INVESTMENT OPPORTUNITY
RAINTREE CORPORATE CENTER BUILDING I8980 East Raintree Drive Scottsdale, AZ
A premier multi-tenant office investment situated within the in the Scottsdale Airpark, the second largest employment center in Arizona
2 / 8980 East Raintree
ERIC WICHTERMAN Executive Managing Director +1 602 224 4471 [email protected]
MIKE COOVER Managing Director +1 602 224 4473 [email protected]
CAPITAL MARKETS
INVESTMENT
CONTACTS
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01 OFFERING SUMMARY 04
02 EXECUTIVE SUMMARY 8
03 PROPERTY OVERVIEW 18
04 AREA OVERVIEW 26
05 MARKET INFORMATION 42
06 FINANCIAL ANALYSIS 50
TABLE OF
CONTENTS
4 / 8980 East Raintree
OFFERING
SUMMARY01
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6 / 8980 East Raintree
THE
OFFERINGPROPERTY OVERVIEW
Single-story freestanding office building in north Scottsdale.
Prominently situated along 90th Street, just north of Raintree Drive.
Parking is provided at a ratio of ±4 spaces per 1,000 square feet.
Attractive modern curb appeal.
Constructed in 1999 using decorative masonry block with steel accents.
Ideally designed to accommodate small sized tenants that dominate the
market.
LINCOLN DRIVE
INDIAN BEND ROAD
CHAPARRAL ROADCAMELBACK ROAD
INDIAN SCHOOL ROAD
MCDOWELL ROAD
RIO SALADO PARKWAY
PIMA
ROA
D
HAYD
EN R
OAD
SCOT
TSDA
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68TH
STRE
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44TH
STRE
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STRE
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7TH
STRE
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CENT
RAL A
VENU
E
7TH
AVEN
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27TH
AVE
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43RD
AVE
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51ST
AVE
NUE
48TH
STRE
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VIA DE VENTURA
DOUBLETREE RANCH ROAD
SHEA BOULEVARD
CACTUS ROAD
THUNDERBIRD ROAD
GREENWAY ROAD
BELL ROAD
FRANK LLOYD WRIGHT BOULEVA RD
MAYO BOULEVARD
56TH
STRE
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TATU
M BO
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40TH
STRE
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32ND
STRE
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CAVE
CREE
K RO
ADUNION HILLS DRIVE
DEER VALLEY ROAD
PINNACLE PEAK ROAD
HAPPY VALLEY ROAD
GREENWAY ROAD
CACTUS ROAD
THUNDERBIRD ROAD
PEORIA AVENUE
OLIVE AVENUE
NORTHERN AVENUE
PINNACLE PEAK ROAD
HAPPY VALLEY ROAD
JOMAX ROAD
THOMAS ROAD
PARADISEVALLEY
SCOTTSDALE
PEORIA
GLENDALE
PHOENIX
SALT RIVER PIMA MARICOPA INDIAN
COMMUNITY
D O W N TO W NP H O E N I X
M I DTO W NP H O E N I X
D O W N TO W NS COT T S D A L E
D E S E R T R I D G E
D E E R VA L L E Y
PHOENIX SKY HARBORINTERNATIONAL AIRPORT
PHOENIX DEER VALLEY MUNICIPAL AIRPORT
SCOTTSDALEAIRPORT
YEAR BUILT 1999 PARKING RATIO
WITHIN COMPLEX
±4:1,000
NET RENTABLE AREA
±7,561SQUARE FEET
Raintree Corporate Center Building I8980 East Raintree Drive in Scottsdale Arizona 85260
OCCUPANCY 100%
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LOCATION AND AMENITIES
Located within north Scottsdale’s prestigious Scottsdale Airpark submarket,
the second largest employment center in Arizona.
Thriving upscale nearby retail amenities with Kierland Commons, Scottsdale
Quarter, Scottsdale Promenade and Scottsdale Towne Center all located
within a five minute drive.
Immediate trade area houses many of the Valley’s finest apartment and
condominium properties, as well as affluent residential neighborhoods such
as Silverleaf, DC Ranch, McDowell Mountain Ranch, Troon and Estancia.
Excellent freeway access provided by the Loop 101, approximately one-half
mile west of the Property.
Scottsdale Municipal Airport lies approximately one mile west and is
the highest profile private airport in the Valley for private and corporate
clientele.
INVESTMENT HIGHLIGHTS
Rare opportunity to acquire a superbly constructed and highly attractive
multi-tenant office building located in the heart of one of the foremost office
locations in Arizona.
The combination of this prime location, with a close proximity substantial
nearby retail amenities; and coupled with its first class status as a business
address, provide long term investment viability.
Situated in the Scottsdale Airpark, which ranks third out of 22 Valley
submarkets with respect to office net absorption since 2013.
Superb access to a high-quality Scottsdale labor pool, nationally known for
its dense, upscale and highly-educated population.
IN-PLACE CAP RATE
±7%
PRICE
$1,600,000
Situated in the Scottsdale Airpark, which ranks third out of 22 Valley submarkets with respect to office net absorption since 2013.
8 / 8980 East Raintree
EXECUTIVE
SUMMARY02
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10 / 8980 East Raintree
EXECUTIVE
SUMMARY
THE PROPERTY
• 100% occupied Multi-tenant office
property located within the Raintree
Corporate Center, in north Scottsdale.
• Modern architecture and curb appeal.
• Configured for multi-tenant use,
functional and efficient floor plans
accommodate small tenants.
• ±7,561 SF constructed in 1999.
• Masonry construction.
THE SITE
• Prime location within the prestigious
Scottsdale Airpark.
• Located along 90th Street just north of
Raintree Drive.
• Breathtaking views of adjacent McDowell
Mountain Park and Preserve.
• A total of eight (8) covered reserved parking spaces, P185 -P192 are allocated to the Property. Surface parking is first come first served with a total advertised
complex ratio of 4:1,000 square feet.
• Excellent freeway access with the Loop
101 Freeway lying approximately one-half
mile to the west.
INVESTMENT HIGHLIGHTS
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UNPARALLELED RETAIL AMENITIES SURROUND THE PROPERTY
• With respect to premier retail destinations, Kierland Commons, The
Scottsdale Quarter, The Promenade, Sonora Village and Scottsdale
Towne Center comprise the bulk of surrounding retail amenities.
• Dozens of popular restaurant concepts surround the Scottsdale Airpark
Corporate Center including: True Food, Zinburger, Mastro’s Ocean Club,
Dominick’s Steakhouse, P.F. Chang’s, Cheesecake Factory, Sol Mexican
Cocina, O.H.S.O., Wildflower, Panera Bread, Pei-Wei and Shake Shack.
• Large scale retailers such as Best Buy, Target, Kohl’s, Costco, Ross,
T.J. Maxx, Home Depot, Staples and Walmart Supercenter are in the
immediate vicinity.
• Kierland Commons is a true destination location for retail amenities,
housing upscale retailers such as Victoria’s Secret, Crate & Barrel,
Anthropology, Sur La Table and Michael Kors.
• Notable tenants of Scottsdale Quarter include: an Apple Store, Nike,
Restoration Hardware, West Elm, Pottery Barn, True Food and H&M.
12 / 8980 East Raintree
EXECUTIVE
SUMMARY
SCOTTSDALE AIRPORT
• Scottsdale Municipal Airport lies less
than one-mile east of the Property and is
undergoing a $27M renovation.
• One of the busiest single-runway
facilities in the country with more than
615 general aviation flights a day.
• Approximately 450 private aircraft are
based at Scottsdale Airport.
• Scottsdale Airport is considered the
premier airport in the Valley in terms of
prestige amongst private and corporate
clientele.
SCOTTSDALE AIRPARK SUBMARKET
• The Scottsdale Airpark is one of the
premier office submarkets in the Valley
with respect to affluence, amenities and
employment.
• With over 17.4 million SF of office and
industrial space the Scottsdale Airpark is
the second largest employment pool in
the greater Phoenix area.
• North Scottsdale businesses range
from Fortune 500 companies to sole
proprietors and represent over 80
different business categories.
Scottsdale Airport is considered the premier airport in the Valley in terms of prestige amongst private and corporate clientele.
• Major employers include ST
Microelectronics, Eide Bailly, PayPal,
Prudential Insurance, Vanguard, Mass
Mutual, Pulte Homes and Thompson
Reuters, GoDaddy, Allied Waste, Liberty
Mutual, Taser International and Discount
Tire Company.
• The average office asking rates in the
Scottsdale Airpark submarket grew by
over 6% over the past three years—a
firm indication of the intense demand
office users have for the area.
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Major corporations are located in the Scottsdale Airpark include: Pay Pal, Prudential Insurance, Vanguard, Mass Mutual, Pulte Homes and Thompson Reuters, Go-Daddy, Allied Waste, Liberty Mutual, Taser International and Discount Tire Company.
SCOTTSDALE’S UPSCALE DEMOGRAPHICS AND RESIDENTIAL NEIGHBORHOODS
• The City of Scottsdale’s annual
household income of $109,302 is
amongst the highest in the country.
• Several of north Scottsdale’s premier
high-end residential communities
are directly north and east of the
Property, offering immediate access to
tremendous density and wealth.
• These include: DC Ranch, Silverleaf,
McDowell Mountain Ranch, Grayhawk,
Estancia and Troon.
• Homes in these neighborhoods range
in pricing from $650,000 to over
$10,000,000.90TH STREET
RAINTREE DRIVE
$8.0 M
$1.2 M
$1.5 M
$1.1 M
$1.4 M$1.1 M
$1.8 M
$1.0 M$1.2 M
$1.1 M$1.0 M
$1.5 M
$1.8 M$1.6 M
$2.5 M $1.9 M$2.4 M
$3.9 M
$3.5 M
$5.5 M$8.0 M
$9.5 M$11.5 M
$7.4 M $4.8 M
$5.8 M$10.0 M
$1.4 M
$2.5 M
$2.0 M$1.5 M
$1.8 M
$2.1 M
$3.4 M$1.1 M
$1.6 M$1.4 M$2.7 M
$1.8 M
$1.0 M $1.7 M
$4.9 M $4.0 M$1.6 M $3.0 M
$1.9 M$1.7 M
$7.3 M
$3.7 M
3.0 M
TPC SCOTTSDALE CHAMPIONS
GOLF COURSE
14 / 8980 East Raintree
PROPERTY
OVERVIEW03
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16 / 8980 East Raintree
PROPERTY
OVERVIEW LAND SITE SUMMARY
ADDRESS8980 East Raintree Drive Scottsdale, AZ
ACCESSTwo (2) points of access both along Raintree Circle Drive
LAND TO BE CONVEYED
N/A Condo Plat
PARCEL 217-15-953
ZONING I-1, City of Scottsdale.
PARKING
A total of eight (8) covered reserved parking spaces, P185 -P192 are allocated to the Property. Surface parking is first come first served with a total advertised complex ratio of 4:1,000 square feet.
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BUILDING SPECS
PROPERTY SIZE ±7,561 square feet.
COMPLETION 1999
ROOFFoam roof. Includes 15-year limited silicone warranty.
MECHANICAL 12 heat pumps.
CEILING HEIGHT 9’ from the floor to the grid ceiling.
ELECTRICAL Electrical service is provided by multiple service panels with 110/220/440 service.
FIRE PROTECTIONSprinklers are throughout the office building and serviced/radio monitored by Safe Guard Fire monitoring group.
REST ROOMSCommon area restrooms located inside the building.
18 / 8980 East Raintree
PROPERTY
OVERVIEW
Site Plan Overview - The Subject is 8980 East Raintree Drive
NORTH
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8980East
Raintree
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110Kitchen
Restrooms
KitchenRestrooms
100
130
120
Floor Plan
AREA
OVERVIEW04
Nearby SCOTTSDALE QUARTER and KIERLAND COMMONS
22 / 8980 East Raintree
UPSCALE RESIDENTIAL
The northern portion of the City of
Scottsdale contains the most affluent
housing in Scottsdale. The McDowell
Mountains provide the only mountainous
backdrop in Scottsdale and have served as
a canvas for what has evolved into one of
the most upscale and high-profile residential
areas in Arizona.
The numerous and prestigious master-
planned communities that lie in north
Scottsdale include: Silverleaf, DC Ranch,
Desert Mountain, Troon, McDowell Mountain
Ranch, Estancia and Grayhawk. Many
of these communities contain signature-
designed golf courses that golfers travel
from all over the country to enjoy.
FIRST-CLASS RETAIL AMENITIES
North Scottsdale is home to some of the
highest-profile and upscale retail shopping
centers in the State. The most notable of
which are Kierland Commons and Scottsdale
Quarter—both massive, award-winning open-
air lifestyle centers.
Kierland Commons: Kierland Commons
was introduced in the early -2000s, and
at the time, was a pioneering model for
the modern-era successful retail shopping
center. This award-winning 38-acre mixed-
use development combines over 70 shops
and restaurants with residential and office
space in an outdoor, walkable environment.
Tenants in Kierland Commons include: Sur
La Table, Crate & Barrel, P.F. Chang’s China
Bistro, Victoria’s Secret, Anthropology,
Maestro’s Ocean Club, Shake Shack and
Michael Kors.
Scottsdale Quarter: Drafting off of Kierland
Commons’ vast success, Scottsdale Quarter
was developed directly across Scottsdale
Road. This 370,000 SF mixed-use
development combines retail, entertainment
office, and multi-family residential.
Esteemed tenants of the project include:
NIKE, Apple Store, Dominick’s Steakhouse,
Restoration Hardware, Express, Pottery Barn,
and True Food.
The Promenade: With more than 75 stores
spread over 569,000 SF, The Promenade
is one of the most popular shopping
destinations in north Scottsdale. The open
air center, conveniently located at Frank
Lloyd Wright Blvd. and Scottsdale Road,
features shopping, dining and retail including
Nordstrom Rack, Saks Off 5th, Pier 1 Imports,
Maggiano’s, Capital Grille, The Original Chop
Shop and Modern Market.
MECCA FOR LUXURY HOTELS & RESORTS
Some of the finest hotels and resorts are
located in north Scottsdale, providing a
mecca of hospitality options for vacationers
and business travelers. The most noteworthy
of these are: the Fairmont Scottsdale
Princess Resort, the Four Seasons, The
Westin Kierland Resort & Spa and the
Scottsdale Marriott at McDowell Mountain.
AREA
OVERVIEW
NORTH SCOTTSDALE
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90TH STREET
24 / 8980 East Raintree
SCOTTSDALE AIRPORT
North Scottsdale is home to one of the
busiest single-runway airports in the nation.
Given its location, Scottsdale Airport is
the highest-profile municipal airport in the
greater Phoenix area. Over 400 private
and/or corporate aircraft are based at
Scottsdale Airport and approximately
200,000 takeoffs and landing operations
occur at the airport annually. Several state-
of-the-art FBO terminals lie within the
airport to accommodate its intense demand.
The airport is also renovating several
facilities at present.
SCOTTSDALE AIRPARK IS ARIZONA’S SECOND LARGEST EMPLOYMENT CENTER
The tremendous locational qualities of
North Scottsdale helped spur tremendous
population and employment growth in
recent decades. As a result, the Scottsdale
Airpark ballooned into the second
largest employment center in Arizona.
Approximately 17 million SF of office
and industrial space is located within the
submarket. Further, several million square
feet of retail and additional property types
are lie within the airpark. It is estimated
that 2,900 businesses are located in the
Scottsdale Airpark, employing 51,000
people.
AREA
OVERVIEW
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90TH
STR
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RAINTREE DRIVE
DOWNTOWNTEMPE
DOWNTOWNSCOTTSDALE
TALKING STICK
CAMELBACK MOUNTAIN
The Scottsdale Airpark is one of the largest
employment center in the State of Arizona
with more than 2,900 businesses and
51,000 employees in over 17 million square
feet of commercial space. Strategically
located along the Loop 101 corridor, it
has access to a workforce of nearly half a
million within a 30-minute commute and
transportation links include a world-class
municipal general aviation airport. Some of
the most prestigious business headquarters
locations in the western United States can
be found here, including PayPal, Prudential
Insurance, Vanguard, Mass Mutual, Pulte
Homes, Go-Daddy, Allied Waste, and Taser
International.
NORTH SCOTTSDALE’S SUPERB FREEWAY ACCESS
The Loop 101 Freeway wraps around
North Scottsdale providing excellent,
multi-directional freeway access to the
Scottsdale Airpark submarket. Through its
eight interchanges, the Loop 101 Freeway
provides easy access to most all labor pools
in the Valley, including: South Scottsdale,
Tempe, the Southeast Valley and Northwest
Phoenix. Within a 10 minute drive a
population of over 95,000 is accessed.
When increasing the drive time to 20
minutes the accessible population reaches
585,000.
26 / 8980 East Raintree
Located in the beautiful Sonoran Desert, Scottsdale is bordered by Phoenix to the west and the McDowell Mountains to the east. Scottsdale is a premier community known for a high quality of life with attractive residential, business and shopping areas. One of the most livable cities in the country, Scottsdale is a place to live, learn,
work, play and raise a family.
Ranked in TIME’s “Best 50 Places to Live 2016” – Scottsdale is the only Arizona city to capture the recognition.
CITY OF SCOTTSDALE
DEMOGRAPHICS
• Stretching 31 miles from north
to south, the Scottsdale area
encompasses 184.5 square miles. As
one of Arizona’s ten largest cities, the
City of Scottsdale holds a population
of more than 231,000.
• A key characteristic of the local
population is the concentration of
middle aged residents, with a median
age of 47. The population boasts
comparatively high-earnings, with
an average household income of
$113,000.
3.2%
20.0%
41.5%
16.9%
14.7%
3.8%
85+
65-84
35-64
20-34
5-19
<4
Gen Xers make up the highest percentage of Scottsdale's population.41.5%
CITY OF SCOTTSDALEAGE BREAKDOWN
CITY OF SCOTTSDALEPOPULATION GROWTH
180,000
190,000
200,000
210,000
220,000
230,000
240,000
250,000
260,000
200
020
01
200
220
03
200
420
05
200
620
07
200
820
09
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Scottsdale is slated to increase by 16,904 people in the next 5 years. 7.0%
AREA
OVERVIEW
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ECONOMY/EMPLOYMENT
• Scottsdale is one of the state’s leading
job centers with a diverse economy
built on medical research, high-tech
innovation, tourism and corporate
headquarters. Scottsdale is home to
nearly 18,000 businesses, supplying
over 150,000 jobs and more than 20%
of Arizona corporate headquarters is
located in the area. In 2016, Forbes
ranked Scottsdale No. 3 in the country
for growth in information economy.
• The Scottsdale Airpark is one of the
largest employment centers in the
State of Arizona with more than 2,900
businesses and 51,000 employees in
over 2 million square feet of commercial
space. Strategically located along the
Loop 101 corridor, it has access to a
workforce of nearly half a million within a
30-minute commute and transportation
links include a world-class municipal
general aviation airport. Some of the
most prestigious business headquarters
locations in the western United States
can be found here, including GoDaddy,
Taser, JDA Software, Magellan Health,
Nautilus Insurance, Quicken Loans, as
well as regional operations for CVS
Health and Vanguard.
• The “Cure Corridor” located along
Shea Boulevard and Scottsdale Road
boasts the city’s health care and biotech
industry clusters. These medical leaders
are working cooperatively on innovative
research and treatments that are placing
Scottsdale at the forefront of a number
of medical breakthroughs. Thirteen
percent of all Metro area bio-life sciences
employment is located in the City of
Scottsdale, at facilities such as Mayo
Clinic and Honor Health.
• Downtown Scottsdale is home to a
number of corporate users, including
YELP, McKesson and Weebly. Technology
companies and young professionals are
attracted to the area because it provides
a mix of specialty retail, art galleries,
dining to suit every taste, legendary
nightlife, and public art and cultural
attractions with broad appeal.
• Only a five minute drive from Downtown
Scottsdale is SkySong, the ASU
Scottsdale Innovation Center, which is
home to a global business community
linking technology, research, education
and entrepreneurship. This half built
42-acre mixed use development will
eventually house 1.2 million square
feet of commercial space with on-site
luxury residential apartments and retail/
restaurant offerings.
Companies in high-growth sectors have elected to locate significant facilities in the Metro Phoenix area, most notably in high-tech, earning the designation of the Silicon Desert.
28 / 8980 East Raintree
TOP SCOTTSDALE EMPLOYERS
OCCUPATIONAL COMPOSITION
6,300 Employees
2,500 Employees
3,800Employees
1,800Employees
2,700 Employees
1,000 Employees
1,884Employees
5,383Employees
1,350 Employees
3,000 Employees
51.1% (62,105)
Management, business, science
and arts
27.1% (32,897)
Sales and office
3.2% (3,942)Natural
resources, construction and
maintenance
3.6% (4,315)
Production, transportation and material
moving
15.0% (18,201)
Service Industry
AREA
OVERVIEW
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SCOTTSDALE BUSINESS DIFFERENTIATORS
$118KAVERAGE TECH SALARIES
in combined labor and real estate costs over a 10-year periodCHOOSING SCOTTSDALE WILL SAVE $51M - $108M
60,000 SF @ 200 SF/PERSON EQUALS 300 PEOPLE
AVG SALARY X HEADCOUNT = TOTAL ANNUAL SALARY COST
TOTAL 10 YEAR SALARY COST + REAL ESTATE COST
REAL ESTATE COSTS CLASS A RENTS - PER YEAR
vs LosAngeles
SanFranciscoScottsdale
$89K
$26.7MM
$288M
$2.1MM
$31.5MM
$339MM
$2.4MM
$35.4MM
$396MM
$4.2MM
$89K X 300
$267MM + $21MM
60,000 SF @ $35 PSF Gross
60,000 SF @ $40 PSF Gross
60,000 SF @ $70 PSF Gross
$105K X 300
$315MM + $24MM
$118K X 300
$354MM + $42MM
$105K
SCOTTSDALE BUSINESS DIFFERENTIATORS
30 / 8980 East Raintree
COMMUTE/TRANSPORTATION
• Scottsdale’s location makes it one of
the Valley’s most desirable addresses.
Accessible by two freeways, Loop 101 carries
commuters to and from the north and south
and Loop 202 crosses the southern part
of the city giving easy access to Phoenix,
Tempe and Mesa. Other north-south
corridors through the city’s greenbelts
provide access to the Scottsdale’s
employment, shopping and entertainment
centers.
• Valley Metro operates three express bus
routes (510, 511 and 512) to and from
downtown Phoenix during peak hours, as
well as local bus routes. A downtown trolley
also serves the Scottsdale community.
• Scottsdale is near the heart of the Greater
Phoenix metropolitan area and minutes from
Sky Harbor International Airport, offering
easy access to more than 80 domestic
locations and 21 international destinations.
Close to California, Texas and Mexico,
Scottsdale’s strategic location offers face-
to-face connectivity to a massive customer
base within a few hours of travel.
Scottsdale’s centralized location in the metropolitan area provides tremendous ease of access to over 1M drivers within 30 minutes.
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MESA
GILBERT
CHANDLER
SCOTTSDALE
PARADISEVALLEY
TEMPE
GLENDALE
PEORIASURPRISE
SUN CITY
GOODYEAR
TOLLESON
PHOENIX
MID
TOW
NPH
OEN
IX
DOWNTOWNPHOENIX
DOWNTOWNSCOTTSDALE
DOWNTOWNTEMPE
CAMELBACKCORRIDOR
10 Minutes2018 Population:
130,430
20 Minutes2018 Population:
594,573
CENTRALSCOTTSDALE
PRIC
E R
OA
DCO
RR
IDO
R
DEER VALLEYDESERTRIDGE
I-17
COR
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OR
30 Minutes2018 Population:
1,885,749
8980 EASTRAINTREE DRIVE
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AREA
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EDUCATION
• More than 54.6% of the population holds
a Bachelor’s degree or higher, making this
one of the most highly educated areas
in Arizona. Within the community there
are five colleges that offer Associates
Degrees or Certificates and three
universities in the community that offer
Bachelor’s Degree or higher.
• Scottsdale students are served by six
different school districts that overlap
municipal boundaries. The Scottsdale
Unified School District is home to 16
elementary schools, two early childhood
learning centers, three traditional (K-
8) schools, six middle schools and six
high schools. Depending on location
in Scottsdale, children may enroll in
other school districts. There are also
preschools, charter schools, private
schools, religious schools and college
prep schools for students of various ages.
Scottsdale’s population is highly educated, with 54.6% holding a Bachelor’s degree or higher.
SCOTTSDALE EDUCATION ATTAINMENT
Scottsdale’s centralized location in the metropolitan area provides tremendous ease of access to over 1M drivers within 30 minutes.
11.8% High School
Graduate 21.0% Some College
7.3% Associates
Degree 32.8% Bachelor’s
Degree
21.8% Graduate Degree
32 / 8980 East Raintree
Metro Phoenix is the fifth largest
city in the United States and
anchors the nation’s 12th largest
metropolitan area, with 4.7 million
residents. Greater Phoenix
encompasses 2,000 square miles
and more than 20 incorporated
cities, including Glendale,
Scottsdale, Tempe and Mesa, and
is the financial, commercial,
cultural, entertainment and
government center of Arizona.
Forbes Named Arizona #1 in Best States for Future Job Growth
PHOENIX
DEMOGRAPHICS
• The population of Greater Phoenix is
4.7 million and is expected to grow
to nearly 6.4 million in the next 20
years. A relatively young region,
Greater Phoenix has a median age
of 35.8 – two years younger than the
average age nationwide.
• The population boasts comparatively
high-earnings, with an average
household income of over $77,596.
This is well above the national
median average household income,
which stands at $55,775.
AREA
OVERVIEW
1.8%
13.1%
36.2%
21.6%
20.3%
7.0%
85+
65-84
35-64
20-34
5-19
<4
Gen Xers make up the highest percentage of Phoenix's population. 36.2%CITY OF PHOENIX
AGE BREAKDOWN
CITY OF PHOENIXPOPULATION GROWTH
3,200,0003,400,0003,600,0003,800,0004,000,0004,200,0004,400,0004,600,0004,800,0005,000,0005,200,000
200
020
01
200
220
03
200
420
05
200
620
07
200
820
09
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Phoenix is slated to increase by 365,599 people in the next 5 years. 7.7%
/ 33
ECONOMY/EMPLOYMENT
• The Metro Phoenix employment base
has grown rapidly in the past 20 years
and currently boasts more than 2 million
workers. Projected employment by
occupation shows continued strength
in the area’s professional and technical
work force, with service employment
increasing as well. Arizona is nationally
ranked #2 as a top state for workforce
quality and availability, and #1 in higher
education degree opportunities. A
steady influx of new workers and high
graduation levels from the state’s largest
university, Arizona State University,
enrich the quality of labor. Thanks to
the variety of universities and technical
schools in the area, the pipeline of skilled
workers continues to grow.
• Metro Phoenix has a diversified base of
industries, led by aerospace, high-tech
manufacturing, distribution and logistics,
financial services and corporate/regional
headquarters. Phoenix has recently seen
many companies move or expand from
California including Google-Waymo,
McKesson, Dexcom, DoubleDutch,
Entertainment Partners, Uber, and
ZipRecruiter. Major data processing,
credit card and customer service
companies are also attracted to
Greater Phoenix’s telecommunications
infrastructure. Phoenix has a predictable
climate and low catastrophic risk – no
earthquakes, tornadoes or coastal
flooding.
• Intel, Freescale, Microchip Technology
and ON Semiconductor have given
Arizona the distinction of being
the fourth largest semiconductor
manufacturing exporter in the nation.
In addition, Metro Phoenix also attracts
major software development and internet
employers such as Yelp, GoDaddy,
PayPal, Zenefits, Infusionsoft, Weebly and
Clearlink.
• Phoenix is ranked among the top in
the country for its solar and renewable
energy sector, and has a rapidly growing
healthcare and biomedical industry. With
$1.3 billion in strategic investments over
the past 10 years added into its emerging
healthcare enterprise and research
capabilities, Greater Phoenix is the place
for healthcare opportunities. Arizona is
among national leaders with more than
1,400 active clinical trials and is expected
to add 43,000 healthcare jobs in the
next decade – more than Minneapolis,
Philadelphia, San Francisco and Seattle.
Companies in high-growth sectors have elected to locate significant facilities in the Metro Phoenix area, most notably in high-tech, earning the designation of the Silicon Desert.
34 / 8980 East Raintree
TOP PHOENIX EMPLOYERS
OCCUPATIONAL COMPOSITION
AREA
OVERVIEW
13,340 Employees
17,270Employees
24,670Employees
27,320Employees
5,235Employees
9,502Employees
9,800Employees
10,550Employees
10,940Employees
11,080Employees
12,740Employees
12,960Employees
11.1%(184,150)
Consumer Services
26.6%(439,690)
Government, Healthcare, Education
16.7(275,540)Hospitality,
Retail, Entertainment
21.4%(353,160)Business, Financial
24.2%(399,720)
Manufacturing, Transportation
/ 35
PHOENIX BUSINESS DIFFERENTIATORS
$118KAVERAGE TECH SALARIES
in combined labor and real estate costs over a 10-year period
CHOOSING SOUTHEAST VALLEY WILL SAVE $71M - $128M
60,000 SF @ 200 SF/PERSON EQUALS 300 PEOPLE
AVG SALARY X HEADCOUNT = TOTAL ANNUAL SALARY COST
TOTAL 10 YEAR SALARY COST + REAL ESTATE COST
REAL ESTATE COSTS CLASS A RENTS - PER YEAR
vs LosAngeles
SanFranciscoPhoenix
$85K
$25.5MM
$268M
$1.8MM
$31.5MM
$339MM
$2.4MM
$35.4MM
$396MM
$4.2MM
$85K X 300
$250MM + $18MM
60,000 SF @ $30 PSF Gross
60,000 SF @ $40 PSF Gross
60,000 SF @ $70 PSF Gross
$105K X 300
$315MM + $24MM
$118K X 300
$354MM + $42MM
$105K
36 / 8980 East Raintree90TH STREET
RAIN
TREE DRIV
E
SCOTTSDALE AIRPARK
SCOTTSDALE QUARTER
KIERLAND COMMONS
SONORA VILLAGE
PARADISE VALLEY MALL
SCOTTSDALE PROMENADE TPC SCOTTSDALE
CHAMPIONSGOLF COURSE
MARKET
INFORMATION05
/ 3790TH STREET
RAIN
TREE DRIV
E
SCOTTSDALE AIRPARK
SCOTTSDALE QUARTER
KIERLAND COMMONS
SONORA VILLAGE
PARADISE VALLEY MALL
SCOTTSDALE PROMENADE TPC SCOTTSDALE
CHAMPIONSGOLF COURSE
38 / 8980 East Raintree
MARKET
INFORMATION
PHOENIX OFFICE MARKET 4Q 2018ECONOMYThe Metro Phoenix job market continues to show signs of improvement, adding over 82,400 jobs year-over-year through December. During the same time period, the unemployment rate remained at 3.9%. According to the Bureau of Labor Statistics, the Phoenix metropolitan statistical area added 25,000 office sector jobs through the fourth quarter 2018. The three sectors that make up office employment are: business & professional services, information/technology and financial activities.
MARKET OVERVIEWIn the fourth quarter of 2018, vacancy in the Metro Phoenix office market stood at 15.6%, dropping 180 basis-points (bps) from the fourth quarter 2017 rate of 17.4%. This is the lowest vacancy rate since fourth quarter 2007 (14.3%).
The Metro Phoenix office market continued to experience robust demand in fourth quarter 2018, absorbing +640,000 square feet (sf). This brings the 2018 total to +2.8 million square feet (msf), more than double the square footage absorbed in 2017 (+1.4 msf). This marks the seventh largest net gain for a single year going back to 1999. The largest net gain for any single year posted was +4.2 msf in 2005. In fourth quarter 2018, all building classes (A-C) posted positive occupancy growth led by Class B (+333,000 sf), followed by Class A (+295,000 sf)
and Class C (+12,000 sf). For the year, Class B space absorbed over +1.6 msf, followed by Class A with over +1.1 msf and Class C with over +58,000 sf, for a total of +2.8 msf of positive absorption.
Out of Metro Phoenix’s 22 office submarkets, 12 experienced positive absorption in the fourth quarter of 2018. Tempe North submarket led with +265,200 sf due in large part to McKesson occupying 177,600 sf in State Farms old buildings. Scottsdale Airpark followed with +153,600 sf with notable move ins such as P.F. Chang’s (+53,000 sf) and CVS Caremark (+52,000 sf). The Chandler/Gilbert/202 submarket (+135,500 sf) can be attributed to Deloitte occupying +102,000 sf at the newly developed Commons at Rivulon. Ten of the 22 submarkets experienced negative absorption in fourth quarter 2018, led by the Downtown submarket (-125,800 sf). At the close of 2018, 18 out of 22 submarkets experience positive annual occupancy growth led by Tempe North (+1.0 msf), Price Corridor (+450,000 sf) and Chandler/Gilbert/202 (+325,000 sf) submarkets. The Metrocenter (-168,000 sf) and West Phoenix (-56,000 sf) submarkets experienced negative absorption.
NEW DEVELOPMENTThroughout 2018, developers delivered just under 1.3 msf of new product to the Metro Phoenix office market. Seven speculative projects introduced over 734,000 sf and three built-to-suits (bts) delivered
Overall Net Absorption/Overall Asking Rent 3-QTR TRAILING AVERAGE
Market Indicators (Overall, All Classes)2017 2018 12-Month
Forecast
Vacancy 17.4% 15.6%
Net Absorption (sf) 1.4m 2.8m
Under Construction (sf) 1,4m 2.7m
Average Asking Rent* $25.13 $25.83
Q4 17 Q4 18 12-Month Forecast
Phoenix Employment 2,054k 2,137k
Phoenix Unemployment 4.0% 3.9%
U.S. Unemployment 4.1% 3.7%
$19.00
$20.00
$21.00
$22.00
$23.00
$24.00
$25.00
$26.00
0
200
400
600
800
1,000
1,200
Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018
Net Absorption, MSF Asking Rent, $ PSF
Overall Net Absorption/Overall Asking Rent4-QTR TRAILING AVERAGE
*Rental rates reflect overall gross asking $psf/year
*Q2 data is based on the U.S. Bureau of Labor Statistics, All Employees: Total Nonfarm in Phoenix-Mesa-Scottsdale, AZ (MSA).
/ 39
Submarket Total Inventory Direct 2018 Net
Property Type Square Feet Vacancy AbsorptionScottsdale AirparkTotal 10,106,532 10.3% $29.60 259,295Metro Phoenix Total 102,920,586 14.5% $25.28 2,785,231
Asking Rent
BY THE NUMBERS: Scottsdale Airpark vs. Metro Phoenix
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
$15.00
$17.00
$19.00
$21.00
$23.00
$25.00
$27.00
$29.00
$31.00
$33.00
2014 2015 2016 2017 2018
Direct Average Rate
Class A Direct Average Rate
Direct Vacancy
Class A Direct Vacancy
Scottsdale Airpark Net Absorption, Completions & Vacancy
The Scottsdale Airpark office submarket, with 10.1 million SF, is the second largest submarket in Metro Phoenix. The combination of north Scottsdale’s abundant upscale housing and its high quality demography has helped grow to a commerce park that houses over 17 million SF of office and industrial space, making it the second largest employment center in the Valley. The Scottsdale Airpark is estimated to contain approximately 2,900 businesses and 51,000 employees.
The direct office vacancy rate for the Scottsdale Airpark stands at 10.3% as of the fourth quarter of 2018, 420 basis points lower than the overall Metro Phoenix vacancy rate. The submarket absorbed 259,295 during 2018 and the average asking lease rate stood at $29.60/SF FSG. Over the past three years asking lease rates have risen by over 6% and over 26% since 2013—highlighting the intense tenant demand for the submarket. The submarket ranks third out of Metro Phoenix’s 22 submarkets in terms of net absorption from 2013 to present.
SCOTTSDALE AIRPARK SUBMARKET
over 545,000 sf. Currently, Metro Phoenix has 2.7 msf under construction, with 13 speculative projects totaling 2.2 msf and four bts projects totaling 563,000 sf. The Tempe North submarket accounts for six of the 17 projects under construction totaling 1.2 msf, followed by Price Corridor with four projects totaling 623,000 sf. Class A product continues to dominate the entire market with 14 projects under construction accounting for over 2.3 msf. Of the 2.3 msf of Class A product under construction, 2.1 msf is expected to deliver by the end of 2019.
MARKET RENTSThe overall rent in the Metro Phoenix office market increased in fourth quarter 2018, to $25.83 per square foot (psf) on an annual full-service basis. This accounts for a 2.8% ($0.70 psf) increase from fourth quarter 2017. The Price Corridor submarket led with a 12.3% increase in overall asking rates, followed by East-Central Phoenix (9.4%) and Deer Valley (8.7%). The Camelback Corridor and South Scottsdale submarkets continue to lead the market in highest rental rates. Glendale/Peoria remains the smallest and least expensive office submarket.
40 / 8980 East Raintree
MARKET
INFORMATION
OUTLOOK
• Absorption was positive in all quarter of 2018; and
in 18 of 22 submarkets for the year, with no strong
winners or losers. With the bulk of development
concentrated in just three submarkets (Tempe North,
Price Corridor and Downtown), we expect submarket
absorption to be more uneven, with higher highs and
lower lows, in 2019 and 2020.
• Demand for coworking space increased throughout
2018 with firms such as WeWork, Workuity, Spaces
and Industrious increasing their footprints in Metro
Phoenix. This trend is expected to continue in 2019
as these firms expand further into large blocks of
vacant space and new companies like Serendipity
Labs and Novel Coworking enter the market.
• Build-to-suit projects can move very quickly in Metro
Phoenix. Phoenix has shorter construction periods
than other cities, so the current pipeline for 2020
deliveries is too early to predict.
• Vacancy rates dropped considerably during 2018,
finishing at 15.6%—declining over 180 bps since
fourth quarter 2017. The vacancy rate is anticipated
to drop in 2019. Arizona’s low unemployment rate
and favorable outlook should yield considerable
growth in population and GDP, which outpaces the
country as a whole.
METRO PHOENIX OFFICE SNAPSHOT 4Q 2018
SUBMARKET TOTAL BLDGS INVENTORY SUBLET
VACANTDIRECT VACANT
VACANCY RATE
Q4 NET ABSORPTION
2018 NET ABSORPTION
UNDER CONSTRUCTION
OVERALL AVG
ASKING RENT
DIRECT ASKING
RENT
Downtown 42 7,217,776 92,824 1,076,346 16.2% -125,834 129,830 328,402 $30.16 $30.87
Midtown 82 10,518,389 48,139 2,388,330 23.2% -10,891 8,592 0 $22.59 $23.15
CBD Total 124 17,736,165 140,963 3,464,676 20.3% -136,725 138,422 328,402 $25.07 $25.59
44th Street Corridor 42 3,389,155 22,083 457,975 14.2% 89,757 145,243 0 $25.78 $26.34
Arrowhead 23 1,448,463 2,114 67,508 4.8% 30,320 63,915 0 $23.72 $23.69
Camelback Corridor 72 7,364,794 94,211 1,268,928 18.5% -79,809 -31,890 0 $33.09 $33.33
Chandler/Gilbert/202 43 2,762,651 7,000 864,668 31.6% 135,482 324,880 166,888 $25.56 $25.56
Deer Valley 73 7,742,376 3,346 939,370 12.2% -5,800 142,741 150,000 $24.60 $24.63
East-Central Phoenix 44 2,020,173 0 215,116 10.6% 38,419 34,713 0 $21.59 $21.59
Glendale/Peoria 14 831,080 0 67,354 8.1% -4,856 9,546 0 $17.73 $17.73
Mesa 24 1,239,068 20,816 133,934 12.5% 14,336 61,346 0 $20.79 $20.76
Metrocenter 67 4,584,900 11,904 1,266,548 27.9% -49,850 -167,888 0 $20.38 $20.45
N Phoenix/Desert Ridge 36 2,534,993 47,085 309,369 14.1% 24,521 -18,194 0 $25.22 $25.07
Piestewa Peak Corridor 32 1,972,910 39,534 372,814 20.9% 19,526 38,839 0 $20.76 $21.21
Price Corridor 59 6,332,824 3,333 487,138 7.7% 65,690 450,677 623,370 $28.07 $28.60
Scottsdale Airpark 145 10,106,532 406,512 1,042,487 14.3% 153,629 259,295 0 $28.92 $29.60
Scottsdale Central 67 5,257,817 65,009 484,129 10.4% -28,557 38,353 0 $27.21 $28.32
Scottsdale South 37 4,011,416 45,653 651,168 17.4% -26,306 10,474 274,338 $31.25 $32.05
Sky Harbor 54 4,902,235 40,098 900,954 19.2% 114,667 255,041 0 $22.99 $23.53
South I-10/Ahwatukee 56 3,181,548 48,048 326,634 11.8% 53,918 13,999 0 $21.49 $21.69
Superstition Corridor 45 2,425,915 13,051 326,704 14.0% -12,962 59,445 0 $20.50 $21.10
Tempe North 98 11,407,422 164,674 957,125 9.8% 265,257 1,011,984 1,169,628 $27.93 $28.12
West Phoenix 37 1,668,149 0 295,202 17.7% -20,709 -55,710 0 $18.83 $18.83
Suburban Total 1,068 85,184,421 1,034,471 11,435,125 14.6% 776,673 2,646,809 2,384,224 $26.03 $26.18
CLASS TOTAL BLDGS INVENTORY SUBLET
VACANTDIRECT VACANT
VACANCY RATE
Q4 NET ABSORPTION
2018 NET ABSORPTION
UNDER CONSTRUCTION
OVERALL AVG
ASKING RENT
DIRECT ASKING
RENT
Class A 266 42,520,988 689,727 5,075,625 13.6% 295,039 1,141,002 2,339,256 $30.30 $30.99
Class B 741 53,053,521 449,736 8,720,432 17.3% 333,019 1,586,059 373,370 $23.59 $23.83
Class C 185 7,346,077 35,971 1,103,744 15.5% 11,890 58,170 0 $18.69 $18.67
Grand Total 1,192 102,920,586 1,175,434 14,899,801 15.6% 639,948 2,785,231 2,712,626 $25.83 $26.05
/ 41
1 - 44th Street Corridor
2 - Sky Harbor*
3 - Camelback Corridor
4 - Chandler/Gilbert/202
5 - Deer Valley
6 - Midtown
7 - Downtown
8 - Glendale / Peoria
9 - Mesa
10 - East-Central Phoenix
11 - Metrocenter
12 - N Phoenix/Desert Ridge
13 - Scottsdale Airpark
14 - Scottsdale Central
15 - Scottsdale South
16 - Piestewa Peak Corridor
17 - Arrowhead
18 - Superstition Corridor
19 - Tempe North
20 - South I-10/Ahwatukee
21 - West Phoenix
22 - Price Corridor
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P H O E N I X M E S A
C H A N D L E R
G I L B E R T
Q U E E N C R E E K
S A LT R I V E RP I M A - M A R I C O PA
C O M M U N I T Y
F O R TM C D O W E L L
YAVA PA I N AT I O N
F O U N TA I N H I L L S
S C O T T S D A L E
PA R A D I S E VA L L E Y
G I L A R I V E R C O M M U N I T Y
T O L L E S O N
AV O N D A L EG O O DY E A R
L I T C H F I E L DPA R K
G L E N D A L E
P E O R I A
S U R P R I S E
E L M I R A G E
T E M P E
1 - 44th Street Corridor
2 - Sky Harbor*
3 - Camelback Corridor
4 - Chandler/Gilbert/202
5 - Deer Valley
6 - Midtown
7 - Downtown
8 - Glendale / Peoria
9 - Mesa
10 - East-Central Phoenix
11 - Metrocenter
12 - N Phoenix/Desert Ridge
13 - Scottsdale Airpark
14 - Scottsdale Central
15 - Scottsdale South
16 - Piestewa Peak Corridor
17 - Arrowhead
18 - Superstition Corridor
19 - Tempe North
20 - South I-10/Ahwatukee
21 - West Phoenix
22 - Price Corridor
METRO PHOENIX OFFICE SUBMARKET MAP
42 / 8980 East Raintree
06 FINANCIAL
INFORMATION
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44 / 8980 East Raintree
FINANCIAL
INFORMATION
NET OPERATING INCOME
Static In-Place Forward Looking
Year 1 PSFProperty Size 7,561 SF
Occupancy 100.0%
INCOME (1)Avg. Base
Scheduled Rental Income $161,474 Rent
$21.36
Reimbursement Income $0
Parking & Other Income $2,400
EFFECTIVE GROSS INCOME $163,874 $21.67
OPERATING EXPENSES (4)
Repairs & Maintenance $2,700 $0.36
Utilities $19,227 $2.54
Association Fee $10,552 $1.40
Insurance $1,250 $0.17
Management 4.0% $6,459 $0.85
Real Estate Taxes $12,446 $1.65
Janitorial (common area) $2,915 $0.39
TOTAL OPERATING EXPENSES $55,548 $7.35
Net Operating Income $108,325 $14.33
Price $1,600,000 $212
Leasing Costs (TI / LC)
Capitalization Rate 6.8%
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RENT ROLL
Occupied Suites:
Suite Tenant Business Lines Size Rent/SF Rent/Yr Increases Stop Comments:
100 2,185 See Comments $22.00 $48,070 Owner's suite. Will sign a new leaseMonth-to Month for up to 2 years at $22.00/SF FSG.
Willing to vacate for a user buyer .
110 1,880 4/15/18 4/30/21 $21.50 $40,420 5/1/20 $22.00 Tenant pays own janitorial. Utilities37 Months are included in lease rate. Lease guaranty.
120 1,746 1/1/17 1/31/20 $19.00 $33,174 Tenant pays own janitorial. Utilities37 Months are included in lease rate. Three 1-year optio
to renew at market with notice.
130 1,750 6/1/18 6/30/20 $22.00 $38,500 7/1/20 $23.00 Tenant pays own janitorial. Utilities25 Months are included in lease rate.
If tenant renews lease, rate will be$23/SF
Occupied Total: 7,561 Sq. Ft.Percent Occupied: 100.00%
Financial Services
Mortgage Firm
Term
Banking & Trust
Law Firm
46 / 8980 East Raintree
FINANCIAL
INFORMATION
STATIC CASH FLOW IN PLACE LOOKING FORWARD 1 YEAR8980 East Raintree DriveScheduled Monthly Rental Income
Existing Tenants Suite Mkt Rate Sq. Ft. May June July August September October November December January February March April Total
Banking & Trust 100 $22.00 2,185 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $4,006 $48,070Law Firm 110 $22.00 1,880 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $3,368 $40,420Financial Services 120 $22.00 1,746 $2,765 $2,765 $2,765 $2,765 $2,765 $2,765 $2,765 $2,765 $2,765 $3,201 $3,201 $3,201 $34,484Mortgage Firm 130 $22.00 1,750 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $3,208 $38,500
Existing Tenant Total: 7,561 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,784 $13,784 $13,784 $161,474
Available Suites Suite Mkt Rate Sq. Ft. May June July August September October November December January February March April Total
Available Suite $0.00 0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Vacant Suite Total: 0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
ESTIMATED TOTAL: 7,561 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,347 $13,784 $13,784 $13,784 $161,474
* Shaded areas indicate an expiration yielding a renewal or a releasing of the suite.
2019 2020
2019 2020
For the Calendar Year May 2019 through April 2020
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DISCLAIMER
This projection is based on assumptions
reflecting a certain set of conditions. However,
some assumptions inevitably will not materialize
and unanticipated events and circumstances may
occur; therefore, actual results achieved may
vary from our estimates, and the variation may
be material. Cushman & Wakefield extends no
guarantees and makes no warranties, expressed
or implied, with respect to this projection. In that
regard, neither Cushman & Wakefield nor any
affiliate, employee, officer, director, shareholder,
or agent thereof, shall have any liability
whatsoever arising from this projection or the
actual results achieved.
The information and opinion contained herein
are furnished as a real estate brokerage
service by Cushman & Wakefield based upon
comparative market data. It is not an appraisal.
Cushman & Wakefield is not an MAI qualified
appraiser, nor is it qualified or authorized to give
legal or tax advice in regard to any proposed
transaction. If you desire such advice, you are
encouraged to consult with a professional
appraiser, attorney and/or accountant.
ERIC WICHTERMAN Executive Managing Director +1 602 224 4471 [email protected]
MIKE COOVER Managing Director +1 602 224 4473 [email protected]
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