By Ron Davis | Phoenix Business Journal
Back in November, a vigorous bidding war broke out at a state land auction between two Valley hospitals for 48 acres of north Scottsdale land.
Phoenix-based Banner Health had been working with the city of Scottsdale earlier in the year on entitlements for the land before it went for auction on Nov. 16. But HonorHealth also brought its auction paddle to compete for the land.
The $56.95 million minimum bid ratcheted up to $84 million, with HonorHealth walking away the winner of the land at the northeast corner of Loop 101 and Hayden Road.
When Banner CFO Dennis Laraway finally conceded the auction, he was heard saying to another staffer, “That’s OK, there’s more land.”
How much? The city of Scottsdale’s economic development department estimates there’s more than 500 acres of developable land left north of Loop 101 — and most of the acreage is only available for sale through a state land auction. Because of the area’s attraction for sprawling corporate campuses it’s been given the moniker — the corporate corridor.
“The capacity for more corporate growth is phenomenal,” Rob Millar, Scottsdale’s economic development director, said. “When that 500 acres is developed — for all intents and purposes — Scottsdale — will be built out.”
And that land is in demand, with several major projects — some expected to cost north of $1 billion — in the early phases of development in north Scottsdale. While it may be years before those developments see a full build-out, developers expect them to play starring roles in the future of Scottsdale as the city envisions building out the corridor for decades to come.
Experts say there’s about 500 acres north of the Loop 101 in north Scottsdale that’s
available for development. Most of that land is owned by the state of Arizona.
Meanwhile, Banner has since found another parcel — 48 acres on the southwest corner of Hayden Road and Loop 101 in north Scottsdale — to build a $400 million hospital campus complete with a four-story hospital, medical office building and cancer center.
And once Banner Scottsdale Medical Center opens in 2026, it will have several new neighbors. Those neighbors will come by way of billion-dollar developments including Cavasson, One Scottsdale and Optima McDowell Mountain Village. Axon Enterprise Inc. also spent big money to acquire land to build its new headquarters.
“It’s all been very planned and very controlled,” said Scottsdale Councilwoman Tammy Caputi. “We’re watching to make sure that we take a look at our water resources; that development contributes to the infrastructure needed and that we do neighborhood outreach.”
Making big bets
Nationwide Mutual Insurance Cos. is a major employer in Scottsdale. Its real estate arm will be the landlord of nearly 2 million square feet of office space across 135 acres at the emerging Cavasson development.
Brian Ellis, president and COO of Nationwide Realty Investors said the firm wanted to develop a similar mixed-use project the firm had previously put together near its headquarters in Columbus, Ohio. Nationwide’s Grandview Yard includes 1.4 million square feet of commercial space, restaurants, grocery and service retail and hotels.
“It was the most attractive, undeveloped site in the state of Arizona when thinking about access, visibility, surrounding amenities, views, all the infrastructure and the reputations of Scottsdale and the state of Arizona,” Ellis said of the 135-acre site on the northwest corner of Loop 101 and Hayden Road.
Nationwide raised its hand to express an interest in buying the site, going through entitlements and a rezoning of the property by working closely with Millar and other city and state officials. But Nationwide still had to win the land at auction.
Nationwide ended up being the auction’s only bidder and bought the land for $83 million, the appraised value of the land.
“There’s a lot of money at stake. There weren’t a lot of people who could do that. We had the financial wherewithal to do that,” Ellis said. “We’re a Fortune 100 financial institution that can take a long-term view and wants to be invested in real estate.”
Cavasson will be worth in excess of $1 billion when completed. As far as spending goes, the development is only about a third of the way to reaching that billion-dollar mark.
To date, Nationwide has opened the 237-key Hilton North Scottsdale at Cavasson, a 440,000-square-foot office building, the corporate office for Choice Hotels, a six-story parking garage and a 15,000-square-foot retail building. Another 150,000-square-foot office is under construction, another 100,000 square feet across two medical offices and about 1,600 multifamily units are also planned for Cavasson.
Moving north
DMB Associates Inc.’s bet on north Scottsdale was placed about 20 years ago. But, it is now starting to take shape. The Scottsdale-based developer owns about 75 acres of land
Before the Great Recession, DMB had invested upward of $30 million in infrastructure at the site. Just last year, the developer pumped another $12 million to get the site ready for future development near Loop 101 and Scottsdale Road.
“I believe north Scottsdale is going to become central Scottsdale at some point because the city of Scottsdale is so large and everything is moving northwards,” said Susan Bansak, CEO of DMB. “We’ve always seen it as the next horizon or the next frontier.”
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