CityScape Phoenix. Image courtesy of RED Development
RED Development has signed an additional 46,323 square meter lease with Western Alliance Bank for CityScape Phoenix, a 1.2 million square meter mixed-use tower in downtown Phoenix. As a result, Arizona’s largest banking division, headquartered in Class A, will occupy around 250,000 square meters on six floors. After the expansion, the property will be 98 percent occupied, RED Development told Commercial Property Executive.
The Western Alliance opened in 2010 right after the tower was completed in CityScape and has grown its presence over the years. The previous expansion in 2019 resulted in a total occupancy of around 116,000 square feet, the owner confirmed for CPE. The current expansion adds further conference rooms and 110 new seats to the bank’s headquarters.
A live-work-play goal
CityScape is just a few minutes’ walk from City Hall and, according to CommercialEdge, comprises two city blocks at 1 E. Washington St. in an opportunity zone. The first phase of the project, the 27-story office building, went into operation in 2010, while in 2012 the second phase, a 25-story structure with 224 luxury apartments on a 250-room hotel, followed. The buildings are connected over 50,000. Square feet of Patriot’s Park, a green space with a splash pad, seating, and entertainment space.
The 600,000 square meter office tower, which also has 27,000 square meters of retail space, has 23,600 square meters of floor slabs and five levels of underground parking. Amenities include an EOS fitness center and 14 restaurants.
The property is located on 4.4 acres near a variety of shopping, entertainment, and sports venues including the Phoenix Suns Arena and Arizona Diamondbacks Stadium. The Phoenix Convention Center and the ASU Downtown campus and state and government offices are all within 1 mile of the hotel. The location is also within walking distance of The Monroe, a 261,672 square foot office tower that Industrious rented 30,000 square feet last February.
The ups and downs of downtown offices
Like most U.S. markets, Phoenix’s office space was directly affected during the pandemic, although listing rates remained virtually unchanged. According to a recent CommercialEdge report, the subway had a vacancy rate of 17.4 percent in December, which was below the US average of 14.2 percent, and nearly 2.4 million square feet of space in the pipeline. Even so, the Downtown submarket was a top performer in the fourth quarter of 2020, seeing positive absorption of 75,452 square feet, according to a report by Cushman & Wakefield. In the meantime, more than half of the sub-markets of the subway have recorded negative absorption.
In addition, Downtown was the only submarket that added office space in the fourth quarter. The Wexford Innovation Center was the only completed property and only the fourth building to be delivered to the submarket since 2010. The Cushman & Wakefield report shows that 2020 was the second year in a row that only one office building in downtown Phoenix went online.
Part of the downtown Phoenix revitalization
The CityScape story began in 2005 when RED Development entered into negotiations with the city to acquire and redevelop two vacant lots and a public park in the city center. The developer laid the foundation stone for the 500 million dollar project in 2007. The mortgage loan included a $ 42.4 million loan from KeyBank, according to public records. CallisonRTKL was the project architect while AECOM and Hunt Construction Group acted as contractors.
CityScape, viewed as a risky development during the recession, soon became a live work-play destination that benefited from the revitalization of downtown Phoenix that also included the completion of the first phase of the Light Rail Transit System, the expansion of the Phoenix, includes Convention Center, the growth of the Phoenix Biomedical Center, and the opening of the ASU Downtown Phoenix.
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