Go North: Concentrated Development in Downtown Tempe
It’s no secret that the Valley has gained a massive influx of new residents in recent years, driving up rents and home values in the process, and providing developers with the opportunity to get to work to welcome them.
The same can be said for Tempe, which has gained new tenants like Amazon and thousands of new residents to add to the growing college town. Projects like 100 Mill and South Pier have taken over downtown Tempe, perhaps to accompany the new Tempe Streetcar that will soon criss-cross the neighborhood.
But South Tempe hasn’t seen the development boom of the region near Tempe Town Lake. A look at the city’s list of ongoing projects shows only a handful in South Tempe, and even fewer of them are multi-family housing projects. Tempe is expected to add more than 57,000 new residents by 2040, according to the city.
Ryan Levesque, assistant director of community development for the City of Tempe, said downtown growth is booming by design.
“A lot of the development seems to be concentrated generally around the downtown core, the Town Lake area in our Tempe urban cores, which is really generated by the light rail alignment,” he said. “It usually happens to many areas where we are also encouraging density, using alternative modes of transport to alleviate traffic problems using the city infrastructure we have invested in before, or alternative modes of transport. So many of these areas generally generate around the downtown and light rail corridor areas.
Levesque said his department sees up to 150 permit applications per week in Tempe, which is the highest ever. Resident renovations are the main driver at the moment, he said, but there is no shortage of new projects underway in the city.
Levesque pointed to several key development sites in South Tempe, such as the Emerald Center mall and the upcoming Electric Pickle entertainment center, as well as several multi-family properties.
But he said the lack of major projects in South Tempe, seen in downtown or North Tempe, often comes down to zoning.
“A lot of south Tempe is single-family residential zoning, compared to the zoning we have downtown, which is very dense and purposely done that way,” he said, adding that the requirements in Rezoning matters take time and a lot of public hearings, as well as City Council approval.
On your mind
Whatever the region, Charlie Von Arentschildt, vice president of CBRE, a commercial real estate brokerage, said Tempe is one of the easiest towns in the Valley to get development approval for out-of-state clients.
“Tempe is currently one of the best submarkets in the country,” he said. “From a data perspective, this is the strongest submarket from a vacancy perspective and has outperformed proportional coverage in terms of absorption, new transactions and new tenants. in Tempe is really interesting because there have been so many success stories and so many success stories that when developers are looking for sites, Tempe comes to mind.
Tenant demand is also high, Von Arentschildt said, adding that the city had doubled from a 5 million square foot market in 2011 to $10 million now.
His clients prefer to move downtown because of all the amenities it offers, including having Arizona State University as a close neighbor, as opposed to the more residential south of Tempe.
“There are great amenities downtown, ASU is there, so you have access to the workforce coming out of ASU,” Von Arentschildt said. “I’ve heard tenants say that when they reoccupy coming out of COVID, they try to make life as nice and easy as possible because the goal is to retain employees. If you can provide a shorter commute and have a wide range of new housing, housing available in downtown Tempe and south Tempe, even in the Southwest Valley where there has been strong growth in housing, employers want to be as close as possible.”
While Von Arentschildt said South Tempe isn’t completely out of place, citing commercial developments like Discovery Business Park and some small three-story buildings as examples, the lack of available sites is a hindrance.
“A site’s availability is always something to consider,” he said. “You’ve seen development there, but I think the land available and the ease and time of development is definitely a factor.
Either way, he said Tempe has established itself as a destination for developers and businesses when looking for a place to grow their business.
“You’re starting to see Tempe have such a good brand that employers don’t say they’re opening an office in Phoenix, but a Tempe office,” Von Arentschildt said.