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Scottsdale’s State of the Multifamily Market

By December 8, 2022January 17th, 2023No Comments

On December 1st, ten panelists spoke at the Hyatt Regency Scottsdale Resort about the Scottsdale State of the Market: An Update On the City’s Leading Developments, Construction and Future Plans.

One panel, moderated by Jason Morris (Withey Morris), focused on Analyzing Scottsdale’s Multifamily Market and featured Zach Haptonstall (Rise48 Equity, Scottsdale 5th Ave), Jennifer Schrader (CaliberCo), Tammy Caputi (Scottsdale City Council), Nick Rahman (ZOM Living, Hazel & Azure) and Larry Kush (ORION Investment Real Estate).

 

Larry Kush, Jennifer Schraeder, Tammy Caputi, Nick Rahman at Scottsdale State of the Market.

 

Here are some highlights:

Caputi: The City of Scottsdale has approved less projects in the last two years than the City of Mesa probably approves in one day. We are starting to push away the good projects and make it much too hard, complicated and expensive to move forward in Scottsdale. There has to be a balance.

Kush: Up on 92nd Street near Shea, there are two developers…Kaplan (94 Hundred Shea) and Caliber (Mercado Courtyards) that want to build around 500 units on two sites that border each other. I seriously doubt it will ever be approved because the NIMBYism has really taken over.

Schrader: What we experience here is a small subset of people who don’t want to see change. We’re actually converting an office building into apartments. We not taking vacant land, we’re taking an office that’s been vacant for a decade.

Caputi: The City of Scottsdale has been very consistent, about 70/30 single-family to multifamily homes. We have delivered about 800 multifamily units every year for the last 20 years. This idea that we’re being overrun by apartments is just absolutely ridiculous.

Haptonstall: You’ve got different politicians complaining about how people like us are jacking up the rents, so it’s not an affordable market anymore. But then on the other hand, you don’t want to provide more housing to increase the supply. It’s very hypocritical.

Caputi: To get a project approved, you’ve got to have the neighborhood onboard. You’re going to have to bring an unbelievable amount of tangible community benefits — making sure there’s no short-term rentals, offering some workforce housing, assuring a water supply.

Schrader: I saw some stats recently that multifamily units on average use about a quarter the amount of water as a single-family home. So, this argument that if we build another apartment building, we’re going to cause the city to run out of water doesn’t make any sense.

Morris: In order to get multifamily approved, how important is it to have mixed use?

Kush: If you go downtown right now, you’ll see all these wonderful apartment buildings with first-floor retail and no one’s in it. Kaplan built a project up at Scottsdale Quarter and to meet the retail requirement, they made their gym open to the public. For the most part, putting retail on the first floor isn’t working anywhere.

Rahman: We’re typically not seeking to build mixed use or retail unless we feel it’s going to be successful. From institutional financing of a multifamily project, it makes it more difficult for a project to come to fruition if additional retail or commercial is added.

Caputi: We don’t need more retail, we need more housing. Almost every project we’re seeing now is a retail center that is laying vacant, begging for housing. And yet, what holds these projects up is that we’re insisting that they reinsert retail into them…retail that has already failed. It just doesn’t make economic sense and it’s not our place.