Tucson Retail Market Sector: Ring up 2016 at the registers

Nancy McClure, first vice president at CBRE Tucson

By Nancy McClure (reprint TAR December Scorecard Edition)

Retailers just went through a holiday selling season like none in the past. Black Friday was and no longer will be the end-all gauge for how the holiday season will go. Lines were blurred and people spent money in stores, on – line and delivered, bought on – line and picked up in store, cross-shopped on mobile devices while in the store and got best pricing, etc.

It’s a frenetic world and retailers are trying to keep up.

Deciding where to put stores and how big will be the hot topics in every retailer board room in January. Decision – making on locations is slow; no one wants to make mistakes in an ever-changing environment.

The Tucson retail market is poised to see more new construction in areas that don’t have the space retailers need and in its core, redevelopment of obsolete structures in prime locations will continue at a fast clip. Vacancy rates have shown some decline and to gauge “health” in the overall market, rental rates need to stabilize and rise. Tucson has all the elements for future growth.

Here’s a snapshot of what is planned for 2016:

Fry’s Food & Drug will build 2 large stores at 79,000-SF and 100,000-SF
Walmart Neighborhood Market will construct a couple new 41,000-SF stores in centers that have had vacant boxes
A new power center will start site work and building at I-19/Irvington
New retail will reformat old centers at prime locations such as Oracle/Limberlost and Oracle/Orange Grove
New eateries will offer fresh concepts and stale, older concepts will shutter
Discount retail will continue to lead in growth: look to peripheral areas to get new stores
The new Tucson Premium Outlet center will put additional pressure on Foothills Mall
Medical is going retail: look for more dentists, clinics and physicians opening in traditional retail settings for more patient convenience and exposure
Two of the vacant Haggen stores will reopen as a Safeway and an Albertsons
Investors will continue to see Tucson as a good place to buy centers with cap rates higher than the coastal regionals
Tucson will continue to benefit from the Mexican shopper coming to our market
Regional mall “core” hubs will continue to see obsolete properties redeveloped

Nancy A. McClure is First Vice President of CBRE in Tucson, and recently named to Real Estate Forum’s list of Women of Influence in the Southwest. She can be reached at 520. 323.5117.