June 4, 2009 - CityNorth - Nordstroms, Bloomindale's & Macy's, Phoenix AZ

Bloomingdale's, Macy's pull out of CityNorth

"Phase 2 is on the back burner"

The remaining two department stores announced for the second phase of CityNorth have joined Nordstrom in pulling away, a developer's spokesman confirmed.

Bloomingdale's, Macy's pull out of CityNorth

he remaining two department stores announced for the second phase of CityNorth have joined Nordstrom in pulling away, a developer's spokesman confirmed.

The departures leave Phase 2 with no committed tenants.

CityNorth, located north of Loop 101 at 56th Street in northeast Phoenix, was envisioned as a spectacular new urban core.

Originally, Phase 2 was scheduled to open late this year, and subsequent phases were to follow. Related Urban Development, one of the developers of the project's retail core, envisioned new hotels, plenty of shopping and dining, office space and new residential units filling the 144-acre site just east of Desert Ridge Marketplace.

Bloomingdale's announced its decision to come to CityNorth in February 2008, and Macy's followed in May 2008. Both announcements came before the recession effectively shut off credit markets that provide funding for such projects.

Developers hope to renegotiate their agreements with the department stores when the economy recovers. But Westcor, the shopping-center company that operates Scottsdale Fashion Square and numerous other malls in the Valley, is hoping to lure at least one of them to one of its two retail projects on Scottsdale Road north of Loop 101. Palisene and Scottsdale One are 2 miles east of CityNorth.

"The amount of demand is right for one shopping center," Westcor Vice President Scott Nelson said. "The last thing you want to do is create two mediocre properties."

When Nordstrom opted out, Related's vice president of marketing, Najla Kayyem, said the decision was based on CityNorth's Phase 2 deadlines.

"We are disappointed that this has not moved forward," she said, "but we don't control the capital and financial markets."

Meanwhile, CityNorth is doing its best to keep Phase 1 active. Bars and restaurants along High Street, the two-block stretch of retail outlets south of Deer Valley Drive and west of 56th Street, appear to be doing well.

Webber Hudson, executive vice president of Related Urban Development, told Women's Wear Daily that Related is tweaking Phase 1, which opened in November.

"We're going to do a music venue and comedy venue," Hudson told the fashion publication in its Monday issue. "That's what the market wants. We'll complete Phase 1 as an entertainment district."

Kayyem says the developer is "close to a large announcement but not there yet."

"Phase 2 is on the back burner" until the economy recovers, Hudson told Women's Wear Daily.

Original Story - Arizona Republic