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August, 2018

Posted By Heather Garbarino, Friday, September 14, 2018
Updated: Monday, September 17, 2018

Residential Development: The Times Are "A Changin"

 

A popular industry saying goes, “Retail follows rooftops.” The Valley’s motto could well be: “Retail and office and industrial follow rooftops.”

 

With the Great Recession and the bursting of the housing bubble in the rearview mirror, the Valley’s homebuilding industry is on solid footing once again. Valley Partnership’s August Friday Morning Breakfast featured a panel whose companies combined have accounted for 17 percent of homes sold in the past 30 days.

 

They included Greg Abrams, Vice President, Land Acquisitions, Planning & Entitlements, PulteGroup; Jeff GundersonSenior Vice President of Land Acquisition, Lennar; Ryan Huffman, Executive Vice President of OperationsRichmond American;  and Dennis Webb, Vice President, Fulton Homes. Moderating was Jim Belfiore, President, Belfiore Real Estate Consulting.

 

This spring, homebuilders sold more than in any spring in more than a decade. In the process, new home prices are finally appreciating. Part of the recipe for this slow but successful recovery is the addition of the “turnkey” product by multiple builders bringing the first-time and returning homeowners back to the market.

 

In referring to turnkey homes – either spec housing or ready-to-go custom homes – to each builder it means something different.

 

“We have always been a strong spec builder,” Webb said. “We can deliver in 30 to 60 days the buyers still have options they can add. Our upgrades are among the highest in the country. These are not yesterday’s floor plans. These are new communities; mini masterplans.”

 

Richmond American is typically not a spec builder, Huffman said. Its turnkey segment highlights customization for what a home buyer might want.

 

“Most of our business is driven by entry level or move up buyers,” Huffman said. “These are people all waiting the last few years to get back into the market. It’s now moving faster. Our Seasons collection is a good example. Those homes include spec level features.”

 

Lennar has a much different vision, Gunderson said. That homebuilder takes the “everything-included approach.”

 

“For 20 years our philosophy has been to really try to understand our customers,” he said. “This allows us to operate more efficiently. You can get exactly what you want in a house for that price. This gives us a good understanding of who our buyer is.”

 

With his company one of the bigger builders in the Valley, Abrams said the strategy at PulteGroup is to manage production levels in its communities.

 

“The big thing is maintaining a consistent work schedule,” Abrams said. “We know when they (construction crews) leave. We build a consumer-inspired planned community. We make sure they are selection the product and options they really desire. This comes from a lot of national research and focus groups. It is something you can really see in our homes.”

 

Options have moved beyond pools and kitchen appliance upgrades to RV garages and luxury packages. Infill locations are becoming extremely popular. And yes, labor woes continue be an issue.

                                       

Still, the panelists remain upbeat.

 

“We’re all bringing in more buyers,” Webb said. “It’s a busy market.”

 

 

The August breakfast wrapped up with special guest speaker U.S. Congresswoman Kyrsten Sinema. Photo courtesy of SRP.

 

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JULY 2018

Posted By Heather Garbarino, Monday, August 6, 2018
Updated: Wednesday, August 29, 2018

“Go West … Developers!”


 


Connecting to the West Valley by staying in the Loop


Little did American newspaper editor Horace Greeley know when he penned the famous quote “Go West, young man” that it would also be the rallying cry for a Metro Phoenix regional corridor ready to witness incredible growth.

 

For years, the Loop 303 freeway was a dream of the West Valley. Its opening in October 2017 has already started to change the development patterns in its wake. Even before that, most thought the South Mountain Loop 202 would never come to fruition. Today, construction is well under way with a late 2019 anticipated opening.

 

These much-anticipated transportation corridors connecting the West Valley to the Southeast Valley are quickly becoming a reality. Panelists at the July Friday Morning Breakfast shared their views of the West Valley’s future with a full house at Phoenix Country Club.

Moderating the event was Greg Vogel, Founder/CEO, Land Advisors. The panel comprised Lori Collins, Deputy Director, City of Phoenix; Megan Creecy-Herman, Vice President, Liberty Property Trust; Tony Lydon, Managing Director, JLL; and Cathy Thuringer, Principal, Trammell Crow Company.  

“I started some 31 years ago in the far West Valley and worked my way in because that’s when Interstate 10 was being completed from Los Angeles,” Vogel said. “Also, 1985 was when the first half cent sales tax was passed. It enabled us to get ahead in transportation.

“The tables shifted to the East where there was more clout, money, and strong lobbying efforts. The 202 and 303 got shorted. But you can’t build freeways anywhere now. The West Valley is open,” Vogel said.

 

The Valley’s population growth has been the key to its development growth, Vogel said. In 1985, there were 1.5 million people living here. Today, the Metro Phoenix population is just shy of 5 million at 4.9 million. The Valley’s growth, Vogel said, has now shifted to the West Valley.

 

“This growth cycle is one that is really exciting,” Thuringer said. “It’s more ordered, more measured, more diverse, and not as frenzied as 2005 and 2006. The economic base is very encouraging. Economic development entities are really involved.”

 

Lydon said a “silver bullet” in the West Valley’s toolbox is its Foreign Trade Zone (FTZ) designation. Other factors bolstering the West Valley’s standing, he said, include infrastructure, and capital investment in infrastructure.

 

“I agree that this cycle is more measured,” Creecy-Herman said. “The last cycle was overbooked, and pretty aggressive. The numbers now seem to be broad-based in the midsize industrial product, from 50,000 square and up. All the sizes are being delivered. We’ve been about 200 to 250 deals a year in that size. We need those to grow the market.”

 

Thuringer said Phoenix industrial space is highly sought after with a lot of large capital players in the gateway markets. “It’s a better investment,” she said.

 

“As a region, we paid for sins the past,” Lydon said. “Now we have dynamic consumption and trade. We have a great relationship with Mexico. We’ve already seen the manufacturing sector improve by 30 to 40 percent. The next step is to begin to design and build for the mid-size users.”

 

The West Valley is key when competing against other regions, Collins said. “Roughly 85 percent are looking for ready space,” she said.

New product or ready space? Obsolescence is a hot topic, one that bodes well for the West Valley, Lydon said.

 

“There are great opportunities for those older buildings,” he said. “Three important words: Last mile fulfillment. This is key for distribution in dense urban areas. Older product is being converted to LMF.”

 

When it comes to significant anchors in the West Valley, panelists pointed to the region’s higher education entities, Grand Canyon University and Midwestern University. Lydon said a German pharmaceutical firm toured the Southeast Valley and Sky Harbor submarkets but decided on the West Valley.

 

“Midwestern has a robust pharmacy school,” Lydon said. “That was important to them.”

 

What will benefit from growth in the West Valley? Lydon’s list includes e-commerce, food and beverage, manufacturing, healthcare, logistics, data centers, education, workforce, infrastructure, the FTZ, and executive housing.

 

“The workforce is heading West,” Lydon said. “This is going to be a much different West Valley 24 to 36 months from now.”

 

Added Collins: “Phoenix has a good transportation system. Once the 202 opens it will be great. There are not many cities we compete against that can boast a 22-mile strip of freeway opening. It will be a great new gateway.”

 

2018 Valley Partnership Community Project revealed

Sunshine Acres Children’s Home in Mesa was announced as the recipient of the 2018 Community Project. Partners transformed an underutilized parcel of land into a vibrant fitness park and recreation area in 2016. Valley Partnership is returning to Mesa on Nov. 3. Please join us.

 

 

 

 

 

 

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