Property: 29-acre development site
Buyer: Sunstone Two Tree and Capital Square
Seller: Withheld
Property type: Single-family homes and townhomes
Units: 320
Location: Glendale, Arizona
Purchase price: Withheld
When Scott Maddux put a 29-acre lot at the southeast corner of Northern Parkway and N. Sarival Avenue in Glendale, Arizona, under contract in 2021, he thought he was paying a fair price.
As time passed and the price of dirt rose, Maddux felt even better about the deal. “Values continued to move materially higher over the balance of 2021 and into 2022,” Maddux, the president of Sunstone Two Tree, a rental housing developer and owner based in Westlake Village, California, told Multifamily Dive. “So I think, six to 12 months after we put it under contract, we felt like our land basis was extremely below market.”
Then, borrowing costs began increasing in 2022 as interest rates increased and land costs fell. But Sunstone Two Tree bought the land long enough ago that the numbers still made sense.
“Because our closing period was two-and-a-half years, by the time we closed on the land, we were at a price still below market,” Maddux told Multifamily Dive.
Sunstone Two Tree closed on the land in late September and is slated to begin construction this month on a 320-unit rental community that will include 102 detached single-family homes averaging 1,655 square feet and 218 townhomes averaging 1,257 square feet. The two-story homes will have direct garage access, a private yard and a number of community amenities, including a pool, spa, fitness center, parks, BBQs, gated entry and sports courts.
“We're really excited about this opportunity,” Maddux said. “The rents in this pocket of Phoenix are strong. And with all of the industrial development happening around us, there are a lot of tailwinds that are driving demand for our project that we think will help us.”
Other projects on the way
The Northern Parkway project isn’t the only development Sunstone Two Tree is working on. The company also received approvals to build two other projects in the Phoenix area. All three projects will offer access to downtown Phoenix, Sky Harbor Airport, freeways, shopping centers, schools and employers.
On a 7.64-acre lot located at the southeast corner of N. 99th Avenue and W. Van Buren Street in Tolleson, Arizona, Sunstone Two Tree will develop 143 three-bedroom, two-story townhomes which will average 1,350 square feet. Each one will have a two-car garage and a private backyard.
Sunstone Two Tree also received approvals for a BTR community on a 5.64-acre piece of land on the northwest corner of S. 91st Ave and W. Lower Buckeye Road in Phoenix. The developer plans 88 three-bedroom townhomes with attached, two-car garages and private backyards at the property.
Amenities at both projects will include pickleball courts, parks, playgrounds, a dog run, a clubhouse, a pool, a fitness center and tot lots.
With the new communities, Sunstone Two Tree now has nine different BTR communities, totaling 1,500 homes. It will continue looking for land for new projects, but Maddux also knows that land costs can be stubborn, despite what’s happening in the economy and with interest rates.
“Land prices tend to be pretty sticky and move slowly because land sellers are generally generational in nature,” he said.
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