Q4 2016 Tucson Land Update

2016 Q4 Newsletter header

01 Jan Q4 2016 Tucson Land Update


Mtn Vail Est Len 16Q4

Top: Mountain Vail Estates – Richmond / Above: Mountain Vail Estates – Lennar

A Year of Growth in Tucson

Strong permits, house starts and land development add to an improved economic outlook

The year 2016 was a good one for the Tucson home building market and for Tucson in general. The Great Recession took its toll on Tucson and attitudes regarding the economy and future growth were often negative for many years. It seemed jobs and growth were passing us by in favor of larger markets, including Phoenix just to our north. The housing market began its turnaround in 2012 but it was slow. The driving force of the housing rebound was the move-up markets, particularly in the Northwest submarket. While the higher prices and increased sales were welcomed, there was also an underlying concern of the sustainability and depth of this move-up market in Tucson where the median household income is only $46,162 (per US Census). The lack of high paying jobs was always a point of discussion.

In 2016 things began to change. In March, Banner Health announced that it had allocated $500 million for capital improvements in Tucson which would result in significant construction and other related jobs. Home Goods purchased land to construct a distribution center and announced in April that it would be looking to hire 400 employees initially and then increasing that number to 900 in subsequent years. Then in May, Caterpillar announced that it would be relocating its Surface, Mining & Technology Division to downtown Tucson. They estimated this would bring in 600 executive level jobs within the next five years. The biotech company Monsanto purchased 155 acres in Marana in October and plans to employ 50 initially but the operations may expand to employ much more. Raytheon announced in November that they plan to expand in Tucson and hire an additional 2,000 employees over the next five years. That same month Lucid Motors announced plans to construct a plant in Casa Grand to assemble electric cars. It hopes to employ 2,000 workers and be at full capacity within six years.

The impact of the employment and economic benefit of these future jobs is significant. An additional benefit that is hard to quantify is the number of supporting vendors and businesses that will follow these larger corporations to Tucson. With these job announcements attitudes regarding the economic outlook of Tucson are now extremely positive, a near 180 from just a year ago. This optimism is spreading through the home building industry as now they can more easily identify future demand for housing.

The builders and developers deserve credit for exercising their faith in the future growth and strength of the Tucson market as 620 permits were pulled in Q1. This was 80 more than Q4 2015 and 150 more than Q1 2015. In Q2 there were 750 single family permits pulled. This was followed up with 622 and 667 in Quarters 3 and 4 respectively, for an annual total of 2,699 permits, a 24% (523 permit) increase over 2015.

Builders have been working hard to fill their pipelines with lot inventory over the past few years primarily with platted lot purchases. These lots began to enter the market in significant numbers in 2016 with 1,953 new lots being completed. This is a roughly the same number as the prior two years combined when 873 and 1,139 lots were brought to market. It will be crucial to maintain or increase this pace of development to meet the demands of the improving market.

One negative aspect of the year related to land was a significant drop in the value of land transactions and correlated lots. In 2016 the total value of the 49 single family related land purchases was $64.9 million with 1,474 lots. This is considerably lower than the prior four years:

2015: $118.8 million / 3,766 lots*

2014: $108.6 million / 2,457 lots*

2013: $127.1 million / 4,765 lots*

2012: $ 97.4 million / 2,362 lots*

* lot numbers are approximate as some raw or block platted land deals did not have lot counts associated with them. Once entitled, these lot counts will increase.

Each of the prior four years had at least one extraordinary purchase, which 2016 lacked. While this lower number of lots purchased should not impact 2017, it may start to impact 2018 and beyond if builders and investors do not increase their land purchases and lot development going forward. The current strong economic outlook should bolster confidence and we should see more deals being done this next year. We are excited for the Tucson land market as we begin the new year in 2017.

Please contact us for additional insight and information.

comp chart
New Lots
starts chart

2016 Residential Land Transactions

2016 Q4 Newsletter 2-3

Sales data from Real Estate Daily News / RED Comps


Gladden Farms – Meritage


Market Overview

Lot Supply

The finished lot supply decreased by 50 lots in Q4 to 3,099. This is the lowest quarterly number of the year but is still above the low of 3,015 in Q4 2015. There were 378 new finished lots added in Q4: 130 lots in Saguaro Bloom (DR Horton); 79 lots in Palo Verde Ridge (DR Horton); 70 lots in Gladden Farms (KB Home); 35 lots in La Estancia (Meritage); 34 lots in Linda Vista Heights (Richmond); and 30 lots in Santa Rita Ranch III (KB Home). In 2016 a total of 1,953 new SFR lots were been added to the market and 1,904 new SFR homes were started. During Q4 builders began construction on 463 new single family homes, 12 less than in Q3 and 83 less than in Q2, but still more starts than any other quarter since Q1 2010.

There are currently 12 single family communities (887 lots) under construction throughout Tucson. Of these up to 461 could be finished in Q1 2017. Up to six new communities could be added next quarter and additional lots will be added to existing communities.

There are approximately 74 active SFR communities throughout the Tucson area. Eight communities were built out in Q4, but are still selling the remaining specs: five in the NW, two in the SE and one in the SW submarket.

Lot Supply Statistics

Q4 ’16 vs. Q4 ’15 vs. Q4 ’14

Finished Lots: 3,099 / 3,015 / 3,697
New Lots Added: 378 / 162 / 243
Total New Lots Added – prior 12 mo: 1,953 / 873 / 1,139
Total Quarter Permits * 667 / 540 / 611

(Permit data from Bright Future Real Estate Research, LLC)

SFR Community Statistics as of December 31, 2016:

74 active traditional SFR communities
8 communities were built-out or closed in Q4 (most still selling specs)
4 new communities were finished or opened in Q3
12 communities under construction (887 lots / up to 461 could be finished in Q1 ’17)
up to 6 new communities could be added in Q1
other future lots will be additions to existing communities
14 residential land transactions in Q4 2016 totaling over $20.5 million
3 finished lot transactions
4 rolling options in 4 communities
3 investor land transactions – 2 raw land for future development & 1 platted
4 platted lot transactions to builders – 2 in NW, 1 East and 1 infill

Lot Ownership

During Q4 2016 investor inventory decreased by 103 lots.

Builder controlled lots: 2,501 (80.7%)
Investor controlled lots: 598 (19.3%)

Investor Ownership Q4 2016:

48.6% Far South submarket (206 lots)
17.0% Northwest submarket (247 lots)
12.4% Southeast submarket (106 lots)
10.5% Southwest submarket ( 39 lots)

Tangerine Ridge

Tangerine Ridge – Pulte

Santa Cruz Mdws 16Q4

Santa Cruz Meadows – Richmond



Once again the Q4 permits remained strong with 667 being pulled, up 3 from Q3. Tucson finished the year with 2,699 single family permits, up 523 permits (a 24% increase) from 2015. This was the most single family permits pulled in a year since 2008 with 3,018.

New home starts dropped to 428 for the quarter, down from 475 in Q3 and 546 in Q2. Despite this quarterly decline, there were still 1,869 new single family homes started in 2016. This was the highest number since 2009.

We anticipate 2017 to maintain the current momentum in permits and starts. The economic outlook for Tucson is stronger than it has been for some time, boosted by the recently announced businesses and jobs coming to Tucson. The new communities coming online are in strong areas and should more than compensate for closed stores. However, based on current pipelines we do not currently see as many new lots being introduced in 2017. This could impact permits in 2018 and beyond unless additional development begins during the first half of 2017.


Dove Mtn Mattamy 16Q4

Blue Agave at Dove Mtn – Mattamy

GF KB 16Q4

Gladden Farms – KB Home

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

Sales comp data from Real Estate Daily News Comps (realestatedaily-news.com)


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



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