Indianapolis-based Milhaus is making its Arizona debut with a $175 million apartment community on land recently annexed by Tempe — with plans to build or acquire 2,000 units within the next five years.
Milhaus is teaming up with Los Angeles-based development firm Banyon Residential for the 621-unit project at 1245 E. Curry Road in Tempe, with plans to break ground this month. Also on the team are architecture firm Todd & Associates, McShane Construction, Rick Engineering and Design-Art LLC interior design.
The first phase will include 311 units totaling $91 million in development costs. Units will range from 500-square-foot studios to 1,400-square-foot 4-bedroom units, with rents starting at $1,500.
Brad Vogelsmeier, vice president of development for Milhaus, said he has two projects under contract in Tempe and Phoenix and is aggressively looking at other properties.
“Our hope is to establish more of a presence over the next few years,” he said.
The first project is at the southwest corner of Miller and Curry roads on what was a county island until Tempe recently annexed that 17-acre parcel.
The goal is to annex 78 acres of that county island, said Tempe City Councilwoman Jennifer Adams, who has been working on this annexation project for the past three years.
“This is a huge win for the city of Tempe,” she said.
The county island just north of Loop 202 and east of Scottsdale Road has been an eyesore for years, Adams said.
“It’s really a blighted area,” she said. “It’s super exciting that we’re taking land that wasn’t doing anything for us nor for north Tempe residents and making it into a really beautiful project. Tempe is landlocked. To get 78 acres is a huge step in the right direction.”
Linda Fritz-Salazar, vice president and associate broker for Scottsdale-based Orion Investment Real Estate, said this is absolutely huge for Tempe, the county island and for the north side of Tempe Town Lake.
“This will be the start of a huge transformation on the north side of the lake,” Fritz-Salazar said. “I can’t even begin to tell people how exciting this is. I certainly applaud Banyon Residential for pulling together 19 separate sites totaling 17 acres within the 70-acre county island.”
While Banyon was instrumental in pulling together the assemblage, Adams and Tempe Economic Development Director Donna Kennedy were instrumental in solidifying the deal, Fritz-Salazar said.
“In my opinion, this is the start of a true makeover for north Tempe,” she said.
On March 12, Milhaus paid $19.47 million to an entity tracing to Daniel Rush for 17 light industrial buildings totaling 135,524 square feet on 16.54 acres, with $52.45 million in financing provided by UMB Bank, according to Vizzda LLC, a Tempe-based real estate database.
Robert Soules, vice president of investment sales for Commercial Properties Inc. represented the sellers in the deal.
Soules said the sellers originally opposed annexation efforts but eventually relented.
The acreage is located within a Qualified Opportunity Zone, which was established by the Tax Cuts and Jobs Acts of 2017 to spur economic development and job creation.
While Milhaus manages more than $350 million in Qualified Opportunity Zone assets nationwide, Vogelsmeier said the QOZ status of the area wasn’t the reason he pursued that parcel.
“It was more a byproduct — an added benefit,” he said. “We don’t solely pursue projects just in opportunity zones by nature of the market we’re in and neighborhoods we’re in.”
Even so, he said Milhaus has a long-term investment mindset for many of the projects he pursues.
“This opportunity zone requires you to hold the investment for a minimum of 10 years, which aligned with our long-term investment goals to begin with,” he said. “It was a natural fit for us and gives us a long-term investment hold in the market. We will continue to pursue additional opportunities to grow our portfolio.”
The apartment community will offer residents luxury amenities such as a pool deck, grill stations, outdoor spa, commercial grade fitness center, clubhouse with work and entertainment areas, and an on-site library, dog park overlooking downtown Tempe. The project is less than a quarter mile to Tempe Town Lake an a mile to Arizona State University.