By Corina Vanek for Phoenix Business Journal
Once upon a time, Metrocenter was the king of the Valley’s shopping malls.
Now, the nearly 47-year-old mall just off Interstate 17 and south of Peoria Avenue in Phoenix is becoming a decaying infestation that could afflict the surrounding area, at least according to a prominent city official.
While the mall’s owner, Carlyle Development Group Inc., put together a redevelopment plan, it is now ready to sell Metrocenter. Marketing the property to the right buyer in order for it to reach its full potential is the first priority for Christine Mackay, economic development director for the City of Phoenix, in 2020.
To ultimately heal the mall — and promote growth in its surrounding area — it could cost a new developer between $300M and $500M amid what likely would be a years-long process. The result could transform the property into something that might not resemble a mall at all. The mall property’s zoning covers 130 acres, while the property itself includes 1.4MSF of space.
Following a New Blueprint
Mackay has faith Metrocenter can be redeveloped into something more than it is. She points to the recent redevelopment of Park Central Mall along Central Avenue in Phoenix as an example of a successful repositioning of a former power center into a mixed-use area with a new lease on life.
Park Central’s transformation has been such that it has drawn in new office tenants as well as Creighton University, which has started construction of a medical school at the site near Central Avenue and Earll Drive. (AZBEX, Oct. 12, 2018)
The challenges faced by both malls include land parcels with multiple owners and parking easements written into the properties’ covenants, conditions and restrictions.
At Park Central, current owners Plaza Cos. and Holualoa Cos., were able to alter easements to make way for redevelopment. Mackay said the city is working closely with the multiple property owners at Metrocenter to do the same.
Metrocenter’s decline occurred amid a perfect storm of issues affecting suburban growth and shoppers rejecting brick-and-mortar buying for online ease. Until 2016, the mall was zoned to only allow retail uses, which had become generally obsolete on that scale.
New York-based Carlyle Development Group worked to create a planned unit development zoning for Metrocenter that was approved by the Phoenix City Council in 2016. That move opened up the redevelopment possibility at the mall. (AZBEX; May 15, 2015)
The rezoning changed the supplemental uses at the property, allowing for residential and potential mid- and high-rise buildings up to 17 stories tall.
Carlyle bought Metrocenter in 2012 for $12.2M in a purchase that did not include the anchor stores.
Thomas Fear, director of acquisitions for Carlyle, said the group always intended to leverage the mall’s central Valley location and ease of access. After the firm acquired the mall, the area was designated an “opportunity zone” through the 2017 Tax Cuts and Jobs Act. The designation means those who invest capital gains into Metrocenter and substantially improve the property can receive favorable tax treatment on the investment and the returns.
Read more at Phoenix Business Journal.