A massive master-planned community (MPC) — one in which an estimated 300,000 residents will be moving to Buckeye and calling it home — is underway. Known as Douglas Ranch, the nearly 37,000-acre property is expected to become a leading MPC in the nation, with 100,000 homes and 55 million square feet of commercial development.
The Howard Hughes Corporation (HHC) purchased the property from acclaimed sports executive Jerry Colangelo and his team at JDM Partners, along with Eldorado Holdings. “Douglas Ranch is HHC’s largest MPC yet, spanning 37,000 acres in the West Valley. We could not be more thrilled to put our capital to work on this $600 million all-cash transaction. JDM and Eldorado will both remain as our 50/50 joint venture partners for the launch of Trillium, the first 3,000-acre village of Douglas Ranch,” explains David O’Reilly, CEO of HHC, on an investor call. Residential lot sales in Trillium are expected to begin in the first half of 2022.
In a press release announcing the launch of the community, Colangelo says, “To ensure the success of Douglas Ranch, we specifically sought out The Howard Hughes Corporation for its unique capability to build exceptional communities, implement proven best-in-class practices across new platforms at significant scale, and rapidly deliver on build-to-suit opportunities to help businesses relocate. As we prepare to start selling homes, we are excited that Douglas Ranch has been elevated to the ranks of the Howard Hughes communities that are among the most sought-after places to live, work and thrive in the nation.”
With this acquisition, HHC now holds the country’s largest portfolio of MPCs, totaling more than 100,000 acres. Other HHC communities include Summerlin in Las Vegas, and The Woodlands and Bridgeland in the Greater Houston area.
Meeting a need for people moving to Buckeye
People seeking a low cost of living and respite from harsh winters have long looked to the Valley as a place to settle. Data from the U.S. Census Bureau shows that Maricopa County was the fastest growing county in the U.S. thanks in part to Greater Phoenix’s quality of life.
The City of Buckeye was among the 10 fastest-growing of all U.S. cities during the same period, growing 80% to nearly 92,000 residents, according to the U.S. Census Bureau. O’Reilly points to Arizona’s pro-business, low tax structure as a feature that will continue to draw future residents.
Over the last year, however, home prices in the Valley have soared as the trend of people moving to the Grand Canyon State continued. A Zillow market report shows that in October 2021, the metro area’s Zillow Home Value Index was $418,170, constituting a 32.7% year-over-year increase. During the same period, for-sale inventory dropped 17.4% year-over-year.
Jay Cross, president of HHC, believes Douglas Ranch will help with the dearth of shelter.
“While the housing market over the last year saw a fast acceleration, there is no sign suggesting this will abate anytime soon, especially given the fact that demand in Phoenix is so much greater than supply,” he says. “If we look at this demand more closely, we can see that within Greater Phoenix, the majority of the market is migrating west directly along the path toward Douglas Ranch.”
Cross continues, “The West Valley has taken more than 50% of the market for single-family home permits. The demographics of those migrating to the West Valley are largely young families and professionals, and the amount of young people is only projected to grow faster over the next several years.”
With the expansion of a community the size of Douglas Ranch comes concerns about the desert’s most precious resource: water. O’Reilly contends that HHC has experience developing in arid conditions.
“We want to create a community that is built to last. We will be sharply focused on incorporating innovative solutions throughout Douglas Ranch in the form of cutting-edge technology,” he explains. “One of our major focuses will be around water conservation. Our team in Summerland has already implemented several water conservation measures due to the climate in the Las Vegas Valley, and we will be able to replicate their best practices at Douglas Ranch to ensure we are being thoughtful about our water usage.”
Greater Phoenix has become a darling for industry, with companies from Amazon to KORE Power, a lithium-ion battery manufacturer, making significant investments in the region. This inflow of capital further boosts the region’s appeal.
The possibility of Interstate 11 passing through Douglas Ranch is a boon for the community — along with its proximity to Interstate 10 — that will enable residents to travel throughout the region with ease. Cross remarks that HHC wants to ensure that the development of Interstate 11 is successful; the company even is willing to donate land to help the project come to fruition.
“We consider Douglas Ranch’s location as a strong catalyst for residential and commercial opportunities. On the residential side, the close proximity to surrounding large cities will allow for the continued influx of residents from the West Coast and further afield,” he explains. “From the commercial lens, we see this as an opportunity to develop new asset types, such as industrial space. This MPC is ideally situated to become a transportation hub for several industries.”
Cross notes that Phoenix has gained significant traction in the industrial market. Indeed, Colliers in Arizona’s Q3 2021 industrial market report asserts that, “During the third quarter, the Phoenix industrial market was more active than at any time in its history, posting 7.2 million square feet of positive net absorption, outperforming last quarter, which was a previous milestone. This marks the 10th consecutive quarter of more than 1,000,000 square feet of positive net absorption.”
The strength of the industrial market is intriguing to HHC, according to Cross. “The Phoenix market currently has more than 24 million square feet of industrial space under construction, the most of any other city in the country. Over the last decade, rents have risen significantly while vacancy has consistently declined, which points to strong underlying demand in the sector.” Furthermore, the Valley has an established market for single-family build-to-rent communities. Cross notes that these two sectors are asset classes that HHC is looking to add to its portfolio.
Ultimately, O’Reilly sees Douglas Ranch as a blank canvas on which to innovate. “We have the chance to develop this MPC from the ground up with a vision of distinguishing Douglas Ranch as a best-in-class community focused on sustainability and technology — a city for the future in a place residents and tenants can live, work, play and discover.”