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PHOENIX-Powerhouse Family Fitness Center is opening its fifth location in the area, leasing 25,000 square feet at the 16th Street and Bethany Home Road Shopping Center. In addition to the 10-year lease, Red Mountain Retail Group and Lateral 10 LLC are readying to renovate their 40-year-old center, which will have 107,903 square feet of retail space on 8.6 acres upon completion.

Reno, NV-based Powerhouse Family Fitness will open its newest gym at 1503 E. Bethany Home Road by January. The health club operator already has one fitness center in Mesa and Chandler and two in Scottsdale.

The retail space is being marketed for $32 per square foot to $40 per square foot, triple net. James Hood, vice president of retail for Colliers International, acknowledges that Powerhouse Family Fitness also received a tenant improvement allowance to go along with its lease.

“This was formerly a Bashas’-anchored grocery center,” explains Hood, who teams with Colliers associate Adam Hood on the assignment. Rod Cogburn of Coldwell Banker Commercial Plummer & Associates in Reno the health club operator.

Bashas’ Supermarket closed its store about two years ago to relocate within the submarket. The center was 15% occupied prior to the Powerhouse Family Fitness lease. James Hood says the leasing team is working on other leases, but nothing is set in stone as yet.

Red Mountain Retail Group Inc., headquartered in Santa Ana CA, and Phoenix-based Lateral 10 LLC picked up the center about a year ago for $6 million as a value-add opportunity. The joint venture will soon begin a facelift on the center’s exterior. Completion is scheduled for second or third quarter 2009.

Meanwhile, Hood tells GlobeSt.com that the partnership is in the process of closing on more land so it can expand the center, making plans to raze a service station at the hard corner to make way for additional retail space. “The entire project should be finished in about 2010,” he adds. A construction budget was not available.

Hood says the center’s upside is its location at a dominant intersection and Phoenix City Grill, a well-known restaurant, as a tenant. He says the owners will hang onto the asset following renovation because of its potential. “This center is a diamond in the rough,” Hood says. “To be able to have a center in the central Phoenix area in an infill location off the Camelback Corridor is pretty rare.”

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