The Arizona Republic Arizona Mills Mall opened in Tempe in the 1990s.
The 1990s was a watershed decade for Arizona and metro Phoenix that saw a cadre of Old Guard power brokers and movers and shakers swept out by collapse of the commercial real-estate market and the subsequent savings-and-loan debacle.
But the financial tsunami that swept over the state in the early 1990s created opportunities for a new breed of community leaders and businesses that were able to capitalize on the downturn and leave their mark on the area's economy and landscape.
Robert Sarver's Southwest Value Partners and Francis and Jahm Najafi's companies got starts early in the decade. DMB Partners emerged as a major Phoenix area developer. Vestar Development was a pioneer of the big-box power center and helped Target and Walmart expand in the area.
The new wave of entrepreneurs took the places of long-time bankers such as Gene Rice and Gary Driggs, whose MaraBank S&L and Western Savings & Loan Association were seized by the government, and high-flying developers such as Charles Keating and Conley Wolfswinkel, who were sued by the government and put out of business.
High-profile business leaders such as Keith Turley and Karl Eller lost footing when their respective companies, Pinnacle West Capital Corp. and Circle K Corp., made missteps and ran into trouble.
Vestar founders Lee Hanley, Rick Kuhle, David Larcher, Paul Rhodes and Peter Thomas borrowed $100 million to buy the commercial-building division of Tucson's Estes Homes in 1989 just as commercial real-estate prices were starting to fall and savings and loans to fail.
The deal included 35 commercial properties developed by Estes Development Co., including the partially completed 1.2 million-square-foot Scottsdale Pavilions retail center at Pima and Indian Bend roads, arguably the nation's first power center.
The Vestar partners at first couldn't believe their bad timing as they watched commercial real-estate values plunge in metro Phoenix and around the country.
But their luck would soon change.
Their deal with Estes was financed by the pension plan of Chicago-based "Baby Bell" Ameritech Corp., which was looking to build up its real-estate portfolio in the West. Instead of financing the venture, Ameritech came in as a capital partner.
As a result, Vestar had access to a vast amount of capital at a time when there was virtually no conventional money available for real-estate developments and acquisitions.
Larcher, Vestar's executive vice president, said that Ameritech's backing enabled the company to take advantage of depressed real estate and make key acquisitions. It also positioned Vestar to develop relationships with retailers such as Target and Walmart, which were looking to expand in Arizona and Southern California.
Vestar built dozens of Walmart- and Target-anchored retail centers during the decade.
Ameritech's deep pockets helped finance the second phase of Scottsdale Pavilions and to build Scottsdale Towne Center, Deer Valley Towne Center and numerous other power centers.
"The 1990s was a decade where it was very hard to finance real-estate projects and the fact we were able to secure a long-term source of capital allowed us to jump ahead of our competitors and grow rapidly," Larcher said.
Vestar emerged at the end of the 1990s as one of the nation's largest and most respected shopping-center developers -- a status it continues to hold more than a decade later.
by Max Jarman The Arizona Republic Dec. 1, 2011 05:15 PM
Real estate dominated Valley business in the 90s