This Arizona developer thinks it may have a model for building apartments regular people can afford

A Tucson-based development firm is creating what could turn into a model for housing in desirable, expensive neighborhoods that average people in metro Phoenix can afford.Holualoa Cos., a developer with high-profile projects throughout the Valley, has a new project in the Camelback corridor to to redevelop a portion of an office complex at 21st Street and Highland Avenue.The developer bought the 13-acre site, which includes two office buildings, a 2-acre lake, a parking garage and a restaurant in late 2021 for $50 million, according to real estate database Vizzda. The company now plans to redevelop the northwestern of the portion of the site, which will include razing the restaurant, the Half Moon Sports Grill, to build 144 apartment units. They submitted plans to Phoenix in late June to begin the zoning process.“Costs are much higher for urban, infill locations,” Steve Betts, managing director of development for Holualoa said, “How can we deliver attainable workforce housing in a more expensive, urban setting?”That answer, Betts thinks, could be not starting from scratch.Land, parking and infrastructure add to costsBetts listed land prices, infrastructure costs like water and sewer lines, and parking as some of the top contributors to higher pricing for construction, which can translate to high rents.By buying a site that already is earning money through office rents and sharing parking lots and infrastructure with the existing buildings, a developer can build an apartment complex more cheaply. The apartments themselves offer pared-down amenities, with a focus on coworking spaces, meeting rooms, bicycle closets and other amenities that cost less to build and less to maintain.According to Holualoa documents, rents at the Dwell projects will start around $1,400. New developments in downtown Tempe vary greatly in price, but some recently proposed luxury apartments in the area range in rent from $1,500 to $3,500 depending on unit size.Area must be desirable to make up for pared-down amenitiesTo make up for a lack of amenities that are commonplace in high-end apartments — like pools, movie cinemas and luxury gyms — the Dwell developments are in walkable and bike friendly areas like the Camelback corridor and the other location in downtown Tempe.“They need to be in a location where the amenities are the attractive, urban environment around the Dwell project,” Betts said.At the Highland property, the office complex came with a 2-acre lake, which will see enhancements for both office users and eventual residents at the apartment complex. The site, which was a golf course before the office buildings and nearby retail were built, previously used the lake as water retention for the golf course, Betts said. The company plans to build shade structures, game areas, a boardwalk and patios around the lake, and add a meeting room and sitting areas to the small island in the middle of the lake.“Today you can walk out onto the island, but it’s really underutilized now,” he said.Filling the need in the ‘missing middle’Betts said Arizona has done a great job attracting new jobs to the region, but even jobs that pay well and require skills don’t always earn enough to afford housing in the Valley’s more desirable areas.Rents at Dwell are not subsidized but are generally affordable to people making between 80% and 120% of the area median income, what Betts referred to as the “missing middle” of affordability. Housing is generally considered affordable if a person does not spend more than one-third of their gross monthly income on it.“We hope that now that we’ve proven the Dwell concept, we can do a dozen of these around the Valley,” Betts said.Holualoa’s first Dwell project, in Tempe near Fifth Street and Farmer Avenue, is under construction and recently had concrete poured at the site. The apartments there are expected to open in late summer of 2024.The Phoenix location is in the early stages of approvals at the city, and likely will start construction midway through 2024, Betts said.Reach the reporter at cvanek@arizonarepublic.com. Follow her on Twitter @CorinaVanek. 

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