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PHOENIX-In their first joint venture, RED Development LLC and USAA Real Estate Co. will develop a 325,000-sf lifestyle center with a $45-million price tag. The Shops at Norterra will break ground in summer 2006.
The Shops at Norterra, eyed for a spring 2007 opening, will be situated on 38 acres at the northeast corner of Interstate 17 and Happy Valley Road, right next to the USAA Phoenix campus. The San Antonio-based insurance company contributed the acreage to the joint venture and will share the development cost with RED Development, according to Mike Polachek, a partner with Kansas City, MO-based RED Development.
"We thought this site would be great for a lifestyle kind of project," Polachek says, adding his long-term relationships with USAA executives got the ball rolling on the Shops at Norterra. He tells GlobeSt.com that it took six months of negotiations to nail down the details of the partnership.
According to Polachek, three retail tenants are negotiating for 120,000 sf in the development. He expects the project will be at least 50% preleased when ground breaks. RED Development and its sister company, RED Realty Advisors LLC are handling the project leasing. Small shop space will likely lease for more than $30 per sf.
"This area is an emerging area that needs more upscale retail," Polachek says. The Shops at Norterra will bring a bit of "cache" to the Black Canyon Corridor, he says. He expects the project to include a movie theater, specialty grocer, home furnishings retailers, electronics store, bookstore, fashion retailers and restaurants.
"Daytime demand will be driven by the USAA Phoenix campus and the growing office and industrial development near the Deer Valley Airport," Polachek says. "Evening demand will come from the residential growth."
The Shops at Norterra, being designed by Butler Design Group in Phoenix, will feature pedestrian walkways, including a path to the USAA campus. USAA has agreed to share the existing parking structure after office hours. The general contractor hasn't been selected.
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