Featured in CoStar News on Jan. 6, 2022.
SimonCRE CEO Says Open-Air Center Should Thrive in the Time of COVID-19
An Arizona developer is betting that Phoenix’s explosive growth and signs of recovery for destination retail make it a good time to start one of the first open-air shopping malls to be built in the Western U.S. in more than a decade.
SimonCRE, a national development firm based in Scottsdale, expects to finish construction next month of the first buildings at a power center called Village at Prasada in Surprise, Arizona, where the rapid population growth in West Valley suburbs along the Loop 303 freeway is bolstering shopping demand.
About half of the space at the 700,000-square-foot shopping mall off the Loop 303 and Waddell Road will be finished next fall, with leases in place for national tenants including Five Below, HomeGoods, T.J. Maxx, Marshalls, PetSmart and Ulta.
SimonCRE CEO Joshua Simon said in an interview that the timing is right for the $500 million project, as national retail sales rebound by nearly 8% year over year as shoppers head back to stores, restaurants and entertainment venues.
The population of Surprise has grown by more than 70% over the past two decades, he said.
“Sales growth is driving tenants to open new locations, and that’s driving a new wave of retail development,” Simon said. “Growth got a little ahead of itself and many people were burned when all the new shopping centers were getting built in 2010. Now, retail can safely follow new rooftops.”
The project, which is more than 90% leased, is also expected to include a row of restaurants, a 500-unit apartment complex and a 61,000-square-foot entertainment venue called FatCats that will have bowling and movies.
The project will include a row of restaurants and entertainment venues.
Shoppers are ready to return to physical retail but would prefer to be outside rather than in enclosed malls, Simon added.
“Arizona is warm and it's nice outside, and with the omicron wave, it just reiterates the fact that open-air centers make the most sense," Simon said.
The 100-acre mall is part of the 3,355-acre Prasada master-planned community being developed with Phoenix’s RED Development, Santa Monica, California-based REIT Macerich Co. and other firms. Future projects in the area include medical buildings, offices, hotels and 14,000 single-family homes.
The forecast for retail real estate in Phoenix is optimistic as workers and companies relocate to Arizona from other states, according to a recent report from Colliers. The retail vacancy rate fell to just over 7% in the third quarter, matching 2019's pre-pandemic levels.