Macerich Sells Tucson’s La Encantada Retail Center for $165M

Macerich has sold La Encantada, a 246,000-square-foot retail center in Tucson, Arizona, for $165.3 million. The sale generated $100 million in incremental liquidity for the firm.

The sale of La Encantada is Macerich’s second major sale in the Phoenix area this year. In March, the firm sold 95% of the Paradise Valley Mall for $95 million. A newly formed joint-venture partnership with an affiliate of RED Development purchased the property. The joint-venture partnership plans to develop a multi-year, multi-phased, mixed-use project at the 92-acre site, which is possible due to rezoning by the city in response to local demand. The redevelopment project will comprise high-end grocery, restaurants, multifamily space, offices, retail space and more. The property will feature equal parts residential and non-residential space, for a total 6.5 million square feet of occupied building area. Macerich will retain a 5% ownership stake in the building.

The two sales are examples of Macerich’s plan to dispose of non-core assets. This year, the strategy has generated $200 million of incremental liquidity for the firm.

Overall, investors have a rosy outlook on the Phoenix market, but Nadel Architecture and Planning’s Greg Lyon said earlier this year that Phoenix has a healthy and growing retail sector, and new projects delivering into the market will focus on outdoor dining and gathering spaces and daily needs.

To support the demand, the firm expanded into the Phoenix market. Nadel opened a new office in Phoenix, focusing heavily on retail design and development. With offices in Los Angeles and Las Vegas, the firm said that expanding into Phoenix was a natural next step. However, the Phoenix market is well positioned for growth, particularly in the retail sector. Rick Redpath will lead the new firm. He has worked with Nadel in the past, and brings 30 years of experience to the position.