Recession took toll on potential Scottsdale developments

Image of the proposed Solis project (formerly Waterview) on Camelback Road east of Scottsdale Road.

Development brochures for some of Scottsdale's most ambitious projects from a few years ago show pretty pictures of lushly landscaped shopping plazas with fountains and a mix of shops, condos and offices in opulent settings.

Those computer-enhanced images are yellowing now. Some of the Northeast Valley projects have stalled and the optimism and free-flowing investment cash of the era before 2008 seem like a mirage.

Unearthing the publicity pamphlets recently, while cleaning my desk, took me down a memory lane of hope and hype.


Nordstrom, Bloomingdale's and Macy's were touted to open at CityNorth by 2011.

Westcor promoted plans for 190-foot condos and a shopping center with a retractable roof at Palisene northwest of Loop 101 and Scottsdale Road.

Across the road to the east, DMB Associates heralded designs for its One Scottsdale project with 1,100 residential units, 400 hotel rooms and 1.8 million square feet of shopping, dining and office space.

Henkel AG did open its North American headquarters on DMB's 120-acre site in 2008, but One Scottsdale's other buildings have not made it off the drawing board.

Scottsdale Canal Development spent tens of millions of dollars buying and rezoning land for its Solis Scottsdale Resort and Residences northeast of Scottsdale and Camelback roads. It bulldozed aging apartments.

Developers paid for an economic study that projected Solis Scottsdale would generate $3.7 million in city tax revenue in its fourth year.

Four years after the plans surfaced, the Scottsdale Canal Development property is up for bid today in a foreclosure sale.

Bad timing

Timing is everything in music, comedy and development. And these projects got caught on the downbeat of the development cycle that followed a crippling recession and still recovering financial markets.

Projects around the Valley are trying to rebound from bad timing, bad plans or both. That includes the former Centerpoint condo towers in Tempe, Elevation Chandler and CityNorth, three projects that are among the biggest belly flops.

CityNorth, which opened in November 2008, just months after the economic crisis hit, was sold at a foreclosure sale in July 2010. The three anchor department stores and scores of smaller shops and restaurants have pulled out.

Westcor is pursuing development of a luxury outlet mall at Scottsdale Road and Loop 101 that would open early in 2013. The company is not saying if it would be built at Palisene on the Phoenix side of Scottsdale Road or at One Scottsdale to the east.

Westcor and DMB in March 2008 agreed that Westcor would develop the retail at One Scottsdale.

Charley Freericks, DMB general manager of commercial real estate, said One Scottsdale would welcome the Fashion Outlets of Scottsdale, but Westcor has not disclosed its intended location for the project.

In the meantime, other interests are "kicking the tires" at One Scottsdale and the company is feeling optimistic about landing some deals, he said.

One Scottsdale has been on hold for the past few years, but it's in a better position than CityNorth, Freericks said.

"We're starting with a clean slate as the economy comes back to life," he said.

Apartments lead recovery

Paul Katsenes, Scottsdale community and economic development director, said retail development at Scottsdale Road and Loop 101 "would be taking an enormous beating right now" if it had gone forward a few years ago.

Scottsdale Quarter, about 2 miles away, has done really well under the circumstances, he said.

"There is a unique character about retail that it's the last real-estate component to come out of a bad economy," said Katsenes, adding that apartments are the first to emerge.

Indeed, apartment projects are so hot right now that it should suggest some caution to avoid overdevelopment.

As the market recovers, it's good to keep some perspective and remember all those pretty pictures from five years ago.

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Recession's victims

Here are some of the higher-profile development projects in the Northeast Valley that stalled or were derailed by the recession:

• CityNorth, the mixed-use project at 56th Street and Loop 101.

• Palisene, Westcor's planned regional mall northwest of Scottsdale Road and Loop 101.

• One Scottsdale, DMB Associates' mixed-use project northeast of Scottsdale Road and Loop 101.

• Solis Scottsdale, hotel and luxury condominiums northeast of Scottsdale and Camelback roads.

• Portales Place, a former Grace Communities condo project at Goldwater Boulevard and Highland Avenue.

by Peter Corbett The Arizona Republic Sept. 2, 2011 06:33 AM

Recession took toll on potential Scottsdale developments