7 minute read
CRE
The Rise of B2R Communities
The current forecast for multifamily properties is a roller coaster for anyone trying to pin down information from leading analysts. During this time of uncertainty, we have identified a few trends to expect in the coming years. First, as always, location is key. Some areas of the U.S. will see a decline in housing demand while others will continue to experience large population increases and property shortages. Affordable housing has been a challenge for quite some time and multifamily players have their work cut out for them to create opportunities for housing as a solution for people, communities and societal repair. In addition to continuing shortages in single-family detached homes in key areas, which drives up costs to buy, many people find themselves unable to invest. Others may want to, but want the stability that master-planned communities provide for comfort and long-term needs.
These conditions are driving factors behind the rise of a relatively new residential product, the B2R, or built-to-rent developments. Essentially, they are a merge between the standard apartment unit and a single-family home. These master-planned communities provide high-end apartment amenities with the detached residential experience. They currently make up about 6% of all new homes but are projected to soon double as demand for more flexible housing options continues to grow.
With those kinds of projected numbers, it’s becoming important to recognize this type of property as a forward-thinking trend that should not be ignored. In the Phoenix metropolitan area, we have been seeing these developments pop up all over the Valley. We don’t see the trend stopping any time soon, as home prices and bidding wars continue to escalate. One thing to note is, although these communities offer another option for renters, they are all consistently A–A+ properties, with 10-20% of a premium over more traditional single-family rental homes. They also offer, in general, a more elevated unit finish package from comparable attached multifamily properties.
While they fill a hole in the market we didn’t realize existed less than a decade ago, now that the offering is established, where does it go from here? We would like to see an evolution toward more affordable options for lower-income families that still offer the sense of community and security, but round out the B–C property scale. We would also like to see a type of property that offers rent to buy (perhaps B2R2B?) or some type of ownership opportunity that would aid families that have to rent vs. families that could buy but choose to rent.
In regard to design, multifamily has had a significant shift from cookie-cutter aesthetics to infusing character and brand, and these properties should be no different. We talk a lot about psychographics vs. demographics with our clients and, while demographics are helpful for data, psychographics are integral to programming and strategy. Amenities are the heartbeat of any property, whether it be institutional, residential or hospitality, and these amenities could use a shift in focus to amp up their character and community. Regardless, these developments are ones to watch, and we’re hopeful they can continue to bring a fresh offering to a housing market in need of innovation. —Christina Johnson, creative director of Phoenix- and San Francisco-based Private Label International (privatelabelintl.com), a full-service interior design studio that develops hospitality environments and lifestyle brand experiences for clients worldwide GET REAL
by Mike Hunter
‘Attainable’ Multifamily Development in North Phoenix
In a joint venture with Holualoa Companies, Scottsdale-based Greenlight Communities will build a new 292-unit development under its Cabana brand at Happy Valley Road and 19th Avenue in Phoenix. Greenlight purchased the property in early May for $5.8 million and plans to break ground on the new project in August 2021.
Greenlight Communities is the first company to innovatively focus solely on building “attainable” housing to fill the void between affordable and luxury apartments, using its leading-edge business and development model to create a one-of-a-kind housing alternative for middle-class residents working in fields such as teaching, healthcare and public safety. livegreenlight.com • holualoa.com
Major Tech Corridor Development in Mesa
East Gate Plaza, a 17-acre mixed-use development by Scottsdalebased Diversified Partners in the Elliot tech corridor in Mesa at northeast corner of Ellsworth and Elliot roads, will include medical, office and retail components. Diversified Partners has multiple deals in process that include restaurants, retail, convenience store/ gas station, coffee, dessert, nail salon and dental/orthodontic users, to name a few. “We are creating a destination community, playing off the tech corridor theme, which means there will be lots of glass, angular lines and rich materials such as masonry, rollup doors and exposed steel elements,” says principal architect and EDIFICE owner Dane Astle. dpcre.com
Luxury Build-to-Rent Development for Apache Junction
Chandler-based Paragon Development Group recently began construction on Hampton Meridian, a new 195-unit, luxury, buildto-rent community on 15.67 acres on the NEC of West Southern Avenue and South Meridian Road in Apache Junction. Its first units are expected to be available in March 2022. “The demand for convenient, new and well-located residential rental choices in the US 60 corridor and within 30 minutes to Downtown Phoenix contributed significantly to Paragon’s decision to develop another of its build-to-rent communities in the Southeast Valley submarket,” says Bruce Dunn, president of Paragon Development Group. westland-properties.com/closedtransactions/hamptonmeridian
Bringing (Good) KARMA to North Central Phoenix
As we step back into a post-pandemic world, I know I am not alone when I say I have emerged after months of work and self-reflection with a new perspective and clear focus on what I want to do and achieve both personally and professionally. In December 2020, I launched Boyer Vertical, a boutique real estate development company that integrates my architecture, design|build|construction, and real estate management companies.
This July, after a year of planning, our first Boyer Vertical project will launch. KARMA is a collection of 11 smart, modern single-family residences coming to North Central Phoenix in March 2022. Located at Bethany Home Road and 13th Place, KARMA offers three floor plans ranging from 2,380 square feet to 2,610 square feet. Each two-story home will include 4 bedrooms, 2.5 or 3.5 bathrooms, two-car garages, and private backyards. Pricing starts around $1 million.
KARMA exemplifies my focus on sustainable, architecturally significant projects located in core urban and suburban opportunity areas of metropolitan Phoenix. Sustainability plays a key role at KARMA. The compact building footprint is highly insulated, reducing overall energy use. Homes are prewired for solar and can accommodate electric vehicle charging in every garage. Additional features include high-volume spaces washed with natural light, passive skylight ventilation, LED lighting throughout, and floor plans designed to maximize Arizona’s indoor/outdoor lifestyle. The KARMA floor plans pivoted in the pandemic to address the life/ workstyle flexibility buyers are looking for.
For me, sustainable design means doing what’s smart for the environment, the specific project, and the local community each project is embedded within. I want to add value to the neighborhood, and create homes that look good, function well, and are timeless. I want to contribute to the fabric of the neighborhood. The key to successful infill projects like KARMA lies in understanding what is special about the neighborhood and delivering a design solution that blends into the context of the area.
The Brokery will be handling all sales for KARMA. —Jason Boyer, CEO and president of Boyer Vertical (boyervertical.com)
KARMA karmaphx.com
Between COVID-19 and new innovations across the pharmaceutical industry, demand for life sciences space has never been higher. This is good news for Phoenix, which is in a prime position to support this lucrative business sector.
According to JLL’s new Life Sciences Outlook, growth in the prescription drug market is expected to surpass $1 trillion by 2022, benefiting in large part from pandemic-related tailwinds. This is combined with accelerations in the life sciences industry, particularly among life-enhancing pharmaceuticals and medical device sought out by millennials at the peak of their earning potential.
Although the life sciences have traditionally centered on coastal markets (Boston, San Francisco and San Diego captured 70% of all VC investment in 2019), more and more life sciences companies are moving to the nation’s interior — to markets like Phoenix offering a highly educated workforce and growing research community.
That creates demand for institutional-grade life sciences real estate.
An example of this is Workspace (www.workspaceproperty.com), a fullservice real estate property company that recently selected JLL to market its 1.3-million-square-foot metro Phoenix portfolio of plug-and-play office, industrial and life sciences space.
Located primarily in Cotton Center, just south of Sky Harbor Airport and in the Elliot Road/I-10 corridor, Workspace has one of Phoenix’s largest concentrations of buildings that allow life sciences tenants to adapt and expand over time.
As the Phoenix life sciences market grows, spaces like these will be critical, allowing companies to quickly establish a footprint while also solving for one of the industry’s greatest challenges —being able to grow without relocating. Considering the time and expense that life sciences organizations put into their lab, clean room and research build-outs, being able to grow within the same complex, without having to abandon and rebuild, is a gamechanger. —Mark Gustin, managing director of JLL (us.jll.com)
