SCOTTSDALE, AZ-Though the condo conversion craze is officially dead, certain markets still boast a high demand for ground-up condominiums while others have projects barely limping toward the finish line. The dichotomy is especially apparent in two submarkets in the Greater Phoenix metro.
In Scottsdale, local developer Urban Home Development Corp. is betting $220 million on two developments, the 288-unit Citro Camelback at 78th Street and Camelback Road and 68-unit Citro Biltmore, situated at Missouri Avenue and 18th Street. But farther south, in Chandler, Signature Properties West's Elevation Chandler project has been stalled once again--and is now on the market.
Multifamily expert Marc Huisken, senior vice president with Phoenix-based Grubb & Ellis/BRE Commercial LLC, isn't surprised at the dichotomy, anymore than he's surprised that ground-up condos in Scottsdale are doing as well as they are. He points out the Citro Biltmore will likely do well, but Citro Camelback most likely will sell like gangbusters.
Huisken, who sold the Citro Camelback site to Urban Home Development in April 2005, tells GlobeSt.com that condos built in Scottsdale have historically done well, especially those built ground-up rather than converted. Statistics released by Grubb & Ellis support the assertion. According to the Q4 2006 figures, 898 condos and townhouses sold in the North and South Scottsdale submarkets, outstripping sales in other submarkets.
"Scottsdale is a high-end market with a lot of amenities like restaurants, entertainment and shopping," Huisken points out. "It's a great location to build. People are going to want to own near where the action is."
Chandler, he continues, is a little different, partly because the demographics consist more of families and fewer young urban professionals. Although Chandler is a good area, "there's no cache to living in a condo in Chandler when I can pay the same amount of money to buy a house with a nice big yard," Huisken says. As a result, a project such as the 20-acre Elevation Chandler, which would be snapped up in Scottsdale, has a tougher haul in its location despite being near the regional Chandler Fashion Center.
The future lesson for developers, therefore, is to not assume what works in one place will work throughout the region. "You can't do a Scottsdale Waterfront in Chandler because it won't work," Huisken says. "It just wouldn't have the same feel to it."
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