Record AZ land sale: 75,000/acre for rattlesnake-infested desert scrubland!
azcentral.com
$400 million Chrysler land sale a state record
Sprawl squeezes proving grounds
Catherine Reagor and Bob Golfen
The Arizona Republic
Sept. 29, 2005 12:00 AM
New homes will replace Dodge Vipers and PT Cruisers on a huge piece of land northwest of Phoenix, where automaker Chrysler has tested its vehicles since 1958.
In the biggest land sale in Arizona history, real estate developers are paying more than $400 million for DaimlerChrysler's landmark 5,500-acre proving grounds.
"What we do on our proving grounds is confidential," said Mary Beth Halprin, a senior manager for DaimlerChrysler Corp. about the land where it tests new designs and concepts. "As areas around them develop, our ability to test vehicles becomes more difficult."
The automaker's management agreed Wednesday to sell its Arizona proving grounds, which is closer to Wickenburg than downtown Phoenix.
Halprin wouldn't disclose the sales price and said no details of the deal will available until it closes early next year.
Real estate analysts value the deal at more than $75,000 an acre. DaimlerChrysler's proving grounds is mostly vacant, unimproved land. It has a few office buildings and laboratories along with the paved test tracks and other vehicle-testing areas.
The site needs enough water and sewer capacity to house a community with tens of thousands of residents, so its owners are talking to nearby cities such as Surprise about annexing it.
Arizona's previous record for a land sale was Newland Communities' $250 million purchase of a chunk of the Goodyear development Estrella Mountain Ranch in May.
DaimlerChrysler will lease back the land from the investment group and continue to operate its Arizona proving grounds until late 2007.
Land broker Nate Nathan of Scottsdale-based Nathan & Associates, who is negotiating the deal, declined to comment.
Real estate market watchers say an investment group with Las Vegas and Los Angeles ties is buying the land and plans to create a community like the West Valley's Verrado development, which is going up on the former Caterpillar proving grounds in Buckeye.
Growth adds pressure
Many of the world's automakers and heavy-equipment manufacturers test cars and components in central Arizona. They come for the hot, dry climate and, until recently, the wide-open spaces. Besides DaimlerChrysler, General Motors, Toyota, Nissan and Volkswagen all have proving grounds in metropolitan Phoenix.
All are feeling pressure from the Valley's growth and burgeoning land values. But for some like DaimlerChrysler, Arizona proving grounds are turning into hot investments.
Officials at Nissan's 3,000-acre Arizona Test Center, near the Valley's new suburb Maricopa, are casting a wary eye at the booming growth rate in that area, said John Kalandro, director of human resources and administration for the Nissan facility.
Nissan's facility in Pinal County is surrounded by several new developments.
"We're hearing some very aggressive numbers in terms of growth and how close it will come to us," Kalandro said. "The projected growth has surprised us."
Nissan has been meeting with developers and city officials to talk about possible implications of growth around its facility. But, for now, the automaker has no plans to leave.
"Our investment there is substantial," Kalandro said.
Testing grounds are used to wring out every piece of a vehicle, from electrical parts and transmissions to fabrics and paint, to ensure that the companies' products are ready for the rigors of real-world driving.
Automakers also operate under a veil of secrecy at their proving grounds, where they try to keep future products and prototype vehicles away from prying eyes and camera-toting industrial spies. The encroachment of neighborhoods could compromise those privacy efforts.
History of testing
General Motors was the first to open a proving grounds in Arizona, starting its original hot-weather testing facility on a 5-acre site in what is now central Phoenix in 1937. The automaker moved in 1953 to the 5,000-acre Desert Proving Grounds in southeast Mesa, where it stands as the oldest automotive proving grounds in the state. Ford's 3,800-acre testing center near Kingman opened in 1954.
The landmark GM facility has seen essentially every car and truck made by the company in the past half-century, from the original Corvette to today's Cadillac Escalade, and every exotic prototype and experimental vehicle. The proving grounds include a famous banked, 5-mile circular track, a maze of rough roads and broad asphalt lots, and a number of offices, shops and laboratories.
General Motors announced in 2000 plans to close its Desert Proving Grounds in 2002 and move the huge operation to an even more arid area in Mexico. In 2004, GM sold off 1,800 acres of vacant land on the proving grounds for development but has since scrapped plans to close the remainder of the facility.
"The proving grounds are going to stay open for the foreseeable future," said Patty Garcia, a GM spokeswoman. One of DaimlerChrysler's nearest test-site neighbors is Toyota's sprawling 12,000-acre facility, which includes a 10-mile high-speed oval track. Toyota also has been forced to deal with intense growth issues in the West Valley.
Toyota's proving grounds was isolated when it opened in April 1993 about 16 miles west of the DaimlerChrysler facility, said Bruce Brownley, the Japanese company's general manager for corporate planning and internal affairs.
"When we selected that site, we thought we would be in a remote location for a long, long time," Brownley said. "We've been surprised by the accelerated growth in that area."
The area surrounding the Toyota facility has been annexed by Buckeye in anticipation of rapid growth, including the 35,000-acre Douglas Ranch development next to the proving grounds.
DaimlerChrysler's proving grounds is west of the new development Vistancia, where houses began selling last year. The proving grounds is next to another new development called Sun Haven.
The land won't begin to sprout houses for two years. |
