X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

This is a very interesting time in Phoenix for retail, because we will have so many large spaces on the market at one time,” Judi Butterworth, head of the retail marketing group at CB Richard Ellis told GlobeSt.com. “It is going to be a difficult project given the circumstances.”

Fleming Companies Inc. is selling off dozens of ABCO Foods locations throughout the Valley, and Kroger is expected to close a number of Fry’s Food stores in the coming year. Kroger completed its purchase of Smith’s, Smitty’s and Fry’s last year and plans to close duplication locations and smaller stores, which will result in large vacancies in about a dozen grocery-store-anchored retail centers in 2001.

“You are going to see a lot of unique ways to utilize older retail and some it won’t be retail when it gets done,” Butterworth says.

Even with the glut of space expected to hit the market next year, Butterworth believes that the vacancy rate might only drift up slightly. Most of the new space being built now, some six million sf, is significantly pre-leased and will have little available space to offer.

Lease rates, which have risen sharply in the past three years, could level off in 2001, she says. Rental rates in a small shop in the center with a good anchor are asking between $18 and $36 per sf, while mall space is going for between $30 and $50 per sf.

“We’ve reached a threshold that needs to stabilize,” she says.

Regardless of what happens in 2001, the past year was stellar for retail in the Valley.

At the start of the fourth quarter, retail vacancy in the Valley hit 4.54%, more than a full percentage point lower than the start of the year when the vacancy rate was 5.52%, according to a survey by CB Richard Ellis. This is the lowest rate in more than a decade and a level that, by all accounts, maintained itself through the fourth quarter.

Even though more retail space was built and brought to market in 2000 than in any year of the past decade–more than three million sf of space–demand has outpaced that development. The amount of new retail space created marked a modern high point for development.

The steady influx of 100,000 new residents annually into the Valley and residential housing in new areas has pumped up retail development. With the East Valley nearing build-out in several suburbs, new housing development moved to the West Valley, North Scottsdale and further south into Chandler, spurring new retail development in these areas.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE 2020Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.