Real Estate

Bucking the Trend: Scottsdale Fashion Square Eyes Million-Dollar Expansion

(Source: Scottsdale Independent): Melissa Fittro

While retail stores and shopping malls throughout the nation struggle to survive and remain relevant, the owners of Scottsdale Fashion Square are seeking approval for changes they say will ensure the popular mall’s future remains strong and vital.

Lauded by many as one of the most popular shopping destinations in the country, Scottsdale Fashion Square is home to hundreds of retail shops from Forever 21 and Dick’s Sporting Goods, to Jimmy Choo and Louis Vuitton.

Most important to city officials: The mall is one of the highest sales tax generators in the city of Scottsdale.

Macerich, a California-based developer of retail commercial space, is seeking approval from municipal leaders to expand the mall’s brick-and-mortar footprint along Hyland Avenue in downtown Scottsdale.

During its June 28 meeting, the Scottsdale Planning Commission recommended approval of the pursued expansion of Fashion Square. The vote was unanimous, although two commission members — Ali Fakih and Prescott Smith — were forced to recuse themselves due to a conflict of interest, records show.

Macerich is represented by prominent Zoning Attorney John Berry of Berry & Riddell LLC. The proposal is expected to go before Scottsdale City Council Tuesday, Aug. 29.

Sitting on the northwest corner of Camelback and Scottsdale roads and surrounded by several other retail shops, office buildings and restaurants is the shopping mecca community leaders say generates over $10 million a year — about 7 percent — of total city sales tax remits.

Macerich is looking to amend the zoning restrictions on the 56-acre site and approval to increase building heights up to 150 feet.

Some neighbors, however, have expressed concern over proposed building heights and a lack of plans available for public review.

The Planning Commission report states the 150-foot-tall building could be “generally located at the northwest corner of Camelback Road and Scottsdale Road,” within a proposed development envelope that would be created by the approval of the development plan.

Macerich is seeking recommendation for approval of a downtown infill incentive district application, over 1.8-acres of the total 56-acre site. The infill incentive request is to amend the required step-back plane for buildings within 300 feet of the downtown boundary, city documents state.

Ultimately, the mall wants to establish the framework for future development of the property, Mr. Berry says.

“Once in a while there comes before you a case that is critical in the long-term sustainability of our community, and this is one of those cases,” Mr. Berry said during the June 28 meeting.

“We have a downtown that is the envy of the state, the envy of the country. It is a downtown that is vibrant, alive, attracting investment — billions in investment — we have to protect and sustain that.”

Proposed plans

Several downtown Scottsdale residents gathered at City Hall June 28 to voice both opposition and support for the case.

A neighboring condominium community, Optima Camelview Village, had several residents who voiced concerned over the building height and lack of plans presented prior to voting on the Planning Commission recommendation.

Planning Commissioner Larry Kush said it’s not unusual for a developer to submit plans that are vague or general in nature.

“Too often the Planning Commission is asked to zone stuff that’s a big block of white — the applicant is not required to submit the architecture,” Mr. Kush explained.

“In fact, the city doesn’t even want it. I do agree, it’s hard to zone something this massive — we do it constantly where we’re not seeing the product.”

The mall site is designated in the Scottsdale General Plan as mixed-use neighborhoods — which includes higher density residential, office and retail uses. Additionally, the site is identified as a growth area.

“This case is very, very simple from a land-use perspective,” Mr. Berry explained. “It’s about whether on about 15-percent of our site, we can add five more floors than we’re currently entitled to — that’s it.”

The proposed map amendment and development plan details potential land uses that could include, but are not limited to, additional retail, office, hotel, restaurant, multifamily residential and a grocer.

Plans also include a proposed 25 dwelling units per acre, while up to 50 are allowed, according to the Planning Commission report.

Mr. Berry said one need only look at other malls throughout the Valley to see the challenges faced by retail businesses. It’s important, he says, to constantly upgrade to remain competitive.

“Tonight is about whether our case for Fashion Square is in conformance with the collective community vision for our downtown,” Mr. Berry explained.

The development proposal could accommodate up to 1.8 million additional square feet of commercial floor area, and 1,625 dwelling units, the Planning Commission report states, although it notes that it is not likely to develop to maximum potential.

The mall is presently approved at a height of 90 feet, Mr. Berry says, in addition to Optima at 130 feet, the Amtrust building at about 150 feet, and two waterfront towers at 150 feet.

He says Macerich and the community have been working together for 21 months — since November 2015 — to come to a mutual understanding of what is required and desired.

“We’ve taken a good hard look at traffic, and we’ve analyzed not only the mall but the four projects that have recently been approved,” Mr. Berry says.

“When you analyze the four recently approved projects, plus the mall’s proposed project, we generate only 47 percent — less than half of the new traffic in this area.”

Scottsdale Road sees an average daily traffic of 32,000 automobiles, the traffic analysis states. With the proposed zoning amendments, Scottsdale Road could see an increase of 1,300 to 1,500 additional trips during the morning and evening rush hours.

To mitigate this increase, Macerich says it is willing to invest up to $1.5 million to resolve traffic congestion.

Mr. Berry believes future tenants of the proposed development could bring up to 10 times the amount of sales.

“Theoretically, Barney’s generated, I’m told, in 60,000 square feet, about $10 million in sales, which generated about $650,000 in sales tax revenue,” he said.

“That same 60,000 square feet with this one 15,000-square-foot tenant that’s in the development review board process of architecture, will move from a $10 million sales figure to approximately $100 million in total revenue. A ten-times difference in that small piece of downtown.”

Scottsdale Fashion Square sits on the northwest corner of Scottsdale and Camelback roads. (photo by Melissa Fittro)

Residential view

The Optima Camelview Village community has banded together to start a petition, resulting in over 40 percent of eligible residents signing, according to resident Kevin Gambill.

“I would like to point out, in Camelview Optima, we represent over a half-billion dollars in residential value relative to property taxes,” Mr. Gambill expressed during the June 28 meeting. “This is a significant amount of money and should afford us some influence on the development on our neighborhood.”

Optima Sonoran Camelview sits just north of the empty plot at Hyland Avenue and Scottsdale Road. It features several gardens throughout the community, and boasts floor-to-ceiling windows.

Mr. Gambill says the Optima Home Owners Association has maintained a natural position on the project, and has facilitated several community meetings with Macerich.

“In these open forums we have asked one key question — we’ve been told that with the current zoning, the mall is destined to fail. What we want to know, is how does a 90-foot tall vs. 150-foot tall make the difference between the mall failing and the mall succeeding?” asked Mr. Gambill at the meeting.

While Macerich has made numerous stipulations, as explained by Mr. Berry, the overall issues of building height and setback remain, Mr. Gambill says.

Several other Optima Camelview Village residents, and Scottsdale Waterfront residents voiced opposition to the project for similar reasons.

Not everyone is opposed to the proposal. Over 100 letters of support from property and business owners up and down Scottsdale Road and neighboring areas were submitted to the city prior to the Planning Commission meeting.

Downtown Scottsdale resident Bill Crawford voiced his support for the Fashion Square expansion.

“This is a project that we stand behind,” Mr. Crawford said. “The applicant, Macerich, is a responsible custodian. Fashion Square is a success despite declining trends.”

Mr. Crawford says a strong downtown is key to making Scottsdale a great city.

“We just need to seize the opportunity to move forward and consider the fact that we are extremely lucky to have this project before us,” he said. “Instead of fighting Fashion Square it should be embraced and we can all go forward into a bright future.”