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Retailers making move to beat high rents
Shelley Gillespie

Thursday, July 22, 2010

Lance Lane is moving Lance Lane State Farm Insurance across the street in September. Although not a monumental change, it reflects a series of trends that are impacting which stores survive, which stores locate in Maricopa, and which stores go out of business. The leasing companies also play a big part in who comes, stays, and goes.

What’s new

New retailers are coming to Maricopa. In two cases, the store names are the same, but the faces are new.

Say Sushi has reopened in the front section of the Fry’s Plaza (Maricopa Marketplace). Eunice Lee, who developed the concept, is now managing the sushi restaurant. (Prior to the restaurant’s closing, another operator owned and managed Say Sushi and did not adhere to Lee’s high standards.) The store has been upgraded with a more inviting look and a very experienced staff. They are open daily for lunch and dinner, but are closed Sundays and from 2:30-5:00 P.M. daily between lunch and dinner. Say Sushi is located at 21101 N. John Wayne Parkway; phone (520) 494-2233.

Quiznos Sub has re-opened with a new franchise owner, Maricopa local Rich Tigner. His 1.2 mile commute from his Maricopa home to the Fry’s Marketplace location means he plans to be a hands-on owner. The Quiznos menu emphasizes a wide assortment of sandwiches, soups and salads with “toasty” breads, and many low calorie options. Their hours are 10:00 A.M. to 9:00 P.M. Monday-Saturday and 11:00 A.M. to 8:00 P.M. on Sunday. Quiznos is located at 20987 N. John Wayne Parkway; phone (520) 568-5201.

Barclay Group, the leasing company for Maricopa Marketplace, is currently in negotiations for a “frozen dessert” company, but the deal is not yet signed. They are also looking for good prospects for a dry cleaner and a new real estate tenant, among other categories they would like to have represented.

Deciding factors

When Maricopa incorporated in 2003, retailers initially rode a wave of massive population influx. Growth was expected to continue exponentially, possibly to 75,000 by 2010 and to 500,000 by 2030. Instead, the economy and housing market collapsed with population estimates currently at 40,000 residents, with as many as 60,000 residents in the “trade area” (the distance that people are willing to drive to shop -– within 15-20 minutes.) (Figures were provided by Maricopa Economic Development Manager Danielle Casey.)

By 2010, retailers who moved to Maricopa were looking for a much bigger population to ensure their success. Now that many of the leases are up for renewal, retailers are looking for some breaks in their rents to reflect Maricopa’s lower than expected population count. As a result, residents might expect to see some stores relocating, such as Lance Lane, where the retailer finds a better value.

After negotiating, Lane actually received a reasonable rate from the Barclay Group, but decided to move across the street to the plaza run by the Flory family. He stated, “The Florys were nothing but professional.” Their offer started “closer to market value…reasonable.” Barclays’ initial offer was $5-6 per square foot more – “a significant difference.”

Lane started discussing his lease renewal nine months before his lease was over with Barclay Group. He knew if he wanted to move that he would need time to build out a new location and get the required permits. Things just weren’t happening quickly enough, so he made the commitment to move.

What really made the difference? Lane found the Florys really interested in having him as a tenant and saying so. They even offered to lend him their truck for the move. The personal touch made the difference. Lane prides himself on offering personal service to his clients and the fast and sincere response from the Florys family helped him make his decision to move. (His new location will be between Arena Sports Grill and Brooklyn Boys Pizzeria & Restaurant at 20800 N. John Wayne Parkway.)

In contrast, the Barclay Group made Lane deal with a “lot of different people” and they “did not seem like they were talking to each other.” A new property manager started during his negotiations, too. So that slowed things down as well.

Other stories

The Say Sushi and Quiznos owners had a different experience with the Barclay Group.

Tigner had “nothing to complain about. They’ve (Barclay Group) been excellent to work with.” Debra Sarjeant, the property manager, has been “awesome.” After looking around in other locations, Tigner decided on the deal with Barclay Group. At a recent lunch hour, Tigner and his staff were busy. Maricopa is obviously happy to have Quiznos back as another food option.

Say Sushi owner Eunice Lee negotiated with Barclay’s previous property manager, who worked with her on her rate. They gave her a good rate, but only a two-year lease. She is already seeing good business and expects to renew her lease after two years.

Luisa Foster, owner of Sunrise Café, is frustrated because she is paying, according to information from her fellow tenants, about twice as much per square foot for her space. Despite an almost 30% dip in business during the summer -- the “snowbirds” are gone -- her request for rent relief has been ignored. She has found Barclay Group “uncooperative.” Instead of working with her, they added a cost of living rent increase of 3%. She has two years left on her lease.

Copa Tan has renewed its lease, but was unavailable for comment.

Barclay Group’s perspective

Jim Gardner, senior vice president of marketing for Barclay Group, oversees 20 centers in six states. Discussing criteria for leasing, he indicated that they look for the “best tenant in each category…who can be part of the fabric of the community,” and will attract business for other tenants.

Because of the poor economy, they have “backed up from rates” at the high levels. However, Gardner thinks “things are a lot better than it was. The market seems to be steady and getting better.” He says they “have a lot of prospects for that particular center (Maricopa Marketplace).” Barclay Group “always intends to run a good center and keep the existing tenants happy,” but they have “constraints” with the loans they have on the property and must meet their obligations, too.

Although they have had some staff changes, Gardner claims that Barclay Group has “stabilized” and is now growing. Property Manager Debra Sarjeant, who has been with Barclay Group since February, has 15 years of property management experience. She is responsible for common area upkeep, managing the vendors, and keeping the “property presentable.” Property managers are not always appreciated despite the services they provide to keep the facilities attractive, since they also collect rents.

Changes coming

Other Maricopa storeowners have indicated that, when their leases expire in the next year or two, they might relocate. The “Maricopa shuffle,” might result in some new players and some new locations for the current retailers. Stay tuned….