12 minute read
BUSINESS
State’s first candyland-bar opens in Chandler
BY KEN SAIN
Arizonan Staff Writer
Zabdi Hess said it wasn’t hard coming up with the inspiration for a new kind of tap room. She and her husband Kyle have a three-year-old child.
“We wanted something different,” Zabdi said. “There’s lots of tap rooms in the area, but we wanted to stand out, and offer different pairings with candy and beer.”
So that’s how she came up with the idea to open The Sugar Bar at Warner and McQueen roads in Chandler. It’s Arizona’s first bar and candy store.
It’s a family-friendly place where a couple can bring their children. While they are sampling craft beers, the kids can eat candy or select one of the board games to play.
“Outside of downtown Chandler and downtown Gilbert, between them there’s not much in terms of craft beer availability,” Kyle said. “We did our demographic research too, and around here there’s a ton of that 30-to-45 year range, … one or two kids, so that family demographic that we’re looking for.”
The Sugar Bar opened in early December and Kyle said they’ve been very happy with the turnout.
“It’s been awesome man,” Kyle said. “We’ve been busy pretty much every day. Mondays and Tuesdays are a little slower, per the usual, but every weekend is busy.”
Before opening their combination bar and candy shop, Kyle worked in digital
Zabdi and Kyle Hess have opened The Sugar Bar at Warner and McQueen roads in Chandler. It’s Arizona’s first bar and candy store. (David Minton/Arizonan Staff Photographer) seeSUGAR page 29
BY PAUL MARYNIAK
Arizonan Executive Editor
The rush by major investors to gobble up apartment complexes at eye-popping prices came to Chandler big time in recent months.
Five Chandler complexes since August sold for twice to three times the price paid by their previous owners within as little as 13 months and no longer than six years, according to data compiled by the Valley real estate tracker vizzda.com. Those sales reflect an ongoing pattern by large real estate investment companies, whose interest has been piqued by steadily increasing rents in a tight housing market in Maricopa County, where thousands of out-of-state residents are coming to live. Throughout the East Valley, eight- and nine-figure deals have been consummated within the past 12 months, data show.
“There’s more money than ever betting that apartment rents are heading tonew heights,” Bloomburg.com reported, citing a Real Capital Analytics report that investors spent $53 billion on multifamily real estate nationally in just the second quarter of 2021 alone.
They and other experts also point to the fact that rent offers a steady longterm income stream largely unaffected by the economic fluctuations that impact the re-sale and new single-family market. The five recent mega-transactions for Chandler complexes included: • The October sale of the Greens Apartments at 125 S. Alma School Road for $125.3 million – nearly three times the 2015 sale price of $46.2 million.
That sale by the Phoenix-based Conam Group of Companies to Decron
Properties of Los Angeles worked out to $186,250 for each of the 324 apartments spread out across 28 two-story buildings. • The September sale to Windemere Investments of Texas of the Soleil Apartments at 725 No. Dobson Road for $63 million – less than two years after the seller, 3rd Avenue Investments of
Phoenix, bought the 188-apartmentsturned-condo complex for $40 million.
That represented a per-unit price of $335,106. • California-based Davlyn Investments’ Dec. 15 acquisition of the 280-unit
Broadstone Trevio on S. Ellis Street for $114.4 million – more than twice the $47.5 million price that seller
TruAmerica Multifamily paid for the 16-year-old complex in 2015. • The purchase by Scottsdale-based Private Portfolio Group and subsidiary Pillar Communities of the 116-townhouse complex called Villas at Chandler Heights last month for $55.1 million only three years after The Carte
Group, the seller, bought it for half that price. • Last month’s sale of the Marquis at Chandler complex at 2200 W. Frye Road by Pacific Coast Capital Partners to Texas-based CWS Capital Partners for $150 million – 11 months after Pacific bought it for $95 million.
That transaction represented a price of $441,176 for each of the Marquis complex’s 340 apartments that are spread across nine four-story buildings.
Both Decron Properties and CWS Capital Partners are real estate investment management companies with similar financial objectives.
CWS says on its website, “We seek investment opportunities with the primary objective of strong growth potential while maintaining preservation of capital.”
Stressing that it is primarily a builder, Decron Properties states its development philosophy “blends land use, en-
THE CHANDLER ARIZONAN | WWW.CHANDLERNEWS.COM | JANUARY 9, 2022
Inflation requires better retirement planning
BY HAROLD WONG
Arizonan Guest Writer
Inflation is accelerating in America. Recent data shows that the producer price index (a wholesale prices measure) in November 2021 increased by 9.6% over the previous 12 months, the largest gain on record.
Case study: Joe and Susan Boomer are 60 and are not sure when they will retire. Many of their retired friends who are 1020 years older than them are now very frightened by the current high inflation. This is forcing Joe and Susan to rethink their retirement plans and investment strategies. Assume that inflation will average 6% over the next 10 years.
Facts: Joe and Susan, currently, have total wages of $150,000 and $10,000 of investment income. They pay a total of $11,475 of Social Security and Medicare payroll taxes and $22,000 total income taxes. They save $30,000 per year and invest it. They have saved $1 million of financial assets and have no debts at all. They hope to be able to spend $120,000 per year in retirement and expect to live until 92. They have no pensions and their combined Social Security if taken at age 62 would be $35,000 annually vs. $70,000 if taken at age 70.
According to moneychimp.com, the compound annual growth rate in the S&P 500 Index has been 4.57% in the 21year period starting Jan. 1, 2000. When one adds dividends of 2.02% the gross is 6.59%. If one subtracts a future 6% inflation rate, the net return would be 0.59% before annual Wall Street fees.
Even if they invest only in super lowfee Vanguard index funds, their projected net return would be zero. Note that if you loan to Uncle Sam by buying a 30-year US Treasury Bond, the current interest yield is 1.91%.
Using $35,000 from Social Security taken at age 62 (most take it at 62) plus an assumed average 3% cost-of-living increases for eight years, that equals $44,337 annual Social Security income at age 70. One would add their $1 million times 2% return = $20,000 annually. One would add their $30,000 of annual savings for 10 years = $300,000 more saved times 2% return, which gives them an extra $6,000 of income. Now total retirement income is $70,337, which is only 59% of their desired $120,000 retirement income. However, with 6% annual inflation for the next 10 years, they would need $214,902 annual income in 10 years to buy what $120,000 will buy today. Their $70,337 retirement income will be only 33% of what is needed and retirement looks grim. Inflation means they need three times their projected income to retire as planned!
Different plan: They take Social Security at age 70 and it’s $80,000 a year, counting cost-of-living increases. They deposit $700,000 in a private pension plan at age 60 and it generates $70,000 a year at age 70. They invest $70,000 annually in solar equipment that saves them $20,000 a year in taxes and has a 10% return. Using a financial calculator: PMT = $70,000; I = 10% return; N = 10 years; and FV (Future Value) = $1,227,181. At age 70, 7% ($1,227,181) = $85,903. Now total retirement income is$235,903 and allows them to spend more than what they planned on, even with high inflation for the next 10 years. They will still have some extra financial assets left over for emergencies.
Conclusion: Continued high inflation requires innovative retirement planning.
Live seminar: For a discussion on “Double Your Retirement Income and Slash Your Taxes! At 10 a.m. Jan. 29 at Hyatt Place, 3535 W. Chandler Blvd. Chandler, and a free lunch at 12:15 p.m. catered by La Madeleine French Café, RSVP or schedule a free consultation by contacting Dr. Harold Wong at 480-706-0177 or harold_ wong@hotmail.com. His website is drharoldwong.com.
Dr. Harold Wong earned his Ph.D. in e conomics at University of California/ Berkeley and has appeared on over 400
TV/radio programs. ■
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marketing and Zabdi was a teacher. They admit changing fields during a pandemic and with a young child was a challenge. “It was definitely a risk, for sure,” Kyle said. “But we felt confident enough in a lot of the research we had done, and the overall market for it.”
They began forming the company at the start of 2021, when hopes were high that the vaccine would soon allow people to socialize again. By summer they had selected the location and began getting their shop ready to open. And just a few weeks after the Dec. 2 opening, COVID cases are hitting record The family-friendly Sugar Bar is a place where adults can bring their kids to eat candy or play games while they enjoy some craft
beers. (David Minton/Arizonan Staff Photographer) highs as the Omicron variant spread.
“Everything was looking like it would be OK,” Kyle said. “Obviously, that’s taken a weird turn.”
Patrons can bring their own food to The Sugar Bar. That’s because the food options inside are limited, mostly to the candy, some popcorn and maybe nachos on the weekends.
Finding beers that pair with candies is part of the fun.
“There are a lot of new beers that pair really well with candies,” Kyle said. “Obviously our dark beers pair really well with chocolate, we have a lot of sour beers that pair well with our gummies and sour candies.”
Above all, however, was Kyle and Zabdi wanted a place for families.
“We wanted it to be a place where people could take their kids too,” Kyle said. “We have a three-year-old, and he goes with us everywhere. It’s nice to find a place that’s kid friendly.”
Information: thesugarbar.co
APARTMENTS from page 27
titlement, and construction expertise with a vision that creates lasting value in real estate assets” as long-term investors in real estate.
Chandler by far is not the only East Valley community where mega-deals involving apartment complexes have occurred in the last 12 months.
Just across the I-10 from Chandler, Sares-Regis Group of Newport Beach, California, last month bought the 312unit Arboretum at South Mountain complex on Chandler Boeuilvard at I-10 for $118.3 million – far more than the $45.5 million it sold for in May 2016.
Earlier last fall, Tides Equities of California sold a complex it bought four years ago for $47.2 million to another investment group for $137 million. The following day, Tides Equities bought two Mesa complexes for a total $217.5 million. Such transactions reflect what Bloomberg called a shift by real estate investors from offices, hotels and malls, which it said “fared poorly in the pandemic.” The Marquis at Chandler apartment complex on Frye Road sold last month for $150 million – 11 months after the seller paid $95
million for it. (Special to the Arizonan)
“The influx of money has pushed prices higher and forced private equity firms to behave like the aggressive homebuyers in the frenzied housing market,” Bloomberg said. “Some investors are frustrated by current prices for apartment buildings. But many are raising their bids, waiving inspections and promising to close fast, with rising rents driving a flurry of deals.” It quoted one investment activist as stating: “That’s what happens in a whitehot market. Some of them will sharpen the pencil on the next one and get a little more aggressive because they need to deploy that capital.” According to a number of analysts, the interest in apartment complexes also is being fueled by soaring home prices that have especially impacted first-time homebuyers and aging baby boomers anxious to downsize.
Large investors also aren’t just looking at apartment complexes for the longterm benefit of a steady revenue stream that rent delivers.
The Cromford Report, which closely watches the Phoenix Metro housing market, noted that large investors also are buying single-family homes in bulk – and not turning them over for resale.
Instead, the Cromford Report noted, “investors are extremely interested in purchasing single-family homes in Phoenix. The receipts from rents are rising faster than anywhere else in the country.
“Rents are rising because there are more people wanting to rent than there are rental properties. Many families are starting to see single-family rentals as preferable to apartments or condo-style rentals. This effect is probably supported by living conditions during a pandemic.
“While this continues, we can expect investor demand to remain robust, which in turn prevents the market cooling down as it would if ordinary home buyers were the only source of demand.”
Manage Case, a company that manages apartment complexes, echoed that lure of rent for investors.
“There is little to support any prediction other than rising rent prices,” it said. “Those hoping for a lull in the rising price trend will likely be disappointed.”
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