Developers Find Opportunity in Ethnic, Green Projects

Friday, January 25, 2008

Phoenix Business Journal - Jan Bucholz

Some commercial real estate experts expect retail vacancies in Phoenix to increase significantly this year. An unprecedented 11.6 million square feet of new retail was delivered in 2007. That could be a death knell for older strip malls, unless the location is ripe for redevelopment.

Other established retail developers have ambitious plans to continue to build, but with the housing market in turmoil, don't be surprised if some previosuly announced projects are delayed until economics improve.

Still, some newer retail players see opportunities instead of barriers. They are following new trends that are catching on around the country, including ethnic-oriented, "green" and smaller mixed-use boutique centers.

Upscale Mixed-Use Boutiques

Scottsdale-based Esterra Development is breaking gound in February on Bell Mar, a 73,000-square-foot project that is not defined by an anchor tenant. Instead, there will be 18,000-square-feet of office space incorporated into a visiually appealing retail project that includes two "upscale casual" independant restaurants.

"This is a trend today, using restaurants as the anchors," said Esterra President Gary Arnold.

But design is paramount. The company hired Phoenix-based Archicon LC to do the design - with South Beach, Miami, art deco styling that at night appears like a cruise ship - and arranged for Oase, a German company, to build a $1 million water feature.

The laser fountain, with special effects lighting, sails and misting systems was essential for making this a destination location, Arnold said.

"This is the eastern entry point in Surprise and (city officials) wanted to make a statement. They wanted something more than a strip mall," Arnold said.

Across town near Power and Ray Roads, Esterra is building Aero Gateway, a 45,000-square-foot center that also will feature noteworthy design elements.

"We're taking the proximity of (Phoenix-Mesa) Gaetway Airport and making the retail look like old hangars,"Arnold said.

Scott Lang of SKL Architects in Phoenix and Newpart Beach, Calif. has created the intriguing look.

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