Developers scale back $900M CityScape project in downtown Phoenix

[Source: Jahna Berry, Arizona Republic] — Although a growing number of businesses plan to open in the downtown Phoenix project called CityScape, the worsening economy is forcing developers to scale back other parts of the three-block, $900 million plan.  Construction of more than 1,000 condos in the project, which straddles both sides of Central Avenue and First Street, between Washington and Jefferson streets, has been put on hold.

The downsizing from CityScape’s original plans, which were unveiled in 2007, is another sign that the deepening recession is taking a toll on a constellation of multimillion-dollar projects designed to bring jobs, shoppers, and residents into downtown Phoenix.  Plans for two 500-condominium buildings have been postponed until the housing market recovers.  Construction issues also prompted a developer to eliminate 65 planned apartments.  There are other changes, project officials say:

  • One planned hotel, Twelve, is no longer part of the project.  However, a 34-story tower, the future home of a 250-room Hotel Palomar and 165 condos, is under construction.
  • P.F. Chang’s has pulled out of the project but may open a restaurant later.  It will be replaced by a steakhouse from Fox Restaurant Concepts.
  • Wachovia, the anchor tenant in the project’s 27-story office tower, could withdraw.  Wells Fargo, which already has a downtown Phoenix high-rise, has plans to acquire the bank.
  • The list of tenants now includes a gym and a retail outlet, and developers hope to add a drugstore soon.

“The market is worse than it was three years ago,” said Keith Earnest, a vice president at RED Development, a CityScape developer.  “Hopefully, we are at the bottom…  We have a great location, and we continue to be optimistic.”  [Note: To read the full article, click here.  To read one local blogger’s February 2007 and August 2008 prediction of CityScape’s scaling back, click here.]

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