Is 16th Street the newest commercial real estate hub?
We are halfway through the year 2017 and the Phoenix downtown and central corridor market continues to show an influx of commercial real estate property growth. Is 16th Street the new hub for commercial real estate development? Let’s take a moment to highlight what we do know.
The retailer, Target Corp. have a number of stores across the valley, but this “flexible-format” Target store has replaced the recently discontinued Sports Authority store on the southeast corner of 16th Street and Camelback Rd. This 50,000 square-footage property is slated to open in July 2017. The property size of this new location is a third of the size of a traditional Target store but because of its location, is expected to be a consumer attraction of the area. SVN Desert Commercial Advisor, Paul Borgesen III stated, “We are at the top of the market prices and numbers we have not seen in ten years.”
Over the years, SVN has listed, leased and/or sold over 25 listings down 16th street. Earlier this year, Beau Flahart leased the property located at 1602 E. Indian School Rd. to new tenants, Samurai Comics on a 5-year lease term. “The property owner did not want to sell this property, because he wanted to use the net rental income as an investment for his daughter’s college tuition,” said Flahart of his client’s objectives. Not too far from that retail location was the sale of the flex warehouse space located at 3840 N. 16th Street for $900,000. SVN advisors, Rommie Mojahed, Justin Horwitz and Borgesen III represented the seller in the transaction. This 8,579 square-foot property was occupied by the founder of Red Cup Living, Michael Romley who wanted to liquidate his building asset and look into additional business enterprise opportunities. Borgesen III added, “It’s the ideal time in the market for a seller to seek other investment properties.”
In addition, the emerging market trends in multifamily living are growing in popularity. Apartments and condominiums are also adapting and bringing creative design and architecture to a visual reality. Multifamily investment advisor Chip Kloppenburg who sold a $17,000,000 property last September said, “There are thousands of new units currently being leased up with more still under construction which will be online later this year.” Just around the Biltmore, Camelback and Central corridor, there are over a dozen properties that represent the growing appeal of people who want to live in the upscale trendy lifestyle demographics. Why go to a wine bar when you have a wine lounge and your own wine locker at the complex you reside in? Builders are designing properties with security-based elevators to their specific floors, plush landscaping, resort-like/rooftop pools, gaming clubhouses that look like stylish bars, and hi-tech fitness centers that make residents feel like millionaires instead. Yes, it’s about the amenities! However, it does come with a price. Is it worth it? Well, the Gen X and Gen Y’s are equally on the same quest for the urban lifestyle living, luxurious amenities and shopping & dinning conveniences so as long as you can pay for that lifestyle, then everyone has that opportunity.
Across the street from the recent sale of 3840 N. 16th Street is Casa Tierra Apartments, the 200 unit property that is currently on the market for sale. There is a plethora of apartment complexes all north of Indian School starting with Level at Sixteenth, caddy corner to the five year old Miracle Mile location. Highland Avenue is another street in popular demand. Formally known as Pinnacle Town Center, Altera Highland located at 1601 E. Highland Ave. introduced their residents to a complete makeover revolutionizing this into modern exterior colors, accent ground lighting, renovated pool, office lobby, and clubhouse. Most importantly, they renovated the units by adding in contemporary lighting, hard wood floors, and upgraded kitchen cabinetry. Right across the west side of the street off 16th Street is the long anticipated mixed-use retail and multifamily property, Crescent Highlands and just north of that is another luxury property, Escape at 4700 N. 16th St. The mix of luxury complexes don’t just stop there because just north of Camelback is the newest property under construction called Peak 16 slated to open its first phase up in December and all three phases, totaling 200 units opened by July 2018. Finally, the last of the multifamily properties along 16th for a few miles is The Trend (how appropriate) at 51 Apartment Homes that is only a couple of years old. Last August, the new owners bought the complex from Mark Taylor with no improvements needed. The property comes with modern designs, beautifully designed fitness center, and a rooftop pool overlooking the downtown Phoenix area. Kloppenburg continue to express, “With the influx of Class A product, I think we will see the vacancy rates increase slightly and rents level out.”
The holy grail of urban living is the inevitable quest for luxury comfort, culture, and convenience for infinite restaurant and entertainment choices. With out of state trendy restaurant concepts moving to Arizona, there is certainly plenty of room for more growth. Popular eateries such as The Rokerij, Richardson’s, The Vig Uptown, Capriotti’s Sandwich Shop, Dick’s Hideaway, Phoenix City Grille, Texaz Grill, Zipps Sports Bar, Z’Tejas Mexican Restaurant and Grill, Lucis Healthy Marketplace, Dunkin Donuts, Starbuck’s, Ajo Al’s Mexican Café, 5 & Dinner, Chipotle, Miracle Mile Deli, and Lukes of Chicago are all restaurants located on 16th street within three miles of each other.
So again, is 16th Street the newest commercial real estate hub for real estate development? Clearly there are several multifamily luxury properties to choose from with all the amenities you can dream of, there are dozens of retailers along 16th street, and dozens of restaurant choices to dine at. If urban living, lifestyle and restaurant hubs are what you are looking for, then as a resident and local consumer, you clearly have it made. As an investor, what are you waiting for?