Thomas J. Kluznick Co.'s CityNorth project may sit in one of the best untapped markets in America. Located in Phoenix's Northeast Valley, the 5 million-square-foot mixed-use development will include offices, two hotels, about 2,000 housing units and a million square feet of upscale retail. Klutznick is joined by partner Related Urban Development.
CityNorth will be a town center for the 700,000 people who live in the area, says Webber Hudson, Related Cos.' executive vice president. High-end retailers find the area's demographics appealing. Phoenix's northeast quadrant has average household income exceeding $100,000, according to locally based developer Westcor.
Welcome to Phoenix. “I've never seen anything like what's been going on here in the last three years and I've been doing entitlement work here for 35 years,” says Paul Gilbert from the law offices of Beus Gilbert.
Gilbert says he knows of at least 20 master-planned communities in the works around Phoenix.
In such a hot market, shopping center developers increasingly are partnering with other builders to create huge mixed-use projects, Even America's largest mall owner Simon Property Group. In a 40/40/20 partnership, Simon will invest $50 million for the option to develop parts of the commercial property and sell other parcels to a third party. The project is set to have about 4,840 acres of homes and 645 acres of commercial and retail development. It is Simon's first project with single-family homes.
Also, Westcor is working with the Landmark Land Co. to create Palisene, which will include its own Central Park with an amphitheater. In the rapidly growing West Valley, Westcor is also developing the 4,200-acre Prasada (above), which will include more than 800 acres of neighborhood and power centers, with Fulton Homes.
And Red Development is expanding into mixed-use development in partnership with Cardon Development Group and the Barron Collier Co. to develop CityScape in downtown Phoenix.
“Phoenix is the second-fastest growing metropolitan area in the United States behind Las Vegas,” says Hudson. All 10 of the largest homebuilders in the U.S. have projects in Phoenix.
“But better than Las Vegas are the income projections.” The aggregate 2005 household income was $88,146 versus $39,385 for Las Vegas, according to Claritas. By 2010, aggregate income here is projected to be $112,330.