Tempe residents will have to wait longer for the city’s first convention center as plans for the privately funded University Square have been put on hold indefinitely.
Saxa Inc., the company behind the project, failed to secure financing for a proposed hotel and convention center just north of ASU campus on East University Drive. Stearns Bank N.A. foreclosed on the property in late November and is now looking to sell it.
“They (Saxa Inc.) couldn’t find the financing for that project,” said Tempe Community Development Manager Chris Salomone. “We are in such an uncertain market.”
Saxa planned to build University Square on the property north of University Drive, between Myrtle and Forest avenues.
University Square was planned to be a multipurpose property featuring a 242,000-square-foot hotel, a 95,000-square-foot convention center, and 111,000-square-foot of retail, restaurant and parking spaces.
Dick Thomas, chief credit officer of Stearns Bank, said the property is currently listed with the Land Advisors Organization, a brokerage company, and it is accepting offers.
“The project [University Square] was some thing that the former developer was pursuing,” Thomas said. “We just want to get it sold.”
Though Thomas said Stearns Bank has no plans to pursue the development of this or similar projects, Thomas did say a potential buyer could “move forward with those plans,” though he couldn’t comment on who that buyer might be.
Salomone said many experts in the hospitality industry determined Tempe was a viable place to make a profit because of factors such as the light rail and proximity to ASU.
Before the Tempe City Council approved the project in 2008, the city hired a third-party consultant to determine if it could sustain a convention center of comparable size, Salomone said. The findings of that report indicated that Tempe could support a convention center.
“Everybody is waiting for financing to come back to the market,” Salomone said. “I think [the hospitality industry] is not going to go away. They’re going to try to come back to Tempe.”
The project was originally conceived as a dense real estate property, Salomone said, but it couldn’t secure any investors because many thought the project was unfeasible. Saxa came in with the “more reasonable idea” to build a hotel and conference center, but the project met a similar end.
With the relocation of Dave’s Doghouse to Wilson Hall on the Tempe campus, the property is now vacant.
W. P. Carey School of Business research professor Lee McPheters said such a project might find an easier time securing funding in the future.
“Arizona has always been one of the prime destinations for business conventions,” McPheters said. “Everything is in place — it’s just [that] we’re in the middle of coming back from the worst recession in decades.”
Tempe could see this or a similar project possibly in a few years, he said.
“Unfortunately in this environment, you to get financing. You have to get people who are looking for a good return on their investment right now,” McPheters said. “People always have good ideas, but sometimes getting financing is a bit harder to do.”
Reach the reporter at
joseph.schmidt@asu.edu
