Commercial Real Estate

Infill development: the good, the bad and the zoning

Infill development: the good, the bad and the zoning

Infill development: the good, the bad and the zoning

infill developmentInfill development in the urban areas of Phoenix has grown steadily in the last decade. The explosive growth of high and mid-rise apartments has also unleashed further development of restaurants, retail and service-oriented business that follow apartment and condo dwellers into their new digs. Even so, vacant lots still make up a good chunk of the land mass in Phoenix. In a 2010 survey, they represented 43 percent of Phoenix’s land mass. Leaders recently looked at what was making developers hesitate.


The Bad


In the past, developers hesitated to tackle infill projects. The City of Phoenix was notoriously backed up on issuing permits. Projects that could be permitted in 5 months outside city limits might wait 18 months in Phoenix. Another concern with an infill development is that you are coming into a neighborhood that already exists. There is potential for neighbors, both commercial and residential to fight a project. It’s a problem that really doesn’t exist for developers looking to build on the outskirts of the urban areas.

Case in point: a group recently faced the power of potentially unhappy neighbors in North Central Phoenix. North Phoenix Baptist Church at Central Ave and Bethany Home Road tried to launch plans to build a senior residential facility. The plan called for restaurants and shopping on the property as well. As the church sits in the heart of a residential neighborhood, the project would have required re-zoning the property to allow for such retail activity. North Central’s powerful neighborhood association quickly mobilized and sent the developers packing.

Infill developments also carry the unknown factor. Builders are going to dig on a lot that has a history. They never know what they are going to find when they start digging. Those hidden surprises can significantly impact the start-up costs.


The good


Despite the potential challenges, infill development is taking off. With gas prices creeping up again and increasing traffic that comes with growth, people don’t want to drive as much or as far. Business owners and residents are looking for restaurants, retail and services closer to their homes.The expanding light rail has also made urban areas more attractive. On top of that, the City of Phoenix wants to encourage the development of infill projects and created a plan to woo developers. In 2015, the City passed its Reinvent PHX plan. Among other things it, cut the permitting bottle-neck, by offering 24-hour permitting, 24-hour inspections and 5-day site plan approvals. Reinvent PHX was designed to promote development where Phoenix has already made the investment in water lines and other infrastructure. Leap frogging development and building new waterlines cost the city much more than updating those services on an infill project.


The Zoning


On top of expediting the permitting and inspection process, Phoenix has created the Walkable Urban Code (WU), also part of its Reinvent PHX plan.  The WU identifies zoning districts around light rail stations. It allows for a variety of residential, retail and business developments to exist right next to each other. Think of an apartment building that has a restaurant on the ground floor, along with a yoga studio and offices next door. The idea is to promote density and activity around transit stops. The WU, unlike other codes, focuses on the way people walk or ride bikes rather than their driving patterns.

Infill development has the potential to offer a win-win to developers. With expedited permitting and inspections, advantages zoning and already existing infrastructure for utilities, a growing number of builders have checked their hesitancy at the door. The landscape of downtown and midtown Phoenix is changing day by day as new buildings rise up among the older.

If you are an investor or developer interested in purchasing property for a future infill project, consider working with our commercial experts at Landmark Title. It you have questions regarding title on a specific property contact Vicki Etherton or Marie Volm at (602) 748-2800.


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