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SURPRISE, AZ-The city has lived up to its name for a Las Vegas-based developer that got a substantial discount on a massive land purchase that has been in escrow for the past year. Land Baron Investments had its $45-million offer for a 576-acre site accepted in mid-2006, but whittled it down to $39.5 million by this month’s closing.

“The market’s changed in the last 12 months because of the residential correction,” Land Baron partner Michael Chernine tells GlobeSt.com. “It’s put the projects around this particular location on a bit of a slower path and allowed us to get a better deal.” The development site is north of Grand and 211th avenues.

Chernine says there was a lot of competition for the site when his firm made its offer, but most of the losing bidders were planning more or less pure residential plays. His company plans a mix of retail, commercial and high-density residential. He says the seller recognized the competition would not be there if the property went back on the market, enabling Land Baron to negotiate the price downward.

The seller was a limited partnership formed by a group of investors that included Wil Cardon of the Cardon Cos. in Mesa, AZ and Michael Cowley of Phoenix. The sale was brokered by Scott Truitt and Josh Cameron of Western Land Co. in Peoria, AZ and Bob Hertzog of Summit Land Consultants in Phoenix.

According to Chernine, the city is looking for the development to become the “epicenter” of its business district. It adjoins a site designated for a new campus of the Maricopa County Community College District.

Chernine estimates it will take three to five years to start vertical construction. The company intends to begin infrastructure work, finalize annexation and certify zoning over the next 12 months, at which point it can begin selling development sites.

Chernine says he and his partners are already talking to potential users. “We’re working on several shopping center deals and a hospital deal right now as well as a manufacturing center,” he says. “We have to create our own world here.”

Chernine says he is not worried the residential slowdown will impact his development because of the extended time line. “Some of the best developers in the country are building homes at the old Chrysler Proving Grounds, which is 5,500 acres right next to us,” he says. “Even if the homes don’t go up as fast as people expected, we’re confident those projects are going to get built eventually. We’re trying to forecast three to five years out so what’s happening right now doesn’t bother us too much.”

Land Baron has several other projects in development in the Phoenix area. It is also buying 289 acres in the Painted Hills area west of Tucson on behalf of the Dallas police and firefighters pension fund. That deal has churned up some controversy. According to a local newspaper, the land was appraised at $4.5 million when voters approved a 2004 bond issue to preserve undeveloped Pima County land. Land Baron has agreed to pay $27 million for it.

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