Target has now started construction on a massive distribution center, which is located north of Interstate 10 on Rita Road. The distribution center will ship online orders for Target.com, the store’s online presence. The distribution center is larger than 16 football fields, or roughly 1 million square feet. When completed (approximately two years from now), it is expected to employ hundreds of people. This is just one of many new developments validating Tucson as a destination for corporations to locate large plants and assets to the region. Target stated that Tucson’s strategic location, with access to interstate highways, railroad, and airport facilities, was a major factor in selecting Tucson AZ as the location for this huge distribution center. Hopefully, other businesses will take notice that Target (the second largest retailer in America) has selected Tucson, Arizona, as the spot for their distribution center, and will give Tucson an opportunity to provide them with as perfect a location also. This, in turn, could make Tucson, Arizona, one of the nation’s leading logistics centers.

Since Bank of America purchased Countrywide last week, it has now become the major player in mortgage loans for America. This graph (from The Wall Street Journal online) shows that the Bank of America and Countrywide now represent one quarter of all loans originated in the country! What this means is twofold. First, the good news. By saving Countrywide from bankruptcy, it solidifies the real estate market and keeps things from getting much worse. Some think that if Countrywide had gone bankrupt, it would have severely halted the entire mortgage business from Wall Street to Main Street. The bad news for consumers is that because Bank of America now essentially owns a quarter of the mortgage business in America, I believe the result will be higher costs and interest rates for borrowers since there naturally will be less competition — at least for the next year. Once the market shakes out, there will once again be new mortgage companies and programs that will compete with the large players. This has always been the case.

Last week was a very unstable one for Countrywide Home Loans. The largest mortgage originator in America saw its stock drop off a cliff, had its stock halted amid bankruptcy concerns, and had to hold a press conference to deny that they were going to file for bankruptcy. Then, at the 11th hour, Bank of America came to their rescue and stepped up to purchase Countrywide Home Loans for $4B. In my opinion, B of A did this for multiple reasons. The simplest is that they understand the mortgage business and can pick up Countrywide for a cheap price. They understand all the facets of the business, and will be able to assist Countrywide out of their troubles. In the end, Bank of America will become the largest mortgage originator in America by a long shot. Secondly, back in August, Bank of America injected two billion dollars into Countrywide to help keep the company solvent. They purchased the 2 billion dollars worth of stock at around $18/share. When Countrywide’s stock dipped to the low $5/share mark, it only made sense for Bank of America to spend another $4 billion to buy the entire company and ensure their initial 2 billion dollar investment did not get lost if Countrywide did proceed to file bankruptcy. Finally, the real estate market and the mortgage market are in shambles. Bank of America realizes this and has the cash to buy when everyone is selling. In the long term, buying Countrywide may prove to have been an amazing business deal once the real estate and mortgage markets have stabilized and pulled out of their downturn.

Today it was reported that the State Land Department is planning for a 15,900 home development that will more than quadruple the area of northern Pima County’s population when completed. The Department released a draft of the development plans, called the Arroyo Grande plan. The new area will be large enough to house about 38,000 people, roughly the current size of Oro Valley (estimated at 44,000). This super development will span across 14 square miles bordered by Oro Valley on the south, Pinal County on the north, Oracle Road on the east, and the Tortolita Mountains on the west. That’s a HUGE AREA!

Yesterday KB Home reported their 4th quarter results and they were dismal, to be optimistic about it. For the quarter ended Nov. 30, the company posted a loss of $772.7 million. That’s a $ 772.7 MILLION LOSS in 3 months! This just goes to show how bad things really are for all builders. KB Home, in my opinion, runs a pretty good operation building homes for primarily first time homebuyers. Other homebuilders have faired just as badly. Pulte, DR Horton, Richmond American, and Standard Pacific (who just sold their Tucson operations earlier this month) have all been beaten down pretty hard.

National homebuilder Standard Pacific has left the Tucson marketplace, selling their business to local Arizona real estate executives Chris Kemmerly and Steve Quinlan. Standard Pacific entered the Tucson market in 2004 when they purchased Chris Kemmerly’s Kemmerly Homes which owned and built the Miramonte brand, which was very successful and well known in Tucson. I believe the reasons for their departure are self-evident. Standard Pacific was taking significant losses. Their stock price indicated serious trouble at the company. Standard Pacific is selling their Tucson operations to raise cash and prevent future losses. Standard Pacific sold about 700 lots ready for homes to be built and about 70 homes that are all currently in some phase of construction. The new company says they will be also be looking to purchase more land and subdivisions later in the year for additional building.

Tucson AZ has just been selected by a publicly traded company — Stanley, Inc. (NYSE: SXE) — a leading provider of systems integration and professional services to the US federal government. Stanley, Inc. will be building and managing a secure passport production center in Tucson AZ for the U.S. Department of State. The company will immediately begin construction of the secure facility with production operations expected to begin in spring of 2008. Stanley will hire more than 150 full time and part time employees in the next 12-18 months.

With all the resetting of ARM’s and the generally bad market conditions across the country, the mortgage companies that were raking in billions upon billions during the boom are now losing billions. This is a real threat to the whole economy. If it persists or gets worse, it could easily lead the country into a recession. The banks and mortgage companies have no clue how to stop the bleeding. As more ARM’s reset, fewer borrowers can afford the mortgage, and since the real estate market is so competitive, they are having a very difficult time selling as well. The only thing left for these borrowers is a foreclosure or a bank-granted “short sale,” either of which costs the lender tens of thousands. A foreclosure especially eats up money due to attorney’s fees and the condition of the property after a foreclosure has occurred.

Local real estate land baron and real estate developing icon of the Tucson area, Don Diamond, has given 15 million dollars of his own money to get a $55 million children’s hospital off the ground. This new children’s hospital, Diamond Children’s Medical Center, will also be a national player in children’s research and medical technology because it will be one of only a few national children’s hospitals across the Unites States. It is to be affiliated with the University of Arizona.

As many people are aware, the Ritz-Carlton is building its first hotel in the Tucson area. A luxury residential community — the largest one Ritz-Carlton has ever been involved with — will be constructed adjacent to the hotel. The first phase of this development will consist of more than 90 residences. The total project will number close to 300 residences to be built in the Ritz-Carlton community. They will be offering 5 different floor plans, from 2771 to 4836 sq ft. The homes will be completely customizable and, I imagine, will offer a standards list that will be one of the most luxurious of any new home development in Arizona.