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Leasing and Development

Tucson’s Land and Housing: 2020 and Beyond – Part 3 of a 5-part series with Will White of LAO Tucson

By: Will White, Land Advisors Organization Tucson

TUCSON, ARIZONA — (Editor’s Note) In Q1 Real Estate Daily News began publishing “Tucson’s Land and Housing: 2020 and Beyond”, a 5-part series written in conjunction with Will White of Land Advisors Organization-Tucson. The focus of the series is to provide an insightful look into the various components driving Tucson metro’s successful, but complex, land and housing market. Will has been a Land Broker in Tucson for over 20 years and currently represents many of Tucson’s most successful master-planned communities and large-scale residential projects.

A lot has changed since our last series update in April, and fortunately, most of it has been in a positive direction. In our last article, we were in the initial throes of the COVID-19 pandemic and – logically – a tremendous amount of uncertainty was plaguing the land and housing industry. From late March thru mid-April, there was definitely a “hold on tight” approach, with strategies being put into action to fend off unknown risk and prepare for the huge correction that was expected to be coming. We saw a shift in late-April with homebuilders working diligently to make the best out of the current situation and moving forward, albeit with significant caution.

This change in strategy appears to have paid off, with the results for April being a pleasant surprise. Even more surprising was the pent-up demand that was waiting in the wings for May. May was exceptional in Tucson and most homebuilders put up record monthly numbers that were even more shocking considering the negative predictions that were made just two months prior.

Simply put, 2020 has been a year for the history books and we are only halfway through it. We have gone from a great start in Q1, to a predicted housing apocalypse, to a completely unexpected show of strength in housing. In today’s update we will touch on where we are now, explain why we believe this is the case, and then try to predict how the balance of 2020 in Tucson likely will play out.

Completely Different Look:

May housing numbers show one of the strongest months on record for the Tucson metro area, in not only sales but also in new home prices. This is welcome news by all of us in the industry, and it arguably could create one of the busiest land markets Tucson has seen in some time.

Over the past several years, Tucson has struggled with limited inventory in all fronts, new home communities, resale home supply, and land and lot inventories. Ironically, this storyline of under-supply may have saved Tucson from a catastrophic situation.

During the COVID “time out” homebuilders delayed most land spend and requested extensions to their existing land transactions and construction. This was largely done based on the common assumption that sales were going to grind to a halt.

Surprisingly, sales continued at a strong pace. Absorptions have and continue to increase, and consumer demand is spilling over into what has traditionally been our slower summer months. While good news, it is important to note that the hiatus in lot acquisitions and new community development has caused several issues. First, homebuilders are just now looking to close on deals that were previously scheduled for March/April. This delayed new construction of replacement communities up to six months and will cause them to miss a majority of the 2021 selling season. Second, in a normal world they would have closed on these initial deals and then directed their attention to additional acquisitions for the second half of 2020. While the limited supply – and associated consumer demand – has kept activity strong, the delays have now created what will now be a shortage of inventory for the next 12+ months.

Homebuilders are now acutely aware of this and land sales have reached a feverish pace over the past 45 days. Fortunately (or unfortunately, depending on your perspective), landowners are very aware of this newfound builder urgency and leverage has clearly shifted from buyer to seller.

Land Prices:

Finished lot prices in Tucson have moved substantially upward over the past 36-48 months. Even though many predicted declining prices during the pandemic, we have seen absolutely no land/lot price depreciation through the first half of the year. Transactional urgency is up, land prices are holding steady or increasing, and there is no evidence to show that this trajectory will stop in the next 6-12 months.

The lot supply/demand equation is historically out of alignment. Even though horizontal development costs continue to rise and push finished lot pricing upwards, future inventory is becoming the focal point for homebuilders. Homebuilder success this spring and the delay of acquisitions are fueling intensified homebuilder competition. Even with the feverish pace of second half acquisitions, it is an almost absolute certainly that builders will be short on lot deliveries for 2021.

While a handful of homebuilders have been proactive and are well positioned in the region’s top projects, many others are not. This fact will also increase competition for limited resources which will in turn continue to drive prices upward.

Hot spots in Tucson:

Most of the activity in Tucson remains focused on the northwest and southeast submarkets. These areas are home to Tucson’s most successful master-planned communities and they continue to exceed all expectations. Sales, pricing, and new deal activity are brisk in projects like Gladden Farms, La Estancia, and the east Vail area into the Rincon Foothills. New projects like Rocking K are substantially under construction and ramping up for openings at the start of 2021. While homebuilders will continue to focus on the projects that are proven producers and are closer into Tucson, they have also been keeping an eye on the future by taking positions further out on projects that can bring more affordable options to the consumer.

Where do we go from here?

Our observation over the last several weeks of activity and discussions is that home builders will continue the push to affordability and towards proven submarkets/projects. Their acquisitions will be focused on deals that, while considered expensive in the moment, ultimately limit their overall risk and position them for success in the future. We expect them to gravitate away from development deals that saddle them with large development risk and look to partner more with the region’s master-developers.

With the economic gains that Tucson has made over the past several years and the fact that the SFR permit bar is historically low in Tucson, we see consumer demand continuing to be strong in both new and resale homes in Tucson. We are definitely not saying it will be smooth as there are too many unknown variables current in-play, but we do believe that our low levels of inventory will be the main story for the next 24-36 months.

(Murky) Crystall Ball:

Without question, Tucson is in interesting times. A lot has changed since the first installment of this series and our next installment could be just as different. The fact is no one knows exactly how this will play out. While there are several variables to consider that could go either way, one thing we know for sure is that we were short on inventory going into 2020 and we will continue to be short throughout the year. Not short in one or two categories, but short in many of them (community counts, MLS resale inventory, labor, land and lots, etc.). With the COVID-19 “time out” we amplified this shortage and it will take a huge push to get ahead of things.

We know that the future is uncertain, but we also are aware that it could have been much worse. The pace and strength that the market moves forward with will be dependent on sales and consumer sentiment. The creation of enough ‘housing runway’ for growth will, as it has been in the past, continue to be a challenge for Tucson. For housing and land in Tucson, we may not be out of the woods, but, based on the last 45 days, we may just be seeing a preview of the type of market that has been overdue for many years.

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Leasing and Development

Land Advisors Organization Residential Development Team sells final Peralta Canyon parcel to Beazer Homes for $6.659M

Scottsdale, Ariz. – Land Advisors Organization is pleased to announce the sale of 78 lots in Peralta Canyon Phase II, located at the base of the Superstition Mountains in Gold Canyon, to Beazer Homes for $6.659 million.

The sale of this parcel marks the close-out of available land at Peralta Canyon. Beazer Homes joins Lennar Homes and Gehan Homes in the second phase of this highly desirable community.

The sale was handled by Ryan Semro, Bret Rinehart and Ben Heglie, who specialize in single-family and multi-family residential development in Arizona for Land Advisors Organization.

The team has represented the seller, Peralta Canyon LLC developed by Voyager Properties, in the sale of land to homebuilders in 10 separate transactions. Builders represented by the team in these sales include Beazer Homes, CalATlantic, Gehan, KB Homes and Lennar Homes.

“Working with clients like Voyager Properties and Beazer Homes is very rewarding,” said Semro, with Land Advisors Organization’s residential team. “We’ve watched and predicted the growth in the area for years, and being able to help Peralta Canyon to close-out Phase II while expanding the presence of a well-respected builder like Beazer Homes into the phase is one of the ways we feel that we contribute to building successful communities around the Valley.”

This most recent sale of the 55-foot by 110-foot guaranteed finished lots closed earlier this month and provides Beazer Homes with coveted inventory at the NE corner of US 60 and Peralta Road in Gold Canyon, Arizona.

Construction of Beazer Homes’ newest Superstition Mountain single-family home development recently commenced.

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Leasing and Development

KB Home Opens Arizona, Colorado Communities

KB Home (NYSE: KBH) on Friday announced the grand openings of communities in Arizona and outside Denver.

Arroyo Seco, a distinct collection of affordably priced ranch-style homes, is located in Buckeye, near major highways and featuring numerous planned amenities.

“Arroyo Seco offers home shoppers the opportunity to purchase a new, personalized KB home at a price that fits their budget,” said Kevin McAndrews, president of KB Home’s Phoenix division. “The new community is situated close to major freeways and will have several proposed amenities that will provide residents access to abundant outdoor activities.”

Arroyo Seco residents will enjoy the community’s numerous proposed amenities, including a baseball field, soccer field, playground, sports courts, greenbelts, ramadas and walking paths. The four single-story floor plans at Arroyo Seco feature up to four bedrooms and two baths, and range in size from approximately 1,700 to 2,300 square feet. These new homes feature great rooms, storage space, designer kitchens and optional three-car garages.

Arroyo Seco is close to Interstate 10 and Loop 303, offering convenient access to job centers, downtown Phoenix and several entertainment venues. The community is also situated within the Litchfield Elementary School District. Pricing begins in the $250,000s.

To the north, KB Home announced the grand opening of The Canyons, an enclave of one- and two-story homes nestled among the rolling hills of Castle Pines, Colorado. The new community is located in The Canyons, a new 1,270-acre master plan that will offer a host of planned resort-style amenities.

A KB Home model at The Canyons.
A KB Home model at The Canyons.

“We are proud to be opening our second community at The Canyons, where we will offer a diverse selection of new-home designs in a neighborhood that will include a number of planned resort-style amenities,” said Randy Carpenter, president of KB Home’s Colorado division. “With almost a third of this master-planned community dedicated to parks, trails and open space, our homes can provide a tranquil setting where the outdoors is a constant invitation to explore.”

The Canyons is Castle Pine’s newest master-planned community and just a short drive to Douglas County schools, shopping and dining. The planned resort-style amenities will include expansive parks, hiking trails and a community center with event space, a fitness center, pool, coffee bar, lounge and kid’s zone. KB Home’s newest addition to the master plan showcases one- and two-story homes with up to seven bedrooms and four-and-a-half baths, ranging in size from approximately 1,900 to 2,500 square feet. These new KB homes feature spacious great rooms, gourmet kitchens, expansive master suites, covered porches and basements. Pricing begins from the $520,000s.

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Leasing and Development

Maracay Unveils New Community in Buckeye

BUCKEYE, Ariz. —Maracay is unveiling its highly anticipated Arroyo Seco residential community, located near the edge of the stunning White Tank Mountains in Buckeye, Arizona, on Saturday, Feb. 15.

The grand opening event will include a neighborhood gathering from 12-3 p.m. and feature a catered lunch and refreshments. Potential home buyers are encouraged to attend the family-friendly event, explore the community and learn all about the neighborhood and its amenities with one of Maracay’s New Home Advisors.

Featuring a monumental entrance that sets the stage for a collection of oversized homesites, Arroyo Seco offers the intimacy of a private neighborhood without forfeiting the benefits of an amenity-rich community. The largest homesites available offer more than one-quarter acre, which provide added elbow room between homes to maximize living space and privacy. Meanwhile, a majority of the homesites are also strategically situated in a north/south orientation for cooler home interiors during the warm summer months.

“Arroyo Seco offers a selection of thoughtful home amenities designed to appeal to those who can’t get enough of the West Valley’s easy access to adventure. Outdoor lovers will enjoy the detached or attached RV garages and accessory buildings, while multi-generational families will fall in love with the detached casita option,” said Maracay Project Development Manager Stephen Burris. “The detached or attached RV garages and accessory buildings are perfect for storing a boat, RV or gear for an outdoor excursion or trip to nearby Lake Pleasant.”

Families can choose from five spacious, one- and two-story floor plans, ranging from approximately 2,695 to 4,347 square feet, and personalize each home with Maracay’s Flex Design® options. Included options with these homes are GE® stainless steel appliances, granite kitchen countertops, gas tankless water heaters and a detached casita option with a full living and dining area, walk-in closet, bedroom, bathroom and covered porch.

Beyond each home’s four walls, residents will find a community that celebrates the outdoors with a centrally located park, complete with sports fields and plenty of open space for the kids to roam and play. Volleyball and basketball courts, a tot lot, ramadas and community grills beckon neighbors outside for afternoon barbecues, al fresco dining and weekend get togethers with friends and family. Nearby, Maricopa County’s largest regional park, White Tank Mountain Regional Park, offers 30,000 square feet of rugged and beautiful desert-mountain landscape featuring a range of outdoor activities, including tent or RV camping, picnicking, hiking and much more. Big-city amenities are also just a short trip away via State Route 303 and Interstate 10, which puts Arroyo Seco just 20 minutes from Downtown Phoenix.

The homes at Arroyo Seco will be registered with the U.S. Green Building Council (USGBC), a third-party rating system that verifies compliance across several areas addressing sustainability, with the goal of earning the LEED® Certified designation. Designed to use 30–50 percent less energy than typical homes, each home will meet the EPA’s Indoor airPLUS specifications and will feature water-efficient fixtures, LED lighting, energy-efficient heating and cooling systems, Energy Star® appliances, tankless water heaters, and Wi-Fi-enabled, programmable thermostats. All homes will also be Energy Star® certified and feature the latest in smart home technology and Maracay’s proprietary LivingSmart® program for maximum performance and cost efficiency.

For more information about Arroyo Seco, please contact Maracay’s New Homes Specialist Team at or by calling (480) 401-5620.

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Leasing and Development

As Tucson Moves to Affordability, Meritage Homes is Strategically Entrenched

MARANA and TUCSON, ARIZONA – Meritage Homes closed on 91 SFR lots at Gladden Farms in Marana near the end of 2019 for $4.1 million, $44,800 per finished lot. All lots are 40 x 120.

Gladden Farms is a 1,350-acre master planned community in northern Marana, just west of Interstate 10 between Tangerine and Moore Roads. With four home builders active in the community, it is one of the most active communities in the Northwest submarket.

Meritage bought its first block lots at Gladden Farms in December 2015.

Will White and John Carroll of Land Advisors Organization in Tucson handled the transaction and have the marketing assignment on all of Gladden Farms by the developer, Crown West.

“Meritage has been very strategic in entrenching themselves in Tucson’s top projects and in this lot size segment,” said White. “They are currently in position to have a strong and efficient ‘conveyor belt’ of lots if they choose. In a market that is experiencing a historic shortage of developable lots, it’s a nice spot to be in.”

Since the beginning of the year, Meritage Homes has also closed on 41 SFR lots at La Estancia in the eastern Tucson market for $2 million, of $49,000 per finished lot. The 41 lots were 40 x 115.

La Estancia is a 565-acre residential community located along the I-10 corridor between Wilmot Road and Kolb Road, and offers residents access to the nearby Julian Wash trail system.

Will White and John Carroll of Land Advisors Organization in Tucson handled the transaction for buyer and developer, Sunbelt Holdings.

“Tucson has been moving to affordability for the past 3 years,” White said. Lot offerings of 40′-50′ feet are not on the market long (if they make it to the market at all) and the pace and pricing power is helping to underwrite these deals quickly and easily. It is proving to be a very successful and sought-after lot size/ home size. The situation we have in Tucson is that several builders are searching for these positions and there are only so many of them to go around. If these lot size opportunities are presented, it would be a good move to pick them up swiftly.”

For additional information, White and Carroll can be reached at 520.514.7454.

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