[Source: Jan Buchholz, Phoenix Business Journal]
From the “that didn’t last long” file, word comes today that the sale of condos at 44 Monroe in downtown Phoenix is off.
In early November, the new owner of most of the project — it was purchased by ST Residential after the lender took it back — said they would sell the units for nearly half of their original pricing.
The high-rise at First Avenue and Monroe Street has 196 units, with 14 occupied by residents who bought at the height of the market, when they cost between $450,000 and $3.2 million.
But now the plan is to lease them. In a letter sent to brokers and other interested parties Thursday afternoon, a representative from the sales team said the market dynamics don’t support sales. No word yet on what rents will run, but look for a mix of Arizona State University students and staff, and young professionals working downtown to settle into the high-rise lifestyle.
[Source: LightRailBlogger.com] — I took my neighbors on a hour long bike tour of downtown Phoenix. Mike and Jane were not too familiar with the backstory to some of the historic sights in our urban core, so it was fun to give them some background on the landmarks in the heart of the city.
We started in the Evans Churchill neighborhood near 4th Street and Fillmore. We visited the community garden near Conspire Coffee and the murals in the alley behind 5th Street near Roosevelt in the arts district. Mike, Jane and I then went to the Phoenix Public Market, the Westward Ho and Civic Space Park. Our tour then continued south on 1st Avenue to see the Orpheum Lofts, 44 Monroe and the old City Hall.
Next. we made our way over to Hanny’s Restaurant, which used to be home to a high end department store back in the day. We then stopped by St. Mary’s Basilica where Pope John Paul II visited several years ago. Our trip ended at Heritage Square and then we stoppped for a bite to eat at Front Row – TGIFriday’s restaurant inside Chase Field where the Arizona Diamondbacks play ball.
How did I do? Where would you take friends or out of town guests to explore the heart of Phoenix? [Note: Read the full blog entry at Touring downtown Phoenix… by bike.]
[Source: Jon Talton, Rogue Columnist] — It’s surprising that some appear so sanguine about the likely foreclosure of most units at the 44 Monroe condo tower. This, along with a similar fate for the Summit at Copper Square and 44’s developer Grace Communities failing to rehab the historic Valley National Bank building because of the Mortgages Ltd. fiasco, represents a devastating setback for luring private investment into downtown Phoenix. Maybe people are too shell shocked to take it all in. Maybe they’re willing to settle for things being better than they were 20 years ago, which is undeniably true. Neither option is wise for those who wish the central city well.
Make no mistake: the Phoenix depression is metro-wide. I saw rotting framing and miles of distressed subdivisions out in the exurbs. Tempe foolishly threw away its opportunity to build a mid-rise boutique downtown of national quality — now it has an empty condo high-rise and Mill Avenue is swooning again. But my conviction remains that there is no healthy major city without a strong urban downtown, and center city problems left unchecked have a habit of spreading. (And don’t be taken in by the propaganda: Phoenix did have a vibrant downtown — it was killed by civic malpractice).
In Phoenix, the past few years have seen some notable triumphs: the beginnings of a downtown ASU campus, light rail, a convention center worthy of such a tourist-dependent city, a new convention hotel, and a blossoming of independently owned restaurants. The biosciences campus has been planted (although it has been allowed to stall and, I fear, its future is uncertain). Yet major private investment has not followed; 44 Monroe and the Summit represented the strongest chance for that within the existing local business model of “real estate first.” The many towers proposed for the entire Central Corridor are now blighted empty lots. CityScape? I’ll believe it when I see it. What I see is a homely suburban design, not the soaring “game changer” sold to the public on the front page of the newspaper.
The great recession, the great reset: Where will they leave downtown Phoenix and the Central Corridor? It’s tough all over, now that a commercial real-estate crisis will follow the explosion of the residential and mortgage bubble. Nationally, suburbs and exurbs are being hit harder than downtowns. Suburban poverty is spreading. The massive destruction of wealth and overhang of leverage make restarting the sprawl machine of old impossible. Smart places, such as Denver, are trying to retrofit the suburbs for a higher energy future. Some suburbs themselves are working to provide walkable, mixed-use and even urbanish neighborhoods.
The headwinds in Phoenix are different. Most people have blinkered suburban values — they can’t imagine a different life. City Hall’s decisions to clear-cut hundreds of buildings and drive out businesses that catered to the working poor have left Phoenix without the bones that other cities have used to revive their cores. The old headquarters companies were bought or dismembered and their successors often keep only token presences in downtown (imagine, for example, if Wells Fargo had built its operations center downtown instead of in Chandler). And the limited economy leaves few non-real estate businesses anyway. I could go on, but what can be done now, in the reset? [Note: To read Jon’s recommendations, click on Downtown Phoenix 2.0?]
[Source: Jahna Berry, Arizona Republic] — Most of the units in 44 Monroe, the swank, 196-unit luxury high-rise could be headed for foreclosure. The bank has filed a notice of trustee’s sale, the first step toward taking over 182 unsold condos. The units are scheduled to be sold to the highest bidder on April 14, according to county documents. A notice of trustee’s sale doesn’t always end in foreclosure but it’s a signal that the project has serious financial problems.
The 44 Monroe owes Corus Construction Venture, LLC $86.8 million, according to county documents. Officials at Grace Communities, the project’s Scottsdale developer, declined to comment on today. The project near 1st Ave. and Monroe St. was completed in 2008.
44 Monroe’s lender collapsed and was taken over last year by the FDIC, which owns a 60 percent stake in Corus Construction Venture, LLC. The rest is of the firm is owned by private equity consortium led by Starwood Capital Group.
This is the second upscale high rise in the heart of downtown Phoenix to face financial trouble in recent months. The Summit at Copper Square, a 165-unit condo complex, sought Chapter 11 protection October. The developer headed to bankruptcy court to stop its lender from foreclosing on 74 unsold units. The Summit’s bank, Scottsdale’s Stearns Bank, filed a notice of trustee sale last summer.
Before the recession and the housing bust crippled the economy, Phoenix leaders hoped that affluent condo dwellers who lived in projects like 44 Monroe and the Summit would help revive downtown Phoenix. [Note: Read the full article at 44 Monroe luxury condos in downtown Phoenix on road to foreclosure.]
[Source: Mike Sunnucks and Jan Buchholz, Phoenix Business Journal] — Some Valley city council members are frustrated with the lack of updates they are getting from real estate developers regarding projects tabled by the market crash and recession. A slew of construction projects have fallen short of expectations, and council members across the Valley are giving developers and their lawyers mixed reviews on keeping their respective cities updated.
“No, no, no, no, no,” Tempe City Councilman Ben Arredondo said when asked whether he’s been kept up to date on the status of stalled projects — including the Tempe Centerpoint condo high-rise, which is in Chapter 7 bankruptcy and sits unfinished on Mill Avenue. Arredondo said he’s not getting frequent or detailed enough updates on Centerpoint or other projects. He said developers — especially those in distressed situations, such as Centerpoint — aren’t giving Valley cities straight answers on their projects. “I don’t think they are ever going to give us the bottom line,” Arredondo said.
Developers and their various lawyers aren’t specifically obligated to keep cities updated on their projects, but some city council members are worried about the status of delayed or abandoned developments and how they might hurt short- and long-term economic development.
Centerpoint developer Ken Losch did not respond to requests for comment. Centerpoint is not the Valley’s only distressed real estate development. The Hotel Monroe redevelopment in downtown Phoenix sits empty and boarded up. Downtown condos such as 44 Monroe and the Summit at Copper Square are mostly empty, and a significant number of suburban subdivisions and commercial developments are unfinished or delayed because of lack of demand and financing.
“I think that everyone is cautious and holding close to the vest. This goes beyond the developers, as end-users are placing projects on hold,” said Surprise City Councilman John Williams. “That said, I believe much of the information shared is often one-sided and biased and may not reflect the exact state of our economic recovery.”
Valley cities signed off on scores of retail, condo, single-home and commercial projects during the real estate boom. Now, many of those projects are on the back burner. “Many of (the planned projects) look foolish in hindsight, but most looked really good at the time,” said Phoenix City Councilman Tom Simplot…
After extensive efforts to obtain updates on several of the largest mixed-use developments in the Valley, few elected officials wanted to discuss the uncertain, even dire, financial situations facing some of them. The Phoenix Business Journal asked for comments about those projects — including CityScape, CityNorth, and Main Street Glendale — from the cities of Phoenix, Glendale, Tempe, Scottsdale and Chandler. The only responses from public officials are those noted above. [Note: Read the full article at City council members annoyed by lack of communication from developers.]
[Source: Sarah Fenske, Phoenix New Times] — There’s a development on the edge of downtown Phoenix that captivated me even before I moved into the neighborhood: the Chateaux on Central. My interest wasn’t a matter of good design — everyone from Will Bruder on down is on the record mocking the place, and rightly so. (With its fanciful turrets, shiny copper roofs, and that ghastly faux-French “eaux,” the project’s overall effect is Disney Does Brownstones in the Desert.) No, the Chateaux on Central were somehow personally evocative. They made me homesick. [Note: Read the full article at Phoenix Interrupted: Downtown’s full of gleaming progress surrounded by vacant lots – now what?]
[Source: Arizona Republic] — As the [global] economic downturn grinds on, downtown Phoenix boosters have been anxiously watching sales at several new condo projects, including 44 Monroe at the intersection of Monroe St. and 1st Ave. City leaders want to revive downtown Phoenix, and getting more people to live there is a crucial part of that plan.
Although 44 Monroe wrapped up construction this year, units have been slow to sell… According to Ryan Zeleznak, Grace Communities principal, of the 196 units in the 34-story building, 96 (49%) are in escrow and about a dozen (6%) have sold (including one for $1.55 million last week).
We’re in a spoofing mood, so bear with us as we offer up the short video above made a few years back. The “3rd Annual Downtown Phoenix Loft & Home Tour” is coming up Saturday, November 1. Well, it’s really just a tour of rather expensive lofts…not that there’s anything wrong with that. No neighborhoods with actual house-like homes (like Capitol Mall, Coronado, F.Q. Story, Garfield, Roosevelt, or Willo) are included. And that’s an opportunity lost on telling the fuller story of living in and around downtown Phoenix.
The loft tour runs from 10 a.m. to 4 p.m. and free shuttles will circulate the tour route through the day for easy transportation. Tour admission is $8 in advance or $10 the day of the tour. Everybody must check in at 5th Street between Roosevelt and Garfield to get your wristband and tour book. Destinations on the tour include: 44 Monroe, 215 E. McKinley, Century Plaza, Chester Place, Portland 2, Portland 38, and The Summit at Copper Square. For more information (including the possibility for free tickets), click here.
[Source: Andrew Conlin, Special for The Republic] — For nearly two decades, we’ve heard confident predictions that downtown Phoenix was on the brink of a crucial “tipping point,” when public investment would no longer be needed to generate new development that was both vigorous and self-sustaining. A term like “tipping point” is a kind of mental shorthand, useful in summarizing complex ideas but sometimes misleading when it comes to making decisions or drawing conclusions.
In reality, we won’t see the beginning of a significant shift from public to private investment until downtown achieves the requisite critical mass. This will be the moment when the collective energy generated by the diverse collection of downtown businesses, retailers, residences, entertainment venues, and academic and cultural institutions fuses into the nucleus of an energetic and growing community. Private investors will be drawn to this energy, creating new businesses and helping to further enrich the downtown scene. This will inspire more people to live and work here, generating new opportunities that will draw new investors. This development “chain reaction” will, we hope, be self-sustaining and transformational. [Note: To read the full opinion piece and comments, click here.]
[Source: Andrew Johnson, Arizona Republic, June 20, 2008] — A developer behind several high-profile real estate projects and a construction contractor filed a petition late Friday to force lender Mortgages Ltd. into bankruptcy. Grace Communities, which is developing the 44 Monroe condominium tower and Hotel Monroe in downtown Phoenix, filed motions in U.S. Bankruptcy Court for the District of Arizona asking a judge to put Mortgages Ltd. into Chapter 7.
Separately, the firm also filed a lawsuit against Mortgages Ltd. seeking the $48 million in financing it claims it is owed for the Hotel Monroe project and to get a $100,000 bond from the lender’s regulator, the state Department of Financial Institutions. If a judge accepts the bankruptcy petition, the Phoenix-based financier would be required to sell its assets. Grace Communities also filed an emergency motion to appoint an independent trustee to take over Mortgages Ltd.’s operations. [Note: To read the full article, click here.]
Other notable Mortgages Ltd. projects funded in and around downtown Phoenix: