Tag Archives: international council of shopping centers

X Team booth, courtesy of Velocity Retail

ICSC RECon 2014: Retail poised for expansion

The 2014 ICSC event in Las Vegas has successfully wrapped up, and initial reports are that the retail industry is poised for continued expansion. The attendance was up from last year with the attendee count reaching close to 40,000. Having experienced the last 5 years of our annual convention during the economic downturn, this year was a welcome change. It was encouraging to see people spending their time talking about what is going on for the future and reviewing new sites. Discussing business. Not the past.

The ominous cloud that has darkened many markets for the past five years has appeared to have lifted. Looking around the convention hall there were site plans on every table, conversations were about new deals as retailers and developers are preparing for a measured expansion in the coming years.

Velocity Retail Group a member of X Team International, a network of experienced retail partners throughout North America. With over 35 offices and 400 professionals we are able to understand the market from a global perspective. Some states such as Texas, California and Florida have strong growth and are back to their pre-recession activity level. This is contrasted by a few other markets that are still feeling the economic effects of recent years.

In the Phoenix market we still have a ways to go, but we are finally rebounding with several economic indicators pointing toward positive growth. Forbes magazine projected Arizona to have the fastest job growth at 3% annually over the next five years, and Moody’s Analytics forecasted Arizona to expand to a U.S. best of 4.6% annual economic growth. A myriad of retailers and restaurants are opening their first stores in the Phoenix area with several more exploring future expansion plans.
The retail market is frozen no more. Phoenix vacancy rates continue to improve, and should finally break back into the single-digits by the beginning of 2015. In fact at that time, most of the retail submarkets in Phoenix except for the Central and Southeast Valley will be considered to be in a healthy position. The big-box sector, with 265 vacant big boxes will continue to be a source of concern. Our company has invested in new technologies, resources, and personnel. We are prepared for the next wave, and are expecting a big one.

USA Place, the new headquarters in Tempe for USA Basketball, will feature 180,000 SF of retail – including a grocery store on this corner. Cushman & Wakefield of Arizona has the retail leasing assignment.

RECon 2014 to address retail market trends

Courtney Auther Van Loo is Associate Director | Retail Properties at Cushman & Wakefield of Arizona, Inc.

Courtney Auther Van Loo is Associate Director | Retail Properties at Cushman & Wakefield of Arizona, Inc.

The good news for the Metro Phoenix retail market as 2013 ended was that net absorption topped 3 million square feet, up from 2.7 MSF in 2012.

Some of that momentum has carried over as vacancy in the Valley in 1Q 2014 declined 70 basis points over the same period last year to 10.3 percent. There has been more than 53,000 square feet of net absorption year to date with the North Phoenix market leading the way.

What lies ahead for the rest of the year?

Next week’s ICSC RECon 2014 will discuss trends, issues and even provide a look into the crystal ball as more than 32,000 retail real estate professionals converge on Las Vegas. RECon is the global convention for the shopping center industry. Trends and issues to be discussed:

>> The New Math: Online shopping has changed the modern shopper’s habits in adding another avenue to products. The Internet has allowed already time-constrained consumers to shop at all hours of the day with product sometimes arriving at their front door the next day. Many retailers have found ways to market themselves apart from other retailers by offering free shipping, online only offers and more.

Although many retailers continue to see an increase in productivity because of the ease and added shopping hours online shopping presents, we’ve also seen online shopping adversely affect retailers and the bricks-and-mortar developments. The adverse side has been the downsizing, consolidation and retailers closing the once-needed space or being unable to compete with online retailer pricing, thus affecting the way developers move forward with future development size.

>> Revitalizing a Challenged Center: A common trend in Metro Phoenix has been the revitalization of shopping centers and older buildings within our core markets. A number of local developers have found it fortuitous to purchase older buildings. It has become a hobby of sorts to purchase and peel the buildings back to their original state in order to expose the brick and wood tresses the buildings have to offer. By then adding some modern fixtures and anchoring the building with a local restaurant operator, the landlord has increased the rents and property values in the surrounding neighborhoods.

Additionally, landlords have taken advantage of purchasing mid- to high-vacancy shopping centers during the down market in order to reposition them with a new tenant mix and create cash flow. Others have been successful in giving their existing shopping centers a simple facelift and adding a restaurant or two to their tenant mix, thus increasing the rents, demand and property values in the surrounding areas. The tenant emphasis is on local restaurant operators with a mix of some regional and national flair.

>> Outlet retailing … Past, Present and Future: Metro Phoenix has seen the opening of two new outlet malls within the past two years – one in Glendale and one in Chandler. Additional outlets are planned. We can relate this trend locally and in the U.S. to shoppers being cash conscious while still wanting access to the brand names.

In turn, retailers see their sales increase as they’re not only able to access the full price shopper, but the outlet shopper as well while having less rent overhead in their locations. Outlet merchandise prices seem lower than what they are, thus driving shoppers to spend more than they normally would at a full-price store; a win for the retailer.

The outlet trend in Metro Phoenix has begun to affect national retailer’s expansion plans in Arizona. Retailers are beginning to see their outlet locations as competition to their full-priced store options. Consequently retailers are not only paying attention to the distance between their full-price stores, but their outlet locations as well.

>> The New Frontiers … A Look Back, and Forward: We will continue to see operators using social media to increase their sales. Operators see social media as a great resource to let their customers (followers) know of upcoming sales, special offers such as free shipping as well as marketing their merchandise by showing their customers who’s buying their products. We have a handful of local businesses that have seen their sales drastically increase over the past couple of years by using social media to market their products.

metrocenter, WEB

The Magic’s in the Makeup: The Shopping Centers of the Past Are the Future

From fresh paint to new market positions, shopping centers are pumping in deferred dollars to greet the returning retail dollars.

“When things stay the same, that’s scary,” says Stan Sanchez, president and partner of De Rito Partners, about the shift in the Arizona shopping center marketplace. “There’s no doubt that location, location, location is still most important for retail site selection. The difference is that the market for the location is shifting.”

Sanchez and his company recognized the shift in the markets surrounding properties they own and manage, and post-recession activity is freshening those properties.

“There’s two parts to all the activity going on,” says Dave Cheatham, president of Velocity Retail Group. “It’s not a wave of renovation; it’s a combination of catching up with deferred maintenance and updating properties for the market.”

Gordon Keig, senior vice president at Kornwasser Shopping Center Properties, LLC, agrees, but with a slightly different take.

“Building in a growth area ties up your money for as much as three years,” he says. “Finding a good value in an older property and turning it around is a lot more appealing because you are working with a current cash flow.”

Although the proverbial “location, location, location” is still good, the property’s market has changed. Demographics shifted in Arizona markets from the time many shopping centers were built. Throughout 2013, the media bemoaned the plight of aging shopping centers or predicted the scraping and redevelopment of obsolete retail corners.

“I don’t see that happening,” says Cheatham. “In the Phoenix and Tucson markets, we have challenges with empty big boxes, and those are being adapted to alternative uses. Shopping centers, even distressed centers, are changing to match the market.”

Kornwasser bought the  Southgate Mall late in 2012 and has plans to tear down the main building in the 346,000 SF mall then rebuild it with smaller, contemporary outward-facing stores.

“There is shrinking demand for retail space,” he says. “Even with the reduced square footage, we’ll have a more functional, efficient and valuable property.”
At the other end of the spectrum are looks.

“Lipstick,” chuckles Sanchez, “Some properties just need a little lipstick – painting, landscaping and a facelift.”

From De Rito’s platform, Sanchez is involved with upgrading its properties, overseeing enhancements of properties managed and in some cases, running the redevelopment efforts.

“It was more than lipstick for Pavilions (Loop 101, Indian Bend and Pima roads in Scottsdale),” he says. “It was a large-scale redevelopment of the property.”
Countering the downsizing trend, De Rito Partners took the center from 900,000 SF to 1.4 MSF.

“Redevelopment in this market requires innovation and creativity. We changed paving, landscaping and facades,” Sanchez lists the upgrades to the Valley’s original power center. “We’ve got a modern look and changed the property to fit the changing market.”

This may be the most important mantra for retail property owners for the second half of the decade: changing the property to fit the changing market. Keig, Sanchez and Cheatham all spoke of how the market has shifted in the past 10 years.

“We have an interesting situation in the market,” says Cheatham. Velocity is one of the largest retail brokerages in the state in terms of square footage represented. “We have more big box vacancies than anywhere else in the nation, and we’re the best place in the country for small-space leasing activity.”

Small store leasing is going to be very healthy in 2014, he says. Rental rates are still very competitive for lessees, but there are going to be fewer new retail spaces developing. Sanchez sees single-digit retail vacancy rates in 2014. For Keig, the investment is in already-developed neighborhoods.

“In-fill is finally beginning to happen,” he points out. “We’ve heard of it for years, but with financing challenges today, it’s easier to back a project where there is some existing cash flow from current tenants. The project moves faster.”

It’s not just the small shopping centers undergoing facelifts and cosmetic surgery. “We’re going to be re-shaping (Scottsdale Fashion Square)” reports Steve Helm, assistant vice present, property management for Macerich and manager of the 1.9 MSF tri-level Fashion Square. Once city approvals are locked down, Macerich plans construction of a nearly 100,000 SF addition that replaces the current, aging Harkins theaterplex on the lower level by raising a new 12-screen complex to the second level. About 50,000 SF of retail space will be opened up under the new theater.

“Redevelopment is exciting and rewarding,” concludes Keig. “It’s an opportunity to invest in neighborhoods, and the neighbors return the favor when you do it well.”

TraciRussell, WEB

ICSC Member Profile: Traci Russell

Traci Russell

VP of Brokerage and
Retail Services CBRE

Years with company: 2
Years as ICSC member: 12

What is the biggest issue facing shopping center real estate?
Some of the major issues shopping centers face today are lack of new tenant concepts, rightsizing of prototypes, storefronts and reconfigurations. While this list might look long and daunting, I think each of these issues come back to a central issue of retailers still trying to navigate the post-recession retail market.

How have consumer attitudes affected the retail market?
Consumers have learned to be much more frugal and value-oriented. Also, they are willing to go much longer between big-ticket item purchases. I also think that consumers will continue to look for convenience; e-commerce and the internet are ways they can achieve that convenience.

What was your most significant deal in 2013?
I’ve partnered with Scott Kaplan and Erik Westedt in Newport Beach, Calif., to provide consultative retail solutions for the 260,000 SF Westgate Entertainment District in Glendale.

jim_edwards, WEB

ICSC Member Profile: Jim Edwards

Jim Edwards

Senior Associate
Velocity Retail

Years with company: 1
Years as ICSC member: 7

What is the biggest issue facing shopping center real estate?
While the Phoenix market is improving, vacancy rates are declining, and leasing activity is up, we still have an abundance of vacant big boxes. More than 275 big boxes are vacant in the Phoenix area. Many of these are not viable for retail use any longer.

How have consumer attitudes affected the retail market?
When consumer attitudes are positive, retail sales increase. During the recession, spending was down, and this has an obvious effect on retail sales. With improvements in the job market, economy and local housing values, we should see improvement in leasing.

What was your most significant deal in 2013?
Our company recently was awarded 1,534,276 SF of retail owned by Northstar Realty Finance Group. I am part of the team responsible for marketing and leasing this portfolio.

JonCowen, SRS-CUT

Jon Cowen Joins SRS Real Estate Partners

SRS Real Estate Partners hired Jon Cowen as senior vice president in the Phoenix office. A well-known name in the Arizona market, Cowen brings a wealth of experience and relationships to SRS. He will focus on representing local and national retailers, shopping center leasing and development and investment sales.
Cowen has more than 24 years of experience in commercial real estate. His career boasts involvement in more than 500 transactions with a value in excess of $1B. He has worked with many high-profile clients such as Kimco Realty, Vestar Development Co., Sears Great Indoors, Skechers, Bank of America, CVS/Pharmacy, McDonald’s, Starbucks, and Staples. Cowen has represented many national retailer’s roll-outs and expansions in the Arizona marketplace such as Café Rio and The Keg Steakhouse and Bar.
Previously, Cowen worked with the Retail Advisory Group at Cushman & Wakefield after his own real estate firm, Cowen Commercial, LLC, was acquired by the company. While at Cushman & Wakefield, he was recognized as the company’s top retail producer for 2011 and 2012.
“Jon is going to be a great addition to the Phoenix office,” said Ed Beeh, executive vice president and market leader for the Phoenix office. “He has made a name for himself in the area and has a wealth of experience. We are very lucky to have him on our team.”
Cowen attended the University of Arizona and is a member of the International Council of Shopping Centers.

shopping

Retail: It’s a New Reality

As municipalities all across Arizona have seen their general funds strongly impacted over the last several years due in part to significant drops in sales tax revenue, the importance of a vibrant/strong retail sector has once again taken on a prominent role.

With Arizona cities in some instances relying on retail sales taxes for up to one-third of their general fund revenue, there is today a quiet, but forceful emphasis – particularly in rural areas – being placed on economic development professionals to make sure their programs help retain and attract new retail businesses to their communities, with the progressive municipalities leading the way.

In addition to the general fund ramifications of retail sales tax collection, another significant new reality of the retail sector has been recognized.  Todd Sergi, co-chair of the AZ/New Mexico Alliance for the International Council of Shopping Centers (ICSC), said the stigma of retail jobs being associated only with unattractive, part-time or low-paying jobs is changing.

“With bankers, pharmacists, medical professionals and other non-traditional retail businesses more commonly becoming a part of the new, redefined mainstream shopping environment, the retail sector is now creating well-paid jobs not traditionally seen before,” Sergi said.

The recession in Arizona provided examples in many instances of what a well-designed, well planned center does, or does not, look like.  Successful retail centers have common themes.  Municipalities have realized what it takes for retailers to have success in their cities, including ample parking, un-obscured visibility and easy access from the surrounding streets and easy-to-see signage.  These elements are routinely found in the more highly occupied centers that fared better through the economic down cycle.
Sergi said, “Everyone realizes that a hard-to-get-to retail center hidden behind large over grown landscaped settings with bad signage and limited parking is a lose-lose.  We don’t need more empty buildings.”

Fortunately, the design and planning barriers for retailers to enter a market have been noted.  Lessons were learned.  Statewide, both elected leaders and municipality staff have seen first-hand examples where dated or onerous policy cost their communities opportunities for new sales tax revenue.  The demand and competition to attract those businesses, in some instances, sent potential new entrants to neighboring communities viewed as more reasonable and forward thinking.

The retail industry has been adapting, as well.

Garrett Newland, vice president of development for Macerich, said we are seeing these adaptations every day with continuing anchor changes and new retail concepts.
“Retail is reinventing itself right before our eyes,” he said.  “What malls look like today is vastly different than what we saw in the ‘80s and ‘90s and it doesn’t matter if it’s a super-regional mall or a corner strip center.”

With empty stores and some poorly designed centers dotting Arizona’s retail landscape, a number of existing centers will have to be retrofitted, or possibly redeveloped, to make them assets to the community that can be counted on to generate needed sales and/or real estate tax revenue.

The evolution of retail e-commerce is also changing the face of retail.

An ICSC report recently indicated that retail e-commerce has grown seven-fold since 2000 and at its current growth rate will double again by 2016.  Legislation that requires e-commerce retailers to capture sales tax dollars for government coffers to some degree may level the playing field for the bricks and mortar retailers.

But even so, to remain competitive the storefront of tomorrow is changing.  Retailers now understand the need to integrate their physical and on-line presence, how to balance the product search, selection, transaction and delivery processes desired by today’s consumer and the ability to offer a variety of delivery and return options.

Michael P. Niemira, vice president, chief economist and director of research for ICSC, said the partnerships being established between the private and public sectors, the ability of retail to adapt and meet the needs of today’s customers and the willingness of economic developers to embrace retail bode well for the future economic success of each of our communities.
Eric Larson is president-elect of the Arizona Association for Economic Development (AAED) and board chair for the Scottsdale area Chamber of Commerce. AAED and ICSC will co-present a retail symposium Jan. 8 in which these topics will be discussed in detail by those quoted and others, as well as presentations made by representatives of new/expanding Arizona retailers.  For information, call (602) 240-2233 or visit www.aaed.com.

ICSC - Jones Lang LaSalle

ICSC, Jones Lang LaSalle To Issue Global Research Study

The International Council of Shopping Centers (ICSC) today reported that in conjunction with Jones Lang LaSalle (JLL), a financial and professional services firm specializing in real estate services and investment management, it would release findings at the 2012 ICSC Retail Real Estate World Summit in Shanghai from a groundbreaking multinational study that examines the evolution and future of Global Retail Real Estate Investment.

Being held Sept. 11-14, the World Summit is an open forum designed to address and shape the critical role and socio-economic impact of the worldwide retail property market.

“Preliminary findings show that over the past decade alone, in excess of one trillion U.S. dollars of retail real estate has been directly traded, of which more than one-third has involved cross-border capital,” said Lauralee Martin, CFO, Jones Lang LaSalle.

“Initially focused on the established markets in North America, Western Europe, Australasia and Asia, capital flows have gradually spread during the mid-2000s to embrace retail markets in Central and Eastern Europe, Russia, China, Turkey and Brazil. ‘Signpost’ deals point to a further widening of activity into new markets in Latin America, North Africa and South East Asia.”

To be authored by Jeremy Kelly, director in global research, Shelley Matthews of the International Capital Group, Alexandra Bryant of Asia Pacific Capital Markets and Josh Gelormini, director of research for the Americas, at Jones Lang LaSalle, this paper will, in the context of significant structural change, explore four key areas:

  • A Typology of Retail Investment Destination – a review of the different investment market characteristics across in the globe.
  • Recent Patterns of Retail Investment – a look at the current wave of globalization and which countries are attracting the most investment.
  • Regional Trends in Retail Investment – a  comparison of regional patterns across Asia Pacific, the Americas, Europe, the Middle East and Africa.
  • The Future Retail Investment Landscape –  a forecast on how the investment landscape will change over the remainder of the decade.

“Our initial research shows that the retail investment market is globalizing,” noted Jeremy Kelly. “Cross-border activity, which accounted for only one-quarter of volumes back in 2004, now accounts for nearly half of trade.  Inter-regional activity has seen particularly strong growth in tandem with the rise of a number of global investors and operators.  2011 and H1 2012 has seen a record U.S. $46B of inter-regional capital flows.”

“The World Summit is undeniably the most appropriate setting from which to release such impactful information, as the foremost global leaders in retail real estate investment will be in attendance,” added Lauralee Martin.

Michael P. Kercheval, president and CEO of ICSC, commented that, “we are honored to have JLL so intricately involved in the World Summit. Having a highly respected global firm like JLL produce this unique piece of research increases the value of the Summit for our attendees and speaks to the nature of this being a groundbreaking and critical event for our industry.”

For more information on The International Council of Shopping Centers, visit www.icsc.org.

newsmakers-alanhouston

SRS Names Alan Houston A 1st VP Of Its Phoenix Office

SRS Real Estate Partners named Alan Houston as a first vice president in the Phoenix office.

Alan Houston brings with him nearly 20 years of commercial real estate experience and relationships throughout major markets across the south central and southwestern U.S.

Alan Houston has been actively involved in acquisition, disposition, development, land brokerage and the completion of more than 700 leases and renewals. He began his retail brokerage career in Austin, Texas, and relocated to Houston in 1996 to join Weingarten Realty Investors. There he was responsible for the leasing and marketing of retail and mixed use properties in multiple states across the south central U.S. Houston relocated to Phoenix in 2007, and as vice president/regional leasing director, led a team of leasing executives covering five southwestern states and a varied portfolio that at times consisted of more than 50 shopping centers, encompassing over six million square feet.

“Alan is a great addition to our team,” said Ed Beeh, executive vice president and market leader for the SRS Phoenix office. “He has extensive and well-rounded knowledge of the retail real estate industry, which will greatly benefit our company and clients.”

Alan Houston graduated from the University of Texas at Austin with a bachelor of business administration degree, specializing in finance and real estate. He has been an active member of International Council of Shopping Centers (ICSC) since 1994 and spends time volunteering at the United Way serving on the Resource Management Committee.

For more information on SRS Real Estate Partners, visit their website at www.srsre.com.

November Seminar Events

November Seminar Events

November Seminar Events

Arizona Multihousing Association

2011 Perspectives and Projections Conference
Nov. 10, 8 a.m. – 1 p.m.
100 N. 3rd St. Phoenix

At the Phoenix Convention Center’s south building, industry experts will answering questions geared toward the multihousing industry — including where the market is headed, how current inventory is being financed, who’s buying and selling in the state and the status of multifamily foreclosures. Experts include Barry Broome, Greater Phoenix Economic Council; Joe Snell, Tucson Regional Economic Opportunities; Don Cardon, Arizona Commerce Authority; Elliott Pollack, Elliott D. Pollack & Associates and more.


Lambda Alpha International

Emerging Trends in Real Estate
Nov. 18, 7:30 a.m.
2901 N. 7th St., Phoenix

Come join Lambda Alpha International at the Phoenix Country Club for Emerging Trends in Real Estate, the most highly-regarded and widely-read forecast report in the real estate industry. This report will be presented along with breakfast for everyone present.


International Council of Shopping Centers (ICSC)

Retail Green Conference and Trade Expo
Nov. 29-30
5350 E. Marriott Dr., Phoenix

Sustainability is now more important than ever, and ICSC’s Retail Green Conference and Trade Expo at the JW Marriott Desert Ridge Resort & Spa intends to show everyone just how much better things have gotten in this field. Conference sessions here are meant to help business owners develop and refine more sustainable practices. Not only that, attendees are encouraged to share any experiences and advice with their peers.


Land Advisors Organization

Land & Housing Forecast
Nov. 30, 3 p.m.
340 N. 3rd St., Phoenix

Come join the Land Advisors Organization at the Sheraton in downtown Phoenix for an interactive discussion of how current housing and land market conditions will affect real estate development. During this event, experts will be able to answer any questions you have, and hopefully give you a better understanding of the real estate industry.

AZRE Magazine November/December 2011

stk32899bsr

The Future Of Shopping Centers

In the U.S. and around the world, the recession is forcing shopping center developers and retailers to re-think the design of the places where we spend our money. Some say the very nature of shopping has changed. Recently the International Council of Shopping Centers held a meeting of its North America Research Advisory Task Force in Phoenix. Mark Stapp, director of the W. P. Carey School’s Master of Real Estate Development program caught up with Michael Niemira, ICSC’s director of research, after the meeting. Listen as Stapp poses the key question. (22:06)

Mega Retailers

Mega Retailers Provide Optimum Outdoor Opportunities

Gone Fishing

Mega retailers provide optimum outdoor opportunities, but how do cities lure them here in the first place?

By Mica Thomas Mulloy

Glendale and Mesa may as well be bringing amusement parks into their respective towns. Upcoming additions to the cities are expected to draw millions of visitors each year—many traveling from hours away—and infuse hundreds of millions of dollars into municipal coffers. But it isn’t Disneyland and Six Flags opening their doors in the Valley; rather outdoor mega-retailers Cabela’s Inc. and Bass Pro Shop.

gone_fishingCabela’s plans its grand opening at the end of August in the Zanjero Business Park near Glendale’s Westgate City Center. Bass Pro Shop recently broke ground in Mesa’s super-sized Riverview retail center at the confluence of loops 101 and 202. Both sporting megaliths are highly coveted and, much as IKEA put Tempe on the retail destination map, are expected to edge West and East Valley commerce opportunities toward retail nirvana.

Born in the ‘War Room’
Cabela’s opens in the midst of Glendale Arena and Cardinals’ stadium to offer West Valley residents a super supply of hunting, fishing and outdoor gear. Cabela’s spokesman David Draper says when his company looks for a retail location, executives first examine their mail-order customer base. They literally pinpoint their customers on large maps in their retail “war room” and determine if there is a large enough demand. With countless recreation opportunities in Arizona and metropolitan Phoenix, Glendale was a good match. “Obviously there is a great opportunity there,” Draper says.

Cabela’s purchased a 28-acre site in September 2005 and anticipates hosting 3 to 5 million customers in its first year. The store will feature acres of sporting displays, a freshwater aquarium and a centerpiece mountain replica complete with running waterfalls and streams.

The retailer received some help along the way—Glendale foot the bill to add necessary infrastructure as a development incentive. “The way we look at it, we are bringing something to the area,” Draper says. “To put our store there, we are going to need some infrastructure.” Glendale Economic Development Director Karen Thoreson says the city agreed to build public improvements based on the calculated financial boom Cabela’s should bring: an estimated $34.6 million in tax revenues over 10 years. “It’s bringing in a lot of business around it, it’s bringing in a lot of people who have never been to this side of the Valley,” she says.

Thoreson believes the area will experience supplementary benefits upon the mega-retailer’s arrival such as more than 1 million annual tourists and the addition of 300 new hotel rooms worth $30 million. “People come to Cabela’s like they come to Disneyland,” she says.

How to Land a Retail Giant
Marty DeRito, DeRito Partners CEO and Riverview developer, wanted to kick off the 250-acre commerce center with a unique anchor tenant. With that in mind, he, project partner Kimco Developers and Mesa economic officials started pursuing IKEA and Bass Pro Shop. When IKEA signed on with Tempe, all focus moved to Bass.

DeRito notes Bass Pro Shop, which sells everything outdoors from boats to bait, was interested, but also looked elsewhere in the state and toward California for their next location. “I had as much competition from other states as I did locally,” he says.

A Mesa contingency traveled to the International Council of Shopping Centers convention several years ago to meet with Bass Pro Shop executives and tout what Mesa, and the entire region for that matter, had to offer the retailer.

DeRito said Riverview will ultimately house three to five auto dealerships, 1.5 million square feet of retail space, 400,000 to 500,000 square feet of office and commerce facilities and two hotels. The center is expected to employ 5,000 to 6,000 people, making it one of the largest employers in the region.

After two years of negotiations, Bass Pro Shop was hooked and signed a letter of intent. Larry Whiteley, Bass Pro Shop manager of corporate public relations, says regardless of what a developer offers, all the puzzle pieces must fit together perfectly before the retailer makes a move. “They could offer the moon, but it still has to be right for us,” he says. “We have to research it ourselves and find out if there is a built-in customer base.” Bass looks at the number of hunting and fishing licenses sold in an area, zip code reports of catalog sales and the area’s outdoor activities. Whiteley says in Mesa’s case, everything fit. “We wouldn’t be considering this and doing this if we didn’t feel confident with this,” he says.

With Bass Pro Shop now on board, DeRito Partners and Mesa came to terms on an incentive package for the project. Developers agreed to front $42 million needed to get the center on its feet with the possibility of earning that money back in coming years with shared retail-generated sales taxes.

AZ Business MagazineDeRito says if the center, and therefore the city, makes money, the developers earn some of their down payment back. If not, it is the developer who will suffer, not the tax payers.

Mesa Economic Development Management Assistant Scot Rigby says the incentive package is a win-win situation for Mesa, and the region as a whole. “Since you’re performing, since you are truly becoming a benefit to the city, you are eligible for these types of incentives,” he says of the plan’s structure.

Rigby believes Bass Pro Shop’s agreement to build in Mesa speaks volumes not only for the store and local citizens, but also the economic viability of the entire valley. “The region is showing national retailers that they need to be in Arizona if they are going to be successful in their plans as a business,” he says. “It’s too big of an area for them to overlook now.”

www.cabelas.com
www.basspro.com

Arizona Business Magazine Aug/Sept 2006