North Phoenix office park will be converted to apartments

A long underused office park near the old Metrocenter mall will soon be transformed into several hundred apartment units.

Why it matters: Phoenix has a severe housing shortage and converting existing buildings into apartments can get units online faster while breathing new life into sleepy office parks .

The big picture: Scottsdale-based Caliber purchased the mostly vacant 312,000-square-foot Canyon Corporate Center at I-17 and Dunlap Avenue this summer and will transform two office buildings and a parking garage into several hundred housing units.

• Construction is expected to begin next summer, with pre-leasing to start the following year.

Zoom in: The project will feature a variety of studio and one-, two- and three-bedroom apartments. The rates will be what Caliber CEO Chris Loeffler called "workforce-plus," meaning they'll be affordable to the average Phoenix family.

• The studios will be assembled on the sides of the parking garage, allowing for drive-up parking access.
• There are nine undeveloped acres surrounding the existing structures that may eventually be used for a new-build apartment complex or assisted living facility.

Between the lines: Office-to-housing conversions , while often speedier than ground-up development, are expensive and difficult to execute, which is likely why we've seen so few successful projects in the Valley.

• Loeffler told us Caliber plans to spend about $40 million on the redevelopment portion of the project alone. The company purchased the center at a "deep discount," which justified the hefty construction price tag, he said.

The intrigue: Loeffler said a combination of forces aligned to make this investment worthwhile:

• Light rail: The project is a short walk to the Dunlap and 25th avenues station and Caliber plans to create a walkable connection.
• Metrocenter redevelopment: The former mall is undergoing a significant transformation that is already inspiring new investment in the area.
• TSMC: Caliber expects employees at Taiwan Semiconductor Manufacturing Co. to find this location and price point enticing.
• Opportunity Zone: The development falls into a federal Opportunity Zone, which allows for tax incentives.

What they're saying: "It took those four things coming together to say, OK, there's enough momentum here to create a real change in this location," Loeffler said.

What we're watching: With older office buildings continuing to see high vacancy rates , more may go up for sale at deeply discounted rates that make it possible for developers to take on expensive conversion projects.