Light rail is more than just providing transportation for the people in Phoenix, it’s also providing a boost in the economy. One person that recognizes the value of Valley Metro’s light rail in downtown is Jeff Moloznik, vice president development with Red Development, the commercial real estate company behind CityScape, a 1.2-million square-foot urban project in the core of downtown Phoenix. It’s located at a light rail stop and features 600,000 square feet of office space, a 242-room hotel with a 224-room apartment building above, 200,000 square feet of retail space , 50,000 square feet of open space, and 3,000 below-grade parking spaces.
The project was kicked off in 2005 and broke ground in 2007 and they are just finishing construction on the apartments. When complete, as to the size and scale of the project, Moloznik said, “It will be just over $500 million.”
He says that the light rail line was one of the drivers for why this primarily retail development company chose this project for this location. “The fact that the city, state and county had made an investment in the light rail was one of the key drivers of an economic feasibility standpoint for us.” He continued, “If the city, state and county are going to invest that kind of capital and the public is going to invest that kind of capital into a system like this long term, this site would have unlimited potential, regardless of what economic situation we were presented with.”
He says he has a philosophy on light rail that he always describes it to people as a natural resource, somewhat like a river. It was used for transportation historically and around the river is where cities developed. “It’s not this revolutionary concept,” he stated. “We plan real estate around transportation infrastructure.
“In the suburbs it’s around freeway intersections; it’s just common.” He continued, “I don’t think of the light rail any different than that in terms of its effect in our business on the site selection process. It’s just the same logic that applies to master planning around freeway intersections.”
Adding to the attractiveness of the location is that with the light rail system, downtown is 15 minutes from the airport. “It’s so convenient and it’s so easy,” Moloznik said. “The nice thing about the light rail is that it’s got a predictability to it and someone that isn’t familiar with mass transit has that comfort level with connecting.”
He said they saw a large hotel off the light rail as a “cool thing” for the traveler. They come in, walk across the street and check into the hotel.
When Red Development was doing the site selection process, looking at the project, evaluating the long-term potential and risk, Moloznik said there are four general pillars that they always use and one was the light rail. “The fact that the city, state and county had made an investment in the light rail and it was completed in December 2008 was one of the key drivers of an economic feasibility standpoint for us.” He stressed, “It was such a level of investment, such a monumental infrastructure project it was one key component as to why we wouldn’t fail here.
“If the city, state and county are going to invest that kind of capital and the public is going to invest that kind of capital into a system like this meant long term, this site would have unlimited potential regardless of what economic situation we were presented with.”
When CityScape is complete, it will be just over $500 million, Moloznik said. “And that was through what was for us, the worst economic crisis.” The construction loan closed in 2009 and it was one of the largest private commercial construction loan closed in the country during that year. “We met with 70 banks in a period of 12 months trying to get a construction loan during that time and no one was loaning any money.