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Tempe announces $600 million office development deal

Plans for a major office and retail complex on Tempe Town Lake were unveiled Friday, launching the next wave of the city’s ambitious waterfront development.

The $600 million Marina Heights project, which will be anchored by an 18-story local State Farm insurance company headquarters, is being touted as the state’s largest office development and the catalyst that will help transform the lakefront into the hot spot for upscale offices and condominium projects originally envisioned.

The State Farm building will include 1.9 million square feet of office space in five buildings on a 20-acre site north of Arizona State University’s Sun Devil Stadium. The project promises to bring jobs and jump-start an area where development stalled during the recession.

A 10-acre lakeside plaza and more than 40,000 square feet of retail space is included in the plan, which will be developed by the Ryan Companies US Inc. and Sunbelt Holdings of Scottsdale.

State Farm expects to move much of its Valley workforce into Marina Heights in 2017. The insurance giant has 2,100 employees at four local offices with immediate plans to hire another 900 workers.

The Marina Heights project faces a review by the Tempe City Council but Mayor Mark Mitchell was enthusiastic about what it will bring to the city.

“These employees, buildings, and amenities will further contribute to and showcase the vibrancy of Tempe Town Lake, Mill Avenue, and Arizona State University, and serve as a catalyst for more high-quality development,” Mitchell said in a statement.

Marina Heights will bring development to a lakefront that saw some projects stall during the recession.

One high-profile project was the Bridgeview Condominiums at Hayden Ferry Lakeside, a 12-story tower with 104 units that opened in 2006. It sold for $20 million in 2009, a fraction of its value, and still had 64unsold units.

Since the Salt River was dammed to create Tempe Town Lake in 1999, private development still only pays about 20 percent of the costs to operate and maintain the lake. The private sector was supposed to absorb 60 percent of the costs under the original development plan for the area.

The Marina Heights project could help relieve taxpayers of some of that burden.

The project is expected to boost ASU’s efforts for development in its adjacent Athletics Facilities District.

The university plans to seek redevelopment of a 330-acre area near Rio Salado Parkway and Rural Road to help fund renovations of Sun Devil Stadium and other sports venues. The Packard Stadium baseball complex and Karsten Golf Course are part of the planned redevelopment.

The Sun Devils’ baseball team plans to move to Phoenix Municipal Stadium in 2015.

ASU President Michael Crow called the development “the first major step in the campaign to fund new and renovated sports facilities for the university.”

Ryan Companies US and Sunbelt Holdings, joint-venture partners, are selling the 20-acre office site to ASU, which will lease it back to them. State Farm will then lease the space from Ryan Companies and Sunbelt Holdings.

Sara Dial, a Ryan Companies spokeswoman, said the deal had not closed and she declined to disclose the sale price or lease terms.

Heidi Kimball, Sunbelt Holdings vice president, said construction would start as soon as the development partners can get their building permits approved.

Marina Heights will include five buildings of four to 18 stories with two levels of underground parking, she said.

State Farm, the sole office tenant, will house employees who provide claims, service and sales support to its customers.

“State Farm selected Tempe because it has a growing population with skill sets that match our customers’ needs,” said Mary Crego, State Farm senior vice president.

“The site along Tempe Town Lake gives our employees access to nearby amenities as well as easy connections to public transportation.”

The Valley’s Metro light rail line is just south of Sun Devil Stadium.

State Farm currently has more than 1 million square feet of space that it owns or leases in the Valley. That includes its operations center at Alameda and Priest drives.

State Farm is selling that property and leasing it back for 10 years, said company spokesman Robert Villegas.

Drawings of the Marina Heights development will be unveiled in July after plans are reviewed by the Tempe City Council, he said.

The State Farm office buildings will disrupt two parking lots for Sun Devil Stadium.

Season ticket holders who park in Lot 4 and RV 4 north of Rio Salado Parkway will have to be relocated this coming season.

That is expected to affect parking for 469 automobiles and 46 recreational vehicles.

Illinois-based State Farm is ranked No. 44 on the Fortune 500 list of the largest companies.

It has 65,000 employees and 17,800 agents.

Republic reporter Jeff Metcalfe contributed to this article.