arizona Capitol Mall redevelopment   | Phoenix, AZ

Overview and Context

The Arizona Capitol Mall, adjacent to downtown Phoenix, encompasses approximately 200 developable acres where the state owns about 50% of the land, including roughly 30 state-managed buildings mostly for office use. The district has historically been a government-centric area, planned in the 1950s as a dispersed civic district focused on administrative offices. However, this has resulted in limited residential presence, little after-hours activity, minimal retail, and pedestrian unfriendliness. The state faces challenges with aging facilities, high maintenance costs, and evolving needs driven by pandemic-era work-from-home trends, prompting a real estate strategy to consider consolidation, redevelopment, and diversification of uses.

Downtown Phoenix has experienced significant growth as a vibrant urban center for living, entertainment, and employment, supported by transit. The Capitol Mall has not evolved similarly and remains underutilized. The government’s plan seeks to leverage surplus land, transit expansions (notably a forthcoming light rail extension), and redevelopment incentives to transform the area into a more active, mixed-use district that complements downtown Phoenix while addressing safety, social, and housing challenges.

Key Concepts and Strategic Directions

1. State Government Office Consolidation:

   • The State is consolidating its offices into fewer, more efficient buildings primarily located on the western edge of the district near the Capitol and Wesley Bolin Memorial Plaza.

   • This consolidation opens land for redevelopment and reduces lease costs.

   • Plans include the possibility of a new Capitol complex west of the current site, reconfiguration of the Capitol Museum grounds, and upgrading Wesley Bolin Park as a more pedestrian-friendly, amenity-rich civic space.

2. Transit-Oriented Development and New Neighborhoods:

   • The extension of light rail through the district is a catalyst for transit-oriented, mixed-use development.

   • The strategy envisions several new high-density residential neighborhoods, targeting 6,600 new homes and approximately 16,400 new residents.

   • New developments are planned to include multifamily housing, ground-level retail, commercial offices (both private sector and hybrid state/private), hotel opportunities, and institutional uses (e.g., academic and research facilities).

   • Residential density is critical to create activity beyond office hours, support retail amenities, and enhance safety and walkability.

3. Institutional and Innovation Hubs:

   • The plan proposes exploring partnerships with major universities (Arizona State University, University of Arizona, Northern Arizona University) to establish a campus for health technology, molecular immunology, and other life sciences.

   • A new institutional hub near key light rail stations is envisioned, combining academic, research, housing, and retail components.

   • This hub is expected to draw students, faculty, and research professionals, promoting extended activity, economic growth, and transit ridership.

4. Public Realm and Open Spaces:

   • Wesley Bolin Memorial Plaza, the district’s central civic park, is targeted for a redesign to function more like a lively “Central Park” with more shade, comfortable pathways, and potentially new civic buildings and commercial activations.

   • Smaller pocket parks and plazas will be created or enhanced across the district, integrated into the urban fabric with new mixed-use developments to activate public spaces.

   • Streetscape improvements will prioritize pedestrian comfort, shade, and connectivity, supporting Phoenix’s “Connected Oasis” vision to create shaded, walkable urban environments amidst a hot desert climate.

Challenges and Social Considerations

• The district faces persistent challenges due to a concentrated homeless population, which has increased due to pandemic effects, overwhelming shelter capacity and leading to encampments and safety concerns.

• The current homeless shelter and associated social service centers present obstacles for private redevelopment and business activity.

• The strategy highlights the importance of collaboration with social service agencies, law enforcement, and the community to address these issues appropriately.

• Incorporation of residential development aims both to diversify land use and help reduce the visible homelessness presence by increasing the resident population and providing socially equitable housing.

Market and Development Outlook

• The housing demand in downtown Phoenix, including the Government Mall district, is strong with significant unmet demand for multifamily residential units.

• The district could accommodate approximately 6,400 new residential units, which would create a population comparable to current downtown residents and employees.

• Office space demand is evolving downward due to remote work trends, but there remains potential for new government and private offices, particularly in consolidated and transit-adjacent locations.

• Retail and hospitality development potential is tied closely to residential growth and establishment of institutional or innovation anchors.

• Hotels are currently limited but may develop near retail nodes or around institutional hubs in the future.

Vision for the Future

The transformation of the Arizona Capitol Mall district aims to create a vibrant, sustainable extension of downtown Phoenix with a diverse mix of uses supporting daytime and nighttime activity. By consolidating government offices, promoting new residential neighborhoods, fostering institutional research partnerships, enhancing public spaces, and leveraging transit-oriented development, the district seeks to:

• Expand housing supply with affordable and workforce options.

• Activate streets and parks through commercial retail and cultural amenities.

• Improve safety and social outcomes by increasing resident presence and collaborating on homelessness solutions.

• Maximize value capture from public infrastructure investments, including the light rail extension.

• Embed sustainability and urban design excellence responsive to Phoenix’s desert climate.

This long-term plan anticipates phased implementation over 20 to 30 years, with continual adjustments aligned to evolving market demands, policy developments, and community priorities.

Implementation Overview and Financial Tools

The real estate strategy outlines a phased approach with key implementation steps and recommended partnerships:

• Short-Term Actions:

  • Re-establishing a central coordinating board for district planning that preserves State control.

  • Developing and applying urban design standards for streetscape improvements.

  • Coordinating with Valley Metro on light rail stop locations between 12th and 15th Avenues.

  • Pursuing detailed plans for redevelopment parcels and interim activation of vacant lots.

  • Engaging with social service providers to begin addressing homelessness.

• Medium to Long-Term Actions:

  • Expanding the scope of the Capitol Mall Consolidation Fund to support both renovations and new space construction.

  • Considering financing through state-issued General Obligation Bonds, Revenue Bonds, or Certificates of Participation for new facilities.

  • Implementing zoning and density bonuses to incentivize private redevelopment on state and private lands.

  • Pursuing public-private partnerships and value capture tools such as Tax Increment Financing (TIF) districts and Community Facilities Districts (CFDs) to support infrastructure and open space investments.

  • Exploring financial tools like 63-20 Bonds and Private Activity Bonds for institutional, residential, and hotel projects.

The City of Phoenix is planning a $500 million General Obligation Bond ballot initiative (anticipated in 2023) which may fund critical infrastructure to support redevelopment efforts, including affordable housing, parks, and heat resiliency projects, representing an opportunity for state-city collaboration.