Metro Phoenix Holds True on Retail Momentum

The big push is coming from expanding local retailers more so than those on the national front, CB Richard Eillis' Judi Butterworth tells GlobeSt.com. However, there are "three or four" nationals sizing up the region. The mix includes IKEA, Garden Ridge and some national restaurant chains. Meanwhile, Sav-A-Lot is headed back after a one-year absence, she reports.

The fourth-quarter close brought a 6.59% vacancy, including regional malls, in a market boasting 101 million sf at 785 centers. Metro Phoenix's northwest submarket is falling behind at 11.94% while North Scottsdale leads the pack with a 4.78% vacancy.

The numbers, Butterworth says, is a continuation of the metro's strong retail market from years prior. The third quarter 2001 saw a vacancy spike as the impact settled in on the loss of Montgomery Ward, Helig-Meyers, Fry's supermarkets, ABCO, Home Base and the AMC and Harkins theater chains. What the fourth-quarter numbers show is that 70% of that vacated retail space was absorbed in that deal-making period, according to Butterworth's calculations. "There was a lot of repositioning," she explains, adding that all A-plus space in and around the metro's regional malls is taken. Basha's Food City lobbed the biggest play when it took over 23 of 28 big boxes abandoned in Southwest Supermarket's exit from the market.

Retail is sure to be good this year as it holds true to its traditional course of following housing development. Though the housing count will be down by a projected 15% from 2001, some 28,000 to 32,000 new homes will rise, says Butterworth. With that will come upward of 25 grocery-anchored centers, still commercial real estate's hottest product practically nationwide.