Tucson Real Estate: New tenants starting to fill empty stores

By Dale Quinn


December 26, 2010

As 2010 comes to a close, many of the gaping holes in shopping centers across Tucson have been filled.

Burlington Coat Factory settled into a 65,000-square-foot space once occupied by Dillard’s at El Con Mall. Peter Piper Pizza opened a massive, 20,000-square-foot parlor across the street from Park Place in space vacated by bankrupt fabric retailer Linens ‘N Things.

The growing chain Ultimate Electronics took up 30,000 square feet on North Oracle Road near West Wetmore Road that sat empty after Circuit City closed its doors.

In some locations, landlords carved up larger vacant spaces to draw in new tenants. Sahuarita Plaza Investors divided an American Home Furnishings near Duval Mine Road and Interstate 19 into three chunks: 30,187 square feet for Ross Dress for Less, 28,874 square feet for Big Lots, and 7,670 square feet for Wick Communications.

K-Gam Broadway Craycroft LLC sliced up a former Shoe Pavilion to make room for Party City and Five Guys Burgers and Fries.

On Tucson’s northeast side, Goodwill Industries of Southern Arizona leased half of the anchor space in Bear Canyon Shopping Center, which sat empty for the better part of two decades.

Overall, real-estate brokers agree that Tucson’s retail market is faring better than Phoenix’s, which has a glut of vacancies. But, unfortunately, empty retail space up north gives retailers unrealistic ideas about haggling into cut-rate leasing deals here.

“There’s a total disconnect between what retailers’ expectations are and what the Tucson market is willing to do,” said Nancy McClure, a first vice president with CB Richard Ellis.

A landlord on a high-traffic intersection along East Broadway isn’t going to make the same kind of concessions as a property owner who’s desperate to fill space in Phoenix, she said.

Scott Soelter, a senior vice president with Grubb & Ellis, was cautious in his optimism about retail absorption in the future. There could yet be more store closures if consumer spending doesn’t pick up, he said.

And that could lead to even more vacancies. While some space has filled, storefronts left by companies squeezed during the recession still linger.

Some of the biggest holes were left by:

• American Home Furnishings. On top of its space in Sahuarita, the defunct furniture retailer left nearly 150,000 square feet empty in a multistory building north of Tucson Mall and another 87,400 square feet on East Golf Links Road near South Harrison Road.

Greg Furrier, a broker with PICOR Commercial Real Estate who is listing both of the vacant properties, said he has found some temporary tenants for the property near Tucson Mall, but he has yet to pin down a permanent occupant. The space, which has two floors with more than 70,000 square of retail area on each one, is a bit large for many retailers. With its plentiful parking and appealing location, it could end up converted into office space, he said.

• Bashas’. The Arizona-based grocer filed for bankruptcy in July 2009 to reorganize its debt and closed several stores – including a few in Tucson – to rein in expenses. Bashas’ has since emerged from bankruptcy and operates many stores. But its vacated Tucson space includes 63,000 square feet on North Dove Mountain Boulevard near West Tangerine Road, 67,000 square feet near East Broadway and Houghton, and 58,000 square feet near Interstate 19 and Duval Mine Road (that’s the same shopping center that had to fill a hole left by American Home Furnishings).

The Dove Mountain location could be particularly challenging, brokers said. A slowdown in home construction on Tucson’s northwest side makes it hard to justify putting another grocery store in that location.

• Mervyns. Of the defunct chain’s three Tucson locations, two remain vacant: 81,000 square feet near East Broadway and Craycroft and 75,000 square feet near South 12th Avenue and West Ajo Way.

McClure, who’s representing the property on Broadway, said there has been interest in the property and it may be another space that’s split to accommodate multiple tenants.

• A couple odds and ends. A newly constructed building that has become one of Tucson’s largest vacancies is the pyramid-shaped structure built for La Curacao. The electronics and appliance chain that targets the Hispanic community no longer plans to occupy the 90,000-square-foot building, which is easily visible on South Sixth Avenue from Interstate 10. The space is up for sale or lease.

On Tucson’s east side, an older vacancy of about 58,000 square feet that years ago was a grocery store sits at Broadway and Kolb.

When it comes to 2011, a lot could depend on how consumers spent during the holidays. Retailers’ decision to expand will likely hinge on whether people have become more willing to open their wallets.

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


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