by Peter Corbett – Feb. 28, 2012 12:38 PM
The Republic | azcentral.com
A condominium-development bust in Scottsdale has given way to a boom of developers lining up to build 5,700 apartments in 18 projects citywide.
Optima Sonoran Village is the first project to get its building permits and start initial site work for a 10-acre property southeast of Camelback Road and 68th Street. Optima is primarily a condo development with rental units available, spokeswoman Susan Bitter Smith said.
A half-mile to the east, Gray Development is planning a $170 million apartment project with 749 units in three buildings with a height limit of 128 feet northeast of Scottsdale and Camelback roads.
“We’re going crazy with apartments just like we went crazy with condos,” said Councilman Bob Littlefield, of a development cycle that fizzled four years ago with the housing-market crash and recession.
Littlefield and Councilwoman Lisa Borowsky have opposed recent apartment zoning cases and expressed concerns about the growing number of apartment projects throughout the city.
But other city officials are not alarmed.
City Manager Dave Richert said the surge is part of the development cycle.
“Financing is available right now for multifamily development,” Richert said. “But not all of them will get built.”
Planning Director Tim Curtis said his department has not calculated the number of apartment units planned in the city.
“We haven’t been tracking what’s rental or condos,” Curtis said. “We just deal with multifamily residential and whether it is compatible with the surrounding uses.”
The Arizona Republic tallied 5,721 units in 18 projects based on plans developers have submitted to the city.
Dan Symer, Scottsdale senior planner, said he is hearing from planning colleagues throughout the Valley about a surge in proposed apartment development.
“It’s whoever gets there first,” Symer said in reference to which projects will proceed.
CBRE, a real-estate company that tracks the market, reported there are 48 apartment projects in the pipeline in metro Phoenix of at least 100 units.
Littlefield said developers have a herd mentality.
“We should definitely put the brakes on” and plan for the long term, not short-term fixes, he said.
Nearly two-thirds of the proposed units are downtown and along McDowell Road.
That includes the Scottsdale Waterfront project just south of the Nordstrom parking garage on a 3.35-acre site that was recently sold.
Broadstone Scottsdale Waterfront LLC, a partnership between Alliance Residential and JP Morgan Asset Management, bought the property from Scottsdale Waterfront LLC for $13.5 million.Cassidy Turley BRE Commercial announced the deal Friday.
David Fogler, Cassidy Turley executive vice president, said apartment developers are buying prime properties they would not have been able to buy four years ago and they will not be able to buy four years from now.
“Those properties will go for higher and better uses than apartment development,” he said.
Fogler agreed with others that not all the proposed apartments will get built.
“Capital to build apartments is still very selective,” he said. “Only the best deals will get built first. If those are successful you’ll see other properties come online.”
The Scottsdale Waterfront developers hope to start construction of 259 apartments by the end of the year and deliver some units by the end of 2013, Fogler said.
No new apartments have been built downtown in a decade, although the Ten Wine Lofts near Osborn and Scottsdale roads, originally planned as for-sale units, were converted to apartments last year.
Optima Sonoran Village is expected to complete its first phase of 210 units in a seven-story building by September 2013. Optima was approved for 493 units but has requested changes to allow another 200 in a later phase, according to spokeswoman Smith.
The McDowell Road corridor also is seeing developer interest. Mark-Taylor Residential Inc. is planning 536units at 74th Street, and SkySong, the ASU Scottsdale Innovation Center, has plans for 325 units. Nancy Cantor, a member of the city’s Neighborhood Advisory Commission, said preliminary plans have also surfaced for apartments on the former Petrie Buick site at 64th Street and McDowell.
“More rooftops will usher in more retail” and economic revitalization, Cantor said.