Mott 32 restaurant to open at Paradise Valley's $2B Ritz-Carlton project

Mott 32 restaurant to open at Paradise Valley's $2B Ritz-Carlton project

By Ron Davis

The Villas, the luxury residential portion of the Ritz-Carlton Paradise Valley, The Palmeraie, are now welcoming residents.

PAUL THOMPSON | PHOENIX BUSINESS JOURNAL

The Ritz-Carlton Paradise Valley and The Palmeraie — a multibillion-dollar project years in the works in Paradise Valley — are expected to take shape during the rest of 2024.

Five Star Development, the developer of the mixed-use project with a hotel, retail and Ritz-Carlton-branded residences dubbed The Villas, said March 27 that high-end Chinese restaurant Mott 32 will be making its Arizona debut as the signature restaurant in the Ritz-Carlton hotel under construction.

Mott 32 has eight locations worldwide, which include Hong Kong, Singapore, Bangkok, Seoul, Cebu, Vancouver and a soon-to-open location in Toronto.

An opening date for both the hotel and restaurant is expected to be announced in the coming months.

The 4,600-square-foot restaurant will include a 4,100-square-foot outdoor patio. Diners can expect "Cantonese dishes with some Beijing and Szechuan influences, prepared using the latest in modern and innovative cooking techniques," according to the restaurant.

“This partnership is the perfect collaboration between luxury, opulence and tradition coming together to create a sense of community that Mott 32 is renowned for. We are excited to introduce our social fine-dining style to the region,” said Xuan Mu, founder of Mott 32, in a statement.

A conceptual rendering of the Mott 32 planned inside the Ritz-Carlton Paradise Valley.

J. LAUREN PR & MARKETING

The news of Mott 32's expansion came as Five Star Development gave a tour March 27 of the built-out Villas on-site, as well as the progress of the common areas of the hotel, which sits on 20 acres of the entire 122-acre development.

The Ritz-Carlton hotel will have 215 rooms/casitas on site along with 400 feet of swimming pools overlooking the mountains. The lobby area will have rotating retailers to keep fresh options for residents on-site and guests staying overnight.

Phoenix Business Journal received a tour of The Villas, the residential portion of the Ritz-Carlton Paradise Valley, on March 27, 2024.

Mann said ideas for Five Star Development to develop the site started back in 2008. It was put on the shelf following the Great Recession. Five Star Development launched home salesin 2018 while estimating that the resort community would open in late 2019.

Delays have stalled the progress of the development, though in May 2023, New York-based Madison Realty Capital originated a $585 million loan to Five Star Development to help finish construction. Representing one of the largest loans in 2023 in metro Phoenix, that financing was arranged by Bryan Clark, managing director of JLL Capital Markets.

"It's a great day for this project, this huge investment in the Valley. [It's] the largest real estate development, I think, in the history of the town. ... It's nice for those who are waiting to be welcomed here as residents," said Paradise Valley Mayor Jerry Bien-Willner. 

Fairmont Scottsdale Princess eyes expansion of guest rooms, restaurants, event spaces and more

Fairmont Scottsdale Princess eyes expansion of guest rooms, restaurants, event spaces and more

By Ron Davis

The Fairmont Scottsdale Princess is eyeing a big expansion on-site.

VRX STUDIOS/JUSTIN KRIEL

An iconic Scottsdale resort is looking to up its game.

The Fairmont Scottsdale Princess filed a request to the city of Scottsdale to update its master plan. The request, which will be considered by the Scottsdale Planning Commission on Feb. 28, seeks to amend development standards and increase the number of hotel guest rooms.

The Princess, located at 7575 E. Princess Drive in north Scottsdale on roughly 66 acres, is looking to build a 155-unit guest wing with underground parking; 43 Sunset Villas/bungalows; a high-end Michael Mina Italian restaurant; an indoor/outdoor coffee roasterie; a conference center and a new ballroom on-site.

The new guest wing would rise four stories on the southeast corner of Cottage Terrace Lane and Hacienda Way.

The 43 bungalows that the Princess looks to build at the resort have been previously approved, but never constructed, by a past zoning case. The resort currently consists of 751 hotel guest rooms, with 61,577 square feet of conference rooms, ballroom and meeting spaces.

With 750 rooms, the Princess currently ranks third on the Phoenix Business Journal's List of Largest Phoenix-area Hotels & Resorts, only trailing the Sheraton Phoenix Downtown and the JW Marriott Phoenix Desert Ridge Resort & Spa.

The Princess envisions the concept for the new restaurant to be an Italian farmhouse "re-envisioned in a modern way for the Arizona desert landscape." It would be located in the northwest corner of the resort property at the intersection of Cottage Terrace Lane and Princess Boulevard and situated in an "orchard of trees." It will be roughly 10,000 square feet with another 6,500 square feet of patio space.

The indoor/outdoor coffee shop be roughly 10,500 square feet, with the bulk of the space eyed for a patio.

“While nothing has been finalized, we look forward to working with Mayor Ortega and city leaders to explore new ways to evolve the Princess to make it a destination for tourists and city residents for years to come,” said Jack Miller, regional vice president and general manager of the Princess, in a statement to the Phoenix Business Journal.

The Princess is working with Scottsdale-based attorney Jordan Rose of Rose Law Group on its application with the city. The resort tasked three architecture firms: Allen+Phillip Architects, Nunzio Marc Desantis Architects and Kolin Altomare Architects for the design of the new guest wing, restaurant and ballroom and conference center, respectively.

In 2022, the Princess opened Privado Villas, a new ultra-luxe boutique hotel that brought 119 residential-style suites with a private entrance and reception. The new offering came from a rise in demand for luxury suites and villas, the Princess said at the time. 

Arizona’s hospitality industry regularly receives national and international praise. Last year, Arizona had the third-most hotel projects under construction in the U.S. Several highly anticipated hotels opened in late 2023, including Sam Fox’s The Global Ambassador, and more are expected to open in 2024 and beyond.



Paradise Valley Town Council gives go-ahead to new luxury community

Paradise Valley Town Council gives go-ahead to new luxury community

By Angela Gonzales

The Paradise Valley Town Council on Jan. 25 unanimously approved a 10.2-acre luxury community with views of Camelback Mountain to the southwest and Mummy Mountain to the northwest.

The property south of Lincoln Drive and west of Scottsdale Road is divided into eight lots ranging between one and 1.3 acres, said Gordon Berry, CEO of Scottsdale-based Tuna Group LLC, developer of the project.

Berry is assembling a team of architects, designers, consultants and builders for this boutique luxury community on Quail Run Road. It's currently being called Quail Run, though Berry is working on plans to rename the community.

"We want to do some special things that have never been done before in the town," Berry said. "We're trying to make this the crown jewel of Paradise Valley."

It's taken a couple of years to get the project approved, he said, as some neighbors nearby originally opposed the project because they were worried about increased traffic in their neighborhood. Berry said he went back to the drawing board to recreate traffic flow so that access into Quail Run will come from the north, rather than the south, mitigating their concerns.

Berry said it's too soon to determine the style of homes and prices at Quail Run, but he expects homes to start at 8,500 square feet.

Originally, Berry had purchased a five-acre parcel and a three-acre parcel and submitted plans to Paradise Valley to build six homes on eight acres.

"During the process, we got to know an adjacent neighbor who had a two-acre parcel adjacent to the three-acre piece," Berry said. "She decided to sell her property to us. We acquired the adjacent property that made up the 10-acre assemblage. Then we recalibrated the plan with eight lots versus the initial six-lot concept."

He expects buyers of these lots to be high-net-worth individuals who may be looking for a winter home in Arizona. He also is open to combining lots if a buyer wants a larger footprint.

"We could combine it to make a two-acre piece of land if we found the right buyer," he said.

Another project being developed by Berry, called Silver Sky, received approval in April 2023 from Paradise Valley Town Council. That luxury enclave near Invergordon Road and Mockingbird Lane will feature 12 luxury homes starting at $11 million.

Infrastructure currently is being installed at Silver Sky, he said.

Barrett-Jackson breaks sales record for 2024 Scottsdale auction

By Brandon Brown

Barrett-Jackson, the Scottsdale-based collector car auction house, broke a company record with its flagship 2024 Scottsdale auction.

In total, 2,016 cars were auctioned off at WestWorld of Scottsdale that brought in $200.9 million in auction sales and 1,180 pieces of authentic auto memorabilia were sold for $6.7 million, adding up to $207.6 million – the most for a single auction in Barrett-Jackson history.

A 1956 Mercedes-Benz 300SL Gullwing fetched the highest price at the week-long event, going for $3.41 million on Jan. 29.

“It was a tremendous event this week in Scottsdale with our largest docket in history, a record number of bidders, and an impromptu live performance by Rock & Roll Hall of Famer Sammy Hagar,” Craig Jackson, chairman and CEO of Barrett-Jackson, said in a statement. “We continue to set the bar within the hobby with record-breaking sales like the 1956 300SL Gullwing, and our top sales reflect both the quality and diversity of our docket.”

Barrett-Jackson announced during the event that it will be adding a second Scottsdale auction in October.

Click through the gallery below to see the hottest sales from Jan. 24, when the highest-priced vehicles were sold:

Other auctions in town

While Barrett-Jackson was the largest collector car auction, it was not the only one to be held last week. Multiple auction houses held events in Scottsdale in January, and the cumulative total of auto sales for the week was $244.8 million, according to industry follower Hagerty.

Overall, 2,375 cars were auctioned off in Scottsdale last week with the average price at $103,083, according to Hagerty’s count. That is up from the 2,242 auctioned off in 2023.

While most of the action was at Barrett-Jackson, the car that fetched the highest price was at the Bonhams event in Scottsdale, where a 2022 Bugatti Chiron Super Sport Coupe sold for $5.175 million.

Some other high-priced cars included a 2020 McLaren Speedtail Coupe that sold for $2,012,500 at RM Sotheby’s and a 1938 Mercedes-Benz 540K Sindelfingen Cabriolet B that went for $1,545,000, also at RM Sotheby’s.

Check out the daily recaps of the top cars sold each day during the 2024 Barrett-Jackson Scottsdale Auction:

Click here to see the top selling cars from Monday

Click here to see the top selling cars from Tuesday

Click here to see the top selling cars from Wednesday

Click here to see the top selling cars from Thursday

Click here to see the top selling cars from Friday

Click here to see the top selling cars from Saturday and Sunday



Valley luxury homes saw biggest price increases

Valley luxury homes saw biggest price increases

By Paul Maryniak

This 7,364-square-foot home on E. Knoll Street, Mesa, sold earlier this month for $2.44 million. Built in 2008, the six-bedroom, 10-bath house includes a two-bed, two-bath casita, gourmet kitchen and a wealth of other amenities.

(Special to the Tribune)

The average square-foot price of single-family homes in the Valley rose the most over the last two years in cities with the most luxury homes, according to a leading analyst of the Phoenix Metro market.

That increase was the highest in Paradise Valley, where the per-square-foot price soared 42.3% between 2021-2023, the Cromford Report said last week.

“This is the first time since 2000 that we have seen Paradise Valley accelerate well ahead of the pack,” it stated. “It probably has something to do with the number of homes that are torn down and replaced with new builds that have extremely high costs per square foot. 

“This process extends the gap between Paradise Valley and Scottsdale home pricing.”

Scottsdale saw the second highest increase at 23%, a shade ahead of Wickenberg’s 22.9%. Fountain Hills, Cave Creek and Carefree also saw per-square-foot price increases above 20%.

Per-square-foot prices in the last two years rose 17.2% while in the Southeast Valley, they rose at least 10%.

That includes Apache Junction (15.1%), Chandler (13.7%), Mesa (13.2%), Gilbert (12.6%), Tempe (12.2%), Sun Lakes (11.6%) and Queen Creek (11.2%).

The Cromford Report also noted that Valley-wide between 2022 and 2023, the year-over-year per-square-foot price increases were the highest among homes selling for at least $3 million.

In that time period, homes that sold for $11 million or more saw the sharpest increase in per-square-foot prices at 12.8%. 

Homes with a sale price of $7.5 million and $10 million saw a 9.5% increase while homes in the $5 million-$7 million range recorded an 8.7% increase.

Homes that sold for $2 million or less, on the other hand, saw average per-square-foot prices drop between December 2022 and last month, according to the Cromford Report.

That decline was the greatest among homes that sold for $350,000-$400,000, where the per-square-foot price dropped an average 7.7%. Declines in other price ranges were between 2.1% for homes selling between $700,000 and $800,000 to 5.9% for those selling between $300,000 and $350,000.

“The cheaper you go, the more 12-month average prices tend to have fallen,” the Cromford Report said.

“We rarely see such a clear pattern, so I conclude that something is bolstering the luxury market,” it continued. “It is not lack of supply, which is plentiful, although active listing counts are not excessive compared to the normal levels at these altitudes. 

“It seems that luxury buyers have been less affected by the high interest rates which appear to have had a much more serious effect on first-time home buyers.”

The Cromford Report’s analysis comes at a time of mixed assessments of the housing market in Arizona, the Valley and nationwide.

Arizona REALTORS President Shelley Ostrowski predicted that recent declines in mortgage interest rates will see more buyers jump into the market, benefitting sellers.

“I see more buyers coming back into the market as interest rates begin to settle,” said Ostrowski. “The housing market will remain strong in 2024, emphasizing the importance of clear communication and why buyers and sellers are best trusted to use a Realtor.”

This 1,032-square-foot patio home on the perimeter of the 55+ Fountain of the Sun golf course recently sold for $275,000. The two-bedroom, two-bath house has an open, split-bedroom floor plan and underwent numerous improvements, including a $12,000 shower upgrade. 

(Special to the Tribune)

Sindy Ready, Arizona REALTORS president-elect and associate broker for RE/MAX Excalibur in Scottsdale, also predicted more activity in the market.

 “While inventory might be lower than usual at this time, interest rates are speculated to decrease by the end of the second quarter to a historically normal rate of 6% to 6.5%, which will bring more buyers into the market,” Ready said.

Ready also doubted the Valley will see a “silver tsunami” created by a flood of baby boomers unloading their houses.

“Many baby boomers in today’s housing market are rightsizing as opposed to downsizing, meaning they are searching for a different floor plan or a level property that accommodates their lifestyle,” said Ready. 

“This means simplifying backyard maintenance and introducing trendy new features to the home such as an outdoor kitchen, fire pit, and seating area.”

Shane Cook, 2024 treasurer of the Arizona REALTORS from eXp Realty in Gilbert, added: “I expect interest rates to retreat some, which will create more buyer demand

“With inventory now in short supply, this could mean a potential impact on the market that continues to be more favored to the seller.”

The Cromford Report provided data that gave reason for at least sellers to be optimistic, noting that all 17 Valley submarkets showed a “trend in favor of sellers is starting to accelerate.”

But other experts held out little optimism about a big downward shift in home prices.

“I don’t think we’re going to see a big break in prices, since the broader trend facing the housing market continues to be not enough supply relative to demand,” said Realtor.com Chief Economist Danielle Hale.

A survey by Fannie Mae said its monthly survey in December showed that more buyers are expecting more mortgage rate reductions.

But Fannie Mae also said the survey showed that homebuyers were “overwhelmingly pessimistic” in their assessment of the market, with only 17% saying this is a good time to go home-shopping.

“Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it’s both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year,” said Mark Palim, vice president and deputy chief economist at Fannie Mae.

“Of course, that’s likely dependent on the extent to which mortgage rate expectations are met with actual mortgage rate declines,” he added. 

Scottsdale ranks No. 1 among best cities for jobs in the U.S.

Scottsdale ranks No. 1 among best cities for jobs in the U.S.

With 2024 bringing the chance for new beginnings and finding a better job often proving to be more effective at keeping up with inflation than cost-cutting, the personal-finance website WalletHub today released its report on the Best Places to Find a Job in 2024. And Scottsdale ranks No. 1 among the best cities for jobs in the U.S.

To determine the strongest local job markets in the U.S., WalletHub compared more than 180 cities across 31 key metrics. The data set ranges from job opportunities per job seeker to employment growth to the monthly average starting salary.

Best Cities for Jobs

1. Scottsdale, AZ

2. Tampa, FL

3. Salt Lake City, UT

4. Columbia, MD

5. Austin, TX

6. Atlanta, GA

7. Seattle, WA

8. Pittsburgh, PA

9. Plano, TX

10. Boston, MA

Worst Cities for Jobs

173. Bridgeport, CT

174. Columbus, GA

175. Memphis, TN

176. Bakersfield, CA

177. Stockton, CA

178. Augusta, GA

179. San Bernardino, CA

180. Gulfport, MS

181. Las Cruces, NM

182. Newark, NJ

Best vs. Worst

  • Columbia, Maryland, has the highest median annual household income (adjusted by cost of living), which is 3.1 times higher than in Detroit, Michigan, the city with the lowest.

  • San Jose, California, has the highest monthly average starting salary, which is 3.7 times higher than in Fort Smith, Arkansas, the city with the lowest.

  • Fremont, California, has the fewest part-time employees for every 100 full-time employees, which is 3.8 times fewer than in Burlington, Vermont, the city with the most.

  • Pearl City, Hawaii, has the lowest share of workers living in poverty, which is 11.7 times lower than in Huntington, West Virginia, the city

FOX IN THE PENTHOUSE; How the Valley's foremost restaurateur broke into the luxury hotel business

Sam Fox outside of The Global Ambassador hotel in Phoenix

FOX IN THE PENTHOUSE

How the Valley's foremost restaurateur broke into the luxury hotel business

By: Brandon Brown

Hotels have been on Sam Fox’s mind for a long time.

So when plans for the Global Ambassador started coming together in 2019, he had spent a lifetime preparing for the moment. The 141-room hotel is set to open Dec. 6 next to The Grove mixed-use project on the northwest corner of 44th Street and Camelback Road in Phoenix.

“The idea of having my hotel is probably 10-plus years,” Fox said. “I just thought it was the evolution of an entrepreneur as a businessman.”

Fox, who founded Fox Restaurant Concepts in 2004 – think popular establishments such as The Henry, Flower Child and Culinary Dropout – has been nominated for 12 James Beard Awards. He is known as a master restaurateur, but he wanted to dive deeper into the hospitality world and have people not only trust him to serve up a great breakfast, lunch or dinner, but also spend the night at his establishment.

“At one time I tried to buy an old motel, which didn't work out, and there was a property in Tucson that I had my eye on that I tried to acquire, that didn't work. These were all existing properties,” Fox said. “And then this land became available.”

Fox, who has worked with Phoenix-based RED Development in the past, said he wanted to build his own hotel from the ground up inside the $300 million Grove project. Fox, along with business partner and friend Brian Frakes, the CEO of Common Bond Development, acquired three acres from RED for just over $11 million at a site for the hotel.

Sam Fox and Brian Frakes go over plans for the Global Ambassador inside the hotel's restaurant during its construction.

“At first I thought it was going to be a little bit smaller and on one acre,” Fox said, “But now it's a lot grander than I ever thought it was going to be from the beginning. But I'm really happy at the place we wound up. I'm at a good place in my life where it makes sense for it to be like this.”

Fox is now four years removed from the day-to-day operations of his Fox Restaurant Concepts, which was acquired by the Cheesecake Factory in a deal valued at more than $350 million.

Fox remained the head of FRC under the Cheesecake Factory umbrella. But Fox has been able to start another company – Author & Edit Hospitality – and focus on passion projects including the Global Ambassador and the Twelve Thirty Club in Nashville, which Fox said is one of the top 10 grossing restaurants in the country.

Fox is the first to admit that he is new to the hotel business, but through years of travel and taking notes on what he has liked or would like at various hotels around the world, he came up with a vision for the Global Ambassador.

“Over the past 15 or 20 years that Sam and I and our wives have been friends, we've traveled a lot together and it's become one of those things where our previous experiences are helping our situation now,” Frakes said. “We’ll remember the hotels we stayed at in France or Italy or New York and try to recreate the vibe of the lobby or the room.”

With the Global Ambassador, Fox took what he is really good at – food and beverage – and made it central to the project.

The Global Ambassador has multiple restaurants inside – Le Âme, a Parisian steakhouse that Fox called “the heart of the hotel;” Pink Dolphin, the restaurant and bar connected to the pool that serves Mexican and Peruvian-inspired dishes and drinks; the Mediterranean Rooftop, which is located on top of the hotel with views of Camelback Mountain; Le Market, a breakfast, lunch and coffee spot; Lobby Bar, which Fox wants to be full and raucous with live music on a regular basis; and The Grill, which is the restaurant for the Global Ambassador’s members club.

“I always tell people that I'm building this hotel, but it's really about restaurants and the pool and the market and the gym and sometimes I forget we even have hotel rooms here,” Fox said.

Fox has personally and meticulously gone over and chosen every aspect of the hotel — from light fixtures and pitchers in the restaurant to the architecture and structure of the building.

Part of Valley's new luxury properties

There are 26 hotels under construction in the Valley that will add 4,527 new rooms to the metro's inventory, according to data from CoStar Group, which tracks real estate and hospitality projects. Another 40 projects and 4,748 rooms are in the final planning stage while 46 projects and 5,298 rooms are earlier in the development process, according to CoStar data.

The total 14,573 rooms under construction or being planned would increase the Valley’s hotel room count by roughly 20%. High-end and luxury hotels are making up a large chuck of the rooms being built in Phoenix.

“Between December 2023 and December 2024, we could see six new high-end, full-service properties open. This includes the Global Ambassador, Caesars' first nongaming hotel with Caesar’s Republic Scottsdale, the Ritz-Carlton Paradise Valley and Vai Resort,” said Eric Kerr, the vice president of insights and development at Visit Phoenix. “These huge projects will generate tons of media exposure for the destination and bring new, high-spending visitors to the city.”

The Global Ambassador will be part of this new class of luxury properties, but its ownership and management said it differs from anything else being offered here.

“I think we carve our own niche," said Fox. "We have an amazing building at one of the best intersections of the city."

What makes Global Ambassador different

Fox and crew also stand out because they are doing it all by themselves.

Most hotels either have a brand they are connected with – the Marriotts and Hiltons of the world – that have specific standards for how hotels need to look and how they are operated. But The Global Ambassador is based on exactly what Fox and his team want to do.

“The opportunity to be involved in something where one individual is making all the decisions from beginning to end, that's really powerful, that doesn't exist in our industry often,” said Geoff Gray, the managing director and general manager of the Global Ambassador.

Under the watchful eyes of his hotel staff, Sam Fox, right, taste tests some of The Global Ambassador's cuisine on Nov. 20, 2023 prior to its opening in the first week of December.

Gray joined up with Fox in August 2022 after a 12-year tenure with Hyatt Hotels. During the run-up to the opening of the Global Ambassador, Gray has worked with Fox on making his visions for his hotel become a reality.

“Sam is an incredible restaurateur, he’s built incredible organizations, but he's also very cognizant of what he hasn't done before and he finds people that are experts in that field to help make sure it's successful,” Gray said.

Fox brought on Judith Testani of Testani Design Troupe to be the interior designer for the hotel, Nelsen Partners as the architect and Berghoff Design Group as the landscape architect. Okland Construction was the general contractor. Fox spent one-on-one time with all these companies to make sure they could complete his vision.

“Sam knows what he likes and what he wants the guest to experience, and then we break it backwards and say, ‘OK, now how we are we going to accomplish that,’” Gray said.

During those conversations – which included all sorts of aspects of the hospitality business ranging from in-room dining to how employees should address guests – Gray said he would tell Fox how things are typically done in the industry, but then together they would add their own spin on typical hotel practices.

One thing that Fox said he was very passionate about was getting good water pressure in every room in the hotel. So a system was created that brings all the water up to the top floor of the building and goes down. Fox said having good water pressure adds to the feeling of being on vacation, as does a big TV.

“He knows how he wants people to feel,” Gray said.

Fox: 'It's a little sensory overload'

Knowing what experience he wants to create, and then finding ways to make that happen is what made Fox successful in the restaurant industry. People have flocked to Fox Restaurant Concept eateries for years not just for the food, but for the experience and ambience.

One of the first feelings Fox wants people to have when they come to the Global Ambassador is confusion – which is another way Fox is setting himself apart from the rest of the hospitality industry.

“It’s a little sensory overload,” Fox said. “Guests have to sort of look around, try to figure it out a little bit. It doesn't feel like a traditional hotel.”

The front of the Global Ambassador faces west into the Grove mixed-use development and has four entrances – the lobby, the pool, the café and the restaurant – which Fox said is to help lead guests to discover new elements of the property every time they come.

Even the main entrance doesn’t lead directly to the reception desk, but rather to the hotel's Lobby Bar.

“The Lobby Bar is going to have great energy. I want this to feel like a big city,” Fox said. “Phoenix is a big city, but it doesn't feel like London, it doesn’t feel like New York; but I wanted that energy when you walked into the building.”

Sam Fox looks over the progress that the Global Ambassador is making prior to its grand opening in the first week of December.

Like the historic hotels of Paris, London and New York, Fox wants this project to last and be something he is remembered for.

“This is a legacy project for me,” Fox said. “This is sort of the pinnacle of my career. I feel like it's going to be hard to top this.”

Don't let Fox fool you — the Global Ambassador won't be the swan song for either him or Frakes.

Fox is still involved with FRC, which recently announced it will be opening a second location of The Henry — a coffee shop and restaurant on East Camelback Road that has become a workday haunt for Phoenix’s business, political and cultural leaders.

Frakes said after developing a hotel on this scale, it will likely open more doors for him in the hospitality world.

“We're going to be actively looking for opportunities to create something special,” Frakes said. “We've learned a lot about creating hotels and hotel rooms and the hospitality side of that … we've learned a new discipline.”

And, by making their first hotel project very complex, Frakes said he and Fox will be able to do something on this scale — or bigger — more easily in the future.

As remote work continues, these hot markets are poised for growth

by Emily Mack

The Sun Belt is poised for the strongest residential real estate growth in the United States, according to the 2024 Emerging Trends in Real Estate report, released jointly by PwC and the Urban Land Institute every year.

Based on thousands of surveys and hundreds of personal interviews, the annual report provides an in-depth real estate outlook for the U.S. and Canada. And this year, several cities stuck out as hotbeds for development.

Citing their demonstrated interest in urban growth, the report named 10 top markets to watch as we enter 2024:

1. Nashville
2. Phoenix
3. Dallas/Fort Worth
4. Atlanta
5. Austin
6. San Diego
7. Boston
8. San Antonio
9. Raleigh/Durham
10. Seattle

While Chicago as a whole did not crack the top 10, there are hot spots locally as well. A recent Mainstreet Organization of REALTORS® report showed home sales more than doubling year over year in Park Forest and Niles and nearly doubling in Oswego, Brookfield and Westmont. 

Some pockets of the city have answered the call to repurpose high-vacancy office buildings or demolish them and rebuild on the same land.

Chicago is planning LaSalle Street Reimagined, a program which aims to diversify an area that’s currently 85% office space. That includes the conversion of five downtown office buildings to create more than 1,000 apartments. At least 30% of those apartments would be designated as affordable housing.

“It’s clear that the real estate industry is entering a new era of thinking, building and operating. The emergence of hybrid-work models, the strength of the retail sector and the growth of Sun Belt markets underscore the new reality on the ground, specifically in our top cities — Nashville, Phoenix, Dallas/Fort Worth, Atlanta and Austin,” Anita Kramer, senior vice president of ULI’s Center for Real Estate Economics and Capital Markets, said in a press release accompanying the report.

However, Kramer noted that this year’s data shows slightly lower ratings across the board when it comes to development and investment prospects, which reflects “a certain degree of caution.” She also noted that ratings among top cities are tighter, “indicating a sense that there is less difference among market prospects than has been the case.”

In fact, the theme of this year’s report is “The Great Reset,” reflecting how the industry can no longer rely on past benchmarks to determine the future of the market.

One such example is hybrid work, which the report says is here to stay. John Burns Research & Consulting estimates that the suburbs captured 87% of net growth between 2015 to 2022, 5% more than 2015 to 2019, as remote and hybrid workers shift out of big cities and forgo the typical office. Since 2021, U.S. home prices have risen by double-digit percentages in some of the most popular suburbs of Tampa, Phoenix and Atlanta.

Meanwhile, some fully remote workers are making even bigger moves — often to warmer environments. “COVID migrants have added even more fuel to the interregional migration to the Sun Belt that started well before,” the report says, solidifying overall interest in those Southern states.

This is especially notable when you consider that, prior to the pandemic, remote workers were actually less likely to move than other workers because they had less incentive. Their work arrangements were already in place. But newly remote workers suddenly found themselves with more freedom and new options. And the composition of those moving workers also changed.

In general, the movers are more affluent, according to census data, and skew younger. A Fannie Mae survey found that 15% of remote workers between ages 18 to 34 are “willing to relocate to a new metropolitan or regional area.” By contrast, just 8% of remote workers aged 35 to 44 are willing to move regions.

Looking ahead, these migration patterns indicate a major market impact: More homes will be needed in suburbs and smaller cities. Employees will need retail closer to their homes, rather than near downtown offices. People will consider buying and renting larger homes so they can work there comfortably. And, naturally, the need for office buildings will decline.

Compared to Q4 of 2019, during Q2 2023, pre-pandemic, downtown office vacancies are up 73% and suburban office vacancies are up 32%. In turn, office buildings have lost their appeal to investors, with sales of those buildings declining more than twice as much as other property types.

 

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