Tucson, Arizona – Tucson’s retail big box sector remained stagnant in many areas over the past year as bricks and mortar retail continues to be challenged by online sales. National retailers and property owners look for innovative ways to adapt to changing consumer preferences, according to CBRE Tucson’s Year-End Big Box Report.
Big box vacancy (spaces greater than 10,000-square-feet) saw an increase of a number of spaces vacant year-over-year, with 44 spaces, but the total square footage vacant dropped slightly to 946,192-square-feet available at the end of 2017, compared to 31 spaces totaling 995,588-square-feet at year-end 2016. Additionally, the Tucson area closed out both 2016 and 2017 with 9 vacant big boxes of 30,000 square feet or more. Tucson had a Fry’s Food and Safeway vacate, that added to the larger space vacancy with just 1 of the 2 being absorbed.
“Drawing from a national trend, Tucson saw healthy activity from discount retailers like Ross, HomeGoods, TJ Maxx, Tuesday Morning and Beall’s, as well as the internet resistant players in the fitness and entertainment sectors, such as the new TopGolf” said Nancy McClure, First Vice President with CBRE’s Tucson office. “Absorption declined with most of the new retail being built as ground-up in peripheral areas of metropolitan Tucson, thus leaving many vacant boxes left vacant.”
In total, 386,238-square-feet of big box space was leased in 2017, down from 2016’s 506,570- square-feet of absorbed big box space.
Several new-to-market concepts and expanding retailers include Dave & Busters and Planet Fitness at I-10 and Kino Boulevard; Hobby Lobby at Oracle and Orange Grove, as well as national chains like Ross, TJ Maxx, Petco, HomeGoods and Dollar Tree with new locations in Marana and Vail.
“Many of these big box retailers went into new, ground-up construction in the peripheral areas of metropolitan Tucson, leaving existing vacant properties to sit vacant,” said McClure. “There are many of these that are obsolete properties that may never get absorbed and the challenge moving forward is working to redevelop or construct new retail spaces that meet the current retail prototypes or reuse or demolish to make way for other uses.”
The year ahead will usher in more challenges for certain retailers like department stores, resulting in more vacancies and the need for creativity in re-tenanting larger spaces.
“Property owners who are adapting to the changes in retailing, with the guidance of real estate advisors, are thriving,” said McClure. “To do that they are targeting the most active categories and are proactively working to remove, reduce or modify restrictive covenants to allow such uses as entertainment, fitness, and conversion to call centers and other office uses. It goes without saying, most retailers are working to modify their store sizes, and number of stores to adjust to customer demand. No doubt that effort will be on-going and fluid over time.”
CLICK HERE for full report.