Arizona Center Development

[muertecaza]

Originally Posted by exit2lef

Interesting. I don't think of Bruder as designing vertically. While the Burton Barr Library is five stories tall, it's wider than it is high, so it's more of a horizontal building. That seems true of most of the work showcased on the website. I also don't think of Bruder's designs as particularly urban. The Burton Barr Library, for example, is set back from Central and many of his other projects have a desert feel. That's not necessarily bad, but not what I'd envision on a relatively small parcel at 5th Street & Van Buren. It will be interesting to see what this looks like if it goes forward.

I also wasn't able to find any instances of North American Development Group building high rise residential. Apparently they mostly develop shopping centers? Which is somewhat concerning. I guess NADG and Bruder did just recently collaborate on Eldorado on 1st in Scottsdale (http://eldoradoon1st.com/), so there has been some success there. Useless to speculate I guess.

[biggus diggus]

So we have a guy who has never designed a (constructed) high rise, a company who has never developed a high rise, an over saturated apartment market, and a location in which a new ownership​ team really needs to draw attention and create excitement.

Yeah, I'll wait here.

And don't a single one of you try to tell me the downtown market isn't over saturated in the upscale segment, rents are dropping and vacancy rates are rising.

[Obadno]

Originally Posted by biggus diggus

And don't a single one of you try to tell me the downtown market isn't over saturated in the upscale segment, rents are dropping and vacancy rates are rising.

The Market isn't oversaturated

[mdpx]

Originally Posted by biggus diggus

So we have a guy who has never designed a (constructed) high rise, a company who has never developed a high rise, an over saturated apartment market, and a location in which a new ownership​ team really needs to draw attention and create excitement.

Yeah, I'll wait here.

And don't a single one of you try to tell me the downtown market isn't over saturated in the upscale segment, rents are dropping and vacancy rates are rising.

You are just incorrect. Here are the facts on Downtown's Top 20 High-value Multifamily properties:

Last quarter overall vacancy: 13.6%
This quarter overall vacancy: 9.8%
Occupancy last quarter: 86.4%
Occupancy this quarter: 90.2%
Concessions are down (good sign). They don't need as many incentives to lease up.

These figures are similar to totall Downtown multifamily regardless of quality. It's across the board.

Biggus-You have been singing the imminent death of multifamily song for sometime and arguing against facts with several on the forum. What repressed anti-apartment pain are you processing, dude? I'm curious. Thanks.

[biggus diggus]

Originally Posted by mdpx

You are just incorrect. Here are the facts on Downtown's Top 20 High-value Multifamily properties:

Last quarter overall vacancy: 13.6%
This quarter overall vacancy: 9.8%
Occupancy last quarter: 86.4%
Occupancy this quarter: 90.2%
Concessions are down (good sign). They don't need as many incentives to lease up.

These figures are similar to totall Downtown multifamily regardless of quality. It's across the board.

Biggus-You have been singing the imminent death of multifamily song for sometime and arguing against facts with several on the forum. What repressed anti-apartment pain are you processing, dude? I'm curious. Thanks.

What you have just stated is absolutely 100% counter to every anecdotal piece of information given to me by people who are in the buildings (either owners or management) every single day, I trust them much more than some stat that may or may not be out dated (depending on what opening date they chose for many of the new units) or even worse could be biased. Maybe these stats were published two weeks before 380 units became available, maybe since they became available things have been harder, there's no way of knowing unless you're actually there. My sources are whining already.

When management tells me "we had to drop the rents again because there's too much competition in the neighborhood" I interpret it to mean there are more units than there are buyers. It's no different than if you were selling a car. Porsche GT cars are produced in numbers of about 1000-2000 per run and there may be 25,000 ready, willing, and able buyers so the prices skyrocket. There's an almost unlimited amount of Chevrolet Malibus out there so anyone can walk onto a lot and make whatever deal they want. A year ago running apartment buildings downtown you were closer to the Porsche end of that spectrum, now they've fallen back to reality with signs pointing toward continuing over-saturation. I doubt downtown will ever be the Chevy Malibu of apartments but I think you must understand the concept of supply and demand.

I've been in the industry my whole (long) life buying, selling, and running apartments. I know a lot of people who do the same thing, I'm not singing some death song for the hell of it, there's starting to be stiff competition for tenants around Central Phoenix.

[Obadno]

Originally Posted by biggus diggus

What you have just stated is absolutely 100% counter to every anecdotal piece of information given to me by people who are in the buildings (either owners or management) every single day, I trust them much more than some stat that may or may not be out dated (depending on what opening date they chose for many of the new units) or even worse could be biased. Maybe these stats were published two weeks before 380 units became available, maybe since they became available things have been harder, there's no way of knowing unless you're actually there. My sources are whining already.

When management tells me "we had to drop the rents again because there's too much competition in the neighborhood" I interpret it to mean there are more units than there are buyers. It's no different than if you were selling a car. Porsche GT cars are produced in numbers of about 1000-2000 per run and there may be 25,000 ready, willing, and able buyers so the prices skyrocket. There's an almost unlimited amount of Chevrolet Malibus out there so anyone can walk onto a lot and make whatever deal they want. A year ago running apartment buildings downtown you were closer to the Porsche end of that spectrum, now they've fallen back to reality with signs pointing toward continuing over-saturation. I doubt downtown will ever be the Chevy Malibu of apartments but I think you must understand the concept of supply and demand.

I've been in the industry my whole (long) life buying, selling, and running apartments. I know a lot of people who do the same thing, I'm not singing some death song for the hell of it, there's starting to be stiff competition for tenants around Central Phoenix.

You seem to know what you are a talking about most of the time, and I have no idea where Mdpx got the stats.

But If the stats he provided are accurate arguing that your anecdotal discussions outweigh the actual numbers is not a good place to stand on.

[biggus diggus]

Originally Posted by Obadno

But If the stats he provided are accurate arguing that your anecdotal discussions outweigh the actual numbers is not a good place to stand on.

I understand your position and I appreciate it because I would likely take the same stance if I were you. Let me just offer this scenario, though:

There are 3,000 units under construction and then 500 of them become available. There's excitement in the air and they lease to 90% right away. Now there are 2,500 under construction and people are chomping at the bit for the next few to open, when 500 more open they lease to near capacity almost instantly at asking price. At this point some stats are published indicating the downtown luxury apartment market is the healthiest thing there is. Now, 1,000 more units open up and half of them lease right away and the other 500 are sitting around, prices come down a bit and activity picks back up but the lease rates are now a little lower and vacancies are a little longer. At this point 1,000 more open up and that last batch of 500 is still having trouble. Uh oh, now there's 1,500 on the market, time to lower prices to beat out our neighbors. This is how over-saturation begins. The market will continue to correct itself, right now it's slowing down.

Any stats published in the middle of that cycle would not reflect the down-turn in the market. Further, we don't know who published those stats, is it someone with a horse in the race?

Anyway, I'm not trying to take everyone here to negative town, I'm just realistic with my expectations. I've been doing this in very high volume for a very long time and I've seen these cycles before. If everyone I know is telling me they're having more trouble now than they were a few months ago and attributing it to increased competition, I have to take them for their word. I have had some units sitting around in the Biltmore area and have had to practically give them away recently, which is pretty abnormal for the past 2-3 years. My downtown residents aren't moving out because I'm still charging them the rents that were appropriate 12-18 months ago and if they moved out of my place they would have to pay 15% more for anything else. Captive audience.

[fawd]

Originally Posted by biggus diggus

When management tells me "we had to drop the rents again because there's too much competition in the neighborhood"

Which apartments are dropping rents??? I'd actually like to know, I must be living in the wrong place.

I have two apartments in two different developments downtown... Both buildings have been increasing rates EVERY year (including this year) since we got them in 2013 and 2014 respectively

[biggus diggus]

Baron and proxy are both renting for less now vs. when they first opened.

I'm not talking about year to year rents, it's too early to forecast that since these places have only been open for months. 11/12 Capital Place have dropped by 10% since opening.

It's common, though, to raise rent at each renewal for existing tenants. They may be raising existing tenant's rents thinking "they wont move" while they are simultaneously having to drop rates to fill new vacancies.

[PHXFlyer11]

Originally Posted by biggus diggus

Baron and proxy are both renting for less now vs. when they first opened.

I'm not talking about year to year rents, it's too early to forecast that since these places have only been open for months. 11/12 Capital Place have dropped by 10% since opening.

It's common, though, to raise rent at each renewal for existing tenants. They may be raising existing tenant's rents thinking "they wont move" while they are simultaneously having to drop rates to fill new vacancies.

Give it a rest. Yes, eventually you will be right. Will it be a year or 5 years from now? Even a broken clock is right twice a day.

[biggus diggus]

Everything I just talked about is in the past, already happened.

[dtnphx]

You'll fight to the death because you, and your lifelong (from birth, probably) of dissecting the apartment market in Phoenix tells you it's all gonna crash. Well dude, sure it will at some point, but to throw your hands proving how right you are, you're not seeing the big picture. People are moving here in droves...more than most anywhere in the U.S. Do these people need to live somewhere? And, with the lowest amount of homes available on the market, many are turning to apartments by choice or not.

This article below is from last year, but points out the trend and the need for more housing (last paragraph).

http://ktar.com/story/984120/report-...lse-in-nation/

[fawd]

Originally Posted by biggus diggus

Baron and proxy are both renting for less now vs. when they first opened.

Gotcha. I could have told you that before they opened - they were over priced out of the gate.


Didnt I say a month ago to expect more 'big' residental developments in downtown Phoenix after the whole 'they cut the appartments out of Block23' non-sense?

We've got more room to grow still

[gymratmanaz]

Thanks Fawd!

[TJPHXskyscraperfan]

So my lease is ending soon so I figured I check out some of the new apartments. Linear And Illuminate were pretty full, Linear had one unit at the price I wanted to be at but it didn't have a walk in closet which was a deal breaker and Illiminate didn't have a patio for the price I wanted to be at. They both are filling up fast. I checked out Union and there were 2 different couples signing leases while I was there. They barely opened a month ago and the
leasing agent said they were already at 30 percent, even without a pool and gym. Checked out Alta Filmore too and they seemed to be filling up fast too. I live at Capital and decided to stay and renew my lease here which I have watched fill up quick as well. I believe over 90% now. Phoenix will continue to grow and the demand will continue. Yes the price has to be right and I definitely do pay a premium for living downtown. If u look at a city similar to us like Houston, they actually seem to pay lower rents than us if you look at a couple of there high rise websites and they have way more highrises than us. Along with a ton of the 4 to 6 story apartments that are going up everywhere. With 80 to 100 thousand people moving to Maricopa County every year plus suburban kids wanting to be in the city, empty nesters and so on.

[Ballister]

[biggus diggus]

Of course they're "filling up fast". Do you think they're going to tell a possible tenant "nah, we have tons of available units!"?

The fact you guys are so intent on arguing with someone who does multi-family housing for a living is kind of weird to me but you seem to all know better because you read something on the internet. Anyway, I don't care about being right that much so I'm just going to lurk for a while. I'll be back when I see something that interests me.

[TJPHXskyscraperfan]

You can look at their websites and see exactly what is available. You won't see much, except for the 5 floor at Illiminate, and they are charging a lot more for the top floor. These properties have only been open a fews months. It should take about a year before a property is completely full but they seem to be filling up a lot faster than that.

[Jjs5056]

exit2lef's description of Bruder's design aesthetic is spot-on and, frankly, fits right into the AZ Center model of development, which despite a new valet, is just lipstick. 5th and Van Buren is probably the last place I'd have put a residential tower given its neighbors are the PBC, Mercado, and Archdiocese. Long-term, having the ground floors of both offices and this residential tower lined with retail facing the gardens would have been advantageous, while adding small amounts of street retail along 5th might have helped integrate the PBC.

However, it seems as if the ground floor will be nearly 100% private resident space -- a "grand living room." Sounds like they might throw a coffee shop in there, but really? The first new building of what was intended to be the shopping center of DT PHX has no plan for how it will fit into a new retail strategy? I wouldn't be surprised if, like the offices, VB and 5th are the butt of building with garage ramps and loading docks.

As for the AMC, even if it were selling out, the problem is its footprint. The Center should be bisected by Taylor to allow for tons more street frontage. An upgraded DineIn theater with entrance on 3rd Street, residential above, and retail along Fillmore would have much more sensible circulation.

[mdpx]

Originally Posted by biggus diggus

Of course they're "filling up fast". Do you think they're going to tell a possible tenant "nah, we have tons of available units!"?

The fact you guys are so intent on arguing with someone who does multi-family housing for a living is kind of weird to me but you seem to all know better because you read something on the internet. Anyway, I don't care about being right that much so I'm just going to lurk for a while. I'll be back when I see something that interests me.

What a child. Pffft!