By Rebekah Morris for Arizona Builder’s Exchange
Capping an intense nine-month Masters of Real Estate Development (MRED) program at ASU, three teams of graduating students presented to a room full of industry veterans what they would do to redevelop the NWC of Rural & University in Tempe.
No pressure: the audience are your likely employers who know the market, have decades of experience and can torpedo your months of work product in a matter of minutes. Students rose to the challenge – pitching ideas that were both researched and creative, presenting numbers with as much confidence as could be had.
The Case: Fraternity Row
The subject parcel, a 16-acre dirt pile on the NWC of Rural Road and University Drive was previously the home of Fraternity Row. Also included in the challenge is the 6th Street right-of-way. Based in reality, this parcel has repeatedly been called out as the very first project in the long-range ASU Athletic Facilities District.
Each team of students had two mentors helping them create an entire development proposal: an architectural mentor to help with programming, renderings, and the like, and a capital mentor to ensure the finances are both feasible and close to reality. Teams had approximately two months to complete the project; the winning team was awarded $1,000 to each participant.
The winning team, ICON Development, presented the most “out-of-the-box” proposal, as well as focused their efforts on attracting high-level tenants in a build-to-suit arrangement vs. a speculative development. The team included Michael Beck, Amanda Donner, Kammy Harding and Kristjan Holm.
Their tagline was “Generate Revenue for Athletics with Athletics”. They paired a sports training facility, EXOS, next to Mayo Clinic’s sports medicine R&D Facility. The group interviewed the operators of EXOS, a premier sports training facility in North Phoenix, determining their needs for space, what types of uses work well nearby, and the like.
Thinking of EXOS was no accident: they formerly occupied a space on ASU’s campus before outgrowing the facility. Mayo Clinic has a sports medicine division at their Mayo Clinic Square in Minneapolis. While they have plenty of space in North Phoenix, it makes a lot of sense to construct a high-level sports rehab facility next to a training facility like EXOS.
Additional uses on the parcel would include a hotel and conference space, Class A Office space, and a multifamily development.
Reaction from the Experts
The teams were all peppered with detailed questions about their financial assumptions, how they would make money, whether the returns were reasonable and more. The land transaction is very tricky: it is owned by ASU and must be conveyed to the developer via a 99-year lease. The teams varied in their approach of how ASU is paid, but they all researched how that deal would be structured.
Brian Kearney, Sr. VP of Development for Catellus, provided some feedback after the event.
This is the fourth annual REIAC challenge, sponsored by Rockefeller Group. The exercise has great benefits for all sides – not only do the students get the experience of calling on a real parcel in the Valley, the parcel owners benefit from the student’s activity.
Featured parcels generated interest from the local development community, sometimes selling after the activity with multiple offers. The students also get a chance to strut their stuff in front of the key audience – their future employers.