Arizona Ascent June 2024 Issue

EDITOR’S NOTE

At Arizona Ascent, our mission is to illuminate and energize the thrilling dynamics of Arizona's real estate landscape. In this June 2024 issue, we delve into timely and essential topics reshaping the Grand Canyon State.

Our Business Spotlight goes behind the scenes with Lavazza Safety, a pioneering occupational safety consulting firm ensuring Arizona workplaces operate at peak standards. Owners Adam and Aaron Lavazza share their inspirational entrepreneurial journey and unwavering commitment to workforce protection.

Our cover story delves into the thrilling $40 billion TSMC semiconductor plant's seismic impact in Phoenix's 85085 zip code. This monumental project has sparked a residential real estate frenzy, with home values set to skyrocket as an estimated 50,000 new jobs flood in. We explore the farreaching effects of this economic tsunami across Valley cities.

In Scottsdale, a momentous mayoral election looms as the city strives to foster growth while preserving its unique Southwestern character. We sit down with leading candidate Linda Milhaven, whose three decades of civic leadership uniquely equip her to steer Scottsdale's future.

MARCH 2024 | ISSUE

At Arizona Ascent, our unwavering commitment is to empower, educate, and activate our community. Whether you're a seasoned buyer or seller intrigued by market dynamics, we provide valuable insights - from practical tips to forecasting upcoming trends - to navigate Arizona's ever-evolving real estate landscape with confidence.

Onward and upward,

Jaki Underwood

May2024MarketReport: Cromford®MarketIndexAnalysis

The Cromford® Market Index for all areas and types has declined a little further over the last week and dropped below the 110 mark, meaning we officially classify the market as balanced.

SupplyandDemandDynamics:

MarketTrends

SlowDecline:The CMI has been gradually decreasing over the past few months, which means the market balance change is subtle and likely not noticeable every week. However, compared to last year's period, the CMI is significantly lower, indicating a more pronounced shift in the market balance.

Supply continues to increase slowly due to a combination of factors, including new construction and a decrease in demand. On the other hand, demand remains weak, with fewer buyers in the Market. This imbalance drives the Market towards a more neutral stance, with prices stabilizing and negotiations more balanced.

Area-SpecificConditions

Seller'sMarket: Areas like Chandler and Gilbert remain under solid seller control.

Buyer'sMarket:Areas such as Maricopa and Buckeye offer buyers a significant advantage due to higher supply, including a large number of newly built homes.

The "official" classification of the market as balanced is supported by year-todate observations:

InventoryIncrease:There has been a steady and disproportionate increase in inventory relative to demand.

DemandDecrease:Overall demand is down by 10%, without considering specific price ranges.

Bifurcation in the Market

Sub-$1MMarket:

Demand below $1 million has decreased by 11% year-over-year.

$1M+Market: In contrast, the Market for properties over $1 million has seen a demand increase of just over 7%.

ResilienceoftheLuxurySector:

The luxury sector remains more resilient due to several factors:

InfluxofCapital: Money continues to flow into the valley, bolstering the high-end market.

CashTransactions: A significant 53% of transactions over $1.5 million are cash purchases, indicating strong financial backing in the luxury market.

RealEstateBriefs

PhoenixBig-BoxMarketBooming DespiteSlowingGrowth

According to a new report from CBRE, third-party logistics (3PL) providers leased the most bigbox warehouse space in Phoenix, accounting for 32.6% of all transactions.

Rockefeller Group has broken ground on Corsica Villas, two build-to-rent (BTR) townhome communities totaling 152 units in South Phoenix. This marks the developer's first BTR project in Arizona.

The two sites, spanning 16.5 acres along the Baseline Road corridor, will feature:

Corsica Villas at 20th St: 68 units with 2-3 bedrooms and attached 2-car garages.

Corsica Villas at Euclid Ave & 7th St: 84 units, including 2-bed carriage units and 3-bed townhomes.

The units range from 1,126 to 1,525 sq ft and offer private backyards, pet doors, and views of South Mountain. Community amenities are planned at both locations.

Phoenix remains a top big-box warehouse leasing and development market, though its growth rate slowed to 6% in 2023 from 14.3% the prior year.

With around 23 million square feet under construction but only 26.4% pre-leased, vacancy rates could rise further in 2024, given Phoenix has the secondhighest construction pipeline in North America after ranking behind only Savannah in 2023's growth rate..

However, water supply issues pose potential constraints for the future growth of industrial users like microchip manufacturing facilities.

RockefellerGroupBreaksGroundon CorsicaVillasBTRCommunitiesin Phoenix

CBREInks$62.75MillionSaleofParc TollesonMultifamilyProperty

CBRE's Asher Gunter, Matt Pesch, Sean Cunningham and Austin Groen represented seller Evergreen Devco in the sale of Parc Tolleson, a newly built 261-unit garden-style community located at 8727 West McDowell Road in Tolleson, AZ near the Loop 101 and I-10 intersection to Millburn & Company.

Troy Tegeler and Trevor Breaux arranged financing. The sale of Parc Tolleson is a reflection of the robust Metro Phoenix multifamily market, which posted over 12,000 units of multifamily absorption in 2023, one of the top U.S. metros.

This trend continued with over 5,800 units absorbed in Q1 2024, demonstrating the market's resilience and strong demand.

Edison Midtown, a luxury 110unit condo community in Phoenix's vibrant midtown district, has been completed by Tannin Development Corp. after a $25 million investment from the developer.

The project, stalled for six years under the previous owner, features two modern buildings with upscale finishes like quartz countertops and stainless appliances.

With phase I's 50 units sold out and 28 of phase II's 60 units already spoken for, prices start at $419,900 for the homes in this prime walkable location near dining, retail, and Creighton University's medical school.

EdisonMidtownCondosRevived After$25MInvestment Page : 7

Surf's Up: Catching the TSMC Wave to Prime Property Investment

ByJakiUnderwood,Editor-in-Chief

It's not just any real estate wave, but a unique tidal surge sweeping the Phoenix metro area. The TSMC semiconductor plant, a colossal $40 billion venture, is not a mere economic ripple. It's a rare force of nature that is set to redefine the housing landscape of the region for the foreseeable future.

The 85085 ZIP code is ground zero, housing the massive construction site. The surge has already begun, with TSMC employees swiftly purchasing the limited 91 listings. This is a seller's paradise, with property values potentially skyrocketing by 20% or more annually over the next few years as chip-makers compete for the limited supply.

But the TSMC tide won't stop there. Its powerful currents will raise all boats across the Valley's northern reaches from Peoria to Mesa.

Residential developers like Lennar, Mattamy, and Brookfield are reading the waters, plotting thousands of new homes to supply the estimated 50,000 jobs TSMC will spawn. When those streams of new residents converge, prices will rise like a rising sea level.

We've seen this effect before with major corporate campuses turned economic powerhouses. Just look at the high-value eddies forming around giants like Apple, Google, Amazon, and more, as employee demand for short commutes drives prices skyward in surrounding neighborhoods.

Lennarhasplanstobuildmorethan700homesnear TSMCinNorth Phoenix.

At a median of $450,000, Phoenix home values may se after cresting at $470,000 last year. But that numb outgoing low tide as TSMC's gravitational pull builds. Current homeowners in the tsunami's path essentially hold a call option on explosive future pricing – why wouldn't they exercise it and stay rigged? This stability and long-term potential of the Phoenix real estate market should provide a sense of security and confidence to potential investors.

The only remaining question is how high the TSMC tide will crest at its peak, lifting property values to new records across its widening radius of influence. For intrepid real estate investors, it's time to wax up their capital and paddle out to meet this once-in-a-generation swell head-on.

As a cyclical force, the semiconductor industry provides excellent opportunities for forward-thinking investors. With Arizona's businessfriendly environment and TSMC's unparalleled $40 billion commitment, the Phoenix region could be the ideal location to ride this wave for the next decade and beyond.

Page : 9

The85085ZIPcodeisgroundzero,housingthemassiveconstructionsite.

The Prosperous Path For Scottsdale:

Interview with Scottsdale Mayoral Candidate

Linda Milhaven

By Jennifer Conrad, Managing Editor

The City of Scottsdale is at an inflection point, balancing continued economic growth and development with preserving the quality of life that has made it such a desirable place to live, work and visit. Few candidates are as well-equipped to strike that balance as Linda Milhaven. With over 30 years of civic leadership, including 12 years on the Scottsdale City Council, Milhaven has the deep experience and financial accumen to guide the city towards a prosperous future while respecting its unique Southwestern character.

We sat down with Milhaven to dive deeper into her background, her vision for Scottsdale's future, and how she plans to earn and maintain the trust of residents.

ALifetimeof ScottsdaleService

Milhaven's commitment to Scottsdale traces back to her early career as a community bank president, serving local small businesses and residents. "I saw firsthand how downtown businesses were struggling when it was designated as a 'blighted' area," she recalls.

Recognizing the importance of economic development, she ran for City Council in 2008. "I didn't see candidates who shared my view on supporting businesses. Downtown had thrived as a regional shopping destination, and I knew adding more residential and commercial space could revitalize it."

Milhaven spent her council tenure doing exactly that. Major redevelopment projects like McDowell Road and SkySong transformed from vacant lots into thriving economic hubs. More residential development breathed new life into dormant areas of downtown. "Now we see baby strollers, people walking dogs, crowded patios - it's incredibly vibrant," Milhaven beams.

With over 30 years of civic leadership, including 12 years on the Scottsdale City Council, Milhaven brings extensive experience and financial acumen to guide the city towards prosperity.

Her dedication extended well beyond Council chambers. Milhaven volunteered and led prominent civic organizations like the Scottsdale Area Chamber of Commerce, Scottsdale Arts, and the Better Business Bureau. This year, she was inducted into Scottsdale's History Hall of Fame. "My passion has always been giving back to make this an even better place," she says.

A Prosperous Vision

This development would help retain and attract businesses, creating jobs and boosting tax revenues to fund critical services and amenities. "Our business community pays the lion's share of taxes enabling low residential rates and investments in parks, trails, etc.," Milhaven notes. "A strong private sector is what allows us to invest in our unmatched quality of life."

This fiscal stewardship is a core tenet of her platform. Milhaven points to her advocacy on recent ballot measures as an example, preferring to leverage existing funds rather than raise taxes. "On the spending limit increase, I support it to maintain services but demand an accounting of why expenditures grew so quickly," she says.

The Responsible Water Pathway

"We need to invest in raising dam heights, offer incentives for desert landscaping, and ensure new development uses latest watersaving technologies," she says. "But we're in decent shape by recycling wastewater into aquifers. We actually have more aquifer water now than 20 years ago."

Robust Public Safety

Milhaven is focused on continually strengthening conservation efforts while ensuring ample supply through multiple sources like the Salt, Verde and Colorado River allocations.

Milhaven is passionate about prioritizing funding for police, fire and public safety. During her Council tenure, she made these services' compensation packages competitive to attract top talent.

Milhaven volunteered and led prominent civic organizations like the Scottsdale Area Chamber of Commerce, Scottsdale Arts, and the Better Business Bureau.

Addressing issues like the rise in homeless individuals and residential squatters is also a priority. Milhaven supports increasing temporary shelter beds while connecting homeless individuals with services for job training, substance abuse treatment and transitional housing. "We'll lobby for stronger laws against squatters, explore limiting densities of vacation rentals disrupting neighborhoods, and look at creative solutions like the innovative recapturing of rainwater."

Protecting the Essence of Scottsdale

Amid change and growth, Milhaven insists on "keeping Scottsdale special" by maintaining and enhancing beloved amenities. "We need to continually reinvest in parks, open spaces and civic assets like the aging Indian Bend Wash so they don't deteriorate," she says. "And we must add new amenities residents want, like the new soccer fields and dog parks."

EarningCommunityTrust

For any candidate, earning constituents' trust is arguably the highest priority. Milhaven believes it begins with sincere engagement. "You have to actively listen to all perspectives respectfully, so everyone feels heard," she explains.

"I aim to always be straightforward about where I stand, even if we disagree. As long as people see you're considering their concerns and trying to balance interests, you can build trust and mutual respect."

Her longstanding community ties are another advantage. "I've been involved in Scottsdale for over 30 years, which provides a deep network and understanding of different groups' priorities," she says. "I can identify ways to find common ground and move the city forward in a united way."

With over 30 years of involvement in Scottsdale, Milhaven has developed a deep network and a thorough understanding of various groups' priorities.

The Right Candidate for the Moment

As Milhaven makes her case to Scottsdale voters, she's buoyed by a crucial endorsement - the Scottsdale Area Association of Realtors. "Realtors are hugely invested in quality of life, because that's what they're selling," she notes. "Their endorsement shows my ability to balance economic vitality with preserving what makes Scottsdale so desirable."

Ultimately, Milhaven sees herself as the ideal guide for this juncture in Scottsdale's evolution. "My decades of financial experience ensure we invest prudently in priorities," she states. My deep civic roots give me the perspective to protect Scottsdale's character while allowing responsible growth that funds amenities and services."

"I'll be a mayor ensuring we have the resources for a thriving economy, but never lose what makes this community so special."

Milhaven views herself as the ideal guide for Scottsdale's current stage of evolution.

Lavazza Safety: Pioneering Occupational Safety in Arizona

By Jennifer Conrad, Managing Editor

In this month's Business Spotlight, we are thrilled to introduce Lavazza Safety, a company that has revolutionized occupational safety consulting in Arizona. With an unwavering commitment to safeguarding workplaces, Lavazza Safety has not only become a trusted name but has also significantly improved safety standards across the state.

We had the privilege of sitting down with founders Adam and Aaron Lavazza to discuss their journey, the industries they serve, and their pivotal role in ensuring workplace safety.

Lavazza Safety's journey began in 2022 when four brothers, Adam, Aaron, Anthony, and Austin, inspired by their brother Anthony's dedication to safety, decided to make a significant impact. Anthony, a Marine Corps veteran, spent 11 years focusing on safety oversight during his military career.

After being medically retired, he planned to enter the medical field but ultimately found his passion in safety, earning a Master's in Safety and Health Management and becoming a Certified Safety Professional (CSP). "Anthony's experience as a federal OSHA compliance officer in New York highlighted the lack of proper safety practices," explained Adam Lavazza. "This led us to establish Lavazza Safety to bring comprehensive occupational safety consulting to Arizona businesses."

AdamLavazza. CEOandCFO

Aaron Lavazza. DirectorofBusiness Development

Anthony'sexperienceasaOSHAcompliance officerinNewYorkhighlightedthelackofproper safetypractices,

With Arizona's rapid construction and commercial development, Lavazza Safety integrates safety into these projects. About a year and a half ago, Arizona updated its OSHA compliance standards to align with federal regulations, leading to more inspections and a greater emphasis on adherence. Lavazza Safety's services are designed to help businesses meet these updated standards.

They engage with businesses through education, training, initial audits, and continuous assessments, fostering a safety culture that becomes second nature rather than just a compliance checkbox. "We work closely with businesses to instill a safety-first mentality," noted Adam Lavazza. "Our goal is to make safety a part of their DNA."

Changing a company's safety culture is a complex process, but it is one that Lavazza Safety takes on with dedication. They start by conducting a thorough assessment of the company's current safety practices and identifying areas for improvement. They then develop a customized safety plan, which includes training sessions, policy adjustments, and regular safety audits.

Through these initiatives, Lavazza Safety aims to show the value of safety beyond compliance, making it a fundamental part of their operations through education and daily practice integration. "We help companies see that safety is not just a regulatory requirement but a critical component of their overall success," said Aaron Lavazza.

A typical safety audit with Lavazza Safety starts with an initial assessment covering seven key areas. The team, often led by Anthony, conducts a thorough site inspection, reviewing documentation and procedures. They then create a scorecard and prioritize findings, working with the company to address gaps through training, policy adjustments, and other measures.

LavazzaSafetyemphasizesthatsafetygoesbeyondcompliance, integratingitintodailyoperationsthrougheducationandpractice.

This comprehensive approach ensures that businesses meet compliance standards and cultivate a genuine safety culture. The benefits of this approach are twofold: it helps businesses avoid costly fines and penalties, and it creates a safer and more productive work environment. "Our audits are designed to identify and mitigate risks proactively," explained Adam Lavazza. "We provide actionable insights that help businesses improve their safety practices."

Its unique approach and deep expertise truly sets Lavazza Safety apart from other safety consulting companies. Anthony's unparalleled experience as a top OSHA compliance officer, combined with the team's exceptional qualifications, ensures they deliver top-notch, knowledgeable services. Their unwavering commitment to fostering an authentic safety culture truly distinguishes them in the industry. "Our team's unmatched experience and unwavering dedication make us stand out," said Aaron Lavazza. "We are passionate about making workplaces safer."

Looking to the future, Lavazza Safety has an ambitious vision. They aim to become synonymous with workplace safety in Arizona, with their logo recognized as a mark of safety excellence. They aspire that when an OSHA inspector sees their logo, they will immediately know the site meets high safety standards.

Ultimately, Lavazza Safety is dedicated to contributing to a safer, more compliant, and thriving business environment in Arizona. "Our vision is to make Lavazza Safety a benchmark for safety excellence," said Adam Lavazza. "We want to be the go-to safety consultants for businesses across Arizona, making a significant impact on the state's business landscape."

"Ourunmatchedexperienceanddedicationsetusapart,"saidAaronLavazza."Wearepassionateaboutworkplacesafety."

XNRGY Climate Systems' Arrival Sparks a Real Estate Renaissance in Mesa

By Jennifer Conrad, Managing Editor

In the heart of Mesa, Arizona, a monumental transformation is underway. XNRGY Climate Systems, a pioneering force in the climate control industry, has set its sights on the city, heralding the dawn of a new era by constructing a state-ofthe-art manufacturing facility and U.S. headquarters.

This ambitious endeavor, boasting a staggering $300 million investment, commenced on April 16, 2024, and is expected to be completed by Q1 2025. This marks a pivotal moment for the company and the local community, with significant changes in the real estate market expected to follow.

The implications of XNRGY Climate Systems' arrival are profound, particularly for Mesa's residential real estate market. With the promise of 900 new jobs, including manufacturing, research and development, and management positions, the housing and property ownership landscape stands on the precipice of change, presenting many opportunities for residents and investors alike.

A Surge in Demand

The influx of 900 employment opportunities within the city's borders promises to alter the dynamics of the local housing market significantly. As job seekers flock to Mesa to pursue career prospects, the demand for housing is poised to skyrocket. With more buyers and renters vying for available properties, competition is expected to intensify, potentially driving prices upwards.

Neighborhood Evolution

The impact of XNRGY Climate Systems' presence extends far beyond the confines of its manufacturing facility. Surrounding neighborhoods are poised to undergo a metamorphosis, with areas proximate to the new facility becoming hotspots for residential living.

The allure of proximity to employment opportunities will likely enhance property values in these locales, catalyzing a renaissance of sorts. Meanwhile, other neighborhoods may experience a more subtle transformation, benefiting from the economic stimulus generated by the company's operations.

Investment Oasis

XNRGY Climate Systems' foray into Mesa represents a veritable goldmine of opportunities. The prospect of a burgeoning job market coupled with anticipated increases in property value spells lucrative potential for those savvy enough to capitalize on it. Whether through rental income or strategic renovations, the real estate landscape is ripe with promise, offering a chance to reap substantial returns on investment.

Infrastructure Overhaul

As Mesa prepares for an influx of residents and businesses, the need for enhanced infrastructure becomes paramount. Anticipating the strain on existing resources, the city is poised to embark on infrastructure improvements. From road expansions to school developments, these initiatives aim to accommodate the burgeoning population and significantly enhance the quality of life in Mesa. The collective efforts to improve the city's infrastructure will foster a sense of optimism and inclusivity within the community, reassuring residents and businesses about the city's bright future.