Equity Partnership Acquires CityCenter of CityNorth Mixed-Use Development
Portland, Ore.-based real estate private equity firm Scanlan Kemper Bard Companies (SKB), will close on a deal today to acquire Phoenix development CityCenter of CityNorth with its equity partner, Wayzata Investment Partners (Wayzata).
The partners acquired the 628,000 SF mixed-use, luxury project putting SKB in an excellent position to drive activity at the project going forward.
CityCenter of CityNorth includes:
>> 99 units (123,000 SF) of residential condominiums (currently leased as apartments);
>> 330,000 SF of office space;
>> 175,000 SF of ground-level retail space;
>> A 6-level parking structure with 1,418 stalls, and an additional 458 surface parking stalls;
>> 4.9 acres of undeveloped, adjacent land.
“CityCenter of CityNorth is an extraordinary real estate asset created by a developer with a reputation for high caliber work,” said Bob Scanlan, principal and CEO of SKB. “The price and quality of the mixed-use development were very attractive to our team, as is the opportunity to participate in the recovery of the Phoenix market.”
The project, developed by Related Companies, was completed in November 2008. CityNorth was foreclosed on in April of 2010, but has seen recent activity with new restaurant, retail and office tenant move-ins during 2012 and 1Q 2013.
Holliday Fenoglio Fowler, L.P. (HFF) marketed the property on behalf of the seller. The HFF investment sales team was led by senior managing director Ryan Gallagher and associate director CJ Osbrink, along with director Ryan Fitzpatrick, managing director Bryan Ley, senior managing director Jim Batjer and managing director Mark Wintner.
“The quality construction combined with its location in a rapidly rebounding Metro, augurs well for us and for Phoenix,” said Todd Gooding, president and principal of SKB.
The development is a part of the Desert Ridge Master Plan, which is currently 50% complete. It includes more than 2,400 residential homes and apartments, approximately 2.5 MSF of office and retail space, the Mayo Clinic medical facility (which occupies 750,000 SF), the 950-room J.W. Marriott Resort, and the Musical Instrument Museum.
Once completed, Desert Ridge is expected to include 50,000 residents and more than 8 MSF of commercial space.
SKB plans to re-energize CityCenter of CityNorth with an ample tenant improvement and leasing commission budget in keeping with the quality of the project. In addition, SKB will rebrand CityCenter of CityNorth through a marketing strategy aimed initially at bringing entertainment-oriented retailers to the project.
With its reduced cost basis, SKB plans to increase occupancy through highly competitive rents, add additional parking and invest in cosmetic upgrades.