New retail development across the United States is in the midst of a dramatic slowdown, but fast-growing Phoenix continues to see activity with a multibillion-dollar project about to get off the ground.
Developer Vestar on Monday unveiled plans for Legacy Park, a roughly 9.4 million-square-foot mixed-use complex slated for a vacant 200-acre site in Mesa, in the East Valley area of the greater Phoenix market. The first phase, estimated to cost more than $1 billion, would include a 300,000-square-foot shopping complex for upscale retailers and chef-driven restaurants and roughly 700 residential units above the retail, according to Vestar. The size and design would be comparable to Scottsdale Quarter, another mixed-use development where Vestar is a strategic partner, according to the Phoenix-based company.
In Mesa, Vestar is partnering on Legacy Park with the property’s owner, Pacific Proving. When it’s completed, the development is supposed to also include a hotel, office space, and parks and recreation areas. Legacy Park is slated to break ground in 2027.
U.S. retail development has significantly slowed in mature markets after years of overbuilding and now often entails tearing down outdated enclosed malls or reimagining them as mixed-use centers. But states that have experienced recent population growth, such as Arizona and Texas, are still seeing ground-up retail development, according to Ryan Ash, Vestar’s vice president of development.
“And I think the biggest driver of that is just fundamental population growth,” he told CoStar News. “Over the last five years, I think the population of Phoenix has grown by nearly a million people. That is significant.”
The Phoenix area has 2.2 million square feet of retail space under development as of the third quarter, the fourth-largest pipeline in the U.S., according to Connor Devereux, CoStar Group director of market analytics for Phoenix. In addition, Phoenix has seen a 6.5 million-square-foot increase of its inventory of retail space since the fourth quarter of 2019, the sixth most in the nation, he told CoStar News.
“In general, retail construction’s down,” Devereux said. “It’s very hard to build, but Phoenix is one of the areas where it is happening. And Vestar is a big part of that.”
Vestar’s developments have reshaped the core of the city of Phoenix and suburban Scottsdale. The developer enjoyed success developing Tempe Marketplace in Tempe and Desert Ridge Marketplace in Phoenix. Vestar is now expanding into the periphery of the market to places like Mesa with Legacy Park and Verrado Marketplace in Buckeye. Verrado Marketplace is a $275 million, 500,000-square-foot shopping center slated to open next year in the Western Valley part of the Phoenix area.
Next summer, Vestar is scheduled to break ground on Laveen Towne Center, a 500,000-square-foot, open-air shopping center slated for a 90-acre site in southwest Phoenix. It’s one of five ground-up projects that Vestar said it has brought to the Phoenix metropolitan area since 2020. Another 1.5 million square feet of new projects are in pre-development, set to be completed by 2031, according to Vestar. Its portfolio exceeds 30 million square feet across the western United States.
Most retail construction in Phoenix is now taking place “in emerging submarkets where population growth is strongest and the existing retail offering is more limited” and there’s cheaper and more abundant land, like Buckeye, Devereux said in a report. The city’s population increased 22% from 2020 to 2024, the fifth-largest gain in the country among the 340-plus cities and towns with at least 100,000 people, according to Devereux. That growth rate translates to more than 20,000 extra residents during the four-year period, supporting underlying demand for housing and retail, he said.
Across the way in the East Valley, there are ambitious plans for Legacy Park, which would be built at the convergence of Mesa, Gilbert and Queen Creek. Vestar said it’s looking to create what it calls a sophisticated urban oasis in that region. The development’s property is part of the former 1,805-acre site of a General Motors proving ground, owned by Pacific Proving.
In addition to its retail component, Legacy Park is slated to eventually have:
• 2,500 multifamily residences.
• A 600-room resort hotel developed by Athens Group.
• 3.4 million square feet of mid-rise office and corporate campus space.
• A 20-plus-acre urban park around a large lake meant to serve as a regional gathering space.
“So we will deliver phase one in 2029,” Vestar’s Ash said. “And then the subsequent phases — the surrounding corporate campuses and additional housing and a boutique hotel — will be determined on economic forces and demand. We can’t speak to how fast that will go, but we do expect it to be built out over the next decade.”
Vestar is bullish on Mesa, which is home to defense contractors and tech companies, Ash said. Legacy Park is also adjacent to Mesa Gateway Airport, which he said is a growth vehicle for the city. Ash compared it to John Wayne Airport in Orange County, California, because of the relative convenience it offers compared with the larger international airports.
Over the next 20 years, Legacy Park is projected to generate roughly $56 billion in economic output, create more than 20,000 jobs and contribute significant tax revenues to Mesa, according to Vestar.
Neil Saunders, a retail analyst and managing director at analytics firm GlobalData who is based in the Phoenix area, described the region as “a growth market in terms of both population and as a destination for tourists.”
It is also “a very consumption-focused market with shopping and leisure being major activities,” Saunders said in an email to CoStar News.
“That’s one of the reasons why there is so much interest in new space for retail and entertainment,” he said. “Combining this with residential also satisfies housing needs and gives new centers a [built-in] consumer base. Legacy Park sounds like it is hitting a lot of these nails on the head.”
That’s in contrast to what CoStar’s most recent report found regarding retail development nationwide.
“Elevated construction and financing costs continue to weigh heavily on retail construction activity across the U.S.,” the report said. “As a result, retail construction activity is expected to remain well below historical norms for at least the next several years.”
Legacy Park also follows in the footsteps of mixed-used centers like Scottsdale Quarter and PV Phoenix, a redevelopment of the former Paradise Valley mall, according to Saunders.
“In some ways, these centers are a modernization of retail as older malls like Fiesta, which was in Mesa, have closed and the space has exited the market,” he said. “Due to the climate, outdoor centers work very well year-round in Phoenix in a way that they might not elsewhere.”
In Buckeye, Verrado Marketplace would be located at the entrance of DMB Associates’ 8,800-acre Verrado master-planned community. The retail center already has a solid roster of tenants signed up, including Target, Safeway, Ross Stores, Marshalls, HomeGoods, Ulta Beauty and Shake Shack. Most of them are scheduled to open next May. Harkins BackLot, a new family entertainment center from the regional movie theater chain, is preparing to debut next year in the fall. The venue’s first location is open at The Shops at Norterra in Phoenix.
Less than a mile away from Verrado Marketplace in Buckeye, Sun Belt Investment Holdings has begun work on Buckeye Commons, Devereux said. The roughly 400,000-square-foot Costco-anchored retail center is slated to open next year.