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PRESCOTT PROTOTYPE?

Westcor’s latest hybrid center breaks the mold of its predecessors

By Maura K. Ammenheuser

Prescott’s affluent residents have, until recently, driven to Phoenix to spend their money. Now they don’t have to.

It is tough to categorize Prescott Gateway. The project is part traditional mall, part big-box power center and part streetscape village, all packed into 615,000 square feet in a secondary market.

Opened March 8, Gateway is the first major retail development to debut in Prescott, Ariz., a high-altitude town about 100 miles northwest of Phoenix, in at least seven years and the area’s first new mall in more than 20.

“Maybe that’s a sign of the innovativeness developers [have] today. There’s no label for it,” said Wally Chester, executive vice president of development at Phoenix-based Westcor Partners, the center’s developer, owner and manager. Westcor wants this center to be “more things to more people,” Chester said, including retail, entertainment, good food, service and security in a lovely setting. (Westcor signed a deal in May to be bought by the Santa Monica, Calif.-based Macerich Co. for $1.5 billion.)

Gateway is the third hybrid, streetscape-style retail project Westcor has rolled out in recent years. Its immediate predecessors are FlatIron Crossing, Broomfield, Colo.; and Chandler (Ariz.) Fashion Center (SCT, May 2002).

Gateway’s enclosed section includes some 410,000 square feet, anchored by Barnes & Noble, Dillard’s, J.C. Penney and Sears. (Penney and Sears moved from Ponderosa Plaza, an older mall across town, and opened larger stores at Gateway.) Outside, 30 shops and restaurants totaling 154,000 square feet include such national, big-box tenants as Linens ’n Things, Michaels and Pier 1 Imports. Gateway was 80 percent leased at its opening.

Gateway’s centerpiece is Heritage Circle, an outdoor circle punctuated by a 40-foot pine tree and serving as a gathering and events place. It’s also a display space dedicated to local history.

Chester said he expects sales to reach the high $300-per-square-foot level this year. “There was obviously a pent-up demand.”

Prescott, the county seat of Yavapai County, and the towns of Prescott Valley and Chino Valley constitute what is known locally as the Tri-City area. Just 101,000 people live within 25 miles of Gateway. But the area is growing, and these are people that retailers salivate over.

“There’s tons of money up here,” said Steve Conrad, Gateway’s general manager, “tons of old money and tons of California money.” Yavapai County residents rank second in Arizona in average bank deposits per capita, he said, and these rich people are needy — for a nearby place to shop.

“Everybody has to shop in the big city,” Conrad said, referring to Phoenix. The center’s customers include affluent retirees, families and, in summer months, probably tourists.

Little new retail has popped up in Prescott till now, because the area wasn’t growing much up until the 1990s in terms of population or infrastructure improvements, said Greg Fister, the city’s economic development coordinator.

But Prescott, with its beautiful courthouse, historic Victorian homes, abundant bars and boutiques and relatively cool temperatures, attracts tourists, especially in the summer. Industry and roads are growing, and people are buying second homes. Some national retailers are considering here, said Ron Recht, co-owner of Pacific Development Partners, Los Angeles, which owns Ponderosa Plaza.

Gateway is not the only shopping center in town, but nobody describes the others nearby as direct competition, because they’re too different. The closest major retail site is Frontier Village, a power center that opened some seven years ago on the Yavapai Native American reservation, a mile from Gateway. Its approximately 50 tenants include The Home Depot, Target, a grocery and many discount stores.

Ponderosa, 21 years old and showing it, is riddled with vacancies. It is also slated for a major overhaul. “You have to go ugly before it gets better,” Recht said. “We’re going through that now. We’re in the middle of cleaning it out.”

Pacific took over the center two years ago (it owned the land the center sits on all along) and is redesigning the 260,000-square-foot mall. It will feature a major new retailer, which Recht would not identify, three new food outparcels and a 7,000-square-foot office pad.

Even after Ponderosa’s overhaul, it won’t compete directly with Gateway, Recht said. He said he doubts that residents on Prescott’s richer and denser western side will routinely pass by an updated mall in their own neighborhood to drive 25 minutes to Gateway if the shopping experience is similar at each. Conrad said the centers are about six miles apart.

For all this market’s promise and despite Prescott’s wealth, Fister said he does not expect many more developers will come here, because even if the projected 4 percent annual growth occurs, the market will still be relatively small.

Few projects make it to their grand opening without problems, and Gateway is no exception. Westcor faced opposition in the form of lawsuits and referenda from locals concerned about environmental, aesthetic and other issues. Much of the trouble arose because people living in pricey homes uphill from Gateway “didn’t want to look down on a mall,” Fister said. Some were none too happy either when Westcor removed the top of a hill to construct Gateway. Nevertheless, the legal and political challenges have since been resolved, and Westcor’s Chester said that many critics have been won over by Gateway’s design; featuring stone and timber, plus a 45-foot fireplace in the food court, it is sympathetic to the local architecture.

Gateway is similar to FlatIron and Chandler in that it features big-box tenants next to an enclosed mall. But it has “a much more intimate design,” Chester said. It includes a street, with curbside parking, running the length of the center. Some mall tenants face only the street, others face inward and outward. The street itself is “one of the best venues for special events,” Chester added, though Westcor hadn’t foreseen that. Everything from senior centers to motorcycle groups want to hold their events there.

But “the main lesson we learned [from FlatIron and Chandler] was dealing with some of the [big-box] tenants,” Chester said. “We have to accommodate these people” by letting them open on their own schedule, for example, rather than forcing the mall’s grand-opening date on them, and by dealing with their physical requirements. Such companies are more accustomed to freestanding stores than shared buildings.

Westcor has made a major departure from the traditional malls that it and the rest of the industry built decades ago. The company’s first projects were Los Arcos Mall, Scottsdale, Ariz., and Metrocenter, Phoenix.

It’s perhaps telling that another project offering an enclosed mall plus an outdoor lifestyle section — the 1.3 million-square-foot Streets at Southpoint, Durham, N.C., built by Chicago’s Urban Retail Properties — opened the same day Gateway did. The two were the first malls to open in the United States this year.

Westcor plans more such centers, such as La Encantada, an anchorless 260,000-square-foot project in Tucson, Ariz., on which the company expects to break ground by mid-May.

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