According to Metrostudy’s survey, builders in the Tucson area started 889 homes during the third quarter, down from 1,366 starts in the same quarter a year ago.
“With new-home inventory under control, starts are likely to stay in this range for the next few quarters,” said Ben Sage, director of Metrostudy’s Arizona division.
 The Lodge on the Desert hotel is expanding to 99 guest rooms from 35 as well as adding new meeting space. All the work should be done by the end of March.Joe Pangburn photo |
“New listings coming into the market continue to be considerably fewer than last year, thus contributing to the lower listing inventory that has occurred over the last several months,” said Kimberly Clifton, president of the Tucson Association of Realtors.
If Tucson stays on its current pace it will end the year with just under 3,500 starts this year, which would be down about 38 percent from 2007 and down 68 percent from the peak of 2005.
“Tucson builders are controlling their housing inventories better than builders in other metropolitan areas across the nation,” Sage said. “Market recovery is not imminent, however, because of the weak economy and the oversupply of resale homes on the market.”
The Realtors reported the average sales price increased almost 4.2 percent in October to $226,435 from $217,397 in September. The average sales price in October 2008 was $259,557.
The median sales price for October was $180,000, down from $180,500 in September. It is down almost 14.3 percent from October 2007’s median price of $210,000.
Once each quarter, Metrostudy physically surveys every lot in every subdivision in the Tucson market, which includes Cochise County. The far south areas of Sahuarita and Green Valley continued to have the most new-home starts; 949 for the 12 months ending in September. The next most active areas were the southeast regions of Vail and Corona de Tucson at 556 starts and the northwest side with 514 starts. The starts on the southeast side were down 56 compared with a year ago and the northwest side was down 36 percent from the previous 12-month period.
Land development activity has slowed substantially in the past 12 months. Builders and developers delivered 2,607 new lots to the market while absorbing 2,619 lots. The number of vacant developed lots in inventory has held steady at 14,821, representing a 51-month supply, well above the equilibrium level of 15 to 20 months, Sage said.
“Not only is there an oversupply of vacant developed lots, there also is a large number of future lots,” Sage said.
There are 21,473 platted future lots in the market, with development activity started on 5,294 of them.
“Much of the planned development has been put on hold, as the cost to develop new lots typically exceeds the current retail price of finished lots,” Sage said.
Despite keeping new home inventory in check, Sage still believes complete recovery is a way off yet.
“The financial crisis has created an environment of uncertainty for the Tucson housing market. The local housing industry is unlikely to recover until the mortgage industry stabilizes and the job market improves,” Sage said.
Hotel is expanding to triple its size
New is blending with old for a three-acre expansion for the historic Lodge on the Desert, 306 N. Alvernon Way.
The hotel, originally opened in 1936, is in the process of nearly tripling its size from 35 guest rooms to 99 and taking its meeting space from 2,500 to 6,900 square feet.
Construction began roughly a year ago and the first phases of the work will be complete starting next month including a new entry to the check-in hacienda, new lobby with library, a new pool and new meeting facilities.
“We really wanted the new buildings to look and feel like they go together,” said Jacque Traweek, the general manager. “They made sure there were imperfections on the peaks, they made sure the tiles placed on the buildings were either scratched, cracked or broken before going up. This building is nearly 70 years old, this one is six months old, yet they look like they go together.”
The buildings for the new rooms are called villages. Each village is two stories with multiple rooms and a balcony on second floor for guests to enjoy.
Traweek said Lodge on the Desert is home to the second oldest swimming pool in Tucson. Unfortunately, that piece of history will have to be demolished as part of the renovations.
“It has been leaking for 25 years now,” Traweek said.
As part of the renovations, they will sink the pool and in its place, they will create a large grass lawn.
Things will look different from the street too. Lodge on the Desert has received permission to erect 12 foot walls along North Alvernon Way and to install a turn lane into the property.
“Guests will turn into the property and be greeted by a large fountain in the middle of a roundabout,” Traweek said.
The rooms on the southwest side of the property will be converted into a day spa for guests.
Traweek said plans to fill the property have been in place for nearly 10 years. The renovations are scheduled to be complete by the end of March next year. They will phase in the units and buildings as they are completed moving north on the property.
Worth noting
• Circle K Stores Inc. signed a ground lease for 60,000 square feet of land at the southeast corner of Sixth Avenue and Interstate 10 and plans to construct a Circle K store on the site. The landlord is DeConcini Family Trust. Brenna Lacey and Debbie Heslop of Volk Company Commercial Real Estate handled the transaction.
• Rue21 Inc., Warrendale, Pa., signed a lease for 4,859 square feet of shop space at the Foothills Mall, 7395-7555 N. La Cholla Blvd. from FMP Kimco Foothills LLC, Phoenix. Scott Jensen of Feldman Mall Properties represented the landlord. Jesse Peron and Pete Villaescusa of CB Richard Ellis represented the tenant. The store is a specialty retail store, offering fashions for teens. It operates 11 stores in Arizona. The Foothills Mall store opened Nov. 6, rue21’s first location in Tucson.
• Statistical Research Incorporated leased 3,168 square feet of office space at 2500 N. Pantano Road from North Pantano Associates LLC. Randee Turner of Bourn Partners LLC represented the landlord and Barbara McGill of Long Realty Co. represented the tenant.
• Sweet 16 Self-Serve Frozen Yogurt leased 1,500 square feet of space at 6860 E. Sunrise Drive in Ventana Village from Westwood Financial Corp. of Los Angeles, Calif. Shannon Murphy and Brandon Rodgers of CB Richard Ellis represented the landlord. The store is scheduled to open in December.
Submit items for this column to Joe Pangburn at jpangburn@azbiz.com. Real Estate & Construction appears weekly.
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