Dan Lupien

Service-driven retail is taking off in Phoenix. While the big box market is struggling, service- and entertainment-driven retail concepts are experiencing roaring success. The Block at Pima Center, a new retail development in Scottsdale, is a perfect example of the leasing activity. The first phase of the project was fully leased before delivery earlier this month, and the second phase is already 50% leased.

“Coming from the big box world at Kimco Realty and now on my own, it is clear there is a shift happening in the retail market,” Dan Lupien of developer Palmer Development, tells GlobeSt.com. “Retail big box development will continue to be a challenge. Big Box stores are downsizing or getting eliminated altogether because the buying habits of consumers are evolving. For many millennials, the thought of driving to a big box power center to go shopping seems like a ridiculous notion—but they will dine out at restaurants almost every meal. Service retail, entertainment and restaurant developments will continue to thrive so long as the developer can create a sense of place in the project.”

Along with service- and entertainment-focused tenants, communal spaces are also becoming a major element of a successful retail space. “Incorporating large patios with beautiful landscaping and shade where people can meet or work is important. Communal areas with public Wi-Fi and a strong lineup of tenants who understand this new consumer market is critical,” says Lupien. “We have found strong demand for this product type in Scottsdale. The successful retail projects of the future will be smaller, well-positioned retail centers that serve as an amenity to something larger like a mixed-use project.”

At The Block, the successful leasing strategy was the result of substantial research about the area’s retail needs and the changing market dynamics. “We created a merchandising plan that reflected the customer base in Pima Center and the surrounding trade area,” says Lupien. “Which means we first identified the categories that were missing in the trade area and then specific tenants within those categories. Strong QSR brands, service related retailers and sit down dining concepts were at the top of the list. We then called the list for a year straight before we signed our first lease. We basically had to educate the market about a trade area that had not existed prior to our efforts.”

The market also worked in the developer’s favor. During the development of the center, the market has continued to adopt entertainment and service model in response to consumer demands. “We overcame many objections that are inherent in any new development and over time we found success,” says Lupien. “Then the Talking Stick Entertainment and Business Corridor continued to mature as we continued our efforts. I don’t think we could have timed this any better.”