PRINT THIS STORY:

CHANGE TEXT SIZE:

Westcor, Vestar biggest — but not sole — players

The Phoenix area, known as the “Valley of the Sun,” is dominated by two homegrown goliaths with enormous clout and broad footprints that reverberate for miles.

This may sound like a mere fable, but it’s true retail lore.

Westcor and Vestar Development, which already have a long leg up over rivals in the competition for prime retail turf in their Phoenix home market, say they’ll soon be fortifying their positions with a succession of new projects there.

Between them, the two plan to build about 12 million square feet of retail space over the next several years, a roughly 10 percent expansion of that market’s existing 111 million square feet.

Westcor, which owns seven of the area’s nine regional malls, says it will build five new super-regionals measuring about 1 million square feet each in high-growth suburban areas. The first are pegged for the suburbs of Gilbert and Goodyear.

Meanwhile, Vestar is hastening to finish six open-air lifestyle and retail-entertainment centers, totaling more than 3 million square feet, by 2006. It plans to build an additional 1 million to 1.5 million square feet annually over the next five to seven years, says David J. Larcher, the firm’s executive vice president of development.

These two firms’ dominant positioning in the Greater Phoenix area is something of an anomaly in the Sun Belt, where Dallas, Houston and Las Vegas have a broad variety of developers vying for strategic shopping-center sites, observers say.

Both Vestar and the Macerich Co.-owned Westcor have long-standing relationships with major tenants and know the market very well, says Greg Abbott, a retail broker at De Rito Partners, a Phoenix-based commercial real estate firm. “A lot of people say Phoenix is the biggest small town in America, and in many respects they’re right. It has a very tight brokerage and development community. Those companies who have been doing business a long time here benefit greatly.”

Abbott fields frequent calls from out-of-town developers inquiring about local opportunities. “We tend to ask them if they have a tenant in tow,” he said. “If they don’t, it can be hard to get started in the market.”

Westcor has been building regional malls in the region for 35 years, “so we have 35-year relationships with our tenant-merchants and department stores,” said David C. Scholl, Westcor’s senior vice president of development.

Larcher says the six Vestar projects slated for completion in the next 18 months represent an investment of about $475 million. SuperTarget will make its Arizona debut at Vestar’s Gilbert Crossroads Towne Center and Gilbert Gateway Towne Center next year. Barnes & Noble, Wal-Mart Supercenter and Ross Dress for Less are slated to go into Vestar centers in Tempe and Phoenix.

A few of the power center locations that Westcor and Vestar have earmarked for future construction may not get developed at all “because one gets tenants the other wanted and the two [sites] are too close to one another,” said retail consultant Robert Kammrath, president of Phoenix-based Kammrath & Associates.

Westcor and Vestar share a common ingredient for success, says Daniel J. Gardiner, president of Phoenix Commercial Advisors. “They both enjoy strong relationships with tenants who have faith in their ability to perform,” Gardiner said.

But they still don’t have the market to themselves. Smaller shopping centers (the Phoenix area has between 800 and 900 measuring 20,000 square feet or larger) present opportunities, as do specialty centers, says Abbott. De Rito’s 5-year-old “fashion center” in Casa Paloma, Chandler, performs well with such tenants as Ann Taylor, Banana Republic and Gap, he says.

Westcor, established in 1970 by Rusty Lyon and Robert L. Ward, was sold to The Macerich Co. in 2002 for $1.5 billion. Vestar, which was founded in 1977, has offices in San Diego and Los Angeles.

— SM