Other retailers, seeking to increase market share or take advantage of the vacancy situation, have come in and absorbed about 90,000 square feet of the space that was vacated.
Contiguous space of at least 20,000 square feet is considered to be big box real estate.
 Bankruptcies and store closings have created new market opportunities for national retailers, like Burlington Coat Factory’s takeover of vacant space at El Con Mall. Roger Yohem photo |
Pent-up demand also is in play from both retailers and consumers. Chain Store Age, a retail industry trade publication, reported a “soft” increase in national retail sales in June compared to May. For example, Costco Wholesale’s sales rose 4 percent.
“There has been pent-up demand for big box retail space within some of the coveted trade areas surrounding the malls,” said McClure. “Mostly, retailers want existing buildings. For retailers in a position to expand or enter the market, these spaces provide prime retail positioning that hasn’t been seen in the last 10 years.”
These “opportunists” have included Ultimate Electronics, Burlington Coat Factory, Staples, Walmart and Ross Dress for Less.
In some cases, the incoming retailer will tear down the existing structure and rebuild on the same footprint. That has been the case with two closed Macy’s stores. At Tucson Mall, the former Macy’s store was razed to build a new 120,000-square foot formal “streetscape” entrance that includes a Cheesecake Factory restaurant and outdoor retailer REI. At El Con Mall, Wal-Mart is planning to build a scaled-down version of a Walmart Supercenter where the vacant Macy’s building now stands.
“Some have chosen to raze and rebuild instead of shoehorning themselves into someone else’s floor plan,” McClure said.
Several existing retailers are looking at “now opportunities” to either improve their location or capitalize on affordable rents, she says. Currently, there is about 1.2 million square feet of available big box space in the region.
One of the more high-profile vacancies is the 81,722 square-foot former Mervyn’s store on the northeast corner of East Broadway and Craycroft Road. McClure has that listing and said multiple offers have been made for the property. The main hold up is trying to determine the best way to divide the building into smaller spaces, she explained.
Overall, McClure said lease/rent rates are holding strong because “our market has exceptional real estate.” As new retailers enter the market, quality properties will be in high demand.
There is another significant positive sign that commercial real estate is in recovery mode. Compared to a year ago, McClure said retailers are getting access to financing for tenant improvements instead of asking landlords to fund renovations.
Declining sales, prices In June, housing sales and prices continued a downward trend, according to the Coldwell Banker Residential Mortgage Market Report. There were 906 sales in June, down 5.9 percent from 963 sales in May, and down 3.2 percent from 936 sales in June 2009.
Year-to-date sales are up 18.9 percent over 2009. This year there have 4,835 sales compared to 4,066 at this time a year ago.
June’s median sales price was $145,000, down 2 percent from $148,000 in May and down 8.2 percent from $158,000 in June 2009. The average sales price was $184,195, down 7.9 percent from $199,895 in June 2009. It was up just 0.1 percent from $184,090 in May.
“The selling price per square foot paints a more accurate picture of the direction of values, for what is happening with prices rather than the average or median,” emphasized Les Boomer, senior vice president at Coldwell Banker. Median and average numbers are skewed by large volumes of low-priced properties mixed in with a few high-end luxury property sales.
In June, the $100 selling price per square foot level was down 2.5 percent from $103 in May; and 7.3 percent lower from the $108 level in June 2009.
“The price per square foot allows for differences in the size of homes. Even though the average may be $185,000, what does that tell you when comparing a 3,000 versus a 1,800 square foot house?” Boomer said.
Sahuarita eases up on signs The Town of Sahuarita has suspended enforcement of a code banning roadside model-home signs for the summer as long as builders don’t overdo it. That will allow Sahuarita time to update its zoning code to permit the small model-home signs in the rights of way, said Town Planning and Zoning Director Sarah More.
Other roadside signs will remain illegal except for political signs, which have a First Amendment exemption. The town will continue to remove signs other than political and builder signs.
The town council must approve any code changes. More said, “it will be the fall before we get this to the council. In the meantime we will be nice, we will lay off the bandit sign issue while we work through this.”
However, if builders start to compete with each other by placing dozens of signs along the roadside, the town will resume sign sweeps. The current sign code is outdated, More said, as it is based on the code in effect in Pima County in 1994 when the town was incorporated.
Sales and leases• 1st Rate 2nd Hand Thrift Store Inc. leased 8,123 square feet at 5851 E. Speedway from Builders Fashion Square LLC. Pete Villaescusa, CB Richard Ellis, represented the landlord. Brenna Lacey, Volk Company Commercial Real Estate, represented the tenant.
• Deringer–Ney Inc. leased 5,734 square feet at 3280 E. Hemisphere Loop, Suite 190, from Tucson Property Investors LLC. Pat Welchert, Picor Commercial Real Estate Services, represented the landlord. Gary Best, Keller Williams Southern Arizona, represented the tenant.
• US Food Service leased 3,711 square feet at 831 E. 18th St. from Norm Anton. Pat Welchert, Picor Commercial Real Estate Services, handled the transaction.
• Disabled American Veterans Tucson Chapter 4 leased 2,910 square feet at 7475 N. I-10 Eastbound Frontage Road, from Ina Road Group. Rob Glaser, Picor Commercial Real Estate Services, represented the landlord. Bruce Suppes, CB Richard Ellis, represented the tenant.
E-mail news items for this column to ryohem@azbiz.com. Inside Real Estate & Construction appears weekly.
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