Mark Taylor, Inc. of Scottsdale (Scott Taylor, principal) plans to build a 252-unit luxury rental complex on a portion of the former Rawhide western town theme park at 7215 E. Silverstone Drive in Scottsdale. The 16.7-acre site for the planned multi-family project is located along the east side of Scottsdale Road and just south of Pinnacle Peak Road.

MT Pinnacle LLC (Mark-Taylor entity) paid $10 million to acquire the land ($13.75 PSF)  The seller was LaSalle115 Holdings LLC-Series 34 Villa Volterra. That company is owned by BMO Harris Bank of Chicago, Ill., as successor to M&I Bank. The high-end apartment community is being designed by Architecural Design Group (a Mark-Taylor affiliate). The one-, two- and three-bedroom units will average about 1,100 sq. ft., with monthly rents averaging around $1,430. Construction slated to start mid-2015, with opening to follow around 10 months later. Mark-Taylor Development to serve as contractor. Development cost (land and buildings) estimated at $45 million. Construction financing still to be arranged. Sources say Mark-Taylor may decide to develop the apartments with a joint venture partner.

Mark-Taylor has long been one of the busiest and most successful apartment developers in the Phoenix area. Mark-Taylor is looking for additional multi-family development sites in the Valley. The newly-acquired site in Scottsdale has an address of 7215 E. Silverstone Drive and is part of a 160-acre parcel that used to be Rawhide. In June 2004, a company formed by Valley auto dealer and real estate investor Larry Van Tuyl paid $46 million to buy the former Rawhide property. The one-time landmark theme park, now known as Silverstone, is being redeveloped with retail, multi-family and single family residential, senior living and a planned office park.

In February 2007, Van Tuyl’s company sold the parcel Mark-Taylor now owns to Gabriele Development in Scottsdale for just under $22.3 million. Gabriele planned to use the land to develop 252 townhomes and condominiums in an Italian village-theme community called Villa Volterra. Those plans never came to fruition and the lender eventually took control of the land.

In September, Van Tuyl formed a joint venture with Craig Eisenberg of Eisenberg Co. of in Phoenix to develop a 75,000-square-foot retail center at Silverstone. That 12-acre site is at the southeast corner of Pinnacle Peak and Scottsdale roads. The plaza, which is being called Silverstone Marketplace, will be anchored by a 25,000-square-foot Sprouts store.

The sale was brokered by Pat Lannan of DPC Realty Services Inc. in Scottsdale.

Taylor can be reached at (480) 991-9111 and Lannan is at (480) 947-6200.

Red Mountain Asset Fund II, LLC, an affiliate of Red Mountain Retail Group of Santa Ana, CA (Michael Mugel, CEO) purchased the inline shops at Fry’s Gold Canyon Plaza, 3720 – 3780 West Ina Road in Marana for $4.45 million ($176 PSF). The property was 100% leased by multiple tenants including Peter Piper Pizza, Cato, Villa Mexican Foods and others.

The sale did not include the Fry’s store or gas station nor Discount Tire in the center. Buildings are located on lots 1 and 4 of Gold Canyon Plaza, totaling 25,250-square-feet of retail space (built 1984) on two pads with an aggregate of 1.8 acres.

This is Red Mountain’s second acquisition in the Tucson market. The company also owns the 190,854-square-foot Southgate Shopping Center, at the south-west corner of the I-10 Freeway and 6th Avenue in Tucson, Arizona.

Town West Realty II (James Horvath, President) was the seller having bought the property in 2011 for $3.45 million.

There were no brokers reported for the transaction, both parties were self-represented.

For leasing information at Gold Canyon or Southgate, contact Carol Harder at Red Mountain at (602) 977-9202.

In terms of 2013 homebuilding activity and trends, this is the most interesting market most industry players have seen in quite some time, some are calling it “a new era for land and homebuilders in Tucson”.

Will White runs the Tucson office for Land Advisors Organization and has negotiated the sale of over 4,500 platted or finished lots in the past 36-months including some of the regions highest priced land deals. We sat down with White recently to discuss the land trends and to hear from this land veteran what he expects to see in this ‘new era’.

“First of all, there’s new stakeholders in the metro Tucson land market, and for the first time ever, the majority of the major residential projects are in the hands of Phoenix developers,” said White. “Communities such as Sanders Grove (Randy Bury and The Cardon Group of Mesa) and Uptown/Marana (The Cardon Group of Mesa), La Estancia and Sendero Pass (Sunbelt Holdings of Scottsdale), Rincon Knolls, Dove Mountain  Boulder Bridge and Donut Hole Vistoso (all True Life communities of Scottsdale) Saguaro Bloom (Grayhawk Development of Scottsdale), Gladden Farms I and II (Petrus Partners /Crown West of New York and Scottsdale), Tortolita (TMR Investors, LLC of Scottsdale). In addition to the large projects of Rocking K and Verano, owned by Diamond Ventures of Tucson.

“Then there is starting to be a “critical” lot shortage that will step up the game for homebuilders as they begin to face that challenge,” according to White. All of the problem projects that were out there in 2008-2012, have been absorbed by Phoenix developers and groups from outside Tucson who control about 20,000 future lots.

With less than 5,000 finished lots remaining and only a small amount of re-zonings on the horizon, a lot shortage is inevitable. To put it into perspective, the UA estimates permits by the year 2019 to be close to 6,000 per year. In order to deliver this many homes, there will need to be approximately 21,000 – 26,000 lots delivered over the next 5-years. Making that task even more daunting is the 10-year projections of approximately 8,500 permits per year. This will require approximately 60,000 lots to be delivered over this same time period. White points out that since the mid-90’s, Tucson has averaged about 27,000 permits every five years. Due to poor conditions, there has not been enough lots put into the pipeline over the past 5-years. “Now we are all playing catch up,” says White.

White says, “One can be as conservative as they would like about these forecasts, but the trend is going higher over the next 10-years. To get back to a supply balance the homebuilders will need to do what they did in 2013 and purchase 3,500 lots annually. If permits make a run up like they did in the late 90’s then it becomes even more critical.”

While there were approximately 1,000 finished lots added in 2013, this isn’t enough to keep up with demand and soon entitled lots will be gone. Land entitlement can take up to 3-years to go from raw land to entitlements and it all starts with rezoning, forget about state land it could take 10 years to rezone as shown in Pinal County recently.

So, where will these lots come from in the future? Rest assured, lot prices will continue to increase in value from the pressures of supply and mounting demand and as long as the economic recovery continues.

We asked White hypothetically, if he were a homebuilder, where he would go next in Tucson? His answer was, “When entitled lots are exhausted, then that’s when things are going to really get interesting. There’s the Houghton/ I-10 SE corridor with about 1,000 lots before state land blocks expansion. There’s the southwest out past Sendero Pass and towards Sahuarita and there’s the I-10 corridor from Marana to Pinal County. Take your pick, but pick quickly!” All of these areas are going to become hot spots.

This is where the new stakeholders could play a critical role, in bringing resources and practical knowledge and experience to move Tucson forward. Having new outside stakeholders, with new perspectives is a positive thing, and may be just be what saves Tucson from stagnation in a few years. It’s not the first time these developers have faced growth challenges, and most have been involved in some of the most beloved communities in our State, award winning communities such as McDowell Mountain Ranch in Scottsdale comes to mind.

All these developers want economic progress for Tucson and it’s not asking too much to expect our County to recognize this and welcome these new stakeholders, who bring gifts of jobs and prosperity from Phoenix to the table with them. The possibilities are as endless as our imaginations, but first it may take an appreciation of the critical threshold where we find ourselves of a ‘new era’ for Tucson, not only for homebuilding but other commercial projects.

White can be reached at (520) 514-7454.