Categories Narrative

Metropolitan Phoenix Housing Market at a Glance

Job growth has muddled along nationwide. Housing has been even slower. But there are bright spots and Arizona is in the mix. Below are two different graphics, one on job creation and the other on the healthiest housing markets. I will be sending a specific Metro Phoenix housing narrative in the next week or two, but for now take a look at this:

–Top job growth—Florida with 4 of the top 5 markets (Texas has dropped off with the oil slump). Here is an update on the Arizona job recovery:

    Arizona employment recovery struggle

  • Peak employment – October 2007 – 2,686,300 employed
  • Lowest employment – September 2010 – 2,372,800 employed
  • Current employment – September 2015 – 2,633,200 employed

    Source: Arizona Department of Administration

–Metro Phoenix has 8 of the top 50 healthiest housing markets. This is not new housing rather houses under water, days on the market, etc. In terms of new housing, Metro Phoenix is way off historical averages.

All this leads us to one of the key reasons why our rebound out of the Great Recession has been so slow. We normally see job growth and housing markets at the top of the charts (not 8th). This recovery has happened without much benefit from the homebuilders.

If you want to talk about who is fueling this recovery cycle, give me a call.



P.S. Last week, my partner, Andrew Cheney, sent out some pictures from his Tour of Mont Blanc hike he did this past summer. He sent them out to just a few local clients and friends, however, he got such good feedback I thought I would include them along with this week’s narrative. Enjoy.   

Pages from Mont Blanc July 2015 Slideshow-emailClick here for photos

Graphic: The 10 Best And Worst Cities For Job Growth

By: Kurt Badenhausen
Forbes_logo.svg 2
JUL 29, 2015

Housing Market_Job Growth (2) 2

For the full article, please click here.

8 Phoenix-area cities hit top 50 healthiest US housing markets

By: Eric Jay Toll
August 25, 2015

Phx Housing Mrkt_PHX BIZ JOU


Valley cities scored in the top 50 among healthiest U.S. housing markets.

Eight Arizona cities are rising in the ranks of healthiest housing markets in the U.S., according to a WalletHub study. They all landed in the top 50 healthiest U.S. housing markets for comparably sized cities based on population.

Gilbert, a midsize city, ranked the highest of the Arizona cities at No. 11. Chandler was next at No. 22 and Tempe ranked No. 28 in the midsize cities. Among large U.S. cities Mesa ranked No. 40 and Phoenix was No. 46.

The website consolidated rankings in 14 criteria, including pricing, percent of homes still under water, days on market, affordability, and other measures to determine the healthiest markets in the U.S.

Texas topped the healthiest markets list with No. 1 positions for Austin (large), Plano (midsize) and Frisco (small).

Other Western markets ranked high as well. Seattle (No. 2, large) and Denver (No. 3, large) ranked higher than all Arizona cities. Salt Lake City (No. 21, midsize), trailed Gilbert, but was just one ranking ahead of Chandler.

Rank of Arizona cities among healthiest U.S. residential real estate markets

  • 11 Midsize – Gilbert
  • 22 Midsize – Chandler
  • 28 Midsize – Tempe
  • 35 Midsize – Peoria
  • 36 Midsize – Scottsdale
  • 40 Large – Mesa
  • 46 Large – Phoenix
  • 49 Large – Tucson
  • 55 Midsize – Glendale
  • 88 Small – Surprise
  • 123 Small – Yuma

Source: WalletHub

Categories Narrative

33 more rules for your family’s Thanksgiving touch football game

Fifty-one weeks a year this narrative is informational, commercial real estate focused and, we think, the best in our field.  Not this week.  Once again we bring you Jason Gay’s Rules for Thanksgiving touch football.  Yay!
For me:
–#5–A bit of pregame stretching. Puts down the box of blueberry muffins, stands up.  Ok that’s good enough.
–#16–You were not wide open.
–#22–The special play drawn up by a big time coach.  This year it’s Mike Leach, mad scientist coach for the Washington State Cougars.
On a serious note, thank you for reading this each week, sending articles to me that are interesting to you and most important sending new people to join our readership.  Have a great Thanksgiving.



33 More Rules for Thanksgiving Touch Football

This year’s edition features lame Deflategate jokes, e-cigarette breaks and a play designed by Washington State’s Mike Leach

By: Jason Gay
Updated Nov. 22, 2015

This is the fifth edition of the Journal’s Rules for Thanksgiving Family Touch Football. I bet you think that one of these days, readers will get sick of it, and I will stop. No way. Your Aunt Evelyn has been bringing her Mars Bar cheesy turnip lasagna to Thanksgiving for 52 years, and the family stopped asking her to bring it 51 years ago.
I’m never stopping!

Life does change, however. When I wrote my first Touch Football Rules, I had no children. Now my wife and I have a rambunctious toddler as well as a 10 month old. The toddler wants to run 700 yards in any direction, like a loose pony at a birthday party, or Rob Gronkowski. The 10 month old is on the verge of walking. It’s adorable. She resembles a Jets fan wobbling from the stadium to the party bus.

Yes: I think my kids are game ready. Yes: I think they’ll both start on Thursday.

As for the rest of you, you’re all playing. I don’t want to hear any nonsense about tight hamstrings or Dad’s recent quintuple bypass. No excuses. You’re playing, and you’re playing the whole game. You, too, Peyton Manning.

Here we go:

1. It goes without saying, but this year’s Thanksgiving family touch football game is brought to you by your close family friends at DraftKings and FanDuel.

2. The game begins whenever the host says it begins. Before you start, the host wants you to first set the table. Geez, where are you putting that spoon? Have you ever set a table in your life?

3. No, the napkin doesn’t go there. What is the matter with you?

4. In the morning, there will be some chatter from the fresh-faced younger cousins about running the local Turkey Trot 5K as a warm-up to the family touch football game. Wish them all good luck as you dig into the first of six blueberry muffins.

5. However, you probably should do a little bit of pre-game stretching. Puts down box of blueberry muffins, stands up. OK that’s good enough on the stretching.

6. Hey, remember during last year’s Thanksgiving family touch football game, when dad said it was OK if the game dug up the front lawn, because it would “grow back”? It didn’t grow back.

7. Kids Table is always a three-touchdown favorite over Adults Table. They have more energy, and less bourbon.

8. If you have a lot of children in your family, it’s very exciting to make mom stand there in the yard and choose a side, though it probably means half of you will end up in therapy.

9. Eh, who is kidding whom, half of you are already in therapy.

10. Wait: grandma bought a pair of those sticky wide receiver gloves? This family touch football game is getting a little out of hand.

11. Everyone who handles the football will squeeze it and make at least one lame-o Deflategate joke.

12. Said this many times before, but there are really only two plays in family Thanksgiving touch football: GO DEEP, and GO SHORT. Be careful who you send deep. If you have had a double hip-replacement in the past year, consider going short.

13. Your beloved great-grandpa wants to go deep? Fine. But just to be safe, Google Maps the route to the hospital first. Maybe start the car, too.

14. Please put your phones away during the game. It’s Thanksgiving. Nobody’s calling. Nobody’s emailing. The only thing happening on Facebook is your uncle posted some dumb article about the Rules of Thanksgiving Family Touch Football.

15. You know what everybody loves? When you come back to the huddle and yell at the quarterback that you were “wide open.”

16. You were not wide open.

17. When your brother says he wants to “go inside and check on the bird,” he means “smoke an e-cigarette behind the garage.”

18. Great. Now you’re missing three players who are “checking on the bird.” That might not be an e-cigarette.

19. There are two people in your Thanksgiving who are skipping the Thanksgiving family touch football game to quietly play 18 holes. They are not regretting their choice.

20. Fine, if you really want to punt, you can punt. (Football gets stuck in the gutter.) OK, now what, Ray Guy.

21. I know I said touch football really only has two plays, but this Thanksgiving we have a specially-designed play from Mike Leach, head coach of the Washington State Cougars. Yes: mad scientist Mike Leach actually designed us a Thanksgiving touch football play. It even has an awesome name: “Red Cougar Special.” 
Football VR picture    Football Picture 1 4
Football Picture 2 4    Football Picture 3 3
Football Picture 4 3 


·         Option 1: Looking first to get one-on-one coverage to the single receiver on the left, who is running a hitch and go.

·         Option 2: If it’s not one-on-one coverage, then look for the inside receiver on the right running a corner route to the flag.

·         Option 3: The third read is the outside receiver on the right who is running a slant route over the middle.
·         Option 4: If all else fails, make sure the quarterback is the best athlete and he can run the ball if nobody is open.

​Mike Leach, head coach of the Washington State Cougars PHOTO: STEVE DYKES/GETTY IMAGES

22. Don’t ask me if your family can pull off “Red Cougar Special.” I can barely get my family in the car.

23. There will be a super cute moment when somebody hands the football to a two-year-old and lets him or her run around the field while everyone takes videos and pretends to miss tackles. Look, that sweet kid is running right for the end zone…whoa, whoa, whoa, we have a tie game here, somebody tackle that toddler.

24. Wait isn’t it a little early for Thanksgiving sangria? OK fine. Dang, that is good.

25. In the past, I’ve suggested using jackets and flower pots for end zone markers. This year, how about using four copies of “Little Victories: Perfect Rules for Imperfect Living” by Jason Gay, now available at fine booksellers everywhere? And you’ll probably need 75 more copies to give as Christmas gifts.

26. Was that shameless? Definitely. Look: I’ve evaluated my genes, and I’m pretty certain my kids won’t be getting football scholarships to pre-kindergarten.

27. Halftime injury report: Dad (calf strain, return probable); cousin Tim (ambivalence, return doubtful); Aunt Sarah (ran out of sangria, asleep).

28. During halftime it’s fun to debate who would be on the roster of your family’s All-Time Family Thanksgiving Touch Football Game. There’s your Cousin Alice, a superb athlete who played Div. I soccer in college. Then there’s your great-great-grand-uncle Marvin, a wily fella who sold pocket combs and moonshine and may have spent a year in a Tennessee prison.

29. Are there two or more dogs at your Thanksgiving? Hate to break this to you, but right now they are in the kitchen eating the turkey off the floor.

30. On the plus side, this is the greatest day in your dogs’ lives.

31. The most fun thing to scream at Thanksgiving is “Fumble!” The second most-fun thing to scream is “I don’t care what any of you think! We’re in love and we’re getting married!”

32. Remember: the ground cannot cause a fumble, and your family cannot guilt trip you into staying until Sunday.

33. No arguing about the 2016 Presidential field. That’s what Thanksgiving dinner is for. Wear a helmet!


Categories Narrative

Is an LLC the Right Choice for my Commercial Real Estate Investment?

When I first got into commercial real estate, the Limited Liability Corporation (LLC) had just been created. It didn’t have any case history or track record.  With that in mind, I thought I would do a quick review to make sure the LLC is still the right structure for most real estate investments.  Turns out, it still is for the following reasons:
–The biggest reason is limited liability for the members.
–You can pass through taxation directly to the members.
–It remains pretty easy to form an LLC.
I find these kinds of confirmations nice because the rest of my business is getting disrupted daily.  If you want to know how, give me a call.


P.S. Valley of the Sun United Way moved for the first time in 57 years.  We are proud they selected us to represent them.

Pages from ValleyoftheSunUnitedWay-PostCard-WEBFor a one minute case study, please click here.

Is an LLC the Right Choice for my Commercial Real Estate Investment?

By: Phil Jemmett
Date: January 23, 2014

Protecting personal assets is often a matter of great concern for new commercial real estate investors. When forming an entity, more real property investors are now using limited liability companies (LLCs) to protect their personal assets. The LLC is a newer form of business entity and it has benefits that corporations and partnerships lack.

Limited Liability
“One major advantage of an LLC over a partnership is that the liability of the members of an LLC can be limited to their financial investment,” said Jack Rose, Chief Strategist at Breakwater Equity Partners. “So if the worst happens, the most the owners can lose are the assets being held by the LLC.” In some partnerships, an owner’s personal assets or properties might not be protected. When a lawsuit or a bankruptcy or foreclosure arises, the owner’s personal property could be at risk.

If your commercial real estate portfolio includes a new retail development in Phoenix, a multifamily property in Cincinnati, or an office complex in Cleveland, most consultants will recommend holding each of the properties in a separate LLC. Holding each property in its own LLC limits your liability to that specific investment and this will help you to implement a diversification strategy. For example, if someone chooses to sue you because he or she slipped and fell at your Cincinnati property, the liability ends with your LLC for the Cincinnati property. Your other investments and personal assets are protected because they are held in different LLCs. If each property is held by a separate LLC, then the lawsuit at the Cincinnati property will leave the other properties in your portfolio unencumbered. You are free to refinance or restructure your other properties and can take whatever actions are necessary to maximize the return on your portfolio.

Pass-through Taxation
Unlike some corporations, LLCs provide “pass-through” taxation. Basically, an LLC member is not required to pay taxes at the business level. The “pass-through” taxation allows the LLC member to report the company’s profits or losses on individual tax returns at a lower rate. Corporation owners, on the other hand, face a double tax – on their business income and their personal income tax statements.

Key Features 
Forming and maintaining an LLC is simpler and faster than forming and maintaining a corporation, according to the State of California Franchise Tax Board. LLCs do not issue stock and are not required to hold annual meetings or keep written minutes; however, a corporation must complete those tasks in order to preserve the liability shields for its owners. In general, all the owners (members) are shielded from individual liability for debts and obligations in a LLC. In a corporation, an owner or board member may become liable for events that occur within the organization.

Management Structure
The LLC management structure has fewer restrictions than a corporation. LLCs can be established in any organizational structure agreed upon by the company owners. LLCs can be managed by owners, members, or managers, while corporations must have a board of directors that oversees the major business decisions of the company and officers who manage the day-to-day affairs. An LLC can be owned by individuals or business entities, and can be managed by its owning members or a member-appointed manager.

Who can form an LLC?
In the past, LLCs were generally used by hedge funds, entrepreneurial ventures, and real estate developers, but now LLCs are becoming the primary choice for all types and sizes of businesses. Anyone with significant assets, capital, inventory, or service offering can benefit financially from an LLCs. Many business professionals are savvy enough to create an LLC on their own. The articles of organization, including the name and registered agent, and the operating agreement simply have to be filed with the state in which the LLC is created. However, complications can arise when creating an LLC. Many commercial real estate investors seek out professional help for the creation of their LLC entity and assistance can be found at most commercial real estate advisory firms.

Categories Narrative

Post China 16

Below is a infographic on the Post China 16 (PC 16) that fascinated me.  I know that China’s maturation has jumpstarted manufacturing growth in other countries.  What I didn’t realize is the sheer number of countries affected.  See below to grasp the number and diversity.
These countries include:
–All of Indonesia
–Cambodia and Vietnam
–Eastern Africa
Finally, some good news for those of us living in Arizona – Mexico is on the list.  In a future narrative, I will talk about the Maquiladora program. Having Mexico increase their world prominence in manufacturing would be great for Arizona and the United States for all kinds of reasons.


Post China 16 3

Source: Bill Koenig, Of Interest Today

Click here to view image larger.

To see the full report conducted by Stratfor, please click here.

Categories Narrative

Q3 2015 Phoenix Market Office Report

2015 is shaping up to be a lot like 2014 for the Metro Phoenix Office market: i.e. the continuation of the long, steady, climb out of the Great Recession. 
Below is a link to our 3rd Quarter Phoenix Office Market Report and here is a brief summary:
The overall market had a great quarter, absorbing nearly 850,000 SF of office space.  This helped make up for the lackluster first half of the year that posted just 649,000 SF of net absorption. We are on pace to hit just over 2 million SF, which would match our 25-year average. Vacancy still stands at a stubborn 20.2%.  There is now 2 million square feet of speculative office development (4.2 million SF of total development including State Farm’s campus) under construction which will keep vacancy hovering around the 20% range.  However, speculative office projects have been leasing up quite well (e.g. Hayden Ferry Lakeside III, SkySong 3 and now 4 & Liberty Center).  New construction may not add substantial additional vacancy as anticipated.
Here are my three takeaways depending on your place in the market:
1)  If you’re a tenant – The market is gradually tightening but there are still opportunities for meaningful concessions and economical lease rates.  The closer you are to ASU (i.e. Tempe and South Scottsdale) the lower the vacancy rates are and the more you’ll pay in rent to be near the action.  True Class A properties are now achieving landmark rents despite the vacancy rates.  Expect to pay more if you want the best.
2)  If you’re a landlord – There is some wind at your back and significant tenants in the market.  Well located, quality buildings with walkable amenities are attracting the most tenants.  Suburban and Class B buildings still have to compete hard for tenants, BUT there are more to fight over if we can continue to grow.
3)  If you’re an investor – Class A asset pricing continues to get bid up, but so are rental rates.  Class B rates and values are all over the board depending on the submarket.  There are still opportunities in each asset class.  Phoenix’s long term economic future remains bright.
I look forward to finishing the year strong with more office users growing their businesses.  Please call me to discuss the market in greater detail or help you with your next office transaction.


Click Here for the Q3 2015 Phoenix Market Report 

Pages from 2015 Q3 Office Report