Q4 2015 Tucson Land Update


07 Dec Q4 2015 Tucson Land Update

Midvale KB

Top: Park Modern – Pepper Viner / Above: Midvale – KB Home

Infill Opportunities

Local Builders are Finding Infill Communities as Nationals Focus on Larger Opportunities

The Tucson land market continued to improve in 2015. Much has been said regarding the permit counts in the past as a primary indicator of the market, but as with everything else, there are extenuating circumstances that can explain away variations from the expected path. 2015 ended with 2,176 permits being pulled in the Tucson metro area. This is 108 permits fewer or a 4.7% decline from 2014 and 74 fewer than 2013. However, we know that the market did improve and that the permit number was thrown off by an increase of permits within the City of Tucson at the end of 2014.

We have been tracking the finished lot supply on a quarterly basis in Tucson since 2008 and take note of lots as they are improved and added to the finished lot inventory as well as when builders start to construct houses on the existing finished lots and deduct them from the finished lot inventory. We feel this is another way to gage the health of the market. It does lag permits, but it demonstrates actual demand and builder optimism in the construction of both speculative and sold homes.

In 2015 traditional single family builders started 1,545 new homes (this number does not include active adult, attached or multi-family homes). This is the largest number of home starts since 2009 when 2,615 homes were started. The 2015 home starts were a 12.4% increase from the 1,375 homes started in 2014. This shows a slightly better picture than the 4.7% decline in permits in the same period. To be objective, the 2015 home starts were only 2.0% greater than 2013 and 5.3% greater than 2012. Tucson is not a double-digit growth market yet, but there is growth and it has been steady over the past few years.

Finished lot inventory continues to decline as we ended the year with an all-time low of only 3,025 finished lots in the market. Builders continue to start more homes than new lots are being developed. This trend does not appear to be changing as we go into 2016 and we expect to be below 3,000 finished lots next year. This depletion of lots has not gone unnoticed and builders have been scrambling to find replacement inventory as existing communities build out. Of the approximately 67 active SFR new home communities, up to 34 or about ½ of the existing communities could build out this year based on recent sales and building trends.

Trends in land sales over the past few years highlight the limited supply of finished lots and the need for new lots from both builders and developers. The demand for land bottomed out in 2011 when there was just $34 million in land transactions with $18 million coming from investor purchases, $9.6 million in finished lot transactions, $6.2 million in finished lot option deals and there were no raw or platted lot transactions from builders. Since then transaction totals have increased substantially. The past three years have each recognized over $100 million in land transactions. Finished lot transactions peaked in 2012 at $51 million and have been below $10 million for the past two years. Raw land and platted lot transactions to builders have skyrocketed. Builder transaction values for raw and platted land have increased from $0 in 2011 to $73 million in 2015. These numbers do not include the many large land purchases made over the past few years by investors, many of whom are currently in the platting and entitlement phases, working to have communities and lots ready to deliver to builders.

Many of these new and future communities are located in the periphery of Tucson. Infill projects have been historically overlooked as being too small or too much work for too few lots. Lately several of the builders, particularly the smaller local ones, have turned their attention toward infill locations.

Miramonte Homes has a history of successful infill locations in Tucson. They are currently selling homes in Miramonte at Glenn, a 34 lot community at Glenn Street and Mountain Avenue where they closed 19 homes in 2015 at an average price of $267,000 and an average price per square foot at $137. They recently acquired 11 gated lots in Rancho Merlita on Wrightstown Road where they will be selling homes in the low $500s.

Not far away Pepper-Viner Homes acquired the vacant Wrightstown Elementary School property and platted a 56 lot community called The School Yard where they recently opened for sales starting at $229,900 for a 1,457 square foot home. Pepper-Viner also just opened a new community on Blacklidge Drive and Tyndall Avenue where they are offering small homes on small lots starting at $179,900 for a 1,186 square foot home. Their first phase is 37 lots and will have a similar number of lots in their second phase.

Mesquite Homes is closing out their two east side infill communities of The Mesquites at Riverbend and The Mesquites on Pantano. They have recently broken ground on the new 18 lot community of Alamo Crossing on Pima Street near Wilmot Road. AF Sterling purchased Red Colt Ranch, a 21 lot platted community on 22nd Street near Harrison Road last October. They should begin development early in 2016. Rick Price, a local developer, recently purchased and started development on Camino Seco Village, a 33 lot community on 22nd Street and Camino Seco. Lennar Homes was able to secure and close Robb Hill, a recently platted 53 lot subdivision on Speedway Boulevard near Pantano Road.

The majority of these infill properties are relatively small in number of lots, but the builders are expecting to capitalize on their infill location with lack of competition from other new construction homes. These opportunities are giving the local builders additional communities without having to compete directly with the national builders. However as the available inventory lots and land continues to tighten, we should not be surprised to see more nationals vying for these rare infill opportunities as well.

Please contact us for additional insight and information.

comp chart
Transaction chart

2015 Residential Land Transactions

2015 LandTransactions

Sales data from Real Estate Daily News / RED Comps


Market Overview

Lot Supply

The finished lot supply was reduced by 202 lots in Q4 with a total finished lot count of 3,025. There were 162 new finished lots added to the market in Q4 but all were in the new Maracay Center Pointe Vistoso subdivision in Oro Valley that is scheduled to open later in January 2016. No other lots were completed, although there are many under construction. During Q4 there was a total reduction of 364 finished lots, 39 fewer than in Q3 but 120 more than Q4 of 2014.

There are currently 15 communities (1,139 SFR lots) under construction throughout Tucson. Of these 572 lots or more could be completed in Q1 2016. The majority of new lots coming online in Q1 and throughout 2016 will be in new communities. However we will see some new finished lots added to existing communities such as Sierra Morado and Saguaro Bloom.

There are approximately 67 active SFR communities in the Tucson Metro area. Five communities were built out during the quarter with most still selling remaining specs: 2 in the Foothills, 1 in the NW, 1 in the SW, and 1 in the SE submarkets. As many as 13 more communities could build out in Q1 2016 based on recent building trends.

Lot Supply Statistics

Q4 ’15 vs. Q4 ’14 vs. Q4 ’13

Finished Lots: 3,025 / 3,697 / 3,939
New Lots Added: 162 / 243 / 481
Total New Lots Added – prior 12 mo: 873 / 1,139 / 1,251
Total Quarter Permits * 540 / 611 / 507

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

SFR Community Statistics as of December 31, 2015:

68 active traditional SFR communities
5 communities were built-out or closed in Q4 (most still selling specs)
No existing communities added finished lots in Q4
Miramonte’s Rancho Merlita was the only new community opened in Q4
The finished lots that were added were in Maracay’s soon-to-open community
15 communities under construction (1,139 lots / up to 572 could be finished in Q1)
up to 9 new communities could be added in Q1
14 residential land transactions in Q4 2015 totaling over $15.2 million
6 raw land or platted lot transactions
5 rolling options in 4 communities
2 finished lot transactions
1 investor land transaction

Lot Ownership

During Q4 2015 investor inventory was increased 38 lots as a builder dropped an option to purchase. One builder finished 162 SFR lots in a community scheduled to open in Q1, 2016.

Builder controlled lots: 2,148 71.0%
Investor controlled lots: 877 29.0%

Investor Ownership Q4 2015:

45.2% Far South submarket (255 lots)
31.9% Northwest submarket (405 lots)
24.0% Southeast submarket (177 lots)
8.8% Southwest submarket ( 40 lots)

La Estancia

La Estancia – Meritage / Sunbelt

San Lucas LGI

San Lucas – LGI Homes



We ended 2015 with 2,176 permits for the year and 540 for Q4. While lower than the last two years’ permits counts of 2,284 and 2,250 in 2014 and 2013 respectively, actual SFR house starts were the highest since 2009. Homebuilders started 1,545 homes in 2015 compared to 1,375 in 2014 and 1,514 in 2013. This shows a 12.4% increase in home starts year over year and we feel is more representative of what is happening in the housing market than the decline in permits.

In 2015 there were 19 communities that built out and only 14 new communities were opened. Even with this decline in community counts, house starts increased. As many as 34 communities could build out in 2016 which could significantly impact the number of permits and new homes, however as many as 27 new communities could be introduced to the market. Many of these new communities are in high demand areas such as Oro Valley as well as excellent infill locations that all should generate strong sales and starts.

We anticipate finished lot Inventory to dip below 3,000 for the first time in 2016 as new SFR starts should surpass 1,600 while 1,300 new lots should be introduced based on current plans. Permits should be over 2,300. We anticipate continued steady growth.



Center Pointe Vistoso – Maracay

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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