Future of malls: Arizona’s retail centers evolve as customers’ habits change

Instead, new and emerging shopping destinations might feature thousands of apartments, gyms, and public spaces like splash pads, with stores and restaurants speckled throughout. Developers and urban planners are after places that serve many purposes, not one. They aim to create experiences and destinations.

“There will never be another standalone, traditional mall built in this country,” David Larcher, CEO of Vestar, the developer and owner of several open-air shopping centers in the Phoenix area, including Tempe Marketplace and Desert Ridge Marketplace. Vestar was recently named the operator of Scottsdale Quarter for its new owners, FalconEye Ventures.

Changes to consumer habits, like online shopping and food delivery, have steered customers away from the traditional, enclosed mall. Some staples of traditional malls, like JCPenney and Sears, have shuttered most of their locations, leaving large vacancies at existing malls.

Demolition on the shuttered Paradise Valley Mall in Phoenix began in 2021 and was soon followed by Fiesta Mall in 2023 and Metrocenter in 2024.

Across those three malls, more than 3.8 million square feet of buildings were demolished, clearing 260 acres of prime real estate for new development.

In total, five malls, including those three, have been redeveloped in some way, razing or converting nearly 5 million square feet of buildings on 348 acres of land. By comparison, Scottsdale Fashion Square is about 2 million square feet on 67 acres.

But while some of the region’s legacy malls are coming down and making way for new development, a tight retail market has pushed some developers to take the leap on new large-scale retail projects.

Those projects aim to incorporate new real estate trends to keep their developments viable, such as adding residential space or focusing more on restaurants than traditional shopping.

The redevelopments also reshape the surrounding neighborhoods. After the redevelopment of Park Central in midtown Phoenix, the area around it was named a bioscience corridor, drawing new medical companies to the area.

In areas that have languished, such as those around Metrocenter, developers and cities are expecting the influx of new development and capital expense to inject new life.

Mesa: A tightened focus on doing retail right

In Mesa, city leaders are trying to find the right locations and mix of businesses for the city’s retail corridors.

The city created a strategy in 2024 focused on adding retail, restaurant, hospitality and entertainment offerings in Mesa, Jaye O’Donnell, the city’s economic development director, said.

“Residents have wanted higher quality retail and destination retail,” O’Donnell said. “Economic development hadn’t really focused on retail before; it was mostly core industry. This was an opportunity to add another industry focus that was important for us to stay competitive as a community.”

But attracting retail now looks different: It’s not funneling all major stores to the nearest mall, she said.

The city has many retail areas, such as the Asian District, which have grown to attract specific types of businesses. As Mesa expands and new developments are built, adding retail in the right places makes those areas distinctive and draws business activity to them.

She pointed to recent Mesa projects that include different types of retail and some highly specialized entertainment.

Cannon Beach, a 37-acre mixed-use project anchored by a surfing lagoon, recently opened near Power and Warner roads. The development includes surf-themed activities, such as the lagoon, a stationary surf pool and a cliff diving pool. It also includes several restaurants and is planned to have a hotel.

Medina Station, a proposed development that will include about 651 residential units and 302,000 square feet of commercial space, is planned by Scottsdale-based Simon CRE near Signal Butte Road and Southern Avenue. The project will bring five new restaurants, along with shopping, and will be anchored by Target.

“We are working with developers to make sure the projects they are interested in have the right type of retail,” O’Donnell said.

Projects like those, she said, are good examples of how modern retail is woven into mixed-use developments, rather than a traditional mall that only had one real use.

Having unique destinations, like a surfing park, in the city means drawing visitors from throughout the region, bringing customers who are ready to spend money on activities, stays and food. It also gives neighbors choices for how to spend their leisure time.

The wrecking ball: Fiesta Mall

When a mall does die, like the demolished Fiesta Mall, it can become a thorn in the side of a city to see large-scale vacancy at an otherwise desirable location, O’Donnell said.

“It had been hard to look at when it was vacant big boxes,” she said. “But what we can see now is the opportunity there.”

“Fiesta Mall is in a great location,” O’Donnell said. “It’s a premier center for commercial, residential, hospitality and entertainment. We now work with the property owner to take that collective vision to market.”

The early phases of the new development could take shape soon, Matt Brucker, director of real estate for Verde Investments, the site’s owner, said in an email.

“While no final decisions have been made, early phases will likely include a mix of multifamily residential and retail,” Brucker said. “This will allow us to meet immediate market demand for housing while beginning to reintroduce retail and commercial activity to the site.”

The city has rezoned a wide variety of uses at the Fiesta Mall site. Brucker said the size and location of the site, one of the largest infill parcels in the region, lends it well to almost any new use.

“Fiesta Mall holds deep personal significance for many residents; people have memories of first jobs, first dates, and years of shopping here,” Brucker said. “Our goal has always been to respect that history.”

Construction hasn’t started, and Brucker pointed the scale of the project presents unique challenges.

Another Mesa mall that could be ripe for a refresh, but likely not a full redevelopment, is Superstition Springs Center near Southern Avenue and Power Road. O’Donnell said Macerich, the owner of the mall but not all of the anchor stores, has expressed interest in adding new shopping and restaurants in and around the mall site.

“I don’t think it necessarily needs to be scraped, and I don’t think Macerich thinks that, either,” she said. “There are opportunities to add more to it, like condos, hospitality, and destination entertainment in the mall or outside of the mall.”

O’Donnell said Superstition Springs presents a “great opportunity” to see what the city and developer can do to keep the mall vital.

Park Central and SkySong: Redevelopment of malls in overdrive

But two other defunct Valley malls, Los Arcos in south Scottsdale and Park Central in midtown Phoenix, are already well into their new lives as redevelopment projects.

“Time progressed and created functional obsolescence and vacancy,” Steve Lindley, chief operating officer of Holualoa Cos., the co-developer of both SkySong, at the former Los Arcos site, and the revamped Park Central, said. “You’re left with these big, large-scale infill sites in fantastic locations.”

On both Park Central and SkySong, the ASU Scottsdale Innovation Center, Holualoa partnered with Plaza Cos. on the redevelopment.

SkySong was developed primarily as an office development, also featuring apartments, a hotel and retail and restaurant space. Construction began in 2006, and the first buildings opened in 2008. The site is mostly built out, but does have some remaining land for development.

Unlike Los Arcos, the redevelopment of Park Central reused and converted large department stores into office spaces and other uses.

Instead of razing the whole site, developers stripped down the layers of paint and stucco on the walls to expose ductwork. They removed parts of the walls to add roll-up garage doors to make offices with indoor and outdoor workspace.

The side of the mall facing Central Avenue was leased mostly to restaurants, and other types of retail, like a gym, opened there.

“Retail still works, just not the same as it did in the past,” Lindley said of the mix of businesses at Park Central.
Developers have embraced restaurants, smaller-scale stores and businesses where customers must go in person, like gyms or health spas, when looking for tenants to boost their centers.

Creighton University’s Health Sciences campus was built on the surface parking lot of the mall, along with an apartment complex, a hotel and additional retail pads. Lindley said plans call for another apartment complex and additional development in the former mall’s expansive parking lot.

Lindley said creating a development that has the power to stay relevant means keeping aware of how real estate is used today.

“Real estate used to be somewhere you had to go,” he said. “But now we can work remotely, you can order on Amazon, you can order food from Uber Eats, so now real estate has to be a place you want to go.”

Deciding the balance for what mall redevelopments look like depends greatly on the location and needs of the area, he said.

Metrocenter Mall ‘functionally obsolete’ but reborn as the Metropolitan

At the former Metrocenter Mall, now called the Metropolitan, demolition of the buildings began in November, and now the site is being cleared for new construction.

“A lot of people have finally taken notice of it because demolition is wrapping up,” Steve Betts, senior development director for Concord Wilshire, one of the groups working to redevelop the mall. “80 acres is massive, but people didn’t really realize that until the buildings came down.”

It took years and several different developers to move forward with the demolition and redevelopment of the defunct mall. Two of the businesses that had been operating at the mall, Walmart and a self-storage space, remained and will be amenities for the development’s future residents, Betts said.

Unlike Park Central, Metrocenter was mostly razed because the massive, enclosed building was functionally obsolete.

Betts said he would have loved to have repurposed as much as possible, “but in this case, it was addition by deletion.”

The site will be redeveloped as a heavily residential project, which will mostly focus on for-sale townhomes, Betts said.

Originally, most of that housing was proposed to be rentals. The taxes generated from the rental tax would have been used to reimburse the developer for public benefits like a park, infrastructure and a parking garage.

However, after the state’s repeal of the rental tax took effect in January, Betts said that was no longer feasible, so the public improvements would be funded by recaptured taxes from the real estate sales on the site instead.

Betts said the developers envision three types of townhome products, ranging from about $450,000 to $650,000 in price depending on the style and size. The development could also end up including one or two apartment complexes, Betts said, adding that he believes some attainably priced rentals should be built in the area.

The Metropolitan is adjacent to Interstate 17, with easy access to the booming employment market in north Phoenix, where Taiwan Semiconductor Manufacturing Co. is building its campus. Betts said it makes sense to inject housing into the large area that was dominated by retail for decades.

The location is at the end of the light rail line, and there are nearby stores, restaurants and things to do. The Phoenix Public Library or the Castles N’ Coasters amusement park, as well as the new businesses that will come with the Metropolitan, mean the area will be truly walkable and transit-accessible, Betts said.

“If you need a car, you can have a car, but people won’t have to be car-dependent,” he said.

The development team has also begun work to find the right stores, restaurants and entertainment venues to take spaces at the Metropolitan, Betts said.

Scottsdale-based Diversified Partners signed on to the project to serve as broker for the retail space at the urban core of the new development, called the Loop at the Metropolitan. The group has already begun pitching the site to companies that might want to have a location there.

Securing the right tenants, like in-demand restaurants, can build buzz around a project while construction is still underway.

“We wanted to have them get out ahead of the building to get tenants attached,” Betts said.

Paradise Valley Mall reimagined as PV. Not just stores anymore

The former Paradise Valley Mall, now called PV, is in the middle of a redevelopment that also focuses on both residential and retail, with some office space. Phoenix-based RED Development bought the mall in early 2021 and demolished most of it.

The 100-acre site allows for up to 3,000 apartment units, including about 1,000 that are already complete or under construction.

A smattering of restaurants are beginning to open at PV, with local favorites like Blanco Reserva Cocina + Cantina and Flower Child open, and Federal Pizza, the Vig, Cala and Wren House Brewing all either under construction or planned.

Fender Musical Instruments is under construction on its regional headquarters at the development. The office for Fender is expected to open in the fourth quarter of 2025. The developer also has room for a boutique hotel and some additional office development at the site.

Even though the death of the old mall showed large-scale retail wasn’t viable on the site, some mall staples remain. Sephora was among the first stores to open at the redevelopment, but this time in the context of a walkable neighborhood, surrounded by apartments and a grocery store.

That mix, developers said, could be the key to whether a development that is primarily retail can survive.

Retail space still in high demand

However, some luxury brands are now among the first businesses to announce locations at a new center. Sephora was among the first businesses to open at PV.

Even malls that are seemingly very successful, such as Scottsdale Fashion Square or Biltmore Fashion Park, have required major renovations and additions to remain competitive and on trend, Desmond said.

At Biltmore Fashion Park, he said, the development of the Life Time luxury health club and plans to add a mixed-use tower in the parking lot keep the center fresh. RED Development, the developer of PV, bought Biltmore Fashion Park in late 2024 and has added many new tenants to the center.

In Glendale, the Westgate Entertainment District combined some of the elements of a traditional mall, like a movie theater and smaller-scale retail, with professional sports, public spaces and a restaurant-heavy tenant lineup.

As the area has grown, a casino has added to the nearby offerings and the VAI Resort and Mattel Adventure Park are under construction.

Following the rooftops: Verrado Marketplace, Village at Prasada, Laveen Towne Center

Desmond said much of the Valley’s population growth has been on the outskirts, which is where some of the largest new retail projects are being developed.

These include the Village at Prasada in Surprise, Verrado Marketplace in Buckeye and the planned Laveen Towne Center in southwest Phoenix.

Those shopping centers, unlike the traditional enclosed mall, are all open-air shopping centers, with some embracing a mix of uses from the start.

Laveen Towne Center, for example, is a partnership between Vestar and Brio Investment Group. It is planned to include up to 530,000 square feet of commercial and retail space, along with up to 1,456 residential units.

Larcher, from Vestar, said the company’s existing retail portfolio, which is primarily in Arizona, is about 96% occupied, and when a vacancy does come up, it can be a positive thing.

The company is under construction on Verrado Marketplace and is in the planning stages of Laveen Towne Center, along with a smaller-scale retail center in north Phoenix called Black Mountain Village.

It has about $400 million worth of projects under construction now and plans to break ground on an additional $350 million worth in the next 12 months.

In Vestar’s properties, the past 12 months have been strong for both foot traffic and sales, with foot traffic up about 6.5% and restaurant sales up about 5% over the previous period, Larcher said.

“It really is a matter of staying on top of trends,” he said about what keeps Vestar’s centers relevant. “We have to go out and find operators who are at the forefront of the consumer wants today.”