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CityNorth Project Gets Head Start

CityNorth Project Gets Head Start


Developers to break ground ahead of others slated for north Phoenix

A national developer is looking to the northeast Valley for its next signature project: a giant retail, residential and office property called CityNorth.

But it will have to slug it out with local developers that are making plays nearby for top stores, restaurants and hotels in order to make the project a winner.

Developers say they will break ground in July on the $1.5 billion mixed-use project, which will feature 1.1 million square feet of retail space and restaurants including two or three department stores, 2 million square feet of office space, up to 2,000 residential units and two hotels. It will be on the northwest corner of Loop 101 and 56th Street in north Phoenix, cradled between Desert Ridge Marketplace and the JW Marriott Desert Ridge Resort & Spa.

The summer groundbreaking puts CityNorth ahead of at least three rival mixed-use developments proposed for the northeast Valley.

At the heart of the 150-acre CityNorth project is a 75-acre shopping district that will contain all of the retail and restaurants, 500,000 square feet of offices, and 535 residential units for sale and for rent, all situated on boulevards and plazas for a “town center” feel. It will open in three phases beginning in late 2007 or early 2008 and finish by 2010.

The focus of the first phase is High Street, a boulevard lined by three- or four-story buildings with streetscape retail, plus office space and residential units above. Later phases will have luxury stores, some topped with offices.

CityNorth’s developer, Chicago-based Thomas J. Klutznick Co., and retail leasing partner, New York-based Related Urban Development, declined to name which retailers they are negotiating with. The companies are behind landmarks including Water Tower Place in Chicago and Time Warner Center in New York City.

“This isn’t just a regional shopping center,” Daniel Klutznick, vice president of Thomas J. Klutznick Co., said of the project’s scope.

Two hotels, one a four-star aimed at business travelers and the other a five-star luxury hotel, will flank the site. The five-star hotel will also have 100 condominiums for sale.

The developers will eventually build large office buildings and high-density housing outside of the urbanlike commercial core. Parking will be available along the streets as well as in several garages that will be hidden by the height of the mixed-use buildings.

But Klutznick isn’t the only developer with sights set on the northeast Valley.

At least three other developers, Phoenix-based Westcor, Scottsdale-based DMB Associates Inc. and Scottsdale-based Wolff Cos., plan to build similar mixed-use developments in the northeast Valley but with later timelines.

John Corritore, president of the Corritore Company in Scottsdale, which leased Kierland Commons, Scottsdale Waterfront and Desert Ridge Marketplace, said the developers will inevitably jockey for some of the same department stores and other retailers, creating competition in the corridor.

“It will be a very interesting battle,” said Corritore, who is handling the retail leasing of the Wolff Cos. development in Scottsdale. “Absolutely, there’s not enough (retail) to fill it all.”

The developers of CityNorth say retailers want in sooner than later.

“The market has matured,” said Webber Hudson, executive vice president of Related Urban Development, which is leasing the retail for CityNorth. “It’s continued growing at a nice clip. There’s no reason to wait around.”

Hudson said CityNorth’s lead gives it an advantage over its competition when it comes to luring retailers.

Judi Butterworth, a retail broker for De Rito Partners Development Inc. in Phoenix, said more factors are in play.

“Timing will not drive this,” Butterworth said. “A retailer will wait a year if they want to be somewhere. They’ll wait three years.”

Klutznick is spearheading CityNorth from an office in north Phoenix.

The company is now the main developer of Desert Ridge, a master-planned community that bisects Loop 101 and Tatum Boulevard. The area was once owned by the Arizona State Land Department.

Klutznick once owned a larger chunk of Desert Ridge but has sold pieces to residential and commercial developers, including Vestar Development Co., the Phoenix firm that built Desert Ridge Marketplace, a 1.2 million-square-foot shopping center, to the west of the CityNorth site.

Hudson said the two retail projects will not compete because the stores at CityNorth will be “three to four notches above” what is found at Desert Ridge Marketplace, which includes Target, Greatland, PetSmart and American Eagle Outfitters.

“One of the great things for us is the project next door,” Hudson said, referring to Desert Ridge Marketplace. “It’s a great success story.

“This is going to be much more sophisticated.”

By Erica Sagon, The Arizona Republic, April 18, 2006


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