A development of Woodbine Southwest Corp., the property issituated within Kierland Commons, a 600,000-sf, 38-acre mixed-useproject that features upscale specialty retailers, dining,entertainment, office and luxury residential space into an urbanneighborhood, "Main Street" setting. Phase I, which opened foroccupancy in 2005, consists of 30 one and two-bedroom units thatsold out within 30 days. The second phase, which was recentlycompleted, has 54 one and two-bedroom units as well as fivepenthouse suites on the ninth floor of the loft tower. SignatureProperties is handling the marketing of the project, which wasdesigned by Nelsen Architects.

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[IMGCAP(2)]While some projects in the area have seen a fall-offin potential buyers, Plaza Lofts is seeing a lot more activity,relates Daniel Gosnell, president of Woodbine Southwest. "In termsof why we're still pretty steady, I think it's that we're in alocation that's been proven," he says of the factors that led tothe project's success. "We've got 84 units, which is a pretty smallboutique project, in terms of numbers. For the 30 in the firstphase, the resale values are still higher than what we're sellingthe new tower for, so there's some implied built-in equity to closeescrow."

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The fact that the project is located within Kierland Commons,"which is probably the highest performing mixed-use retail projectin the state," he says, adds some cache. "Once you buy into it, youalready have a great address." In fact, Gosnell notes that anotherresidential complex within Kierland Commons--the Landmark--isnearly sold out as well, and hasn't budged on its pricing,either.

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However, that doesn't mean the community didn't get hit by theslowdown at all. Gosnell admits the units aren't selling at thepace they were before, "but we tend to think that's good. We wantto make sure that when someone buys-in here, they've considered allthe factors. What's happening now is that people are looking fordeals. We haven't lowered our prices. We have some people coming into see how much they can negotiate, but when they understand thatthat's not what we're doing, then they'll go look at otherprojects. But a lot of times, they come back here and understandwhy we haven't been lowering our pricing. We were fortunate on thefront end that--before we started construction--we had asignificant amount of the units sold and committed to, so we don'thave to be in a hurry to sell." Plaza Lofts' pre-sale rate exceeded40%, and the project is now about 70% sold, he says. Units sellfrom $575,000 to about $3 million, or about $1,000 per sf.Comparatively, local sources peg the average price per foot forresidential units in the market at between $600 and $800.

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And while the developer says they'll work with potential buyerswho may have financial constraints, it's not offering concessionsor incentives, either--unlike its counterparts in many markets."We'll try and get creative, but we're really not offeringincentives," he says, "It's something we'd consider, but I don'tthink we need to at this point." Gosnell notes that what ishappening is deals are taking longer to close, "from the timepotential buyers express interest to the time they openescrow--they want to make sure the unit they're buying is the rightone."

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Interestingly, the executive says the marketing effort hasshifted from traditional advertising to relying on walk-by traffic."I think we're starting to become one of many that turn away fromadvertising. We're trying to exploit our biggest asset, which isthe location in the project," he says. The project recently openeda sales office on the ground floor. "Traffic has been pretty solidso far. Given the number of people that come to the project everyday, we get quite a bit of walk-by traffic. A lot of people comein, and quite a few of them are qualified." And the buyer mix, headds, tends to be across the board in terms of age andsocioeconomic profile.

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Plaza Lofts at Kierland Commons feature such high-end amenitiesas a private parking garage, two reception lobbies with card-accessentry, community rooms, heated pool and whirlpool, fitness facilityand outdoor recreation areas that include fire pits, barbequeareas, sitting areas and a water feature.

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For the Metro Phoenix multifamily sales market, Gosnell expectsthe trend to be upward. "We may even start to see the inventory onthe MLS decrease," he says. "I like to believe the bottom may havehit already."

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As for developers that may be having trouble selling units, theexecutive says, "It's all about patience. Those that started withthe right financial model and understood the market wasn't alwaysgoing to be great will be fine. As long as you build in enoughcontingency, you just need to be patient and stick with yourbusiness plan."

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