Phoenix Development News (3)

[SunDevil]

I would add that rent outside of downtown could be the contributing factor for the city of Phoenix rent rising; especially houses as rental properties if people are getting priced out of home buying or out of their homes in general. What is true for one part of a city that is as big and spread out as Phoenix isn't true for other parts of the city.

I don't want that to be the case, but, there is precedent and therefore reason for skepticism. At the same time, there is reason to believe that this time could be different given that downtown has changed dramatically since 2007-2008.


----edit----
I read it right the first time and undid an earlier edit.

[combusean]

Originally Posted by biggus diggus

I feel as though you're trying to corner me into an argument. All I said is too temper your expectations because in the past when ever we have begun seeing multiple over the top, outlandish, or record setting proposals pop up a correction has been on the horizon. Then I said I hope this time it isn't. Why are you turning it into an argument and trying to make someone wrong/right?

It's just discussion, kid. There doesn't always have to be an argument.

Almost every time a city or the world gets a new tallest a recession follows.

This is not my conjecture or a hypothesis, this is well known as the “skyscraper effect” and fleshed out in macro economic and investment theory. Basic googling echos this.

Phoenix alone has seen the 70s recession that followed VNB tower, the SandL crisis following Landmark Capitol Tower, a proposed WTB, and the large structures put up in the late 1980s (which looks similar to this one, esp with the explosion of apartments) the Great Recession following that one project on the Ramada block...

The truth is, this project is unlikely with the long timeline. Troon could not pull off the Jet and it was half the size of this beast. I’m sure a lot of people would like to borrow $350 million but that doesn’t mean it’s going to happen.

[combusean]

Originally Posted by Obadno

You've been saying this for a long time now and I think at some point you should maybe let your guard down

This is the longest economic expansion in the history of the country.

It is totally reasonable to not take it for granted, especially as things started to look dicey in the beginning of the year.

Honestly after the abject horror of the Great Recession I wonder why people don’t have their guard up. My only saving grace is that private capital markets will get hurt the most and hopefully that doesn’t trickle down to people on the street, but it absolutely will if there’s a similar credit crunch and businesses can’t make payroll.

[Obadno]

Originally Posted by combusean

This is the longest economic expansion in the history of the country.

It is totally reasonable to not take it for granted, especially as things started to look dicey in the beginning of the year.

Honestly after the abject horror of the Great Recession I wonder why people don’t have their guard up. My only saving grace is that private capital markets will get hurt the most and hopefully that doesn’t trickle down to people on the street, but it absolutely will if there’s a similar credit crunch and businesses can’t make payroll.

I agree with you if you read my earlier posts but biggus is famously overly pessimistic and cautious for years.

[Obadno]

Originally Posted by biggus diggus

I feel as though you're trying to corner me into an argument. All I said is too temper your expectations because in the past when ever we have begun seeing multiple over the top, outlandish, or record setting proposals pop up a correction has been on the horizon. Then I said I hope this time it isn't. Why are you turning it into an argument and trying to make someone wrong/right?

It's just discussion, kid. There doesn't always have to be an argument.

I’m not arguing I’m asking you to back up such a wild claim in this discussion

Kid

[FireMedic]

It will be Cool to see what the Phoenix Downtown & Midtown skyline's will look like height wise with all these new highrises and 3 or 4 skyscrapers coming

[biggus diggus]

Originally Posted by Obadno

I’m not arguing I’m asking you to back up such a wild claim in this discussion

Kid

I don't think it's a wild claim when I'm saying historically when X happens you see X result and then following that statement with "I hope that's not the case this time". I'm sorry you're offended but you can't really argue with history

I get the feeling that you're excited thinking all these projects are going to happen and you feel like I'm walking up with a needle and popping your balloon. It's not personal, it's just the way the world works. Remember 2007 when Toll Brothers told everyone they were building a 400 some foot building at Central and Thomas? And when developers were throwing out all these ridiculously expensive and lavish buildings they were going to build? That's called the peak of the cycle and it's built mostly with wild ideas based on the past few years of solid growth. Those guys with the grandiose ideas can't find financing because the investors and banks are too smart, the ideas fade away, and the banks end up being right about the market.

Illuminate is advertising a month free on their website, just like I told you guys a year ago would happen... after the first round of leases start expiring you'll see these identical buildings all fighting each other to fill vacancies and they'll offer the moon. I'm not making outlandish claims, I'm telling you history + current events paint a picture of an apartment slowdown.

It's not doom and gloom and it's not pessimism, it's a firm understanding of the way the multi-family market works based on years of owning, managing, and even building apartment buildings.

[ASU Diablo]

I think Obadno is referring to your claim about downtown complexes giving away 18 months of rent. Your response was Illuminate's promotion of a month free. I'm pretty curious to see if this claim is true as well...

[biggus diggus]

Originally Posted by ASU Diablo

I think Obadno is referring to your claim about downtown complexes giving away 18 months of rent. Your response was Illuminate's promotion of a month free. I'm pretty curious to see if this claim is true as well...

I never meant to say 18 months, that's just ludicrous. I figure anyone could tell that it was a brain fart. I meant to say 6 weeks.

[ASU Diablo]

Well to be fair, you've said some pretty outlandish things in the past so figured it was another biggus thing

[CrestedSaguaro]

Biggus, even a blind squirrel finds a nut every once in a while. In other words, your eventually going to be right if you keep saying it for long enough.

[biggus diggus]

We have two different mentalities in this discussion:

1. this is what history presents and this is what's likely to happen.
2. this is what I hope happens because it will make me feel warm and happy.

Neither of the mindsets are inherently "wrong", they just display a different way of looking at things. I'm not being disrespectful to any of you about your hopes and wishes. No reason to be disrespectful to me for sharing what I've learned over the years.

[PHXFlyer11]

Originally Posted by biggus diggus

We have two different mentalities in this discussion:

1. this is what history presents and this is what's likely to happen.
2. this is what I hope happens because it will make me feel warm and happy.

Neither of the mindsets are inherently "wrong", they just display a different way of looking at things. I'm not being disrespectful to any of you about your hopes and wishes. No reason to be disrespectful to me for sharing what I've learned over the years.

You fail to realize the problem here... you've been citing your same argument for five years now. You seem to be operating by the broken clock mentality. Your clock has wrong for 5 years, and maybe for the next 5, but hell, 6 years from now that broken clock will finally be right! That's an AWFUL percentage in calling a market top. But you do you.

[biggus diggus]

Is this really the hill you want to die on?

I haven't been saying the same thing for five years, I've been saying since the amount of construction downtown included too many of the same apartments that the apartment market is likely to collapse on them and we're starting to see early warning signs. I'm used to people arguing with me, in the 90s when I started dumping money into investments in Garfield I lost clients and I lost investors because they said I was "crazy". I made a small fortune on Garfield and those guys missed out. It doesn't bother me that they called me crazy, I'm not so insecure about doing the right thing

[Obadno]

Originally Posted by biggus diggus

Is this really the hill you want to die on?

I haven't been saying the same thing for five years, I've been saying since the amount of construction downtown included too many of the same apartments that the apartment market is likely to collapse on them and we're starting to see early warning signs. I'm used to people arguing with me, in the 90s when I started dumping money into investments in Garfield I lost clients and I lost investors because they said I was "crazy". I made a small fortune on Garfield and those guys missed out. It doesn't bother me that they called me crazy, I'm not so insecure about doing the right thing

Downtown doesnt even have hills

[PHXFlyer11]

Originally Posted by biggus diggus

Is this really the hill you want to die on?

I haven't been saying the same thing for five years, I've been saying since the amount of construction downtown included too many of the same apartments that the apartment market is likely to collapse on them and we're starting to see early warning signs. I'm used to people arguing with me, in the 90s when I started dumping money into investments in Garfield I lost clients and I lost investors because they said I was "crazy". I made a small fortune on Garfield and those guys missed out. It doesn't bother me that they called me crazy, I'm not so insecure about doing the right thing

So basically... what you've said the last five years is "this is a warming sign that more warning signs will come, then those signs will trigger more warnings and eventually something bad will happen and I can say that I've warned you!"

[combusean]

I'm with biggus. If anyone is even in on this market like I am you'd find out that nearly every one of these Type V buildings are crap and in a precarious market position.

They're all noisy, overpriced, and chasing the same limited number of tenants. It's a total crapshoot that you get decent management or neighbors. A 2 bedroom at iLuminate is not affordable to the median household income in Phoenix, maybe at the 75th percentile and up, but those better-off households are more likely to have or want kids which is untenable downtown because the schools are garbage. They're definitely not wanting to deal with the stuff the actual longterm residents are complaining about on Yelp--many of the people that can afford these buildings need quiet and safety so they can go to work in the morning.

I would not want to be left holding the bag when the bottom falls out and tenants either fly to quality (concrete, condos, SFH, etc) or head to cheaper, quieter digs closer to work in the suburbs with better amenities anyways once they realize they can't go out to the restaurants and bars Downtown every night like they used to.

The outlook for all this schlock is dodgy at best. Glut is right.

[ASU Diablo]

Moving on to actual development news, not sure how I missed this but the old City of Phoenix Personnel Building (SEC of 2nd Ave and Monroe) is getting some life. There's signage plastered all over the windows for The Ellis. Appears to be office space/co-working space, retail in the ground level...an Armenian eatery, Avosh Kabob, and Citi Farms which appears to be a "vertical farm". I've never heard of the latter. It mentions a Spring opening

http://www.ellisphx.com

[Ballister]

Originally Posted by biggus diggus

What I said would happen is already starting to. Some of the complexes around downtown are giving away up to 6 weeks rent. ������♂️

edit: I originally typed 18 months mistakenly. What I read was "one and a half months free rent" and my brain went to 'one and a half term' and then led on to one and a half years... honest brain fart.

You've been on your multifamily death march for two years now. Eventually you'll be right. Don't give up hope (doom).

[azwildcat1]

I've been lurking on this board for a long time. I really appreciate what a lot of you post as this is my go to for downtown Phoenix development news. I am a native who has always clamored for a more urban look and feel to our downtown. One question and one comment:

1) Apologies if I missed it but does anyone know the height/floors for asu's planned $130 million Student Housing (which I believe will be on 1st Ave)

2) Just read the last post about the new project called 'The Ellis'. I think if I see or hear of one more restaurant, apartment complex or project in this metro area that is called 'The (insert toolish & transparent attempt at some kitchy mid century modern sounding name)'........I am going to put my fist through my windshield while driving.