Scottsdale Arizona Real Estate Blog

Peter Corbett
The Arizona Republic
Mar. 31, 2008 12:49 PM  NORTHEAST VALLEY – Westcor officials say they still plan to build their Palisene project despite a recent alliance with DMB Associates to develop retail at One Scottsdale, east of Palisene at Loop 101 and Scottsdale Road.

The Valley mall giant intends to be among the bidders April 30 when the Arizona State Land Department auctions 112 acres of state trust land that Westcor wants for Palisene. The site is about a quarter-mile north of Loop 101, west of Scottsdale Road to 68th Street.

“We plan on participating in that process,” Scott Nelson, Westcor vice president of development, said of the auction. “Our commitment to the State Land Department is the same as it was before we announced the alliance with DMB. Westcor and DMB on March 5 announced a partnership in which Westcor will lease and operate the retail sector at DMB’s One Scottsdale development on the east side of Scottsdale Road at Loop 101.

One Scottsdale is planned for 1.8 million square on 120 acres, with offices, 400 hotel rooms and up to 1,100 residential units.

Dial Corp. is building its four-story headquarters at One Scottsdale. It will be the first component of the mixed-use development when it opens this fall. 2008

There are concerns that the alliance will thwart retail development of Palisene because of all the competing retail development in the Northeast Valley. That includes One Scottsdale, CityNorth, two miles to the west, and the Scottsdale Quarter, just east of Kierland Commons, two miles to the south.

But Westcor intends to go forward with Palisene.

“I’m not sure our vision drastically changes,” Nelson said. “It’s an exciting opportunity for both sides of the street to be aligned and complimentary to one another.”

The alliance with DMB gives retailers predictability in that they can open in One Scottsdale in 2011-12, the time frame that many of them are seeking, he said.

State Land Commissioner Mark Winkleman said one of the challenges of developing the 112-acre Palisene site is that the winning bidder has to commit to an expense of $67 million for roads, utilities and drainage improvements for the area.

That cost, on top of a minimum bid of $32 million, could scare away some bidders, he said.

“At the end of the day, the project has to pencil out financially,” Winkleman said. “If you can’t get enough tenants and the land costs too much then you don’t have a project.”

The marketplace, including potential bidders like Westcor, will make the determination on whether a development would be viable given the current costs, the land commissioner said.

Developers have recently be reluctant to buy some state trust land parcels. Last week, there were no bidders at a state land auction for 252-acre residential site southeast of 56th Street and Pinnacle Peak Road.   

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