Slack Demand

One developer's experience doesn't bode well for downtown housing projects

As a growing number of skeptics predict that several ballyhooed downtown housing projects will never be built, proponents are simultaneously anticipating a summer surge in activity. But one developer who has actually implemented a housing complex in the area offers a cautionary note to those building condominiums downtown.

Steve Fenton last year converted a former private school on South Sixth Avenue into the Academy Lofts, planning to have 25 rental and 11 condo units. But only six of the owner-occupied homes sold, so the remainder were rented.

"From what has been our experience," Fenton observes, "we haven't been able to sell the last five (condominium) units."

Despite that, three developers promise to be under construction within a few months with hundreds of new downtown condo units, believing a market for their projects still exists. They are among the numerous builders who a year ago were supposedly leading a downtown housing renaissance (see "Residential Revolution," March 23, 2006) but are now facing recurring questions about their intentions.

"We're proceeding at full blast and expect to be in the ground in late May or early June," declares Oscar Turner of Bourn Partners, developers of The Post on Congress Street near Scott Avenue.

The long-promised six-story project will have about 50 units along with ground-floor retail, and while Turner won't say what the condos will sell for, he does indicate a studio will be available in the low $200,000s.

Acknowledging it is more difficult to finance a condominium project today than it was three years ago, Turner also says, "I hope that once our project is seen, it will light a fire under more people. The Post will probably help those behind us."

Not waiting for that, James LeBeau says that the partnership he belongs to is moving ahead with 44 E. Broadway, a 30-unit condominium project that will convert a former courthouse annex into residential and retail space.

"I'm bullish on the condo market," LeBeau says, "and we should be under construction within a couple of months or less."

Commenting that he doesn't understand the negativity in the community about downtown, LeBeau predicts, "A big change is coming."

Chris Walker, spokesman for a Sixth Street condominium project called Lofts at Fifth Avenue, shares that sentiment. Admitting the 126-unit project was recently for sale, Walker also says the 15- to 18-month construction effort will start this summer. "The market is still there," he insists of the desire to own a downtown condominium. "There is serious pent-up demand."

Two other developments lagging behind these apparent front-runners are Presidio Terrace near the Tucson Water building, and a condominium/brewery project next to the railroad tracks where they cross Stone Avenue.

While initially hoping to be underway soon with her 90- to 120-unit project, Peggy Noonan of Presidio Terrace now says that won't happen until January.

"We're moving ahead with our plans," Noonan says, "and have 30 reservations for units. ... I'm incredibly encouraged."

Emphasizing that her units will be high-end, sustainable condominiums, Noonan adds their cost will exceed $400 a square foot. Those factors, she believes, will differentiate her project from others.

Still working on plans for the 140- to 150-unit condo/brewery project next to the tracks, architect Raul Reyes of Town West Design Development says there isn't a construction schedule for it yet.

An even more uncertain fate seems to have befallen two other downtown condo proposals.

David Ollanik wants to build One West, a 100- to 110-unit project at Speedway Boulevard and Stone Avenue, but needs to buy land from the city. With some municipal officials and neighbors complaining about the lack of affordably priced units within the building, Ollanik says he's still waiting to get onto the City Council's agenda.

Another proposal with question marks floating around it is the conversion of the former Santa Rita Hotel into condos. A year ago this project was slated for 148 units, but telephone calls seeking an update weren't returned. The owners recently did tell the Tucson Citizen they planned to transform the building into a 66-room boutique hotel with an additional 48 condos.

But while those two proposals may have uncertain futures, projects to add more rental units downtown still seem to be moving forward.

On Congress Street, rehabilitation work is presently underway on the second-story apartments surrounding the Rialto Theatre.

Across the street at the former Martin Luther King building, conversion of the public housing apartments into rental units should get going this summer, according to Ron Schwabe of Peach Properties. Once promoted as a condominium project, this redo will now result in 96 apartments along with construction of new retail space.

Also within the next several months, the city of Tucson plans to begin building a 300-space underground parking garage just to the north of the MLK structure. Once it's completed, Jack Siry of the Community Services Department says 68 units of public housing will be built on top, and Schwabe indicates another 80 units of rental housing will also be added.

But new condominium and rental units aren't the only housing in downtown's future. Street work and other construction activity has begun on a 250-unit subdivision along West Congress Street, while single-family developments on 22nd Street have filled in completely over the past year. To keep this trend going, the city is looking to dispose of more downtown property it owns.

Thus, even after the national housing boom went bust and the local downtown condominium market seems to have dissolved, the central city still has it residential supporters.

"Downtown is a great place to be," Turner exclaims about the area's residential prospects. "I'm psyched."

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