Last week, the Rio Nuevo Board approved its budget for the fiscal year that begins July 1, 2015. The budget includes expenses of $10,245,294, slightly more than the prior year’s expenses of $10,193,848. Staff was awarded a 2.5% salary increase and the remaining increase is primarily in marketing dollars spent on projects designed to drive customers into TIF merchants. The Board expects the 2016 revenue to be over $18 million.

New projects include events at Park Place Mall and El Con Mall, Sunshine Mile, as well as downtown. The Board also approved the placement of two touch screen kiosks downtown that will provide real time data about adjacent activities and food and beverage specials.

Rio Nuevo will help organize and fund a State of Downtown luncheon, support the Iron Chef competition, if held downtown, and fund four movie premiers designed to attract customers to El Con and Park Place. The District now collects almost $250,000 annually in non-state revenue, $160,000 of that will go to support these programs that increase TIF merchant customers.

The Board also unanimously approved the modified agreement with the Fox Theatre Foundation. In December, Rio Nuevo provided the funds to remove the National Trust for Historic Preservation from the byzantine relationship between Rio Nuevo and the Fox Foundation. The simplified agreement confirms that the Fox Foundation is Rio Nuevo’s tenant with annual payments of approximately $90,000 back to Rio Nuevo. Rio Nuevo Board will place five members on the Fox board and has entered into restrictions that will prohibit the Fox from entering into new debt, changing its organizational structure, hiring or firing its CEO without Rio Nuevo approval.

The Board took no action on the TCC Phase II proposal of nearly $10 million to upgrade the ballroom, meeting rooms and locker rooms. Other proposals, including new meeting room space and exhibition hall improvements, could require an additional $25 million. The Board agreed to meet with the City of Tucson to explore alternatives to fund the projects.

The Board heard a presentation from historical and merchant representatives for the Sunshine Mile (Broadway from Euclid to County Club) and agreed to get back together after the final decision is made regarding the Broadway widening.

CBRE’s Tucson office has released its fourth quarter 2013 Big Box Retail report. The analysis surveyed vacant retail box spaces in excess of 10,000-square-feet located in shopping centers or freestanding buildings in the Tucson area and submarkets.

Nancy McClure, first vice president and retail specialist with CBRE’s Tucson office, compiled Tucson’s Big Box Retail report and notes that Tucson’s Big Box Retail space has been experiencing positive absorption, with the highest demand focused in the core regional mall hubs.

According to Tucson report highlights:

In 2013, the Tucson retail market saw healthy activity and real estate professionals did a good job filling vacant space. There are only six remaining vacant big box retail spaces of 30,000 square feet and greater in the metro area.

The Park Place Mall area is almost 100 percent leased. This part of the metro area continues to be one of the most active and with a lack of available space, experts anticipate that new development and redevelopment for the retail corridor, as the few available spaces/properties will need renovations to be attractive to major retailers.

McClure is confident that the retail market will continue this trend of slow but steady growth, and believes that retailers in this post-recession world have emerged stronger and more focused than ever. She says the overall consensus within the retail real estate industry was that the recession was good for the overall state of retail – weeding out weak performers and forcing retailers to focus on core merchandise, listening to their customers more closely and learning to adapt to the new world of e-commerce.

Looking to the future, McClure sees one of strongest retail trends as that of omni-channel retailing. This merging of the internet and e-commerce with bricks and mortar space is how savvy retailers have begun to address their customers’ desire for the convenience of shopping online balanced with their needs for real space to interact with products. While some consider this approach to be a major paradigm shift within retail, others can’t help but see the immediate benefit: omni-channel consumers want to use all channels available to them (online, mobile, bricks and mortar, etc.) simultaneously and retailers using an omni-channel approach will be able to track and analyze customer behavior across all channels, not just one or two.

How will this affect the Tucson metro area, not to mention the overall Arizona and the Southwest retail markets, going forward?  McClure says, “With many Big Box retailers still trying to right-size in this post-recession market, we’re going to see many of them adapt the trend of omni-channel retailing across all markets, not just major and coastal cities. As the Big Box companies continue to fine-tune their real estate strategies in relation to their overall business goals, multichannel retailing and a laser sharp customer and merchandizing focus are going to become imperative to strategy. This means that although we may not see growth in leaps and bounds and a glut of new retailers to our market, what we will see is strategic locations by smarter, better retailers who are here for the long haul.”

If you would like more information and retail trends in the Tucson area and across southern Arizona, Nancy McClure and Michael Laatsch at CBRE can be reached at (520) 323-5100.