Phoenix: CityNorth - 144 acre "Urban" development

[shrek05]

CityNorth aiming to land Neiman Marcus, Bloomingdale's

Peter Corbett
The Arizona Republic
Dec. 8, 2006 12:00 AM

Developers of CityNorth think they have the inside track to landing Neiman Marcus and are hoping to bring Bloomingdale's to the $2 billion mixed-use project in northeast Phoenix.

That would be a coup for CityNorth, which is vying with Westcor and DMB Associates Inc. for major tenants at three planned shopping centers along Loop 101 between 56th Street and Scottsdale Road.

CityNorth and other industry players are attending an International Council of Shopping Centers deal-making event in New York, which ends today.
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The buzz Wednesday was that Barneys was talking about opening a store at Scottsdale Fashion Square, which is managed by Westcor.

Kenneth Himmel, a CityNorth development partner, said that Neiman Marcus is close to making an announcement to locate a second store in the Valley and hinted that it would be at CityNorth.

He also expects another anchor tenant to announce its plans soon.

"There is going to be a Bloomingdale's store in the Phoenix market . . . and we think it's reasonable to believe that it's going to be at CityNorth," Himmel said.

Michael Gould, Bloomingdale's chairman, told Women's Wear Daily that the luxury retailer has had preliminary discussions with developers for its first Arizona store.

Neiman Marcus spokeswoman Ginger Reeder said the Dallas-based retailer "never comments on real estate deals until they are finalized. We have made no announcement of any kind about Phoenix."

CityNorth has already landed a 144,000-square-foot Nordstrom store as an anchor for the 144-acre project. The first phase, which broke ground last month, includes 250,000 square feet of retail, an equal amount of office space and 264 residential units. It is scheduled to open northwest of 56th Street and Loop 101 in 2008, with Nordstrom opening in fall 2009.

The Thomas J. Klutznick Co. of Chicago is the other development partner for CityNorth.

Himmel said CityNorth's first phase is 80 percent leased with mostly national retailers.

A spokeswoman for Westcor, which is developing the Palisene shopping center northwest of Loop 101 and Scottsdale Road, said the company had no announcements related to the New York shopping-center event.

Denise Resnik, a spokeswoman for DMB, which is developing the One Scottsdale project northeast of Loop 101 and Scottsdale Road, said the company would not comment on its tenants until it has signed agreements.

The Scottsdale-base developer is seeking city approval to allow buildings of up to 90 feet at One Scottsdale.

Meanwhile, the Dial Corp. has announced it will break ground Monday on its 60-foot-tall building at One Scottsdale. It is the first business locating within the office park.

[HX_Guy]

I drive on by 101 and 56th St pretty often and have noticed this is starting to take shape, including a tower crane up on the site, which was very surprising. How tall are the buildings supposed to get that they require a tower crane?

This project is really a glorified Kierland Commons, but that isn't necessarily a bad thing. If you've been to Kierland Commons, you have to agree that it does have a sort of urban vibe to it. It is an outdoor mall, but having actual car driven streets throughout the development gives it that urban feel. The biggest problem I see with Kierland Commons is that it is not big enough. While you are "in" it, it feels urban, but turn a corner...and parking lot after parking lot...the whole urban feeling vanishes.

And this is where I take it that CityNorth saw the same flaw and decided to copy the idea...X4. Kierland is 38 acres...CityNorth will be 144 acres. From the renderings and the site plan, it looks like it will have several blocks of streets.

Here are the renderings and site plans.

[DevdogAZ]

I love that they've taken the necessary parking structures and wrapped them on all sides with retail development so they're hidden. That's a great idea that I wish they'd do more of downtown.

What do we know about the makeup of the buildings in this project? Clearly there will be a lot of retail, but will there also be any residential or commercial/office? I think it would be great if they mixed all of those into this site.

[HX_Guy]

They are mixing all of that into the site.

The site is supposed to have 2 million sq ft of office, space, 1 million sq ft of retail, around 1000 residential condos, "in town" apartments, townhomes, restaurants, and hotels.

[HooverDam]

Well if they are going to build stuff out on the periphery of the city, I'd much prefer stuff like Kierlands/City North to the usual indoor mall surrounded by tons of surface parking, super low density stuff.

On the other hand, I'd wish some of these department stores would come back downtown. But with places like Nordstroms now having multiple Valley locations, I doubt they'd ever come back downtown. But I really think the area of Van Buren, West of Central could become a good place to house department stores and some bigger box stuff (maybe a Target, or a hardware store).

[HX_Guy]

There isn't the market downtown for a Nordstrom or other high end retailer...at least not right now. Who would shop there? Most of the area surrounding downtown isn't in the market for a Nordstrom's. Yes there are wealthy people in downtown, but as many as you will find in Scottsdale and NE Phoenix?

[HooverDam]

Originally Posted by HX_Guy

There isn't the market downtown for a Nordstrom or other high end retailer...at least not right now. Who would shop there? Most of the area surrounding downtown isn't in the market for a Nordstrom's. Yes there are wealthy people in downtown, but as many as you will find in Scottsdale and NE Phoenix?

I'm sorry, I didn't mean Nordstroms or high end department stores specifically. Really, I'd be just as happy (more happy really, since I'd never shop at a Nordstroms) with a Sears, Dillards, Mervyns, Target, etc downtown. I hate that I have to drive to Camelback and 7th Avenue for a Target. Perhaps I wouldn't need a Target if downtown had an individual hardware store, electronics store, and all the other things that Target has under one roof.

[nbrindley]

man, that's a lot of parking garages. I see at least 5 of em.

[loftlovr]

I have a lot of info on City North here:
http://www.phxloftnetwork.com/forum/viewtopic.php?p=5060

I agree with you HX- it seems like Kierland (which I like) amplified...
I do not know how in the world Palesene, One Scottsdale and Scottsdale Crossing will all co-exist- but that whole grid seems like it will be wonderful in about 5 yrs... (Desert Ridge to Kierland) It seems like all the new projects will fight over the same high end retailers- so many may end up with a bit less than they projected.... (maybe a Guess or Lucky's will be the average)

I do love the materials being used in the buildings of City North (if the renderings tell the truth).

I am a much bigger fan of Downtown Phx in general obviously- but the market isn't there for a Nordstroms yet. Maybe after Cityscape/ Warehouse District/ ASU growth and a few years of light rail development....

We do have a "Big Fat Greek Restaurant" and soon a PF Changs....

Kierland gets ripped on quite a bit for being a "faux" man made Urban center, and for having a Contemporary-Tuscan design...... but it is a great place to be in 9 months out of the year and does a better job shading and having water features than any area in Phoenix right now... and the stores and restaurant mix is wonderful in my opinion....

[HX_Guy]

Yea Kierland is great. It's still missing a grocer and other amenities to make it truely urban, but it's better then any other outdoor mall concept that I've really ever seen.

You are right though, I don't know how all these projects are supposed to compete. Where is Palesene supposed to be built? I know One Scottsdale is on the NEC of 101 and Scottsdale Rd. Scottsdale Crossing is the one across from Kierland right? That would sounds pretty good with a grocer and movie theatre, it will be a nice addition to Kierland.

[HX_Guy]

Originally Posted by nbrindley

man, that's a lot of parking garages. I see at least 5 of em.

According to the color key, the white buildings are parking garages...so I'm seeing a total of 11. A lot of them, but it's also a huge project and if they are to have hotel and office space...a lot of office space, they will need parking.

[loftlovr]

Here are a few threads for review:

Palesene:
http://www.phxloftnetwork.com/forum/viewtopic.php?t=861

"One" Scottsdale threads:
http://www.phxloftnetwork.com/forum/viewtopic.php?p=793
http://www.phxloftnetwork.com/forum/viewtopic.php?t=447

Scottsdale Quarter (formerly Scottsdale Crossing) (the Dial building next to Kierland):
http://www.phxloftnetwork.com/forum/viewtopic.php?t=1834

City North:
http://www.phxloftnetwork.com/forum/viewtopic.php?t=779
http://www.phxloftnetwork.com/forum/viewtopic.php?t=31

(In addition, Desert Ridge and Kierland are already there)
So- this "grid"- from say, Tatum and the 101 to Kierland and Scottsdale road is going to have some wicked shopping.... That 101 North Center has quite a good amount of shops too...

This is an older article on City North:

CityNorth to create hip downtown feel
Michael Clancy
The Arizona Republic
May. 5, 2007 12:00 AM

John Klutznick does not like to use the word "exclusive," but his company's new development in northeast Phoenix can hardly be expected to be anything but.

CityNorth, as the new development is called, is beginning to be built on 144 acres north of Loop 101 and west of 56th Street. It will adjoin Desert Ridge Marketplace.

Klutznick says the development will bring a "downtown" vibe to north Phoenix, with walkable streets looking something like vibrant downtown cores should look like. He likens the ultimate idea to Oak Street in Chicago or Newberry Street in Boston.

Newberry Street refers to itself as Boston's Rodeo Drive - the street of exclusive shops in Beverly Hills.

Chicago's Oak Street, on the north side, also features high level stores like Kate Spade, Yves St. Laurent, Barneys New York and Lucky Brand Jeans.

The big difference between those developments and CityNorth is that the Phoenix project will be built, in phases, from the ground up.

It will feature shops, restaurants, hotels, department stores - even 1,500 residential units made up of condos, apartments and town homes.

A group of retail tenants, besides Nordstrom department store, which already has been identified, will be announced sometime next month, Klutznick said.

The first phase of the CityNorth project, a street of three- and four-story buildings with retail below, offices and apartments above, is expected to be open by fall 2008. Phase 1, the so-called High Street District, will feature almost 300,000 square feet each of office and retail, along with 250 apartments/condos.

Phase 2, featuring retail and mixed uses, will go south along 54th Street to a main plaza and boulevard.

It will feature Nordstrom, one of five department stores anticipated for the site. Phase 2 should be ready by fall 2009.

[HX_Guy]

Goldwater Institute files suit to cut off CityNorth incentive
The Business Journal of Phoenix - 1:35 PM MST Wednesday, August 8, 2007
by Mike Sunnucks
The Business Journal

A fiscally conservative watchdog group has filed a lawsuit to stop a city of Phoenix sales tax subsidy for a proposed retail and mixed-use development in the far northeast part of the city.

The Goldwater Institute has filed suit in Maricopa County Superior Court asking for an injunction against a $100 million Phoenix subsidy for the CityNorth project.

The CityNorth development is a large retail and mixed-use project being built near the Desert Ridge shopping complex off of the Loop 101 Freeway near the Phoenix-Scottsdale border.

The lawsuit claims the city incentive violates state rules and laws related to gifts to private entities from the government as well as restrictions on special legal treatment for a single corporation.

Goldwater is frequent critic of specialized state and local tax breaks and economic development subsidies.

Lisa Noble, a spokeswoman for the Thomas J. Klutznick Co., the Chicago-based developer of CityNorth, declined comment on the matter saying the real estate firm has not yet received a copy of the complaint.



Maybe I'm just odd...but this stuff does not bother me. So what if they are getting tax benefits...if they get the benefits or not, it doesn't affect me...other then the fact that I would like to see the project go forward. It seems these companies are just crying out "It's not fair!"

[PHX31]

Do YOU get any tax benefits?

[HX_Guy]

Me?

[HooverDam]

Is the city actually giving the CityNorth group money? Or are they just reducing/deferring tax payments? If its the latter, I'm all for that. Any tax reduction is something I'll support, even though I'd prefer just an across the board cut.

[Don B.]

It's a question of fairness, and suburban developments should not be getting any sort of tax breaks or abatements whatsoever. If this were in downtown Phoenix and infill, I might be persuaded to think differently.

Where does the gravy train end? Why do some companies get tax breaks and others do not?

I generally can't stand most of what the Goldwater Institute stands for, but this is one action I would completely support.

--don

[combusean]

^ I have read the arguments in favor of subsidies for the project--evidently, it would have happened regardless. But with subsidies, they can make better choices in building materials, build garages instead of lots, and have other nicities to result in a better project overall. That attracts the luxury retailers (more sales tax money) and makes the whole thing happen.

I don't consider CityNorth to be suburban at all--it is out of the way, yes, exurban even, but by location only. It is a high quality, dense, mixed use development

And Don--it's not that there is ever an either/or in Phoenix. It's always "both." CityScape got $100 million in subsidies as well.

To support the Goldwater Institute in this is to be against any subsidies in projects, regardless of their location. We say yes to this lawsuit and we can kiss goodbye a whole slew of things that can make projects work downtown. Affordable housing, LEED certification, historic preservation--it would all fall by the wayside for this sort of precedent.

The Goldwater Institute doesn't give one flying fuck about good urban design, the kind of design that may only happen with subsidies given Phoenix today. They're in this fight on a whole 'nother level.

[Don B.]

Sean, this is one we are going to disagree on:

1. I'm not sure why you wrote "it would have happened regardless." Really? And how is that? Most of the suburban bullshit in Phoenix was not directly subsidized by the city like CityNorth. Even Kierland Commons wasn't feeding off the public trough. Desert Ridge certainly wasn't subsidized.

2. Building a parking garage at CityNorth does not an urban utopia create. In fact, a turd covered with frosting is still a turd. Where's the mass transit? Why is this being constructed in BFE when there's tons of underutilized land in the rest of the city (infill) that this would better be situated on? The city can still control what projects look like without having to shell out huge subsidies. Bribing the developer to build a parking garage here (or making it "nicer" as you put it) is like sticking your finger in the dam as it collapses around you. I might add that this project likely would have happened anyway, due to the location adjacent to Loop 101. That's the only thing that was "likely to have happened regardless," however.

3. None of your comments even remotely begins to address the inherent unfairness of this concept. The people and companies that built other developments with no city subsidy now have to compete with a company on a slanted playing field. This defies the free market economy the United States was founded on. It makes no sense in my head to have three children and say to two of them: You get no lunch money today, but we expect you to compete equally with your brother who will get all of the lunch money. Have fun! Certainly if I were the company that didn't get the handout, I'd be pretty pissed.

As a general rule, there should be no city handouts EVER. This city v. city crap of wooing developers has got to end. Phoenix is not Waterloo, Iowa. It should be able to attract development without companies feeding at the taxpayer's trough.

The only exception might be for infill locations. I would draw a box over central Phoenix and say to developers:

If you want a subsidy, you must build in a rectangle south of Dunlap, east of 51st Avenue, west of 44th Street and north of Baseline. Otherwise you are on your own. May the best man, or company, win.

--don

[Kroney]

I should have been a mall developer. Maricopa County's cities are at war over precious sales tax dollars. The mall developers and big box retailers seemingly facilitate this war by acting as the arms dealers.

It's true that State Senator Ken Cheuvront pushed through a bill that will outlaw the cities within Maricopa County from providing subsidies for retail development. Still, given their addiction to sales tax dollars, something tells me the cities will resort to more creative methods to accomplish the same thing legally. Plus, I'm not sure how this law would apply to subsidies of mixed use development such as Cityscape.

I'd love to get my hands on the cost benefit analysis that the city council used to justify their investment in CityNorth. It probably showed a positive return for the city. Yes, a win for the city is good until one realizes that the "win" came at Scottsdale's expense. The metro area as a whole breaks even. And one can bet that Scottsdale will someday return the favor to PHX. And there will be no shortage of developers wanting to help them out.