The Centerpoint Condominium towers stood abandoned for two years in downtown Tempe as the most glaring symbol of the Valley’s real estate meltdown.
But just as the second tower of the renamed West 6th is nearing completion, Tempe’s condo crash is transforming into an apartment boom.
Nearly 2,500 units have opened, are under construction or expected to have tenants within 18 months. The city estimates the projects are worth $235 million.
The city hasn’t seen such an influx of housing since farmland was being transformed into single-family homes several decades ago, said Chris Anaradian, Tempe’s community development director.
The apartments are mostly in or close to downtown and Arizona State University.
Demand has been growing since before the recession with a lack of student housing, Anaradian said. Many students or young professionals were renting homes but will now want to live closer to ASU or their downtown jobs, he said. Many of those renters like the amenities in modern rental communities and find it more socially engaging than being in a home, Anaradian said.
Some projects have lenders competing to make loans because demand is so strong, Anaradian said.
“There is very little borrowing for any kind of real estate construction projects across the country but apartments are one of the sectors that lenders feel confident in, sadly, because of the recession,” he said.
Tempe counts 11 complexes in this boom. The biggest so far is West 6th, which cost $44.4 million to finish the 375-unit towers.
The largest expected project is a $48 million, two-tower complex at College Avenue and Veterans Way. The site was once a National Guard Armory and was to become the swanky Tempe Lumina, where Phoenix Suns star Amar’e Stoudemire had put money down on a unit.
Nothing ever became of Lumina or several other high-profile condo projects that totaled several thousand units.
Some of the condo deals were put together by speculators with no track record of constructing massive developments, but city officials say the apartment plans are more solid.
One developer, Scottsdale-based Mark-Taylor, is planning two complexes and has numerous others in the Valley. The former Armory site is now owned by Core Campus Communities. Their project is likely to get financing because it is targeting students, said Lisa Collins, deputy development services manager.
“I really think this one is going to move forward quickly,” she said. “They are developers. They’re not just guys buying property.”
The Core Communities project is happening in part because of West 6th’s ability to fully lease the first tower by opening day, said Manjula Vaz, a zoning attorney for Core. The company plans to break ground in early 2012 and open the following year.
“There is a demand to get going right away,” Vaz said.
About half the apartments are geared toward students or young professionals, Anaradian said. That should help with the longstanding friction between homeowners who are upset at the number of students in rental homes. A task force helped several years ago by creating rental registries and trying to limit the number of students in a home.
But the new apartments could have a bigger impact, Anaradian said.
Many students rented homes because there weren’t enough apartments and now they’ll be happy to live closer to campus, Anaradian said.
Tempe has wanted to boost the number of owner-occupied homes for years but Anaradian said the apartment boom doesn’t go against that. The only way to add housing in the landlocked city is to build multifamily housing, he said.
“There is no way that we don’t want people living in our community,” he said. “And there is now way that we don’t want people investing in the community.”
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