Arizona Center sold for $136 mil

The Arizona Center mixed-use development in downtown Phoenix has been sold to CommonWealth REIT of Newton, Mass., for $136.5 million.

When it opened 21 years ago, the center was envisioned as a retail and entertainment magnet. When that concept fizzled, much of the retail space was eventually converted to offices.

The sale of the property puts discussions about its future on the front burner again.


CommonWealth REIT controls a $6.4 billion national portfolio of office and industrial properties, including five other projects in Arizona. It did not immediately respond to a request for information about its plans for the property.

The center includes over 1 million square feet of office and retail space. It was sold by General Growth Properties Inc., which intends to focus on its regional malls.

General Growth, the nation's second-largest mall owner behind Simon Property Group, emerged from Chapter 11 bankruptcy protection in November and has been shedding non-core assets such as the Arizona Center.

"Hopefully, CommonWealth REIT will bring new energy to the project," said Dave Roderique, president and CEO of the Downtown Phoenix Partnership.

The Arizona Center was developed by high-profile mall developer Rouse Co. in 1990 in an effort to jump-start redevelopment in downtown Phoenix.

The city contributed the land, then worth about $8 million, and granted the developer $40 million in sales-tax rebates.

General Growth acquired the Arizona Center in 2004 through its $12.6 billion acquisition of Rouse.

The company is primarily a regional mall developer and didn't seem to know what do with a mixed-use project such as the Arizona Center.

Roderique said the addition of the Sheraton Phoenix Downtown Hotel, Arizona State University's downtown campus and the new convention center have made the area more viable and a retail and entertainment destination.

The 16-plus-acre Arizona Center consists of roughly 800,000 square feet of offices in two high-rises; 160,000 square feet of retail space, including an AMC Theatres complex; and several parking garages.

Included in the deal were three development sites that were originally zones for two more office towers and a hotel.

Bob Young, a CBRE agent who represented the seller in the transaction, said the development parcels give the buyer the opportunity to substantially increase the size and value of the project at some point down the road.

"In addition to acquiring an iconic asset, Arizona Center provides the future upside potential with the development of three pad sites," he said.

Steve Brabant, Glenn Smigiel and Rick Abraham of CBRE's Phoenix office also worked on the deal.

David Keating, a spokesman for General Growth Properties, said the company intended to retain ownership of the Tucson and Park Place malls in Tucson and the Mall at Sierra Vista in Sierra Vista.

General Growth Properties also is a part owner, with Westcor parent Macerich Co., of Arrowhead Towne Center in Glendale and Superstition Springs Center in Mesa.

by Max Jarman The Arizona Republic Mar. 8, 2011 06:21 PM





Arizona Center sold for $136 mil