After some delays, construction on the Papago Plaza redevelopment is moving forward.
The plaza, a longtime shopping destination in southern Scottsdale that fell into disrepair, is undergoing a redevelopment by Scottsdale-based Pivot Development, which bought the property in 2015.
City Council approved the project in December 2018, making way for new construction on the site.
Built in the 1960s, Papago Plaza was one of the city’s top shopping centers for decades but fell out of vogue as the city expanded northward and the McDowell Road corridor – dubbed the Motor Mile for its concentration of car dealerships –began to struggle.
Over the past two decades, most of those dealerships closed or relocated to land along Loop 101 and the Los Arcos Mall across the street gave way to ASU’s SkySong development.
Papago Plaza, one of the last remnants of the old McDowell Road corridor, was at just five percent occupancy by 2018.
A wrecking ball took out Papago Plaza’s iconic pueblo-style buildings in December 2019 and now crews are working on the foundation and preparing to start infrastructure work to make way for phase 1 of the new development.
That work will likely result in some travel headaches for local residents as crews tear up parts of Scottsdale Road near the intersection with McDowell Road for utility line improvements.
Details of that disruption are not yet known as traffic control plans have not yet been submitted to the city for review, said Walt Brodzinski, right-of-way supervisor with the city’s Transportation Department.
But traffic on Scottsdale Road could be disrupted for six to eight months.
“There’s a couple of moving pieces there related to the existing infrastructure whether we can leave it in place or if we have to take it out,”said Lee Mashburn, president of Pivot Development.
Overall, the project will include the 274-unit Broadstone Papago Marketplace apartments and a 118-room Springhill Suites hotel along with around 30,000 feet of retail, including a grocery store.
Designs for both the hotel and apartments were approved by the city’s Development Review Board in 2019.
Mashburn said “we are trying to figure out if we” want to add in office uses as well.
The grocery store element was a hot topic in 2018 as residents in neighborhoods south of the Plaza have long sought a grocery store in the area.
Rumors had swirled in 2018 that the location would house Aldi, an Illinois-based discount grocer, after renderings associated with the redevelopment featured the company’s logo.
Aldi announced on July 21 that it was expanding to the Phoenix market with four locations in Goodyear, Chandler, Gilbert and Peoria.
Mashburn said “we’re not far enough down the road” to announce a grocery tenant but confirmed he was in discussions with Aldi and “other folks” but that “right now we’re further down the road with Aldi.”
The first phase of the redevelopment will include three commercial buildings along Scottsdale Road that would include retail uses and the possible office component.
Late last year, Sigma Contracting issued a press release stating the first phase was scheduled to be completed by fall 2019.
But delays have pushed the expected completion of phase one back to fall 2021, said Mashburn.
“The timing really has something to do with the (Covid-19) pandemic, but really it’s that plus the city review process,” Mashburn said. “And it’s not any knock on them; it’s just the timeline it took to get it done.”
The pandemic has had other effects on the project, too, including complicating negotiations with potential tenants.
Mashburn said interest in the project has not waned in recent months, but businesses are delaying final decisions or looking for breaks on rental rates.
“Everybody’s more cautious; I think that’s the bottom line,” Mashburn said.