Open retail spaces abound in East Valley - East Valley Tribune: News

Open retail spaces abound in East Valley

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Posted: Thursday, February 12, 2009 7:38 pm | Updated: 2:47 am, Sat Oct 8, 2011.

Seven years of relative tranquility in the East Valley's retail market ended last year with a year with a spike in vacancies, according to recent data from Phoenix-based Kammrath & Associates, a real estate consulting company.

Rocked by the economic tumult following the housing market crash, the amount of empty stores jumped nearly four points from 11.7 percent in early 2008 to 15.4 percent today as retailers go out of business with no one to replace them, said Bob Kammrath, the firm's president.

"I think it directly relates to consumer confidence being at the lowest level in God knows when," he said. "That has a lot to do with retail sales."

The number of retail tenants that are open - about 35 - outnumber those that have closed - about 25 - in Gilbert Town Square at Warner and Gilbert roads in Gilbert,

"It's a beautiful complex but they've got space everywhere," said David H. Weinstein, owner of Per Spectacles eyeglass store, who plans to either close or relocate when his lease ends in September.

Weinstein said consumers started less spending before the downturn.

And the problem is compounded by younger people that are strapped for money, while those between 45 and 60-years-old simply aren't spending or are buying their glasses elsewhere due to limitations on their vision insurance.

Owners of Gilbert Town Square couldn't be reached for comment.

The empty stores aren't just a Gilbert problem.

The vacancies at Queen Creek Marketplace at the intersection of Rittenhouse and Ellsworth roads are scattered throughout the center.

The 1.1 million-square-foot shopping complex has a vacant store for roughly every occupied space, although many empty stores are small in size and the center still has several major anchors like SuperTarget and Kohl's.

Ryan Desmond, Queen Creek Marketplace project manager, said the vacancies aren't due to retailers closing, but because leasing activity has slowed since the mall opened.

"This project just opened in March of '08," he said. "It's not as though there were warm bodies in there and they disappeared."

The center recently received three new tenants including an Ulta cosmetics shop and Saba's Western Wear.

Desmond said the recent bankruptcies of several big box retailers including Mervyns, Linens-N-Things and Circuit City has added a lot of empty space to the market.

But the Valley's retail real estate market isn't overbuilt, he said, so the situation should shift into reverse after the economy rebounds.

"(These are) more tenant-specific issues rather than real estate issues," he said.

"It's not that 16th Street and Camelback (Road) is a bad spot for a retail store," he added. "It's that Circuit City, nationally, was suffering. So, will there be another tenant at 16th street and Camelback? Absolutely. How long will that take to happen? I have no idea. It's a function of which retailers today are strong enough to be looking at new sites and ... does that spot make sense."

Kammrath said the problem isn't that store closures are increasing in the Valley, but rather tenants, constrained by the market, aren't filling empty space.

"The turnover rate is about the same as it has been over the last three or four years, however the replacement tenants just aren't there," he said. "In other words, everybody under the present circumstances is very reluctant to open up a new business. Even those people who think this might be an opportunity to increase their market share are having difficulty raising money to do so."

Some shopping center officials insist all is well despite the economic turmoil their counterparts face.

Jennifer Munn, marketing director at SanTan Village in Gilbert, wouldn't disclose the vacancy count at the mall, which is at Williams Field Road and Loop 202.

"We're kind of in a unique situation because we opened up in 2007, so we're still considered a fairly new shopping center," she said.

That new-car smell is still driving tenant interest, Munn said.

Additionally, the mall had many tenants locked into leasing commitments before the economy bottomed out, she said.

Marty Carrillo, a manager at the PGA Tour Superstore at the northeast corner of Arizona Avenue and Warner Road in the Chandler Mercado, said his store is meeting its sales goals despite the empty stores in the center.

That's because Mercado had vacancies ever since the store opened in late 2007.

"We're more of a destination-oriented business. They're looking for us," he said meaning people go to the center specifically to shop his store.

Phoenix-based De Rito Partners, which manages the Chandler Mercado, couldn't be reached for comment.

A shopping center at the southwest corner of Country Club Drive and Southern Avenue in Mesa has seen better days.

About 20 stores are still open, including a bank and two payday loan stores. The center also features Apollo College classroom space.

The center's anchor, Sports Authority, is in the process of closing and moving to Mesa Riverview at Dobson Road and Loop 202.

Carina Cana, a sales associate at K-momo, a Hip-Hop clothing store, said the store's business has been hurt with the mall's vacancies, but she wouldn't say how much sales have declined.

Still, she's not concerned Sports Authority would represent an additional blow to the store because K-momo serves a different clientele.

"Their customers and our customers don't relate at all," she said.

A new silver lining recently appeared for the aging center in the form of a new restaurant and entertainment center named after Julio César Chávez, the Mexican boxing giant.

Campeones - or Champions in English - whose slogan is "Family Food, Fun, Music and Entertainment," could open as early as May or June, and Mesa officials expect it to be a huge draw for the area.

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