- Caliber (CWD, Financial) receives approval for Canyon Village redevelopment project from Phoenix City Council.
- The project aims to convert a distressed 300,000+ sq. ft. office building into 376 multifamily residential units.
- Construction is expected to start in Q4 2025, with initial units available in the second half of 2026.
Caliber (NASDAQ: CWD), a prominent real estate investment, development, and management company, has secured the unanimous approval from the Phoenix City Council for its Canyon Village redevelopment project. This strategic endeavor will transform a distressed office building, over 300,000 square feet in size, into a 376-unit multifamily residential building, leveraging opportunity zone tax incentives.
Located in the North Mountain Village area of Phoenix, this redevelopment is well-positioned to meet the growing demand for housing, particularly influenced by Taiwan Semiconductor Manufacturing Company's (NYSE: TSM) significant investment in Arizona. TSMC has recently increased its commitment by $100 billion, following the early completion of its Fab 2 facility in Phoenix.
The project will tackle a prominent challenge in the real estate sector, where office spaces are among the most distressed asset classes due to declining values and reduced demand post-pandemic. Caliber sees this as a viable opportunity to adaptively reuse such properties, offering the potential for attractive returns.
CEO of Caliber, Chris Loeffler, emphasized the opportunity in distressed commercial real estate, highlighting that the Canyon Village project acquired properties at about 15% of their estimated replacement cost. The project epitomizes the effective collaboration of federal opportunity zone tax programs with city and community partnerships.
As part of the financial strategy, Caliber's Tax-Advantaged Opportunity Zone Fund, LP, has already invested approximately $6.7 million, with an additional $1 million from Opportunity Zone Fund II, LP. The company is seeking further equity for Phase I construction as it plans to commence building by Q4 2025, with the project's first units slated for delivery in late 2026.
With a robust outlook for the multifamily rental market in Phoenix, driven by a significant decrease in new construction starts, CoStar predicts a year-over-year rent growth reaching 5% by late 2027, aligning with pre-COVID levels. Caliber aims to deliver its first units within this favorable market environment, capitalizing on projected rent growth.
