Q3 2014 Tucson Land Update

Q3 14 header

08 Oct Q3 2014 Tucson Land Update

Lennar Vistoso

Top: Rancho Vistoso – Maracay / Above: Rancho Vistoso – Lennar

Lot Development Continues

Land Purchases Highlight the Trend Toward Increased Lot Development

The Tucson land market feels as if it has slowed slightly in 2014. Year to date permits are slightly lower than last year and there are not as many land transactions being closed. There have been twenty-five SFR land transactions through Q3 in 2014 in the Tucson Metro area. This is 51% fewer transactions than the fifty-one deals closed through Q3 in 2013. However, the total values of these transactions were closer. The fifty-one 2013 transactions totalled $80.3 million while the 25 transactions in 2014 were valued at $60.5 million or a difference of 24.6%.

Still this is a significant change year over year. The types of transactions that are taking place indicate the direction our market is heading. By Q3 in 2013 fifteen finished lot deals had closed. There have only been two finished lot sales so far in 2014. The finished lot inventory is limited and has been picked over by the builders. Much of what remains is either out priced for its market and/or location or has non-traditional lot sizes which would require new product from a builder, which they are hesitant to introduce. Many of the remaining finished lot opportunities offer lots at prices below current development costs and could be an excellent opportunity for someone willing to look outside the conventional box.

Rolling options on finished lots have experienced a similar decline: seventeen new transactions through Q3 in 2013 vs. five in 2014. The seventeen transactions in 2013 were from eight communities. Six of the eight have built out. Two new option deals were started in 2014. The lack of existing finished lot inventory as well as developers & land owners selling raw or platted land to builders rather than developing and rolling out lots has reduced the number of option transactions.

The market is moving towards raw and platted land transactions. There were nine platted or raw land transactions in 2013 but there have already been sixteen transactions in 2014. Six of the sixteen were valued over $4 million. In all of 2013 only two transactions were valued over $4 million, one of which was Maracay’s $22.8 million purchase of 122 acres in Rancho Vistoso, which was the highest priced SFR land transaction in the Tucson area for many years (I did not include the $26 million Whetstone Ranch purchase as it is still considered outside the Tucson Metro area and was an investor “buy-and-hold” purchase vs. a builder purchase with the intent to build immediately).

The northwest is the primary location for land purchases, particularly the Oro Valley and Tangerine Corridor areas. Seven of the sixteen raw or platted transactions so far in 2014 have been in this area. Five of the nine raw or platted transactions in 2013 were here as well. Currently there are six communities in various stages of development. Lennar is finishing up its 27 lots in Rancho Vistoso, Maracay has started clearing land in Rancho Vistoso, Pulte is finishing its Casa Sevilla community near Dove Mountain, Miramonte is paving its lots in Dove Mountain, Mattamy recently started clearing land in Dove Mountain, and Toll Brothers is also developing their lots in Dove Mountain.

Land owners in the area are taking note of this activity and are working to rezone and entitle land, many of which already have builders under contract. As zoning and approvals are granted by municipalities, we should see several more land transactions in the Oro Valley/Tangerine/Twin Peaks areas.

So why is the Northwest in such demand? The reason is two fold. First, there had been pent-up demand for move up buyers in this area. Meritage first tapped into this demand with their Sky Ranch community offering quality homes at good prices. Their success started the tidal wave of lot purchases and development from other builders. Second, the higher prices of the homes help support the cost to develop lots. Development costs have only increased since the downturn and the entry level home prices are not enough to offset the fairly static lot development costs which makes developing lots in the more entry level areas extremely difficult for builders, much less developers.

With that said, the Northwest is not the only area in high demand. AF Sterling’s and Maracay’s successes in the East Tucson area has sparked an increased interest in the Northeast area as well. Pulte recently purchased the 48 lot Desert Willow community on Tanque Verde and is currently clearing land. Maracay has tied up additional raw land in the area as a replacement for its Deseo at Sabino Canyon community. AF Sterling recently purchased a 15 lot community on Bear Canyon & Snyder which should be developed this next year. Again, the higher price points that this area supports help offset development costs, making these projects feasible.

Other builders are looking to their existing land inventories and are in the process of developing them. Pulte recently started clearing land on their final phase in Sierra Morado of 173 lots. KB Home is currently finishing 68 lots in Santa Rita Ranch which they have owned for several years. However, they are also finishing their La Cima Esplendora community on Houghton & Escalante which they purchased earlier this year.

Lot development continues to be strong, but due to the time it takes for new projects to move through the municipalities for approvals, we will see overall inventories continue to dip. A platted community can take a year to develop but raw, unentitled land can take two or more years to bring to market as finished lots. Most existing communities have at least a year or more of lot inventory, but within a couple of years community counts will begin to drop faster than new ones can be built to replace them unless more communities begin the development process now.

Please contact us for additional insight and information.

New Lot chart
Miramonte - Dove Mtn

Dove Mountain – Miramonte


2014 Residential Land Transactions

2014 Q3 land sales

Market Overview

Lot Supply

The finished lot supply decreased by 114 lots in Q3 2014, reducing the total finished lot count to 3,731, the lowest amount of finished lots since we started tracking finished lots over six years ago. There were 263 new finished lots in four communities added to the market in Q3: 52 lots in Mariposa Trail (AF Sterling); 92 lots in Eagle Crest (Richmond); 56 lots in Westview Point (Richmond); and 63 lots in Mountain Vail Reserve (KB Home). During Q3 there was a total reduction of 377 finished lots.

There are currently 10 communities (1,097 lots) under construction throughout Tucson. Of these up to 220 lots in 4 communities could be completed in Q4 2014. Three of the other six communities are larger (170+ lots) and only recently started clearing properties. Lots most likely will not be delivered until mid to late 2015. These include Maracay at Rancho Vistoso (342), Mattamy at Dove Mountain (172), and Pulte at Sierra Morado (173). There are a few other smaller communities that were purchased recently but have not yet started development that could provide additional finished lots in 2015.

There are approximately 80 active SFR communities in the Tucson Metro area. Five communities were built out during the quarter, but still selling the remaining specs: 3 in the NW, 1 in the Far South and 1 in the SE submarkets. (these counts include multiple home series within a larger master community such as Sierra Morado, Madera Highlands, etc.)

Lot Supply Statistics

Q3 ’14 vs. Q3 ’13 vs. Q3 ’12

Finished Lots: 3,731 / 3,756 / 4,528
New Lots Added: 263 / 396 / 0
Total New Lots Added – prior 12 mo: 1,411 / 780 / 79
Total Quarter Permits: 534 / 534 / 573

SFR Community Statistics as of October 1, 2014:

80 active traditional SFR communities
5 communities were built-out or closed in Q3 (most still selling specs)
4 new communities were finished or opened in Q3
10 communities under construction (1,097 lots / 220 should be finished in Q4)
up to 4 new communities could be added in Q4
6 residential land transactions in Q3 2014 totaling over $24.6 million
4 platted lot communities – builder purchases
2 rolling options in 3 communities
There were no investor land transactions in Q3

Lot Ownership

During Q3 2014 investor inventory was reduced by 38 lots. This reduction was from the 38 lot option DR Horton has for Mission Antigua in SW Tucson.

Builder controlled lots: 2,717 (72.8%)
Investor controlled lots: 1,014 (27.2%)

Investor Ownership Q3 2014:

44.5% Far South submarket (292 lots)
24.6% Northwest submarket (367 lots)
23.9% Southwest submarket (178 lots)
21.1% Southeast submarket (177 lots)

Lot Reduction Chart


Permits in 2014 started out slowly. Q1 permits were 127 lower than in Q1 2013. Q2 gained ground with 52 more permits than in Q2 2013. Q3 flattened and only matched the 534 permits in Q3 2013. Year to date we are 75 permits behind 2013. However we do expect a surge in permits in Tucson in Q4 as builders take advantage of the impact fee moratorium in eligible communities. Even with the anticipated surge, total permits for 2014 will still be slightly under the 2,250 permits last year.

Pulte - Casa Sevilla

Casa Sevilla – Pulte

Pulte - Sierra Morado 2

Sierra Morado – Pulte

Pulte - Desert Willow

Desert Willow – Pulte

Our lot supply numbers represent only traditional SFR lots. We do not track multi-family, active-adult, or custom lots. Our definition of a ‘finished’ lot is one that is fully improved and a building permit can be pulled. Lots are no longer considered available once trenching has been initiated. Sales do not affect our counts – only starts. Builder lots include all lots under their control, including options.

We currently do not include platted lots in our inventory or ownership counts. However, there is an increasing amount of activity from both builders and investors in acquiring raw and entitled land in the Tucson area. We do track them and will include them in our counts as they are developed.

Investor lots include investors, developers and other non-builders.

* Permit data from Bright Future Real Estate Research, LLC


About Our Company

CHAPMAN LINDSEY Commercial Real Estate Services, L.L.C. was formed in 1991 by successful real estate professionals who wanted to better serve their clients. As a full service commercial real estate company, CHAPMAN LINDSEY offers brokerage and leasing services with an emphasis in vacant land sales. CHAPMAN LINDSEY’s three partners combine over 76 years of commercial real estate experience to provide a focus of expertise in the areas of land, investment properties, property
leasing, acquisition and deposition services, and tenant representation.

The company is an active member of the Southern Arizona CCIM (Certified Commercial Investment Member) Chapter and the Tucson Association of Realtors.

Dan Feig and Aaron Mendenhall specialize in the sale of land and developed lots to investors, developers and home builders in Pima County.


CHAPMAN LINDSEY has closed over $600 million in transactions.
CHAPMAN LINDSEY has also closed over $125 million in land alone in the past 6 years.
CHAPMAN LINDSEY has exclusively represented the following home builders with the purchase or sale of their own land/excess inventory;

Cornerstone Homes, DR Horton Homes, Ducati Homes, KB Home, Lennar Homes, LGI Homes, Maracay Homes, Meritage Homes, Milestone Homes, Miramonte Homes, Pepper-Viner Homes, Richmond American Homes, Standard Pacific Homes and TJ Bednar Homes

If you are looking to buy or sell land, please contact us to discuss how we can put our expertise to work for you.

Daniel Feig / 520-747-4000 x103


Aaron Mendenhall / 520-747-4000 x102