[M II A II R II K]

Vacant stores pose big-box dilemma


April 11, 2012

By Max Jarman

Read More: http://www.azcentral.com/arizonarepu...te-market.html

The growing number of closed supermarkets, electronics superstores and mega bookstores in metro Phoenix continue to weigh down the real-estate market, and the problem may be more troublesome than initially thought. With a limited number of tenants looking for large storefronts, owners are finding it difficult to lease top-tier spaces, let alone less-desirable sites. And it's the less-desirable sites that make up the vast majority of the vacant space. Empty big boxes of 10,000 square feet or more represent almost half of the total vacant retail space in metro Phoenix, and the number continues to grow.

- The vast majority, 71 percent of the almost 8.6 million square feet of vacant big-box space, could be considered challenged because of location, age, configuration and other factors. It could be difficult to find traditional retail tenants for such space, and owners may have to consider non-traditional users, such as churches, charter schools, health clubs and government offices. "The secondary space will require a lot more creativity to lease," CBRE Senior Vice President Kevin Schuck said. Some areas of the Valley are particularly challenged. The west side and southeast Valley have particularly high concentrations of vacant big boxes, with the majority considered challenged sub-prime space. In those areas, developers and municipalities may have to work together to redevelop the sites for completely new uses. "Some retail space may have to go," Schuck said.

- In Chandler, where retail vacancy rates are as high as 30 percent at some intersections, a panel appointed by Mayor Jay Tibshraeny is studying the problem. Chandler has 71 square feet of retail space per capita, substantially more than the average of 44 square feet in the nation's top 50 U.S. markets. "Chandler is almost certainly over-retailed," the committee said in a recent report to the city. Given Chandler's glut of retail space, the committee said the best way to revitalize some of the more challenged commercial areas would be to find new, possibly non-commercial, uses for the space. "Many of the centers within the city's older commercial areas have likely outlived their useful lives as commercial properties," the report said. "Chandler is seeing some good (retail leasing) activity, but it will never fill up all the space," said James Smith, an economic-development specialist with the city.

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