In 2006, two Canadian companies touted plans to build a condominium project in downtown Phoenix that would feature three 40-story buildings, rivaling Chase Tower in height.

Two years later, the lots where Copper Pointe was meant to stand are empty. Signs on one of the lots at Fillmore Street and Third Avenue, which have been there since the land was purchased in 2005, still read "Copper Pointe Condominiums: Coming Soon!"
A development might be coming soon, but it won't be Copper Pointe.

Pointe of View Developments of Calgary, Alberta, and Belleview Communities of Toronto (U.S. base in Scottsdale) quietly have scaled back their project to two six-story buildings at 333 N. Third Ave. They've also changed the name to Downtown's Newest Address Condominiums -- DNA for short.

The sales office is set to open in October, and the developers hope to break ground in spring 2009.
John Chan, director of the city of Phoenix's Downtown Development Office, said it's one of several large projects that have been either scaled back or put on hold.

"A few years ago, they weren't the only ones talking about mid- and high-rise development," Chan said. "It's a function of the market today."

He said a saturation of recently built but unfilled condo developments, mixed with market uncertainty and financing difficulties, are making it tough for big residential projects to get off the ground.

Cal DeSouza, a managing partner of Belleview Communities with his brother, Frank, said they decided to adjust the Copper Pointe project at the beginning of summer 2007, when it became apparent that it might be difficult to acquire the jumbo loans needed to finance the large-scale project.

"We came to a decision that was part crystal ball, part reality," DeSouza said. "We saw that the market was changing, that the instruments of financing were changing. We went back to the drawing board and said, 'What should we do?'"

DeSouza and his partners decided to see "what the market wanted," and determined that reducing the size and number of buildings in the development would create a lower risk for them in an unstable market. It also would create more affordable housing for people wanting to live downtown by reducing the price from about $450 to $300 per square foot.

The reworked 129-unit project will offer one- and two-bedroom floorplans, ranging in price from about $199,000 to the high $300,000s.

The developers hope to bring in retail on the lower level, including a wine bar and delicatessen.
DeSouza hopes to secure 50 percent to 60 percent occupancy by the time the buildings break ground. Although the project calls for two buildings now, he said presales will determine whether they will be built simultaneously or in phases.

He said the Copper Pointe sign on the lot will come down sometime before sales start in October.

Steve Koehler, sales director for DNA, said interest has been good so far. He attributes that to the "realistic" pricing scheme.

Pointe of View and Belleview Communities initially were seeking financial assistance from the city through tax deferments or off-site improvements. DeSouza said they are not receiving any government incentives for the project.

However, Belleview Communities has entered into a land-lease agreement with the city to develop a 130-room loft hotel at Central Avenue and Adams Street, separate from the DNA development. Belleview and Pointe of View also are considering options for one of the parcels at Fillmore and Third Avenue.
Pointe of View also is working on a 41-story condo project in downtown San Diego.

Chan said despite the scaled-back Copper Pointe project, he sees strong demand for high-rise projects in the long term.

Debra Stark, planning director for the city of Phoenix, said the city is working on amending its zoning ordinances to simplify the development process and keep projects on a timeline.

She concedes that the city's current zoning process was not developed with an urban lifestyle in mind.
"The best we can do is look at our regulations and try to make them more user-friendly," she said.

David Wallach, president of W Developments LLC, is behind several Phoenix high-rise projects, including The Summit at Copper Square, which was recently completed, and Omega, which is set to break ground this year.

He said he is happy with the 65 percent closing rate at the Summit and while the Omega project will not change in size from his original proposal, the residential portion likely will be scaled back to make more room for a hotel.

He said it's easy for naysayers to target Copper Pointe as an example of the difficulty in getting high-rise projects to come to fruition in this market, but he added that the morphing of the project into something new is good for downtown.

"I don't think this is a death knell for downtown Phoenix," Wallach said. "The developer is being smart about what's going on. To have a good downtown, you need to have the density of people who can afford $500 a foot, and you need to have the density of people who can afford $300 a foot. You have to satisfy all of those segments."

DeSouza said despite the obstacles he has faced trying to develop the condos, he is optimistic about the future -- particularly with light rail, the new convention center and Arizona State University's downtown campus.

"We're going to see a really big difference," he said.


Author: Yvonne Zusel
Source: The Business Journal