Scottsdale Arizona Real Estate Blog

Commercial realtors call it the Red Mountain/Mesa submarket, a northeast Mesa area that encompasses the city’s biggest aerospace companies, high-end neighborhoods and golf courses.

Yet, with all the alluring demographics, vacant retail spaces abound on many street corners as a lingering impact of the nation’s second-worst economic downturn that ended in mid-2009.

A significant sign that business is bouncing back has emerged with the $1.45 million purchase of a shopping center at the southeastern corner of Brown and Recker roads.

The new owners have made a commitment to invest $1 million or more to reinvigorate it.

“We have a full marketing and renovation plan for the center,” said Jeff Hawke, an owner of Kinetic Companies, a Phoenix company that specializes in real estate investment, retail shopping center development and management.

Among the company hallmarks is engaging neighborhoods affected by Kinetic’s redevelopment of property like the 53,267-square-foot Recker Brown Center, said Hawke, and the company’s co-owner, Joel Moyes.

“We spend a lot of time going to neighborhood meetings and listening to the needs of the community as we assess what we will do,” Hawke said.

A statement from Moyes on the company’s website said its subsidiary, Kinetic Investment Holdings, has a $500 million targeted private-equity placement within the next 18 to 24 months throughout the southwestern U.S.

He said Kinetic does all of its work in-house and company executives often visit the company’s commercial property.

“We are not absentee landlords,” Moyes told the Mesa Republic.

“We’re very bullish on that area and the center.

“We love the demographics. … We are proud to be a part of the neighborhood.”

Despite the proximity of the center and nearby retail property to some of the city’s highest household incomes, Hawke said, “there is no question that the area has been undervalued in buying capacity.”

The center was built in 1992 on almost five acres .

It sold for $9 million in 2005 to a previous owner, Moyes said.

When Kinetic purchased it in December from Arizona Investment Funds, LLC, a firm registered to San Jose, Calif., manager, 20 percent of the center was occupied, by two tenants.

The center’s tenants were Club Tan, a tanning salon, and Tuesday Morning, a chain retailer that sells closeout merchandise, such as home decor, bedding and collectibles.

It was the third shopping center acquisition for Kinetic Companies in 2011 in the Valley.

Tom Semancik of Commercial Properties, Inc., Tempe, represented the seller, and Nick Miner of the same firm, represented the buyer.

Hawke and Moyes said Kinetic is looking to buy more structurally sound property with good potential from “distressed buyers.”

“We believe in Phoenix and its outlying cities,” Hawke said.

“Both Joel and I are ASU grads.

“We believe cities in the Phoenix area will be at the top of the list once again for growth and we are actively pursuing more projects like Brown and Recker.”

He said Kinetic also recently purchased Kiowa Village, a strip center near the southeastern corner of Baseline and Power roads.

“Now is a good time for Mesa,” he said.

“There is reason for people to have optimism.”

MIG Real Estate, based in Newport Beach, Calif., said it plans to convert the Hotel Highland in Phoenix into a Hampton Inn.

The conversion project should be completed by October, a company representative said.

The 119-room Hotel Highland, 2310 E. Highland Avenue, will undergo a variety of modifications to meet the Hampton Hotel system’s standards.

Enhancements to the interior of the hotel will be made to provide guests with free amenities and services including free, hot breakfast, high-speed internet access in all guest rooms, wireless Internet access in the lobby and meeting spaces.

MIG Real Estate acquired the Hotel Highland property in 2010. Hampton Hotels is part of Hilton Worldwide, one of the world’s largest hospitality companies.

3,872 hours of sun a year: With its scenic Sonoran Desert location, Phoenix enjoys sunshine for nearly 85 percent of the year, making it one of the sunniest places in America.

Arizona’s capital city is a magnet for travelers escaping northern winters, and there’s plenty to do and see here: Watch the Phoenix Suns play basketball, visit the Heard Museum or the Desert Botanical Garden, or do what thousands of visitors do: play golf.

More than 200 public, private and resort courses are in the greater Phoenix area, so you can hardly swing your nine-iron without hitting a green.

Scottsdale has outranked Chandler as the eighth best-run city in the nation, according to an analysis by 24/7 Wall St.

The financial news and opinion company said it chose Scottsdale for its healthy employment, low poverty and stable Aaa rating.

Among the largest cities, Scottsdale has the seventh-highest median income in the nation, the highest percentage of high school graduates at 95.9 percent, and is in the top 10 for unemployment and health insurance, according to the online article.

Chandler, which came in ninth, has a Aaa stable rating, and in 2010 had the ninth-lowest unemployment rate among the largest cities and the sixth-lowest poverty rate, 24/7 Wall St. said.

The Delaware-based company reviewed the economies, standard of living and fiscal discipline of the 100 largest cities by population.

Virginia Beach, Va., ranked first, followed by Irvine, Calif., Madison, Wis., Fremont, Calif., Lincoln, Neb., Chesapeake, Va., Seattle, Wash., Scottsdale, Chandler and Plano, Texas.

Miami, Fla., was labeled the worst-run city. The full analysis is available at 247wallst.com/category/2012.

Efforts are under way to develop the Desert Ridge area south of Loop 101 into a bioscience and technology hub, just days after Mayor Greg Stanton announced plans for the Desert Ridge Bioscience Technology Collaborative.

According to Dr. Wyatt Decker, chief executive of the Mayo Clinic in Arizona, more concrete plans could take form within six months, although full development of the plan is likely to take much longer.

“We worked with the mayor to develop the concept,” Decker said, “and we are pleased with his support for Mayo.”

Mayo Hospital is the key medical facility in northeast Phoenix. It occupies 210 acres at 56th Street and Mayo Boulevard, south of Loop 101. It opened in 1998.

Under the Desert Ridge Specific Plan, development in the area between 56th and 64th streets, Loop 101 and the Central Arizona Project canal must be related to or supportive of medical uses, including retail and residential.

Stanton’s plan, announced during his inauguration speech on Tuesday, would expand that idea west to Tatum Boulevard. Some non-medical users already are in place in the area, including American Express and Sumco, which manufactures silicon wafers for the microprocessing and computer industries.

Decker said representatives from Mayo, Arizona State University and the Mayor’s Office have begun working on the next steps. They want to develop a “clear vision” for the future, while showing “meaningful progress” as soon as they can, Decker said.

He foresees medical startups based on ideas generated at Mayo, ASU or elsewhere.

Maria Baier, who as state land commissioner controls most of the vacant property, said Stanton told her of his idea, but she does not have a lot of detail yet. “I told him I would do everything I can to be supportive,” she said. “This idea is quite visionary and positive for the community.”

She said there has been plenty of interest in the land throughout the Desert Ridge and Paradise Ridge areas — large, mostly undeveloped tracts of land along Loop 101 in northeast Phoenix.

“The question is whether we bring it out now or wait for recovery,” she said. “You typically would not dispose of property in a down market.”

The Arizona State Land Department manages the State Land Trust and controls 9.2million acres after selling or leasing 1.6 million acres. The department is required to “enhance value and optimize economic return” on the land for its beneficiaries, primarily public schools.

“We want the trust to realize the appreciation of value in a better market,” Baier said.

She said some of the land in question already has restrictions, including a ban on buildings that would block the view of the Mayo Clinic from the freeway. The department could come to an agreement with the city to determine how the land could be used.

Scottsdale is poised for another wave of resort development with three properties that could add 1,000 rooms, villas and casitas over the next four years.

The Reserve, Reata Ranch and Sereno Canyon all would be built north of the McDowell Mountains and adjacent to the McDowell Sonoran Preserve.

“This will broaden and deepen the resort offerings for Scottsdale on the world stage,” said Taber Anderson, who is developing Reata Ranch on 220 acres southeast of 128th Street and Rio Verde Drive/Dynamite Boulevard.

Scottsdale has not added a resort since 2000 when the Four Seasons Resort Scottsdale at Troon North opened, and the northeast Valley has not seen a surge in hotel rooms like this since 2002 when the JW Marriott Desert Ridge and Westin Kierland resorts opened nearly 1,700 rooms.

The Sereno Canyon Spa & Resort is the latest resort to surface, with plans submitted last month to revise what had been conceived as a gated community of 128 homes on 350 acres. Only nine lots have been sold over the past four years, but no homes have been built.

“We have seen the market for large-lot residential (homes) fall off the edge of the world,” said Steven Voss, president of LVA Urban Design Studio, who is involved in Sereno Canyon’s design.

Crown Community Development, the property owner, is requesting rezoning to allow construction of the resort and spa on the central 222 acres.

The property is southwest of 125th Place and Ranch Gate Road (Happy Valley Road alignment) and is about a mile from the Tom’s Thumb trailhead under construction in the preserve.

Crown has invested $40million in roads, water and sewer lines, landscaping, a gatehouse and entry monuments for Sereno Canyon, Voss said.

The company, which has links to the Little Nell Hotel, in Aspen, Colo., and the Ojai Valley Inn in California, envisions the Scottsdale resort resembling Sedona’s Enchantment Resort with its access to nearby trails and canyons.

Sereno Canyon would feature 96 resort rooms, 108 casitas with two lodging units in one building, 102 single-unit villas and 44 estate homes.

Voss said construction could start by early 2014 and would take about two years to complete.

The Reserve could be the first of the resort trio to open its doors.

Developer Lyle Anderson, known for his Desert Highlands and Desert Mountain golf communities in Scottsdale, said he is putting together equity partners and investors in the project and hopes to break ground by the end of 2012.

“Getting one of these projects going is a lot of work,” said Anderson, adding that he is talking with hotel-management companies for the property.

The Reserve, positioned as an environmentally sensitive eco-resort, was approved by the Scottsdale City Council in November 2010.

Anderson has acquired 5more acres that will be added to his 213-acre site if the city approves rezoning of the new parcel.

The Reserve is adjacent to the preserve and the Golf Club Scottsdale.

The resort is approved for 325 units that will be split between rooms, villas and estate homes, Anderson said.

His son is Taber Anderson, who is developing Reata Ranch, which will tie in with the area’s equestrian roots.

“We’re still defining what a 21st-century Scottsdale guest ranch is going to be,” Taber Anderson said.

“Unfortunately, guest ranches have disappeared, and you have to go to Wickenburg or Tucson to find that now.”

Under its rezoning request, Reata Ranch has asked to build 35 lodge units, 75 cabins, 120 casitas and 100 villas at the guest ranch.

It would also include some stables for short-term horse boarding.

The plan tentatively is set for review by the Scottsdale Planning Commission on Jan.25, Taber Anderson said.

If approved by the commission and City Council, the project could get started by the middle of 2013, he said.

Reata Ranch, like the other two planned resorts, will take advantage of its proximity to the McDowell Sonoran Preserve, which now includes 21,400 acres of mountain and Sonoran Desert terrain.

Scottsdale taxpayer investment in the preserve will pay dividends, with increased visitation and spending in the city and at the new resorts, Taber Anderson said.

“They’ve created their own version of the Grand Canyon,” he added.

Tourism is a key Scottsdale industry, with 8million annual visitors filling 16,000 hotel rooms and contributing an estimated $3.6billion to the local economy.

WASHINGTON – The average rate on 30-year fixed mortgages fell to a record 3.91% this week, third time this year that rates have hit new lows.

Freddie Mac says the rate on the 30-year home loan fell from 3.94% the previous week. The average on the 15-year fixed mortgage was unchanged at 3.21%. That’s also a record.

Low rates offer an historic opportunity for those who can afford to buy a home or refinance. But many Americans either can’t take advantage of the rates or have already done so.

Average mortgage rates have been below 5% for all but two weeks in 2011. Even so, this year is shaping up to be one of the worst ever for home sales.

Triyar Entertainment is unveiling two new plans to transform downtown Scottsdale’s entertainment district with high-end apartments, street-level retail and a relocated and redesigned beach club with additional restaurants and bars.

In addition, the company has revised a previous plan for a new beach club in the district.

All three proposals would be located within close proximity.

The company has been instrumental in the evolution of the area. Triyar developed the W Scottsdale southeast of Scottsdale and Camelback roads, and the Downtown Entertainment Plaza, a restaurant/bar complex on Saddlebag Trail south of Camelback.

It now houses Majerle’s Sports Grill,El Hefe Super Macho Taqueria and Wild Knight.

In April,Triyar announced plans to build Scottsdale Beach Club, a one-story complex with resort-style pool, four bar areas, a floating stage, a full restaurant and other amenities, on the northeastern corner of Stetson Drive and Wells Fargo Avenue.

Now, the developer has submitted zoning pre-applications to Scottsdale that include projects on two separate parcels in the entertainment district. Residents got their first look at the plans during an open house this week at the W Scottsdale.

Shawn Yari,Triyar’s owner, and Benjamin Graff, the developer’s zoning attorney, couldn’t be reached for comment before the meeting. However, the pre-applications include numerous details for what the developer has in mind.

The pre-applications include:

A mixed-use development on the northeastern corner of Stetson Drive and Wells Fargo Avenue, with about 132 residential units, about 5,550 square feet of first-floor retail and surface-level parking.

A mixed-use development on the northeastern corner of Stetson and Civic Center Plaza, with about 92 residential units wrapped around an existing parking garage with access from Civic Center Plaza and 75th Street.

Also, Triyar has indicated to the city that Scottsdale Beach Club would be relocated to the block that now houses Myst nightclub on Shoeman Lane and Suede restaurant/bar on Indian Plaza across from Axis/Radius.

All but the southwestern corner would be demolished to make way for a redesigned pool club, which would include a pool with a live-entertainment area, three restaurant/bars along Saddlebag and a restaurant/bar and nightclub/bar on the west side.

The properties that would house the mixed-use developments now include an older medical office building, apartments/condominiums along the west side of Civic Center Plaza and an office along Stetson.

“It looks like these guys are going forward — they have architects working on it,” said Kim Chafin, senior city planner.

Triyar’s plans for the beach club already have drawn criticism from the Association to Preserve Downtown Scottsdale’s Quality of Life.

The group, made up of citizens and merchants, formed this year with the goal of pressuring the city to address complaints about patrons of the entertainment district.

The district already has the highest concentration of bars in Maricopa County, and the city has strengthened law enforcement and code enforcement in the area to minimize the prevalence of vandalism, disorderly conduct and criminal activity in the area.

“The pool place is in the middle and it’s surrounded by five other bars,” said Bill Crawford, association president. “The pool is a sixth bar. We don’t have room for that, we don’t have room to accommodate the guests, and we don’t have the parking.”

Les Corieri, president of the Scottsdale Downtown and Entertainment District Association, the bar owners’ group, said the proposal would be replacing existing bars, Myst and Suede, “so as far as density, it’s not that much greater, because the older bars would be torn down.”

“For me, it’s synergy, people in one area,” he said. “From a police perspective, it’s easier to police. I think it will be fine.”

Triyar has not indicated the building heights of the mixed-use developments, Chafin said.

“With the infill-incentive district, you can go for more height,” she said.

While parking would be provided on the mixed-use sites, it would not be included at the beach club, as indicated so far by Triyar, and that will be a problem, Chafin said.

Parking already is a big problem in the area, she said.

The property that would house the beach club includes some areas that are zoned specifically for parking space only, Chafin said. Triyar wants to have those areas rezoned to remove that parking-only designation and therefore remove that parking space from the site, she said.

The city has not allowed this type of zoning change before, and this will be an issue, Chafin said.

City Manager David Richert recently said there’s more interest now in investing in new developments in the downtown area and that providing more parking is a part of the plans taking shape.

“I think they’re seeing that we’re starting to come out of this low end of the recession, and they’re starting to make some investments,” he said.

Developers of the Zocallo apartments on the former Barcelona nightclub site hope to start construction by late next year and welcome their first residents by mid-2013.

P.B. Bell & Associates Inc. of Scottsdale and Investment Property Associates, of Grand Haven, Mich., recently bought the 5.8-acre property for $10.25 million. The seller was Chicago-based Scottsdale Place LLC.

The joint-venture development partners plan 240 apartments in four four-story buildings northeast of Scottsdale Road and Greenway-Hayden Loop. Apartment developers coveted the site because of its proximity to the Scottsdale Quarter, Kierland Commons in Phoenix and nearby office parks.

“We think it’s ground zero,” said R. Chapin Bell, P.B. Bell president. “It’s a great urban-infill location for entertainment and jobs. Residents can park their car on weekends and never have to leave.”

The Zocallo project surfaced this summer amid a surge of rezoning requests for apartment development.

9,000 apartments in forecast

A fourth-quarter market-research report from Marcus & Millichap said there are 9,000 apartment units in the planning pipeline for the Valley and 3,500 have been approved.

Only 375 apartments have been added this year, a 0.2 percent increase in the rental supply, and a fraction of the 2,675 units added in 2010.

Pete TeKampe, Marcus & Millichap vice president of investments in Phoenix, said the pace of development will depend on the economic recovery and employment growth.

“We’re adding jobs but there’s still a lot of uncertainty in the economy,” he said.

With that unease has been a shift of social attitudes about owning vs. leasing property.

“Renters were looked down upon five years ago,” said TeKampe, adding that leasing has become a more flexible option for workers interested in mobility.

Developers are targeting young professionals who want well-appointed apartments in good locations and can afford higher rents. A dozen apartment projects proposed for Scottsdale include nearly 5,000 units.

The Zocallo apartments, with underground parking, will feature studio, one- and two-bedroom units of 800 to 1,200 square feet.

Amenities will include custom cabinets, granite countertops, balconies and private rooftop decks.

Scottsdale’s Design Review Board must still review the project.

Aircraft noise debated

Rezoning of the nightclub property ran into resistance because of its proximity to the Scottsdale Airport.

The Airport Advisory Commission recommended denial of the rezoning because of concerns about aircraft noise complaints, but the City Council approved the project in October.

The developers agreed to add soundproofing to the apartments, have residents sign a disclosure statement about the nearby airport and pledged that Zocallo would remain a rental community.

Airport commissioners expressed concern that a conversion to condominiums would bring more complaints from residents, since renters are generally less likely to object to aircraft noise.

MT Builders will be the general contractor for the Zocallo project, with a design from L.R. Niemiec Architects Inc. Both are based in Scottsdale.

Investment Property Associates, which develops apartments, student and senior housing, will manage Zocallo.

Orion Real Estate Solutions of Scottsdale negotiated the property sale on behalf of Scottsdale Place LLC. The buyers were represented by Cindy and Brad Cooke of Colliers International in Phoenix.