The Westgate Entertainment District in Glendale now has the backing of a local billionaire.
YAM Properties, the commercial real-estate company owned by GoDaddy founder Bob Parsons, announced today it has purchased the 76-acre property from iStar Inc. The sale price was $133 million, according to Jesse Goldsmith, vice president at CBRE and one of the property's brokers.
Parsons, of Scottsdale, said in a released statement that he sees huge potential for the entertainment district along Loop 101 and Glendale Avenue, which borders Gila River Arena, home of the Arizona Coyotes, and is near University of Phoenix Stadium, home of the Arizona Cardinals.
“We’re looking to develop features that will entice even more visitors and residents to this unique and vibrant Valley location,” he said.
The flashy complex with towering billboards and water features already has 533,000 square feet of retail shops, restaurants, offices and residences. New offerings to come on the property's 33 acres of undeveloped land may include a boutique hotel, more multifamily residences, office space and specialty entertainment retail, according to YAM Properties.
Westgate is an iconic property, and will soon be transformed by a new vision from Parsons, who knows the Valley and what it needs, said Dan Dahl, director of real estate at YAM Properties.
"We are going to take our time and analyze what the missing factors are out there, see what we could add to it, and take it up a notch," Dahl told The Arizona Republic.
The property had only been on the market since April, with an asking price of $142 million. There was a lot of interest right away, Goldsmith said.
“YAM had an advantage being local and took advantage by acting very quickly,” Goldsmith said in an email.
Parsons’ investment signals a strong future for Westgate and the city, said Glendale Mayor Jerry Weiers and Glendale City Manager Kevin Phelps.
“We see tremendous benefit to having local Arizona ownership," Phelps said in a released statement, "and are excited to provide the signature level of service needed to help bring YAM Properties’ visionary development plan to fruition.”
The new vision is yet unclear. Phelps told The Republic it would make sense to continue to build on the sports and entertainment theme of the district, which separates it from other retail corridors.
Since opening in 2006, Westgate has struggled to gain its financial footing and to reach its full potential. But in recent years, as iStar positioned the district to focus less on retail and high-end housing and more on sports and entertainment, it has seen success.
"Seven years ago, you could shoot off a cannon at Westgate and you might not hit anyone," said David Sotolov, iStar's executive vice president. "Today ... we have created a huge destination for the whole West Valley."
The property is now owned by one of the wealthiest Phoenix residents. Forbes puts Parsons’ net worth at $2.7 billion.
Parsons plans to be very involved in making decisions for what's next at the property, Dahl said. "He doesn't do anything small," Dahl said. "Everything he does, he does right."
Parsons has a knack for taking a concept and pushing it to the next level, Phelps said.
Since 2012, Parsons, through YAM Properties, has scooped up commercial properties across metro Phoenix, creating an ever-expanding portfolio of at least 16 properties. This includes signature spots such as Village at Shea and Scottsdale 101 in Scottsdale and Centerpoint on Mill in Tempe, along with three other properties in north Glendale: Arrowhead Professional Center, Citadelle Plaza and Il Palazzo at Arrowhead Ranch.
With Westgate, Parsons acquires a unique property that benefits from its location next to two major league sports venues. The sale comes shortly after the NFL announced that the Cardinals will host Super Bowl LVII in 2023.
That announcement didn't sway YAM Properties' decision to purchase the property, Dahl said, but it was something that the company was hoping would happen. The company is excited to take part in the event, he said.
"Westgate is the front door to the stadium and the arena," he said.
But the Coyotes have been threatening to leave for years, and the team is now on a year-to-year lease.
Asked whether Parsons or YAM Properties is worried about the Coyotes' future at Westgate, Dahl said he did not want to comment on speculation.
Parsons has not considered buying the Coyotes, or the arena, Dahl said.
Glendale's mayor said Parsons' successful track record indicates future success for Westgate. The district hasn't always had such luck.
Developer Steve Ellman, founder of the Ellman Cos., partnered with Glendale in 2001 to transform farm fields into the Coyotes hockey arena and surround it with the Westgate outdoor shopping and entertainment complex.
But Ellman was slow to get commercial development out of the ground and he relinquished his ownership of the NHL team in 2006, shortly before opening Westgate's first phase.
Just a few years after entertainment district opened, the recession pummeled the Phoenix area, causing financial markets to dry up. Promises for million-dollar condos and more anchor tenants at Westgate went down the drain. The Coyotes filed for bankruptcy in 2009.
By 2011, Ellman defaulted on loans and Westgate was forced into foreclosure. The core of the commercial development was repossessed by the lender, iStar, which chose to retain it, waiting out the financial crisis.
At the time, Westgate was not in a good place, Sotolov said. Much of the shop and restaurant space was vacant and the retail tenants that were there were struggling, and the rest was "basically dirt and parking fields," he said.
iStar has had its wins. Since 2012, it has executed more than 50 retail and office leases, converted vacant office space into high-end lofts, and brought in major tenants such as Dave & Buster's, which opened in 2015.
The company also ushered in and helped build Tanger Outlets, which opened in 2012 and now draws people from across the region, attracting a more steady stream of visitors to Westgate. iStar sold its interest in Tanger in 2016.
This year, Dutch Bros. Coffee opened and Aloft Hotel broke ground on the eastern edge of the property, marking the potential for future development nearby.
YAM Properties saw how well the tenants were doing, Goldsmith said. "We got an offer the same day they toured," he said.
Goldsmith told The Republic in April that an ownership change wouldn’t mean much for Westgate’s current tenants.
Any development on the property would be a boon for the city, which is still paying off Gila River Arena and loses millions every year operating the hockey and concert venue. Glendale borrowed $180 million to open the arena in 2003, thinking that the surrounding Westgate development would bring in enough revenue to pay for itself. So far, that hasn’t panned out.
The city recently restructured the developer agreement for the property, giving any owner more flexibility for development and parking, Phelps said.
Dahl said Glendale has been a great partner to YAM Partners — the first two properties it purchased were in the city — and the company is excited to continue that relationship.