Carlyle Gets the Thumbs-Up for 130-Acre Phoenix Project
- Jun 08, 2016
By Barbra Murray, Contributing Editor
Phoenix—There are 130 acres surrounding Carlyle Development Co.’s Metrocenter Mall in Phoenix, and now the real estate investment company has won the right to commence a major transformation of the site. The Phoenix City Council just approved Carlyle’s Planned Unit Development, paving the way for a dynamic mixed-use destination.
Carlyle has a good starting point as it prepares for the next step of the Metrocenter Mall project, and that is Metrocenter Mall itself. Carlyle acquired the 1.3 million-square-foot shopping center (excluding the individually owned pad sites) from a court-appointed receiver in 2012 for just $12.2 million. Originally developed in 1973, the property was reinvigorated with a $32 million renovation in 2007. Now a bevy of new offerings will soon sprout up around the super-regional mall, courtesy of the PUD.
“After several years of collaboration with the City, the community and its leaders, we now have the official green light to redevelop this valuable infill site in a very significant way, first and foremost by bringing in dynamic new uses that will make this a true urban village for Phoenix residents,” Warren Fink, COO of Carlyle Development, said in a prepared statement.
Per the unanimously approved PUD application, any number of property types could be built on the approximately 45 acres that aren’t occupied by the mall, including office, multifamily, healthcare and additional retail. Additionally, the new zoning designation permits a building height increase to approximately 15 stories, and gives Carlyle the option of expanding its current 800,000-square-foot ownership segment of the mall to 1.6 million square feet.
Carlyle is presently identifying development partners to help bring the property to life. “Our objective is to develop projects that respond to market demand and that reinvigorate this land site as its highest and best use,” Fink added. One project that is already in the works is a 148,000-square-foot Walmart Supercenter.
Whatever takes root at the Metrocenter PUD will likely find a warm reception, as demand in the Phoenix commercial real estate market has been on quite an upswing. The shopping center vacancy rate has decreased consistently for the last 18 quarters, dropping to 11.2 percent—the lowest rate since 2008—in the first quarter of 2016, according to research by commercial real estate services firm Cushman & Wakefield. Class A office users eager to provide amenities to attract and retain top talent are pushing down the office vacancy rate and boosting absorption, which is forecasted to reach 2 million square feet in 2016. And there seems to be no stopping the dwindling multifamily vacancy rate, which, at 5.4 percent, marks a modern-era low in Phoenix.
It appears Carlyle can’t go wrong at Metrocenter.