Tech billionaire George Kurtz's real estate investment firm has acquired Scottsdale Quarter, a mixed-use complex in Arizona that he plans to pump $100 million into, updating its retail and office components.
The company, FalconEye Ventures, has purchased the 755,000-square-foot open-air property at 15279 N. Scottsdale Road, which includes nearly 600 residential units, dining and retail, as well as 300,000 square feet of office space. Terms of the deal were not disclosed on Thursday.
Vestar, a Phoenix-based owner and operator of open-air shopping centers, will be FalconEye's strategic partner at Scottsdale Quarter, as well as holding a minority stake in the property. Vestar will also oversee operations at the acquisition.
Kurtz, a tech entrepreneur, is the CEO and founder of Austin, Texas-based CrowdStrike, a cybersecurity company. He is also a veteran of McAfee. He launched FalconEye in 2020 and has several Arizona real estate projects in the works.
Retail and office landlords across the nation are making improvements to their properties, and FalconEye and Ventures plan to follow a familiar playbook. That often entails getting a more alluring and unique group of retail tenants, and making office workplaces more attractive to younger employees — especially in the tech field — with space that fosters collaboration and offers amenities.
Building on a solid base
“Scottsdale Quarter is a powerful asset with even greater future potential as a magnet retail destination and a hub for breakthrough technology companies,” Kurtz said in a statement. “This acquisition aligns with our commitment to investing in and developing leading mixed-use properties that serve as catalysts for innovative companies and economic growth.”
The Scottsdale Quarter sale will likely far surpass past retail investment activity in the area. Over the past year, 22 retail properties traded in North Scottsdale, involving 390,000 square feet, according to a CoStar report.
"Retail sales volume in North Scottsdale has totaled $73.6 million over the past year," the report said. "Average annual sales volume over the past five years is $177 million and $160 million over the past 10 years."
Scottsdale Quarter, located between North Scottsdale and Paradise Valley, is currently home to retail tenants such as Apple, Restoration Hardware, Lululemon, Jenni Kayne, Veronica Beard, Dominick’s Steakhouse and True Food Kitchen. The $100 million capital improvement program aims to improve its position within the luxury retail sector and make its Class A office space more attractive to technology and creative industry tenants.
The strategy is to focus on wooing new tenants, making infrastructure enhancements, and "offer more experiential retail concepts designed to differentiate the property," according to a statement from FalconEye and Vestar.
Scottsdale Quarter is already "a very high-performing asset," Vestar President and CEO David Larcher told CoStar News on Friday.
Another redevelopment
"Our goal with this is to have a curated luxury district that offers an elevated design-forward shopping experience with a collection of unique brands, similar to retail streets, and districts that you may be familiar with, like SoHo."
As for the office space, the plan is to make it more "innovation focused," according to Larcher. Implementation of the improvements is slated to kick off late this year and take several years to complete.
"We're in the planning stage now," he said.
Scottsdale Quarter sits amid affluent residential communities and serves one of the nation's fastest-growing metropolitan markets. The property serves more than 4.5 million visitors annually.
Kurtz's other real estate projects in the region include The Parque, a $1 billion mixed-use redevelopment of a former amusement park, CrackerJax, at 16001 N. Scottsdale Road in Scottsdale.
Vestar has a portfolio of over 30 million square feet across the western United States and an additional 3 million square feet under active development.