LAS VEGAS-Arroyo Market Square is running at nearly full steam these days. All of the major tenants are up and running at the new 945,000-sf regional power center here and the small shop tenants are finishing their build-out and preparing to open. This is happening despite the present economy because the bulk of the leasing work was completed two years ago, shortly before construction began.
Arroyo Market Square is the first phase of Arroyo, a 450-acre mixed-use development along Interstate 205 on the south side of the Las Vegas Valley, between Henderson and Summerlin. The overall project includes about 1.5 million sf of retail—including the new power center and several small neighborhood centers—along with 1.15 million sf of industrial space and 1.75 million of office space. The project is a joint venture development by Laurich Properties, EJM Development Co. and Clark County. EJM inked a 50-year ground lease with the county and will split income with the county.
Arroyo Market Square is a 30-building development that includes big-box retailers, junior anchors, multi-tenant pads, stand-alone restaurant pads and inline space. EJM regional director Kirk Boylston told GlobeSt.com in May 2006, a month or two before construction began, that Arroyo Market Square was 95% preleased. Nine big box tenants, including Wal-Mart, Home Depot, Sam’s Club and Best Buy, opened in the first quarter of 2008 to the public. Several other merchants are set to open throughout the second quarter.
Kit Graski and The Graski Group of Voit Commercial Brokerage had the exclusive leasing assignment. Graski tells GlobeSt.com that the main reasons the center were its location, between the booming areas of Henderson and Summerlin, and the fact that when leasing was under way it was a landlord’s market.
“Due to its location, we were able to attract all of the best-of-category players, but the reason we are so well leased is we were able to maintain control of where the tenants located,” he says. “As the market goes up and down, tenants can have more power and more pull than the developer; we fell into a period where the developer had more say and the tenant wasn’t able to push us around, so we ended up with better tenant mixes.”
Tenants like to pick where they want to be in a center, Graski says, but for the betterment of the center – and because it was a landlord’s market – he was able to place them where they really belong versus where they thought they should be. As a result, the center has a hard goods area that is anchored by Best Buy, Office Max, Sam’s Club and PetsMart, a soft goods area anchored by Marshall’s, Bed Bath Beyond, Ross, Dress Barn and Famous Footwear. Moreover, each area has additional retail space to accommodate smaller players in the same category because these smaller players feed off the traffic. They also pay more rent, so it’s important to have spaces they want to be in, Graski says.
“If I would have put the Ross next to Officemax and Best Buy, then based on the layout of the center there would not be enough room all of the smaller soft goods retailers that want to be close to Ross and they wouldn’t want to lease a space across the center from Ross, where we did have enough space,” Graski says. “Another project in town let one tenant go where they shouldn’t and they now have a big hole [an areas in the development where nobody wants to lease space] because they don’t have a draw there that the smaller retailers want to be near.”
As for whether the center could meet with the same success today as it did a couple of years ago when it was in lease-up, Graski says he is confident he could attract many of the same anchors because of the center’s location. But it wouldn’t go as quickly, he says.
“Over the past 20 years there have been similar times but in the past you could see the end of the tunnel and retailers could plan; they could be confident in saying ‘the end will be in 2009 so if I put a deal together so it opens in 2010, I’m golden, because I can also take advantage of the weakened rental rates due to the downturn,’” Graski says. “Today, nobody has been able to peer into their crystal ball and see with any confidence when we will come out of this. “Every retailer is being very cautious, re-considering every decision.”