FEATURE ARTICLE, MAY 2010

RETAIL ROUNDUP
Prospects in the West's retail sector might not be the brightest, but just like the varied markets, terrain and people of the region, there are a variety of ways to go about achieving development or investment success in the West.

Investment

At the end of first quarter, Merlone Geier Partners purchased the 180,000-square-foot San Antonio Shopping Center, located at the Palo Alto border of Mountain View, California.

"Our proposed redevelopment plan for the site will include approximately 300,000 square feet of retail and 325 luxury apartment units," says Brad Geier. "New state-of-the-art, prototypical Safeway and Rite Aid stores will be a part of the new development."

"The property’s value is as a development site," says Eric Von Berg, a mortgage-banker principal at Newmark Realty Capital who acted as a broker in Merlone Geier Partners’ $41.25 million acquisition of the Sears-anchored property. "It's a high-income area with many retailers lacking a presence. The ability to do a high density mixed-use project is a requirement of Mountain View.”

Phoenix-based Cole Real Estate Investments had a busy first quarter, acquiring 24 freestanding retail properties totaling more than 468,000 square feet. Freestanding retail tenants included Walgreens, Kohl’s and CVS/pharmacy.

In one of the biggest single-tenant retail investment deals in the West, Pegasus Investments represented a California-based private investor in its acquisition of a 60,000-square-foot retail building occupied by Dick’s Sporting Goods in Eugene, Oregon. The off-market transaction was valued at approximately $200 per square foot. The freestanding, 100 percent net-leased building is located within the 400,000-square-foot Delta Oaks Shopping Center, which is also anchored by Walmart and The Home Depot. 

Development

Specialty merchants; neighborhood retailers and service uses; local and national restaurants; and entertainment venues will populate RED Development's CityScape in downtown Phoenix.

CityScape, RED Development’s massive 1.8 million-square-foot mixed-use project in downtown Phoenix, is nearing Phase 1 completion. The approximately 200,000-square-foot retail component “will include specialty merchants such as urban apparel and home furnishings; neighborhood retail like a specialty grocer and service uses; local and national restaurants; and entertainment venues,” according to the developer’s website.

The resurgence of downtown Phoenix means only increasing demand for CityScape’s offerings. Completion or expansion of the city’s light-rail transit system, the Phoenix Convention Center, the Phoenix Biomedical Center and Arizona State University’s downtown campus, as well as hotels and other new developments, are a veritable boon for CityScape.

RED Development’s 73-acre, lifestyle village, Paseo Lindo, is scheduled to open in spring 2011 in Chandler, Arizona. Located in the southern part of the city near the expanding Price Road Corridor, Paseo Lindo is situated adjacent to RED’s 350,000-square-foot Fulton Ranch Towne Center. The retail component of Paseo Lindo will consist of junior specialty anchors, specialty shops and service providers, as well as fast-casual and sit-down restaurants.

Perhaps it shouldn’t be much of a surprise that Target is feeling quite comfortable on the Front Range. Shea Properties completed the only SuperTarget in Highland Ranch, Colorado, in October 2009 at the developer’s mixed-use Highland Ranch Town Center, which consists of seven buildings surrounding a town square park and adjacent to the Civic Green amphitheater. The 186,000-square-foot, almost $6.2 million Super Target joins The Home Depot, Bed Bath & Beyond and Office Max as anchor tenants at the town center development, located in a suburban community of 85,000 people.

“It was a rare development opportunity for large discount retailer in Highlands Ranch and one of the few power centers to go vertical in 2009,” says Lauren Bottonari, an associate in the Denver office of SRS Real Estate Partners.

An infill Target project will commence this summer at Continuum Partner's Belmar development, an urban, mixed-use district in Lakewood, Colorado.

Groundbreaking for another Target location in the Denver area is scheduled for this summer. A $4.4 million Target infill project is set to begin on 3.5 acres at Belmar, Continuum Partners’ 103-acre downtown, mixed-use district in the city of Lakewood.

“This is unique because Target is going into an urban setting,” says Bottonari. “It is a great infill site; the location is going to change the synergy of Belmar shopping center.” Belmar’s anchor-tenant lineup consists of  Dick’s Sporting Goods, Whole Foods Market, Best Buy, and (coming soon)  Nordstrom Rack.

South of Denver in Colorado Springs,  the 650,000-square-foot University Village Colorado began welcoming consumers last fall with the  Costco and Smashburger openings. Co-anchors Lowe’s Home Improvement Warehouse and Kohl’s joined Costco at the Kratt Commercial Real Estate development earlier this year.

“A major assemblage project, it’s the first large retail development off the new interchange (Interstate 25 and Nevada Avenue),” says Bottonari. “University Village Colorado connects the town to the University of Colorado at Colorado Springs.”

Renova Partners LLC’s $9 million remediation and redevelopment project, Milltown Park, in Sandpoint, Idaho, is about to blossom. A 54,000-square-foot Super 1 Foods grocery store is scheduled to open at the mixed-use site in the early part of summer. Three lots totaling approximately 20 acres remain available for development, which could benefit from Milltown Park’s location adjacent to a proposed expansion campus for the University of Idaho system.

“As a former brownfield site, the city has grown up around it, so it now occupies a central strategic location in the heart of the downtown area,” says Prudential Financial’s Lisa Iurato. “With 26 total acres, it also has the critical mass that creates a retail destination for a multitude of uses. It's an ideal situation for a cinema complex, a hotel with meeting facilities and freestanding pad sites as well as in-line retail merchandise/services.”

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