Longtime retailers Levitz, Sharper Image and Linens 'n Things recently slipped into bankruptcy.
Longtime retailers Levitz, Sharper Image and Linens 'n Things recently slipped into bankruptcy.
Players line up for big retail names
Ann Taylor, Zales Jewelers and Foot Locker are closing stores to avoid the same fate.
But on either side of Scottsdale Road, north of Loop 101, retail developers are building lavish luxury shopping centers, confident retailers will be there to move in when they are completed.
| Click on graphic for detailed North East Valley retail projects map |
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The battle for shopping center supremacy of the north East Valley pits long-dominant local retailer Westcor against new-to-the-Valley, but nationally recognized, upscale developer Related Urban.
The land, which straddles the north Phoenix-Scottsdale border, is undeveloped, zoned, and surrounded by pricey residential communities, said Webber Hudson, Related Urban executive vice president. Related plans to bring 1.5 million square feet of upscale shops to the 144-acre mixed-use CityNorth office-residential-retail development just east of 56th Street and south of the rapidly growing Desert Ridge residential community.
"This is a one-and-only opportunity in the United States with such a concentration of affluence," Hudson said.
Westcor, for at least a decade, planned a remarkably similar retail project called Palisene on 112 acres of state-owned property just east of the CityNorth land.
It's not surprising that both targeted the same area.
"If you look at the affluence in this area, it has the cachet," said Scott Nelson, Westcor vice president of development. "We knew when the Loop 101 got there, it would be the epicenter."
The hugely appetizing demographics of the area are attracting the choicest retailers, even while typical mall chains are cutting back expansion plans.
In fact, upscale retailers are still expanding nationwide despite the tumultuous times, said Malachy Kavanagh, spokesman for the International Council of Shopping Centers.
"The luxury market has not been as impacted by the downturn in the economy," Kavanagh said. "Gas prices impact low-end consumers. Luxury consumers aren't affected."
Besides, the retailers want to be in place when the economy turns around, he said.
But there are only so many high-end stores, Kavanagh said. Hence the fierce competition to win them over.
So far, in the north East Valley the challenger is one up.
When it came to picking off the biggest prize, Bloomingdale's first Arizona store, Related was victorious. Related also landed Nordstrom, which to date has built its Arizona department stores only at Westcor malls.
Westcor likely has Neiman Marcus on the line, but the company hasn't confirmed a deal.
Hudson said he thinks there are enough upscale retailers for one large and one small shopping center, and as long as Westcor keeps its retail vision for the area small, both projects should be successful.
But Westcor has never kept its vision small.
Decade of Dominance
For more than a decade, Westcor used its considerable clout to determine the Valley's shopping center scenario.
Other mall owners didn't have a chance against the local giant. Most just sold out to Westcor - Fiesta Mall, Biltmore Fashion Park. Or gave up - Chris-Town, Tri-City malls.
When Westcor turned its attention to open-air formats, it took on a whole new crop of retail developers.
Presumably with a "If you can't beat 'em ..." attitude, some took Westcor on as a partner - Woodbine Southwest at Kierland Commons, The Pederson Group at The Promenade at Casa Grande, and most recently, DMB at One Scottsdale.
Others, such as Vestar and DeRito Partners, have so far escaped direct competition with Westcor by building different types of shopping centers, or building in different parts of town.
"It comes down to type of product, and we like to think all our projects are different," said DeRito Partners CEO Marty DeRito, who builds so-called power centers, clusters of "big-box" stores such as his latest ventures Mesa Riverview, and the newly purchased Scottsdale Pavilions, the Valley's first power center, which DeRito plans to resuscitate from its dated state.
Westcor mainly stuck with malls, and even recent open-air centers like SanTan Village, are like malls without the walls, DeRito said.
But Westcor mostly determined where and when the major shopping complexes would be built and did so largely unchallenged for the last decade or so,
Competition creeps in
Related changed the rules and controlled the timing of retail development in the north East Valley by signing Bloomingdale's before Westcor even had a piece of property to develop. Westcor had been wooing the coveted retailer for years, but not for that area.
"We were somewhat perplexed Bloomingdale's went there instead of Scottsdale Fashion Square or Biltmore Fashion Park," Nelson said. "...We identify locations, validate a site, its demographics and growth patterns, and we try to build the right project at the right location at the right time."
This isn't quite the right time, Nelson said, and that is evidenced by a one-year delay for the Bloomie's-anchored project announced by Related just weeks ago.
Still, rather than watching Related snag all the top retailers, Westcor abandoned plans for a large luxury mall at Palisene and teamed up with former competitor DMB, which had land in hand for a smaller retail project at its nearby One Scottsdale development, planned for land on the northeast quadrant of Loop 101 and Scottsdale Road.
Nelson said Westcor will still bid on the Palisene property.
But CityNorth master developer Thomas J. Klutznick Company may go after it, too.
If Westcor wins, the company will develop it in conjunction with One Scottsdale, Nelson said.
It could include more residential and more moderate retail chains than in the original plans and probably some bridges over Scottsdale Road to connect the two communities.
And as for Westcor's losing control of the Valley's retail scene, there's not much chance of that.
The company is building a new wing of Scottsdale Fashion Square for Arizona's first Barney's New York, adding major retailers at Fiesta Mall and Paradise Valley Mall, planning to add more residences at at Kierland Commons, finishing plans for the rest of SanTan Village, planning out undeveloped land at Chandler Fashion Center and eyeing West Valley sites for new shopping complexes.
