Santa Monica, Calif.-based Macerich Co. is buying Fiesta Mall in Mesa for $135 million, giving its Phoenix-based Westcor division ownership of every traditional regional mall in the East Valley.
The deal, which is expected to close before the end of the month, will make Fiesta a sister center to former rivals Superstition Springs Center in Mesa, Chandler Fashion Center, Scottsdale Fashion Square, Paradise Valley Mall and even the Biltmore Fashion Park in east Phoenix. Westcor also is planning its newest and biggest shopping center, San Tan Village, in Gilbert, with the mall portion expected to open in 2007.
Arizona Mills in Tempe, an outlet center, is not part of the Westcor complex. L &B Fiesta Mall, a private investor group, put its 1 million-square-foot shopping center on the block in May.
Macerich announced Friday in its quarterly earnings report that it has Fiesta Mall under contract, which, "will further solidify Macerich’s dominance in the Phoenix market."
Gobbling up Fiesta would leave only one traditional mall, Metrocenter in Phoenix, not owned by Westcor.
John Gerdes, vice president of asset management for L &B Realty Advisors, would neither confirm or deny the deal.
"We are certainly hopeful that the expectations in the Macerich report come to fruition," Gerdes said.
Westcor is ready to welcome its former foe into the fold.
"Having one more great mall in our portfolio makes it easier for us to deliver products and services," said David Scholl, Westcor’s senior vice president of real estate. "It will be a luxury for us to merchandise the entire south East Valley and not wonder what will happen in the one mall we don’t own."
Because the sale has not yet closed, Scholl couldn’t say if Fiesta Mall will get a makeover.
"There are no plans today because we are not the owner yet, but Westcor traditionally reinvests in its properties," he said.
Scholl said Westcor is aware that Fiesta Mall management has been part of a city-sponsored task force to revitalize the west Mesa area. He said Westcor would meet with Mesa city officials and neighbors before making any major plans for changing the mall.
Fiesta Mall is managed by General Growth Properties. Scholl could not say whether current management would stay on after the sale.
When Macerich bought Biltmore Fashion Park in August, 2003, Westcor hired Biltmore’s management staff.
Westcor’s control of all the East Valley malls probably won’t have much of an impact on shoppers, said Tom Rex, research director at Arizona State University’s W.P. Carey School of Business. But it raises some concerns.
"It could lead to homogenization," Rex said, with all the malls looking alike.
That’s an aesthetic issue. A bigger worry would be Westcor’s power as the only game in town to strong-arm merchants who want mall slots, he said.
"They’ve had a good share of the market for a number of years now," Rex said. "Typically monopolies are not good for consumers, but it’s different when the owner is not selling directly to customers. A lot will come down to how they run things. If they own all the available space and start upping rents for retailers, ultimately it could lead to higher prices for consumers."
On the positive side, another mall could give Westcor more leverage to bring new retailers to the area by giving them options, said Patrice Duker, spokeswoman for the International Council of Shopping Centers.
Duker said consolidation is typical of the shopping center industry.
"We are seeing large players becoming even larger through mergers and acquisitions," she said.
For shoppers, ownership changes typically are transparent, Duker said.
"As long as the malls give the consumers what they want, for the most part they don’t even know who owns the shopping centers," she said.
Macerich, with 45 million square feet of sales space in 82 shopping centers — most of them in the West — is the ninth largest mall owner in North America, according to the International Council of Shopping Centers. Macerich is still far behind the largest, Simon Property Group, which owns Metrocenter.
Simon has 305 shopping centers with a combined 165 million square feet of shop space.