A Valley developer's plan to build up to 1,100 luxury apartments at Scottsdale and Camelback has resurrected a debate over the height of buildings in the downtown area.
The 1,100 apartments planned for the $200 million project would be in addition to nearly 500 condominiums the Scottsdale City Council approved this week for Optima Sonoran Village at 68th Street and Camelback.
Scottsdale also has approved 165 condos for the Solis Scottsdale Resort and Residences east of the apartment site.
That project and Scottsdale Riverwalk are adjacent to the Arizona Canal that cuts across downtown.
Brian Kearney, Gray chief operating officer, said there is strong demand downtown for luxury apartments, which is distinct from the for-sale condo market.
"This is the best apartment site in Arizona, no doubt," Kearney said.
Apartment-industry officials say there is demand for luxury units in Scottsdale. But the project is likely to encounter opposition from citizen groups that have been battling height and density issues downtown for at least a decade.
The taller of Gray's two buildings could be anywhere from 50 to 148 feet tall, Gray spokesman Jason Rose said.
"We want to do a little more listening to the council and the community" before a decision is made on the height of the project, he said.
The City Council on Wednesday approved an infill incentive district downtown that would allow buildings of up to 150 feet.
Scottsdale Riverwalk at 148 feet would be roughly as tall as the Scottsdale Waterfront condominium towers to the southwest and the AmTrust Bank building at 69th Street and Camelback Road.
The Waterfront towers drew strong opposition before they were approved in 2003.
Scottsdale citizens also filed a referendum in 2008 with nearly 2,700 signatures to halt the five-story, 230-unit Hanover luxury apartment project northwest of Indian School Road and Goldwater Boulevard.
A Maricopa County Superior Court judge tossed out the referendum because it did not follow the proper filing procedures and the issue did not make it onto the ballot. But the project stalled, another victim of the depressed real-estate market and restricted investment capital.
Fear of heights persists
Sonnie Kirtley, Coalition of Greater Scottsdale chairwoman, said the height and density of the Scottsdale Riverwalk might not be compatible with what exists downtown. She had not yet seen details of Gray's proposal.
"Good luck on getting them rented," said Kirtley, adding there already are too many residential vacancies downtown.
Coalition member John Washington said he is concerned about increases in traffic congestion from Optima Sonoran Village and Scottsdale Riverwalk.
Kearney of Gray Development said the housing market is likely to recover by 2013 when the luxury apartments would be finished.
Gray hopes the City Council will approve its project by this fall; construction would start by early 2011.
Gray has a purchase option with Mid First Bank for the property.
Development of Safari Drive stalled after the first phase and the lender foreclosed on the undeveloped portion of the property, which was to include more condos and retail space.
Scottsdale Riverwalk would include restaurants
Other amenities would include underground parking, rooftop tennis courts and swimming pools
Rents would range from $1,000 to $2,000 per month for units starting at about 800 square feet, Kearney said.
Gray has developed about 8,000 apartment units in the Valley over the past 20 years, including Grigio at Tempe Town Lake.
Gray filed for a Chapter 11 bankruptcy protection for Grigio in May.
Apartment sector improving
The apartment sector has suffered in the real-estate downturn but is starting to improve, according to multihousing analyst Peter TeKampe.
Scottsdale is one of the Valley's strongest apartment submarkets with no new supply added in several years, said TeKampe, Marcus and Millichap vice president of investment.
North Scottsdale and Fountain Hills had the Valley's highest average rents in the first quarter at $923 and the lowest vacancy rate at 5.5 percent.
The Valley average rent is $745 per month with a vacancy rate of 13.5 percent.
Rents will start to increase by the end of the year if vacancies stay low but a lot depends on the economy, he said.
"We have to get back into a job-growth mode," said TeKampe, an Arizona Multihousing Association board member.
TeKampe added that Gray's apartment project downtown would be almost a whole new niche that would be unaffected by the so-called shadow market. That refers to investor-owned condos that have become part of the Valley's rental supply.
Gray said its highest rents would be up to $6,000 for the largest, top-floor apartments in Scottsdale Riverwalk.
Plans for luxury apartments spark downtown height debate
Posts
