North Phoenix office park will be converted to apartments
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The Canyon Corporate Center will soon become housing. Photo: Courtesy of Caliber
A long underused office park near the old Metrocenter mall will soon be transformed into several hundred apartment units.
Why it matters: Phoenix has a severe housing shortage and converting existing buildings into apartments can get units online faster while breathing new life into sleepy office parks.
The big picture: Scottsdale-based Caliber purchased the mostly vacant 312,000-square-foot Canyon Corporate Center at I-17 and Dunlap Avenue this summer and will transform two office buildings and a parking garage into several hundred housing units.
- Construction is expected to begin next summer, with pre-leasing to start the following year.
Zoom in: The project will feature a variety of studio and one-, two- and three-bedroom apartments. The rates will be what Caliber CEO Chris Loeffler called "workforce-plus," meaning they'll be affordable to the average Phoenix family.
- The studios will be assembled on the sides of the parking garage, allowing for drive-up parking access.
- There are nine undeveloped acres surrounding the existing structures that may eventually be used for a new-build apartment complex or assisted living facility.
Between the lines: Office-to-housing conversions, while often speedier than ground-up development, are expensive and difficult to execute, which is likely why we've seen so few successful projects in the Valley.
- Loeffler told us Caliber plans to spend about $40 million on the redevelopment portion of the project alone. The company purchased the center at a "deep discount," which justified the hefty construction price tag, he said.
The intrigue: Loeffler said a combination of forces aligned to make this investment worthwhile:
- Light rail: The project is a short walk to the Dunlap and 25th avenues station and Caliber plans to create a walkable connection.
- Metrocenter redevelopment: The former mall is undergoing a significant transformation that is already inspiring new investment in the area.
- TSMC: Caliber expects employees at Taiwan Semiconductor Manufacturing Co. to find this location and price point enticing.
- Opportunity Zone: The development falls into a federal Opportunity Zone, which allows for tax incentives.
What they're saying: "It took those four things coming together to say, OK, there's enough momentum here to create a real change in this location," Loeffler said.
What we're watching: With older office buildings continuing to see high vacancy rates, more may go up for sale at deeply discounted rates that make it possible for developers to take on expensive conversion projects.