North Phoenix is expected to see an explosion of development on the heels of the construction of the Taiwan Semiconductor Manufacturing Co. plant near Interstate 17 and Loop 303, with one developer preparing to build nearly 600 rental homes in two developments in the area.
Scottsdale-based Empire Group bought two parcels of land in Phoenix, one 40-acre piece at North Valley Parkway and Bronco Butte Trail and one 21-acre parcel at North Valley Parkway and Sonoran Desert Drive for $14.4 million and $9.1 million, respectively, according to real estate database Vizzda.
Both of Empire’s sites will be developed into single-family rentals, which look like one-story houses but rent like apartments.
“The whole north Phoenix area along I-17 and Loop 303 is such a dynamic growth area as a result of the chip plant,” Richard Felker, founding partner of the Empire Group, said. “Even before the chip plant, there was so much growth. It’s a really nice part of Phoenix, there’s a lot of open space, mountain views.”
Nearby jobs driving developers
The TSMC plant was “definitely a motivating factor” for seeking out sites in north Phoenix, Felker said, and developers jockeying for positions in the area have claimed most of the land that could be zoned for apartments or single-family rentals.
The plant, which is under construction now, is on schedule to be operational in 2024, TSMC officials said in June. The first phase represents a $12 billion investment from the semiconductor manufacturer. As of early June, the company had about 500 employees undergoing training in Taiwan to work in the Arizona plant, and the company expects to hire more than 2,000 people to work in the Phoenix facility by 2023.
The looming influx of employees has motivated developers to build housing and services in the area, which will soon see major population growth, including people immigrating to Arizona from Taiwan to work in the plant and with supplier companies that also have bought land for facilities nearby.
Empire’s two projects planned in the area are called the Village at Bronco Trail and the Village at Sonoran Vista.
The company has another location in north Peoria, also in close proximity to the TSMC plant, which will break ground later this year, Felker said.
Influx of projects expected to include Oregano’s and Twisted Sugar
In the area around the projects, along Sonoran Desert Drive between I-17 and the 29th Avenue alignment, a handful of developers are planning about 10 different projects that would bring apartments and amenities like shopping and restaurants, Felker said.
“The area will be pretty dynamic in terms of overall housing development,” Felker said. “The whole area of 29th Avenue around the 303 is going to be a hotbed of some retail and conventional multifamily.”
North of Empire’s sites, on 29th Avenue south of Dove Valley Road, developer Thompson Thrift bought a 30-acre parcel the company announced. The project will develop 16 acres of the land into luxury apartments and 35,000 square feet of retail and keep the remainder of the parcel as undeveloped open space as part of the Skunk Creek Wash natural preserve. Oregano’s and a gourmet cookie shop called Twisted Sugar have committed to locations in the development.
South of the Village at Bronco Trail, Blueprint Capital owns about 38 acres of land at 29th Avenue and Sonoran Desert Drive. The developer plans to build rental townhouses, apartments and four commercial buildings, including three drive-thru restaurants, according to Vizzda and city of Phoenix documents.
Rental costs growing as a concern
The Empire Group plans to begin construction on the Village at Bronco Trail in October, and open for residents in late 2024 or early 2025, Felker said. Supply chain delays and increasing construction costs have influenced timelines, as well as planning for rental costs of the units.
Right now, Felker said, rents for the single-family rental homes are comparable to a Class A apartment, and a one-bedroom unit would be around $1,795 per month while a two-bedroom unit is about $2,195 per month.
“If inflation abates and costs get under control, we might be in that price range,” Felker said of the units. “One of the biggest concerns for any developer is, at what point does it become unaffordable?”
Phoenix has been fortunate to attract high-paying jobs and grow the population, especially from areas with higher costs of living, he said, but rents and the cost of living have become a concern for developing housing.
Demand for units like Empire’s single-family rentals has been strong around the Valley, he said.
“As fast as we can get a certificate of occupancy, we are moving people in within 30 days,” he said. The group has six build-for-rent projects under construction now around the Valley and plans to break ground on five more, including the Village at Bronco Trail, this year.