$400 million Chrysler land sale astate record
Sprawl squeezes proving grounds
Catherine Reagor and Bob Golfen
The ArizonaRepublic
Sept. 29, 2005 12:00 AM
New homes will replace DodgeVipers and PT
Cruisers on a huge piece of land northwest of Phoenix, where automakerChrysler
has tested its vehicles since 1958.
In the biggest land sale inArizona
history, real estate developers are paying more than $400 million for
DaimlerChrysler's landmark 5,500-acre proving grounds.
"What wedo on
our proving grounds is confidential," said Mary Beth Halprin, a seniormanager
for DaimlerChrysler Corp. about the land where it tests new designs and
concepts. "As areas around them develop, our ability to test vehiclesbecomes
more difficult."
The automaker's management agreed Wednesday tosell its
Arizona proving grounds, which is closer to Wickenburg than downtown
Phoenix.
Halprin wouldn't disclose the sales price and said nodetails of
the deal will available until it closes early next year.
Realestate
analysts value the deal at more than $75,000 an acre. DaimlerChrysler'sproving
grounds is mostly vacant, unimproved land. It has a few office buildingsand
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 talkingto
nearby cities such as Surprise about annexing it.
Arizona'sprevious
record for a land sale was Newland Communities' $250 million purchase ofa chunk
of the Goodyear development Estrella Mountain Ranch in May.
DaimlerChrysler will lease back the land from the investmentgroup 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 marketwatchers
say an investment group with Las Vegas and Los Angeles ties is buyingthe land
and plans to create a community like the West Valley's Verradodevelopment,
which is going up on the former Caterpillar proving grounds inBuckeye.
Growth adds pressure
Many of the world's automakers and
heavy-equipment manufacturers test cars and components in centralArizona. They
come for the hot, dry climate and, until recently, the wide-open spaces.Besides
DaimlerChrysler, General Motors, Toyota, Nissan and Volkswagen all haveproving
grounds in metropolitan Phoenix.
All are feeling pressure fromthe
Valley's growth and burgeoning land values. But for some likeDaimlerChrysler,
Arizona proving grounds are turning into hot investments.
Officials at
Nissan's 3,000-acre Arizona Test Center, near the Valley's new suburbMaricopa,
are casting a wary eye at the booming growth rate in that area, saidJohn
Kalandro, director of human resources and administration for the Nissan
facility.
Nissan's facility in Pinal County is surrounded byseveral new
developments.
"We're hearing some very aggressive numbers interms of
growth and how close it will come to us," Kalandro said. "The projectedgrowth
has surprised us."
Nissan has been meeting with developers andcity
officials to talk about possible implications of growth around itsfacility.
But, for now, the automaker has no plans to leave.
"Ourinvestment there
is substantial," Kalandro said.
Testing grounds are used towring out
every piece of a vehicle, from electrical parts and transmissions tofabrics and
paint, to ensure that the companies' products are ready for the rigorsof
real-world driving.
Automakers also operate under a veil ofsecrecy at
their proving grounds, where they try to keep future products andprototype
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 opena
proving grounds in Arizona, starting its original hot-weather testingfacility
on a 5-acre site in what is now central Phoenix in 1937. The automakermoved in
1953 to the 5,000-acre Desert Proving Grounds in southeast Mesa, whereit stands
as the oldest automotive proving grounds in the state. Ford's 3,800-acretesting
center near Kingman opened in 1954.
The landmark GM facility hasseen
essentially every car and truck made by the company in the pasthalf-century,
from the original Corvette to today's Cadillac Escalade, and everyexotic
prototype and experimental vehicle. The proving grounds include a famousbanked,
5-mile circular track, a maze of rough roads and broad asphalt lots, anda
number of offices, shops and laboratories.
General Motorsannounced in
2000 plans to close its Desert Proving Grounds in 2002 and move the hugeoperation to an even more arid area in Mexico. In 2004, GM sold off1,800 acres
of vacant land on the proving grounds for development but has sincescrapped
plans to close the remainder of the facility.
"The provinggrounds are
going to stay open for the foreseeable future," said Patty Garcia, a GM
spokeswoman. One of DaimlerChrysler's nearest test-site neighbors isToyota's
sprawling 12,000-acre facility, which includes a 10-mile high-speed ovaltrack.
Toyota also has been forced to deal with intense growth issues in theWest
Valley.
Toyota's proving grounds was isolated when it opened inApril
1993 about 16 miles west of the DaimlerChrysler facility, said BruceBrownley,
the Japanese company's general manager for corporate planning andinternal
affairs.
"When we selected that site, we thought we would be ina remote
location for a long, long time," Brownley said. "We've been surprised bythe
accelerated growth in that area."
The area surrounding the Toyotafacility 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 developmentVistancia, where houses began selling last year. The proving grounds isnext to
another new development called Sun Haven.
The land won't begin to sprout houses for two years.
|
