Bumps on the road to growth - The Explorer: Pima Pinal

Bumps on the road to growth

Lagging economy tips Marana housing and retail dominos

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Posted: Tuesday, May 6, 2008 11:00 pm | Updated: 8:04 am, Thu Mar 24, 2011.

On the west side of the Tucson Mountains stand 2,500 residential lots, surrounded by freshly paved roads, street signs and decorative walls.

Nowhere else in Marana can one see the effects of a lagging economy so starkly than at Saguaro Springs.

Just off Twin Peaks Road, the only three houses there are model homes, fenced off and tucked away among empty lots and signs that say “Road Closed.”

The massive complex ceased development earlier this year due to conflicts between the developers. Late last month, one of the developers, Empire Land, declared bankruptcy in a California federal court.  

Saguaro Springs is not the only Marana development to halt.

Last September, freshly leveled dirt and signs touting a new shopping center graced the corner of Tangerine Farms and Lon Adams Road.

These days, the signs and construction vehicles are gone and weeds fill the land where Newquist Commercial Properties plans to build Gladden Farms Marketplace.

Brian Harpel, president of the Harpel Company, which will lease the shops there, points to two factors that pushed the development’s opening to fall 2009.

“We’ve seen a housing slowdown. We’ve also faced an issue of the FEMA floodplain,” Harpel said.

Last year, FEMA designated a large portion of Marana as floodplain, which would raise insurance costs. Soon after the designation, town officials commissioned a drainage study so they could prove otherwise.

Despite the delay, many of the tenants slated for Gladden Farms, like Fry’s Marketplace, Wells Fargo Bank and McDonald’s, still plan to build there once the economy improves and construction restarts.

“At this point, we haven’t really seen any fallout,” Harpel said.

Slowing residential and commercial development takes a heavy toll on the town’s coffers. The town’s projected 35 percent decrease in permit and license fees likely will equate to $1.7 million in lost revenue, according to official estimates.

Marana officials had hoped 850 houses would begin construction this year. That figure likely will be much lower — about 307 houses — by the end of the fiscal year on June 30.

Town officials are slightly more optimistic about 2008-09, planning for 425 new houses in Marana.

A couple of years ago, however, the town talked about new housing in terms of thousands.

During the 2005 housing boom, Marana issued 1,832 permits for single-family residences. In 2006, the number decreased to 1,218.

Still, some houses are going up in Marana.

The Solara neighborhood, near Moore and Tangerine Farms roads, will add 140 houses to the area.

An expanded Tangerine Farms Road, opening in June, will provide an easy connection from the Solara and the Gladden Farms developments to Interstate 10.

One of the bellwether measures of how well the housing market is doing is the supply of homes available for sale, according to Tucson Association of Realtor President Tom Sloyan.

Currently, the region’s housing supply stands at 10 months.

Once the market stabilizes, Sloyan explained, the inventory should come down to “five or six months.” It would become neither a buyers’ nor a sellers’ market, he added.

So far this year, sales have increased every month, with about 975 sales in April. The figures remain far below those from the same period in 2008, according to statistics from the Realtor’s Multiple Listing Service.

“My feeling is the market has probably hit bottom,” Sloyan said, saying he expects sales to pick up next spring.

Most of these sales came from houses being resold, not houses that were recently constructed, Sloyan said.

It’s the number of rooftops that typically determine which commercial developments get built.

“Retailers typically try to guess where the houses are and adjust accordingly,” said Greg Wexler, project manager of the Arizona Pavilions shopping center at Cortaro Road and Interstate 10.

The future of commercial development in Marana does not entirely hinge on Saguaro Springs. Communities that have seen building delays, like San Lucas, Gladden Farms and Red Point, all suggest that large, future commercial ventures will take longer to come to fruition. Wexler estimates that most of the developments will be pushed back three or four years.

Wexler said the advantage Arizona Pavilions has over planned developments, like Marana Spectrum and the Shops at Tangerine, is that the infrastructure to serve the area already is in place, making it easier for tenants to move in.

In a down economy, developers maneuver into defensive positions.

“The main thing is not going bankrupt,” Wexler said.

As for what retailer developers should do in the next six months?

“I would say go on vacation,” Wexler responded.

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