Friday, February 25, 2011

Interstate Hotels & Resorts Forms Joint Venture; Acquires Sheraton Denver Tech Center

ARLINGTON, VA and DENVER, CO—Interstate Hotels & Resorts, the United States’ largest independent hotel management company,  announced that it has formed a joint venture with Waramaug Hospitality LLC and an investment management company to acquire the Sheraton Denver Tech Center (top left photo) for an undisclosed amount. 

The 262-room property will remain as a Sheraton and immediately undergo a $5.75 million renovation.  Interstate assumed management of the hotel upon completion of the acquisition.

Renovations include a complete make-over of the guest rooms, public and meeting space, food and beverage and recreation areas.  The renovation will be completed in 18 months and will be essentially transparent to guests. 

“This is the only Sheraton-branded hotel in the high-density Denver Tech Center area, and we will use that to our advantage,” said Thomas F. Hewitt (middle right photo), Interstate’s chairman and chief executive officer.  “The Denver hotel market is in recovery mode, and we believe our marketing expertise, economies of scale and proprietary systems will allow us to quickly gain market share.”

Located at 7007 South Clinton Street, the Sheraton Denver Tech Center is proximate to numerous businesses, shopping malls, Six Flags Elitch Gardens Amusement Park and several golf courses. 

The hotel offers 10,500 square feet of meeting space and outdoor swimming pool, business center, exercise room, gift shop and club-level guest lounge, as well as a full-service restaurant, the Redfire Restaurant & Lounge. 

“This is our first project with our partners, but it is our expectation that we will do many deals with them,” said Paul Nussbaum, Waramaug’s chief executive officer.  “We also expect to quickly and efficiently renovate and reposition the hotel to take full advantage of improving market fundamentals.”

Additional information about Interstate is available at the company’s website:
Jerry Daly, Carol McCune, Media, Daly Gray, (703) 435-6293                                ,                                                                                                                                            Carrie McIntyre, SVP, Treasurer, Interstate Hotels & Resorts, (703) 387-3320,

McCarthy Building Companies Begins Construction of Arcadia High School Performing Arts Center in Arcadia, CA

ARCADIA, CA— McCarthy Building Companies, Inc., one of Southern California’s foremost building companies specializing in educational facilities, began construction of the Arcadia High School Performing Arts Center (top left photo) in February 2011.

The 40,000-square-foot facility will anchor the campus at its northwest corner on a 4.2 acre site at Campus Drive and El Monte Avenue. McCarthy is serving as general contractor for the $20 million project and LPA of Irvine is the project architect and interior designer.

Once completed in September 2012, the new performing arts center will become the latest addition to Arcadia High School’s historic campus.

“Neither Arcadia Unified School District (AUSD), nor the City of Arcadia has a facility to host performances, so they rent facilities in other cities,” said Randy Cole, project manager for McCarthy.

“The new Center will provide performance space for Arcadia Unified School District school performances and events that will benefit and serve the entire Arcadia community.

In addition, performing arts, especially music, are extremely important to the District, and this facility will showcase this priority for the Arts through its design.”

Myers Houghton & Partners is the project’s structural engineer and Henrikson Owen & Associates is the mechanical engineer.

McCarthy is currently overseeing construction projects throughout the District at 10 elementary and middle schools within the AUSD school facility improvement program that includes new buildings and modernization.

The AUSD school facilities improvement program is being funded by Resolution No. 1137 which called for the "Arcadia Neighborhood Schools Health, Safety, and Repair Measure" (Measure I) Bond Election on the November 7, 2006 ballot.

Laura Mickelson (LM Communication), (949) 453-0851
Susan Garritano (McCarthy Building Companies, Inc.), (314) 968-3300

Marcus & Millichap Sells $30 Million High-Rise in Tempe, AZ

Centrepoint Towers in Tempe, AZ will be renamed West Sixth in one of the highest-profile transactions to close in recent years.

 PHOENIX, AZ – Marcus & Millichap, the nation’s largest real estate investment services firm, has arranged the sale of Centerpoint Condominiums (top left photo), a luxury high-rise residential project in downtown Tempe, Ariz., for $30 million.

The buyer, Cleveland, Ohio-based Zaremba Group, plans to complete construction of the two towers and convert its 375 condos into rental units. Upon completion, the property will be renamed West Sixth.

Located at 111 W. Sixth St., the project was originally developed by Tempe Land Co. LLC,  a subsidiary of Avenue Communities.

Construction began in 2005 and stalled in 2008.  Construction will resume immediately with Phase I of the complex, a 22-story residential tower, which is slated for occupancy by August 2011.

The asset will incorporate mixed-use retail and restaurant space on the ground floor. Phase II, a 30-story residential tower, will be completed by December of this year, giving the community a total of 375 residences.

Multifamily investment specialists Steve Gebing and Cliff David in the Phoenix office of  Marcus & Millichap represented the buyer,

 Zaremba Group, a national real estate organization based in Cleveland, Ohio with a regional office located in Scottsdale, Arizona. CB Richard Ellis’ Phoenix office represented the seller, ML Manager LLC of Phoenix, Arizona, successor to Mortgages Ltd., which acquired the property at a trustee sale in April 2010. 

“Centerpoint is arguably the most desirable, sought-after multifamily project in the state, representing an unparalleled opportunity for Zaremba to lead the effort in completing the area’s most recognizable residential project,” says Gebing.

 “Near-term fluctuations aside, an irreplaceable location adjacent to the nation’s largest public university campus coupled with scarcity of developable land in the immediate area will enable Zaremba to realize significant success with this project.”

West Sixth will inevitably augment the live/work/play lifestyle of the predominate student atmosphere in downtown Tempe. The innovative, urban apartment community will include several amenities consistent with luxurious living, including a 9,000-square foot fitness facility, with a yoga studio, tanning beds and a lounge. The resort-style pool will boast cabanas, fire pits and a barbeque area. 

“West Sixth offers unmatched amenities and will be the pinnacle for urban lifestyle. We are pleased to now move forward mindful that sales of this magnitude and complexity take time to complete,” says Kent Chantung, director of residential development for Zaremba Group on the interval from the previous expected closing date in October, 2010.

 “The added time in the process allowed us to solve lingering issues. With the obstacles resolved, we are now able to deliver a remarkable living environment to Tempe.”

 Contact: Stacey Corso, Public Relations Manager, (925) 953-1716

CEO Nexus to Co-Host Second Stage Conference at Rollins College March 8

ORLANDO, FL. --- CEO Nexus, a firm that works with public and private organizations in serving growing businesses, will co-host a Second Stage Conference at the Center for Advanced Entrepreneurship at the Crummer Graduate School of Business at Rollins College in Winter Park on Tuesday March 8 from 6 to 8 p.m.

Steve Quello (top right photo), president of CEO Nexus, said conference is open to chief executive officers and principals of second stage companies by invitation only. 

The featured guest speaker is Richard A. Licursi, (lower left photo) co-founder, president and chief executive officer of Spectrum Bridge, Inc., a venture backed company focusing on making wireless bandwith more readily available.    The New Jersey native who received his MBA from Farleigh Dickinson University, is a former vice president of Motorola’s MeshNetworks Product Group.

CEO Nexus is an organization that works in concert with public and private organizations interested in providing business leaders—owners, CEOs and presidents—with practical tools and techniques designed specifically for growing second-stage companies.

Sponsors include the Edward Lowe Foundation, the Florida High Tech Corridor Council, the University of Central Florida Office of Research & Commercialization, Rollins College Center for Advanced Entrepreneurship and GrowFL.

For an invitation and information, contact Steve Quello at 407-590-6101.

For more information, contact:  
Steve Quello, President/Principal, CEO Nexus 407-590-6101,
Larry Vershel or Beth Payan, Larry Vershel Communications 407-644-4142,

Sustained Double-Digit Rent Growth is on the Horizon for Industrial Real Estate, Says Grubb & Ellis National Researcher

By Rene Circ, Vice President, National Director of Research, Industrial, Grubb & Ellis Co., Chicago
 It is difficult to come out and predict two to three consecutive years of near or above 10 percent rent growth following the three worst years in most people’s memories. However, this is precisely the time to start considering the possibility.

 Most of the shadow space has already been absorbed

 Industrial real estate has been slow to come out of its recession. Aggregate demand, measured by net absorption, did not turn positive until three quarters after the official end of the recession.

The slow recovery can be attributed to the unprecedented amount of shadow space – space that is occupied, but not utilized – that needed to be absorbed before companies started to need new space.

Grubb & Ellis calculates that total industrial shadow space, at its peak, exceeded 100 million square feet. Three recorded consecutive quarters of positive net absorption demonstrate that the above-equilibrium shadow space has been absorbed and business growth is driving demand for new industrial real estate.

 U.S. economy is expected to grow at above its potential

 The U.S. economy grew 2.9 percent in 2010 and currently stands 0.1 percent above its pre-recession high. From the total output perspective, the economy is officially out of recovery and in a new expansionary cycle.

 Most recent indicators suggest that economic growth will accelerate in 2011 to about 4 percent. Growth of this magnitude will translate into stronger job creation and consumer confidence.

Also, near record-high corporate profits and cash positions will spur business investment as revenue-growth driven profits replace cost-cutting driven ones. Economic risks, such as rising oil prices due to the unrest in the Middle East, exist, but the current outlook for 2011 remains positive.

 Net effective rents are down 30 to 50 percent across the nation

 On a national level, net effective rents are down 30 percent from their peak. In some markets, rents have fallen as much as 50 percent over the past two to three years.

The total decline is the aggregate of lower face rents and rising landlord concessions. New, longer-term tenants still receive one month of free rent per year of term, which alone reduces the effective rate by approximately 8 percent.

Additional concessions, such as moving allowances and larger tenant improvement packages, push the effective rates still lower.

Meanwhile, Grubb & Ellis statistics show that the national vacancy rate has declined 50 basis points from its peak and net asking rents are stabilizing. The two-year downward pressure on rents is easing across the nation and landlord concessions can tightened very quickly as new tenants absorb key vacancies.

 New construction is not profitable without significant rent growth

 At the end of fourth quarter of 2010, only about 12 million square feet were under construction. At this rate, 2011 may be the year with the lowest new deliveries on record. Yet, current rent levels do not justify new construction.

 If developers require a 10 percent unleveraged return, assuming zero cost of land and $47 per square foot total soft and hard costs, tenant improvements and leasing commissions, they need a triple net rent of $4.32 per square foot.

The table below shows the required net rents assuming land costs are $2 per square foot, keeping the other costs unchanged. 

Today, market net effective rents are below these rent figures, preventing most developers from starting projects on a speculative basis – only 2 million square feet are currently under construction on a speculative basis across the country.

Net Effective Rents Must Rise Considerably

  The next three years will see strong tenant demand and Grubb & Ellis expects vacancies to fall into the single digits by the end of 2011. It is difficult to generalize the industrial real estate market, as rents and land prices vary considerably market-to-market.

However, on average, net effective rents are 20 to 30 percent below rents necessary to justify investments in new, speculative industrial projects. The combination of strong demand and profit-constrained supply will create a space scarcity and push rents up quickly and considerably.

 Rent declines were unprecedented over the past two years and the experienced double-digit declines will need to be reversed at similar speeds, if market equilibrium is to be achieved.

Janice McDill, Senior Vice President, Marketing & Communications
Grubb & Ellis Company. 500 West Monroe Street, Suite 2700, Chicago, IL 60661
Direct: 312.698.6707• Fax: 312.698.5941