The 60,000-sf phase one, all spec office and retail space, is expected to take 14 months to construct. Ken Losch, principal with Scottsdale, AZ-based Avenue Communities, says market demand will set the pace for additional construction. The five-acre site at 31 E. Fifth St. also will hold the 120-room Agio Hotel.

"We already have leases and letters of intent on the retail side and will likely be fully leased by the time we're completed," Losch tells GlobeSt.com. He says the office space hasn't yet been taken to market, but he has every confidence that it too will be committed by completion. The developer is seeking LEED Gold certification.

Losch says he resisted tearing down the 19th century building although renovating it will be more costly. "There is a large constituency that would take the view of tearing it down," he acknowledges. He decided restoration was the key because of a lack of authentic, historical buildings in the Phoenix metro."For me, personally, this is being done in a very innovative way," Losch says. "We're celebrating the old and wrapping it with contemporary uses and materials."

Avenue Communities is the general contractor. On the design side are MS&R Architecture & Interior Design of Minneapolis and Phoenix-based Substance Design Consortium. Southwest Retail Group Co. of Scottsdale is handling retail leasing and Lee & Associates' Phoenix team will market the office space.

Meanwhile, the developer is poised to restart work on the 375-unit Centerpoint Condominium at 110 E. Seventh St., also in Tempe. The project had been stalled due to problems with its former lender, Mortgages Ltd., which resulted in Avenue Communities filing a lawsuit.

Losch says there are new lenders lined up for Centerpoint Condominiums and a settlement is pending with Mortgages Ltd. "We're down to final negotiations with the lender," Losch says. "Once the courts give us authority to move ahead on Centerpoint, we'll do so."

Centerpoint's 22-story tower is close to being completed and construction is under way on a neighboring 30-story tower. If all goes as planned, residents will be able to start moving into the first tower by year's end and the second tower will be ready to occupy six months later. The project also includes a 20,000-sf retail component, which is scheduled to open in early January 2009.

Losch tells GlobeSt.com he lost about six months of construction time because of Mortgages Ltd.'s difficulties. However, he adds "we'll start this again and get it finished and the results will be amazing."