Published on Inside Tucson Business (http://www.insidetucsonbusiness.com)
By Roger Yohem
It was a harsh message when Wells Fargo national economist Mark Vitner said it to a Tucson audience in February and he re-emphasized the point in his national mid-year update this month: keep the housing market's improvements in perspective.
Despite improving conditions, this "is not the start of the next great housing boom."
As the keynote speaker before the Pima County Real Estate Research Council in February, he warned that full recovery from the Great Recession may take 10 years.
"Even with recent gains, new home sales and construction remain shadows of their former selves. Residential construction currently accounts for just 2.3 percent of GDP, down from 6.3 percent at the peak and 4.5 percent for a more typical period," Vitner said this month in his mid-year report.
While the economy slowly corrects, rentals have become hot for several reasons. New household formation has slowed as young people choose to rent due to job uncertainty, and investors are buying foreclosures to convert into rentals.
As a result, there is a "mini-surge" in apartment construction at the same time the traditional home market is gradually improving.
Vitner, who is often quoted in the Wall Street Journal, said this month - as he did in February - that job creation will drive the economic recovery.
468 new apartments
One developer alone, Scottsdale-based MC Companies, will add 468 units to Tucson's "outdated, tired" apartment inventory this year. The Place at Canyon Ridge, 2656 W. Broadway, will feature 116 units and The Place at Creekside, 9971 E. Speedway, will have 208 units in its first phase opening.
MC Companies is a partnership between industry experts Ross McCallister, who lives in Tucson, and Ken McElroy of Scottsdale. Founded in 1985, the firm has seven multi-family properties in the Tucson region.
Since less than 2,000 units have been added in the last 10 years, "Tucson's demand for quality, affordable apartment community homes has exceeded the current inventory for some time," said McCallister. "We believe the Tucson economy is strong and there is a high demand for quality rental product. The Place at Canyon Ridge is the first of three projects we are building to help meet that demand."
The 9-acre Canyon Ridge complex cost $8.12 million to develop. The 11.5-acre Creekside project was a $13.27 million investment. Both feature several floor plans, clubhouse, pool, spa, fitness center and upgraded amenities. At 144 units, Creekside's second phase will open later this year.
For both developments, Tucson's Acorn Associates, 4400 E. Broadway, was the architect and MCCW, Scottsdale, was the general contractor.
McCallister, with 30 years of development and finance experience, was president of the McCallister Co. before MC Companies. He is a licensed general contractor and real estate broker. McElroy oversees the firm's asset portfolio and daily operations.
Locally, MC Companies also own Puesta del Sol, 2299 N. Silverbell Road; Village at the Foothills, 2600 W. Ina Road; The Place at Edgewood, 550 N. Harrison Road; and The Place at Tierra Rica, 3201 W. Ina Road. The company's interests include 10,000 apartments in Arizona, Nevada, Oklahoma and Texas.
Over-sold in 85756
For a fourth consecutive month, more homes sold in the southside 85756 zip code than were officially listed as for sale. The area around Tucson International Airport between Interstates 10 and 19 has been popular due to a consistent supply of foreclosures and other low-priced properties.
More houses sold in the zip code than "active" listings due to a timing quirk, according to the Tucson Association of Realtors Multiple Listing Service. For example, a listing may expire after the home enters escrow.
With 37 official listings, four more homes were sold in the zip code in June. Extra sales were even higher in zip code 85706 where 44 homes with 34 active listings. The area also is near the airport around Drexel Road and Alvernon Way.
In June, the most listings were in zip code of 85739 at the northern end of Pima County where 223 homes were for sale. The area is along North Oracle Road from Catalina State Park north to the junction of State Routes 77 and 79.
The next two highest areas for active listings were the central Catalina Foothills at 198 and Green Valley at 197.
Sales and leases
· Tuesday Morning leased 10,000 square feet at 6884 E. Sunrise Drive, Suite 150, in Ventana Village from Westwood Financial Corporation, represented by Craig Finfrock, Commercial Retail Advisors. The tenant was represented by Jon Radus, Studley Inc.
· Affordable Workstations leased 7,685 square feet at 610 N. Ninth Ave. from Rich Rodgers Central Inc., represented by Brandon Rodgers, Picor Commercial Real Estate Services.
· HiTemp Metals leased 7,383 square feet at 4650 S. Coach Drive, Suite 100, from Butterfield Tech Center II, represented by Jon O'Shea and Rob Fischrup, Vast Commercial Real Estate. Gary Best, Keller Williams Commercial, represented the tenant.
· Tucson Gymnastics Center leased a 5,700 square-foot building at 4631 S. Station Master Drive from Dunlop Oil Inc., represented by Dave Gallaher, Tucson Industrial Realty. The tenant was represented by Ron Zimmerman, Grubb and Ellis.
· Service Solutions leased 3,600 square feet at 1121 W. Grant Road, Suites 410-412, from Sloat Family Partnership, represented by Stephen Cohen and Russell Hall, Picor Commercial Real Estate Services.