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PHOENIX-Low-end retailers with an upscale mindset are moving in on vacant big-box stores, bringing their discounted wares to some of the area’s tonier neighborhoods in a fierce battle over middle-class dollars.

“Out of the 115 vacant boxes over 15,000 sf in Phoenix, probably three of them will be 99-Cent Only Stores,” Judi Butterworth, first vice president with CB Richard Ellis Inc., tells GlobeSt.com, referring to the cut-rate merchandiser that recently opened stores in Scottsdale and Chandler.

The Valley boasts the largest number of vacant big boxes in the West, many of which were left without tenants due to a series of grocery-store mergers and corporate cutbacks over the last two years, Butterworth said. Those spaces are increasingly becoming much sought-after locations for discount chains eager to tap into middle-class pocketbooks.

But Paul Holland with Insignia/ESG tells GlobeSt.com that not all big boxes are drawing the same interest from deep-discount retailers. Vacant stores with about 20,000 sf fare better with prospective tenants like 99 Cent Only Stores or Big Lots while larger unoccupied retail outlets draw few leasing offers.

“The challenge (for those larger stores) has come in splitting the space,” Holland said, noting that the $10 per sf to $12 per sf cost of turning a grocery store into a retail outlet has kept many building owners from converting their properties.

While larger big boxes are having some tough rental times, smaller vacancies are having much better success, not only with low-end retailers but with other non-traditional tenants “We’re seeing charter schools, medical uses and churches going into some of these boxes,” said Butterworth. Trendier upscale outlets, like the grocery store Sprouts, are also moving in on the more premier locations, she noted. “We’re finding it’s been a great opportunity for the right merchants,” she said. “Five years from now, I think people will say why didn’t we expand.

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