Article on the 5-story apartments at Smith & Rio starting construction.
https://www.bizjournals.com/phoenix/...ate=2021-07-15
High Street Residential, the Dallas-based residential subsidiary of Trammell Crow Co., has broken ground on a 310-unit apartment community in Tempe.
Total development costs for the project are expected to range between $75 million and $80 million, said Paul Tuchin, principal with High Street Residential.
Called Smith & Rio, the 5-story apartment community will be built on 3.4 acres just south of Loop 202 and west of Loop 101. Construction is expected to be completed in 2023.
Located at 1979 E. Rio Salado Parkway, the apartment community will be built directly across the street from the 1.3 million-square-foot Tempe Marketplace. Wespac Construction is general contractor, while ESG Architecture and Design is architect for the project.
Tuchin said it's too soon to determine rental rates for the 5-story property, which will offer a mix of studio, one-, and two-bedroom units, including a selection of one-bedroom units with additional den/home office space. Amenities will include a fifth-floor sky lounge, two outdoor courtyards, a dog park and pet lounge, a work-from-home area with individual work spaces, a pool, spa, fitness center and water features throughout the outdoor spaces.
"Phoenix has strong market fundamentals and is a leading market for job/employment growth and population growth, making it an attractive place to build and invest," Tuchin said. "There is a true need for a diversified housing stock in the metro and the demand for 'for-rent' housing continues to outpace supply."
Smith & Rio is among nearly 24,000 apartment units under construction in metro Phoenix, said Peter O'Neil, research director for NorthMarq, up from about 15,000 units that were under construction one year ago.
"Not all of these units were delivered in the second half of this year — the bulk of the projects will come online in 2022 or 2023," O'Neil said. "The increase in the number of projects in the development pipeline is going to greatly help ease the supply-demand imbalance that we have been experiencing for the past year."
Chasing the demand
The projects under construction are needed to keep pace with renter demand for apartments, O'Neil said.
"Renters have moved into a net of more than 15,000 apartment units in the past year, more than doubling the average annual absorption levels since 2015," O'Neil said.
Apartment vacancy rates have reached all-time lows, fueling rent increases, he said.
"Vacancy ended the second quarter at just 4.1%, down from 5.7% one year ago, and the lowest figure on record," O'Neil said. "Local rents rose more than $100 per month in the second quarter."
High Street Residential's newest project adds to its 191-unit The Astor at Osborn and the 160-unit Gramercy Scottsdale. The first phase of the 348-unit Mercer on Fillmore is expected to be ready in a few months.
"We are working on a second phase of our Mercer on Fillmore project in downtown Phoenix," Tuchin said, with construction to begin in 2022 or 2023.
The High Street Residential team is managing five active multifamily projects, which will deliver a total of 1,350 units, Tuchin said.
"HSR still owns all of our multifamily developments, though as a merchant developer, the business plan for all TCC/HSR developments is to sell once an asset is stabilized," he said.
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