Old Town Remains King
All eyes remain on Old Town as a prime employment and redevelopment area in Scottsdale, even as other parts of the city, including the Scottsdale Airpark and the McDowell Road Corridor, emerge as heavy-hitters for attracting new development.
Stockdale Capital Partners, led by Managing Principal Shawn Yari, has spent years buying up property in Old Town, aiming for a landmark redevelopment project. Last December, Scottsdale City Council approved plans for the Scottsdale Collection, Yari’s bold project at the southeast corner of Scottsdale and Camelback roads.
In total, plans call for the project to include 580,451 square feet of commercial space and 512 units of residential. The site is adjacent to where Stockdale is already developing the Marquee office building at Scottsdale Road and Shoeman Lane.
“I really think in the western United States, there aren’t four better intersections than the corner of Scottsdale road and Camelback,” Yari said in a recent panel discussion on economic development in Scottsdale hosted by the Phoenix Business Journal. “Those are two iconic streets, and they cross in the corner of Main and Main. For us to be blessed to have the opportunity to acquire properties and envision great development, and then execute is a generational opportunity.”
What’s next for Old Town?
Old Town was designated an “opportunity zone” by the Tax Cuts and Jobs Act of 2017. That means capital gains invested into real estate or businesses operating in that census tract are subject to preferential tax treatment, designed as a way to encourage investment into neglected areas, though few could describe Old Town as neglected.
Jon Rosenberg, managing partner and co-founder of LevRose Commercial Real Estate, another of the four panelists at the virtual event, said some of Old Town, like many of Yari’s properties, are primed for redevelopment, but said the neighbors are also sensitive to changes in the area.
Not all redevelopment plans in Old Town have been embraced. In early 2020, City Council repealed its approval for a planned 2 million-square-foot mixed-use development SouthBridge 2 project after community members launched a campaign against it due to its height and density. The developer eventually requested that the council remove its approval of the project and did not move forward with the plans.
“There are some areas that I know that people are trying to circle around and keep low density and some of the character of the area, but there’s also some buildings that are just not necessarily historic, but are more obsolete,” Rosenberg said. “So, there’s going to be some opportunities there as well.”
Jordan Rose, owner of Rose Law Group, said Old Town is a testament to the creativity of developers who have had a hand in some of the iconic buildings in the area, which has become a way for the city to sell itself.
“I had a client sitting on my balcony because we were trying to socially distance and be outside and talk,” Rose said. “And he looked outside he’s from out of state, and he said, ‘This is crazy. This is the best place possible in the world.’”
Rob Millar, economic development director for Scottsdale, said companies, especially technology companies, continue to move to Old Town and other hot areas of Scottsdale because they offer amenities that cannot be matched.
“We expect northern Tempe and downtown Scottsdale to continue to be where we’re seeing more venture capital, especially with startups with ASU SkySong, but the Airpark also will continue to see opportunities,” Millar said.
South Scottsdale-McDowell Road Corridor
SkySong, a massive mixed-use project, built on the site of the former Los Arcos Mall, is attracting major employers on its own, but it also has sparked other redevelopment projects and plans in the south Scottsdale-McDowell Road Corridor.
Since 2013, more than $140.8 million worth of private redevelopment has occurred in the area surrounding SkySong, representing eight different projects, according to a recent study commission by SkySong’s developers. An additional $510.3 million in future projects has also been identified in the area.
Rose said that while Arizona, unlike some other states, can’t give money directly to companies to recruit them because it violates the state’s constitution, cities like Scottsdale are able to work with businesses and developers to keep to a strict schedule.
“They can give the gift of time and the gift to a developer of once you decide this is your place, we can give you a schedule and we can stick to it,” she said. “And there’s very few markets in the country that can really do that, and Scottsdale can.”
While Old Town may be the best known part of Scottsdale, new development in the Scottsdale Airpark area is aiming to bring the space near Loop 101 and Scottsdale Road to its full potential.
Yari’s company, Stockdale Capital, recently completed the adaptive reuse of the former Henkel Scottsdale headquarters near Loop 101 and Scottsdale Road, including renaming the building, the Ilume Innovation Center. The project has repositioned some of the laboratories in the building into creative office space and kept some traditional office space. The 4-story building also has a 1.5-acre rooftop park that was added in the renovation.
“I think Scottsdale and the 101 at some point in the future will be talked about is being one of those key intersections of the state,” Millar said. “And that area of state land is the most highly desirable and sought out land in the state. And with that comes a high valuation.”
Nationwide Realty Investors, the real estate arm of Nationwide Mutual Insurance Cos. bought 134 acres of state land in 2018 for its development, called Cavasson, which is planned for a mix of uses, heavily focused on office and apartments. Some of the developments, including an office that will be used partially by Nationwide for a regional headquarters, are already under construction and nearing completion.
Axon, the maker of Taser stun guns, also recently purchased state land in the area for its headquarters. The company bought 74 acres in September 2020 at a state land auction. The company has an agreement with the city of Scottsdale to develop 250,000 square feet of commercial space and reach a payroll of $130 million within five years after buying the land. Axon will also sell a parcel between 4.5 and 6 acres in size back to the city for civic use, according to city documents. The city will pay an estimated $2.6 million for the land.
“I think there’s going to be a lot more good developments in that area,” Millar said. “We envision at least two or three more corporate headquarters in that area.”
Article provided by: Phoenix Business Journal