The future of a portion of the property belonging to the ill-fated Southbridge Two project is no longer in the hands of developer Carter Unger.
Unger sold 4.5 acres of the nearly 10-acre property for $38 million to developer Creative RE, which is led by Bob Agahi and David Sellers, according to an announcement made last Wednesday.
“We fully understand the sensitivities and dynamics of these properties and this neighborhood. That’s why our capital and approach will be a patient one,” Agahi said.
Agahi and Sellers said they are not looking to rush into any project and want to accommodate tenants already on the property. Agahi anticipated maybe starting a conversation with the city about what could go on the property sometime mid to late next year.
The new project will be much scaled down from the controversial proposal made two years ago by Unger, son of the late-developer Fred Unger, who spearheaded the original Southbridge development.
“Lower height, lower density, it’s a completely different plan,” Agahi said. “There’s not really one thing we’re salvaging from the old plan.”
Like the old project, though, Agahi and Selelrs see a mixed-use development with office, retail, a hotel and residential on the site.
Perkins & Will will provide the architectural services for the project.
“We want to deliver something that is creative and really hasn’t been seen before,” Agahi said.
Creation RE has developed several other projects in Scottsdale, including the Chauncey, a mixed-use – office and retail – property at the corner of E. McCormick Parkway and Hayden Road.
Agahi and Sellers said they have had a relationship with the Ungers going back to Fred and it was a mutual agreement they consider the sale of the property.
Agahi said the Ungers interviewed several applicants to purchase the land, but would not speculate as to why they decided to sell now.
“It was very important to me and my family’s legacy to find the right custodians for these signature properties,” Unger said in a written statement. “We believe we have found those people in Bob and David and look forward to their stewardship over the next many years.”
The Southbridge Two area was the site of a highly controversial development proposal that would have drastically changed the 5th Avenue shopping district in downtown Scottsdale. It would have been an expansive multi-use project with 200,000 square feet of new, Class A office space, hotels and condominiums complete with ground level retail throughout.
The massive project drew the ire of much of the public and opponents collected 17,000 signatures – well above the 12,000 needed – to get a referendum on the November 2020 ballot to halt the development. Unger fought the referendum in court, trying to invalidate signatures on the petitions, but lost. He then scuttled the project before it went to a vote.
City Council, which had voted 4-3 to rezone the property for the project in December 2019, then voted by the same margin to rescind that rezoning in April 2020. That vote came despite a protest of those who had collected the signatures for the referendum and wanted to vote on the project anyway.
Council also repealed abandonments, a development plan and agreement and the sale of its Rose Garden parking lot to Unger for $8 million.
Scottsdale Mayor David Ortega, who was not on council at the time but campaigned against the project, is optimistic the new owners will bring a low-scale, low-density project before Council for approval.
“I hope they keep in mind we did pass the General Plan 2035 (in November), which was passed by the voters, which is a good guide for development,” he said.
Councilwoman Betty Janik, who also campaigned against the project but was not on council at the time, echoed the mayor’s sentiments.
“I do hope we can come together to come up with a really dynamic project because it is a really special area,” she said.
Councilwomen Linda Milhaven and Kathy Littlefield were the only two members of the current council to vote on the project.
Milhaven, who voted for it, said the area had been “designated slum and blight” with buildings that had outlived their life spans.
“We still would have had West Main Street, we still would have had our beautiful Old Town,” she said.
Milhaven said the project would have drawn tourists to the area but that people got hung up on the height of the buildings, which maxed out at 150 feet tall.
“I think the people got hung up on height – which was sad because the Ungers were will to negotiate on height,” Millhaven said.
She is worried a new owner will not be the accommodating landlord the Ungers have been to what she says are struggling businesses in the area.
Littlefield, who voted against the original project, describes the area as the opposite of slum and blight. “It’s popular,” she said. “It’s vibrant. People want to be there.”
She feels the project would have eaten away at Scottsdale’s character.
“It would have destroyed everything that is on 5th Avenue: the stores, the shops, the history, the things that people come to see in the old west,” Littlefield said.
She said she will be interested to see what kind of project the new owners propose.
“It has to fit within the confines of Old Town,” she said.
Unger, who did not return the Progress’ calls or emails, unveiled in February plans for a scaled-own version of Southbridge Two that would have included less height and density than the previous iteration – though building heights would still have exceed the one- and two-story shops that populate most of the area today.
The new plan showed 500 residential units, around 120,000-square-feet of retail space and a 140-room hotel on multiple sites west of Scottsdale Road along with a large public plaza.
Plans for a 128-foot-high office building that would have fronted on Scottsdale Road under the old Southbridge Two were removed.
Under the new proposal, one site, located on a triangle of land roughly between Stetson and the north side of 5th Avenue, would have included ground-level retail underneath a hotel and residential units.
Another site at the western edge of 5th Avenue at the intersection with Goldwater Boulevard would have featured additional retail and residential space along with a 24,500-square-foot park that would have fed to the canal bank.
Creation RE is a Phoenix-based multi-platform real estate & alternative investment company with over $3.5 billion in projects spread across six states. Creation RE focuses on ground-up commercial real estate development, hospitality and alternative investments into various early and late stage growth companies. Creation RE works with several large institutional investors, including JP Morgan, Crow Holdings, Cross Harbor Partners, etc. Creation has offices in Arizona, Texas and New York.