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Developer waits, then he pouncesBuilder takes advantage of market dips
Arizona Business Gazette July 26, 2001 Twenty-eight years in the real-estate business have taught Michael Pollack a lesson that has eluded many a starry-eyed developer: The boom times don't last forever. "There's turbulence in the commercial, industrial and multifamily sectors," Pollack said. "We've had people approach us in the last few months and ask, 'Will you take over this property for the mortgage?' We haven't heard that since 1995 or '96." A changing market is also affecting Pollack's unique approach to real estate. His firm remains committed to buying rundown properties at fire-sale prices and redeveloping them ("We're opportunity buyers, we are what we are"), but a proposed Chandler project is a move toward traditional development. In December, Pollack acquired a 13-acre parcel at the southeast corner of Arizona Avenue and Elliot Road. Combined with 17 acres he owns on the northeast corner and a refurbished 70,000-square-foot shopping center on the northwest corner, Pollack controls 45 acres surrounding the intersection. He plans to begin construction on the northeast corner by late 2002, starting with about 110,000 square feet of space that can divided to as little as 1,000 square feet for incubator-type businesses. "I've always said that if the market ever got to the point where I could build as cheaply as I could buy, then I'd start building," Pollack said. Doug Ballard, director of planning and development in Chandler, says Pollack has yet to bring any formal plans to the city. The northeast corner is zoned for light industrial and some retail, while the southeast corner could accommodate commercial offices and a hotel. "As a percentage of land use, we're fairly underrepresented for office space and we're looking for more," Ballard said. From the city's perspective, the intersection of Arizona and Elliot is in a high-profile location. It's about 3 1/2 miles north of downtown Chandler and half a mile south of the Tempe border. "It really is a gateway to Chandler," Ballard said. "We have it designated as an employment and office area and it has mixed-use potential." Pollack's redevelopment of the northwest corner is typical of his work since 1991, when he swooped into the Valley after establishing himself as a developer of industrial property in northern California. At that time, the Phoenix real-estate market could have hung out a sign reading "Welcome To Rock Bottom." The area was flooded with vacant or near-vacant office towers, and banks were hemorrhaging red ink like so many stuck pigs. "The market was so bad," Pollack said. "The national media was saying don't go to Phoenix, but it was great if you were a buyer. Retail was such a bargain that you could buy buildings for less than what the developer paid for the land." Beginning with a 23,000-foot shopping center in Mesa, Pollack implemented his contrarian approach. He eventually built a $200 million portfolio that would grow to include more than 50 shopping centers from Peoria to Mesa. One of Pollack's purchases - the former Reliable Furniture warehouse near Alma School and Baseline roads - stands as a lavish monument to his philosophy. At $33 a square foot, Pollack couldn't resist buying the old building. But he didn't know what to do with it. "I couldn't put in retail because there's no left-turn lane off of Baseline. A warehouse wouldn't work for the same reason," he said. "Who could use this?" After some more thought, Pollack figured out a solution: He could use it. Sinking $1.5 million into renovations, Pollack created a business headquarters that is far from standard issue. Think a Vegas casino without blackjack tables, or maybe the Playboy Mansion without the grotto. "It would have cost even more to build it new," he said. "It was a lifelong dream, and I got everything I wanted." Eighteen employees have the run of a 31,000-square-foot space where chandeliers glitter from the ceiling and a polished sheen rises from the black marble floors. One hallway leads to a cavernous room filled with video games, while another door opens to a museum of advertising memorabilia. Having survived all manner of real-estate cycles, Pollack still talks excitedly about the business. "I've seen it all; stagflation, inflation, recession," he said. "This is my hobby and my life; I love everything about it." |
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