Texas Apartment Developer Bets on Phoenix’s Artsy Roosevelt Row

Article originally posted on CoStar on July 23, 2021

Concerns of Potential Apartment Glut Rise As Investors Follow Renters Downtown

Texas-based developer Lincoln Ventures just bought land in downtown Phoenix for its third residential high-rise after breaking ground on student housing towers miles away in Atlanta, Georgia, and Austin, Texas.

Lincoln plans to build Moontower PHX, a 26-story tower with 327 apartments, first-floor offices and seven floors of parking, after paying roughly $5.4 million for less than an acre on Third Street between McKinley and East Garfield streets near Phoenix’s Roosevelt Row neighborhood, an up-and-coming area full of trendy restaurants, art galleries and coffee shops.

The developer has placed its bet on apartments and student housing, sectors where investors are bullish that the pandemic will have a minimal impact in the years ahead. Many feared the health crisis would permanently move renters out of crowded city centers and transfer students off campus to online courses for good.

Lincoln Ventures expects to finish construction on Moontower PHX by 2023, according to CoStar data.

Lincoln Ventures’ Phoenix project signals confidence that renters and foot traffic are returning to Roosevelt Row as the area’s hip restaurants, shops and art galleries reopen and more residents get vaccinated. Rising enrollment at nearby Arizona State University and the extension of light rail brought an influx of young professionals to the area in the years before the onset of the virus.

Apartment vacancies increased in the early months of the health crisis, but landlords have lured tenants back with offers of free rent and other concessions, according to a CoStar Market Analytics report. Investors are following renters back to downtown, sending quarterly sales volume to an all-time high.

The outlook for owners over the next few years is unclear. With more than 6,000 mostly high-end apartments under construction in the area, landlords should brace for higher vacancies and slowing rent growth in the next few years as new units open, the CoStar report said.

The developer has built several office, apartment and student housing projects in its hometown of Austin, Texas, over the past four years, including an 18-story project also called Moontower, which it sold last fall for $112 million in one of the biggest student housing sales of 2020. Lincoln is building at least four more multifamily and office projects in Austin, according to CoStar data and the developer’s website.

Farther east, Lincoln broke ground this month with joint-venture partner ELV Associates on a 25-story, a 565-bed student-housing project at 859 Spring St. NW in midtown Atlanta near the Georgia Tech campus.