Tempe apartment project aims to be model for affordable urban development Article originally posted on AZ Central on October 15, 2025 A Tempe apartment complex built on the parking lot of an office building could become a model for urban development with lower price points. Dwell, a 129-unit apartment complex located at Farmer Avenue and Fifth Street, is now open, with about 80% of the units already leased, Olga Denisova, acquisitions and asset management for Holualoa Cos., the developer of the project, said. Developing housing at a price that is attainable to people earning between 80% and 120% of the area median income is more common in suburban locations said Steve Betts, managing director of development for Holualoa. But building in an area where land and development is more expensive is more challenging. “A few years ago, we started realizing that you can’t just do attainable housing in suburban locations,” Betts said. “A lot of the jobs that are coming to the Valley are coming to the urban locations.” In areas like downtown Tempe, acquiring land and providing necessary parking can drive up the cost of development, therefore driving up the asking rents in the final project, Betts said. The concept of Dwell, which included Holualoa buying a site that contained occupied office buildings and a large surface parking lot, helped subsidize the cost of the development because of ongoing rent from the offices and sharing the existing parking. The apartments were built on a podium, meaning that the surface parking remained intact and the first level of apartment units is above it. Because office users and residents are usually on the property at different times of day, the existing parking can serve both users. The site totals about 2.2 acres. Pared-down amenities mean lower cost Units at Dwell include two sizes of studios and a one-bedroom option. Each type has a built-in desk and a washer and dryer in the unit. The amenity package is pared down from the luxury offerings that have become common in downtown Tempe, Betts said. The pet-friendly development has a dog run, a fitness center, an upstairs game area and lounge and some meeting rooms for residents to use. Prices at the development start around $1,100 for a studio and $1,300 for one-bedroom unit. “This is a very urban project,” Betts said. “What we are selling is the urban context. The amenity is downtown Tempe, not a pool or a party deck or movie theater.” Keeping the units and amenities basic helps keep the cost lower, Betts said, which can be a challenge when cities have design requirements built into their approvals process that require more expensive finishes or other elements. Betts said the development team set out to build a project in downtown Tempe that would be affordable to city employees and other people earning average wages in the city, hoping the project would be a proof of concept that could be replicable. However, it did hit some roadblocks along the way, he said. The site is near a single-family neighborhood on one side that restricted the height and density of the future development, he said. A development with more units and an additional story of height could have been more cost-efficient, he said. At the time the project started construction, costs of construction materials spiked, leading to higher costs, especially for material like concrete, Betts said. “Having to build the podium was very expensive, wood was very expensive,” he said. “I’m very proud of this project and think it’s a great model. We unfortunately got the timing wrong and picked a site that couldn’t get the density we wanted.” State law could promote similar projects A new state law promoting adaptive reuse for sites like Dwell could make future iterations easier. The law automatically allows multifamily construction on sites that are commercially zoned but have either sat idle or are at least half vacant, without needing a rezoning. Betts said he thinks the new statute could help promote infill development like Dwell and could help create attainably priced housing without need for a government subsidy. If the law would have been in place when Dwell was built, Holualoa would have been able to increase the density to make the development more cost efficient, he said. “For projects like this it will make a huge difference,” he said.