At the intersection of the San Tan and 101 Freeways in Chandler, AZ, is the Chandler Fashion Center. The area has boomed in the last few years- the pride of Chandler- with a large mall, surrounded by restaurants and additional shopping- it’s located in a fast growing upscale area.
The most prominent structure in the area is a massive project. It consists of a 15 story condominium tower, a 10 story hotel/condo building, and a four story parking structure- and it has languished, an unfinished skeleton with no signs of activity, for nearly two months.
According to the June 29 Arizona Republic, "The Elevation Chandler Web site features a ‘construction camera’ that still sends out updated photos every 15 minutes or so. Clicking back to early May, when work was going gangbusters, it’s clear to see the stop was sudden. On May 8, the construction crane loomed over the site. On May 9, it was gone. The only changes since have been the cars passing at the nearby intersection."
This is of particular concern, as the Republic goes on to state, "The condo craze that blew through the Southeast Valley last year seems to have cooled. Paying top dollar for walls common to a neighbor has not been the traditional home buying pattern in this market. Some real-estate market watchers will tell you that the condo market is getting flooded, that the nearly 8,000 units planned across the Valley are too many."
The same story is repeating itself in the Valley home building market. Just a few miles south of Chandler in the town of Maricopa, dozens of unfinished homes stand empty. According to a June 30 article in the TriValley Central, Turner Dunn, one of the areas smaller builders, has ceased work in it’s Fiesta and Celebration neighborhoods.
The TriValley states, "According to several angry home buyers, Turner Dunn has provided little reasoning, or recourse, for the extended construction delay. Phone calls have gone unanswered. Doors at the local sales offices have been locked since June 16. A sign posted last weekend at a Celebration model home, where landscaping is overrun with weeds and trees have fallen over, states that the offices are ‘temporarily closed’ and will reopen soon."
In the nearby community of Queen Creek, empty builder’s "spec" homes abound. In addition to the large builder inventory, there are currently 2832 listings in Queen Creek- in a community that, according to the AZ Republic only has 16,000 people. (Listings do include unincorporated areas.) Builders are having to work very hard to compete for buyers, as rising gas prices are discouraging migration to outlying areas. The potential for fallout in areas such as Maricopa and Queen Creek is great.
Of further concern with the Elevation Chandler project, according to today’s Arizona Republic, is that over $3 million in mechanics liens have been filed against it. The Republic quotes Jeff Cline, owner of the project as saying on June 17, "Neither Elevation Chandler nor the developer is bankrupt or is filing for bankruptcy. Full and complete financing is in place to complete this project."
In a June 30 email to the Republic however, Mr. Cline stated, "The financing is just in the process of being completed for the project. Upon funding, any amounts due shall be paid current, and the project shall commence site construction with the original contractor."
Difficulties withÂ both the Elevation Chandler and Turner Dunn projects do not indicate that the local housing industry is on the verge of collapse. These are only two of many builders working in the Phoenix area. However, this does seem to indicate that the days of easy profits in this market are gone. We are likely to see more fallout among the less competitive companies in the days ahead.