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Hotel to be razed for 'affordable' units, developer says
 

A hotel on North Central Avenue in Phoenix will be knocked down to make way for condominiums in the increasingly competitive midtown market.

The Holiday Inn at 4321 N. Central will be razed to clear a spot for three five-story condo buildings to be developed by Cresleigh Homes Arizona. Cresleigh Vice President Wade Kempton said demolition of the hotel begins in July. He expects residents to begin moving into the planned 257 condos late next year.

Kempton declined to project prices for the condos, which he said would run from 600-square-foot studios to three-bedroom units of 1,400 square feet. He said they would be "affordable" and be within the price range of college students and people who work for the city.

Affordability is a key issue in metropolitan Phoenix housing in general and especially in the area's fledgling condo market. Condos have become an alternative to the starter home as prices for single-family houses soared.

But so many condo projects aim for the affluent buyer. If the prices aren't in the millions, many of the high-rise towers are asking for several hundred thousand dollars as the entry point, matching or exceeding prices for typical single-family homes in the Valley.

The Cresleigh project is in an area of relative affordability. The Landmark on Central has prices starting below $200,000, but the planned Century Plaza conversion will have some units selling for more than $1 million.

Condo developers recite a similar mantra about Central Avenue.

They believe the planned light-rail system will be a big selling point and talk up the area's proximity to the city's downtown. Central is gradually shedding its identity as an office hub as condos crowd into the mix.

Some analysts think there are too many condo projects in the works, especially those on the most-expensive side of the ledger. They say the market is unproven in a city where the single-family home has been king.

"The easiest thing to do in this town is issue a press release about your high-rise condo," said RL Brown, publisher of the Phoenix Housing Market Letter. "There's nowhere near the demand for expensive downtown condos for the supply that has been proposed."

Brown said there will be some condo projects that will succeed as workforce housing, although "no one is positioning downtown condos for the workforce that needs them."

He said Cresleigh has a good site and thinks the project will sell at the right price.

Kempton doesn't think there are too many projects in the works.

"We think Central Avenue has a tremendous amount of potential," he said. "These properties in the high-rise zoning category tend to be a little more pricey. They don't affect us."

Keith Mishkin, a broker with Cambridge Properties, said the Cresleigh project would benefit from its location near Steele Indian School Park. He doesn't think too many condos are piling into midtown.

"It's way underserviced and underbuilt," he said. "There's a lot of empty space out there. When midtown really starts to develop, it helps the retailers, it helps everything. . . . We see a huge demand for good price points throughout that corridor."

One wild card for the area: The Barron Collier Co. owns 15 vacant acres along Central north of Indian School Road. It hasn't announced plans for that property.

"A developer like Collier could create an entire neighborhood," Mishkin said. "There are tremendous opportunities. I see that area going through a lot of change."

Glen Creno
The Arizona Republic