the industry. Big Surf closed during the pandemic, and the property was sold to Overton Moore, which the demolished park.
What’s ahead? Commercial real estate trends in the Valley of the Sun for 2023
Rent growth for apartments is likely to continue to slow, retail has rebounded, and self-storage and industrial remains strong as we enter a new year, AZ Big Media reports. An influx of residents drove up multifamily rent over the past three years. But more units are coming on the market. Apartment rents were 27% higher year-over-year at the beginning of 2022. They have slowed to 12% and will probably slow further as more units come online. Phoenix’s retail sector has recovered quickly from the impact of COVID-19. Smaller retailers have performed well, and rents have increased at a rate above the national average. Industrial is expected to continue to perform well for investors. Buyers and tenants have had to pay top dollar for industrial properties. Rent has grown 16.5% annually, and the average price in metro area rose 195 increase year-over-year to per square foot of $168. Shortages of labor and materials have pinched construction. Land regulations have slowed growth near Scottsdale Airpark and other areas in high demand. Self-storage has seen strong growth nationally, particularly in the Phoenix area. All those renters who moved in needed a place to put their stuff. Expect that trend to continue awhile longer.
Energy and Efficiency
Seattle developer secures financing to construct mass-timber office building
A developer has secured $109 million in financing to build the first phase of a mass-timber project that the company touts will be one of the most energy-efficient office buildings in Seattle, Commercial Search reports. Developer evolution Project’s plans for 35 Stone, a preleased office development, call for 112,700 square feet of office space and 7,500 square feet of retail. The building is expected to cut reduce energy usage by at least 25%.