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PHOENIX-Alliance Residential Co. will soon close on 4.14 acres for $5 million, with plans to build a $34-million, 240-unit complex on the site. The broker working with the local developer says at least two more sites are earmarked to be acquired by the end of 2008.

Michael Lieb, president of Michael A. Lieb Ltd. in Phoenix, says Alliance Residential next month will buy a site at the intersection of 16th Street and Campbell Avenue. Construction is scheduled to begin in the fall, with units to be delivered to market in early 2010. Although the complex will carry Alliance Residential’s Broadstone brand, the project name’s has yet to be determined.

Lieb negotiated the land deal between Alliance Residential and Broderson Properties LLC of Phoenix. He says the developer has land deals working for a Downtown site and one in the northern tier. “One is in escrow and the other is under negotiation,” he says. “Both should close by yearend.”

Alliance Residential did not return calls by press time to comment on the upcoming projects. In all likelihood, the projects will be going vertical at a time when the multifamily market is softening in the region.

Greg Willett, vice president of research and analysis for M/PF YieldStar in Carrollton, TX, says fourth quarter 2007 figures showed the Phoenix metro’s 279,000 units were 92.5% occupied, with 7,644 units under construction. Willett tells GlobeSt.com that preliminary numbers for the first quarter aren’t showing much change.

“We can point to the overbuilt single-family market and the fact that Phoenix is one of the top five metro markets for ongoing foreclosures,” Willett explains. “Because of that, the inventory for shadow market product is growing continually. That’s a huge problem for the area.”

But, Willett says Alliance Residential’s strategy of buying land and building on it may not be so far-fetched. For one thing, the site about to be bought is near the Camelback Corridor, an attractive infill location with few remaining developable tracts.

“The general perception is that this is still one of the fastest-growing metropolitan markets in the country,” Willett says. “This will clearly create a lot of demand for multifamily housing. We just won’t see that demand for a couple of years.” By the time Alliance Residential delivers its crop of units, he adds, the company should see some positive interest from renters.

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