The retail battleground in North Phoenix has shifted.
The affluent area is highly coveted by developers. The Macerich Westcor division's Palisene project and DMB Associates' One Scottsdale, as well as Related Urban Development and the Thomas J. Klutznick Co.'s City North, have competed for retail tenants.
With City North securing commitments from Nordstrom, Bloomingdale's and Macy's West, Macerich and DMB have decided they will have a better chance of realizing their goals by joining forces.
"We didn't want to contribute to the fragmentation of luxury up there," said Bob Williams, senior vice president of development leasing at Macerich. "The competitive landscape with the projects within 5 miles of each other wasn't going to be supportable. We asked ourselves, how do we take a leadership role and resolve this? We're a perfect match" for DMB.
Macerich Partnership LP, the operating partnership of Macerich, and DMB Associates said they have complimentary strengths and skills. DMB leads on the luxury residential, office and hospitality fronts, while Macerich has deep experience with retail development, leasing and operations.
The first venture in the Macerich-DMB alliance will be One Scottsdale, a 120-acre project on the northeastern tip of the Scottsdale Road corridor. The venture will focus on the retail core of the project, which makes up 55 of the 120 acres, with the rest for homes, hotels and offices. The project has approval for as much as 1.8 million square feet of commercial space, which "will allow for a significant amount of luxury retail opportunities," Williams said.
Robert Mayhew, vice president of DMB Commercial, said, "City North has done a good job of procuring department stores. We haven't been pursuing mass retail. We're looking at a narrow segment. We haven't tried to be the million- or 2 million-square-foot mall. We've been focused on luxury retail with 25 percent of our gross leasable space coming from restaurants. There's been a proliferation of retail in the market, and that's why we've concentrated on luxury."
Scott Nelson, vice president of development at Macerich, said Palisene's retail lineup will compliment One Scottsdale. "There's an opportunity for both [projects] to be successful," he added. "We might go after global names at One Scottsdale and local retailers at Palisene. The goal is for [those projects] to become the luxury address for North Scottsdale Road."Macerich, which owns Scottsdale Fashion Square and Biltmore Fashion Park in Phoenix, believes it has a pool of luxury tenants eager to expand in the market.
"We're bringing Michael Kors, Jimmy Choo and Carolina Herrera to Arizona," Williams said.
The plans for One Scottsdale and Palisene remain flexible. "One Scottsdale could get a little bit larger," Nelson said. "We have the potential to have department stores or anchor stores, but nothing's been formalized. We'll be talking to those players. We believe that 2010-2011 or 2012 is when our retailers would like to see themselves here."
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