Shifting development gears
After decades on the Valley’s edges, iconic homebuilder prepares to move to the center
Metro Phoenix’s growth has been defined and refined over the past 20 years by the big planned developments DC Ranch in Scottsdale, Verrado in Buckeye and Eastmark in Mesa.
The projects, on the edges of the Valley when they started, have grown into popular communities where schools, shops and jobs arrived before many of the early residents. Big chunks of land in the developments have been preserved for open space, meaning fewer home sales but more parks and trails for residents.
Real estate analysts credit the developments for upping the quality of Arizona’s growth.
DC Ranch draws buyers and golfers from around the world, and many of Arizona’s priciest mansions sit in its Silverleaf neighborhood. Verrado brought a new feel to West Valley housing with its historic-looking homes. And Eastmark is one of the top-selling communities in the U.S., drawing many families to the Valley’s eastern edge.
Scottsdale-based DMB Associates, the iconic developer of those large communities, is now
“DMB is very smart about development and sets very high standards that other developers must compete against.” Mark Stapp Arizona real estate analyst
shifting gears. It is creating a new company to focus on infill projects in the Valley and California — including its first apartment complex, on a prime piece of land along the light rail in Tempe.
DMB will continue steering the growth of its existing communities. But its founders — Drew Brown, Mark Sklar and Bennett Dorrance — are handing over some of that management, and have funded the new company for future projects.
“DC Ranch, our first large-scale master-planned community, is basically done,” said Brown, who, like his partners, is in his 70s. “Not saying we are done, but we are older and built a business based on large developments that take 20 years to complete.
“None of us are prepared to double down on another 20-year project, but we will still be involved.”
Dorrance called the change a “transition without ignoring the old projects that made DMB.”
Sklar said he and his longtime friends are ready to take a more “stewardship role than daily management.”
The new firm, DMB Development, will still carry the initials of the influential founders — and will be led by DMB Associates President Brent Herrington.
“We have spent a few years talking about DMB 2.0 as Drew, Mark and Bennett power down a bit and focus on other things,” Herrington said. “The growth platform for DMB Development will be to start looking back over our shoulders at opportunities for people trying to live and work closer to their jobs and all the fun stuff they like to do.”
Metro Phoenix’s growth is shifting. Homebuyers are less interested in the “drive until you qualify” mentality, and less willing to take on longer commutes in exchange for larger homes and more suburban amenities.
After the housing crash, buyers and renters began to move closer in. Builders followed with smaller single-family developments, condominium projects and lots of apartments in central Phoenix, Scottsdale and Tempe.
DMB Development is planning a new type of infill project with high-end apartments that draw long-term renters. Plans for its first apartment project — Eastline Village, on Apache Boulevard about midway between the downtowns of Tempe and Mesa — will be finalized soon. “It will be thoughtfully designed apartments with innovative offices and co-work space and some really cool retail,” Herrington said. “We have a huge opportunity to redevelop and recolonize areas closer in.”
Arizona real estate analyst Mark Stapp, director of the Master of Real Estate Development program at Arizona State University, said DMB did a lot to improve the character of metro Phoenix’s growth in communities farther out. He predicted they will now do that for infill.
“Infill is hard to do, but DMB is very smart about development and sets very high standards that other developers must compete against,” he said.
DMB Development is working on other central Valley projects but isn’t ready to talk about them yet.
In California, the new DMB company is working on an infill project in Sacramento that could involve boat slips, as well as other dense and centrally located developments in Irvine and Napa.
“We (DMB’s founders) have substantially capitalized the new company to grow,” Brown said. “It will move forward with the DMB brand with new transactions, some similar to what we have done before and others very different.”
DMB formed in the late 1980s and initially focused on purchasing commercial developments, including Tempe’s Centerpoint and a blue-neon bank tower in Mesa.
It also partnered in housing developments such as Power Ranch and Superstition Springs in Mesa.
But it’s first foray into comprehensive planning of a huge tract of vacant land started in the mid-1990s with the 8,000acre DC Ranch in north Scottsdale, next to the McDowell Mountains.
DMB spent years planning DC Ranch before construction started.
In 1996, Brown led a golf-cart tour across DC Ranch’s vacant desert, pointing out where the trails would connect, where the schools would go up, where the most popular restaurants would be located and which homes would cost the most because they would have the best views.
In 2013, on a similar tour, Brown pointed out how the things he envisioned 15 years earlier had been developed — and how the community, its neighborhoods and its residents had exceeded his expectations.
DC Ranch has been lauded by the Washington, D.C.-based real estate think tank Urban Land Institute as a model for developing a planned community on a metro area’s edge.
The Urban Land Institute cites the preservation of more than half of DC Ranch’s land, its miles of paths with pedestrian underpasses, early smarthome technology and smaller neighborhoods as reasons.
It also credits DMB with opening a large town center with shopping and restaurants, schools and a community center very early in the Scottsdale community’s development.
Before DC Ranch, retail, schools and other amenities typically lagged homeowners moving in for several months or even years.
Now, there are only 14 lots left for sale in DC Ranch. That land is in its most upscale neighborhood, Silverleaf, where houses have been listed for more than $30 million.
On a prime parcel in Silverleaf, DMB is partnering with the California-based New Home Co. to develop 72 high-end condos priced at $1.5 million or more. DMB stepped in after the condo project stalled with an earlier developer.
Condo sales are up 50 percent in metro Phoenix, and the pricier end of the market is growing the fastest, according to Arizona housing research firm the Cromford Report.
DMB looked far to the West for its second big Phoenix-area community.
Home sales started in early 2004 in 8,800-acre Verrado, on the former Caterpillar proving ground at the base of the White Tank Mountains in Buckeye.
Verrado’s already-completed main street, with a grocery, drugstore, coffee shop, nearby school under construction and small neighborhoods with bungalow-style houses with big porches, drew big crowds of early buyers.
National and local housing analysts predicted a DC Ranch-esque community in the West Valley could change the area’s reputation as mainly an affordable-home and retirement-community hub. Buckeye readily annexed Verrado, welcoming the development’s more high-end plans.
During the community’s opening weekend, buyers lined up and put their names in a lottery to buy one of the first houses. All three of DMB’s principals were at opening day, greeting the crowd. Dorrance even donned a neon vest to help direct parking.
DMB hoped for a repeat of DC Ranch’s early success. But by 2007, the housing market was stalling and a crash more severe than most imagined was looming. “We were lucky with DC Ranch, and most of our California projects, when the crash hit,” Brown said. “But Verrado got beat up pretty bad.”
By 2008, Valley home sales had plummeted, and homebuilders began returning lots to lenders. DMB stepped in and bought Verrado lots back from the banks to ensure future growth in the community kept to the plan — and to prevent builders from throwing up smaller, cheaper houses just to get a sale.
“DMB is in it for the long haul,” said Gadi Kaufman, an analyst with Washington, D.C.-based Robert Charles Lessor & Co., in 2012. “Look at the other big builders in Phoenix who bought parcels and had grand plans but handed them back when the market fell.”
He said Phoenix’s housing crash would have been much worse if its major parcels had not been developed with DMB’s level of commitment.
DMB also subsidized the Bashas’ grocery store in downtown Verrado to keep it open during the crash.
“You learn the most about people in the toughest times,” said John Graham, CEO of Valley developer Sunbelt Holdings. He has known DMB’s founders for more than three decades. “Whether it’s standing behind important developments or philanthropic and community involvement, DMB’s partners never wavered or bowed out.”
Home sales have tripled at Verrado since 2014, to 430 last year.
DMB paid $260 million for the 3,200acre land for its Mesa Eastmark development in 2006 and was in early planning stages when the crash hit.
When the housing market started to recover in 2012, seven big homebuilders spent a total of $50 million for lots in Eastmark. It was one of the first signs the Valley’s housing crash could be over.
Eastmark has been one of the top selling communities in the U.S. during the past few years. In 2017, it ranked No. 6 for the most home sales: 919, according to California-based John Burns Real Estate Consulting. It was the top-selling new-home community in Arizona.
Sales in the community — popular with homebuyers because of its diverse mix of homes, parks and schools — jumped 83 percent last year.
“Eastmark has become one of my favorite master-plans to visit. DMB and its builder partners have created a community that appeals to all homebuyers,” said Ken Perlman, a principal with John Burns Real Estate. “But the lifestyle elements DMB added are what really makes Eastmark special.”
He said those amenities include “some of the best schools in Phoenix, amazing community festivals and unique family-friendly gathering spots such as the Handlebar diner and the kid-friendly ‘Bus Stop’ hangout.”
Brian and Victoria Della Valle bought a new house in Eastmark in 2015 to be near a BASIS school for their daughter, and because of DMB’s reputation.
“We looked all over the Valley,” said Brian Della Valle, who moved his family from New Jersey for his job. “We have a great neighborhood, shopping nearby, and the (Loop) 202 freeway makes it easy to get everywhere else.”
Dorrance said Eastmark is on track for up to another 1,000 home sales this year. Several other big land sales, including a site for a school, are in the works at Eastmark.
For DMB, the work has been more than developing large communities; it’s been about building up the Valley as a community, Valley leaders said.
Its founders are part of many economic, growth, technology and philanthropic boards. Brown has chaired the boards of the Phoenix Art Museum, the Flinn Foundation and Greater Phoenix Leadership.
Dorrance has been very active with the boards of the Arizona Science Center, the Translational Genomics Research Institute and the Arizona Community Foundation.
Sklar has committed many hours to the Banner Alzheimer’s Institute, the Phoenix Jewish Community Foundation and the Phoenix Symphony.
“In years to come, we will continue to see the many ways Drew, Mark and Bennett paved the way for better growth in Arizona,” said Sharon Harper, CEO of the real estate and medical company the Plaza Cos. and past chair of Greater Phoenix Leadership. “Their imprint on our community is tremendous. They see the whole picture and always step up when our community needs their civic support.”
Sklar said to him, DMB hasn’t been about one specific project. “It’s about three people who became friends and formed a business that has purpose beyond making money,” he said.
Dorrance remembers fondly the vacations the three men took together with their families. “Now we all have grandchildren and want to spend more time with them,” he said.
Brown said the three are all proud of their developments, but it’s about more than that for him as well.
“We have been lucky to build communities for people that hopefully make their lives better,” he said. “That means a lot to us.”
“It’s about three people who became friends and formed a business that has purpose beyond making money.” Mark Sklar DMB Associates co-founder