Peter Corbett
The Arizona Republic
Mar. 5, 2008 06:08 AM Rival developers who were slugging it out to land luxury retailers have joined together to build One Scottsdale, northeast of Loop 101 and Scottsdale Road. Scottsdale-based DMB Associates Inc. and Westcor announced Friday that Westcor will develop, lease and operate 500,000 square feet of retail within DMB’s One Scottsdale community, which will include office, residential and hotel components on 120 acres.
Westcor later will build its Palisene mixed-use project just across the street – northwest of Loop 101 and Scottsdale Road.
“This is an exciting project to create a vision of luxury retail on both sides of Scottsdale Road and do it right and at the right time,” said Bob Williams, Westcor senior vice president of development and leasing.The alliance ends the competition between DMB and Westcor to attract the most desirable luxury retailers to their respective developments.
It also aligns the two entities as they compete for retailers, restaurants and other tenants with CityNorth, yet another major mixed-use project on 144 acres northwest of Loop 101 and 56th Street.
CityNorth is a 3.6 million-square-foot project of retail, residential, hotels and offices that is being developed by the Thomas J. Klutznick Co. and Related Urban Development. It already has signed Phoenix’s first Nordstrom and Arizona’s first Bloomingdale’s as anchor department stores, opening in late 2009.
“CityNorth is under construction and its first phase will open in October,” said John Klutznick, vice president of the Klutznick firm. “Regardless of competition or other developments, CityNorth is delivering on its promise to be the dynamic urban core for the entire northeast Valley.”
Dial at One Scottsdale At the One Scottsdale site, Dial Corp. already is building its U.S. headquarters and should be finished this year. Tracey Gotsis, a Westcor senior vice president of marketing, said retailers want to open at One Scottsdale between 2010 and 2012.
Meanwhile, DMB will focus on developing office buildings adjacent to Dial, along with condominiums and other housing.
Including retail, office and commercial, One Scottsdale is planned for 1.8 million square feet.
Scott Nelson, Westcor vice president of development, said the alliance allows Westcor and DMB to develop the right project for Scottsdale, which will “compliment CityNorth rather than compete with it.”
Robert Mayhew, DMB Commercial general manager, added that the luxury retail at One Scottsdale would not duplicate what CityNorth is doing.
DMB expects to announce a hotel for One Scottsdale soon, but no retail tenants were disclosed.
State land auction looms The DMB-Westcor joint venture could thwart a state land auction for the 112 acres that Westcor wants for its Palisene project. The Arizona State Land Department intends to auction that site on April 30. The winning bidder must pay at least $32 million to lease the land, plus $67 million to develop utilities and roads for the site.
Westcor, a division of Santa Monica, Calif.-based Macerich Partnership LP, still intends to acquire the 112 acres and develop the site, said Nelson, the Westcor vice president.
Westcor will talk with the Land Department about the timing of the auction, he said.
Land Commissioner Mark Winkleman said that Westcor’s involvement in developing One Scottsdale raises questions about their interest in bidding on the land for Palisene.
“We don’t know if they will show up and bid,” Winkleman said. “There are indications that they may not. We’ll find out on April 30.”
There are valid questions about how much retail the northeast Valley can support, Winkleman added.
Too much retail planned? David Krietor, Phoenix deputy city manager for economic development, said its impossible to speculate about how the alliance will affect the Palisene development. Palisene, also known as Paradise Ridge, “is a great piece of real estate which ultimately will be developed in a way that benefits the (Phoenix) when the time is right,” Krietor said.
“As for retail, everything will cue off how CityNorth develops, as they are lining up retailers,” he said.
Scottsdale Mayor Mary Manross said the alliance “bodes well for One Scottsdale’s future; to have two quality developers involved.”
But it is not likely to end competition between Scottsdale and Phoenix for retail development, the mayor added.
“I don’t know if that ever disappears,” Manross aid. “I’m just focusing on the impact (the alliance) has on Scottsdale.”
Impacts beyond Arizona DMB officials said that the alliance with Westcor and Macerich also will link the two companies for projects in California and Hawaii. The agreement has developed over the past year or more. Drew Brown, DMB chief executive, and Art Coppola, Macerich chief executive, have had informal talks, said Kane, the DMB executive.
Coppola bought a home about a year ago in Silverleaf, a DMB luxury community that is part of Scottsdale’s DC Ranch.
“DMB is the architect of exceptional placemaking,” Coppola said in a statement. “They are the standard for luxury living in the Western United States.”
Republic reporter Michael Clancy contributed to this story.
