Sunday, September 18, 2011

Downtowns' revival a good sign

It is recent history that merely seems ancient: Increasingly attractive downtown regions in Phoenix, Tempe and Scottsdale suddenly were becoming hot locations for new and renovated condo construction.

It seemed like the perfect development storm. Countless Baby Boomers with an itch for the arty urban life wanted out of suburbia and into maintenance-free condos by the new light rail. And, commensurately, Valley downtowns began evolving into places that a graying (but hip!) Boomer might like to call home.

It was 2006 and the condo-building boom had arrived. As The Republic's Catherine Reagor reported Wednesday, as many as 8,000 new condo units were on the planning books that year. Some, like 44 Monroe in Phoenix, now converted to apartments, would be built new from the ground up; some, like One Lexington, would see older buildings being converted to exciting new uses. The boom was on. Then, overnight, it went bust.

Now, the revival starts. After four years of utter desolation in virtually every area of the region's real-estate market, a new perfect storm is swirling around urban condos and apartments. Enormously deflated costs have brought buyers and renters back into the developments that have sat vacant and, often, half-completed for years.

As Reagor reported, many of the projects needed to run through the difficult bankruptcies of the original owners before the classic market forces of demand and price could again take effect.

Prior to the developer's bankruptcy, just 14 condo units at One Lexington had been sold. Now, the converted bank building on Central Avenue is nearly 90 percent full, with many units selling for half of the 2006 asking price.

One factor that has remained constant through the years-long real-estate tumult is the desirability of the locations.

In north Phoenix, loft condos around the popular and trendy Kierland Commons never really lost much value throughout the real-estate crash, so attractive was the neighborhood.

Now, downtown Phoenix is reaping the benefit of years of private and public investment. With a growing arts community, appealing local restaurants and clubs, a convenient light-rail transit system and a fast-increasing population of young people attending Arizona State Universitydowntown, the region's "curb appeal" is positive.

There are other factors at play. For decades, development of downtown Phoenix was hamstrung by dice-rolling investors who helped bid up prices, often compromising the viability of projects. Now, it seems people are buying into condos just to, like, live there. What a concept.

Metropolitan Phoenix has a long way to go before it runs through the unprecedented inventory of homes and commercial properties that has piled up during this cruel economic downturn. But recoveries must start somewhere. How ironic that the first signs of real-estate life in a Valley known for its seas of single-family homes would be in urban condos.

The Arizona Republic Sept. 17, 2011 12:00 AM

Downtowns' revival a good sign

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