Is the era of the great American mansion over? For years the size of houses has been growing but now Tucson is among several places in the United States where builders are introducing smaller homes.

The average U.S. home for sale grew 60 percent from 1970 to 2004 - to 2,330 square feet from 1,400 square feet, according to the National Association of Homebuilders.

Print this story Email this story Post a Comment New KB Home unit going up in San Lorenzo at Rancho Valencia near Valencia and South Swan roads.Joe Pangburn photo ADVERTISEMENT

For a variety of reasons, there is growing demand for smaller homes. In Tucson KB Home is responding to that demand with a 1,004-square-foot home priced from $132,000 to $157,000, according to Mark Rodocker, division president of KB Home.

"The average square footage we had with our older plans was 2,200 square feet," he said. "The average is now 1,950 square feet."

Rodocker said KB Home is offering floor plans ranging from 1,004 to 1,608 square feet at its San Lorenzo at Rancho Valencia development near Valencia and South Swan roads. It is also offering homes starting at 1,378 square feet at Presidio del Cielo in Sahuarita.

"It comes down to being able to offer functionality for the homeowner — or for those looking to downsize — and still provide an enjoyable and livable home," he said. "We’re focusing on the first-time homebuyer, providing smaller floor plans to expand offerings and creating more affordable homes that are still built to order where the customer can come in and personalize his home.

There’s a growing market for smaller homes among singles, divorcees, newly married couples and empty nesters who want to downsize," Rodocker said.

Rising energy costs and growing environmental concerns are also creating new housing trends that KB Home is trying to fill, Rodocker said. For example, KB Home gives buyers choices that can reduce energy and water use. While all homes now include four-star energy appliances, buyers also can select products that can reduce water use by 30 percent.

Economic recovery will follow residential

It’s all about residential real estate in Tucson and the economy won’t pick up until the housing market recovers. That’s the prediction of George H. Amos III, president and chief executive of Tucson Realty & Trust Co.

Residential housing drives the Tucson economy and when housing hurts, just about everything else is affected, Amos said, adding that the limping housing market here is beginning to affect commercial real estate markets as well.

"Our feeling is that if markets can stabilize and oil comes down, things should start getting better by mid 2009 — it may be 2010 before things gain momentum," Amos said. "But recovery will occur only if housing takes off in March of next year. If not, recovery probably won’t begin until 2010."

Amos said tightening in the credit market could have a devastating effect on Tucson. He predicted loan terms to developers from banks here will be "a lot harder" and the region won’t see as much development because lenders won’t be lending.

As developers’ notes come due, Amos said, some banks won’t renew loans and there will be a "domino effect." Smaller banks have been making the majority of developer loans here, he said, and they aren’t making those loans now.

Want a ranch? Head for Mexico

If you’re interested in investing in ranch land, you might want to focus south of the border. Richard Johnson, ranch, farm and land specialist with Tucson Realty & Trust, says Mexican ranches are appealing to investors for two reasons: The Mexican labor market that has dried up in Arizona has largely returned to Mexico and, more importantly, it’s still possible to make money ranching in Mexico.

Yearling cattle at 650 pounds bring about the same price at market in Sonora as they do in Arizona, $500 to $550. But it costs substantially less to raise that yearling in Sonora - $25 to $50 compared to $150 to $300 in Arizona.

"Operating costs down there are 10 percent of what they are in the United States," Johnson said. And it’s similar when it comes to the price of buying ranch land. He said ranch land near Sonoita in Arizona is priced at about $3,700 per acre but a similar ranch in Sonora is $450 per acre.

Still though, Johnson said there are plenty of investors who say they have money to buy land; they’re just waiting for prices to bottom.

Barker Morrissey hired for TI’s Williams Centre site

Barker Morrissey Contracting has been hired to build and renovate space in Williams Centre for Texas Instruments relocation from its current facilities at 6730 S. Tucson Blvd. near Tucson International Airport.

The project involves renovating 75,000 square feet at 5401 Williams Court with completion expected fourth quarter 2008, and building a new 25,000-square-foot office building at 5411 Williams Court, with completion expected in second quarter 2009. The renovated space, owned by Bourn Partners, previously housed AOL.

Bob Malin of Barker Morrissey is the project manager.

Toll Brothers rolls out Madera Highlands project

Toll Brothers, which builds luxury homes, will launch its second new home development in the region, Madera Highlands, in Sahuarita.

Two model homes - the Cantabria and Vicanto - are open in the gated neighborhood that will be made up of 60 semi-custom homes on estate-sized sites. Three other floor plans are available ranging from 2,925 square feet to more than 4,000 square feet. Prices start in the low $600,000s.    

Home Depot gives $10,000 to Habitat for Humanity

The Home Depot Foundation has given $10,000 in gift cards to Habitat for Humanity Tucson to support the organization’s 7th Annual Building Freedom Day Sept. 11. On that day 350 volunteers will begin construction on five new homes in the Corazon Del Pueblo development where nine Habitat homes have already been completed and two are in progress. Corazon Del Pueblo is on 70 acres one mile east of the Interstate 10 and Valencia Road interchange near Littletown. 

Home Depot’s grant will allow Habitat to purchase building materials, tools and other equipment. 

Worth Noting

• Krissna LLC purchased the Baymont Inn, 90 W. Esperanza Blvd., Green Valley, for $4.2 million from FPB buildings LLC. Bob Jones of Re/Max All Executives Commercial Division represented the seller while the division’s John Hamner represented the buyer.

• Michael R. Wattis Inc. purchased 3.56 acres at 6950 E. Golf Links Road, near Kolb Road, from WestStar Loan Servicing Corporation for just over $1.04 million. The buyer plans to build a medical facility on the land. Brenna Lacey of Volk Company Commercial Real Estate represented the seller.

• Ina Freedom Self Storage LLC has purchased 2.46 acres on the north side of Ina Road, east of I-10, for $575,000. Brenna Lacey and Dave Hammack of Volk Company Commercial Real Estate represented the seller, Tucson Electric Power Company.

• Duerksen Properties LLC, Kathleen M. Duerksen, has purchased an 1,898-square-foot newly constructed office condominium at the Grant Road Professional Plaza, 5979 E. Grant Road, Suite 115, for $364,444. Dr. Duerksen plans to open a medical office specializing in facial plastic surgery in October 2009, after interior construction is complete. Nancy McClure and Bruce A. Suppes of CB Richard Ellis represented the buyer. Doug Marsh of Oxford Properties represented the seller, DAZ5-Grant Road LLC.

• Modular Space Corporation, Berwyn, Penn., has leased 4.5 acres at 7910 S. Kolb Road from Tucson Park & Sell Inc. The company provides mobile offices, site trailers, portable storage containers and modular buildings and has leased the property for temporary storage of its modular trailers. Tim Minnehan of CB Richard Ellis represented the tenant. Peter Douglas of Picor Commercial Real Estate Services represented the landlord.

• Presagis USA Inc. has subleased 12,900 square feet of office space at 5151 E. Broadway from Goldblatt Systems LLC, a developer of software for the healthcare industry, which is relocating from another suite in the same building to expand its operation. Bob Davis, Bill DiVito and Howard Kong of CB Richard Ellis represented the subtenant in structuring its 23-month lease. Buzz Isaacson of Buzz Isaacson Realty represented the sublessor.

• Desert Sports & Fitness Express, has signed a six-year lease for 10,843 square feet at Manzanita Plaza, 2900-3050 W. Valencia Road, to open a third Tucson fitness center in September. Vincent Mast of CB Richard Ellis represented the tenant. Terry Dahlstrom of Volk Company represented the landlord, Manzanita Holdings Inc.

• L-3 Services Inc., a division of New York-based L-3 Communications, signed a short-term lease for a 5,158-square-foot distribution building, plus a 120,000-square-foot yard at 2800 E. Airport Drive from the Tucson Airport Authority. Brandon Rodgers of CB Richard Ellis Tucson and Randy Brown of CB Richard Ellis’ Los Angeles office, represented the tenant.

• CIGNA Healthcare signed a five-year lease for 3,886 square feet of office space from 4400 Tower LLC at Broadway Tower, 4400 E. Broadway. CIGNA plans to relocate its administrative, sales and marketing operations to the new location in September. Brandon Rodgers of CB Richard Ellis represented the tenant while Mike Gross of Tucson Realty & Trust represented the landlord.

• The Party Place leased 3,864 square feet of retail space from Rancho Sahuarita Commercial Ventures LLC at the Rancho Sahuarita Marketplace at the northeast corner of Interstate 19 and Senorita Road. Aaron LaPrise and Brian Harpel of the Harpel Company Inc. represented the landlord.

• Fleet Feet Sports Tucson signed a five-year lease for 3,648 square feet at Tanque Verde Place, a 14,000-square-foot retail strip center at 7301 E. Tanque Verde Road, from Tanque Verde Place LLC. Nancy McClure of CB Richard Ellis represented the landlord. Fleet Feet Sports. which sells athletic footwear and apparel, is relocating from the La Plaza Shoppes, 6530-6548 E. Tanque Verde Road.

• Dr. Herbert Jalowski, a family practice physician, signed a five-year lease for 3,583 square feet at Orange Grove Medical Clinic, 1925 W. Orange Grove Road, from Healthcare Realty Trust of Nashville, Tenn. Jalowski plans to open his new office there in August. David A. Volk and Bruce A. Suppes of CB Richard Ellis represented the tenant. Bonnie Aaronson of Oxford Realty Advisors represented the landlord.

• EOD Technology Inc. leased 3,400 square feet from Innovations Holdings Inc. at 2700 E. Bilby, Suite A. Patrick Welchert of Tucson Realty & Trust Co. represented the landlord.

• Tango Down Corporation leased a 3,000-square-foot building at 4720 N. La Cholla Blvd. from Northwest Plaza RP-II LLC. Patrick Welchert of Tucson Realty & Trust Co. represented the landlord. Patrick Teske of Tierra Antigua Realty represented the tenant.

• Casa Del Luz Hospice leased 2,400 square feet at Entrada de Oro, 7999 N. Oracle Road, Oro Valley, from Weingarten Realty Investors. The space will be used for administrative offices. Tim Bentley of Bourn Partners LLC represented both parties.

• VAWD Applied Science & Technology Corporation leased 2,100 square feet of industrial space at 1607 S. Pantano Road from Buxton-Smith LTD. Ron Zimmerman of Bourn Partners LLC represented both the landlord and tenant.

• H2K Inc., a franchisee of Huntington Learning Centers of Oradell, N.J., has signed a five-year lease for 2,000 square feet at the Mercado at Cañada Hills, a new 71,000-square-foot community retail center at 10510-10560 N. La Cañada Drive developed by Whirlygig Properties LLC, from La Cañada Land Holdings LLC. The franchisee, a tutoring service provider, will open in December. Pete Villaescusa, Jesse Peron and Shannon Murphy of CB Richard Ellis represented the landlord. Jose Rincon of Long Realty represented the tenant.

• Sertino’s Coffee & Ice Cream leased 1,879 square feet within Rancho Sahuarita Marketplace at the northeast corner of  Interstate 19 and Sahuarita Road from Rancho Sahuarita Commercial Ventures LLC.  Aaron LaPrise and Brian Harpel of the Harpel Company represented the landlord.

• COMDA/International Calendar West Inc., Toronto, Ontario, signed a three-year lease for 1,750 square feet at Village on Broadway, 2900 E. Broadway, from H.L.F. Properties Inc. Nancy McClure of CB Richard Ellis represented the landlord. Bruce A. Suppes of CB Richard Ellis represented the tenant. The marketer of promotional items is moving from its current location at 55 N. Sixth Ave.

• Sally Beauty Supply LLC leased 1,560 square feet of space from Evergreen-Interstate 19 & Nogales LLC at Madera Marketplace at the northeast corner of I-19 and Nogales Highway in Sahuarita. Dave Hammack and Brenna Lacey of Volk Company Commercial Real Estate represented the landlord.

• Tarrik Installation, which produces kitchen millwork, signed a one-year lease for a 1,500-square-foot warehouse at 3810 E. 44^th St. from Richard Rodgers Investments Inc. Brandon Rodgers of CB Richard Ellis represented the landlord.

• Design & Adorn LLC, a South Carolina bead and jewelry store, signed a two-year lease for 1,250 square feet at Plaza Escondida, 7862 N. Oracle Road, Oro Valley, from HJ Tucson LLC of Newport Beach, Calif. Shannon Murphy of CB Richard Ellis represented the landlord. David Hammack of Volk Company represented the tenant.

• James M. Harkin and Mary Ann Johnson signed a five-year lease for 1,116 square feet of office space at New World Plaza, a two-story office building at 5055 E. Broadway, Suite D201, from Pacific Income Properties. Harkin and Johnson plan to relocate their Ameriprise Financial Services office from 5151 E. Broadway this month. David A. Volk of CB Richard Ellis represented the tenants while Steve Schulyer of Partners Management represented the landlord.

• Landmark Insurance Associates Inc. has signed a three-year lease for 1,103 square feet of office space at Broadway Proper, a three-building, multi-tenant office complex at 7650-7670 E. Broadway, from the Arizona State Retirement System. Bruce A. Suppes of CB Richard Ellis represented the landlord. Landmark Insurance Associates plans to relocate from 310 S. Williams Blvd.

• Sonoran Engineers LLC, a new civil engineering firm, signed a two-year lease for 830 square feet of office space from M. Karam & Sons Mercantile Inc. of Nogales at Giaconda Office Plaza, 231-235 W. Giaconda Way. Bruce A. Suppes of CB Richard Ellis represented the tenant. Mark Biery of Chapman Lindsey Commercial Real Estate Services represented the landlord.

• Angelina Rodriguez signed a one-year lease for 710 square feet at El Sol Shopping Center, a 9,918-square-foot retail strip center at 2934 E. 22^nd St., from Rich Rodgers Investments Inc. Brandon Rodgers of CB Richard Ellis represented the landlord. The tenant plans to open a furniture store there in August.

• David Preston and Glen Gunsolley, both CPAs, have leased 500 square feet at 4626 E. Fort Lowell from McMahon Properties LLC. Jean Barclay of Synergy Commercial Real Estate Inc. represented the tenants.

• VPSI Inc. of Troy, Mich., leased 430 square feet at El Dorado Square, 1200 N. El Dorado Place. The national vanpool service provider has partnered with the Pima Association of Governments (PAG) for 14 vans serving Pima County commuters. Brandon Rodgers of CB Richard Ellis represented the tenant. Denise Lau of Shenkatow Realty Advisors represented the landlord, El Dorado Ventures LLC.

• Ganga, a discount clothing company, is establishing two new area stores at 4192 E. 22^nd St. in Randolph Plaza, and 2422 S. Sixth Ave. Maly Construction, a Tucson commercial construction company owned by Marigale Maly, renovated the properties for occupancy on behalf of Arizona Partners Real Estate Investments.

Submit items for this feature to reporter Ed Egger at eegger@azbiz.com. Real Estate & Construction appears weekly.