A development of Woodbine Southwest Corp., the property is situated within Kierland Commons, a 600,000-sf, 38-acre mixed-use project that features upscale specialty retailers, dining, entertainment, office and luxury residential space into an urban neighborhood, "Main Street" setting. Phase I, which opened for occupancy in 2005, consists of 30 one and two-bedroom units that sold out within 30 days. The second phase, which was recently completed, has 54 one and two-bedroom units as well as five penthouse suites on the ninth floor of the loft tower. Signature Properties is handling the marketing of the project, which was designed by Nelsen Architects.
[IMGCAP(2)]While some projects in the area have seen a fall-off in potential buyers, Plaza Lofts is seeing a lot more activity, relates Daniel Gosnell, president of Woodbine Southwest. "In terms of why we're still pretty steady, I think it's that we're in a location that's been proven," he says of the factors that led to the project's success. "We've got 84 units, which is a pretty small boutique project, in terms of numbers. For the 30 in the first phase, the resale values are still higher than what we're selling the new tower for, so there's some implied built-in equity to close escrow."
The fact that the project is located within Kierland Commons, "which is probably the highest performing mixed-use retail project in the state," he says, adds some cache. "Once you buy into it, you already have a great address." In fact, Gosnell notes that another residential complex within Kierland Commons--the Landmark--is nearly sold out as well, and hasn't budged on its pricing, either.
However, that doesn't mean the community didn't get hit by the slowdown at all. Gosnell admits the units aren't selling at the pace they were before, "but we tend to think that's good. We want to make sure that when someone buys-in here, they've considered all the factors. What's happening now is that people are looking for deals. We haven't lowered our prices. We have some people coming in to see how much they can negotiate, but when they understand that that's not what we're doing, then they'll go look at other projects. But a lot of times, they come back here and understand why we haven't been lowering our pricing. We were fortunate on the front end that--before we started construction--we had a significant amount of the units sold and committed to, so we don't have to be in a hurry to sell." Plaza Lofts' pre-sale rate exceeded 40%, and the project is now about 70% sold, he says. Units sell from $575,000 to about $3 million, or about $1,000 per sf. Comparatively, local sources peg the average price per foot for residential units in the market at between $600 and $800.
And while the developer says they'll work with potential buyers who may have financial constraints, it's not offering concessions or incentives, either--unlike its counterparts in many markets. "We'll try and get creative, but we're really not offering incentives," he says, "It's something we'd consider, but I don't think we need to at this point." Gosnell notes that what is happening is deals are taking longer to close, "from the time potential buyers express interest to the time they open escrow--they want to make sure the unit they're buying is the right one."
Interestingly, the executive says the marketing effort has shifted from traditional advertising to relying on walk-by traffic. "I think we're starting to become one of many that turn away from advertising. We're trying to exploit our biggest asset, which is the location in the project," he says. The project recently opened a sales office on the ground floor. "Traffic has been pretty solid so far. Given the number of people that come to the project every day, we get quite a bit of walk-by traffic. A lot of people come in, and quite a few of them are qualified." And the buyer mix, he adds, tends to be across the board in terms of age and socioeconomic profile.
Plaza Lofts at Kierland Commons feature such high-end amenities as a private parking garage, two reception lobbies with card-access entry, community rooms, heated pool and whirlpool, fitness facility and outdoor recreation areas that include fire pits, barbeque areas, sitting areas and a water feature.
For the Metro Phoenix multifamily sales market, Gosnell expects the trend to be upward. "We may even start to see the inventory on the MLS decrease," he says. "I like to believe the bottom may have hit already."
As for developers that may be having trouble selling units, the executive says, "It's all about patience. Those that started with the right financial model and understood the market wasn't always going to be great will be fine. As long as you build in enough contingency, you just need to be patient and stick with your business plan."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
