Phoenix Developer of the Year
Dominate with a Capital 'D'

K. Robert Wendel

Westcor, Arizona's largest developer, already owns and manages 21,000,000 sq. ft. of retail space from Tucson north to Flagstaff and west to Yuma and even into Colorado, but the Phoenix-based firm shows no signs of slowing as it continues to develop shopping centers.

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In the last three years, the firm has developed more than 3,500,000 sq. ft. alone, and in the Phoenix market Westcor dominates the scene, owning eight of the Valley's nine malls.

"Westcor seems to have emerged as the dominate developer with a capital "D," said Valley economist R.L. Brown, a principal with Phoenix-based R.L. Brown Reports.

The firm is moving forward with plans for a new regional mall in Gilbert in suburban Phoenix and a renovation and expansion of the Flagstaff Mall in northern Arizona. Construction was recently completed on the Yuma Palms retail project.

The firm, known for its long-term vision, also recently purchased four parcels for new regional malls in north Phoenix and the West Valley cities of Peoria, Goodyear and Buckeye.

"On average, from the time we buy a piece of land and commit to developing a mall, its 10 or 15 years from idea to grand opening," said David Scholl, Westcor's senior vice president of development. "Developing a center is a series of baby steps over a long period of time."

Santa Monica, Calif.-based Macerich Co., purchased Westcor in 2002, but Westcor's roots continue to be deep in Arizona.

Westcor was founded in 1965 by former Air Force test pilot Rusty Lyons, who is also the son of real estate magnate Russ Lyons. The firm's first major development was Tower Plaza in Phoenix. The project's success led to other work, including Los Arcos Mall in Scottsdale and the first mega mall west of the Mississippi River, Metro Center in Phoenix.

Metro Center broke the shopping mall model by featuring five competing anchors under the same roof.

The project, with its amusement park and miniature golf course, was a hit with Valley residents, who traveled from the far reaches of the metropolitan area to shop at the nearly 200 stores. The 1974 project also helped establish a formula for future projects such as Scottsdale Fashion Square, a high-end destination shopping area home to elite retailers such as Nordstrom and Neiman Marcus.

"Scottsdale Fashion Square has really been a labor of love with a many-phased project starting in 1986," said Mark Pendleton, president of Kitchell Contractors, which built the original Scottsdale mall in 1979. "Westcor was great to partner with on all phases of the project, and from my perspective it is well led. It seems to know what piece of the market it is about, and when it has a project, it has a vision of what the project will be."

Since 1979, Westcor developed and purchased major shopping centers in every significant market of metropolitan Phoenix. They include Arrowhead Towne Center in Peoria, Superstition Springs Center in Mesa, Scottsdale Fashion Square, The Borgata and Hilton Village in Scottsdale, Desert Sky Mall in Phoenix and Chandler Fashion Center.

Westcor also reached outside of Phoenix, developing Flagstaff Mall and Prescott Gateway. Tucson's La Encantada, an upscale "lifestyle" center, was the firm's most recent foray into Pima County and the firm is developing two projects in Boulder, Colo.

The combination of Westcor's development skills and Macerich's facility management skills creates a development powerhouse with a greater depth and breath

The Macerich Company is a real estate investment trust and one of the largest owners/operators of regional malls in the United States and the largest in the West.

According to company information, Macerich's inventory of malls is one of the most productive in the country, with occupancy levels of more than 90 percent and tenant sales of $361 per sq. ft. in 2003. The Macerich Co. portfolio includes 76,000,000 sq. ft. of gross leaseable space in 75 malls across the country.

"I think our two companies complement each other because Macerich has never developed anything from the ground up, and that's where our expertise is," Scholl said.

"Other than the technical side of merging systems, Macerich has been good at leaving us a certain amount of autonomy to continue to do what we do best."

Knowing its market is important to Westcor's success. Over the years, the firm has carefully tailored its projects to mirror the market demands. Extensive research, keeping on top of trends and forecasting lines of growth are part of every development process Westcor undertakes, according to Scholl.

Scholl said the newest trend sweeping the nation is "lifestyle centers," a mixture of indoor and outdoor shopping, entertainment and restaurants. Regional shopping centers are giving way to power centers, which are anchored by a large mall, such as Chandler Fashion Center, and surrounded by several hundred acres of stand-alone shopping, big-box retail, movie theaters and dining.

"Our first-line customer is the retailer, so our company has made a commitment to stay in touch with the retailers and understanding what they are asking for and then going and executing the project," Scholl said.

Westcor also works closely with communities and cities that plan to add shopping centers.

"Westcor is good about taking residents' input and being flexible," said Greg Tilque, economic development director for Gilbert, a quickly growing city southeast of Phoenix.