Tag Archives: retail

Raising Canes, WEB

Raising Cane’s® Chicken Fingers Continues Its Arizona Expansion

Cassidy Turley has completed a  0.83-acre (36,213 square feet) build-to-suit lease for MRG Marketing & Management, Inc., Southwest franchise partner for Raising Cane’s Chicken Fingers, at Arrowhead Marketplace, located at the northwest corner of Bell Road and 79thth Avenue in Glendale.

Cassidy Turley Vice President Mark Bramlett represented MRG in its lease transaction with the landlord, Evergreen 79th & Bell, LLC, a division of Evergreen Development. The Glendale location will open summer 2014.

MRG has opened five Raising Cane’s restaurants within the metro Phoenix area since 2011 at 2715 W. Peoria Ave. and 4325 E. Thomas Road in Phoenix, 960 E. University Drive in Tempe, 9935 W. McDowell Road in Avondale and 1945 S. Stapley Drive in Mesa. The company also operates seven Raising Cane’s restaurants in Nevada, with plans for two additional locations. The concept for Raising Cane’s was started in 1996 in Baton Rouge, LA. The quick-service restaurant chain was named in the Top 3 on Sandelman’s 2012 and 2013 Excellent Fast-Food Chains list.

Shea Scottsdale Safeway

Safeway sale creates looming cloud over Phoenix retail real estate market

Over the past two years, the Phoenix retail real estate market continues to improve with lowered

vacancy rates and strong absorption. The one area that persists as a cause for concern is the number of vacant big boxes in the market. With the recent announcement of the impending sale of Safeway to one or more of their competitors, this is news that could create further hardship in the Arizona shopping center industry; here is why.

Overall Phoenix retail market 4Q 2013.

Overall Phoenix retail market 4Q 2013.

 

Currently, there are 308 vacant big boxes in the Phoenix metropolitan area. Over 56% of these boxes are in neighborhood shopping centers.

 

This amounts to a total of 175 vacant boxes in neighborhood centers. Never before in the history of the Phoenix area have we ever come close to having this amount of vacancies in our neighborhood shopping centers.

 

When a grocery store becomes vacant in a neighborhood center this obviously creates a harmful effect on the small shop tenants in the shopping center who depend on the traffic driven by the grocery store. A grocery anchored center does not have the same pulling power to draw customers that a power center or regional mall does. Neighborhood centers typically only reach shoppers in a one to three mile radius. These smaller trade areas are the hardest to replace from a re-tenanting perspective if there is not another grocery store that can fill the void.

Vacant big boxes by type of center.

Vacant big boxes by type of center.

 

 

With the continued transformation of the grocery industry shifting to regional trade areas and to larger and larger formats often over 100,000 square feet, retailers such as WinCo, Super Wal-Mart and Fry’s Marketplace are not viable candidates for these neighborhood centers. Additionally, many times a grocery store has a restriction against another grocery store going into the same space, limiting the already small pool of potential replacement tenants even further. These types of vacancies also have a very negative effect on the value of this type of shopping center. Many of them have lost 70% to 80% of their value because of a vacant anchor.

 

When Basha’s filed for bankruptcy in 2009 they left 25 vacant grocery stores in their wake. Today, five years later 13 stores — over half —are still vacant. If Safeway is sold to someone who is currently in our grocery market, I fear that there will be a rash of store closings which will further exacerbate our big box problem – just as we are starting to gain some ground.

 

Neighborhood shopping centers have been a mainstay for investors as power centers have lost some of their appeal in recent years. Neighborhood centers were considered a safer investment as they had not been affected by the downsizing and consolidations among the power center users (electronic stores and office supply, are examples). Many REITs are looking for a safer product type for their investors and neighborhood centers fit their criteria nicely. A merger of this type will cause the investors to step back and evaluate their options even further.

 

In the event of a Safeway-Albertson’s merger this could be one of the better outcomes for Arizona, as Albertson’s would have an opportunity to increase their footprint and market share in Phoenix. In this event, don’t be surprised if there is a large block of stores that hit the marketplace, which will impact our improving yet still fragile retail market.

 

The grocery business in Arizona is very diverse and like all retail, will continue to evolve. There is no doubt that we will have some interesting times on the horizon. Let’s hope that this merger creates a cloud that has a silver lining, and that however this merger shakes out that the stores are able to continue to operate and not add to our big box surplus.

PHX-Karting,-CPIweb

Big Deals: Retail, Oct. to Nov. 2013

There’s no such thing as a “small” deal in this industry, coming out of a recession. However, it’s the big deals, and the brokers who make them, that make the market an interesting one to watch.
In every issue, AZRE publishes the top five notable sales and leases for a period of 60 days (one month out from publication) based on research compiled by Cassidy Turley and Colliers International with CoStar.
Top 5 Notable Leases and Sales (October 1 to November 30, 2013) Source: Cassidy Turley Research Department, Colliers International and CoStar

SALES

1. Fountain Hills Plaza, Fountain Hills FountainHillsPlaza
111,289 SF; $20.5M
Buyer: Whitestone REIT
Seller: The Pederson Group
Listing Brokers: Glenn Smigiel, Bob Young, Steve Brabant and Rick Abraham, CBRE

2. Safeway, Peoria
57,795 SF; $14.36M
Buyer: SAR Enterprises
Seller: Pacific West Land
Listing Brokerage: CBRE

3. LA Fitness, Casa Grande
45,000 SF; $9M
Buyer: The McNaughton Company
Seller: Vanderbilt Group, LLC
Listing Brokerage: Retail Investment Group, LLC

4. Ashley Furniture/Oasis Bedrooms, Mesa
53,312 SF; $6.1M
Buyer: Ashley Furniture
Seller: Coventry II DDR SM
Listing Brokerage: Marcus & Millichap

5. Palm Valley Pavilions East, Goodyear
35,199 SF; $4.8M
Buyer: Claxton Real Estate LP
Seller: John & Cathy Monson
Listing Brokerage: CBRE

LEASES

1. Greenway Village, Phoenix  PHX Karting Indoors - Ds3 Rendering 091313
94,500 SF
Landlord: McKinley, Inc.
Tenant: HobbyTown USA
Landlord Broker: Trent Rustan, Arizona Partners Retail Investment Group LLC
Tenant Broker: Josh Gosnell, Commercial Properties, Inc.

2. Broadway Dobson Center, Mesa
42,303 SF
Landlord: MGF Property, LLC
Tentant: Call It New, Call It Antique
Landlord BrokerAGE: Rein & Grossoehme
Tenant BrokerAGE: LevRose Real Estate

3. 140 N. Country Club Dr., Mesa
33,438 SF
Landlord: A & S Capitol, LLC
Tenant: J Levine Auctions
Landlord BrokerAGE: Menlo Group Commercial Real Estate
Tenant BrokerAGE: Menlo Group Commercial Real Estate

4. Chandler Festival, Chandler
31,906 SF
Landlord: Cole Real Estate Investments
Tenant: Conn’s
Landlord BrokerAGE: RED Development, LLC

5. Glendale Market Square, Glendale
28,909 SF
Landlord: Kimco Realty
Tenant: EJ’s Auction
Landlord BrokerAGE: Kimco Realty

Honorable Mention: CREST Specialty School

JLL Phoenix Office Gets First Retail Broker Team

Jones Lang LaSalle (JLL) announced Wednesday the expansion of its retail platform into Phoenix, with the addition of three brokerage specialists. Tyson Switzenberg will lead the firm’s newly formed Phoenix retail brokerage practice, along with Senior Associate John Reva and Associate Trask Switzenberg. Together they will partner with Craig Killman, JLL’s West Coast Retail Market Lead, to provide brokerage services to retail owners and tenants in the region.

“Phoenix is a target market for retail owners and tenants alike, and the addition of Tyson, John and Trask will allow us to better serve our clients’ growing demands in the region. Their acute knowledge of the Phoenix commercial real estate market and ability to recognize developing trends will provide our clients unmatched strategic planning and execution,” said Killman.

Steve Yenser, National Retail Brokerage Lead for Jones Lang LaSalle, added, “The trio’s ability to add value to retail owned assets and hone in on the right site selection options for our retailer clients is a tremendous addition to our platform. In the year ahead we’ll continue to add top-talent brokerage experts in key markets across the Southwest and United States.”
Tyson, John and Trask join JLL from SR Commercial Real Estate and bring with them a strong roster of local and national clients. In their new roles at JLL, they will be responsible for developing and executing strategies that maximize clients’ real estate needs to their full potential. Additionally, they’ll be focused on developing new business opportunities for current and future investor and retailer clients.

Prior to forming SR Commercial Real Estate, Tyson Switzenberg was a Senior Associate with Phoenix Commercial Advisors, where he managed more than 60 transactions each year. He also worked at D.L. Slaughter Company, where he facilitated more than 20 major U.S. drugstore transactions and leased eight ground-up grocery-anchored centers. Tyson earned a Bachelor of Arts degree from McNeese State University and is an active member of the International Council of Shopping Centers (ICSC).

Prior to forming SR Commercial Real Estate, John Reva served a Leasing Associate with Vestar Development Co., where he was responsible for the leasing of shop space at Tempe Marketplace, Oro Valley Marketplace and Canyon Trails Towne Center. Additionally, his experience includes working as a Retail Specialist with Retail Brokers, Inc., where he leased a retail portfolio of more than 35 assets totaling more than 300,000 square feet. John earned the degree of Juris Doctor from Thomas M. Cooley Law School in Lansing, Mich. and a Bachelor of Science degree from The University of Utah in Salt Lake City. He is a member of the State Bar of Arizona and the International Council of Shopping Centers (ICSC), and from 2010 – 2013 served as ICSC’s State Next Generation Chair for Arizona/New Mexico.

Trask Switzenberg previously served as an Associate at SR Commercial Real Estate, LLC, where he handled the leasing for a portfolio of 20-plus assets totalling more than one million square feet, and prior to that he worked at Pinnacle Development, LLC. Trask earned a Bachelor of Science degree from the University of Louisiana and is a member of the International Council of Shopping Centers (ICSC).

During the last two years, Jones Lang LaSalle Retail has added more than 50 retail brokerage experts in major markets including Atlanta, Austin, Boston, Charlotte, Chicago, Dallas, Florida, Hawaii, New York, San Antonio, Seattle and Southern California. During the first half 2013, the group added more than 60 new assignments and more than 30 retail clients to its network across the United States.

rsz_cbre-2

CBRE Completes 2,700SF Dickey’s BBQ Lease in Tucson

CBRE has completed a 2,700 SF retail lease at the Plaza Escondida Shopping Center at 7850 N. Oracle Rd. in Tucson.

Jesse Peron and Peter Villaescusa with CBRE’s Tucson office represented the landlord, Newport, Calif.-based Roseville Tucson LLC. The tenant, Dickey’s BBQ Pit, was represented by Gary Best of Keller Williams Southern Arizona in Tucson.

Dickey’s BBQ Pit is one of the fastest growing chains in the country, ranking fourth on Nation’s Restaurant News Second 100 list. The Texas-based BBQ franchise has four other locations in Arizona, all in the Phoenix metro area. This lease marks the first location in Tucson and southern Arizona.

Retail-Shopping-Bags

Retailers report increase in December sales

A last-minute surge in spending helped many major retailers report better-than-expected sales in December, a relief for stores that make up to 40 percent of annual revenue during the holiday period.

Consumers had a lot to worry about this holiday, including the possibility of the U.S. economy falling off the “fiscal cliff.” But after spending cautiously during most of the season, they loosened their purse strings in the final shopping days.

Twenty retailers reported sales in December rose an average of 4.5 percent compared with the year-ago period, according to the International Council of Shopping Centers. That’s on the high end of the expected range of 4 percent to 4.5 percent. Costco, Nordstrom and TJX Cos. were among the best performers. Target and Barnes & Noble had weaker results.

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.

economy

Arizona Could Hit Full Economic Recovery in 3 Years

We’re finally on the path to full economic recovery, and Arizona may get there in about three years. That’s the main message from experts who spoke today at the 49th Annual Economic Forecast Luncheon co-sponsored by Arizona State University’s W. P. Carey School of Business and JPMorgan Chase.

About 1,000 people attended the event at the Phoenix Convention Center, where economists painted a generally brighter picture for 2013.

“As of September, Arizona ranked fifth among states for job growth, and the Phoenix area was fourth among large metropolitan areas,” said Research Professor Lee McPheters, director of the JPMorgan Chase Economic Outlook Center at the W. P. Carey School of Business. “Arizona is expected to add 60,000 jobs in 2013, led by professional and business services, retail, hospitality and health care. We should finally dip below 8-percent unemployment in 2013 — down to 7.6 percent.”

McPheters added, as long as the national economy doesn’t drag us down, Arizona may see 2.5-percent growth in its employment rate next year. The state had 2-percent growth this year. Despite the jump, Arizona has gained back less than a third of the jobs it lost during the recession. McPheters believes it will take another three years to return to pre-recession employment levels.

In 2013, McPheters expects improved 5-percent growth in personal income, up from just 4 percent this year. He projects retail sales will go up 6 percent, from 5 percent this year. He expects Arizona’s population to rise 1.5 percent, and he believes single-family housing permits will shoot up a whopping 50 percent, with the local housing market now on the mend.

Both McPheters and Beth Ann Bovino, deputy chief economist at Standard & Poor’s, hinged their forecasts on whether the national economy can really pull forward; otherwise, Arizona will go down, too. The biggest question out there is whether Congress can avoid the “fiscal cliff” – where automatic spending cuts would kick in, just as various tax cuts expire. Bovino says that could plunge the United States back into recession and push national unemployment back above 9 percent by the end of the year.

“If we can avoid the fiscal cliff, then it looks like the economy could finally be in a self-sustaining recovery,” said Bovino. “We expect this year’s gross domestic product (GDP) to hit 2.1 percent, stronger than previously projected. For 2013, we’re looking at about 2.3 percent. Reports also show a stronger jobs market and signs that households are willing to buy big items, such as cars and homes.”

Bovino adds the U.S. unemployment rate was at 7.9 percent in October, and she sees signs more people are joining the workforce and getting jobs. However, she says the labor participation rate is still near a 30-year low, meaning more people will still be coming back to the workforce to look for jobs, keeping the unemployment rate low for a quite a while. Despite this, Bovino expects the national unemployment rate to drop to 7.6 percent next year.

She also has a good outlook for the national housing market, with housing starts already up 45 percent this September over last September. Bovino referenced a report that 1.3 million homes rose above water – with the value going higher than what was owed – in the first half of this year alone. She expects residential construction to go up almost 19 percent in 2013.

In the financial sector, Anthony Chan, chief economist for private wealth management at JPMorgan Chase & Co., says corporations remain flush with cash. They’re waiting for some clarity on where the market will go as a result of the fiscal-cliff situation and other factors.

“U.S. corporations are reluctant to go through global mergers and acquisitions or make big investments until they have a clearer picture,” said Chan. “Corporations are keeping high cash balances, in order to deal with the uncertainty. They’re making near-record profits in some cases, and many values on the stock market look good. However, everyone’s waiting to see what will happen.”

He said high-yield investments, such as bonds, and gold remain relatively attractive. The U.S. dollar keeps falling against currencies from emerging markets, as monetary agencies work through different strategies of dealing with the rough economy.

In the local housing market, Elliott D. Pollack, chief executive officer of Scottsdale-based economic and real estate consulting firm Elliott D. Pollack and Company, also drew some conclusions.

“Even though about 40 percent of Arizona homeowners are underwater on their mortgages, we’re starting to see a recovery,” said Pollack. “The single-family-home and apartment markets look great. Industrial real estate has improved quite a bit. Only office and retail have quite a way to go.”

Pollack adds new residential foreclosure notices are down almost 70 percent from the peak in 2008. Phoenix-area home prices are up more than 35 percent over last year. New-home sales are also doing well, with 67 percent of the local subdivisions active today projected to be sold out in less than a year. Builders are going to have to work to meet the demand, with less land and labor available.

Pollack sees a strong rental presence, with about 22 percent of local single-family homes being used as rentals right now. That’s up from less than 12 percent just a decade ago. Landlords appear to be buying up many single-family homes, and more people are moving to the area.

“In the absence of a fiscal cliff, things should continue to improve over the next several years,” said Pollack. “By 2015, things should be normalized. As I like to say, we’re only one decent population-flow year away from the issue being resolved.”

More details and analysis from the event, including the presentation slides, are available from knowWPCarey, the business school’s online resource and newsletter, at http://knowwpcarey.com.

T Mobile IPhone

Release of iPhone 5 gives retail a boost

The new iPhone 5 goes on sale in retail stores later this week, but buyers went online early last Friday to gobble up the latest Apple offering.

Apple opened online pre-orders of the new smartphone at 3:01 a.m. last Friday and sold out of its available stock within an hour.

According to Apple’s website, people looking to order the iPhone 5 now will need to wait two weeks before getting the new device.

“Our online systems have performed flawlessly. We have seen significant volume since we started to accept the pre-orders at 3 a.m. There is clearly strong interest from our customers,” said Michelle Gilbert, spokeswoman for Verizon Wireless.

Gilbert said customers were asking questions about their account to see if they were eligible to upgrade to the new phone, its costs and what would be the correct rate plan for them.

“We’re very pleased with our customers’ initial interest in the iPhone 5 on Verizon’s 4G LTE network. Our stores will be open early at 8 a.m. [Friday] when the iPhone [officially] launches,” Gilbert said

The iPhone 5 will cost $199 for a 16 GB version; $299 for a 32 GB version; and $399 for a 64 GB version.