Thursday, July 14, 2011

Tenants, Glendale officials retain high hopes for Westgate

Westgate City Center, Glendale, Arizona David Kadlubowski/The Arizona Republic

Westgate City Center, a retail-and-entertainment center with opulent fountains and flashy billboards, opened in Glendale in 2006.

Glendale leaders and tenants at Westgate City Center remain optimistic in the wake of last month's announcement that the shopping-and-entertainment complex may be sold at auction.

Restaurant and shop operators said the ownership problems don't worry them too much as their businesses will remain open. Beyond ownership strife, they see their future more connected to obtaining a major anchor tenant to bring a steady flow of visitors when there isn't a game or concert at Arena.

Glendale Mayor Elaine Scruggs and other City Council members expressed confidence that Westgate again would flourish after the downturn.

"We're just in horrible times right now, but absolutely (growth) will come back," Scruggs said.

The Ellman Cos., in announcing June 20 the possibility of a trustee's sale, blamed the potential foreclosure on the economy and continued uncertainty about the Phoenix Coyotes' future at the arena.

That news has many looking back at developer Steve Ellman's grandiose vision for Westgate at a time when the possibilities for growth in Glendale seemed nearly boundless.

The area where Glendale's sports-and-entertainment district stands was farm fields 10 years ago. Loop 101 was just opening and the city searched for a catalyst to high-end development. The goal: pushing the city beyond rooftops.

City leaders found their spark in Ellman, who had spent three years unsuccessfully trying to sell his idea of a hockey arena and retail complex to Scottsdale.

Glendale leaders were more receptive, reaching a deal with Ellman. He would build a 6.5 million-square-foot entertainment, retail, office, hotel and residential complex called Westgate City Center and redevelop a decaying central Glendale shopping plaza, Northern Crossing. In return, the city would put $180 million into building a hockey arena.

The city would use revenue from Westgate to pay off the 30-year arena debt.

It was a heady time for Glendale leaders and residents. Ellman, then the owner of the Coyotes, wore a hockey jersey and was flanked by hockey legend Wayne Gretzky as the City Council approved the deal in 2001.

A year later, Glendale scored another boon when the city was selected as the site of the Arizona Cardinals stadium.

The city opened the hockey arena in 2003, and Ellman was supposed to open the first phase of commercial development the following year.

Westgate wouldn't open its first 500,000 square feet until late 2006, shortly after the christening of the Cardinals stadium. But the Westgate complex was stunning, and hockey and football fans flocked in on game days.

The climax came in February 2008 when shops, restaurants and hotels raced to open ahead of Super Bowl XLII at the nearby University of Phoenix Stadium.

Then came the nation's real-estate crisis and, in 2009, a blow to Westgate's biggest tenant, the Coyotes.

Jerry Moyes, who had become owner of the Coyotes, filed the team into bankruptcy in May 2009.

More than two years later, the city and the National Hockey League continue to negotiate with potential buyers, but a resolution remains unclear.

Despite the bankruptcy, Westgate tenants say fans continue to crowd Kabuki Japanese Restaurant, Saddle Ranch Chop House and other bars and restaurants on game nights.

"Every time the Coyotes have a game it's a great, great day," said Eric Bennett, acting general manager at Saddle Ranch.

Players' wives and family shop for bathing suits at Swim 'n Sport and other boutiques.

"The Coyotes keep me going in December," said Lisa Bourassa, manager at the swimsuit shop.

If the team leaves, managers say it could be crippling to Westgate businesses. That would affect the city, which relies on sales-tax hauls to pay the arena debt.

But as much as Westgate tenants rely on Coyotes fans, they hope for an anchor store that would draw traffic when there isn't an event.

Last month at a Las Vegas real-estate convention, Ellman touted the possibility of a Tanger Factory Outlet Center at Westgate.

Westgate tenants are thrilled by the possibility.

Another destination point at Westgate or an anchor department store would draw more shoppers to other places at the complex, said Maria Ybarra, owner of Salon M, which is housed in a live-work unit developed as part of Westgate.

Westgate's mix of small clothing boutiques are fun to explore but aren't enough to draw shoppers who have never heard of them, Ybarra said.

Jerry Shin, manager of Kabuki, said store owners would love to see office users relocate to Westgate or a new outlet mall to increase lunchtime traffic.

Kabuki's Glendale restaurant is one of 14 on the West Coast and sees fewer lunch customers than any other eatery in the chain, he said.

"(Tanger) gives a lot of hopes to tenants at Westgate," Shin said.

But the prospect of an outlet on Westgate's undeveloped western corner would appear less clear after Ellman's announcement.

Ellman could still negotiate a deal with lenders to keep the complex. If not, new buyers could purchase Westgate in 90 days or so at auction or lenders could take over if no buyer is secured.

Glendale Councilman Manny Martinez wants Ellman to continue to manage and own the entertainment complex.

"He's put his heart and soul into the project," the councilman said.

Councilwoman Joyce Clark, who in the past was critical of Ellman over delays in opening Westgate, said she wishes him the best of luck during the upcoming process but is open to others who might have the funds to support Westgate.

by Lisa Halverstadt The Arizona Republic Jul. 10, 2011 06:42 PM

Tenants, Glendale officials retain high hopes for Westgate

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