Saturday, October 29, 2011

$1.6 billion Prasada project stays on track in Surprise

Surprise has a number of goals when it comes to Prasada, a mammoth commercial and residential center that will straddle Loop 303 in the decades ahead.

City officials want to see thousands of new jobs, new homebuyers and a healthy new stream of sales-tax revenue. City Council members were eager to revise a development agreement with Prasada developer Westcor recently, largely because it would help them reach the most important goal of all.

"The goal of this development agreement is to get it built," said Surprise Community Development Director Jeff Mihelich, who laid out the deal in a City Council meeting in September.

The terms of the agreement extend some building deadlines for Westcor, reduces to $200 million from $240 million the amount Surprise must reimburse Westcor for infrastructure, cuts some interest rates and gives the city flexibility in making those payments.

City officials said the wait and the financial incentives will be worth it when the $1.6 billion project is complete.

"At the end of the day, it would be the largest commercial development in the state of Arizona," Mihelich said. "It would have a profound and positive impact on Surprise for years to come."

Once built, the regional mall and surrounding power centers, auto mall and new neighborhoods are expected to pour $40 million a year into city accounts, while boosting the Dysart Unified School District's income by $16 million a year. Surprise would be able to lay claim to 18,500 new jobs, with 14,600 employees working on construction alone.

The day when the entire project is complete could be two decades in the future, since the timeline for the regional mall depends on the economy and growth in Surprise and the West Valley.

Garrett Newland, vice president of development at Westcor, said that work on Prasada never stopped. Much of it took place at ground level, where $50 million worth of roads, water and wastewater systems have been built.

"For those of us spending tens of millions of dollars, we are very committed," Newland said of the project. "We're in it for the long term."

Prasada's grand vision

Westcor executives first unveiled plans for Prasada in 2005, when housing was booming and Surprise could hardly keep up with growth.

Prasada would transform a 3,400-acre swath of farmland into a regional mall, surrounded by power centers, restaurants, theaters, an auto mall, commercial offices and a community of 7,200 houses, townhouses and condominiums. The project would straddle Loop 303, filling in both sides of the freeway between Waddell and Cactus roads. The commercial core would fill 800 acres and attract shoppers from miles around.

Fulton Homes and other builders would construct suburban and urban landscapes, complete with grassy open space and trails.

Prasada was to play off of the new lifestyle trend found in developments such as Phoenix's Kierland Commons, where residents could live, work shop and play without having to get into a car. Harkins Theatres and Dillard's were to anchor the project.

It would, as Mihelich phrased it six years later, "put Surprise on the map."

Facing economic strain

The economy pushed the whole project back by a number of years. Under the original plans, Prasada would have opened 2 million square feet of commercial space by the end of 2012. The revised agreement with the city pushes that deadline to 2017.

But elements are falling in place, even with the downturn.

Two of the 10 planned auto dealers have opened at 303 AutoShow at Prasada - Sands Chevrolet and Sands Kia. City officials are reviewing a site plan for a Coulter Nissan dealership.

A Fry's Marketplace is complete and a Walmart, now under construction, will open next year. Building permits have been issued for Target.

Since announcing plans for Prasada in 2005, Westcor executives have been careful to not set a timeline for the project. That hasn't changed.

Newland described development as a numbers game; the population and the income have to be in place before anyone breaks ground on a regional mall.

Westcor will not start drafting site plans for the Prasada mall until the company's new regional mall in Goodyear, Estrella Falls, has been open for at least a couple of years. That project was delayed in 2009 and now may open in 2014 or 2015.

Assuming growth continues, that's when Westcor would start planning the Prasada mall, a project that would take about two years to build.

Prasada would follow the same development pattern of some other regional Westcor malls: First the power centers open with big-box stores such as Walmart and Target. The auto mall draws in more shoppers and, when the population and income level hit a certain point, the larger stores can project enough sales to start building.

Department stores such as Dillard's, Macy's, J.C. Penney and even higher-end brands such as Nordstrom are all watching the West Valley, Newland said.

In the meantime, Walmart and Target will open and two or three other power centers will appear at Prasada.

"Income levels in Surprise are already very good," Newland said. "The bottom line is there will be a lot of development at Prasada the next 15 to 20 years."

Homes before retail

People may be able to buy their own piece of Prasada before the first retailer opens at the mall.

Suburban Land Reserve, the company that owns the residential portion of Prasada, hopes to begin building by 2013.

Carl Duke, the company's vice president of portfolio management, said that the market remains soft.

Despite the slowed economy, the company's plans have not changed much, Duke said, although they may not build all of the 7,200 homes originally envisioned for many years, if at all.

Plans call to start with single-family houses before the mall is built, since that is a selling point for homebuyers. More urban-style homes likely would be built later in the life of the project.

Duke said that company executives are optimistic, since Phoenix should be well-situated compared with other Southwest cities when interest rates rise.

"We are seeing a number of signs that are encouraging," he said. "Overall, we are very bullish on the Phoenix market. We think there is a huge opportunity for job growth, and the affordability of the area is critical."

by Lesley Wright The Arizona Republic Oct. 24, 2011 10:26 AM

$1.6 billion Prasada project stays on track in Surprise

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