Resurgence In Infill Development Evident In Phoenix

May 30, 2014

(Photo by Mark Brodie - KJZZ)
New development on an old site in the city.
(Photo by Mark Brodie - KJZZ)
Portland Place will be joined by another infill housing complex next door.

There is an increasing popularity of infill development, and one place you can see that is high above Hance Park in Phoenix.

You can faintly hear traffic on I-10 from the roof of Portland Place, a 54-unit condo building at 3rd Avenue and Portland.

"A lot of activity that had started and was moving along prior to the recession coming into play. What’s happened is that the people have come back, looked at downtown, and said, ‘Let’s pick up from where we stopped,'" said Tim Sprague, a principal in the development company Habitat Metro, which focuses on infill projects. It’s the firm behind Portland Place, and the second phase of that project, which is slated to start construction right next door later this year.

"The best part about infill is coming in and figuring out a way to compliment an existing neighborhood. The challenge of infill is that you are building something in an already developed area, and you run in to challenges of potentially imposing your will upon them," Sprague said.

Sprague said there are a few reasons for the resurgence in infill: millenials who want to be able to walk and bike places and empty nesters who don’t want the upkeep of a single family house.

And then there’s transit. Deb Sydenham, Executive Director of the Urban Land Institute’s Arizona District Council, seconds that.

"It’s really a resurgence with Phoenix because the downtown is becoming so much more vibrant. The light rail’s been an amazing catalyst for that. And, we’re seeing it happen in not just downtown Phoenix, but Tempe, Mesa, as well," Sydenham said.

Sydenham said even with all of the infill development, there are still, and will continue to be, housing projects on the outskirts. Those developments tend to include more single-family houses, while infill projects are generally condos or townhomes.

Jeremy McArthur, President of the Valley land brokerage firm McArthur Land Company, says infill generally encompasses up to five acres, while on the fringes, developments can be hundreds or thousands of acres. He says he’s seen a dramatic increase in interest in the smaller projects over the last six months.

"I think some of the groups that took what I will call a leap of faith and did buy some of the projects closer in at pretty high prices, they were rewarded with a lot of home sales at significantly even higher prices than they had anticipated," McArthur said.

But there are some challenges with infill projects - especially with infrastructure, like sewers, utilities and the like. Sprague said what’s already there may not be able to handle what you want to do.

"If you have what they call greenfield property, you literally have a blank canvas and you’re able to go out and design to whatever you want to. On the other hand, when you’re doing infill development, you're dealing with the cards that’ve been dealt to you," he said.
 
Sprague said that can be more expensive and is often more time consuming, but is also more rewarding. And, it’s not just residential projects that are going old school.

"The recession has opened up everybody’s eyes about what’s missing in these older neighborhoods because everybody’s been focused on the suburbs," said David Wetta, founder of Wetta Ventures, which does infill and adaptive re-use projects in the Valley.

Wetta and I met at Old School, a development of his on the corner of 7th Street and Osborne in Phoenix. The property, as you may have guessed, includes an old school building, as well as an old church, which is now a restaurant. There’s also a Starbucks in a new building there. He says commercial infill projects require different research than suburban ones.

"When you go to the suburbs, you basically look for a grocery store and a McDonald’s. And then you start building next to it," Wetta said.

Wetta said the developer building a master planned community has to do a lot of work to see where the growth is going to go. But, he says, ultimately, it’s about rooftops. Not so for infill. He says residential density is helpful, but so are good traffic patterns.

Wetta’s latest project is in Tempe, around ASU. He says in some ways, that city may have a more urban environment than Phoenix.

"I don’t think there’s anywhere in town that’s got more density than that. And the height, they want height. The taller the buildings, both the city of Tempe and the university, as well, they want everything going vertical," he said.

Wetta expects the trend of infill to continue for a while, as do the other people interviewed for this story.

Syndenham said as long as demand is high and the supply is relatively low, developers will continue to be able to make money on those kinds of projects, meaning they’re likely to continue pursuing them.