Scottsdale Arizona Shopping Update - Who is Opening - Who is on Hold
April 29, 2008 – 7:47 am
Arizona Resorts/ Arizona Travel Deals / Arizona Golf / Spas in AZ
Mall makes room for Barneys
Since the groundwork for Scottsdale Fashion Square was first laid in 1961, the upscale retail center, Arizona’s largest has been in a constant state of growth.
Three major renovations between 1989 and 1998 have given the sprawling shopping center more than 2 million square feet of retail space and 225 store spaces.
But for its demanding, well-heeled shoppers, it wasn’t enough.
“We’re maxed out on 68th (Street) and on Scottsdale Road, but we have opportunities to develop to the north,” said Steven R. Helm, senior manager for property management at Scottsdale Fashion Square.
“We still have room to grow,” he said while overlooking a pit two stories deep on the mall’s east side, where bulldozers, backhoes and semitrucks carved out an underground parking garage with 500 spaces.
Atop the parking structure will sit two shopping levels with about 100,000 square feet of additional retail space anchored by the state’s first Barneys New York.
Aside from Barneys, which is slated to open in fall 2009, the expansion brings space for 25 to 30 new stores and two high-end restaurants.
Timothy Elliot, a Barneys spokesman, said the store’s opening was too far off to comment on details.
When customers began to flock to Neiman Marcus in 1991, it “showed there was a market for luxury retail,” Helm said.
Fourteen years later, after Robinsons-May department store’s lease ended, Fashion Square officials began talking with Barneys about plans to expand the mall’s east side to accommodate the store.
In September, Robinsons-May and a parking garage were demolished to make way for the $130 million redevelopment.
“This was specially for Barneys,” Helm said of the project. “We always have highly desired retailers interested, but we have to have a spot to put them. This is the fashion place of choice that always brings the first and brings the best.”
Fashion Square is negotiating with retailers to fill the additional shops and restaurants being built. However, Helm declined to name any of the potential retailers until they are officially signed.
The Weitz Co. recently announced its Phoenix-based Southwest Business Unit would construct the interior of Barneys, which will include an ornate staircase, a large floating glass cube above the entrance and exotic stones, woods and carpet.
In all, Weitz will construct 65,000 square feet of interior space and a 5,000-square-foot restaurant named Fred’s at Barneys.
Even as construction carries on, the Fashion Square continues to attract new retailers. In the past six months, at least eight new stores have opened and others are on the way, Helm said.
Several stores opening
Scheduled to open next week is Bottega Veneta.
In two weeks, the Gap will reopen its store with adult fashions, which closed when its 10-year lease ended.
Puma and Armani Exchange are expected to open stores in June or July.
“Now we are at Phase 10, and that’s just the middle of the end,” Helm said.
Phase 11 for Fashion Square includes possible redevelopment of properties it owns at the nearby Days Inn and Coco’s Bakery Restaurant north of the mall.
The 10-year leases for both businesses are up by year’s end, but they will likely be renewed, Helm said.
Slump delays Bloomingdale’s opening
The Valley’s first Bloomingdale’s and second Nordstrom will not open until November 2010 - a year later than planned.
Bringing the department stores to CityNorth in northeast Phoenix will be delayed for a year because of the slowing economy, said Kenneth Himmel of Related Urban Development, lead partner on the project.
The delay will give the company more time to secure financing for construction of the second phase, which consists of a central area likely to become the centerpiece of the entire project, he said.
The project, located at Loop 101 and 56th Street in the Desert Ridge area, ultimately will become one of the largest mixed-use projects in the state. It will include retail and restaurants, residential options and luxury office space developed over 144 acres just east of Desert Ridge Marketplace.
Phase one, consisting of shops and restaurants, as well as office and residential space, will open as scheduled later this year, Himmel said.
“Everyone’s afraid to make a decision,” said Himmel, adding that both Bloomingdale’s and Nordstrom supported the decision. “The whole question is timing. Without the right timing, you can be hurt very badly.”
He said the pending lawsuit filed by the Goldwater Institute, targeting the project’s $97.4 million agreement with Phoenix, had little bearing on the decision. The lawsuit is awaiting a judge’s decision, expected any day.
Clint Bolick, attorney for the Goldwater Institute, said the delay “underscores why taxpayer subsidies are a bad idea.”
In the suit, attorneys for the city and CityNorth argued that the money is an economic-development investment, pinned to the use of spaces in future parking garages, allowing more room for retail that will pay off in increased taxes. Bolick argued that the money constitutes an illegal gift to the project.
Vice Mayor Peggy Neely, who represents the district in which CityNorth sits, said she hopes residents realize the negative impact of the lawsuit.
“Many people will not have the jobs we had projected, and because of today’s announcement, the amount of construction sales tax will decrease to both the city and the state,” she said.
David Krietor, deputy city manager for Phoenix, said CityNorth has had a difficult time lining up financing.
“I have never seen the capital and credit markets dry up so quickly and to this extent,” he said.
“This is why it is important to make these deals performance based,” he said, referring to the city’s arrangement with CityNorth. “We ask the developer to take all the risk, and our investment takes place only if they perform.”
Himmel said the first phase has nearly all its retail space already leased, with close to full occupancy expected by the end of this year.
The residential sales and office leasing have lagged, however.
Himmel said he is confident that 150,000 square feet of the 330,000 square feet of office space is close to lease, and that by the time phase one opens, 20 to 25 percent of the office space will be occupied. Within a year, he said, he expects that number to be up to 90 to 95 percent.
Residential sales have been slow, he said, but the project has enough flexibility that the 99 residential units do not need to be sold right away.
Himmel said no adjustments are being made in lease rates or residential pricing.
Scott Nelson, vice president of Westcor, the Valley’s biggest shopping-center developer, said CityNorth appears to be reacting to the same market forces that led to Westcor’s partnership with DMB Partners on the One Scottsdale project, which will compete with CityNorth.
He said One Scottsdale’s retail offerings will open in the years 2010-2012.
Sorry, comments for this entry are closed at this time.