Scottsdale Arizona Real Estate Blog

by Jane Larson – Feb. 3, 2009 07:00 AM
The Arizona Republic

Developers are excited about adding full-service restaurants to their projects along Loop 101 in Scottsdale, now that the Salt River Pima-Maricopa Indian Community has voted to allow alcohol sales in the commercial corridor.

DeRito Partners Inc., owners of the Scottsdale Pavilions shopping center at the 101 and Indian Bend Road, plan to start marketing to restaurant chains.

“It gives us time to kick off an aggressive campaign to quality restaurants and talk to them about the opportunity along the 101, which was never available before,” said Marty DeRito, chief executive officer of the Phoenix-based development company. “This was 20 years in the making.” and Mervyns, has space available in existing buildings and has room in its parking lots to build stand-alone restaurants, he said.

The Salt River community voted Thursday to approve the Restaurant Alcohol Initiative, which will allow liquor sales in restaurants that make at least 40 percent of their revenue from food. Bars and package-liquor stores would still be prohibited.

The tribe had voted down similar measures over the years.

DeRito said his firm would target family restaurants, national and regional chains, as well as “great chefs” in the area to open eateries at the Pavilions. The shopping center, which has been hit hard by the loss of big-box retailers including Circuit City

Given the shaky economy and tight financing for new construction, developers said, the Pavilions and its existing space may well be the first to benefit from the change.

DeRito said he hoped to have new restaurants in the center by early next year, when the tribe is due to open its 500-room hotel and expanded casino one-half mile away, on the east side of the freeway. Within three years, he said, the Pavilions could have 20 restaurants.

At Pima Center, a 200-acre office and retail development north of the Pavilions, the first restaurants could be under construction by early 2010 and open by summer of 2010, said Gerry Blomquist, partner in master developer MainSpring Capital.

The center plans to target lunch spots such as Chili’s Grill and Bar and P.F. Chang’s China Bistro as well as some fine-dining restaurants to serve its planned hotels, he said. It could have seven or eight different types of restaurants by the time the development is built out in about seven years, he said.

“With our upscale employee base, we want to be able to say, ‘Here are your choices for dinner and lunch, and when you have people coming in they can go here,’”Blomquist said.

Some 2,000 to 2,500 employees already work at companies based in the Pima Center, and 10,000 workers could be there by build-out, Blomquist said. Employees now have to drive to Scottsdale Road or go north on Loop 101 to find restaurants.

“It’s really big to our project,” he said of the vote.

Riverwalk Arizona, a 187-acre office and retail complex on the freeway’s east side, eventually could have six to 10 restaurants, said Kurt Rosene, senior vice president of developer Alter Group. About 2,000 people work in the development now, with up to 9,000 expected in five years.

“We’ve been trying for the last several years to attract high-quality, sit-down restaurants to Riverwalk,” Rosene said. “Every one derives a portion from alcohol sales, and we weren’t able to attract them until the vote passed.”

Alter Group has talked to quite a few nationally known restaurant names, he said, along with others that offer sports or automobile themes.

“We get calls from restaurants that I’ve never heard of that want to tie into car collectors” who visit Scottsdale for the Pavilions’ weekly car show or Barrett-Jackson Auction Co.’s annual event, he said.

Riverwalk also is going through the Salt River community’s approval process to build Hampton Inn and Suites and Homewood Suites business hotels across from the tribe’s new hotel and expanded Casino Arizona. Construction would start this year, and the hotels could open in mid-2010, Rosene said.

The hotels are likely to attract restaurants that want to locate nearby and open at the same time, he said.

Now that the initiative has passed, the community will make various policy decisions and update its alcohol ordinance over the next several months, said Stacey Gubser, director of the community development department. The revised ordinance will have to be approved by the community’s council.

The Community Office of Alcohol Beverage Control will provide regulatory oversight, she said.

A licensing and fee structure also will be developed, said Quannah Dallas, manager of the tribe’s economic development division. She expects the first proposals to come from developers that already have leases for community land.

The additional restaurants would help the Salt River community, which already operates two casinos, a sand-and-gravel operation and other enterprises, further diversify its tax base. The community estimated that the new restaurants would generate up to $50,000 each in taxes.

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