North Marana growth heats up as the area looks to be a major beneficiary of Tucson’s strong market
Land deals seem to be non-stop these days in this sub-market of southern Arizona and Real Estate Daily News decided to look deeper into what is driving this. We thought there was no better place to start than the company who has been the “go to” source in this area. Will White and John Carroll of Land Advisors Organization have been involved in a major portion of the activity in north Marana for decades and represent several of the area’s larger projects going forward.
We recently sat down with White to get his thoughts on all this activity in north Marana and to ask what we can expect going forward.
Q: Will, the Tucson market has had an amazing ride over the past 18 months. Nowhere is this more true than in north Marana. Can you break down how (and why) this has happened?
North Marana benefited from a Tucson land market that was short on lot inventory going into 2020 and is extremly short going forward. This area has the most privately held land available that is unconstrained and can be delivered in the Tucson metro area. In addition, the land there is developable and there are entitlements in place and infrastructure at the ready. Difficult to find that right now in other areas of Tucson. As other large projects around the region saw most of their lot inventory purchased in the past 12 months, the homebuilders have turned their sights on this area. Keep in mind also that this area is already home to successful projects like Gladden Farms that will put up the most SFR permits in the market this year. The area was already successful and will look to only get better as we move forward.
Q: We all have heard how tight the land supply is in Tucson. Is this also the case in Marana?
The picture is getting clearer on the supply side of things in Tucson. It is historically short on lots and it would take some time to get back to balance. At the current pace, the Tucson metro market needs 19,000-34,000 lots to be built and delivered to builders in the next 5 years. Bottom line, the market is not set up to deliver this many lots in just 5 years. It’s a big challenge. Important to keep in mind that these numbers are based on our historically low permit pace, +/-5,000 permits. Adding pressure is, there is consensus that we have 20% more consumer demand for housing than what can be produced. Due to the land constraints around the region here, we believe the north Marana will begin taking up to 40-50% market share of all of the permits in Tucson metro area. What this means is north Marana needs to be delivering 2,000 lots annually to homebuilders, or10,000 over the next 5 years. The race is on to get these lots produced and they will 100% come at a premium.
Q: How are homebuilders reacting to this dwindling land supply? Are they moving forward or pulling back?
Homebuilders have done a nice job of securing lots in north Marana to-date. On the land side, we are not currently seeing any pull back in Tucson. Gladden Farms has grown its roster to 6 homebuilders over the past year and has been a “go to” project in Marana. The homebuilders have been selling really well. However, with all of the acquisition activity at Gladden over the past 18 months, new lots are becoming harder to secure. What we are seeing now is a lot of homebuilder strategy revolving around positioning for the future up there. There are 4-5 larger projects in north Marana that will be the main supplier for the homebuilders moving forward. Several builders are working with these owners/developers right now to secure spots in the initial phases of these projects. This becomes important when looking at future pipeline availability in the big projects. As there wont be enough positions to go around in these initial phases, It will definitely be the “haves and have nots” and some builders will be constantly on the search. Definitely better to be proactive than reactive in north Marana.
Q: Tell me what homebuilders find attractive about that submarket
It's important to remember that north Marana has been active for decades, but we are definitely seeing it accelerate. What is great about the area is a lot of it is new and it has a great feel to it. The projects are new, the homes are new and the product is getting more innovative, the infrastructure and roads are new, the schools are good, and we will most likely see new employment and commercial services to support all of this residential. The area just looks and feels very good and it has a lot of history to it. Also, the Town of Marana has been very open to work with and, in our experience, has rolled out the red carpet to the area’s homebuilders and developers up there. The process is pretty streamlined in getting things going. Lastly, the homebuilders like to be where they can be successful and north Marana has shown some of the region’s best pricing power and pace. As this continues, they will look for ways to keep building on that success.
Q: Okay – we get that north Marana is hot. But, in your opinion, are some areas there hotter than others?
You have two interchange points of access currently into this area, Tangerine Road and Marana Road to the north. The success of Gladden Farms off Tangerine is well documented and now we are seeing projects begin on the eastside of I-10 that will be accessed off of Tangerine. That interchange has been “main and main” for some time. What we definitely have our eyes on next is what is becoming known as the “MRC” or “Marana Road corridor”. This is accessed at Marana Road and I-10 and it is the area that will light up soon with all that is being planned up there in larger master-plan projects, commercial/retail and major infrastructure work, both west and east of I-10. In addition to that, we have seen the homebuilders very active father north up I-10 at Red Rock Village so that gives you and idea of the total spectrum.
Q: Lastly, look into the Land Advisors’ crystal ball. What does north Marana look like 5 years from now?
The past 18 months has proven that our crystal ball isn’t as clear as we would like all the time. North Marana has a large amount of land to grow, very good master developers in place, a strong and supportive municipality, proven homebuilding track record, growing employment and commercial uses, and it is on top of its growing infrastructure needs. As we mentioned, in 5 years, we believe this area north of Tangerine will have to accommodate close to 2,000-2500 permits a year. We also think that we will see renewed demand for various commercial and retail services as well as a growing employment base. In 5 years, we think homebuilders in Tucson metro will rely on this area for upwards of half of their pipeline and business. We will see the Tangerine and I-10 area fill out and we will see a large amount focus on the Marana Road corridor (MRC). Demand is far exceeding supply in all areas of Tucson and to get it back in balance will take time. North Marana will be a major player in that solution.