$500 Million In Construction Projects
By Jay Gonzales
In a year that Tucsonans have mostly been confined to their homes, working remotely, with limited opportunities to venture out, Downtown Tucson has undergone a transformation that will surprise – maybe even shock – anyone who hasn’t been keeping tabs.
More than $500 million in construction projects were ongoing during the pandemic, said Rio Nuevo District Board Chair Fletcher McCusker. A new hotel and a parking garage have gone up on the Tucson Convention Center grounds. The old La Placita Village has been replaced by a massive, soon-to-be-opened residential and retail community. Two large residential/retail projects are in motion in the Mercado District west of Interstate 10. And plans have continued for the city’s first high-rise in 35 years that will change the downtown skyline we’ve come to know.
Most downtown construction projects continued without a pause – yet not without angst – as the pandemic severely bruised the economy from top to bottom. But with Tucson ranked by outsiders as one of the U.S. cities best positioned for a post-COVID-19 economic recovery, the builders here kept on building.
“In the long run, we are still very bullish on the downtown Tucson market,” said Omar Mireles, president of HSL Properties and developer of The Flin, a 243-unit residential development on the site where the colorful La Placita Village office complex once stood on the southwest quad of Broadway and Church Avenue.
“There are others that are bringing apartment homes into the market downtown,” Mireles acknowledged, “and I think perhaps it will be a little bit slower absorption than we initially anticipated. Given the challenges, we still remain bullish.”
Admittedly, much of the construction underway downtown was beyond the point of no return when the pandemic disruption hit. It wasn’t feasible to just stop, developers said. But still, they were not shy about pressing forward with their projects, anticipating Tucson will remain on the radar for companies looking to relocate here and residents looking for a new lifestyle.
“There really was no choice,” Adam Weinstein, president and CEO of The Gadsden Company, said of his decision to continue his two projects. “We had to just plow along and take our lumps.”
‘Nothing short of Herculean’
The Gadsden Company is developing two large, combined residential/commercial projects in the Mercado District. The Monier is a $35 million retail and residential complex directly south of the Mercado San Agustin shopping and dining center, which Gadsden built at Avenida del Convento and Congress Street. With 122 apartments and nearly 13,000 square feet of retail and commercial space, The Monier was slated to open for occupancy at the end of March.
Gadsden has a larger project, The Bautista, which is going up just to the east between Linda Avenue and the Santa Cruz River. The $72 million development is projected to have 253 residential units with 16,500 square feet of retail and restaurants. The project continued during COVID-19, but it is now slated for opening in 2023, about 90 days later than originally scheduled.
“It’s a constantly moving series of needles rather than one needle, and getting them all aligned and moving forward is nothing short of Herculean,” Weinstein said of managing two projects worth more than $100 million. “We always knew that we’d be able to get through it.
“I think it was just a matter of how much of a delay this was ultimately going to cause, and making sure that we were in a strong position to be able to cover all of these circumstances and be able to move forward. That’s a big challenge, especially when you’re a small development company and you’re developing more than one product at any one time.”
Builders that received incentives and funding from Rio Nuevo universally credit the tax increment finance district with keeping the momentum going throughout the pandemic. Rio Nuevo provided a combined $4.2 million in funding for The Gadsden Company’s two projects, as well as millions in funding for a number of other projects that are changing the landscape downtown.
As residents start visiting downtown again, they’ll see something quite different. “They won’t recognize downtown when they come down,” Mark Irvin, longtime board member of Rio Nuevo, said about the area generally and the Tucson Convention Center specifically.
“When people come back, there’s going to be a new hotel. There’s going to be two new garages. Eckbo Fountains are going to be fixed. There’s going to be 18,000 more square feet of meeting rooms. And the entire TCC is going to be upgraded.”
Tucson is ‘one of the premier destinations’
The Tucson Convention Center capital improvements – $65 million worth – also include upgrades to the Music Hall and the Leo Rich Theater. There are upgrades to the meeting rooms and the Exhibition Hall, which will have improved technology to attract meetings and conventions in a new environment brought on by COVID-19 and the various health and safety protocols.
“We were worried in the pandemic that everything would just dry up, but Tucson is identified now as one of the premier destinations, post-pandemic,” McCusker said. “As a result of that, we’re seeing a lot of inbound interest.”
Developers Marcel Dabdoub and Ron Schwabe are still in the planning stages of their joint mega-project, the 19-story, 75 E. Broadway project that has yet to break ground. The pandemic and the accompanying economic downturn hasn’t soured them on the idea of adding a high-rise with a 3,000-square-foot footprint, the largest of any high-rises existing downtown.
The lot next door to the historic James A. Walsh United States Courthouse has been cleared. At press time, the developers were working on finalizing the financing so they could break ground in June. Swaim Associates is the architect on the project. Sundt Construction is the general contractor.
The size of the property was too irresistible to let a global pandemic stop what Schwabe and Dabdoub wanted to build there. They forecast that 75 E. Broadway will be a building that could potentially attract a company that wants to relocate and needs a large space, but doesn’t want to occupy multiple floors in a headquarters.
“There’s nothing like it” in Tucson, Dabdoub said. “The most important feature to the community is that we’re offering 3,000-square-foot floor plates of Class A office space, which does not currently exist in Tucson. There are prospective employers that are looking at Tucson. A lot of times they call brokers and ask if there’s any large floor-plate office space available and there really isn’t.”
“They go to Phoenix,” Schwabe said. “Phoenix has a lot of full, floor-plate kind of marquee buildings that they can just move right into.”
Onsite activity as early as June 1
The building is still being designed and has undergone a number of transformations. At one point, it looked like it might be 22 stories, then was reduced to 14 floors. It is now planned to be 19 – the first two floors for retail space, a parking garage on five floors, four floors of apartments and seven floors of office/commercial space. The 19th floor is planned to include meeting space and a restaurant. Conceivably, someone could live in the building, work in it, shop and eat there, too.
At one point, the building was planned to be entirely retail and office space along with the parking garage. When Schwabe and Dabdoub switched financing partners to Boston Asia Capital out of Massachusetts, the building took on its current configuration.
“Our firm has been working with Marcel and Ron continuously to develop and modify the scope of that project,” said Mark Bollard, principal at Swaim Associates. “It’s going to move quickly. We have some milestones that we need to meet, and we should see activity on site as early as June 1.”
“Boston Asia is very bullish on Tucson and they said, ‘Let’s go big,’ ” said Principal Phil Swaim. “They think that adding the residential and adding the top-floor experience and things like that is going to make this a much richer building.”
The three tallest downtown buildings are clustered within a block of each other on Stone Avenue from Pennington Street to Broadway. That will allow 75 E. Broadway to set its own mark about a block east, changing the skyline often seen in photos commonly shot from “A” Mountain. Its location will make every area of downtown accessible to its future residents, who will find themselves in the heart of activity from the eastern edge of downtown to the western entertainment area anchored by the TCC. The streetcar will also connect it to the Mercado District.
The community as a whole
“When you look at the longterm growth that’s going to happen downtown, this is certainly where the new projects are happening – next to AC Hotel, TEP – and then you get this project in there,” Swaim said. “Hopefully, over the next few years we’ll see Ronstadt (Transit Center) developed just to the north of here. You get all of that done and it really does create a strong hub in this area.”
With its hand in 75 E. Broadway and the renovations at the TCC, Sundt Construction is continuing its legacy of involvement in a long list of major projects throughout the community. One of its most recent and noticeable major projects was Banner – University Medical Center Tucson, the new hospital on the University of Arizona medical campus.
“It’s a combination of sometimes being in the right place at the right time and a lot of really hard work,” said Sundt VP Ian McDowell. “I think we’ve all been dedicated to creating a community. We’re out there trying to be helpful, whether it’s to developers or Rio Nuevo or the county or the city. When somebody wants to get something done, they tend to come to us because they know we’ve got a good track record and we’re looking at the community as a whole.”
Arguably, the most visible transformation during the pandemic has been at the TCC, where the DoubleTree by Hilton and a new parking garage opened in the east parking lot during the pandemic. Construction was underway when the pandemic hit, and limited activity and traffic around the TCC made for easier access and less disruption.
Both the DoubleTree and the garage were designed by Swaim Associates. Ryan Companies U.S. from Minnesota built the hotel. Concord General Contracting and Sundt teamed together to build the parking garage as part of the overall $65 million in work.
Both companies had completed prior Rio Nuevo work. Concord was the general contractor on the Tucson Arena renovation two years ago. Sundt built the Caterpillar office building on the west side of the freeway that many have seen as the catalyst for the downtown resurgence.
“We figured why not put both our teams together. It was a natural fit,” said Concord President J.V. Nyman. “We have subcontractors that Sundt might not use and Sundt has subs that we may not use. Having two GCs come together makes the pool of subcontractors a lot bigger.”
Nyman said the experience with Rio Nuevo on the arena project made it a no-brainer for his company to continue looking for opportunities to be involved in the transformation taking place downtown with Rio Nuevo’s support.
“They do their best to set up our teams and the architecture teams for success, and then likewise on our end, we want to perform,” Nyman said, adding that roughly half of the $65 million in work at the TCC is done. “There’s about 30-some million to go, maybe a little more. We’ll be out there hoofing it for another minimum of a year.”
More meeting spaces, expanded parking
With all the work that remains, the area around the TCC is already transformed, said Glenn Grabski, GM of the TCC.
“If you come down Church (Avenue) and look at the front of this building, it looks completely different than it did a year ago,” Grabski said. “The hotel is up. The garage is up. The landscape in front of the box office and the upper plaza area has been redone with lighting and trees and the bricks leveled out. It’s got a completely different curb appeal than before.
“I stand out in front and I look toward the cathedral and the hotel going on behind that, I look north at The Flin project. When The Flin is completely finished, Church from Broadway to Cushing (Street) will look completely different, especially on this west side.”
While the TCC undoubtedly missed the revenue generated by events that didn’t take place over the last year, work on the much-needed renovations has been able to go on without much disruption.
The older meeting rooms off the north plaza were refurbished with a new look and new technology, including teleconferencing capability for businesses and nonprofits that lack that type of capability in their offices.
The restrooms in the meeting spaces got a welcome upgrade. “It’s made things a little easier for people just to not have to worry about event schedules,” Grabski said. “Every restroom in this facility needed work and we’ll pretty much get them all.”
About 16,000 square feet of meeting space was added near the Exhibition Hall. The ballroom got a “facelift,” Grabski said.
The parking garage added nearly 150 spaces to the east of the Tucson Arena with, according to Grabski, better lighting and easier access in and out of the garage than there had been for the parking lot.
Upgrades to Music Hall, Leo Rich Theater
More work is ahead at the Music Hall and the Leo Rich Theater, including new seats in the Music Hall.
Up the block from the TCC, The Flin has begun pre-leasing as it completes final stages of construction. Like the other projects, there was no turning back when the pandemic hit. Mireles and HSL Properties have not wavered in their belief in downtown and its future.
“Downtown development is not for the faint of heart. It’s expensive. It’s difficult compared to other projects. It takes longer,” Mireles said. “There’s a lot of nuance to developing in downtown. As we’ve seen things develop over the last 12 months-plus, we have seen and learned that it is manageable.”
The challenges at The Flin were as much about the tight quarters at the construction site as the issues brought on by working in the COVID-19 environment, which slowed the project, said Jim Tofel, VP of development for Tofel Dent Construction, the general contractor.
The project will have 220,725 square feet in a six-story complex that will have two underground parking garages. Restaurant and retail space will take up about 4,500 square feet. There were several considerations, including preserving historic properties and buildings such as the iconic Plaza de la Mesilla, more commonly known as The Gazebo, on the north, and the Samaniego House at the southeast end.
“We knew going in that that was going to be a very difficult project,” Tofel said. “It’s probably the most difficult construction project in the state right now. It’s a tight footprint and we really pushed the boundaries in terms of packing as much into that footprint as we could. We’re surrounded by historic buildings. And the access to that site is really tough.”
‘Extremely challenging’ project
The former, colorful La Placita shopping and office center that was razed for the project had its fans who said it was a highly visible symbol of Tucson. Others said it didn’t reflect the character and culture of the community. Whatever replaced it was going to play an equally visible role. Tofel said The Flin, a signature project for the company, will fulfill that role.
“There’s no question it’s the most difficult project that we’ve ever undertaken as a firm,” Tofel said. “We’ve got a lot of big projects going, but this one is extremely challenging and it’s something that I believe is going to be a huge success. It’s going to be something that we’re going to look at for the rest of our lives, and we’re going to be proud of it.”
Another Church Avenue project continues north from The Flin. The $30 million renovation of the Pima County Historic Courthouse has already seen the iconic dome refurbished inside and out. The north side of the building had been renovated and gained a new second-floor tenant – Visit Tucson.
UArizona’s Alfie Norville Gem & Mineral Museum, The Dillinger Courtroom and County Sheriff and County Court Mini-Museum, and some county administration offices were in the final stages of renovation and were to be open in the spring.
The outdoor January 8th Memorial to the west was finished in time to mark the 10-year anniversary of the tragic shooting that killed six.
‘No turning back’
The pandemic may have affected smaller builders more than larger ones. People like Alex and Stephanie Lee, for whom the margin for error is less than for big builders, found there was no turning back on a project that was underway when the pandemic hit.
The Lees were in the throes of a lifetime project, having purchased the San Carlos Apartments from Alex’s family, which had owned it since 1940. The building at 13th Street and Sixth Avenue west of the TCC dates to 1908. The first phase was to renovate 15 of the 30 apartments, which were completed and occupied by August 2019, and the rest of the project was cruising along. They were working on the second 15 apartments when COVID-19 hit and nerves got shattered.
“There was no way we could stop because we couldn’t let our guys go. We have an amazing crew,” Alex said. “We had too much money sitting in the thing to not at least get it done so we could hopefully get some rents coming in. It was just too scary.”
“We bet the farm,” said Stephanie.
With Alex’s ties to a longtime Tucson family, the Lees have an attachment to downtown. They wanted to continue to be a part of the resurgence that clearly didn’t hit the brakes during the pandemic. They have now formed a construction company with the hopes of building a business focused on downtown.
They purchased a boarding house on Fifth Avenue that will be their next downtown project. They’ve been working on permitting, which involves the Arizona Historical Society.
“We hope that that’s kind of a niche for us,” Alex said. “We love the historic buildings downtown.”
‘We’ve kept our foot on the accelerator’
As the community and the world hopefully regain a sense of normalcy, Rio Nuevo’s leaders continue to forge ahead supporting projects. There’s 1 South Church, Tucson’s current tallest high-rise office building that will convert some floors for a hotel. There’s also the historic Sunshine Mile, a mid-20th-century strip of commercial and retail buildings east of downtown along Broadway.
“I think the thing that is kind of interesting is while so many other people have their foot on the brake pedal, we’ve kept our foot on the accelerator,” said Irvin, the Rio Nuevo board member. “We’re just seeing a lot of people that are looking at downtown from a business perspective.”
Tucson has gained national visibility from many high rankings in livability, jobs, workforce talent availability, tourism and more. That likely will continue to keep Tucson on the radar of companies, developers, employees and entrepreneurs, and leaders say, keep growth going.
“All of a sudden Tucson is now in the top five of cities to look to post-pandemic,” Rio Nuevo’s McCusker said. “We’re seeing a real migration of tech companies and tech workers like Austin and Portland saw. At same time, we’re seeing huge interest from developers that have targeted Tucson’s future. And somehow that became almost like a Pied Piper, and none of us had anything to do with that. The attributes of Tucson all of a sudden became important to a post-pandemic population.”