From PBJ:
https://www.bizjournals.com/phoenix/...phoenix-s.html
Downtown Phoenix’s skyline could look very different if a number of proposed high-rise developments and other projects come fruition.
While developers have proposed plenty of big projects in Phoenix before that never happened, there are a number of new downtown developments under construction or in the development pipeline.
Others are being planned and proposed.
“Over the next 18 months, the Phoenix skyline is going to change significantly with potentially as many as 12 mid- and high-rise buildings going up,” said Christine Mackay, director, Phoenix Community and Economic Development.
Mackay said downtown Phoenix is drawing interest from developers all over the U.S.
“I don’t believe there has ever been a time in Phoenix’s history that there will be so many cranes over downtown at one time.”
Most of the potential new additions to the Phoenix skyline are residential, hotels or mixed-use heavy with residential.
“Any high rise for now will be residential,” said Andrew Cheney, a prominent commercial real estate broker and principal with Lee & Associates in Phoenix.
There are new apartments in the works on Central Avenue and Willetta Street by Tilton Construction and another at Second Street and Willetta from Transwestern. The latter is on land being acquired from Cable One Inc. (NYSE: CABO), according to Orion Investment Real Estate.
Apartment redevelopment of the Circles Records & Tapes building at Central Avenue and McKinley Street is in full construction mode. There also are new apartments recently debuted or being built in the Roosevelt Row area on the north side of downtown.
The Link PHX, which is slated to open in August 2019, is a 30-story mixed-used apartment project that will have 257 units. It is being developed by Chicago-based CA Ventures and Diamond Realty Investments.
The long watched Block 23 parcel at Washington and First Streets between CityScape and Collier Center is under construction. It includes the sought-after downtown grocery store, a Fry’s Food & Drug Stores location. RED Development also is putting in apartments along with high-tech and creative offices at the project.
Cheney said commercial real estate developers, investors and brokers are seeing how Block 23’s office components do, and that could dictate interest in new office development. Downtown hasn’t seen new offices added since the last real estate boom and boost more than a decade ago.
“You wont see a new office tower for a while until some of the vacancy is eliminated,” Cheney said. “But, you will continue to see new restaurants and music venues pop up, a new hotel at Arizona Center and new action on ASU’s downtown campus.
Cheney is referring to a new 15-story AC Hotel by Marriott (Nasdaq: MAR) is slated for development at the Arizona Center at Third and Van Buren streets.
The Arizona Center is going through a major renovation, and a 31-story new apartment is slated there from Parallel Capital Partners,
There also are plans for a 19-story apartment tower at Second and McKinley streets that would have urban micro-units with rents starting at $1,350 per month.
The $36 million project is being developed by Amstar/McKinley LLC and is adjacent to Angel Trumpet’s Ale House. But $8 million in property tax breaks from the city of Phoenix are being challenged by the Goldwater Institute in court.
True North Holdings is developing a previously city-owned parcel into a mixed-use project called RO2. Plans include a 19-story multifamily tower.
Much of the new development has been on the north side of downtown, including along Roosevelt Row. The artsy area has drawn interest and new apartment developments.
Hines Interests is also expected to build a multifamily tower at the Collier Center in the heart of downtown. A Hines spokesman declined comment on that project, but it was discussed during a Phoenix City Council meeting in December regarding the city buying 20 private parking spaces downtown for $500,000.
“The developer has proposed to develop the undeveloped pad at Colliers Center with a high-rise, multi-family residential rental project. The pad is located at the southeast corner of the Colliers Center, near the corner of Third Street and Jefferson Street,” according to city documents.
Crescent Bay Holdings continues its plans to redevelop the Barrister Building at Central Avenue and Jefferson Street. The redevelopment includes a new high-rise building slated to go next to the historic Barrister Building.
Phoenix has long sought to bring more resident to its downtown core. Some of that has been helped by Metro light rail as well as the growth of Arizona State University’s downtown campus.
ASU President Michael Crow announced in December the Thunderbird School of Global Management would move to downtown Phoenix, ditching its longtime Glendale campus.
Mackay is optimistic about job growth downtown.
“We believe 2018 is going to keep up the velocity of businesses coming to downtown Phoenix for the vibe,” said Mackay. “We’ve got Quicken Loans with over 1,000 employees, Uber and UnitedHealthcare both have more than 500 workers downtown, and there are other major employers with an eye on central Phoenix.”
Quicken Loans is moving more than 1,000 employees from Scottsdale to the One North Central building at Central and Washington. Those gains help offset JPMorgan Chase & Co. (NYSE: JPM) shifting jobs from downtown’s Chase Tower to a new campus it is building in Tempe.
Mackay said the jobs and new development are pushing Phoenix towards having “a true urban downtown." Cushman & Wakefield reports there were 2,800 new multifamily units under construction in downtown and central Phoenix with another 2,700 planned.
Cheney, who is one of the leasing brokers for the Renaissance Square development downtown, said the central business district needs to see lower vacancy rates and higher rents before it sees new office developments. Downtown office rents need to show some lasting strength to get more new product in Phoenix’s CBD..
The downtown office vacancy rate is 16.9 percent, according to commercial real estate firm JLL (NYSE: JLL). That compares to a 19.6 percent rate regionally and tighter vacancy rates in downtown Tempe and Old Town Scottsdale.
Office rents in downtown Phoenix average $31.16. That is among the more expensive submarkets in the region along with the 24th Street and Camelback Road area ($31.22) and some even higher rents in popular buildings and areas of Tempe near Mill Avenue and ASU and downtown Scottsdale near Scottsdale Fashion Square.
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