Garden Communities' Phoenix start is a payroll bet on a 2022 basis

Garden Communities plans a 504-unit apartment community on 41 acres near Desert Ridge Marketplace in north Phoenix, land the Wilf family — owner of the Minnesota Vikings — holds and that Garden Communities bought at a state land auction in 2022 for $44 million, according to Phoenix Business Journal reporting carried by Connect CRE.

At that price across 504 units, the land cost runs about $87,000 a door, a basis that says more about the neighborhood than the metro rent curve, since the 1.2 million-square-foot Desert Ridge Marketplace, developed by Vestar Development Co., and the JW Marriott Phoenix Desert Ridge Resort and Spa sit adjacent. The coverage does not say how the Wilf family's ownership and the Garden Communities purchase fit together; on the record given, the state auctioned the land to the developer and the project goes up on Wilf-held ground.

North Phoenix is where the demand story sits: Mayo Clinic has been building there, and a $65 billion chip factory is expected to open next year, a pairing the reporting credits for the growth now sweeping the city's northern edge. Land taken down at a state auction in 2022, years ahead of the payroll the project is underwriting, is the cheapest form of conviction available to an apartment developer.

This publication has argued that non-data-center supply stays frozen behind the energization queue, and that freeze is real but bites on raw land with no employer anchor; a chip fab is not a data center, and its payroll still behaves like a rent roll. Five hundred units sited against a hospital system and a plant is the kind of project a construction lender will underwrite at a 2022 land basis, and the kind it will not underwrite at a 2026 one.

Employer adjacency has been the cleanest read in this market for a while. All-cash bidders priced a $7.27 million Rochester building off Mayo Clinic's payroll, and Sherman's $136.5 million Rochester construction loan moved a 349-unit project's debt from a standard rent roll to a hospitality credit tied to the same hiring curve.

The scale at which Garden Communities is making that bet lets the land basis do the arguing. Buying 41 acres at auction in 2022 and building on it now means the project can absorb a soft first lease-up that a sponsor paying market land in 2026 cannot, and with the 2028-29 apartment supply gap being underwritten as a financing problem, patient low-basis capital is the cohort positioned to collect.

The chip plant is expected to open next year, and whenever the 504 units deliver, the first rent roll settles whether $44 million for 41 acres was cheap or merely early.