Real estate markets may be bubbling over or dried up depending on the economy, but creativity seems to be an ever-flowing commodity in the industry. Whether Out West or Back East, it is possible in 1991 to find innovative and far-reaching developments that cover all bands in the real estate spectrum.
North of Phoenix in Scottsdale, Desert Mountain continues to flourish as a world-class destination community. The 8,000-acre master planned development caters to second-home buyers for whom the average price tag of $1 million is less a consideration than the caliber of the three championship golf courses that wind among the giant-armed saguaro cactuses.
Just outside downtown Richmond, Tobacco Row is trying to prove that in-city living will work in the Virginia state capital. Developers are welcoming the first residents as part of an ambitious plan to renovate 16 former tobacco warehouses and other industrial facilities into a new neighborhood of apartments, stores and businesses.
These two projects are opposites in many respects: One is new construction, the other renovation; one is upper bracket, the other middle income; one is 45 minutes from the city center, the other 4 1/2 minutes from downtown.
But they both represent the same inventive spark that drives real estate in any market.
Desert Mountain-Along the Desert Foothills Scenic Drive leading north out of Phoenix for Scottsdale and beyond, the cactuses are all labeled so the curious can distinguish the numerous varieties.
The same is true for the new housing projects that line the roads north of Phoenix, projects almost as numerous as the cactuses, although the labels on the residential developments-The Boulders, Eagle Ridge, Sentinel Rock and Carefree Rolling Hills-are much less scientific.
Desert Mountain`s name describes not just the project`s location but also its attitude. At elevations ranging from 2,500 to 5,000-plus feet above sea level, the community has home prices to match. Buyers at this recreation-oriented planned development must be high climbers to live there.
”This is a reward for people who say, `I`ve earned it.` They don`t want to hear from their accountant that it`s a recession,” said Michael Anderson, senior vice president of Desert Mountain Associates Inc.
”Phoenix was hit hard by the recession, though it is rebounding. But people looking for a bargain will not find it here,” Anderson said.
Lot prices start at $125,000 and range as high as $950,000. All purchasers receive a social membership in the golf club, with buyers of lots at $200,000 and up receiving a full membership. The homes going up on the lots typically cost from $750,000 to $1 million.
The average age of Desert Mountain home buyers is 44. Purchasers have high incomes and high net worths. Most have visited or lived in Arizona before buying and consider their home a second or third home, but one that in later years may become a primary residence, Anderson said.
Demand at Desert Mountain is coming from all over the world, but more residents are coming from Chicago than from any other city, Anderson said. So far, 650 home sites have been sold, and more of than 40 of them have gone to buyers from Chicago, with the rest of the Midwest supplying an equal amount.
”I don`t like to tout the good points of Desert Mountain. I don`t want to see everybody move out because it might get crowded,” said a North Shore executive who purchased a home in the development but asked that his name not be used. ”But it is a high-class operation.”
The master plan for the project was created by Taliesin Associated Architects in Scottsdale, a group founded by Frank Lloyd Wright. It calls for the creation of nine villages containing up to 4,600 homesites and 200 acres of commercial development.
A 600-acre golf park, in which the courses are the only unnatural scenery allowed, is at the center of the project. Two of the three Jack Nicklaus-designed courses in the project are within the park.
A 52,000-square-foot clubhouse opened about a year ago, and a swim and tennis club is about ready to break ground.
In addition to the 650 sites that have already been sold, 425 lots have been prepared for development.
”Many of the 8,000 acres are in the mountains and will remain in their natural state for horseback riding or Jeep tours,” Anderson said. ”One of the things we`re really trying to do is maintain the beauty of the natural desert.”
To do that, covenants in the project require homeowners to preserve and return all the natural vegetation on their lot when home building is complete. Homes must also pass architectural review to ensure that they comply with the development`s Southwestern style and use of natural materials.
”The unique thing about the high Sonoran desert is that it has about 1,500 different kinds of vegetation,” said Anderson, an Oak Park native who worked for JMB Realty in Chicago before moving to Phoenix three years ago to head up sales at Desert Mountain. ”It does get hot. But it grows on you.”
Desert Mountain is the brainchild of developer Lyle Anderson, who is not related to Michael Anderson. In 1984, he began assembling the 8,000 acres that included most of the former Carefree Ranch, a typical Western-type cattle spread. Desert Mountain opened in 1986.
Two years ago, Mobil Land Development purchased a 50 percent stake in Desert Mountain and became a joint venture partner in the remainder of the project. Developers expect the building to be completed in about 15 years.
Phoenix, despite the troubles it has experienced, in large part because of the problems of the nation`s savings and loan industry, remains one of the top markets for real estate investment, according to Century 21 Real Estate Corp. Century 21 noted the low unemployment rate and steady population growth of the metropolitan Phoenix area in making its assessment.
”The market has turned considerably for the better here,” said Harry Vardakis, a broker with Palm Desert Realty in Carefree, the town just west of Desert Mountain. ”Next year we`ll be really flying if the last 12 weeks are any indication.”
”I`m sure Desert Mountain has been a big part of the draw and the Boulders (another golf resort development nearby) has been a draw. But really, the uniqueness of this area sells itself. I`ve been out here 22 years and I can tell you, you don`t have to do a selling job out here.”
Tobacco Row-The smell of fresh tobacco still wafts out of the Philip Morris warehouse outside downtown Richmond and a fading Lucky Strike sign still adorns the tallest red brick smokestack in the area, but about the only other place cigarettes can be found nearby anymore is in vending machines.
The tobacco companies have otherwise deserted the strip of East Main Street that runs a block or so from the James River, leaving aging multistory factories for more modern, single-story quarters in the surrounding area.
But the industrial buildings they have left behind are being reclaimed. Tobacco Row Apartments, a 259-unit project in two of the buildings, is the first piece of the $100 million venture.
”The Cameron is the building where the tobacco was brought in right out of the fields,” said Neal Hamilton, a leasing agent for Tobacco Row Apartments. ”Then it went to the Kinney, and from there it was taken to the American Brands building, where it was rolled out into the finished cigars and cigarettes.”
The Cameron building was the first completed. It opened in January and has filled 120 units to date. The Kinney building opened in mid-May. The American Brands building, where the Tobacco Row development firm maintains its offices, will be overhauled later.
”I guess it`s trendy to live downtown,” Hamilton said. ”The apartments are going quickly, much faster than projections. I guess we didn`t charge as much as we could have charged.”
The apartments, with rents for two-bedroom, two-bath units around $675 a month, are drawing a 28- to 35-year-old crowd, with 75 percent of the renters being single and 25 to 30 percent being minorities, Hamilton said.
Richmond attorney William Abeloff, the general partner in the project, is the person with the vision. More than a decade ago, he conceived the idea of buying up 22 deteriorating and mostly abandonded industrial facilities and converting them to new uses. Six of the buildings were to be demolished.
Renovation is not a strange concept in history laden Richmond. The Tobacco Row complex, in fact, is within blocks of the Church Hill
neighborhood-where at Saint John`s Church Patrick Henry delivered his
”Liberty or Death” speech-a neighborhood where homes are being restored in increasing numbers.
But it wasn`t until four years ago that Abeloff found a partner, McCormack Baron & Associates, a St. Louis-based firm noted for a number of restoration projects around the country, that enabled the financing for the project to come together.
”At 1 1/2 million square feet, it`s the largest contiguous group of older warehouses in the country,” said Ted Cox, with the Richmond real estate firm of Morton G. Thalhimer International. ”There`s going to be a lot going on there in the next 10 years.”
Although the market in Richmond has cooled off in the last two years, Cox believes Tobacco Row will be successful.
”The question is, are there 1,000 people who will live downtown? With a working population of 250,000, I think so,” Cox said. ”But one of the worries is there is so much square footage that you have to find other uses than residential for the buildings.”
That worry may have been alleviated. One of the largest advertising agencies in the Middle Atlantic states, the Martin Agency, has agreed to occupy the bulk of one of the buildings to be restored with its office headquarters of 140,000 square feet, lending credibility to the location as a business address.
Even though the office vacancy rate in downtown Richmond is 20 perent, Cox believes there are additional businesses that will take a hard look at the area once Martin moves in next spring.
Cox is trying to sell the 200-year-old Henrico County Courthouse in the Tobacco Row area, seeking a developer who could renovate the landmark for residential, office and restaurant use. Although he has had some interest, no one has made a serious offer, Cox said.
Hamilton said retailers are anxious to begin leasing space in the area, but the Tobacco Row developers have deliberately proceeded with the residential buildings first to provide a customer base for the emerging neighborhood.
The City of Richmond has agreed to put about $6.5 million in improvements into the area, including new brick sidewalks, historic replica lampposts, roadway work and landscaping.
