Proposed Gilbert Regional Park Hotel
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MARKET STUDY DRAFT - AUGUST 19, 2019
Proposed Gilbert Regional Park
Hotel
GILBERT, ARIZONA
SUBMITTED TO : PREPARED BY:
Mr. Glenn Schlottman HVS Convention, Sports & Entertainment
Town of Gilbert Facilities Consulting
50 East Civic Center Drive 205 West Randolph, Suite 1650
Gilbert, Arizona 85296 Chicago, Illinois 60606
+1 (480) 503-6913 +1 (312) 587-9900
Glenn.Schlottman@GilbertAZ.gov
October 1,
DRAFT - August 19, 2019
205 West Randolph Mr. Glenn Schlottman
Suite 1650 Town of Gilbert
Chicago, Illinois 60606 50 East Civic Center Drive
+1 312-587-9900 Gilbert, Arizona 85296
+1 312-488-3631 FAX
www.hvs.com
Re: Proposed Gilbert Regional Park Hotel
Gilbert, Arizona
Atlanta
Boston Dear Mr. Schlottman:
Boulder
Chicago
Attached, you will find our Market Study of the Proposed Gilbert Regional Park Hotel
Dallas
Denver
in Gilbert, Arizona.
Las Vegas
México City
We certify that we have no undisclosed interest in the property, and our
Miami employment and compensation are not contingent upon our findings. This study is
Nassau subject to the comments made throughout this report and to all assumptions and
New York limiting conditions set forth herein.
Newport
San Francisco It has been a pleasure working with you. Please let us know if you have any
Toronto
questions.
Vancouver
Washington
Athens
Sincerely,
Buenos Aires HVS Convention, Sports & Entertainment
Dubai Facilities Consulting
Hong Kong
Lima
London
DRAFT
Madrid
Mumbai
New Delhi
Tom Hazinski
Sao Paulo Managing Director
Shanghai
Singapore
DRAFT
Brian Harris
Senior Director
Table of Contents
SECTION TITLE
1. Executive Summary 1-1
2. Site Analysis and Proposed Hotel 2-1
3. Gilbert Market Overview 3-1
4. Supply and Demand Analysis 4-1
5. Projection of Occupancy and Average Rate 5-1
6. Projection of Income and Expenses 6-1
7. Statement of Assumptions and Limiting Conditions 7-1
8. Certification 8-1
1. Executive Summary
Subject of the The Town of Gilbert (“Town”) engaged HVS Convention, Sports, and Entertainment
Market Study Facilities Consulting (“HVS”) to conduct a Market Study of a Proposed Gilbert
Regional Park Hotel (“Proposed Hotel”). The site under consideration for the
Proposed Hotel is in the Gilbert Regional Park in Gilbert, Arizona. For this study,
HVS analyzed the development of a select-service hotel.
HVS considered a range of hotel development options and focused our analysis on a
high-quality property appropriate for the park location. While a specific opening
date has not been established, for the purposes of this study, HVS assumes the
Proposed Hotel will open on January 1, 2022, as a 100-room select-service hotel of
high quality. The property would feature a complimentary breakfast services area,
1,400 square feet of meeting space, outdoor pool, outdoor whirlpool, fitness room,
lobby workstation, market pantry, and guest laundry area. The hotel would also
include the appropriate back-of-the-house space necessary to support hotel
operations.
The Proposed Hotel would attract the commercial, meeting and group, and leisure
market segments because of a national brand affiliation, new construction, and
Gilbert Regional Park location. Hotel guests would include independent travelers
who are willing to pay a higher rate for a new product, groups looking for small
meeting rooms, and price-sensitive leisure travelers that seek high-quality rooms at
discounted rates on shoulder days and weekends.
Methodology This study employs the methodology illustrated in the figure below.
1-1
DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
FIGURE 1-1
HOTEL MARKET STUDY METHODOLOGY
Research Potential
Competitive Hotels
Economic Indicators
Competitive Set Analysis
Induced Demand
Market ADR and
Occupancy Estimates
Unaccommodated
Demand Occupancy and ADR
Proposed Hotel Market
Forecasts by Market
Penetration
Segment
Room Supply Changes
Comparable Hotel Estimate of Proposed
Inflation and Market Operating Data Hotel Financial
Growth Assumptions Operations
HVS 1) analyzed the historical performance of a competitive set of hotels,
2) estimated the amounts of induced and unaccommodated demand in the market,
and 3) researched potential changes in room supply. Based on these hotel market
trends and economic and demographic indicators of future changes in hotel
demand, HVS projected the future performance of a competitive set of hotel
properties on the local market. Through a market penetration analysis, we
estimated the average daily room rate and occupancy of the Proposed Hotel in each
of the three market segments—commercial, leisure, and meeting and group. An
estimate of average daily room rates and occupancies generates a projection of
room revenues, which, when combined with the operating data on comparable
hotels, yields a ten-year estimate of financial operations.
The methodology used to develop this study is based on market research and
valuation techniques set forth in the textbooks authored by Hospitality Valuation
Services for the American Institute of Real Estate Appraisers and the Appraisal
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and
Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to
Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market
Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels – Valuations
and Market Studies.5 All information was collected and analyzed by the staff of HVS
Convention, Sports & Entertainment Facilities Consulting.
Pertinent Dates The effective date of the study is August 19, 2019. Tom Hazinski and Brian Harris
inspected the site for the Proposed Hotel on June 12, 2019. All projections are
expressed in inflated dollars.
Site The site for the Proposed Hotel is in Gilbert Regional Park (“GRP”). The Town will
offer a land lease for a maximum of 10 acres. Detailed descriptions of the site, GRP,
and The Strand @ Gilbert skills-based water park which will be adjacent to
Proposed Hotel are in Section 2 starting on page 2-2.
The Town will enter into a land lease for the site with the developer of the Proposed
Hotel. The terms of the land lease have not been determined as of the date of this
study. The term of the land lease is expected to be at least 30 years with two ten-
year renewals at the option of the developer.
The ownership structure was not determined as of the date of this study.
The management agreement will need to be negotiated after a development plan for
the Proposed Hotel has been finalized with the developer. We have included a
market appropriate management fee of 3.0% of gross operating revenues. Other
charges related to the future hotel’s brand affiliation, such as frequent guest
programs, are reflected in the appropriate departmental expenses, consistent with
the Uniform System of Accounts for the Lodging Industry (“USALI”).
1 Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of
Real Estate Appraisers, 1978).
2 Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies.
(Chicago: American Institute of Real Estate Appraisers, 1983).
3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and
Valuations. (Chicago: American Institute of Real Estate Appraisers, 1990).
4 Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment
Analysis, and Valuations (Chicago: Appraisal Institute, 1992).
5 Stephen Rushmore and Erich Baum, Hotels and Motels – Valuations and Market Studies.
(Chicago: Appraisal Institute, 2001).
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
Franchise We recommend that the Proposed Hotel operates as an Upper Midscale or Upscale
class, select-service hotel. A specific franchise affiliation would be determined as
part of a future hotel project. We assume that the Proposed Hotel will obtain a
national brand and will retain its brand affiliation throughout the ten-year holding
period. Inherent in this assumption is the expectation that the property will be
operated in accordance with brand standards, including requirements for services
and cleanliness; that the hotel will be maintained in good condition, with all building
systems in good working order; and that any necessary refurbishments or
renovations will be completed in a timely manner and in accordance with the
requirements of the brand. Other charges related to the affiliation, such as frequent
guest programs, are reflected in the appropriate departmental expenses, consistent
with the Uniform System of Accounts for the Lodging Industry (“USALI”).
Summary of Hotel HVS analyzed the performance of a set of hotels that would compete with the
Market Trends Proposed Hotel (“Competitive Hotels” see page 4-3, Figure 4-1). Based on an
evaluation of the occupancy, rate structure, market orientation, location, facilities,
amenities, reputation, and quality, as well as the comments of management
representatives, we have identified four properties that would compete with the
Proposed Hotel on a primary basis, and nine properties that would compete on a
secondary basis, for a total of 13 competitors. Due to location, brand quality, and
service levels, primary competitors vie for the same customers and are 100 percent
competitive with the Proposed Hotel. Secondary competitors have partially
overlapping customer bases, and their competitiveness with the Proposed Hotel is
weighted at less than 100 percent. Section 4 of this study, Supply and Demand
Analysis, provides a detailed discussion of the weighting of the secondary
competitors.
The following figure provides a long-term perspective on the supply and demand
trends of the Competitive Hotels, with data provided by Smith Travel Research
(“STR”). STR is an independent research firm that compiles proprietary data on the
lodging industry.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
FIGURE 1-2
HISTORICAL COMPETITIVE HOTELS ADR, OCCUPANCY, AND REVPAR TRENDS
$140 100.0%
90.0%
$120
80.0%
$100 70.0%
60.0%
$80
50.0%
$60
40.0%
$40 30.0%
ADR RevPAR Occupancy
20.0%
$20
10.0%
$0 0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: STR
Average daily room rate (“ADR”) is the annual revenue of the hotel from room sales
divided by the number of occupied room nights. Occupancy is a percentage
calculated by dividing the annual number of occupied room nights by the annual
number of available room nights. Revenue per available room, (“RevPAR”) is a
common hotel industry metric, calculated by multiplying the occupancy rate by ADR
and provides a combined measure of rate and occupancy.
In 2018, the ADR of Competitive Hotels increased by 0.7% and occupancy increased
by 6.0%, causing RevPAR to increase by 6.8%. Demand grew by 11.2% in 2018. The
increase in demand, partly offset by an increase in available room nights of 4.9%,
caused the occupancy rate to rise to 72.4%.
The following figure reflects HVS’s estimates of operating data of the Competitive
Hotels for the years 2016 through 2018.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
FIGURE 1-3
WEIGHTED HISTORICAL SUPPLY, DEMAND, OCCUPANCY, ADR, & REVPAR
(2016 - 2018)
Competitive
Room Nights Room Nights Competitive Competitive
Year Hotels
Available Sold Hotels ADR Hotels RevPAR
Occupancy
Amount
2016 329,000 237,000 72.0% $113.79 $81.97
2017 387,000 271,000 70.0% $115.67 $81.00
2018 404,000 296,000 73.3% $117.20 $85.87
Percent Change
2017 17.6% 14.3% -2.8% 1.7% -1.2%
2018 4.4% 9.2% 4.6% 1.3% 6.0%
2016 to 2018 22.8% 24.9% 1.7% 3.0% 4.8%
Since 2016, accommodated room nights increased by 24.9%, while the number of
available room nights increased by 22.8%. As a result, market occupancy increased
by 1.7% during the same period. Average daily room rate grew 3% since 2016. The
combined effect of changes in occupancy and ADR caused RevPAR to grow 4.8%
over the three-year period analyzed here.
Monthly Room Night HVS analyzed changes in the Competitive Hotels over the last 12 months as reported
Demand to STR, as shown in the figure below.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona
FIGURE 1-4
UNWEIGHTED HISTORICAL 12 MONTH COMPETITIVE DEMAND TRENDS
Occupied
Month Prior Year Difference Change in Demand
Room Nights
Jul -18 26,368 24,128 2,240 9.3%
Aug-18 28,361 27,188 1,173 4.3%
Sep-18 29,665 25,992 3,673 14.1%
Oct-18 36,266 29,751 6,515 21.9%
Nov-18 36,401 31,448 4,953 15.7%
Dec-18 36,367 29,307 7,060 24.1%
Ja n-19 38,729 32,287 6,442 20.0%
Feb-19 41,878 35,118 6,760 19.2%
Ma r-19 47,520 39,393 8,127 20.6%
Apr-19 38,225 31,694 6,531 20.6%
Ma y-19 38,407 32,654 5,753 17.6%
Jun-19 34,868 27,675 7,193 26.0%
12 Month Tota l 433,055 366,635 66,420 18.1%
Source: STR
Demand within the competitive set showed growth of 18.1% over the last 12
months, due in part to increased supply. Interviews with hotel managers indicate
that the market demand was increasing, and the competition was growing due to
new supply.
Summary of Forecast To forecast the occupancy of the Proposed Hotel, HVS performed a market
Occupancy and penetration analysis of three market segments: commercial, meeting and group, and
Average Rate leisure. The purpose of segmenting the lodging market is to define each major type
of demand, identify customer characteristics, and estimate future growth trends.
The following figure summarizes estimates of accommodated room night demand
by market segment, assuming the Proposed Hotel begins operation on a calendar
year starting January 1, 2022.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 1-5
PROPOSED HOTEL OCCUPANCY FORECAST
Calendar Year 2022 2023 2024 2025
Ava i l a bl e Room Ni ghts 36,500 36,500 36,500 36,500
Abs orpti on by Segment
Commerci a l 9,900 10,600 10,900 10,900
Meeti ng a nd Group 2,100 2,300 2,300 2,300
Lei s ure 11,200 12,200 12,700 12,700
Tota l Abs orpti on 23,200 25,100 25,900 25,900
Projected Occupa ncy 63% 68% 71% 71%
Percent Segmenta ti on
Commerci a l 43% 42% 42% 42%
Meeti ng a nd Group 9% 9% 9% 9%
Lei s ure 48% 49% 49% 49%
The Proposed Hotel would open on January 1, 2022, and for this analysis, we assume
would take three years to stabilize. Based on our analysis presented in Section 5, in
a stabilized year of demand, the property could absorb room nights and achieve a
stabilized occupancy level of 71%. The following figure compares the projected
occupancy of the Proposed Hotel with Competitive Hotels.
1-8
DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 1-6
OCCUPANCY FORECAST
Competitive Hotels Proposed Hotel
72% 72% 72%
70% 71% 71% 71% 71%
68%
63%
2022 2023 2024 2025 2026
In positioning the ADR, we consider the ADR of Competitive Hotels as well as the
location of the Proposed Hotel, and its brand and quality.
The following figure compares the estimated ADR of the Proposed Hotel with the
ADR of Competitive Hotels during five calendar years starting January 1, 2022.
1-9
DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 1-7
AVERAGE RATE FORECAST
Competitive Hotels Proposed Hotel
$148 $151
$139 $143 $143 $147
$131 $134 $135 $138
2022 2023 2024 2025 2026
We positioned the ADR in the base year 2018 at an average rate of $120.00. This
rate would grow with inflation and in proportion to the rate of growth in the
competitive set. The positioned ADR is further discounted by 3.0% in 2022 and
1.0% in 2023 to reflect typical management practices during the years before the
hotel stabilizes in the market.
Summary of Forecast HVS supports its estimates of revenue and expense levels using data on the
Income and Expense operations of comparable hotels and factors specific to this market. Three common
Statement measures of hotel financial performance are 1) ratio to sales (“RTS”), 2) amounts
per available room (“PAR”), and 3) amounts per occupied room night (“POR”) which
are used to present the financial data. The following figure presents the HVS forecast
of income and expense for a stabilized year of operation for the Proposed Hotel.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 1-8
FINANCIAL OPERATIONS IN THE STABILIZED YEAR 2024
STATISTICS
Number of Rooms 100
Occupied Room Nights 25,915
Occupancy 71%
Average Rate $142.59
RevPAR $101.24
$000 % Gross
Operating Revenue
Rooms $3,695 98.8%
Other Opera ted Depa rtments 28 0.7%
Mi s cel l a neous Income 18 0.5%
Total Operating Revenues $3,741 100%
Departmental Expenses*
Rooms $887 24.0%
Other Opera ted Depa rtments 24 85.0%
Sub-total $910 24.3%
Departmental Income $2,831 75.7%
Undistributed Operating Expenses
Admi ni s tra ti ve & Genera l $307 8.2%
Ma rketi ng 198 5.3%
Fra nchi s e Fee 370 9.9%
Prop. Opera ti ons & Ma i nt. 153 4.1%
Uti l i ti es 176 4.7%
Info & Tel ecom Sys tems 37 1.0%
Sub-total $1,241 33.2%
Gross House Profit $1,590 42.5%
Management Fee $112 3.0%
Income Before Non-Opr. Inc. & Exp. $1,477 39.5%
Non-Operating Income & Expenses
Property Ta xes $168 4.5%
Ins ura nce 41 1.1%
La nd Lea s e TBD
Res erve for Repl a cement 150 4.0%
Sub-total $359 9.6%
EBITDA Less Reserve ** $1,118 29.9%
0.0%
*Departmental expense ratios are calculated as a percentage of
departmental revenue.
** The land lease payment was not determined as of the date of this Study
The land lease payment has not been determined as of the date of this study. Please
refer to Section 6 of this study, Projection of Income and Expense, for a detailed
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizonaexplanation of the methodology used in deriving our forecast of financial
operations.
Public/Private A public/private partnership (“P3”) is an economic development tool that is gaining
Partnerships popularity in the hospitality industry. Despite positive market indicators and
demand potential, some hotel projects do not create the necessary financial
performance to support their feasibility. Public incentives can help bridge the
feasibility gap and encourage private development of high impact projects. Many
local governments have entered a P3 with a developer to overcome a funding gap in
the development budget for a hotel they want to be developed in a specific location.
The amount of public support required to finance the Proposed Hotel through a P3
is dependent upon the gap between the capital cost of the project and the amount
of debt and equity that can be raised in the capital markets. P3s in hotel
developments are more frequently used for projects in which a reasonable amount
of public equity investment can make the difference between a feasible and
infeasible project.
The following figure summarized typical deal terms in a P3.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 1-9
SUMMARY OF P3 DEAL TERMS
Issue Terms
A pri va tel y-owned s i ngl e purpos e enti ty, typi ca l l y a l i mi ted l i a bi l i ty corpora ti on
Ownership ("LLC") hol ds ti tl e to the hotel . The owner i s res pons i bl e for enga gi ng the devel oper
a nd opera tor.
The hotel ma y be ma na ged by a hotel bra nd compa ny (e.g. Ma rri ott, Hi l ton, Hya tt,
Interconti nenta l , Lowes ). Or the hotel ma y be opera ted by a thi rd pa rty wi th a
Operations
fra nchi s e a greement to bra nd the property. Compens a ti on of the ma na ger i s
typi ca l l y ba s ed on a percenta ge of gros s revenue, net opera ti ng i ncome or both.
Pri va tel y-owned hotel s a re typi ca l l y fi na nced wi th a mi x of debt a nd equi ty. In the
current ma rkets , l enders wi l l l end 65% to 70% of the va l ue of the project a nd equi ty
i nves tors or mezza ni ne l enders provi de the ba l a nce of the fundi ng. Typi ca l l y the
devel oper obta i ns a va ri a bl e ra te cons tructi on l oa n, whi ch i s l a ter repl a ced wi th
Financing perma nent fi na nci ng when hotel opera ti ons s ta bi l i ze. Equi ty i nves tment i s
obta i ned by s el l i ng s tock i n the LLC a nd the devel opment group ma y ha ve a
control l i ng i nteres t i n the LLC. In publ i c/pri va te pa rtners hi ps , a governmenta l enti ty
ma y a l s o provi de a n equi ty contri buti on to the project wi th l i ttl e or no expecta ti on
of obta i ni ng a return on thei r equi ty i nves tment.
Interes t ra tes on perma nent debt ma y ra nge from 5% to 6% i n the current fi na nci a l
ma rkets . Pri va te equi ty i nves tors ma y requi re 15% to 20% return on equi ty due.
Cost of Funds
Thes e pa ra meters va ry dependi ng on credi t ma rket condi ti ons a nd the a va i l a bi l i ty
of ca pi ta l for hotel i nves tment.
Publ i c s ubs i di es ma y ta ke the form of l a nd contri buti ons , i nfra s tructure a nd pa rki ng
Forms of
devel opment, ta x a ba tements , ta x turn-ba cks , ta x-s ha ri ng a greements , a nd ca s h
Public
s ubs i di es . Publ i c s ubs i di es mus t be ti ed to the publ i c benefi ts the project wi l l
Subsidies
del i ver.
The i nves tors i n the LLC us ua l l y cl a i m the res i dua l project i ncome from opera ti ons
Project
a nd the s a l e of the a s s et. Muni ci pa l i ti es ma y negoti a te a s ha re of project i ncome
Income
i n excha nge for provi di ng publ i c s ubs i di es . Devel opers often negoti a te a "preferred
Sharing
return," whi ch gi ves the devel oper a fi rs t cl a i m on i ncome.
The financial feasibility of the Proposed Hotel depends on several factors, including:
• construction costs,
• estimated net operating income of the Proposed Hotel,
• interest rate levels,
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona• availability of equity,
• seasonality and volatility of the local hotel market, and
• other factors that affect the allocation of investment risk and return.
The most frequently used methods of public incentive for a P3 have included:
• Project Generated Revenues
o Abatement of lodging taxes collected on the property or redirection
of those taxes to the project.
o Abatement of the property tax or subordination of the property
taxes to return on equity investment in the project.
o Turn back or abatement of sales taxes generated by the project.
o Imposition of project-specific taxes such as a higher lodging tax.
• Local Government Participation
o a pledge of city-wide or special district lodging taxes to support the
project. Less frequently, public entities fund their contribution to
the project using:
- food and beverage tax revenues generated by the property or
from a special district, or
- general sales taxes or sales taxes from a special district.
o Credit enhance all or a portion of the debt required to fund the
project to obtain a lower interest rate.
o Reduce or eliminate governmental development-related fees and
permits on the project.
o Grant to fund a portion of the project.
o Increase the lodging tax to fund a portion of the project.
o Infrastructure improvements, including roadway improvements,
parking lots and decks, and other supporting developments.
o Marketing support for the project.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona• State Participation
o A grant or rebate of certain project relates state taxes, such as sales
taxes.
o Sales taxes generated at the project or within a district to support
the project.
Public agencies may choose from a wide variety of options to provide public support
for a hotel project. Whatever forms public support may take, it must be tied to public
benefits the project would incur to the local community.
The package of incentives utilized by local governments in P3s for similar projects
often include providing the site, abatement of property taxes for a specified time,
and the local government’s portion of the hotel occupancy tax generated. The
property taxes and the hotel occupancy tax are generated by the project, which
limits the financial exposure of the local government. If the Town could offer a
similar package of incentives, a P3 for the project should be offered through a
Request for Proposal (“RFP”) process to determine if a developer would be
interested in the project.
State and local law will dictate the forms of allowable public participation. Next
steps may include the following.
• The Town should identify which funding sources it is willing and legally able
to use for the development of the Proposed Hotel.
• Preparation of an RFP that would be sent to potential developers.
• Discussion with the State concerning assistance to the project.
Our analysis does not address unforeseeable events that could alter the financial
performance of the proposed project and the market conditions reflected in the
analyses. We assume that no significant changes, other than those anticipated and
explained in this study, would take place from the date of HVS’ site visit or the date
of this study. Our findings are subject to all the assumptions and limiting conditions
described herein. The reader should contact the authors with any questions after
reading the study.
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DRAFT - August 19, 2019 Executive Summary
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona2. Site Analysis and Proposed Hotel
The suitability of a site for the development of a lodging facility is an important
consideration affecting its economic viability. Factors such as size, accessibility,
visibility, and the proximity of other amenities have a direct impact on the suitability
of a site. Other factors, such as the cost of obtaining the site, infrastructure needs,
and costs of improving a site should also be considered.
Gilbert Regional Park The Town and the Flood Control District of Maricopa County (“FCDMC”) entered
into an Intergovernmental Agreement (“IGA”) in May of 2015 for the recreational
use of the Chandler Heights Basin by the Town. The Maricopa County Board of
Supervisors voted to approve a perpetual recreation easement that allows the Town
to implement and maintain a multi-use recreational area within the District’s
Chandler Heights Basin, 225-acres located south of Queen Creek Road and west of
Higley Road, beginning in September of 2019. When added to the Town’s 47-acres
immediately adjacent to the basin, it will create the 272-acre Gilbert Regional Park
(“GRP”). GRP runs along the west side of Higley Road and stretches southward from
Queen Creek Road to Chandler Heights Road.
In September 2017, after a recalculation of the basin storage requirements, FCDMC
determined that approximately 50 acres within the recreation easement could now
be classified “high and dry” land.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaGILBERT REGIONAL PARK RENDERING
Source: Town of Gilbert
The Town plans to develop the GRP in three phases. Phase One A will include:
• Eight pickleball courts,
• six tennis courts,
• a play structure accessible to people with disabilities,
• restrooms,
• 16 ramadas,
• monument sign,
• trails/sidewalks,
• gravel event law,
• a splash pad, and
• parkway & 300 parking spaces.
Phase One B is scheduled to open in the summer of 2020 and will include:
• A seven-acre lake,
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona• a ten-acre upper great lawn,
• amphitheater/stage,
• six sand volleyball courts,
• two tennis courts,
• additional restroom,
• maintenance facility, and
• connection road to Highly Road.
The future expansions, which are not currently funded, could include:
• Phase 2 encompasses the park area south of the future Ocotillo Road Bridge,
and
• Phase 3 encompasses the remaining upper basin.
The Town will also enter P3s for the development of additional facilities at GRP.
Possible P3s include:
• a water park,
• retail outlets, and
• the Proposed Hotel.
The first P3 was entered between Gilbert and the developers of The Strand @ Gilbert
skills-based water park. The Strand @ Gilbert will be on 25 acres in Phase One.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaTHE STRAND @ GILBERT SKILLS-BASED WATER PARK
Source: Strand@Gilbert
The Strand @ Gilbert will offer:
• A surf lagoon,
• cable wakeboarding,
• swimming areas,
• retail shop,
• indoor party rooms and arcade,
• restaurant, and
• cabanas
The surf lagoon will deliver on-demand wave production with different surf levels
all year long. Lights will illuminate the surf for nighttime use seven days a week. The
Strand @ Gilbert water park will be a major generator of room night demand for the
Proposed Hotel.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaOcotillo Bridge The Town is planning to build a new bridge across the Queen Creek Wash and East
Maricopa Floodway. It will be west of Higley Road and south of Queen Creek Road.
The bridge will connect the east and west portions of Ocotillo Road, which will
improve access to GRP.
OCOTILLO BRIDGE
Source: Kimley-Horn
Site The Town has allocated three sites within GRP for public/private partnerships:
• Site P1-a 25-acre site will be developed into The Strand @ Gilbert water
park,
• Site P2-a 10-acre site that will be developed into the Proposed Hotel, and
• Site P3- a 5-acre site that may be developed into retail space in the future.
The remaining acreage of GRP will be developed by the Town. Sites P1, P2, and P3
are shown in the following map.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaSITE – P2
The Town is currently constructing Phase One within GRP. The Town expects to
continue making significant investment in GRP.
Site Utility The topography of the site is generally flat, and the shape permits efficient use of
the site for building and site improvements, including ingress and egress. The site
will not contain any significant portion of undeveloped land that could be sold,
entitled, and developed for alternate use. The site will be fully developed with
building and site improvements.
According to the Town, the site is served by all necessary utilities.
Soil and Geological and soil reports were not provided to us or made available for our review
Subsoil Conditions during the preparation of this report. We are not qualified to evaluate soil conditions
other than by visual inspection of the surface; no extraordinary conditions were
apparent.
Nuisances The Town did not inform HVS of any site-specific nuisances or hazards at the
and Hazards proposed site, and there were no visible signs of toxic ground contaminants at the
time of our inspection. Because we are not experts in this field, we do not warrant
the absence of hazardous waste and urge the reader to obtain an independent
analysis of these factors.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaAccess and Visibility Interstate 10 provides primary regional access through the area extending to such
cities as Tucson to the southeast and Los Angeles, California, to the west. Interstate
17 is another major highway, which provides access to Flagstaff to the north and
has its southern terminus in Phoenix. State Route 202, or Loop 202/Santan
Freeway, forms a beltway around the cities of Tempe, Chandler, Mesa, and Gilbert.
State Route 101, or Loop 101, intersects with Loop 202/Santan Freeway in Chandler
and the northeast corner of Tempe; this freeway forms a beltway around the
northern cities of Scottsdale, Phoenix, Glendale, and Peoria.
REGIONAL ROADS SYSTEM
Airport Access The Proposed Hotel will be well served by the Phoenix Sky Harbor International
Airport, which is approximately 25 miles northwest of the site for the Proposed
Hotel and Phoenix-Mesa Gateway Airport, which is approximately 10 miles to the
east.
Flood Zone According to the Federal Emergency Management Agency map illustrated
below, the site is in flood zone X (shaded).
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaCOPY OF FLOOD ZONE MAP
The flood zone definition for the X (Area with Reduced Flood Risk Due to Levee)
designation is as follows: areas outside the 500-year flood plain; areas of the 500-
year flood; areas of the 100-year flood with average depths of less than one foot or
with drainage areas less than one square mile and areas protected by levees from
the 100-year.
Zoning The site is zoned Public Facilities/Institutional District and is currently unimproved
vacant land. The purpose of the Public Facility/Institutional District is to provide for
utilities and public and quasi-public uses such as schools, hospitals, libraries,
recreation centers, golf courses, and parks. The Town has determined that a hotel is
a qualified use.
We assume that all necessary permits and approvals will be secured (including the
appropriate liquor license, if applicable) and that the Proposed Hotel will be
constructed following local zoning ordinances, building codes, and all other
applicable regulations. Our zoning analysis should be verified before any physical
changes are made to the site.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaEasements and We are not aware of any easements attached to the possible sites that would
Encroachments significantly affect the utility of the property or marketability of this project.
Description of the For the purposes of this study, HVS assumes that the hotel will be a select-service
Proposed Hotel hotel conforming to the brand-specific guidelines, including construction and
operational brand standards. Our forecast assumes that the property will be
maintained in a competitive condition, undergoing regular renovations of soft goods
and case goods funded primarily by a reserve for replacement.
The following figure shows the features of the Proposed Hotel.
FIGURE 2-1
PROPOSED HOTEL FACILITIES
Guestroom Configuration Keys
Ki ngs 44
Queen/Queen 50
One-Bedroom Sui te 6
Tota l (ADA-Compl i a nt Rooms per Loca l Code) 100
Seating
Food & Beverage Facilities Seats per Room
Capacity
Compl i menta ry brea kfa s t s ervi ces a rea 0.4 40
Square Feet
Indoor Meeting Facilities
Combined
Meeti ng Rooms 1,400
Amenities & Services
Outdoor Pool Lobby Works ta ti on
Outdoor Whi rl pool Ma rket Pa ntry
Fi tnes s Room Gues t La undry Area
Infrastructure
Pa rki ng Spa ces Hotel 100
El eva tors 2 Gues t
Li fe Sa fety Sys tems Spri nkl ers , Smoke Detectors
Cons tructi on Deta i l s TBD
The lobby will be appropriate for a select-service hotel. The Proposed Hotel will
offer a complimentary breakfast area and will feature standard and suite-style
guestroom configurations. Guestroom bathrooms will be of a standard size, with a
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, Arizonashower-in-tub, commode, and single sink with vanity area, featuring a stone
countertop.
For this study, we assume the Proposed Hotel would include the following:
• A well-designed, functional layout of support areas, and guestrooms.
• The hotel staff would be adequately trained to allow for a successful
opening.
• Pre-marketing efforts would have introduced the product to major local
accounts for at least six months in advance of the opening date.
• Meet all pertinent codes and brand standards.
• Open and operational on the assumed opening date.
• Construction would not create any environmental hazards.
Construction Cost Since no specific concept plan or construction costs estimates are available, we
assume a range of potential costs from $12 million to $18 million, excluding the cost
of the site due to the land lease with the Town, based on comparable select-service
hotel developments.
Capital Expenditures After its opening, the Proposed Hotel would require ongoing upgrades and periodic
renovations to maintain its competitive level in this market. The forecasted reserve
for replacement should adequately fund these costs if the management employs a
successful, ongoing maintenance program.
Ownership, Franchise, The ownership structure of the Proposed Hotel has not been determined as of the
and Management date of this study. We recommend that the Proposed Hotel operates as an Upper
Assumptions Midscale or class, select-service hotel as classified by STR. The developer of the
property will select a specific brand/franchise affiliation. The estimated forecasted
fees include base and incentive fees. We assume that the Proposed Hotel will be
managed by a professional hotel-operating company, with fees deducted at rates
consistent with current market standards.
We recommend that the Proposed Hotel operates as an Upper Midscale or Upscale
class, select-service hotel. A specific franchise affiliation has yet to be finalized. We
assume that the Proposed Hotel will obtain a brand from a national brand and will
retain its brand affiliation throughout the holding period. Inherent in this
assumption is the expectation that the property will be operated in accordance with
brand standards, including requirements for services and cleanliness; that the hotel
will be maintained in good condition, with all building systems in good working
order; and that any necessary refurbishments or renovations will be completed in a
timely manner and in accordance with the requirements of the brand.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFor this analysis, we assume that the Proposed Hotel developer would be
determined sometime in 2019, and after a two-year design and construction period,
the hotel would open on January 1, 2022.
Conclusions The Town is making significant investments in GRP and anticipates future
investments. The extensive road system will allow easy access to GRP. The 100-
room select-service Proposed Hotel will provide additional amenities in GRP and
another quality lodging option in the Town.
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DRAFT - August 19, 2019 Site Analysis and Proposed Hotel
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona3. Gilbert Market Overview
HVS explored economic and demographic factors that affect the level of lodging
demand in the market, including population, income, employment, retail sales,
business presence, major tourist attractions, and transportation access. We relied
on third-party data sources to review historical trends and provide forecasts of the
rate of growth or decline of the local economy. We also assessed whether the
neighborhood surrounding the site would support the development of the Proposed
Hotel. This market overview provides a framework for projections of lodging
demand and revenue growth in the local market.
National Economic Our analysis of the outlook for this specific market also considers the broader
Trends context of the national economy. The U.S. economy expanded at an overall rate of
2.9% in 2018, compared to 2.2% in 2017, the highest growth registered since 2015.
Growth hit a high of 4.2% in the second quarter of 2018, declining to 2.2% in the
fourth quarter of 2018. Growth rebounded to 3.2% in the first quarter of 2019,
surpassing expectations of 2.0% growth. GDP growth in 2018 was stimulated by the
Tax Cut and Jobs Act, which was passed in December 2017, driven primarily by fixed
investments and strong consumer spending, particularly personal consumption
expenditures (PCE) and spending related to both non-durable and durable goods.
Investment in equipment and intellectual property rose, while investment in
structures and residential real estate declined. In the year-to-date 2019 period,
economic expansion has been driven by increases in personal consumption
expenditures (PCE), private inventory investment, exports, state and local
government spending, and nonresidential fixed investment.
3-1
DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 3-1
UNITED STATES GDP GROWTH RATES
2010 Q1 1.6%
Q2 3.9%
Q3 2.8%
Q4 2.8%
2011 Q1 -1.3%
Q2 3.2%
Q3 0.8%
Q4 4.6%
2012 Q1 2.3%
Q2 1.6%
Q3 2.5%
Q4 0.1%
2013 Q1 1.9%
Q2 1.1%
Q3 3.1%
Q4 4.0%
2014 Q1 -1.2%
Q2 4.0%
Q3 5.0%
Q4 2.0%
2015 Q1 3.2%
Q2 2.7%
Q3 1.0%
Q4 0.4%
2016 Q1 1.5%
Q2 2.3%
Q3 1.9%
Q4 1.8%
2017 Q1 1.8%
Q2 3.0%
Q3 2.8%
Q4 2.3%
2018 Q1 2.2%
Q2 4.2%
Q3 3.4%
Q4 2.2%
2019 Q1 3.1%
Source: Bureau of Economic Analysis
U.S. economic growth continues to support expansion of lodging demand. In 2018,
demand growth registered 2.5%, just under the 2.7% level recorded in 2017. The
economic growth, low unemployment, higher levels of personal income, and
stability in the U.S. economy as of early 2019 is helping to maintain strong interest
in hotel investments by a diverse array of market participants.
3-2
DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaArizona Arizona is the sixth largest state, measuring roughly 114,000 square miles. The state
is bordered by California and Nevada to the west, Utah, and Colorado to the north,
New Mexico to the east, and Mexico to the south. Interstates 10 and 40 provide
access to major cities and destinations throughout the state.
The state capital of Arizona is Phoenix. Arizona is home to several other highly
populated cities such as Tucson, Scottsdale, and Flagstaff. The Grand Canyon is in
north-central Arizona; the Canyon is 277 miles long, 600 feet to 18 miles wide, and
over a mile deep. Arizona is known around the world for its natural beauty, pleasant
desert winters, varied recreational activities, and diverse cultural opportunities.
Arizona’s main economic sectors include services, trade, and manufacturing. The
single largest economic sector is services. Arizona has been particularly successful
in attracting new high-technology companies.
Gilbert is undergoing a major redevelopment of its downtown Heritage District,
with an expanding restaurant scene. Developers are seeking approval by the Town
Council for high-level housing, retail outlets, restaurant space, office space, and one
boutique hotel on a nine-acre site. The multi-phase development of the 272-acre
Gilbert Regional Park by the Town is also underway. While the first, $16-million
construction phase, anticipated to end in fall of 2019, focuses on park recreational
and sports amenities, the second and third phases are expected to include a ten-acre
event lawn and an amphitheater. Moreover, a third-party developer has announced
the addition of The Strand @ Gilbert to the Regional Park. This 25-acre water park
is slated to open in the summer of 2021. The breadth of economic anchors and
quality of life in Gilbert, as well as the Town's growing population, should bolster
the area's economy in the near term.
Market Area Definition Gilbert is part of the greater Phoenix MSA economy. Phoenix is the capital and
largest city in the state of Arizona, comprising 15 urban villages that include well-
known neighborhoods or districts. Greater Phoenix serves as a hub for aerospace,
high-tech, bioscience, advanced business services, and sustainable technologies
companies. Tourism is an especially vital part of the economy. With more than 16
million visitors from throughout the United States and Canada annually visiting for
the warm weather and sunshine in the Valley of the Sun, Phoenix is an important
resort and regional destination.
The market area includes all of Gilbert, Arizona, and the surrounding area, as
illustrated in the following map.
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DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaMAP OF MARKET AREA
Economic and HVS used the Complete Economic and Demographic Data Source published by Woods
Demographic Review & Poole Economics, Inc., a well-regarded forecasting service based in Washington,
D.C. as a source of economic and demographic data. Using a database containing
more than 900 variables for each county in the nation, Woods & Poole employs a
sophisticated regional model to forecast economic and demographic trends. Census
data and information published by the Bureau of Economic Analysis provide the
basis for historical statistics. Woods & Poole formulates the projections, and all
dollar amounts have been adjusted for inflation, thus reflecting real change. The
following figure summarizes this data.
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DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 3-2
ECONOMIC AND DEMOGRAPHIC DATA SUMMARY
Estimated Annual
Beginning Ending
Economic Indicator/Area 2000 2010 2018 2025 Compound Change
Amount Amount
2018 to 2025
Resident Population (millions)
Ma ri copa County 3.09 4.92 1.7%
Phoeni x-Mes a -Scotts da l e, AZ MSA 3.27 5.42 1.7%
Sta te of Ari zona 5.16 7.94 1.5%
Uni ted Sta tes 282.16 350.94 0.9%
Per-Capita Personal Income* (thousands)
Ma ri copa County $35.51 $45.2 1.6%
Phoeni x-Mes a -Scotts da l e, AZ MSA $34.70 $43.6 1.5%
Sta te of Ari zona $31.56 $41.7 1.5%
Uni ted Sta tes $36.81 $50.2 1.2%
W&P Wealth Index
Ma ri copa County $99.94 $91.85 0.2%
Phoeni x-Mes a -Scotts da l e, AZ MSA $97.59 $88.73 0.2%
Sta te of Ari zona $89.41 $84.68 0.2%
Uni ted Sta tes $100.00 $100.00 0.0%
Food and Beverage Sales* (billions)
Ma ri copa County $4.41 $9.08 2.1%
Phoeni x-Mes a -Scotts da l e, AZ MSA $4.52 $9.44 2.1%
Sta te of Ari zona $6.68 $13.50 2.0%
Uni ted Sta tes $368.83 $662.61 1.5%
Total Retail Sales* (billions)
Ma ri copa County $47.31 $83.87 2.1%
Phoeni x-Mes a -Scotts da l e, AZ MSA $48.54 $87.44 2.1%
Sta te of Ari zona $71.25 $120.98 2.0%
Uni ted Sta tes $3,902.83 $5,598.24 1.4%
* Inflation Adjusted
Source: Woods & Poole Economics, Inc.
Maricopa County’s project growth in population, per-capita personal income, food,
and beverage sales, and total retail sales exceed both the State of Arizona and the
country. The projected growth in Maricopa County provides the foundation for
growth in hotel room night demand.
Workforce The characteristics of an area's workforce indicate the type and amount of transient
Characteristics visitation likely to be generated by local businesses. Sectors such as finance,
insurance, and real estate (“FIRE”); wholesale trade; and services produce a
considerable number of visitors who are not particularly rated sensitive. The
government sector often generates transient room nights, but per-diem
3-5
DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, Arizonareimbursement allowances often limit the accommodations selection to budget and
mid-priced lodging facilities. Contributions from manufacturing, construction,
transportation, communications and public utilities (“TCPU”) employers can also be
important, depending on the company type.
The following figure shows the estimated change in employment in the top ten
sectors in the Maricopa County workforce distribution by the various business
sectors in 2000, 2010, and 2018, and a forecast for 2025.
FIGURE 3-3
TOP TEN EMPLOYMENT SECTORS IN MARICOPA COUNTY
Beginning Ending
Sector/Geographic Area Employment Amount 2000 2010 2018 2025 Amount
(thousands) (thousands)
Maricopa County
Hea l th Ca re And Soci a l As s i s tance 138.6 388.7
Retai l Tra de 215.2 342.1
Fi na nce And Ins ura nce 125.9 272.1
Admi ni s tra tive And Wa s te Servi ces 187.7 264.7
Accommoda tion And Food Servi ces 133.4 231.8
State And Loca l Government 156.9 222.2
Profes s i ona l And Techni ca l Servi ces 119.4 206.2
Rea l Es tate And Rental And Lea s e 86.6 196.2
Cons truction 144.9 174.6
Other Servi ces , Except Publ i c Admi ni s tra tion 89.5 154.3
Other 481.0 633.2
Total Maricopa County 1,879.1 3,086.1
U.S. 165,372 223,254
Source: Woods & Poole Economics, Inc.
The health care and social assistance, retail trade, state and local government,
accommodation and food service, other services except public administration,
construction, administrative and waste services, transportation and warehousing,
and real estate and rental and lease sectors of the economy should continue to
expand along with the overall growth in the local economy. From 2018 to 2025,
Health Care And Social Assistance are expected to expand at a faster rate for a total
increase of 31.4%. The construction sector has continued to recover from a
significant decline due to the last recession.
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DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaUnemployment The following figure presents historical unemployment rates for the Proposed
Statistics Hotel’s market area.
FIGURE 3-4
UNEMPLOYMENT STATISTICS
Gilbert MSA Arizona USA
12%
10%
8%
6%
4%
2%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: U.S. Bureau of Labor Statistics
Locally, the unemployment rate was 3.5% in 2018; for this same area in 2019, the
most recent month’s unemployment rate registered at 3.4%, versus 3.3% for the
same month in 2018. Unemployment rose in 2009, and 2010 as the height of the
national recession took hold and remained elevated in 2011. However,
unemployment declined in 2012 as the economy rebounded, a trend that continued
through 2018.
Major Business and The following figure shows the largest employers in the region.
Industry
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DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, ArizonaFIGURE 3-5
TOP EMPLOYERS IN GILBERT
Number of
Rank Major Employers
Employees
1 Go Da ddy Softwa re, Inc. 1,430
2 B H Drywa l l Stucco Pa i nti ng 997
3 Ba nner Ga tewa y Medi ca l Center 891
4 Mercy Gi l bert Medi ca l Center 850
5 Is a geni x Interna ti ona l 650
6 Hunter Contra cti ng Co. 550
7 Wa l ma rt 358
8 Ea rnha rdt Auto Center 356
9 Ba nner Home Ca re 334
10 Si l ent Ai re USA, Inc. 320
Source: Gilbert Economic Development, 2019
Gilbert benefits from a diverse and growing economy anchored by health care,
technology, and aerospace. The following bullet points highlight major demand
generators for this market:
• Offering a combined two million square feet of medical and research
facilities, Banner M.D. Anderson Cancer Center, the Ironwood Cancer
Research Center, Mercy Gilbert Medical Center, Banner Gateway Medical
Center, Gilbert Hospital, and Translational Research Institute anchor the
healthcare industry in Gilbert. According to economic development officials,
the Banner Center is expanding its 133,000 square-foot clinic by 500,000
square feet to accommodate research trials. Local news sources also report
that Mercy Gilbert Medical is adding a five-story, nearly 374,000 square-foot
Women’s and Children’s Pavilion, which is expected to offer a Level-3
neonatal intensive care unit and 24 labor-and-delivery rooms. The project
broke ground in November 2018 and is expected to be completed in 2020.
Prominent technology firms in the Chandler market include web-hosting
company GoDaddy and Unicon Inc. Due to Gilbert's proximity to Mesa-based
Arizona State University Polytechnic campus, biotech companies such as
REV Biodiesel and Colnatec have been expanding their presence in Gilbert
over the past years. Lockheed Martin and Northrop Grumman support
Gilbert's Aerospace and Defense sector.
• In June 2018, Deloitte signed an agreement with the Town of Gilbert to
construct a $34-million, 100,000-square-foot U.S. Delivery Center for
technology solutions at The Commons at Rivulon, which is expected to add
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DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona2,500 jobs. Rivulon, a 250-acre mixed-use development near Loop 202 and
Gilbert Road, currently features multiple car dealerships and the Isagenix
world headquarters. The development is expected to feature over three
million square feet of Class A office space and an estimated 100,000 square
feet of retail space upon full completion. Plans also call for the development
of two hotels in Rivulon, although details have yet to be determined.
Furthermore, Gilbert is establishing itself as a host of a year-round weekend
youth baseball, softball, and soccer tournaments. Town-owned Cactus
Yards, a sports facility with eight baseball fields, batting cages, a 20,000-
square-foot indoor field house and seating for 1,600, reopened in February
2019 after an extensive 19-month, $15-million renovation. According to
local news sources, the park attracted over 100 teams and an estimated
10,000 spectators on President's Day weekend.
• Intel has a major presence in Chandler with two large campuses, West
Chandler Boulevard and South Dobson Road at Ocotillo Road, and two
smaller office buildings. The West Chandler Boulevard campus represents
the breadth of Intel's business activities worldwide, including planning and
logistics, assembly-test and development, packaging development,
corporate environmental health and safety, product research, development,
venture capital, and sales and marketing. The Dobson-Ocotillo campus
focuses primarily on high-volume microprocessor manufacturing. Intel’s
fabrication facilities in Arizona manufacture the Intel® Pentium®
processor. Intel Corporation completed a new $1.7-billion chip-
manufacturing facility, designated Fab 42, at its site in Chandler in 2013. At
the time of its construction, the new factory was expected to be the most
advanced high-volume semiconductor manufacturing facility in the world
and bring 1,000 jobs to the market. However, the building has remained
empty since its completion. According to economic development officials,
Intel activity and employment levels are expected to remain stable in the
near term.
• The finance industry is a key component of the Phoenix area's economy.
Wells Fargo, one of the largest banks in the nation, has significant regional
operations in Chandler. In December 2013, Wells Fargo broke ground on a
$125-million expansion of its Chandler campus; the 410,000 square-foot
space doubled the size of its facility at Ocotillo Corporate Center. The new
buildings feature office space, a meeting center, and a café and will host
approximately 2,500 new employees when open. Moreover, Wells Fargo is
seeking approval for another expansion, which will include two 13-story
office buildings. Other financial companies, such as Bank of America,
Nationstar Mortgage, Toyota Financial Services, and GM Financial Services,
also have a strong presence Chandler.
3-9
DRAFT - August 19, 2019 Gilbert Market Overview
Proposed Gilbert Regional Park Hotel - Gilbert, Arizona• The technology and aerospace industries are key employers in Chandler.
Technology firms with a major presence in the Chandler market include
Freescale Semiconductor, Orbital ATK, PayPal, Microchip Technology,
General Motors, Garmin International, Infusionsoft, and Avnet. In 2014,
General Motors opened its 150,000-square-foot IT Innovation Center in
Chandler. Arizona state officials project the innovation center will have a
$580-million economic impact over a five-year period. Also, in 2014, Garmin
International opened a 60,000-square-foot research and development
facility in the Chandler Corporate Center. The expansion has allowed for an
additional 140 jobs in the Chandler market. According to economic
development officials, PayPal and Infusionsoft have plans for future
expansion.
The area economy is diverse, with strong employers in the technology,
manufacturing, finance, and aerospace industries. Major companies such as Intel,
PayPal, Wells Fargo, and General Motors maintain a strong presence in Chandler,
while the healthcare and retail sectors further support the local economy. DaVita
RX, CVS Health, Apria Healthcare, and Banner Health are major healthcare
companies in Chandler. The Chandler Regional Medical Center is the seventh-
largest employer in Chandler. Additionally, Chandler Fashion Center is the second-
largest mall in the Phoenix metropolitan area and features over 180 stores. The
breadth of economic anchors in Chandler and the Town’s growing population will
positively influence lodging demand.
Airport Traffic Phoenix Sky Harbor International Airport (PHX) is the principal gateway for the
Valley of the Sun region of Arizona, with major commercial airlines serving cities in
the U.S., Canada, Mexico, and Europe. Growth of the airport has been spurred by a
surge of population and job gains in the state over the last decade, as well as the
successes of Dallas-based Southwest Airlines and Tempe-based US Airways, which
merged with American Airlines in 2015. PHX Sky Train, an automated train
stretching from 44th Street and Washington Street to the airport terminals and
parking area, opened in 2013. The expansion of the Sky Train to the Rental Car
Center is underway and will be operational in 2021. A $590-million Terminal
Modernization Program of Terminal 3 began in March 2015. Phase I was completed
in December 2016, which included a new security checkpoint, additional ticket
counters, and baggage handling facilities. Phase II, which was completed in January
2019, added a 15-gate concourse with large seating areas and food and retail
concessions. Phase III is planned to add new food and beverage facilities and
enhanced customer amenities with new finishes to the north concourse; this final
phase is scheduled to be completed in 2020.
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DRAFT - August 19, 2019 Gilbert Market Overview
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