Retailers expanding in Tucson: Walmarts on the march

Dale Quinn
March 11, 2012

Retailers expanding in Tucson

The Walmarts are coming.

In the wake of the Great Recession, Walmart is one major retailer with significant plans for expansion in Tucson.

The company has three new supercenters and two neighborhood markets in the works.

The discount retailer has identified Tucson as an area that’s underserved when it comes to affordable shopping options, said Delia Garcia, a Walmart spokeswoman.

“Our goal is to improve access to affordable groceries for Tucson families,” Garcia said.

Tucson’s big-box retail market has been hit hard by bankruptcies and closures since 2008. National chains such as Mervyn’s, Circuit City, Linens ‘N Things and Borders book stores have left big spaces in shopping centers.

And as consumers reined in spending, discount retailers like Walmart, along with dollar and second-hand stores, have become increasingly popular.

With its one-stop-shopping model, Walmart fills a niche in the retail market, said Greg Furrier, a commercial broker with PICOR Commercial Real Estate Services. In contrast, an electronics retailer like Best Buy, which sells destination products people are willing to drive for, won’t have as many stores, Furrier said.

When considering whether Walmart presents a threat to other grocers, consumers don’t generally change their habits unless they can save a decent amount of money, Furrier said. So more expensive grocers tend to be more vulnerable when a Walmart moves in nearby, he said.

The consumer market has recently shifted toward discount retailers – spurring the expansion of Walmart – but Furrier said there’s no way to know for sure how long that trend will last.

Others expanding

Other national chains, such as convenience store chain QuikTrip, have also been opening stores in Tucson, Furrier noted.

Drugstores and sit-down restaurants have also been looking for space in Tucson.

Tenants have been able to demand deep discounts from landlords in recent years as it became increasingly difficult to keep space filled. But that has started to change, Furrier said.

“We’re really in a period where we start kind of shifting from a tenant’s market to a landlord’s market,” Furrier said.

In a big-box retail report, Nancy McClure identified Walmart, PetSmart, LA Fitness, Whole Foods and Costco as companies that are opening stores in the Tucson market. McClure is a first vice president at CBRE specializing in retail properties.

The appetite for retail space in prime Tucson locations is strong, McClure said. But retailers are looking at opportunities across the country, and that includes areas where landlords are more desperate to cut deals with tenants.

“Many Tucson ownerships are not in that position and retailers are finding slow to no traction in securing the sites that they had hoped to obtain at a deeply discounted rate,” McClure wrote.

Big-box spaces vacated

At the end of 2011, greater Tucson had more than 1.55 million square feet of big-box space available. Since the fourth quarter of 2008, several retailers have closed stores, contributing to that vacancy.

Retailer Vacated space (sq. ft.)

American Home 415,749
Mervyn’s 271,240
Bashas’ 128,400
Linens ‘N Things 112,539
Circuit City 64,624
Borders 53,200
Shoe Pavilion 42,700

Source: CBRE’s Year-end 2011 Big Box Retail Report for Tucson, by Nancy McClure.

The new Walmarts

• Walmart has plans for a supercenter at El Con Mall, near East Broadway and North Alvernon Way, on the site that was originally a Levy’s department store. Neighbors who oppose the retailer have filed a lawsuit against the city, arguing the Tucson Board of Adjustment erred when it determined the Walmart can move into the space.

• Construction on a supercenter at Tucson Marketplace at The Bridges, near North Park Avenue and Interstate 10, has already begun. That location is expected to open by the end of the year.

• Walmart purchased vacant land for about $3.3 million at 2711 S. Houghton Road and plans to start construction on a supercenter this summer. The store should open in the first quarter of next year.

• Walmart bought commercial property at 2554, 2560 and 2570 S. Kolb Road, north of East Golf Links Road, for about $2.9 million. The retailer plans to redevelop it into a Walmart Neighborhood Market. Construction should start in the summer, and the store is expected to open next year.

• Walmart plans a neighborhood market on the southwest corner of East Broadway and Camino Seco. Construction should start in the summer so the store can open early next year.

Contact reporter Dale Quinn at [email protected] or 573-4197.

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