Notable: Overcoming Land Acquisition Challenges in Chandler, AZ

When we set out to purchase two adjacent infill sites totaling 13 acres in Chandler, AZ, we never imagined that it would become among the most complex land deals we’ve pursued. We sat down with Matt Visnansky, Vice President & General Manager of Real Estate Development, to find out what made this particular project so complicated and how we ultimately moved forward.

Q: Why was Opus interested in these two parcels in Chandler, AZ?
A: Development in Phoenix has been focused on larger buildings and larger users over the last few years, which has created pent up demand from smaller users and a lack of supply to meet their needs. Smaller users tend to like infill locations due to their accessibility to highways and a desirable labor pool, and these two sites – a five-acre lot and an eight-acre lot – represented an infill opportunity in Chandler, which is a large, well-established, thriving suburb about 30 minutes southeast of Phoenix. Our initial concept was to tear down the three existing structures and construct a new, modern three-building industrial development that would appeal to smaller users, especially those looking for their own building.

Q: Did the parcels themselves present any obvious development challenges?
A: There’s a high-pressure gas line with a 60-foot easement that runs diagonally through the two parcels. So as we looked at how we wanted to develop the irregular shaped site, we had to bear in mind that we couldn’t construct a building within 30 feet of either side of the pipeline. We had to think pretty creatively about how to design the buildings to maximize the acreage on an seemingly inefficient site.

Q: Did the team run into any issues with the seller?
A: I would say there were some complexities. Both parcels were owned by Valley Christian Church (VCC), which had had a previous developer walk away from deal after a full year and numerous extensions. So, understandably, they were skeptical of another developer coming into the mix, and they were cautious when we asked for an extension. Ultimately, they requested additional non-refundable earnest money, but, at the time, we hadn’t secured a capital partner yet.

Q: Clearly, we opted to move ahead. So why did we end up selling one of the parcels?
A: Our initial intent was to keep both sites, and, as I mentioned, tear down the three existing structures and construct three new small-user industrial buildings. But initial capital feedback suggested concerns about the land basis being too high, so, we had to find a way to reduce it. It so happened that the smaller of these two parcels was zoned and grandfathered in to include an outdoor storage yard, a.k.a. Industrial Outside Storage (IOS), contingent on their being a commercial building and related commercial operation on the property. Not being very familiar with IOS, our developers Mike George, Manager of Real Estate Development, and Ben Pobuda, Senior Manager of Real Estate Development, did some research and engaged IOS brokers who quickly found multiple buyers/users for the triangular parcel. We ultimately selected Valley Wide Plastering, and, in selling the parcel to them, reduced our basis while also leasing us with a far more efficient development parcel.

Q: Did we find a capital partner?
A: We did! With many capital partners sidelined, Mike George knew of an entrepreneurial and opportunistic investment group, and we actually approached them as we were finalizing the sale to Valley Wide Plastering. This group was willing to work with us whether the Valley sale went through or not and ultimately benefitted from a double escrow closing.

Q: Would you say that we have expertise in completing complex deals?
A: Every development opportunity has challenges, but I think the fact that we’re an integrated multidisciplinary team gives us an advantage in evaluating those challenges, mitigating any risks and developing viable and valuable projects. This pursuit is a great example of that.

Q: So what are we building and when does construction start?
A: We’re planning a two-building industrial development on our eight acres. We anticipate starting construction on Envision 56 in October 2025.