A division of The Empire Group of Cos. just sold a luxury apartment community it built in downtown Phoenix, as the Scottsdale developer gears up to begin construction on what will become Arizona’s tallest tower a few blocks away.
New York Life Real Estate Investors paid $125.5 million in cash to Aspirant Development for The Stewart Apartments, 800 N. Central Ave., Phoenix, which Empire Group built in 2018, according to Tempe-based Vizzda LLC real estate database.
The 19-story building totaling 312 units sold for $402,243.59 per unit, according to Vizzda.
The property was over 95% occupied when it sold, said Randy Grudzinski, partner and head of capital markets for Empire Group.
Rental rates were up to $2.80 a square foot, which portends well for the success of its next luxury apartment tower being planned nearby.
Called The Astra Phoenix, the 47-story tower will be the tallest tower in Arizona, as was first reported by Business Journal in August 2019, and will cost about $450 million to develop, Grudzinski said.
It will be 535 feet tall. Currently, Chase Tower at the southeast corner of Central Avenue and Van Buren Street is the tallest building in the state, at 483 feet.
The new project will be built at 333 N. 2nd Ave., a few blocks away from The Stewart, which sits at Central Avenue and McKinley Street.
Projected opening in 2024
Grudzinski expects The Astra Phoenix to command well over $3 a square foot in rents by the time it opens in late 2024. The entire project is expected to be completed in 2025.
Plans call for breaking ground toward the end of the first half of 2022, he said.
“We have several debt term sheets,” he said. “We are just initializing our equity group. We want to get done with that by the end of the year so we can get started with shovels in the ground by the end of the first half of next year.”
The 1.47-acre site sits within an Opportunity Zone, providing certain tax benefits to investors.
The project will include 400 class A-plus apartment units, as well as a 254-key full-service luxury boutique hotel in what will be the north tower. The south tower will include 200,000 square feet of a large floorplate office and 295 units of co-living space, made popular by Society Phoenix, a 330-room apartment community a few blocks away at the southwest corner of Second Avenue and Van Buren Street.
The ground level of both towers contain 18,000 square feet of retail and restaurant space, he said.
The architect on the tower project is Solomon Cordwell Buenz. No general contractor has been named yet.
Construction of this new project comes at a time when there are 32,693 apartment units currently under construction in metro Phoenix, according to Colliers International‘s second quarter multifamily research and forecast report.
This marks the 29th consecutive quarter where the number of units under construction was above 10,000, according to the report, which says 2021 should prove to be the highest delivery of multifamily units since the 9,315 units delivered in 2009.