Project updates
This link has an update on some of the projects and there is an additional insert on alot of Tempe projects. Looks like most are on hold. Can't imagine any new condos going in at this point. There are way to many vacant.
http://www.eastvalleytribune.com/story/128930
An impressive array of major projects is on the drawing boards for the East Valley and Pinal County - ranging from the Gaylord Hotel/convention center in east Mesa to the $250 million Waveyard aquatic park in Mesa and the $600 million Coyote Canyon theme park in Florence to a forest of high-rise condos and hotels in Tempe and Scottsdale.
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It's enough to make a construction crane-supplier drool.
But how many of those visions will actually be built, especially given the tight-credit, slow-growth economy?
The people who answer that question tend to line up in two groups. Those who are backing the projects say they will go forward. Just about everyone else is doubtful.
"If you go over the history of large projects proposed in the Valley in the past 30 to 40 years, maybe a third get off the ground," said Bob Kammrath, a Phoenix real estate consultant.
"The safe bet is there is no financing for those projects. If they have cash, those deals will happen. If the project has a creditworthy tenant, that is a done deal. But these others are quite speculative and dependent on people having a lot of disposable income. And that's shrinking."
Still, Kammrath sees a bright side to all the proposals: "it means a lot of people think we will make a comeback."
Bo Morris, spokesman for Scottsdale-based Waveyard Development LLC, insists the water park proposed on Mesa-owned land at the Loop 101 and 202 freeways is on target to break ground as planned late this year or early next year.
"We're still on our timetable," he said.
But Mesa City Manager Chris Brady admits he isn't so sure.
"Right now the capital markets for large projects are very difficult," he said. "But we go through economic cycles. ... They may be difficult today, but we are dreaming and hoping and planning for great things for the future of Mesa. If they don't happen - no harm, no foul."
THE BEST BET
Of the proposed East Valley projects, Kammrath thinks the Gaylord resort, which is to be at the site of the General Motors Desert Proving Ground, is the most viable because its developers have the deepest pockets.
Others also like Gaylord's prospects. Wil Cardon, president of the Cardon Group, a Mesa-based real estate investment firm, and chairman of the Smart Growth Committee of the Urban Land Institute, said Gaylord Entertainment Co. of Nashville, Tenn., and DMB Associates of Scottsdale, the landowner, have a track record of turning their ideas into reality.
"There's an old saying in this business: The guys with the most oxygen in their tanks win," he said.
He has fewer hopes for the theme parks, saying that "people are looking for sure bets."
Even with their relatively strong financing, Gaylord and DMB are seeking $136.5 million in tax incentives from Mesa to make their deal work. And that will require the approval of city voters, which may be a tough sell in tight economic times.
Satyan Maddi, a financier who is attempting to raise money for the $600 million Coyote Canyon theme park, admitted that normal financing through banks has dried up. But he said there are private equity firms and investors willing to look at entertainment ventures as an alternative to the stock market.
He is "very optimistic" that sufficient money can be raised to break ground in the first quarter of next year.
"The project is very sound," he said.
SLOWDOWN EVIDENCE
Dennis Hoffman, an economics professor at the W.P. School of Business at Arizona State University, sees evidence of the development slowdown right outside his office window - the near-standstill on construction of the Centerpoint condominium towers in downtown Tempe. The project has been on a virtual hold since the bankruptcy filing of Mortgages Ltd., the Phoenix-based company that provided financing.
"Anyone with financing in these projects who thinks it will be easy to lease space or find customers at those theme parks, the whole of Arizona, needs to recognize that this is not just a slow-growth economy," he said. "We are in a recession as deep as anything I've seen here."
But he, too, takes a positive long-term view, saying the buildings may rise out of the ground when the economy recovers.
"I'm still hard-pressed to write our state off," he said.
Len LaBrie, executive vice president of Phoenix-based Meridian Bank, confirmed that bankers are being very conservative in their loan standards. He said the commercial projects that are the most likely to get financing are owner-occupied buildings. An example he cited was a company that might be renting its office space and would want to purchase the building for its own use.
High-rise condominiums are tough to finance, he said, although that could depend on variables such as location and number of units pre-sold.
His verdict on hotels: "For us, probably not at this time."
The key to freeing up lending is greater confidence in future growth, LaBrie said.
"Without confidence, it's tough to do anything," he said.
CASH IS KING
In Scottsdale, which had benefited from a recent boom in high-end condo, hotel and retail projects, financing has stalled some plans. That was the case for SouthBridge developer Fred Unger, who had approval to build 42 high-end condos along the Arizona Canal on the western edge of his urban downtown project that today includes four buildings of restaurants, offices and shops across the canal from Scottsdale Waterfront.
But Unger has an alternative to the financing problems - he found a cash-financed backer to develop an Element extended-stay hotel, a new Westin concept. Unger said he's working with Lewis Wolff, owner of the Oakland Athletics baseball team and chairman of Wolff Urban Development, on the project.
"Absent that, I would be sitting waiting for the market to improve," Unger said.
That is the case for another phase of SouthBridge - 12 brownstones along the canal. Unger has the city approval and half are sold, but he still cannot secure financing to build.
ON HOLD
Tempe may be the East Valley city hit hardest by the financing freeze because it has so many projects in the pipeline. Most have come to a standstill, said Chris Salomone, the city's community development manager.
"The lenders, the joint venture partners, are treating Tempe a little differently," he said. "We are getting some projects done because of the university and the light rail and our presence near the (Phoenix Sky Harbor International) airport. But the majority of the entitled projects are on hold."
The only projects moving forward are student housing along Apache Boulevard and hotels, he said. Most office and retail projects are stagnant, and anything with a residential component will probably have to wait until 2010 to come out of the ground, he said.
"The good thing about Tempe is we have very patient money here," he said. "There are some large entitles involved that have confidence the market will come back by 2010, and they want to be ready when it comes back."
In Scottsdale, major residential, retail and entertainment projects are not moving forward as expected.
This includes Centrovida, formerly known as Los Arcos Crossing, just to the east of SkySong near McDowell and Scottsdale roads. Centrovida filed its rezoning in January, but in June said the project was backing away from its mixed-use urban concept and instead focusing more on retail. No new plans have been submitted or hearings set.
And while the W Hotel recently opened just east of the Scottsdale and Camelback roads intersection, the surrounding area that's slated to be part of Triyar Co.'s large entertainment district first announced a year ago has not taken shape.
The Hanover Co., a major Houston-based developer of high-end apartment buildings, received approval in February for a five-story Scottsdale project at the northwest corner of Indian School Road and Goldwater Boulevard that would include about 230 units and first-floor shops.
Hanover's Eric Kenney said the company still wants to build the project, but he said financing is not available and construction will be tied to the recovery of the national financial markets.
"We're still bullish on downtown Scottsdale, and when the time is right and the financing out there, we'd love to be part of it. But right now we just have to wait and see how it goes," Kenney said.
Financing problems have even become a legal defense in Scottsdale, as the stalled Main Street Plaza condo project is saying the economic collapse should allow for a deadline extension to comply with land purchase deadlines set out in an agreement with Scottsdale.