Is Grand Canal Redevelopment Building Steam?

Credit: Grand Canalscape

By Roland Murphy for Arizona Builder’s Exchange

Recent commercial real estate movements in the area of 12th Street and The Grand Canal have tongues wagging and rumors flying about the future of development near the Grand Canalscape redevelopment zone.

NAI Horizon announced earlier this week it negotiated the $7M sale of “the largest multifamily-zoned land holding in Central Phoenix.” According to the announcement, “NAI Horizon Vice President Kim Kristoff represented Sidney M. Rosen as trustee on behalf of a lifetime grouping of partners and trust beneficiaries. The combined R-5/R-4 zoning allows up to 311 apartment units based upon the results of a previous site plan submittal.”

Sources confirmed to AZBEX the purchase consisted of multiple parcels spanning seven acres from the NEC of 12th Street and East Devonshire Avenue nearly to the canal. Those same sources confirm at least two other assemblages are under consideration/in negotiations in the immediate vicinity.

Scottsdale-based developer Deco Communities was the buyer in the Rosen transaction. Deco has two other Valley projects noted in the AZBEX Database – Cabana on Washington, a 175KSF, 224-unit complex on East Washington Street, and Peacock Scottsdale, a 147KSF, 146-unit development on North Scottsdale Road.

Given Deco’s high-end focus and recent development history, speculation has been running high as to whether this may be the early ramp-up to the expected revitalization and up-market redevelopment associated with Phoenix’s Grand Canalscape master plan. AZBEX was among the first to report on the plan details when they were initially presented to the public. (AZBEX, Sept. 1, 2015)

The multi-phase Grand Canalscape project’s goal is “to reintegrate the canal system into the areas it touches and to make it a point of pride and community for residents,” according to a presentation by Kerry Wilcoxon of the city’s Street Transportation Department in 2015. The project website states it “will create a nearly 12-mile continuous trail system along the Grand Canal from I-17 to the Phoenix/Tempe border and is part of a larger regional trail and crossing project, which will ultimately result in a continuous trail along the Grand Canal between Glendale and Tempe.”

Developed Waterways Have Yielded Development Success

In the 2015 presentation, planners and officials expressed a desire for rejuvenation along the canal, particularly in the central portions of the city, and made frequent comparisons to the explosion in growth along Tempe Town Lake and the Arizona Canal in Scottsdale. The appeal of development on water sites even led Senator John McCain to lobby for development along the entirety of the Rio Salado as his legacy project before his passing earlier this summer.

AZBEX reached out to Thomas Brophy, research director for ABI Multifamily, which bills itself as “the Western US’ leading multifamily brokerage and advisory services firm,” about water-adjacent development and the potential along the Grand Canalscape.

“Tempe and Scottsdale, via their own water projects of Town Lake and Waterfront respectively, realized there was a tremendous value opportunity in amenitizing their water/canal systems,” Brophy said. “From an economic development perspective alone, the areas around those two projects have witnessed literally billions in public and private investment with thousands of new jobs created and major, institutional, companies relocating to be near this type of innovative development. While not as grandiose as the previously mentioned projects, City of Phoenix via its Grand Canalscape initiative has commenced upon the opening salvo in amenitizing its entire canal system, making it more pedestrian friendly and upgrading this vital link between neighborhoods.  The fact that Deco Communities chose this particular location for an iconic new apartment community is a huge step in the transformation of the Turney Villa neighborhood and the start of the re-urbanization of Phoenix’s waterways.”

Deco’s purchase and the potential others in the pipeline are not the only ones in the immediate area. In June, ABI Multifamily handled the $3.7M sale of the 36-unit Regency Apartments on North Longview Avenue, immediately south of the canal and just east of the cluster Deco just purchased.

Bucking CRE Trends?

This degree of interest over the past few months goes against recent trends in the area. While the spaces between 7th Avenue and 7th Street, and between 16th and 32nd streets have been hot for quite a while, 12th Street has been comparatively quiet, a point mentioned in the NAI announcement.  “Over the past four years, the property has been marketed nationwide and internationally,” Kristoff said. “Most of the national firms resisted the idea of a project on North 12th Street and have paid as much as three times more for their land acquisitions only a few blocks away.”

It goes on to note, “New nearby apartment projects developed by national firms include the Loft at Campbell and N. 16th Street, the Crescent and Alante at Highland and N. 16th Street, Alta Camelback at N. 7th Street and E. Camelback, Citi stretching between Highland and Camelback, and several others north and south along N. 7th and N. 16th streets.”

Messages left for Phoenix economic development officials, and questions emailed to Devo Communities leadership and project staff were not returned by press time. However, given the executed and potentially pending movement along 12th Street and Grand Canal, it appears possible the vision for capitalizing on a rejuvenated water feature might be building up steam.

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