Condo conversion, or the process of converting an apartment or another space into a condominium, is a hot trend across the Valley and is becoming more popular in Tempe, city staff said.
About 600 apartment units in Tempe were converted to condominiums last year said Jay Butler, director of the Arizona Real Estate Center at ASU's Polytechnic campus.
The center found a total of 10,140 units were changed to condos Valley-wide in 2005, Butler said.
Condo conversions have become more popular as single-family home prices have skyrocketed since 2004, he said.
"People went for more affordable concepts of home ownership," Butler said.
The average price of a resold single-family home in Tempe leaped 37 percent to $250,000 last year, according to AREC. In 2004, the average home price was $182,000.
A resold condominium or townhouse sold for an average of $162,000 in 2005, up 38 percent from $117,000 in 2004.
It's hard to estimate how many converted condos were sold because many were put on the market near the end of 2005, Butler said.
Still, the conversion craze has been less prominent in Tempe, where many apartments are older and more expensive to fix, Butler added.
"The apartments that have proven to be good conversions were really built as condominiums in the first place," Butler said.
Besides being more affordable than houses, condos offer home-like amenities, such as garages and separate dining rooms, Butler said.
Condominiums also require less exterior maintenance than a house, he added.
Requests to convert apartment complexes into condominiums are handled by the Development Services Department, which is in charge of issuing building permits and building safety requirements. Requests then go on to the City Council for approval.
There have been four requests to change apartment complexes to condominiums in Tempe since January, said Diana Kaminksi, a senior planner for the city.
Eleven condo-conversion requests were submitted in 2005, she added.
Kaminski said condo conversion is attractive for economic development because Tempe is a land-locked city with little room to build new homes.
But the city is concerned there are no set standards for considering a conversion proposal, Kaminski said.
"If they're making an approval or denial of a case, [the council needs] information," Kaminski said.
Specific concerns include possible condo overcrowding, which could lead to negative effects on parking, water consumption and traffic, she added.
Butler said it's also possible that current apartment tenants' leases could also be cancelled so complexes could sell those units as condominiums.
But most developers are cautious when they complete conversions and let current occupants stay as long as they want, he added.
Until last year, Villa Real, a condominium development near Broadway Road and Loop 101, was run like an apartment complex.
Kelly Notary, a sales and marketing manager at California-Silverstone Communities LLC, the company that purchased Villa Real, said all leases were honored.
Current tenants also got the first chance to purchase their former apartments, she added.
Jodi Gabler, a project manager for Condo Conversion Pros, said many parents of ASU students have bought Tempe condos as an investment.
Gabler said parents can make a profit by later selling their children's units at a higher price, she said.
"You could use it as a vacation home and sell it for the return on investment," Gabler said.
Reach the reporter at grayson.steinberg@asu.edu.
