Co-living apartment project X Phoenix runs out of cash

The hike in interest rates to traditional levels has offered a clear reminder that time is money.

And time appears to be up on a luxury high-rise that looks destined to be a blight for some time on the skyline of Phoenix, where an out-of-town developer has only gotten halfway to its vision of putting a high-end gloss on co-living.

The 600,000-square-foot second phase of X Phoenix — a co-living project of Chicago-based developer X Company — owes its general contractor $36.2 million, the Phoenix Business Journal reports. The project currently sits idle.

The distress sheds light on a Government Property Lease Excise Tax, or GPLET, agreement with the City of Phoenix to abate property taxes during construction. The deal gives ownership of both phases of X Phoenix to the city.

Christine Mackay, economic development director for the city, told the Business Journal earlier this year that the deal was struck with the expectation that X Company would find new financing to retire its debt with the city and resume construction this summer. Mackey said she expects to get an update from the developers, who could not be reached for comment, later this week.

“Our goal is always to move forward with the ownership of the building and move forward with the project,” she said. “Especially in this one, where the two buildings are meant to tie together with the amenity package.”

General contractor Clayco, also based in Chicago, has filed the largest of numerous lawsuits making claims for unpaid work against the developer.

X Company finished the first phase of its downtown Phoenix co-living development at 200 West Monroe Street, where tenants can get leases ranging from around $1,000 to $3,200 per month on whole apartments or individual bedrooms and bathrooms and shared kitchens and living areas within units. Prices are higher for whole units and range upward based on various amenities offered under the “X Club” brand.

The project occupies an entire city block.

Signs of distress on the second phase of the X Phoenix first became clear when the developer halted work in September. That followed a similar move on separate X Company projects in Tampa and Houston. 

The halt of the work on X Phoenix looks to be an Arizona version of the 1.2 million-square-foot mixed-used Oceanside Plaza in Los Angeles, which has become known as “Graffiti Towers” since work halted on the project several years ago.

Clayco’s lawsuit claims that it is now seeking payment from the developer after an earlier deal to give it more time. An agreement reached in March gave X Company until May 3 to get caught up on payments for work. Clayco said the offer included “a substantial and valuable concession providing” the developer “additional time to pursue financing options.” 

Representatives of Clayco and X Company could not be reached for comment by the Business Journal.