Face Lifts Give Malls New Life
Date: 06-11-02
Newspaper: Tribune Newspapers
Author: Donna Hogan
Gilbert Plaza's merchants are pretty much the same today as a few months ago, before the neighborhood shopping center at Gilbert and Broadway roads in Mesa got its face lift.
But the updated features, tile roofs and lusher landscaping appears to be attracting some new customers, said Simon Jergis, who owns the Fonecom Pager and Cellular shop in the spruced up center.
Jergis said it's too soon to say whether a better looking facade will mean a better bottom line for. his business. The transformation was only completed a few months ago, and it is a typically slow summer in Arizona, he said.
"We didn't feel any effect yet," he said. "But we are seeing people driving in here with fancier cars."
East, Valley economic experts say shopping center redevelopment can change the look and feel of an entire neighborhood. They say merchants such as Jergis have a better chance of success in the future because their plaza was refurbished.
Neglected at the core
While new shopping centers with grocery stores, dry cleaners and other neighborhoodtype shops seem to pop up as fast as the housing developments that attract, them to the fringes of cities, older shopping centers in a municipality's core often are overlooked.
They get run down, shabby and become a blight rather than a benefit for neighborhoods, said Greg Marek, Mesa's redevelopment director.
"When shopping centers deteriorate, you get negative uses that impact a neighborhood," Marek said. "The average consumer shies away from places that look run down because there is a perception that they are not safe."
When the regular shoppers stay away, the merchants follow, he said. That hurts the neighborhood, and it hurts the whole city because sales taxes decline, he said.
It's a problem that all cities face, said Garrett Newland, Chandler's economic development director.
"It's a function of time," Newland said. "As the market grows; newer shopping centers are built farther away, and they pull key tenants. It's a detriment to a community. Neighborhoods need the services."
City incentives
Chandler is so concerned about the situation that the city is about to launch a "commercial reinvestment program" in which .the city would target shopping centers with too many empty storefronts and provide a developer with matching funds for such improvements as landscaping, signs and updated facades, Newland said.
Marek said Mesa is working on a program that would relax some building code requirements for the redevelopment of older buildings. The cost for 1950s and '60s era shopping centers to meet modern building codes can be a deterrent to fixing them up, he said.
There was little incentive to spend money to fix up Gilbert Plaza because, despite its age and dated look, it was full of merchants, said Mesa based developer Michael Pollack. Nevertheless, Pollack, who said he anted up about $650,000 to buy Gilbert Plaza in the mid 1990s, spent $250,000 this year to give it a more up todate look.
Rehabilitating old shopping centers is Pollack's forte, and, he said it pays off over time.
"We're firm believers in redevelopment," Pollack said. "In the long run it will be beneficial. There's always turnover in smaller centers, and betterlooking projects are more stabilized."
Ultimately, attractive shopping centers will draw top tenants and stay more fully leased, Pollack said.
A stitch in time
And the best time to do major work on an older center is while it is still full of tenants, even though most owners tend to wait until the center is losing merchants before spending money, he said.
"When things are good and you are full, it is the best time to invest in a center," he said. "When you have a good cash flow and money to do a redevelopment, you make the improvements and position yourself in case the market turns soft. In a bad market, you don't have , the time to respond."
Pollack has about 65 Arizona properties in his portfolio, ranging from retail centers to apartments and offices. About 85 percent of those are redevelopments instead of new buildings, he said.
Another local developer, Jim Pederson of the Phoenix-based Pederson Group, who has renovated several East Valley shopping centers, said a good owner manager continuously modernizes and updates a property and can spot a problem before it becomes serious. But absentee investor owners looking only at the bottom line and not the future of a center sometimes let little problems turn into major ones, Pederson said.
Scottsdale case study
That's what happened to Chaparral Plaza at Chaparral and Hayden roads in Scottsdale.
"That center was about 30 years old," Pederson said. "It had an A.J. Bayless (supermarket) and a Revco (drug store), and when they moved out the center was functionally obsolete. For about 10 years, it just went downhill."
Pederson bought Chaparral Plaza despite its run down condition, lack of tenants and limited visibility from Hayden Road because it was "a good trade area," he said.
It was one of the most extensive fix tips the local developer did on any of his shopping center refurbishments, Pederson said. He demolished about twothirds of the structures and rebuilt them from scratch. He still owns and manages the shopping center and said it's one of the best performers in the state.
Other Pederson makeovers include three Mesa shopping centers: Mesa Shores at Baseline and Gilbert roads, Buck horn Plaza at Main Street and Recker Road, and North Mesa Plaza at University Drive and Lindsay Road.
Pederson's redevelopment of a languishing Tempe retail center at McClintock Drive and Guadalupe Road attracted a new list of coveted tenants such as Stein Mart, Changing Hands Bookstore and Trader Joe's, said Jan Schaefer, Tempe's economic development director.
"It changed the whole tenor of the place," Schaefer said. "It was a good revitalization."
No room to grow
For land locked Tempe, redeveloping old shopping centers is critical because there are few places to build new ones, she said.
"When a shopping center gets out of date, it isn't usable," Schaefer said. "When a developer comes along and revitalizes it, it's good for the neighborhood and good for the city. You want a sustainable economy. You don't want throwaways on your corners."
Gilbert Plaza's renovation was enough of an incentive for seven year tenant El Rancho Market, a family owned business, to open an ice cream shop next to its grocery store.
Noe Rascon, whose family owns the market, thinks the shopping center appears "twice as big" since its transfocmation from its 50s era style pink and blue flat roof to its adobe and tile Southwestern look with vaulted roofs and oleander bushes.
"Business may be up 5 percent to 10 percent," he said. It's hard to tell for sure because Sept. 11 took a toll on revenue, Rascon said.
But for Lou Brooks, who has lived in the area for 25 years, Gilbert Plaza is just a much more pleasant place to do business since its makeover.
"This does a lot for the neighborhood," he said. "It was getting run down."
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