De Rito Partners president Chuck Carlise tells GlobeSt.com that the man-made lakes looked pretty, but their purpose wasn't quite so lovely. Because the project at 9175 E. Indian Bend had been built 20 years ago on Salt River Pima-Maricopa Indian land, original developer Vestar had to create a way to deal with the wastewater.

"The water, once treated, was stored in the lovely lakes up front," Carlise explains. "Once we told everyone that the lake water was actually sewage water, they were happy with the concept of us removing the lakes." The water has been drained, used for irrigation and "of course, that's a tremendous upside for us because now we can develop on those areas," Carlise comments.

He estimates that all three parcels – the two that once held lakes and one that is near the freeway – could hold about 150,000 square feet. Some of that space will be allocated to a hotel and restaurants.

While De Rito is seeking developer partners for the available acreage, it is also actively pursing methods to fill space vacated in the past year by Mervyn's, Circuit City and other retailers that had to declare bankruptcy. Carlise says a lot of different site plans have been evaluated for the available space. Once such solution is high-end outlet shops.

"Right now, in our market place, the tenants that seem to be the healthiest are the outlet guys," Carlise says. What also adds appeal to the outlet idea, he continues, is that a $500 million tribal casino is under development across the freeway. "This whole thing lends itself to an outlet kind of environment," Carlise acknowledges.In the meantime, De Rito has already spent around $10 million on the center's cosmetics including resurfacing parking areas and roads leading to the shopping center, repairing the roof and redoing the whole landscaping.

The upgrades, Carlise comments, are to attract new tenants and to keep the older ones happy. "When we bought the Pavilions, it wasn't really a good place, and the temptation for many tenants to move was great," he explains. "But with us doing all we've done to upgrade, then the market turning as it has, the tenants are more willing to stay. They're seeing we're backing up our words with actions."

As a result, large tenants such as Home Depot and Target have renewed their leases. "With the recession, they're finding it's better to stick where they are," Carlise says. "There are no competing projects to move to, and they don't want to spend the money to relocate."

Instant Insights /

De Rito Moves Ahead on 1.1M-SF Scottsdale Pavilions

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