Bed Bath & Beyond locations shuttered around Valley could be in high demand

Ron Davis, Phoenix Business Journal

The bankruptcy of home goods retailers Bed Bath & Beyond and Buybuy Baby will leave more than 10 big box spaces vacant in the Valley. Retailers, landlords, and commercial brokers could see an opportunity to write the next chapter of those empty buildings

Generally, a Bed Bath & Beyond store ranges between 25,000 and 35,000 square feet, said Ryan Desmond, a partner at Phoenix-based Western Retail Advisors. While the bankruptcy proceedings still need to play out a little further, he said those spaces could be in high demand from other retail tenants or shopping center owners.

While Bed Bath & Beyond will close its stores, it still has lease agreements with the landlords. The duration of the remainder of those leases could vary, but they could possibly come with multiple options for extensions.

“So in cases another retailer might say, ‘Jeez, there’s another eight years on that lease and a pretty attractive rent, a great shopping center, I’ll pay X dollars to take that lease over,'” Desmond said. “In other cases, the landlord themselves may be the winning bidder because they want to retain control of the site to release it to who they’d like to see there. … Landlords are going to be in many cases happy to get that space back because they can fill the space at a better rent, and maybe a different use that they think is more advantageous to the center.”

There are examples of both those scenarios in the Phoenix market in a recent bankruptcy court auction.

Burlington Coat Factory, a discount clothing retailer, was especially active in the auction in late June, successfully bidding on 44 leases for an aggregate of $12 million, including one in Avondale. Schnitzer Properties, the owner of Chandler Pavilions shopping center, raised its hand for the closed Bed Bath & Beyond located within the center for $350,000. The bid deadline for the auction was June 26, according to affiliated publication Albany Business Review.

And in June, Crate & Barrel opened an outlet store in a former Bed Bath & Beyond at the Chandler Village Center, the Arizona Republic reported.

Landlords likely seeking single tenants

Desmond said that landlords would look to backfill the entire space to one tenant. The simple reason for that, Desmond said, is a steep cost, possibly $1 million to demise the space, spilt the utilities and make changes to the facade or elevation of the building to accommodate two users.

A recent example of one tenant backfilling a closed big box space is Picklemall at the Arizona Mills shopping center in Tempe. Picklemall will occupy a 104,000-square-foot space previously occupied by At Home Stores and install 24 pickleball courts to replace what was once aisles of home decor goods. It will be Picklemall’s first location in the United States.

For a vacant Bed Bath & Beyond, Desmond said, landlords will likely look at established credit tenants with strong financials first rather than take a gamble on an unproven entertainment concept. He pointed to examples of well-established retailers such as Harkins Theaters, Aldi, Bob’s Discount Furniture and Nordstrom Rack — all of which have taken spaces from retailers that went out of business in the Valley.

Phoenix’s retail market started the year strong with 1.2 million of positive net absorption and a vacancy rate of 4.3% in the first quarter of 2023. With a full-service asking average asking rent of $17.40 per square foot, the rates are higher than the pre-pandemic rates during the first quarter of 2019, according to a market report from CBRE Group Inc.

Bed Bath & Beyond (Nasdaq: BBBY) has been in financial distress for more than a year. It replaced its CEO last year after sales plummeted in the first quarter. It started closing stores to cut expenses and had warned as early as January that bankruptcy was possible. In February, Bed Bath & Beyond struck a unique financing deal with hedge fund Hudson Bay Capital Management. But that deal fell apart in April.

In the Phoenix-area there are nine Bed Bath & Beyond stores, and across the state there 13 Bed Bath & Beyond locations.

These Arizona locations of Bed Bath & Beyond are still open or have been sold as of July 21:

Avondale – 10060 W. McDowell Road**
Chandler – 3445 W. Frye Road**
Chandler – 850 N. 54th Street**
Gilbert – 2793 S. Market Street*
Glendale – 7340 W. Bell Road*
Phoenix – 7000 E. Mayo Blvd*
Prescott – 3250 Gateway Boulevard*
Tucson – 6310 N. Oracle Road*

These Arizona locations of Bed Bath & Beyond have already closed:

Mesa – 837 N. Dobson Road
Phoenix – 1919 E. Camelback Road
Surprise – 13723 W. Bell Road
Tucson – 4811 E. Grant Road
Yuma – 1212 S. Castle Dome Avenue

* Location is still open according to Bed Bath & Beyond’s website ** Location has been recently sold

Originally published by The Phoenix Business Journal on July 24, 2023.

Target, Harkins Theatres on wish list for huge Buckeye shopping center, documents show

Audrey Jensen, Phoenix Business Journal

A rendering shows the design for the planned Verrado Marketplace in Buckeye, which will be developed and operated similar to the developer’s other projects in the Valley, such as Desert Ridge Marketplace.

A new Target, Harkins Theatres and more could be some of the first tenants secured for the planned Verrado Marketplace shopping, entertainment and dining center in Buckeye, according to city documents.

The $125 million Verrado Marketplace was announced in 2022 by Phoenix-based Vestar and Scottsdale-based DMB Associates, the master developer of the 8,800-acre Verrado community.

It’s expected to include 500,000 square feet of mixed-use space across 48 acres at the northeast corner of Interstate 10 and Verrado Way at the entrance of the Verrado community, but no tenants have been formally announced for the project.

On July 18, Buckeye City Council is scheduled to vote on a new development agreement with Vestar. A public presentation document included in the item shows a proposed site plan for Verrado Marketplace with potential high-profile tenant names including Harkins Theatres, Target, HomeGoods, Marshalls, Ross Dress for Less and Total Wine & More.

A Target Corp. spokesperson said the company is continually evaluating potential store locations but didn’t have any specifics to share. Harkins did not immediately respond to a request for information.

Vestar declined to say whether any tenants have been confirmed for the shopping center but said in a statement that the “community-oriented center” is expected to break ground in the summer of 2024 with an opening slated for late 2025.

The project, Vestar said, will encompass a department-store anchor, specialty shops featuring leading apparel, home furnishings and personal care brands, a state-of-the-art theater and entertainment concept, a variety of dining including upscale restaurants and fast casual options, a grocery store and neighborhood services.

Verrado would create 1,500 permanent jobs

Verrado Marketplace will be developed in the same fashion as the company’s other major centers Tempe Marketplace and Desert Ridge Marketplace and is estimated to generate 1,500 permanent jobs and $50 million in revenue for Buckeye over a decade. Between construction and operations, the company estimates the project will have an output of $1.8 billion.

 

“The City of Buckeye has been a tremendous partner as we work together to bring this new retail destination to their fast-growing community,” said Jeff Axtell, executive vice president of development for Vestar, in a statement. “They share our vision for Verrado Marketplace to become a lively community space where residents can socialize, unwind and connect with their favorite brands.”

 

In addition, Verrado Marketplace will host gathering spaces including a public plaza with outdoor fireplaces and a performance venue.

The proposed development agreement says that in addition to the retail center, Vestar will provide a 2,000-square-foot police substation at no cost to the city for 20 years, an event plaza available to the city and residents and other infrastructure for a reimbursement from the city of up to $3.7 million, to be paid through construction sales tax and permit fees from the project.

 

“We are thrilled that Vestar has selected Buckeye as the site of their next signature project,” said Buckeye Mayor Eric Orsborn in a statement. “Verrado Marketplace will be a major attraction for our city, creating jobs, retail and entertainment options and providing a community space for our residents.”

 

Ryan Desmond, Charles Skaggs and Justin DiBiase of Western Retail Advisors are the leasing brokers for the project. Desmond said the tenant mix at Verrado Marketplace is expected to rival Vestar’s other projects across the Valley.

 

“Interest has been extremely strong across a range of restaurant, retail and entertainment uses, and negotiations are moving forward at a rapid pace,” Desmond said in a statement. “The desire that tenants have to locate here speaks to both the strength of the Verrado trade area and the quality of product that Vestar develops.”

 

A general contractor and architect have not yet been selected.

The four corners surrounding the major intersection has been booming with growth. Just south of Verrado Marketplace, a new Costco store just opened in July and is set to anchor another retail center totaling 411,000 square feet called Buckeye Commons while Abrazo Health is planning to build a hospital campus across 27 acres at a corner on I-10 and Verrado Way.

Vestar has also opened or planned large centers in Queen Creek and west Phoenix such as the Laveen Towne Center that will total 400,000 square feet.

Originally published by The Phoenix Business Journal on July 14, 2023.

Target, Kohl’s and more confirmed for fast-growing retail center in Surprise

Audrey Jensen, Phoenix Business Journal

The new Village at Prasada shopping center will bring new restaurants, stores and entertainment options to the Loop 303 area in Surprise.

Target, Kohls, Boot Barn and more are bringing new stores to the fast-growing Prasada shopping centers in Surprise that are being developed by Scottsdale-based national retail developer SimonCRE.

Target Corp. recently acquired about 10 acres between the Loop 303 and Sarival Avenue just north of Waddell Road.

It paid about $4.3 million for the property, according to Maricopa County records, with plans to develop a 150,000-square-foot store to anchor the Prasada North shopping center between the Loop 303 and Sarival Avenue just north of Waddell Road.

Prasada North will include about 350,000 square feet of retail space with tenants including Boot Barn, Torchy’s Tacos, Portillo’s hot dogs, Ahipoki Bowl, Einstein Bagels and Verizon. Adjacent to the shopping center, American Furniture Warehouse is also developing a new store.

“Right now, residents have to travel at least seven miles, one way, to visit these kinds of retailers. We look forward to providing Surprise with more of the retailers that make the top of their yearly wish lists,” said Joshua Simon, Founder, and CEO of SimonCRE, in a statement.

SimonCRE recently acquired 35 acres for the north Prasada retail center from Suburban Land Reserve Inc. for $12 million, according to real estate database Vizzda and Maricopa County records. The first tenants at Prasada North are expected to open by late 2024.

The Prasada North shopping center is an extension of the new Village at Prasada just south of Waddell Road that contains about 700,000 square feet of shopping, dining and service space next to a Costco store and gas station.

Kohls recently signed an agreement with SimonCRE for a new store next to Floor & Decor at the Village at Prasada, adding to other stores and entertainment such as Sprouts Farmers Market, Total Wine, Hobby Lobby, Fat Cats and Dick’s Sporting Goods.

Western Retail Advisors is the leasing brokerage representing SimonCRE on the Prasada developments.

“The clear success of SimonCRE’s Village at Prasada has amplified the demand for retailers to find a home at Prasada North. They’ve taken note of the premier tenants and robust sales at Village at Prasada and want to be a part of it,” said Eric Termansen, founding partner of Western Retail Advisors, in a statement.

SimonCRE has also partnered with another company to develop an initial 70,000 square feet of retail space at the Surprise City Center. The first phase of the joint venture’s project has secured several leases with restaurant concepts including national barbecue chain Mission BBQ, Italian restaurant Osteria Mia, Café Zupas and Better Buzz Coffee Roasters.

Originally published by The Phoenix Business Journal on June 27, 2023.

New Valley downtown project secures several tenants through new partnership

Audrey Jensen, Phoenix Business Journal

SimonCRE has partnered with Carefree Partners to develop the first phase of the Surprise City Center in the West Valley

Scottsdale-based SimonCRE has jumped on board with Phoenix-based Carefree Partners to develop a portion of the Surprise City Center in the West Valley.

The companies have formed a joint venture to develop an initial 70,000 square feet of retail and restaurant space with plans to develop more in the future including office buildings with ground-floor retail, apartments, parking, a family entertainment center and more on about 30 to 40 acres in the city’s growing downtown area.

“Our goal is to replicate a streetscape environment,” Joshua Simon, CEO of SimonCRE told the Business Journal. “If you look at Phoenix as a whole, especially the West Valley, there’s no other infill parcel of this size and this type of zoning where you have lot ability to do height, height density, lots of different uses.”

The first phase of the joint venture’s project has secured several leases with some restaurant concepts that are also new to the area including:

  • National barbecue chain Mission BBQ
  • Italian restaurant Osteria Mia
  • Soup, salad and sandwich shop Café Zupas
  • Better Buzz Coffee Roasters, a San Diego-based shop

Simon said about 50% of the 70,000 square feet of space currently has leases or commitments from tenants even before construction has started. The cost to develop the initial phase will total about $35 million.

Construction is slated to start in the third quarter of this year and be completed about a year later for the first phase of the project. A general contractor has not been selected.

Phoenix Commercial Advisors is the leasing brokerage for the project. Other retail firms such as PHX West Commercial LLC, Velocity and Western Retail Advisors have helped secure tenants at the site.

On Tuesday, Surprise City Council approved an agreement to reimburse the joint venture up to $6.5 million to build out Elm Street west to Bullard Avenue, where the first phase of the project will be located just south of Bell Road.

Plans for Surprise City Center moves forward

Carefree Partners owns about a quarter mile of vacant land around Surprise City Hall near Bell and Litchfield roads. It has been working for years to turn the area into a massive mixed-use destination on an overall property that the company has said is about the size of downtown Phoenix.

So far, the overall 640 acres is about 15% to 20% built out with Ottawa University, a Major League Baseball spring training residential facility, city buildings, amenities such as parks and tennis courts and some retail and apartments.

The joint venture development with SimonCRE will be one of the first at city center that will include a walkable, urban retail component and environment, said Scott Phillips, vice president of Carefree Partners.

“It’s that walkable downtown that we’ve worked so hard with the city to come up with,” Phillips told the Business Journal. “There’s been a lot of development on the site, now we’re getting into the next phase.”

Phillips said during the Council meeting on Tuesday that they’re excited to bring SimonCRE onto the project following its success with the new Village at Prasada power center along the Loop 303 in Surprise.

“We have attempted to kiss a lot of frogs on this project and bring a lot of different retail developers to the table and to date none of them have worked out very well,” Phillips told Council. “The difference with Josh and SimonCRE is that he’s committed to the city of Surprise, he understands the urban form that we’re going for and he’s committed to this project long term.”

Simon of SimonCRE, which has developed more than $500 million worth of projects in the city, said he was approached to join the city center team more than a year ago.

“We really had the same vision for this project and we’re really excited to be a part of it,” Simon said. “For us, obviously we’re able to leverage a lot of our existing relationships, what we’re doing out at Prasada, and we’ve got other projects in the area so we’re really in the know. Plus, it’s really flexing a new muscle for us is streetscape.”

Originally published by The Phoenix Business Journal on June 21, 2023.