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Mixed-use waterfront project rises in Phoenix

By Maura K. Ammenheuser

Suburban Phoenix is not necessarily the first place one would think of for a waterfront retail center. Nonetheless, a 600,000-square-foot, open-air, mixed-use project is slated for construction on the edge of a canal in Scottsdale, Ariz. The new center is intended not only to spiff up the waterway but also to join the city's divided retail areas into a single shopping district.

Developers expect to open The Scottsdale (Ariz.) Waterfront in 2000.

The developers, Mashburn-Hope Ltd., Scottsdale, and Starwood Capital Group, Greenwich, Conn., expect to break ground on The Scottsdale Waterfront by the fall of this year. The project will include 260,000 square feet of retail, about 60 residential units, offices and a 150-room hotel. The $150 million development is scheduled to open in the fall of 2000, said Mashburn-Hope general partner Phil Hope.

The Scottsdale Waterfront will fill 12 acres between the Arizona Canal and Scottsdale Fashion Square, a 1.8 million-square-foot upscale mall across Camelback Road, to the northwest of the new project.

South of the Waterfront, across the canal, lies downtown Scottsdale, which includes its own retail and cultural areas.

"The canal was becoming a divider between two parts of downtown," said Jerry Stabley, project coordinator with the city of Scottsdale.

Development in the 1980s "always turned its back on the Arizona Canal," he explained. Buildings springing up on either side of the water generally faced away from it, and city leaders eventually became anxious to tie downtown's two sections together.

The Scottsdale Waterfront will do that, Stabley said, describing the project as "the last piece of a puzzle" linking Fashion Square and the rest of downtown. Trolleys and at least one pedestrian bridge will allow easy crossing of the canal.

Hope, meanwhile, sees the project as an urban center unto itself, a pedestrian-friendly retail and social area replacing a collection of decades-old buildings, including a movie theater and strip center Mashburn-Hope razed.

"There's a demand here for urban life ... and people want to live, eat, work and play in an area [where] they can do it all in one spot," Hope said. He added that Scottsdale has no clearly defined residential area downtown, except for a handful of recently built apartments.

With the Waterfront "we're really trying to create a city and community center for downtown Scottsdale," he continued, emphasizing the project's outdoor nature.

Plans call for restaurants, nightclubs and a multiscreen cinema linked by plazas, passageways and cobblestone streets stretched along 1,600 feet of the canal.

The Waterfront won't include traditional department stores, focusing instead on about 60 specialty shops. The famed toy store FAO Schwarz will move over from Scottsdale Fashion Square. Other tenants will include Sur La Table, a Seattle kitchenware store; Borders Books & Music; and Portico Bed & Bath.

Hope expects retail rents to run about $50 per square foot to $70 per square foot and sales to reach at least $200 million annually, or $600 per square foot. He bases such optimism on the old saw --"location, location, location."

"The corner of Camelback and Scottsdale roads is one of the best undeveloped corners anywhere in the country," said Scott Knauer, a partner at Starwood, explaining his company's financial commitment to the project.

The Scottsdale Waterfront will bring specialty retail to a site along the historic Arizona Canal.

The site's strength is due largely to nearby Scottsdale Fashion Square. Hope and Veronica Lovesy, SCMD, Scottsdale Fashion Square's marketing director, view each other's centers as complementary, not competitive.

"[The Waterfront] will join the entire downtown Scottsdale area as one giant retail destination," Lovesy said, noting downtown's Fifth Avenue shops are just across the canal from the Waterfront. "It really will collect all of us as one."

Built in the '60s as an open-air center, Scottsdale Fashion Square today is an enclosed mall owned by Westcor Partners, Phoenix. The center's most recent expansion, completed last fall, added 50 stores, bringing the tenant roster to 225. Anchors include Dillard's, Neiman-Marcus, and a Sears that opened in February. Sales reached about $500 per square foot last year, Lovesy said.

She and Hope are especially enthused about Seattle-based Nordstrom, which in the fall opened a store between Fashion Square and the Waterfront site. Built on the Waterfront's side of Camelback Road, the store is connected to Fashion Square by a pedestrian bridge. Nordstrom effectively will anchor both centers, Hope said.

But perhaps the most striking feature of the Waterfront is the canal.

Built as part of a widespread water system by the Hohokam Indians more than 1,000 years ago, the Arizona Canal became an industrial resource in the 20th century, providing water for drinking and utilities, Stabley explained.

Historically, the canal was "a functional resource. It didn't have any need for beautification," Hope said. But Scottsdale officials decided several years ago to change that.

As a result, the Waterfront is designed to feel like a riverside park, Hope said.

"There will be a lot of water effects," such as fountains, said Gerry Metz, a Scottsdale painter and sculptor coordinating the city-mandated public art for the project.

Scottsdale law requires developers of large commercial projects to devote an amount equal to 1% of their construction cost to the arts, either by incorporating artworks in their buildings or simply donating to city arts organizations. The waterfront's public art budget is $1 million.

The rule is "the city's way of keeping the city culturally alive," Metz said. "I think it's great, and most developers have no problems with it."

Metz wasn't certain at press time exactly what works the Waterfront will include, but "there are a lot of things you can put in the art category," he said, such as benches, bus stops, murals or statues.

Whatever items are chosen will "primarily depict the history of this area," Metz said.

Though an estimated 978,000 people live within a 10-mile radius of the project, Hope predicts the Waterfront will lure 4 million people annually.

"This project is being built for the locals," he said. "If you build a great place for the locals, then the visitors will come."