Revival brings major projects to Phoenix's Central corridor

Gone are the bright orange and white construction blockades that currently make driving on Central Avenue such a nightmare.

Instead, the city's main thoroughfare between downtown and midtown is marked by sleek light rail cars, glossy condo towers and bustling restaurants and stores.

Sound far-fetched? Maybe. But at least a dozen developers are planning ambitious infill projects that could make the idea a reality in a few short years.

 

It's possible that not all of them will come to fruition, given current market conditions, but industry analysts are still excited about the area's potential.

More than 50 proposed developments, ranging from low-rise condo communities to expansive towers with residences, offices and shops, are slated to sprout up in Phoenix's central business district in the next five years, according to a recent list of projects compiled by the city.

Developers say Central Avenue and Phoenix's Midtown area - the district north of McDowell Road - is ripe for new investment for a variety of reasons, including its proximity to key office towers, and the resurgence of downtown. Phoenix's central business district is undergoing its own renaissance and boasts several new projects, including an Arizona State University campus.

But Midtown's marquee draw, most say, is the future light rail line.

"If the light rail wasn't there, I don't think the Midtown (market) would see the amount of development that's being proposed on the table," said Andrew Fosberg, a senior associate with the Phoenix office of real estate brokerage CB Richard Ellis.

But while developers are optimistic, it's not a given that all of the proposed projects will be built.

Already, some of the proposals are facing planning and financing obstacles. And the downturn in the residential real estate market has made many developers wary.

For example, the uncertainty has led to a delay in groundbreaking for Cielo Phoenix, a two-tower high-rise development planned for the northeast corner of Central and Columbus avenues, a few blocks south of Indian School Road. The project, however, is still a go, said David Pourbaba, CEO of Los Angeles-based 4D Development, one of the developers behind the deal.

"We have sold enough units and we have financing and the construction people all together," Pourbaba said. "Our problem is we're concerned about the market, so we pushed everything back to the second quarter of 2008."

The development calls for two 36-story towers with 30 floors of residences in each, is still a go.

4D and its partner Milbank Real Estate Services Inc.'s plans also include a pool, green space, putting golf and a movie screen in a common area on top of a parking structure between the towers.

The prevailing wisdom among developers like Pourbaba is that financing challenges, competition for tenants and the amount of time it can take to navigate municipal planning and zoning guidelines, will prevent some of the projects from being built.

"There's just a guarded outlook toward housing right now," said Brian Black, a senior director with brokerage services firm Cushman & Wakefield of Arizona Inc.

Developers also have to take into consideration the surrounding neighborhood when building ambitious high-rises.

Many have faced bruising battles when they've tried to build high-density projects in other parts of the city, most recently at 44th Street and Camelback Road in Phoenix. There are projects proposed on three of the intersection's corners, much to the dismay of the surrounding neighborhoods.

Developers looking at Midtown are likely to have an easier go of it, however, because much of the land along Central Avenue is already zoned for high-rises. That isn't the case in the Camelback area.

"The bottom line is we have to collaborate developers (and) come to some sort of middle ground for the sake of the cities and the sake of the neighborhoods," said Bob Cannon, president of the Willo Neighborhood Association.

The Willo Historic District borders Central and McDowell, where two Israeli firms are planning three residential towers at the northwest corner.

Cannon said the neighborhood's main concern is the project's proposed height, which exceeds existing regulations, and making sure the development includes enough parking.

Despite the obstacles, Doug Edgelow, a principal with Equus Development Corp., said he doesn't believe building on Central Avenue is a major gamble. He believes there will be high demand from potential residents.

"It might be sort of a foreign concept for Phoenix, but not for a lot of people who have lived in other cities," Edgelow said.

Equus Development is about three-fourths complete with the conversion of a 15-story office building at 3225 N. Central Ave. into a 145-unit condo building. Edgelow noted the project is actually 17 stories because the top story contains two-level penthouses.

Plans for the so-called Century Plaza, also include new structures, including a 200-room hotel with condos on the top floors, and three high-rise towers. One would be 250-feet; the other two 450-feet.

By comparison, downtown Phoenix's tallest building, the Chase Tower, is about 486 feet.

" . . . We're across the street from Park Central Mall, we're right in the middle of the major conglomeration of office space in Midtown, so there's a lot of reasons for why you'd want to live where we are in my opinion," Edgelow said.

The light rail line has also ignited interest in a long-vacant lot on the northwest corner of Central Avenue and McDowell Road.

Two Israeli firms, Africa Israel and BSR Group plan to build a tony condominium development with three towers that could rise up to 375 feet. The towers will sit on a two-story "pedestal," an atrium level that includes storefronts along Central and McDowell says, Yon Minei, VP of Planning for AI-BSR LLC. AI-BSR is the joint business entity that the developers formed for the Phoenix project.

The project, which is called One Phoenix, is slated to have 921 units, which could start in the $500,000 range, Minei says. Crews could break ground as early as summer 2008.

The overseas firms may not be familiar names in the Valley, but the firms have built projects around the globe. In the United States, BSR is working on projects in Las Vegas, Ft. Meyers, Fla. and St. Petersburg, Fla.

Despite concerns over how One Phoenix might impact surrounding neighborhoods, Cannon, the Willo Neighborhood Association president, said residents also realize it could bring in-demand retail to the area.

"A lot of Willo residents . . . want a grocery store that is closer that they can walk to, such as a Trader Joe's or Whole Foods," he said. "There's a lot of interest in that and they would obviously serve all the downtown corridor and all the historic neighborhoods."