Developers build more condos despite cooling housing market

Like the rest of the languishing housing market, Valley condominium sales have slipped in the past year.

But that hasn’t discouraged some developers from betting that the right project in the right location will thrive. Construction is set to begin later this year on dozens of new condos in the East Valley.

Condo sales have been slow, but “it takes two years to build those, so there’s going to be time for this market cycle to correct,” said Ben Sage, Arizona division director for national research firm Metrostudy.

Some 1,350 Valley condos sold in March, according to Arizona State University’s Realty Studies department. That was up from 1,050 sales the month prior, but still marked a 23 percent drop from March 2006.

The condo market goes through periods of overbuilding with developers eager to capitalize on trends without doing much research, real estate analyst RL Brown said.

Some projects are struggling, while others are doing well if they’re located in the right spots, Brown said.

“It’s all about product positioning,” he said. “It’s all about targeting a consumer that really exists.”

VIVENDI

Developer Ed Gorman is banking that a 42-unit condo development he’s planning in Scottsdale will attract young people and professionals who want to be close to work.

The project, called Vivendi, would have units ranging in size from 900 square feet to 1,500 square feet and sell for $350,000 to $500,000.

Urban cores are still selling well, while building condos in outlying areas can be a struggle, Gorman said.

Located near the intersection of Hayden and Thomas roads, Vivendi is close to shopping and dining in Downtown Scottsdale and to the freeway, he said.

Gorman is also confident that the market will be stronger by the time his project is completed next year.

“We’re seeing recovery right now,” he said.

Still, developers are now competing for fewer buyers, making it crucial to market a project’s uniqueness, he said.

“We’re back to basics,” Gorman said.

CIELO VILLAS

In Mesa, the city is considering a proposed 72-unit condo complex on 3.2 acres of vacant land near Broadway and Gilbert roads.

Cielo Villas would include three, three-story buildings, city planning documents show.

Close to downtown Mesa, it would be conveniently located for people working in the area, said project architect Mike Rust of Chandler.

The project would also revitalize a depressed area, though it’s still in initial planning stages, Rust said.

TEMPE PLACE

Tempe’s condo market is also strong, in part because available land is quickly dwindling — leaving fewer opportunities for people who want to live there, said Bill Brimie with developer Jorn Homes.

Jorn plans to break ground in three weeks on 75 condos near Baseline Road and Interstate 10.

Units at the Tempe Place project will range in size from 1,000 square feet to just over 2,400 square feet with pricing from $319,900 to $920,000. Some 13 units have already been sold.

It will be close to downtown Tempe, Phoenix, a park and the freeway system, Brimie said.

“Tempe is what it is,” he said. “It’s right in the heart.”

MAIN STREET PLAZA

People want to be in downtown areas, near the hubbub of galleries, restaurants and bars, said Susan Bitter Smith, spokeswoman for the Main Street Plaza condos in Scottsdale.

Construction on the development’s second phase is expected to start in late summer, and 60 percent of the units have already been sold, she said. Though some in the real estate industry worry that the market is being flooded with too many condos, Bitter Smith said many projects are still selling and there are waiting lists. “(Developer’s aren’t) out there spending money for sthings they can’t sell,” she said. “So far, there has not been any lack of customers.”