Sunday, October 9, 2011

Interest in Scottsdale McDowell Corridor redevelopment on rise

Jim Mullin, Scottsdale's economic vitality director, equates revitalization of the McDowell Road corridor with preparing for a long journey.

"I tell people McDowell Road is a marathon - it's not a sprint," he said. "A lot of times people want to stop you at the proverbial mailbox and ask, 'How's the trip going?' There's nothing happening as we speak just yet because we're still planning. In a down economy, we have time to think about that."

With the economic recovery stalled, steps toward McDowell Road's revival gradually have been progressing.

The less than 3-mile stretch of McDowell in Scottsdale, from the Loop 101 to 64th Street, used to have numerous auto dealerships but now only a handful remain, including various Chapman Group dealerships and Scottsdale Maserati.

It also includes abandoned retail outlets, such as Los Arcos Crossing shopping center.

While the corridor became known as Scottsdale's Motor Mile, that identification was only meant to be temporary because the area still was evolving, Mullin said.

"When you have that perspective, I don't think a sense of failure is so prevalent," he said. "It was a temporary use in some respects."

A lot is going to be happening along McDowell in the coming years that will have a big impact on the corridor's character and economic health, Mullin said.

"When there's demand and banks will lend, the developers will come in," he said. "As a city, we're doing everything we can to facilitate that, but we don't want any development before its time either. We don't need an empty building and we don't need a failure on McDowell Road."

Christine Sheehy, the city's executive assistant for special projects, said more property owners are considering redevelopment options as opposed to renting what's already on their property.

"We've spoken to some landowners that have leased their property, and some were temporary and their leases may be running out, so they're looking at whatever opportunities might be available," she said. "A lot of the corridor is zoned mixed use, which is very flexible."

First signs

Mark-Taylor Inc. and Plaza Companies are expected to bring the first large-scale projects to the McDowell corridor near the intersection of McDowell and Scottsdale Road.

SkySong, the Arizona State University Scottsdale Innovation Center, will be adding a third building to its campus, which now includes two 150,000-square-foot buildings consisting of research and commercial space. Plaza Companies is SkySong's developer in partnership with ASU and USAA Real Estate Co.

"Within the next couple of weeks, we will share significant new leases that are very close to being final," said Sharon Harper, Plaza Companies' president and CEO. "When it happens, the first two buildings will be close to occupancy. The momentum hasn't stopped at SkySong even during the recession."

Harper wouldn't divulge any details about the third building.

"We've had strong leasing activity and great vitality at SkySong," she said.

Just east of SkySong, Mark-Taylor plans to build a luxury apartment complex on 17.3 to 24 acres, including the acreage that houses the boarded-up Los Arcos Crossing. The company is seeking City Council approval of rezoning to accommodate the complex.

"Right now, we're putting forward two site plans," said Scott Taylor, Mark-Taylor's president. "One includes 384 units . . . and we might pick up another couple of pieces of land, which could grow the project to 540 units. The resident profile will have an average age of 35 and average household income of $85,000-$90,000."

If the larger project is built, it would bring to the McDowell corridor about 900 residents with about $45 million in household income "that does not exist today," he said.

"It's filling a void in the market," Taylor said. "It's a terrific location to commute from."

Acquisition of the parcels to house the complex is contingent on the council approving the rezoning, he said.

"If we're successful in zoning, breaking ground likely will be in the middle of next year, in the summer," Taylor said. "We'll open the first building nine months after we break ground and then deliver units at a pace of 40 units per month thereafter."

Assembling parcels

At the northeastern corner of McDowell and 64th Street, Sunchase Holdings Inc. has been quietly acquiring acreage that used to house several auto dealerships, Mullin said. So far, it has acquired more than 20 acres, he said.

Power Subaru Scottsdale was the last dealership to vacate the corner and has since moved near Frank Lloyd Wright Boulevard in north Scottsdale. AutoNation still owns the property that housed Power Subaru.

"They (Sunchase Holdings) don't have any plans for that property, but they've acquired the car dealerships there one at a time and so obviously they believe in something down the road," Mullin said. "They're long-term players, but they don't buy property they don't see value in."

Todd Tupper, Sunchase Holdings spokesman, didn't return calls for comment.

"It's a spectacular site to build down the road," Mullin said. "They have the opportunity of providing all that, but the economy needs to help us understand what a large-scale development will look like in the Valley. There are a lot of different recipes that can be cooked on this property."

Legislation signed by Gov. Jan Brewer this year could help foster revitalization efforts on McDowell. Senate Bill 1203 modified language in a previous city-backed bill that allows for the formation of revitalization districts to spur economic development and revitalization.

The districts would allow property owners in a designated area to collectively agree to impose a fee on themselves to pay off bonds taken out for funding infrastructure improvements.

"If somebody wanted to combine some properties and needed to put in additional infrastructure, streets, water, sewer, (that) could be used," Sheehy said.

It's encouraging that the projects that have come forward so far don't need a revitalization district, she said.

"As the Mark-Taylor project moves forward . . . we're hoping that's the driver to McDowell, and will prompt other retail uses and commercial development," Sheehy said. "Then we'll work with other people on financing tools, which may include a revitalization district."

by Edward Gately The Arizona Republic Oct. 7, 2011 11:15 AM

Interest in Scottsdale McDowell Corridor redevelopment on rise

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