http://www.bizjournals.com/phoenix/stories/2007/06/04/story2.html?hbx=
Pier review: Developers ready to start 27-acre Tempe project
The Business Journal of Phoenix - June 1, 2007 by Jonathan J. Cooper The Business Journal
Eighteen months after being selected to develop 27 acres of city-owned land near Tempe Town Lake, a team of developers finally has the green light to proceed.
Plans call for 3.65 million square feet of mixed-use space spread over more than a dozen buildings near the Karsten Golf Course at Rural Road and Rio Salado Parkway. Nearly 1,500 condominium units are anticipated.
Tempe City Council members approved plans May 17 for The Pier at Town Lake, formerly known as Pier 202. The council was scheduled to endorse the $42.5 million land sale late May 31.
It's a significant step toward developing the land surrounding Tempe Town Lake, much of which has been underused since the lake was created in 1999.
The group of California developers, led by Brad Gorman of Laguna Pacific Properties and Michael Barker of Barker Pacific Group, is doing business as Pier 202 Tempe LLC.
With office, retail, residential and hotel components, the project will exceed the city's goals for the site, said Chris Salomone, Tempe's development services manager.
"That site was always considered a large mixed-use site," Salomone said.
Planners are finalizing infrastructure and utility designs, and construction crews should begin site preparations later this year.
The project, to be built in nine phases, is expected to cost more than $1 billion, Barker said.
A large plot of land gives the developers flexibility to tie a variety of complementary uses comfortably into a single project, he said.
"We have a very unique site, with as much lake frontage as the site gives us," Barker said. "We have a well-integrated master plan. That's, I think, what sets us apart."
Pier review: Developers ready to start 27-acre Tempe project
The Business Journal of Phoenix - June 1, 2007by Jonathan J. CooperThe Business Journal
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As proposed, the project includes 1,480 condominium units in four high-rise and six low-rise towers. Condo prices have not been set, nor has the brand name of the project's 285-room, four-star hotel.
Plans also call for 460,000 square feet of commercial space in two 10-story buildings.
The Class A office space will lease for $33 to $35 per square foot, said Don Arones, senior vice president of Grubb & Ellis/BRE Commercial.
Some Tempe business owners were concerned the project's 98,000 square feet of restaurant and retail space would steal customers from the Mill Avenue District to the west, or from Tempe Marketplace to the east.
But Salomone said the Pier project addresses those issues by catering to more upscale tenants. Brokers will go after boutique restaurants and clothing stores, with a focus on local brands. It will mimic the feel of the Kierland Commons retail area in Scottsdale, Arones said.
Retail lease rates have not yet been set.
Developers have been working with Tempe officials for about a year and a half. City staff entered exclusive negotiations with Pier 202 in early 2006 after the group's $42.5 million bid beat out proposals from nine other developers.
Plans for a Peabody Hotel at the site fell through in 2001. Tempe officials have said the Peabody deal would have cost the city roughly $70 million in incentives.
Tempe Mayor Hugh Hallman has said the Pier project is a better deal for taxpayers, allowing the city to bring in money instead of shell out incentives after already making a substantial public investment in the lake infrastructure.
After the Peabody deal collapsed, council members sought proposals that didn't rely on incentives.
"Ultimately, Pier 202 was the successful bidder in that process and is delivering cash back to the community that will not only help us operate the lake, but will give us funds to reinvest in our neighborhood parks," Hallman said.
The Pier project is just one of about a half-dozen mixed-use projects planned or under construction on the Town Lake shore. A handful of other projects will be set back farther from the lake in the downtown area.
In all, 5,000 new residential units are planned. Half of them are either under construction or about to break ground, according to city staff.
"Are we going to take a sledgehammer to open up a walnut?" said Jay Butler, director of realty studies at Arizona State University's Polytechnic campus. "Are we going to overwhelm the market? Even though (developers) won't admit it, that concerns (them)."
How the real estate market reacts to the influx of units and whether sales are brisk will affect the success of the Pier and other projects, Butler said.
But with convenient freeways, a nearby light rail line and easy walking access to local amenities, the area has significant potential -- particularly if gas prices continue to climb, he said.
Details of another planned lakeside project, a joint venture between Arizona State University and SunCor Development Co., were released in late May.
That project, known as Marina Heights, has drawn concern from US Airways Group Inc., which has asked for a Federal Aviation Administration review of the proposed building heights.
The Pier at Town Lake project won't face that kind of concern, Barker said, because the site already has earned FAA approval for buildings up to 300 feet tall, capping the structures at about 22 stories.
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The Pier at Town Lake:
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