Caliber Gets the Go-Ahead for Phoenix Conversion Project
The project is taking advantage of demand resulting from the opening of a nearby chip fabrication plant.
The Phoenix, Ariz., city council has unanimously approved the Canyon Village redevelopment project, which will involve the conversion of two distressed office buildings into a 376-unit multifamily rental community. The project, proposed by and to be carried out by the Caliber Cos., has also received the rezoning necessary to allow for the conversion. Construction will take place at an opportunity zone.
Once the project secures construction financing, it is expected to break ground in the fourth quarter of this year. The first units will be delivered in 2026, and completion of the full project is expected in the first quarter of 2027.
The Canyon Village project is intended to bring much-needed housing to the North Mountain Village area of Phoenix. The community will address an expected increase in housing demand flowing from the ahead-of-schedule completion of Taiwan Semiconductor’s Arizona fabrication plant, which will be the nation’s largest and most-advanced microchip factory. The community will be located 15 miles to the south of TSMC’s megaproject, directly accessible via the Arizona Veterans Highway.
Caliber Cos. purchased the north Phoenix-area Property in September of 2024, with the intention of converting it to apartments. Initially called the Canyon Corporate Center, it was a two-building office campus located at 2510 and 2512 W. Dunlap Ave. that was built between 1989 and 2000. According to Yardi Matrix, Caliber paid a combined $20 million for both buildings, which were previously owned by ViaWest Group.
The project is being funded in part through the federal Opportunity zone program, as well Caliber FundCo, LLC, a single-asset syndication devoted to funding the conversion. It has closed on $6.7 million in investments to date. To round out the development, Caliber is also offering the Caliber Tax-Advantaged Opportunity Zone Fund II, LP, to investors which has collected $1 million in investments.
TSMC has also added $100 billion to its existing $65 billion commitment to the U.S., and expects Fab 2, the second plant on the campus, to be completed ahead of schedule.
Strong outlook
Reduced demand from renters in the wake of the Covid-19 pandemic, as well as declining property values and high interest rates on new filings, have combined to make the $2.4 trillion national office sector the single most distressed real estate asset class. Given that office can often be acquired at a discount to its estimated replacement cost, Caliber believes converting to multifamily provides an appealing reuse opportunity.
A Caliber official noted that the company has witnessed opportunities to acquire commercial real estate at less than 50 percent of estimated replacement costs, in a prepared statement. In the case of Canyon Village, that figure is closer to 15 percent.
A 2025 comeback is forecast for the multifamily rental market in the Valley of the Sun. Units under construction and new construction starts have cratered over the past two years and market fundamentals have shown improvement. According to a January 2025 report from Yardi Matrix, the city has 36,842 units in its construction pipeline, half of which broke ground in 2024. Phoenix also remains an investor magnet, with $3 billion pouring into its multifamily sector in 2025, the third-largest figure nationwide.
READ ALSO: Phoenix Multifamily Report – January 2025
With supply-side pressures alleviated, rent growth should increase and vacancy rates drop in the latter half of this year.
Developers certainly agree. Earlier this month, Ray and VeLa topped out their 401-unit, 26-story downtown Phoenix residential tower bearing the name Ray Phoenix, which the joint venture expects to be completed by early 2026.
