AZ Business Gazette – Palisene project is still a go for Westcor

A recent alliance between Westcor and DMB Associates will not derail Westcor’s plans to develop its Palisene project northwest of Loop 101 and Scottsdale Road.

When the partnership was announced March 5, there were concerns that the alliance would thwart retail development of Palisene because of competing retail development in the northeast Valley.

That includes DMB’s One Scottsdale project, just east of the Palisene site. Plus, CityNorth, two miles to the west in northeast Phoenix, and the Scottsdale Quarter, just east of northeast Phoenix’s Kierland Commons, two miles to the south.

Westcor intends to go forward with Palisene, said Scott Nelson, Westcor vice president of development.

“I’m not sure our vision drastically changes,” Nelson said. “It’s an exciting opportunity for both sides of the street to be aligned and complementary to one another.”

The alliance with DMB gives retailers predictability in that they can open in One Scottsdale in 2011-12, the time frame that many of them are seeking, he said.

One Scottsdale is planned for 1.8 million square feet on 120 acres, with offices, 400 hotel rooms and up to 1,100 residential units.

Dial Corp. is building its four-story headquarters at One Scottsdale. It will be the first component of the mixed-use development when it opens this fall.

State Land Commissioner Mark Winkleman said one of the challenges of developing the 112-acre Palisene site is that the winning bidder has to commit itself to an expense of $67 million for roads, utilities and drainage improvements for the area.

That cost, on top of a minimum bid of $32 million, could scare away some bidders, he said.

“At the end of the day, the project has to pencil out financially,” Winkleman said. “If you can’t get enough tenants and the land costs too much, then you don’t have a project.”

The marketplace, including potential bidders like Westcor, will make the determination on whether a development would be viable given the current costs, the land commissioner said.

Developers have recently been reluctant to buy some state trust-land parcels. Last week, no one bid at a state land auction for a 252-acre residential site southeast of 56th Street and Pinnacle Peak Road.