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Downtown Tucson condo developers seek buyer with 'a lot of cash'

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Developers of Downtown condominium project 44 East Broadway are putting the partially finished building on the market, hoping to find a buyer or investor with deep enough pockets to finish the job.

"It's not a panicky situation," said James LeBeau, managing partner in the project. But "we can't let it limp along anymore."

LeBeau and other partners, including Mesa construction company executive John Dunn, were attempting to convert the former federal courthouse annex into luxury condominiums, complete with four penthouses priced at about $1.3 million.

Now the partners are planning to list the entire unfinished building for about $6 million.

Despite the difficulties in the real estate market — and problems plaguing other Downtown loft and condominium projects — LeBeau said the $14 million 44 East Broadway redevelopment is not in danger of failure. Rather, he said, the business partners simply want to find someone with "a lot of cash" to expedite the process.

"All the hard work is done," said LeBeau. "All they have to do is put in a lot of money."

So far, the project is about one-third complete, said LeBeau, who also works as a commercial real estate finance broker. Dunn, president of Jobax General Contracting LLC, said there are already several parties interested in the building.

"It's a very salable product that we're putting on the market," he said.

Tucson Mayor Bob Walkup, who toured the property recently, said he is impressed with the developers' work so far and is confident they will find a buyer or new partner.

"There is still money for investment nationally," he said. "Your credit has got to be good and your risk has got to be low. Downtown Tucson is a low-risk investment."

Despite Walkup's assertions, local financing experts say lenders are currently shying away from condo-development projects.

"Basically, it's off the list of project types that are financeable," said Valerie Priser, chief executive officer of Catalina Mortgage Co., a commercial financing company.

"Nationwide, we experienced a great overbuild of condo projects," she said, adding that both lenders and investors are wary of the developments now, regardless of location.

Michael Hannley, president and CEO of the Bank of Tucson, said financing a Downtown condo project would not be "impossible, just difficult."

"Tucson and Phoenix are depressed markets, and condominiums are very difficult to finance right now," he said.

Elsewhere in the Downtown area, several condo projects have either fallen through or been put on hold. Among them:

● The Post, a condominium development by Bourn Partners that was slated to begin this spring after many delays, and is still on hold.

● Presidio Terrace, a $30 million loft project that was shelved after the developer, Peggy Noonan, failed to find financing.

● The Lofts at Fifth Avenue, a project put on hold by its developers until the market improves.

● One West, at One West Speedway, which is holding out for federal tax credits in order to begin construction.

LeBeau said he feels his plans are firmer than some of the others because he already has a construction loan. Also, he said the project has long-term investment potential since it is in the core of Downtown and he expects it to be a "class A" development.

In addition to the penthouses, the building would have 30 condominiums priced from about $350,000 to $650,000, LeBeau said. He is also hoping to attract a high-end restaurant, cafe and other retail tenants to the site.

If no big investor or buyer materializes, LeBeau said he plans to finish the building but will probably rent the units out as apartments.

"That would be plan B," he said.

One other project that is going forward Downtown, One North Fifth, at the former Martin Luther King Jr. building, is slated to be rentals rather than condos.