Bidders for Arizona trust land that Westcor wants for its Palisene shopping center will have to pay at least $99 million to gain the development rights.
The State Land Department has valued the 112-acre site northwest of Loop 101 and Scottsdale Road at $32 million. Plus, the winning bidder on a 99-year lease must commit to $67 million in improvements, including roads, utilities and drainage work.
An auction is planned for late September, although no date has been set, Land Commissioner Mark Winkleman said.
"This is going to set the stage for subsequent development" of the larger Paradise Ridge area that includes 2,400 acres of state trust land, Winkleman said.
Westcor, which operates the Valley’s largest malls, has plans to develop a mixed-use project of shopping, dining, offices and condominiums on the leased state land.
Palisene would include up to 1 million square feet of retail and buildings as tall as 190 feet, or 17 stories.
Palisene, which is at least three years away, is one of three major mixed-use projects along Loop 101 in the northeast Valley. The others are:
• CityNorth, northwest of Loop 101 and 56th Street, which the Thomas J. Klutznick Co. is developing. Klutznick has started grading and other work at the site.
• One Scottsdale, northeast of Loop 101 and Scottsdale Road, a project by DMB Associates. Dial Corp. is under way on its new headquarters within One Scottsdale.
Two poised to compete
Now, Klutznick and DMB are showing interest in the state land that Westcor wants for its Palisene project.
Daniel Klutznick, vice president of Klutznick, said his company is interested in any "mixed-use" land the state brings to auction.
"We’ve been involved in the northeast Valley of Phoenix for more than 20 years, and we are committed to this community," he said. "With what we already have under development, Paradise Ridge North is a natural expansion of our plans and vision for the area."
Karrin Taylor, a DMB vice president, said that DMB has an interest in how the property is developed, but it is unclear if it will bid on it.
Westcor officials did not respond to requests for comment.
$10 million deposit to bid
Developers at the fall auction will be required to submit a deposit check of $10 million to bid. That deposit includes first-year rent of $300,000.
Westcor, a subsidiary of Macerich, has a bidding advantage because it has a right of first refusal should it not be the winning bidder when the auction closes, Winkleman said.
Under an outdated bidding system that has been grandfathered in for this state land parcel, Westcor can match the top bid.
The winning bidder would then have one more bid and Westcor would have the option of matching that bid as well, the land commissioner said.
Rule may scare bidders
That right of first refusal could scare off some bidders, Winkleman said, adding that a number of national developers showed interest in the site during a shopping center conference last month in Las Vegas.
Last month, Scottsdale Vistella LLC bid the minimum $68.5 million for a 99-year lease of 124 acres northeast of Bell Road and Loop 101. That is $552,419 per acre but does not include infrastructure costs.
The Palisene parcel is priced at $883,929 per acre, including infrastructure improvements.
The 112-acre site is on the Phoenix side of Scottsdale Road, about a quarter-mile north of Loop 101, and extends north to Thompson Peak Parkway.
Peter Corbett
The Arizona Republic
