Scottsdale Arizona Real Estate Blog

Home construction in Gilbert continues to outpace every other Valley municipality, and the town is on track for its most robust year in new-home permits since 2006.

Several new and existing subdivisions around Gilbert are experiencing a flurry of activity as homebuilders look to capitalize on a rebound in the housing market.

Nearly every Valley community has seen a significant jump in permit activity during the first few months of the year, but nowhere is the spike more pronounced than in Gilbert, according to data produced by the Home Builders Association of Central Arizona.

The town has issued 981 single-family home permits this year, compared with 437 permits during the same four-month period in 2011. Gilbert is on pace to issue almost 3,000 permits this year, which would nearly triple its total from two years ago.

A lack of inventory for resale houses is driving more real-estate agents to point prospective buyers toward new homes instead, Pulte Homes spokeswoman Jacque Petroulakis said.

“Overall, the Southeast Valley is seeing a lot of activity and buyer confidence in terms of real estate,” Petroulakis said.

Pulte Homes is selling houses in two partially built subdivisions in Gilbert: Stratland Estates and Lyon’s Gate. Both communities have seen an increase in traffic over the past six months, and the company has sold about twice as many homes as expected during the past three months, Petroulakis said.

Meanwhile, prices for the new homes have increased slightly with the rise in demand, she said.

Gilbert’s sprawling Power Ranch community near Power and Germann roads has been one of the most active in home construction, according to town records. Gilbert issued 56 home permits for Power Ranch in April, more than any other subdivision.

About two dozen other communities, mainly in the town’s southern region, were issued single-family permits in March and April, records show.

The vast majority of home permits result in a finished house with occupants, Planning & Development Services Manager Kyle Mieras said.

“I don’t think we have many that are sitting vacant,” Mieras said. “Builders aren’t really building spec homes right now.”

With Gilbert’s average household size just over three people, the new homes could end up drawing several thousand residents over the next several months.

Homebuilders’ construction plans are reviewed by nearly every town department to analyze the effect on traffic, schools and municipal services. Although it is rare for the town to reject a proposal,

developers often work with officials and nearby residents to make changes to plans before they are approved by the Planning Commission, Mieras said.

In addition to single-family construction, at least three apartment plans are in Gilbert’s pipeline that would result about 900 total units. There are now about 7,200 apartments in Gilbert.

About 95 percent of the town’s housing inventory is single-family detached residences, according to the General Plan. A Maricopa Association of Governments report estimated there were about 74,000 homes in Gilbert in 2009, but the report suggests that number could grow to 92,000 in 2020 and 109,000 in 2030.

From 1996 to 2006, Gilbert issued more than 3,000 home permits every year but one, according to U.S. Census Bureau statistics. In 2004, that number peaked at 5,071.

Then the recession put the kibosh on speculative construction, and the number of residential permits issued plummeted to 1,109 in 2008 before rebounding to 1,275 in 2009.

 By the numbers

Gilbert has issued more than twice as many permits through the first four months of this year as compared with the same period in 2011.

 2012

January: 149.

February: 262.

March: 286.

April: 284.

Four-month total: 981.

 2011

January: 63.

February: 88.

March: 135.

April: 151.

Four-month total: 437.

Around the Valley

Permit numbers suggest more homes are being built in Gilbert than any other Valley municipality. The town has issued about twice as many permits in 2012 as Phoenix, which has issued the second most. Here are some municipalities’ totals for the first quarter of 2012.

Gilbert: 697.

Phoenix: 347.

Mesa: 163.

Glendale: 71.

Chandler: 181.

Scottsdale: 64.

Goodyear: 201.

Queen Creek: 42.

New communities planned

The Gilbert Planning Commission has recently approved plans for several communities in Gilbert, including the following:

Marbella Vineyards

Date approved: April 4.

Description: The second phase of an existing community near Higley and Ocotillo roads, the project will include about 300 homes.

Santanilla

Date approved: April 4.

Description: The project includes plans for about 80 homes on the west side of Higley Road south of Riggs Road.

The Bridges East.

Date approved: March 7

Description: Plans include about 850 single-family homes in a master-planned community near Recker and Ocotillo roads.

Cooley Station North

Date Approved: Feb. 1

Description: The project will add about 70 homes to the Cooley Station subdivision near Recker and Warner roads.

SCOTTSDALE – The announcement that P.F. Chang’s China Bistro Inc. will go private in a $1.1 billion acquisition by a New York investment firm was the second hit to metro Phoenix’s corporate headquarters list this week.

If the deal goes through, the chain of Asian-themed restaurants no longer will operate as an independent firm or one owned by public stockholders. P.F. Chang’s board has sanctioned the transaction, which was announced Tuesday. But shareholders will need to agree to sell at least about 83 percent of the company’s stock to acquirer Centerbridge Partners, a New York investment firm.

The transaction also is subject to approvals by the Federal Trade Commission, the companies announced.

On Monday, Scottsdale-based RSC Holdings was merged into United Rentals of Connecticut in an unrelated transaction. A spokesman for United Rentals said the economic impact of the previously announced deal, including changes in local employment, haven’t been determined.

Other deals are possible. For example, Tempe-based US Airways has expressed interest in merging with American Airlines in a transaction that could result in the combined firm locating to American’s home in Fort Worth, Texas. Even Freeport-McMoRan Copper & Gold, Arizona’s most profitable company, has been rumored to be an acquisition target.

US Airways and Freeport-McMoRan both rank among the state’s 20 largest corporate and non-profit employers, according to a study by The Arizona Republic.

Excluding P.F. Chang’s and RSC Holdings, the state now counts only 41 public companies with local headquarters, according to a separate Republic analysis, down from more than 70 five years ago and more than 100 in the mid-1990s.

“For a very large city with a very large population, we have an inordinate number of companies that operate here but aren’t headquartered here,” said Harry Papp, managing partner at Phoenix investment firm L. Roy Papp & Associates.

P.F. Chang’s ranks as the 84th largest employer in Arizona with more than 1,600 employees here, according to The Republic. Its stock-market capitalization of $1 billion puts it among the state’s most highly valued corporations.

“We are excited about this transaction with Centerbridge, as it recognizes the value of P.F. Chang’s highly respected brands and talented employees, while providing our stockholders with an immediate and substantial cash premium for their investment,” said Rick Federico, the company’s chairman and CEO, in a statement.

“We are confident that being a private company will provide us with greater flexibility to focus on our long-term strategic plan of elevating our guest experience, enhancing our value proposition, growing traffic and improving the performance of our brands.”

Company officials declined to comment further.

P.F. Chang’s has been the focus of industry speculation over the past year that it may sell to a private-equity investor.

In October, Federico acknowledged that the company had been struggling with falling sales and customers’ perceptions that its menus were overpriced. But he said the company preferred to solve the problems on its own instead of seeking a buyer or outside investor.

Separately, the company on Tuesday reported a disappointing first-quarter financial result, with net income falling to $6.3 million or 30 cents a share from $10.6 million or 46 cents a share one year earlier. Total revenue rose slightly to $318.9 million in the latest quarter from $317.4 million in the first quarter of 2011, but comparable-store sales dipped.

Stock-market analysts tracked by Zacks Investment Research were expecting a profit of 36 cents a share on average for the company.

P.F. Chang’s can solicit better offers through May. However, Stephen Anderson, an analyst with investment firm Miller Tabak, said in a widely quoted note to clients that he didn’t anticipate other suitors.

While the employment impact hasn’t been announced, the Valley took a prestige blow from both announcements.

“Landing a corporate headquarters is the crown jewel of economic-development programs,” said John Boyd Jr. of the Boyd Co., a site-selection consulting service in Princeton, N.J.

Losses can be more painful. It’s not just employee counts that matter when companies change headquarters.

“You get a lot more when the strategic thinkers and the investor-relations, finance, human-resources and other top corporate people are in your community,” said Barbara Barrett, the new interim president of the Thunderbird School of Global Management in Glendale.

In an interview Monday, she called the corporate headquarters of Freeport-McMoRan and US Airways “among Arizona’s greatest assets.”

Corporate headquarters also bring high-salaried executives to an area and boost business for retailers and suppliers as well as service providers such as law and accounting firms. When there are people entering or leaving the local market, that can affect real-estate prices. Museums, foodbanks and a slew of other non-profit groups also depend on corporate donations.

“Employees who live here go to the opera or ballet and use the local services,” said Papp, who sits on the boards of the Phoenix Zoo, the Arizona State University Foundation and other non-profits. Acquiring companies often are generous to philanthropy but typically not as generous as corporations based here, he said.

Though the Valley appears to have taken a step backward in terms of the P.F. Chang’s and RSC Holdings developments, Boyd said he still rates the area favorably for attracting and incubating businesses. Among the factors he cites include moderate corporate and personal income-tax rates, affordable real estate and a competent labor pool.

One plus for Arizona, he said, is a good location for international trade on a major highway route running from Mexico to Canada. Another plus: the potential to lure companies from California, which Boyd describes as having a relatively unfriendly business climate.

A condominium complex under construction west of Scottsdale Fashion Square could include an 11-story building along Camelback Road and hundreds of additional units.

The Scottsdale Planning Commission on Wednesday recommended City Council approval of an amended site plan, amended development standards and a downtown infill-incentive district application for Optima Sonoran Village, at the southeastern corner of Camelback and 68th Street.

The complex is being developed by Optima, which has developed properties in Arizona and. Illinois. It also developed the Optima Camelview Village condominiums at Scottsdale Road and Rancho Vista Drive.

The requests seek an increase in maximum height from 65 feet to 129 feet to increase the building along Camelback to 11 stories from seven, said John Berry, a zoning attorney representing Optima. The requests also would increase the number of units from 493 to 781.

“That building was chosen (for greater height) because it was farthest from the neighbors, so from the beginning we were sensitive to the neighborhood’s concerns,” he said. “We also increased the open space a little bit from the prior approval, but all of those essential elements stayed the same.”

The complex descends in height toward the south, with the lowest buildings adjacent to single-family residences.

Although the project is being built as condominiums to be sold, units will be rented, Berry said.

“They’re (Optima) in the business of building luxury condominium units and that’s what they’re doing here,” he said. “Until the market for luxury condominiums gets even stronger, and it’s improving now … in the meantime, they’ll be renting them until the opportunity to sell them gets even better.”

At its April 11 meeting, the commission postponed consideration of the requests until April 25. At the previous meeting, some nearby residents were ready to speak in opposition to increased height and density.

Optima requested the continuance to work with nearby residents and address concerns. As a result, there was no opposition at Wednesday’s meeting.

“The developer made a concerted effort to listen to the neighbors, and … to come up with solutions that address their concerns,” Berry said. “The solutions discussed include mainly landscaping … to help shield the adjacent buildings.”

Paula Christensen, a nearby resident, thanked Optima for working with neighbors.

“There were many obstacles overcome,” she said. “We know David Hovey (Optima president and owner) will honor his pledges.”

The first phase, which is on the east side of the property, is now under construction and should be completed in 2014, Berry said.

“The second phase would be the building along Camelback,” he said.

Commission Chairman Michael D’Andrea said Optima is a great revenue generator and builds great projects for the city.

“They’re a world-class developer and they finish their projects when others packed up and left,” he said.

The proposal still must be approved by the City Council.

Scottsdale is experiencing a surge of new development projects either planned or under construction.

 Work begins on WestWorld upgrades

Among the more high-profile are a $135 million Blue Sky apartments near Scottsdale Fashion Square and the Optima Sonoran Village condominium complex southeast of Camelback and 68th Street. Developers are hoping to construct a total of 5,700 apartment units in at least 18 projects citywide. Nearly two-thirds of the proposed units are downtown and along McDowell Road.

The Arizona Republic looks at several of the pending projects that made headlines in recent months:

Reata Ranch — Developer Taber Anderson wants to build up to 35 lodge units, 75 cabins, 120 casitas and 100 villas at the guest ranch, which could include stables and hiking and equestrian trails into the nearby McDowell Sonoran Preserve.

Optima Sonoran Village — Initial site work began last fall on the 10-acre property southeast of Camelback Road and 68th Street, with the first phase of 210 units expected to be finished by September 2013. The project primarily is a condominium development, with rental units available.

Maravilla Scottsdale –The resort-style senior community is scheduled for completion in May just west of the Fairmont Scottsdale Princess resort. Plans call for 217 residences, including 36 assisted-living units and 24 memory-care units.

Scottsdale Retail Plaza –The City Council just cleared the way for development of the new beach club in the downtown-entertainment district south of Camelback Road and east of Scottsdale Road. Plans include an indoor/outdoor pool club in the center, a building with restaurant and bar space on the western side and a three-tenant building intended for restaurant and bar use on the eastern side.

Mark-Taylor — Mark-Taylor Residential Inc. is planning 536 apartment units at 74th Street and McDowell Road, the old Los Arcos site. The city in September also agreed to sell the apartment developer 3.74 acres of city-owned land nearby for the complex.

Blue Sky — Construction is expected to start this summer on the $135 million, 13-story apartment complex on Scottsdale Road just north of Camelback Road and across from Scottsdale Fashion Square.

An investment group has purchased 556 acres of residentially zoned land for $3.1 million near San Tan Valley in Pinal County, about 50 miles southeast of downtown Phoenix.

The land, about four miles east of Quail Run Lane on the north side of Skyline Drive, is approved for 1,834 residential lots that once belonged to Montalbano Homes of Arizona. Montalbano had planned to develop a community called Silverado Ranch.

The seller, SA Group Properties Inc., of Los Angeles, had acquired the property by foreclosing on Montalbano in August 2009.

The Cortesian, a 332-unit apartment complex on Camelback Road between Scottsdale and Hayden roads, in Scottsdale, has sold for about $25.9 million.

The seller was Holualoa Cortesian LLC, of Santa Monica, Calif. The buyer was Camelback Cortesian LLC, of Phoenix.

Commercial real estate firm Hendricks & Partners represented the seller in the transaction.

Built in 1971, The Cortesian received more than $4 million in upgrades in 2004 and 2005.

WASHINGTON – The number of Americans who signed contracts to buy U.S. homes rose in March, the latest sign the battered housing market is slowly improving.

And a separate report Thursday said the average rate on 30-year fixed mortgages has dipped to near its record low, keeping home-buying and refinancing affordable.

Mortgage buyer Freddie Mac says the rate on 30-year loans averaged 3.88% this week, down from 3.9% last week. In February, the rate hit 3.87%, lowest since long-term mortgages began in the 1950s.

The 30-year loan is the most common financing option for home buyers.

The average on 15-year fixed-rate mortgages, popular with homeowners who are refinancing, dipped to 3.12%, from 3.13% last week. The national average hit an all-time low of 3.11% two weeks ago.

In the home sales report, the National Association of Realtors says its index of sales agreements increased 4.1% last month to a reading of 101.4, highest since April 2010, when buyers could qualify for a federal home-buying tax credit. A reading of 100 is considered healthy.

Contract signings typically indicate where the housing market is headed. There’s a one- to two-month lag between a signed contract and a completed deal, and not all contracts end with sold homes.

More signings are among recent signs of a slight pickup in the housing market. New home sales fell in March but have risen over the past year. Builders are also more confident.

The Venue Scottsdale, an events complex at Third Avenue and Craftsman Court, is undergoing a $1 million expansion that should be completed in time for next year’s tourist season.

Currently, the Venue is open only for private events and concerts. That will change with the expansion, which includes the addition of a first-floor lounge that will be open to the public, and additional events space on the second floor and third-floor rooftop patio. Construction began this month on the expansion.

The lounge will be named V2 or V Squared, and will be geared toward drawing street traffic, said David Twigger, director of sales and marketing. The first floor will be rented for events at times, but for the most part will be open to the public, he said.

The expansion into an adjacent building that housed the Venue’s executive offices will increase the size of the facility to 34,282 square feet on about 1 acre. The expansion itself is about 8,000 square feet.

Currently, the Venue can host only one event at a time, but that will be changing with the expansion, Twigger said.

The first and second floors of the addition will accommodate about 84 seats each, while the rooftop patio will accommodate about 250 seats. Upon completion, the Venue will be able to accommodate 1,700-1,800 people.

“The main thing is having the separate space because right now it all runs together,” Twigger said.

The expansion will accommodate 45-50 employees, including setup and banquet staff for private events, he said. Most of those positions will be new hires, he said.

The facility originally opened as the Cajun House in 1996 and featured a retractable roof. The roof was closed in subsequent years, and then became retractable again last summer.

Construction isn’t going to slow operations at the Venue, Twigger said.

“We have a busy month coming up in June, with a lot of private events, a lot of non-profit and civic organizations doing galas over the summer,” he said.

Mayor Jim Lane was on hand during a groundbreaking ceremony. He said the Craftsman Court area has been trying to build foot traffic and the Venue’s expansion will help bring more people to the street.

“It’s something the area does need,” he said. “They need more people to be in the area, they need more people to be introduced into the area, and this is a great facility to facilitate just that kind of introduction.”

The Royal Palms Resort and Spa in the Arcadia neighborhood of Phoenix is planning a $1.2 million renovation of its Valencia Casitas.

The project is expected to begin in July and be completed in late August. Royal Palms is at 5200 E. Camelback Road.

Greg Miller, Destination Hotels & Resorts regional vice president, said Royal Palms was once the summer retreat of Delos Cooke, a New York financier and nephew of J.P. Morgan.

“Our interest is to continue with that feel, like a private home,” he said. “The upgrade will include a much larger bathroom with a custom vanity and custom shower.”

Est Est Interior Design and Hayes Architecture/Design Inc. are contracted for the remodel.

The renovation of the 30casitas will include a different color and fabric palette, and new floor tile to reinforce the current Mediterranean design.

The bathroom remodels also will feature built-in coffee bars and privatized water closet.

In addition, the renovation will include a $250,000 fitness center expansion, which will include new floors, windows and additional workout equipment.

The center also will have a computerized workout system that provides a fully interactive, cinema quality, video-based cardio workout, incorporating audio with ambient soundtracks and video footage.

For example, on the treadmill, a runner can choose from a travelogue of scenic locales, such as the Hollywood Hills, and the incline will adjust to match the terrain shown in the video.

The Cortesian, a 332-unit apartment complex on Camelback Road between Scottsdale and Hayden roads, in Scottsdale, has sold for about $25.9 million.

The seller was Holualoa Cortesian LLC, of Santa Monica, Calif. The buyer was Camelback Cortesian LLC, of Phoenix.

Commercial real estate firm Hendricks & Partners represented the seller in the transaction.

Built in 1971, The Cortesian received more than $4 million in upgrades in 2004 and 2005.