Groundbreaking on the project has not yet been determined. "We're just now working on our site plan and making revisions to it," Pat Sauer, vice president and director of development with Cypress Equities West, tells GlobeSt.com. "We have a couple of major tenants in mind right now though. Within the next 60 days, we would like to be pretty far along on them."
Richard Hubbard, the state land department's deputy land commissioner, says infrastructure development for the project will begin "probably within the next couple of years."
Cypress managed to trump local developer Tri Plus Partners in the bidding war. Bids opened at $10.8 million, equal to the property's appraised value. Bidders were required to put 10% before the action began. Hubbard says three companies were qualified to bid, but one dropped out, leaving the two developers. "They kept topping one another in $100,000 increments," he says. The state gleaned 25% more than the land value and an additional $65 million in rent over the life of the lease.
Hubbard says a typical ground lease in this type of situation has a 60-year term, with renewal options to take it to 99 years. "This allows the developer to get the appropriate financing so they can amortize the cost of improvements over the lease," he says.
Proceeds from the lease--and the sale of the land--go into a fund that supports public education in Arizona. Over the lease term, the state coffer is expected to realize $350 million from the development.
In the meantime, the property is a strong investment for Cypress and future tenants. "There's a lot of residential going on in that area," Sauer says. "There are existing homes already there in the Valley area and a large number of planned developments in that part of the market." Added to that, he continues, are the main freeways, including the movement of US Highway 303 farther west. "As those freeways develop more, it makes the land more attractive for residential growth," he notes.
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