TEMPE, AZ-Zaremba Group has made a big bet on luxury apartments in the Phoenix metro area, proving the company’s confidence in the market’s recovery and future performance.
The Cleveland-based company paid $30 million to acquire Centerpoint Condominiums, two unfinished residential towers in downtown Tempe. Local sources say the firm will invest another $35 million to $40 million to complete construction of the project, which offers 375 units along with about 20,000 square feet of ground-floor retail.
Upon completion, the property will be renamed West Sixth. Local experts estimate the complex will be worth more than $115 million when it is finished and stabilized.
Located at 111 W. Sixth St., the project was originally developed by Tempe Land Co. LLC, a subsidiary of Avenue Communities. Construction began in 2005 and stalled in 2008.
ML Manager LLC , headed by former Arizona State Land Commissioner Mark Winkleman, acquired the property at a trustee sale in April 2010. ML Manager is the successor to Mortgages Ltd., the project’s original lender.
Zaremba pursued the high-profile projects for nearly two years, according to Steve Gebing, a multifamily investment specialist in Marcus & Millichap’s Phoenix office. He and Cliff David, a multifamily investment specialist in the same office, represented Zaremba. Tyler Anderson and Sean Cunningham of CBRE’s Phoenix office represented ML Manager LLC.
Gebing tells GlobeSt.com that Zaremba has three other luxury residential projects in the Phoenix area and wanted to expand its footprint here. “With Centerpoint, Zaremba believes it is in a fantastic position to capitalize on growth in the class A rental sector,” he explains. “We’re seeing occupancy stabilize and rents are going back up again. Plus, the north Tempe submarket, where Centerpoint is located, is one of the strongest submarkets because of its proximity to Arizona State University.”
Zaremba will immediately resume construction on phase 1 of the complex, a 22-story residential tower, which is slated for occupancy by August 2011. It features mixed-use retail and restaurant space on the ground floor. Phase II, a 30-story residential tower, will be completed by December of this year.
“This property is the most well-known distressed asset that exists in the entire state of Arizona,” Gebing contends. “It has been a constant reminder of how difficult things have been from an economic perspective. To see construction begin again and to have the project completed--it will help people move past the downturn, at least from a psychological standpoint.”
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