Phoenix Business Journal

After losing a state land auction to HonorHealth last November, the state’s largest health system plans to build a $400 million hospital campus down the street.

Phoenix-based Banner Health plans to purchase 48 acres of land on the southwest corner of Hayden Road and Loop 101 in north Scottsdale — near a separate 48-acre parcel of state land where it had planned to build at the northeast corner of Hayden and Loop 101.

Banner had been working with the city of Scottsdale earlier in the year on entitlements for the state land, which also is across the street from Cavasson, Nationwide Realty Investors’ master-planned development on the northwest corner of Hayden and Loop 101.

But by the time Banner CFO Dennis Laraway was ready to bid on the state land, HonorHealth CEO Todd LaPorte was there to compete for the property. The $56.95 million minimum bid ratcheted all the way up $84 million, with LaPorte ending up as the winning bidder.

When Laraway finally conceded, he was heard saying to another Banner Health staffer, “That’s OK, there’s more land.”

And he found it.

Banner is buying the land from an entity owned by Van Tuyl Cos. and DeRito Partners, confirmed Becky Armendariz, spokeswoman for Banner.

“It is expected to close March 31,” she said.

Banner found land nearby

Hayden Loop 101 Investors LLC, an entity tracing to Scottsdale-based De Rito Partners Development, was the winning bidder of an 85.6-acre site at the southwest corner of Hayden and Loop 101.

De Rito paid $61.85 million, the minimum starting bid, for the acreage. The developer’s application said the property would be used for commercial and industrial use.

Banner will purchase 48 acres of that parcel.

That land also is near Optima Inc.’s 21.88-acre parcel, where it plans to build a $1 billion luxury community on the southeast corner of Scottsdale Road and Loop 101. That community will include 1,330 luxury condominiums and apartments as well as 36,000 square feet of commercial and retail space.

That area also is a few miles from Mayo Clinic’s north Phoenix hospital campus, where it’s wrapping up a $748 million expansion of its campus and is in the process of developing a 120-acre medical and research campus.

Banner plans to build a four-story hospital, medical office building and cancer center on its 48-acre portion of the De Rito/Van Tuyl land.

To be called Banner Scottsdale Medical Center, the hospital is expected to open in 2026 with 106 licensed patient beds and 20 observation beds, along with shelled space for expansion as the community grows.

SmithGroup has been selected for project design, while Okland Construction is the contractor.

The medical campus is expected to employ 1,000 people over the next five years and more than 2,500 jobs at full development.

This has been HonorHealth’s main geographic market area from its beginning after Scottsdale Healthcare and John C Lincoln Health merged in 2013 and became HonorHealth in 2015, said Julie Johnson, executive vice president of Colliers International and long-time medical office broker.

“Banner Health has had large growth plans over the past decade plus and is currently the state’s largest health system,” Johnson said “They have entered many markets previously dominated by other systems and this very desirable Scottsdale market is one that they don’t currently have an acute care hospital — just a behavioral health hospital, physical therapy, surgery and urgent care center. They opened Banner Health Center at Desert Ridge in 2018 and although that is close by it’s actually in Phoenix. Strategically, Scottsdale is a location that Banner Health would like to have a location and with HonorHealth recently outbidding them on the state land parcel in Scottsdale this recently announced location will bring Banner right to where they want to be.”