One of my favorite brokerage presentations and Government Affairs Updates is my Big Project Updates. Even though we are very busy in our respective market niches, it is easy to get tunnel vision and not realize other market projects that are coming or just arrived and how they may be affecting our niche market. I love finding out what Real Estate Professionals are seeing across the real estate industry.
Recently, I was able to present my favorite “Big Projects” across the Valley to a couple of broker meetings. Here is my current list of projects:
Housing
We all know Housing is in short supply, but more importantly what does it look like going forward?
According to the Census Bureau, as of Dec. 31, 2020, the Phoenix Metro area saw housing permits of:
1 unit 31,724
2 units 658
3 – 4 units 207
5+ units 14,029
Total 46,618
Those numbers represent a 24% increase in single family homes over the course of 2020 and a 32% increase in multi-family housing, at a time when we have an 18% increase in the median sales price.
While Avondale saw the largest increase in single family housing permits last year with a 427% increase, here are the numbers of single-family housing permits in 2021 for the largest cities in our area:
Avondale 548
Phoenix 4,049
Buckeye 3,343
Surprise 2,481
Maricopa county 2,424
That’s building permits, entitled land is much larger. For example, in Surprise there were almost 50,000 entitled units as of early February.
Last year builders bought 1,721 acres of land to develop and another 14,335 lots in Metro Phoenix, most of which was in West Valley.
And the reason for the housing shortage is true economic development. The jobs that are arriving this time are diverse and span multiple industries from medical, food and product R&D, to manufacturing of mattresses and appliances, to aerospace, data centers up to 50 acres, distribution centers, food manufacturing and distribution, mortgage and real estate, financial services, transportation and office. This time companies are bringing jobs, and the product or service development, and the corporate headquarters.
Redfin recently estimated the Valley’s net inflow for 2020 was 82,606. The most of any metro area in the Country. And that doesn’t count organic growth. The average budget to purchase a home from this inflow was 23% higher than local buyers.
Increasingly companies are purchasing large pieces of land with the express purpose of expanding over time. For some, like White Claw and Red Bull, they began expanding before they fully completed the initial phase.
And the thing that allows these companies to expand and invest with confidence is Arizona’s dedication to creating the necessary infrastructure over time. Internet, cell phone & communications, water, freeways and roadways, air, and rail.
All of which brings more people who need houses. We are fortunate to have a variety of housing options and I think we need to think about how we preserve that broad variety of housing types and price points. We have traditional small courtyard style apartments and large apartment complexes. We have rental only single family detached subdivisions, with more on the way. We have townhouse, condo and privately owned homes for rent and for sale.
Back in 2015 very few people had even heard of the single-family rental only subdivisions. NexMetro (Avilla) was the first builder of this product with Christopher Todd coming on their heels. Now we have 3 main builders of this NexMetro, Christopher Todd and B&B. Colliers estimates there are more than 22 of these types of projects equaling more than 3,800 units. Individual investors, builders and private investment groups are beginning to build additional residential rental subdivision projects.
Hancock Builders was building the SFD residential rental product for Christopher Todd until late 2020. Now they are building their own SFD residential rental subdivisions.
Some of the largest multifamily property owners in the valley are selling their units and building rental only single-family subdivisions. Meantime, out of state investors mostly from CA, Washington and Canada, are buying apartment buildings in large quantities.
Other Spaces
What other spaces are in demand? Industrial/manufacturing, distribution, and medical. In North Phoenix near 43rd Ave and Dove Valley Rd, there are sites that were rezoned to accommodate uses like semiconductor manufacturing and the supporting industries. This area is being catalyzed by Taiwan Semiconductors who purchased land at the State Land Trust sale last December.
Now the City of Phoenix has designated the area nearby as a supplier area for the types of businesses necessary to support Taiwan Semiconductor. The semiconductor manufacturer will bring more than 1600 jobs to the area, but several more jobs will come as a result of the supporting businesses.
In the West Valley Industrial buildings are getting significantly larger. It wasn’t that long ago that 650,000 sf buildings were considered large. Now it is becoming more common to see 1 million sf buildings. Even though you can’t see it from the road, several of the existing industrial buildings are adding mezzanine space to double or triple their square footage.
One of the things we are seeing is east valley employers with large offices spaces and employees who commute from West Valley, leasing smaller office space in West Valley while choosing to sublet some of their current space. 2021 is a decision year for many employers as they try to decide if they really need the huge spaces and instead need smaller office spaces closer to employees’ homes.
Big Projects
While the West Valley is enjoying its time of rapid growth, it is good to keep an eye on other areas of the Valley. Let’s face it, what happens in one part of the Valley affects other parts of the Valley if for no other reason than residents find new opportunities for recreation, entertainment and cultural appreciation. Businesses may find areas that were previously thought inhospitable have become areas of opportunity.
Here are a few of the Big Projects in the West Valley and Metro Phoenix I think are worth watching:
The mixed-use project called Astra Phoenix, near the YMCA in downtown Phoenix, has been approved by the Phoenix City Council and will begin construction later this year. It will include luxury apartments, a luxury hotel, Class A office space, retail and restaurant. The largest of the two towers will be the tallest building in Arizona.
Current planning for Old Downtown Scottsdale is to redevelop to higher end properties. There will be commercial space and residential space with hotels, restaurants and nightclubs as part of the mix.
In Tempe, a two-tower project is planned for the 1924 Train Depot (Macayo’s Cantina) area. The two towers will be on either side of the light rail tracks. The project will include a rehabilitated and preserved train depot, a 5-star hotel, conference space, retail and restaurants, and a pool with deck that connects the two towers. Parking will be added with a 7-level parking garage.
Also in Tempe, the Novus Innovation Center will see the construction of the ASU hockey, wrestling, and gymnastics center. The center will have luxury suites, group suites and a club lounge, a social deck, and a student section with 942 seats.
City North at Desert Ridge will begin development soon. It is 100 acres with 17 acres being developed as office. The remainder of the project will be apartments, restaurants and hotels.
Glendale is looking forward to Crystal Lagoons. The project will be on the east side of 101 near Westgate Center at 95th Ave. and Cardinals Way. It will have a water park, resort, amusement park, 4D theatre, office and other hotels. It is due to open by October 2022 and has been described as a Disney style resort and recreation quality facility.
Mesa is getting its version of Crystal Lagoons as Cannon Beach. It will be near Power and Warner and will have a surfing lagoon, hotel, restaurants, gymnasium and offices.
In Peoria, Stadium Point will be a mixed-use development near the Peoria Sports Complex. The project will have class A office space, parking, retail, dining, hotel, residential and entertainment.
The Loop 303 has become an industrial magnate. The Loop 303 runs through Goodyear, Glendale, Surprise and Peoria from just south of I-10 to I-17 in the north.
At 303 and Bethany Home the Sarival Logistics Center is being constructed. It will be a 2.25 million sf campus. This is the latest of several large Industrial developments in the area.
Lennar has been building their home within a home product (NexGen) for about 10 years here in the Valley. Their newest version of this is the super house. It will be a multigenerational home with an RV garage. The first homes of this type will be built at the Surprise Asante community and at the Arroyo Seco community in Buckeye.
Alamar in Avondale is a 1130-acre master planned community. By the end of January, it has sold more than half of its originally built homes across 6 builders. Last week ground was broken on the 41-acre public park that will link the county trail system through the community. The park will have a lake, Amphitheatre, sports courts, playing fields, and other amenities. Since the park is a joint project with the City of Avondale, the public will have access to this new community park.
Avondale is also getting a rehab hospital as part of its medical corridor. The hospital will focus on rehab for stroke, hip fractures, spinal fractures, brain injuries and similar injuries. ClearSky Health is building the hospital at 109th Ave and McDowell.
North Peoria is getting a small hospital and ER at Lake Pleasant and JoMax scheduled to open in 2022. And Valley Wise just opened its large facility Grand and Cotton Crossing.
Brooklyn Bedding is expanding to a 650,000-sf building being built at 51st Ave and Bethany Home that is scheduled to open this December.
Taylor Morrison purchased 178 Acres on either side of the 303 at Peoria running north to Cactus. The property will be an extension of their Sycamore Farms community.
Century Communities purchased 2400 home lots across Avondale, Surprise, and Goodyear. The first development will be in Surprise near Asante and will have a price point of high $200,000 to mid $300,000.
Shea Home purchased 415 acres of State Land in December in North Peoria near 75th Ave and JoMax.
Ashton Woods bought a 328-acre parcel next to Shea at 75th Ave and Happy Valley Rd.
Increasingly new home builders are being forced to buy raw land. With the entitlement process taking 12 – 14 months a lot of these new home subdivisions won’t be seen until early 2022.
ViaWest Group is building a three-building spec industrial complex in Goodyear at Elwood and Sarival. The buildings will total over 400,000 sf. It is due to be completed 3rd Qtr 2021.
Solace is a 211-unit apartment project at Ballpark Village in Goodyear breaking ground now and due to open Aug. 2022.
Estrella Mountain Ranch is opening 5 new neighborhoods with Toll Brothers, Landsea, LGI, Beazer and Willian Ryan Homes.
Douglas Ranch – Builders are starting to look at Douglas Ranch, Jerry Colangelo’s project, of a new 22nd Century community with 119,000 homes scheduled to be part of the commercial, retail, medical and education centered development.
Between Surprise and Douglas Ranch is Anthem Festival and soon you should start seeing homes along Sun Valley Parkway between Surprise and Festival.
New Housing Designs
As technology becomes more sophisticated and market demands include considerations other than building materials, home builders and designers will increasingly be taking into account healthy living and energy efficiency needs and wants. Here are a couple of up-and-coming trends:
KB has built a demonstration home for their Healthy Living concept. It is a collaboration with Mayo Clinic and Well Living Lab. The demonstration home can be seen at KB Home’s Santolina at South Mountain development.
Maritage is building a demonstration project for homes with virtual power plants. A battery power storage unit is installed in the house to be charged by the solar on the roof.
Sonnen battery company has teamed up with Mandalay Homes building communities in Prescott (Jasper and Cliffs at the Dells) with solar roof panels combined with the Sonnen battery storage technology. These are master planned communities with all the amenities you would expect. Each home will have a battery and the system is designed to work independent of the grid with the homes in the community creating its own power generation.
Depending on how the builder designed the home system, the Sonnen battery solution can be used to automatically sell stored energy back to the utility company, store the energy for future use by the homeowner or be used as part of an independent neighborhood energy generation system.