Last week, I needed to get out of the office - away from clients and contracts - so Tanya Boruch (also with Realty Executives out of our 101 & Bell office) and I took a discovery trip over to City North last Friday.
At any rate, I’ll be honest and admit I didn’t know very much about City North prior to our trip. I had been a bit more focused on Scottsdale One, and hadn’t given City North nearly the attention I now feel it truly deserves. Oh wait…I’m putting the cart before the horse, so let me back up, and start from the beginning.
City North is located adjacent to Desert Ridge in North Phoenix. It is bounded by Deer Valley Road to the north and Loop 101 to the south, 56th Street to the east and Desert Ridge to the west. The land for the mixed-use project, which will include boutique retailers, 4 big box retailers, office space, 2 hotels, and residential condos is all lease-hold land. It’s state trust land, and Arizona state law requires that state trust land cannot be sold to a commercial developer, for office/retail use, but rather the land must be leased. Being mixed-use, but primarily commercial, mean that for residential owners of the condos above retail, part of the condo association fees will be used to pay the land lease, which has approximately 83 years remaining.
We arrived at the new sales center for City North and were soon met by a sales associate who would be guiding us through the overview of the project. As you might expect, with a project this size, they have quite the display designed to wow potential clients, and as much as I wanted to resist, I was indeed wow’d. I think what struck me with such surprise was in the retailers and restaurants that are already on board. Of the 4 big box tenants, Nordstroms was already announced. While I can’t confirm or deny it, I hear they may be close to signing Barneys. The restaurants named were primarily new to the Phoenix market, with a good bit of east coast flair. Only Kona Bar & Grill is announced and currently in Scottsdale. If you are more worldly than I am, the names probably wouldn’t have slipped by without recognition, but they did mine, so I apologize.
At this point it became apparent to me that City North is going to be a very high end multi-use project. In fact, far higher end than I ever expected for City North, but rather what I was expecting of Scottsdale One. As far as I can tell, it will eclipse Kierland and even the Waterfront in Scottsdale. The project is incredibly ambitious, yet appears to be on track (yes, even in “this market”). They began taking lot reservations 3 weeks ago for the residential condos, and as of Friday had 30+ of the 90+ units reserved in the first phase. All of the currently available units are in the top 3 floors of a 4 story building, with the first floor being retail space. Most are 2 bedrooms units, while there are an approximately equal, but smaller number of 1 and 3 bedrooms units. Pricing starts in the mid-400’s for a 1 bedroom unit on the second floor, and continue up to over $1,000,000 for a 3 bedroom unit. Starting prices begin at roughly $550/sq ft.
Units with windows facing out to the retail side of the building are more expensive than those with windows facing the common area pool side. As well, units on higher floors are more expensive than the lower floors. There appears to be plenty of parking for residents, guests, office users, and retail clients. Residents will have reserved parking locations on the 2nd and 3rd floor of the parking garage, and be able to transition to the residence building via the 2nd floor pool pavilion area, without having to go to the ground floor.
Standard finishes of the units are quite nice and as a result most owners won’t need to spend a fortune at the design center. As an example, berber carpets are standard. When was the last time you ran across that? As you can imagine, with an exterior that is primarily a window-scape they will have some fairly tight control over how you decorate your windows, which will be managed through the design center.
Right now, they don’t have their Public Report, so they can only accept the state maximum of a $5000 lot reservation. Once the public report is in, which is expected in about a week (end of February), they will be wanting a 10% earnest deposit at the time of contract. If you get really extravagant at the design center, they may want more. Also, a limited number of investors will be accepted, and they have yet to hit their limit in that regard. They believe at some point, they may have to so no to investors.
The first phase, which will include 7 buildings of residential, retail, office space, the parking garage, etc., is expected to deliver in October of 2008. It’s critical that they hit this delivery date, to keep the retail clients happy with regard to the holiday shopping season of 2008. Looking at the state of construction, it seems clearly within reason that they will hit this milestone.
If you are looking for an ultra-hip, ultra-upscale city living setting, I can’t think of a better spot in Arizona. Around town, you hear about the “Rodeo Drive” of Phoenix, and while I always expected that to be Scottsdale One, City North has clearly beaten DMB to the punch. Which further explains why DMB has need to put a large chunk of the development of Scottsdale One on hold.
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