As more consumers rely on the convenience of online shopping and seek out specialty stores over big-box retail, more shopping centers are losing traditional tenants. What’s moving in is not only changing the retail landscape, but also neighborhoods.
Maybe you’ve seen charter schools or churches fill vacant retail spaces, but what about condos? They’re coming, said Judi Butterworth with Orion Investments. For more than 35 years, she’s been selling and leasing shopping centers. Lately, Butterworth said more homebuilders are considering retail properties.
“There’s probably not a better place to put two-story condos where they can sell quickly because you’re in an established area that’s stable. The problem is they want to be in higher income areas and they’re all east,” she said.
During a commercial real estate round table organized by the Phoenix Business Journal, land-use attorney Adam Baugh with Withy Morris echoed the sentiment.
“I’ve got a client who’s interested in turning an existing grocery shopping center, scrape it, and to go vertical with residential,” he said. “And, that grocery anchor is relocating to a different spot. It’s a prime arterial intersection in the east valley that will do really well when that chance comes around.”
Butterworth used McDowell Road in Scottsdale as another example. Over the past few years, several car dealerships have left and been replaced with apartments and townhomes. She said cities have become more willing to allow residential to take over commercial locations.
“The cities no longer are holding on to that sales-tax dream. So, in the old days, if you had a C2 zoned property the city would never rezone it because they’d sit there and go, 'Oh, my god, we’re giving up tax dollars,'” she said. “They don’t talk that way today because they know they’re not there. So, there’s a whole different thought pattern on what can actually happen.”
Panelists said more health-care providers and service-oriented businesses like salons are replacing stores that once sold goods. Today’s edition of the Phoenix Business Journal takes a closer look at the future of brick and mortar locations across the Valley.
