2020 was a momentous year and one that had a dramatic impact on commercial real estate. Office and retail leases stalled, building sales halted and hotel projects were largely put on hold during the height of the Covid-19 pandemic. But that isn’t evident with the massive amount of large developments — from a factory to apartment and office towers to entertainment destinations — teed up to start in 2021. It’s a clear sign that developers are optimistic about 2021 and the years to come.
Article originally posted here.
Here is a look at the top 10 Valley commercial real estate projects to watch in 2021:
1. Arizona’s largest-ever direct foreign investment, Taiwan Semiconductor Manufacturing Co. Ltd.’s $12 billion production facility, plans to break ground in 2021.
The plant is expected to eventually employ more than 1,600 people — making it the top deal of 2020 and a project to watch in the year to come. It will be built on 1,128 acres of land near Loop 303 and the 43rd Avenue alignment in north Phoenix that TSMC bought at a Dec. 9 Arizona State Land Department auction for $89 million.
The project has been in the works for years and city and state authorities have described it as a “game changer” for the city and state.
“The timing is really meaningful to us,” Phoenix Mayor Kate Gallego said. “We are looking at how we exit this economic downturn, and we want Phoenix to be the next smart city, with high-wage jobs. We are a global city, and this is how we are going to come out of 2020 stronger and smarter.”
Sources with knowledge of the deal have said the factory will be a magnet for other companies that will work alongside TSMC, including some that will likely buy land that is adjacent to the TSMC site. The surrounding land is owned by the state, but the city of Phoenix rezoned a total of 3,500 acres in the area, including what was purchased by TSMC, for intense employment uses, with the aim to create an employment hub in the area.
Movement is already underway for some ancillary properties that have been called supplier sites for the TSMC plant. The group behind the rezoning of the TSMC site, which lists the city of Phoenix as the applicant, has submitted rezoning applications for three additional north Phoenix sites, totaling 525 acres near Seventh Avenue between Deer Valley and Happy Valley roads. No users have been specified for those sites, but public documents do say they are for uses that will complement the larger site, which was the site purchased by TSMC.
2. A proposal for what will be the state’s tallest tower, a mixed-use project called Astra Phoenix, was approved by Phoenix City Council and is expected to begin construction in late summer or fall of 2021.
The $420 million project will total 1.8 million square feet in two towers, and will include over 390 units of luxury apartments, a 254-key, four-star luxury hotel, 190,000 square feet of class A office space, 290 co-living units and 15,000 square feet of retail and restaurant space.
The larger tower at Astra is planned to be the tallest building in Arizona, reaching 535 feet at its highest point. The Chase Tower, which is 483 feet tall, is the state’s current tallest building. The developer, Aspirant Development, is a division of Scottsdale-based Empire Group.
3. Brothers Shawn and Steven Yari have major redevelopment plans in Old Town Scottsdale. They plan to revamp the city’s bar district to create a higher end hospitality area. Scottsdale City Council approved the rezoning for the plans, which total about 10.25 acres, but not all will be redeveloped for the project, called the Scottsdale Collection.
In total, the plans call for the project to contain 580,451 square feet of commercial space and 512 units of residential. The site is adjacent to where Stockdale is already developing the Marquee office building at Scottsdale Road and Shoeman Lane.
In total, the project will cost about $450 million to develop. Development schedules will depend on market conditions, but the first phase could begin construction in summer 2021.
The plans for the project include demolishing the Dakota nightclub, which is operated by Stockdale, but no tenants will be removed from their locations, the developers said. Plans for the redevelopment area include several new lifestyle hotels in addition to existing restaurants and clubs, including the Mint Night Club and Maya Day and Night Club.
4. Phoenix-based Red Development is planning to build a 17-story office tower in Tempe totaling 319,000 square feet on the northern portion of the 2.5-acre site near Third Street and Ash Avenue, which is bisected by the light rail tracks, according to plans submitted to the city of Tempe. Plans call for constructing the two towers around and over the light rail tracks, creating a space where the train will travel through the buildings.
The project will include the redevelopment of the Macayo’s Depot Cantina in Tempe. For the second tower, Red Development is planning an 18-story, five-star, full-service hotel with up to 280 guest rooms, according to city documents. The hotel tower also will include 9,400 square feet of conference space, 15,225 square feet of street-level indoor retail and restaurant uses and 4,000 square feet of outdoor dining space on the ground floor. The eighth floor will have an amenity deck with a pool that will connect both towers.
The project will have a seven-level above-ground parking garage totaling 418,630 square feet. SmithGroup is the architect for the project.
5. Vertical construction on the first buildings, an apartment complex and an office, at CityNorth near Desert Ridge Marketplace is scheduled to begin in mid-2021. The buildings will kick off development of nearly 100 acres of land that have previously been undeveloped and could eventually include $1.5 billion worth of development.
The developments that are planned and underway are going to use up about 17 acres of the 96.5-acre core, which Crown Realty & Development CEO Robert Flaxman said could accommodate up to $1.5 billion worth of development. Crown has planned to develop the office component on their own, but Flaxman said they have been approached by office developers for the property, and they are entertaining some of those ideas.
A U.S. Bankruptcy Court ruling in early 2019 gave Crown clearance to develop the core 96.5 acres near Desert Ridge and granted it master developer rights to 5,700 more acres, which are owned by the Arizona State Land Department. Since then, all pending appeals have been settled in Crown’s favor. Flaxman said there are not any scheduled auctions for any of the pieces, but as master developer he would like to encourage more development in the area.
6. Crystal Lagoons, a Florida-based company with operations internationally, is planning a 48-acre entertainment destination in Glendale near State Farm Stadium that will be anchored by an 11-acre beach lagoon.
The mixed-use project, branded as a Crystal Lagoons Island Resort, will have a similar feeling to Downtown Disney, with experiential retail, amusement park rides, a 4D theater, a themed hotel and other hotel uses on the site.
The project will include an “aero bar,” a bar in the middle of the lagoon on a vertical structure that becomes elevated 135 feet in the air so patrons can get a 360-degree view. There also will be “the world’s largest helium balloon.” The balloon will be on a tether with a gondola that raises riders 400 feet in the air. A wind study showed the balloon will be able to operate an average of 300 days per year.
As part of the deal with the city of Glendale, the project will be developed in a single phase and will be operational by October 2022, ahead of when the city will host the Super Bowl in 2023.
7. While it might be hard to believe, Glendale’s wasn’t the only lagoon project to be proposed and approved in 2020. Developer Cole Cannon plans to begin construction in 2021 on his surf lagoon and entertainment project called Cannon Beach in Mesa.
The project is planned near Power and Warner roads and will feature a 1.8-acre surfing lagoon complete with a sand beach and splash pad. Users will be able to book a 1-hour time slot to use the surfing lagoon, which will be capped at about 20 users at a time so people will not have to compete with others for waves.
The surf lagoon will be part of a larger, mixed-use portion of the site, totaling about 30 acres, which will include a hotel, restaurants, a gymnasium and office buildings surrounding the surfing area.
8. Merit Partners, the Phoenix-based developer instrumental in the Red Bull and White Claw facilities being built in the West Valley closed on a 614-acre parcel of land in Glendale that will be the site of a $1.5 billion logistics park development.
The parcel at the southwest corner of Bethany Home Road and Loop 303 is part of the 864-acre Allen Ranches property and sold for $70.5 million. The industrial portion of the development will be called Camelback 303.
The project will be developed as a joint venture by Merit Partners, First Industrial Realty Trust Inc. and Diamond Realty Investments.
9. The $115 million sports arena planned by Arizona State University to host hockey, wrestling and gymnastics is set to begin construction in January.
The highly visible building, which will be a part of the Novus Innovation Corridor, will be constructed south of Rio Salado Parkway, east of Packard Drive and immediately north of the Packard Drive parking structure in Tempe. Construction is scheduled to be complete by December 2022.
The arena will include 20 luxury suites, two group suites, and a club lounge featuring a “Center Ice Club” on the main concourse that can host up to 500 fans. On the third level, a social deck will run the length of the eastern side. A 942-seat student section, a probable nod to ASU Basketball’s supporters, the 942 Crew, will occupy the entire west side of the venue.
10. Stadium Point, a mixed-use development near Peoria Sports Complex, will include more than 1 million square feet of development on 17 acres owned by the city along 83rd Avenue south of Bell Road. In October 2019, the city released a request for proposals seeking a master developer for the site. American Life was named the successful respondent in March.
The project will be in four phases. The first is design of the master plan and relocation of a well on the property. The second phase will feature construction of some class A office, parking, retail and dining. The third phase is construction of the hotel, residential, retail, dining and entertainment. The fourth phase is construction of more class A office, parking and residential.