Growth brings Phoenix retail market to Tucson
By Philip S. Moore, Inside Tucson Business
Published on Friday, February 02, 2007
Take a look around any significant metropolitan area n Phoenix, for example n and see what retailers are there. They’ll be coming to Tucson very soon.
The trend is already happening. Major national real estate investment trusts (REITs) have arrived with two commercial acquisitions just last month. The REITs now consider the Tucson region to be ready for the big leagues when it comes to investment. And when they invest here, they bring with them the connections to retailers they have in other major markets.
On Jan. 23, Westwood Financial Corp., based in Los Angeles, closed on a $44.6 million deal to acquire two eastside centers:
• Colonia Verde, a 98,937-square-foot Safeway-anchored center on the northeast corner of Tanque Verde and Sabino Canyon roads.
• Ventana Village, a 110,000 square-foot Bashas’-anchored center on the southwest corner of Sunrise Drive and Kolb Road.
Then, on Jan. 25, Houston-based Weingarten Realty Investors purchased three local retail centers from Bourn Partners and said it hopes to close on more by the end of February in what will be a $170 million deal. The three already purchased are:
• Oracle Crossings, a year-old 270,000 square-foot center south of the southwest corner of North Oracle and Magee roads, anchored by Sprouts Marketplace and Kohl’s department store.
• Entrada de Oro, adjacent and north of Oracle Crossings on the southwest corner of North Oracle and Magee roads, anchored by a Wal-Mart Neighborhood Market.
• Oracle Wetmore Shopping Center on the southwest corner of North Oracle and Wetmore roads, south of Tucson Mall. Its anchor tenants are The Home Depot, PetsMart and Circuit City.
Weingarten didn’t disclose which of the remaining Bourn centers it intends to acquire.
Tim Frakes, vice president for new development and acquisitions for Weingarten, which already owns 19 neighborhood shopping centers in the metropolitan Phoenix area and one in Flagstaff, said the 22-year-old real estate trust has been looking at the Tucson market for several years.
Saying the same thing was Joe Dykstra, spokesman for Westwood, which also owns nine Phoenix area shopping centers and another at La Cañada Drive and River Road.
“We’re always looking to find good properties,” Dykstra said. “We’re very selective, but Arizona is a state that continues to have good population growth and good job creation. We’re looking at Tucson because we want good, solid, properties in a good neighborhood.”
He said Westwood is negotiating to acquire two more Tucson centers.
This comes as no surprise to Greg Furrier, principal and retail specialist for PICOR Commercial Real Estate Services.
“A million in population adds a level of comfort to the decision, but many of these companies have wanted to come here or expand their property holdings for a long time,” Furrier said. “More population means a growing customer base.”
The diverse population is also considered a good mix, he said.
Now the obstacle, Furrier said, is finding available retail property for REITs to buy.
“A million people means more properties to sell, which means more is going to be sold,” he said.
Since many retail REITs already own property in Phoenix, the expansion to Tucson is an easy choice, Furrier said. “They’ve got a corporate infrastructure in place and they know the market.”
Then, when it comes to retailers, it’s easier for them to make the move when they’re already familiar with the owners of the property, says George Amos, president of Tucson Realty & Trust.
“When a retailer goes into a new market, they like to go with folks they’ve already got an established relationship with,” Amos said. “That’s why Phoenix is a good indicator for what’s coming to Tucson. They’re drawn to Phoenix. Then they see that Tucson is good, also. It’s a natural extension for them.”
The trend toward more attention on the national stage is part of a growth process that’s merging the economies of Tucson and Phoenix, and absorbing other communities along Interstate 10 into a single megalopolis, said Marshall Vest, director of the University of Arizona Forecasting Project.
Noting that Arizona is already the 13th most populous state and was the fastest growing state last year, according to the U.S. Census Bureau, Vest sees a population of 14.5 million people here by 2036.
“That’s why we should leave competition to the athletic endeavors,” Vest said. “We have an Arizona product to sell. We need to be working together because we each have a role to play in it.”
Phoenix has become the first stop for any company planning to do business in Arizona, because it’s the commerce, finance and transportation hub. Tucson comes next, Vest said, “because it’s the center for research and development, and it’s the ‘Phoenix city-state’ port to Mexico and Latin America.”
E-mail comments for publication to editor@azbiz.com. Contact Philip S. Moore by e-mail at pmoore@azbiz.com or call (520) 295-4238.
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