Nordstrom opts out of northeast Phoenix CityNorth project

[Source: Michael Clancy, Arizona Republic] — Nordstrom has pulled out of the CityNorth project, leaving the next phase of development at the new northeast Phoenix center up in the air.  The Seattle-based luxury retailer was the first business announced for the mixed-use project.  Now, it has become the first to walk away.  Nordstrom spokeswoman Julee Kraus said the development failed to meet milestone dates, but she declined to elaborate.

Najla Kayyem, vice president of marketing for Related Urban Development, one of CityNorth’s two developers, said the decision was based on deadlines to begin work on the project’s second phase.  “We are disappointed that this has not moved forward,” she said, “but we don’t control the capital and financial markets.”

CityNorth has been plagued by bad timing.  Phase 1 opened on schedule in November 2008 in the midst of the recession.  Phase 2, originally scheduled for a November 2009 debut, was pushed back a year when the economy turned south.  Since then, it has been put on hold as the developers have continued to seek financing.

When the Nordstrom deal was announced in August 2006, developer John Klutznick of the Klutznick Co. said Nordstrom likely would attract other high-end retailers.   On Thursday, he said retailers are cutting back everywhere.  “We are operating in a global economic downturn,” Klutznick said.  “Developers cannot move forward on projects until the credit markets recover and financing is available.”  He added that Nordstrom, which has cut back expansion plans elsewhere, as well, will reconsider CityNorth when the economy rebounds.

David Krietor, a deputy city manager who oversees economic development in Phoenix, said the city was notified two weeks ago.  “They said they had run out of time to complete the transaction with Nordstrom,” he said.  “We were hopeful we could aggregate several high-end, big-box stores at CityNorth.  We are disappointed.”

Krietor suggested that an ongoing lawsuit over a development agreement between CityNorth and Phoenix may have played a role in delaying further progress…  [Note: To read the full article, click here.]

One thought on “Nordstrom opts out of northeast Phoenix CityNorth project”

  1. Mixed feelings about this turn of events. Unfortunately, it means that anticipated jobs and tax revenues have evaporated. At the same time, I think it was wholly inappropriate for the City of Phoenix to provide incentives for a development so far outside its core in an attempt to win a sales tax war with Scottsdale. If CN were to succeed, where would that leave established retail centers like Paradise Valley Mall? We can’t stay on the treadmill of discarding old malls and shopping farther out in the next ring of suburbia forever.

    The people I really feel for in this debacle are the small business people who were lured into the High Street retail area — the one portion of CN that has opened so far. To their credit, the developers of CN recruited some local businesses, including Press, Haus, and Little Artika. I like these places and hope they do not fail, even if I disagree with their choice of location.

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