Outlet mall construction set to start in Marana

2014-08-20T22:00:00Z 2014-08-21T09:25:44Z Outlet mall construction set to start in MaranaBy Tony Davis Arizona Daily Star Arizona Daily Star

Construction for a big, new outlet mall in Marana will start next week, said the mall site’s owner and a town spokesman.

The Tucson Premium Outlets mall developer is starting work on grading and road-blading for its 46-acre site at Interstate 10 and Twin Peaks Road, said Marana town spokesman Rodney Campbell.

And the site landowner will work “side by side” on its grading for other, unannounced, projects on the rest of the 160-acre site called Marana Center, said David Scholl, a partner for the Phoenix-based landowner, Vintage Partners.

But the Simon Property Group, the national mall developer in charge of the project, isn’t talking publicly about construction. It declined repeated requests this week for information about its plans and on whether it has signed up tenants.

Marana’s Campbell said the work should be finished in 12 to 14 months, in time for the mall to open for the 2015 Christmas season.

He called the project a “real game changer for the community,” with the sales tax revenue being able to help with Marana road improvements, parks and police protection.

However, a veteran local commercial broker is skeptical of such a timetable until he sees evidence that the developer has signed up tenants.

Second mall looms

This is one of two planned outlet centers along I-10 on the far northwest side that have been competing to be first to start construction, on the grounds that the market isn’t big enough for two. Developers of the second mall, to be called Designer Outlets of Tucson, said they’re also ready to start construction.

But they won’t close on purchase of their site at I-10 and Avra Valley Road in unincorporated Pima County until the mall has signed tenants, said Larry Hutter, a real estate broker representing developer AWE Talisman LLC.

“I don’t think Simon (the I-10/Twin Peaks mall developer) has won the battle yet. Last time I heard, the tenants had not signed with either side,” Hutter said. “We’re pursuing some pretty unique tenants. If they sign, we believe the rest of them will follow.”

The AWE site is 49 acres total, although the company plans to dedicate some to Pima County as a wildlife corridor.

Tenants first

Because no tenants are announced for the Simon project, “I’d take it with a grain of salt,” Craig Finfrock, a broker for 28 years who owns Commercial Retail Advisers, said of the Marana development’s construction announcements.

“When they are able to make an announcement on tenants, then you know they’ve got something,” Finfrock said. “But unless they are able to give you names of tenants that are committed, meaning signed, they are still working on it.”

“Retail developers are not in the habit of building speculative projects,” Finfrock said. “Almost anytime it happens, the developer ends up losing the project to the bank.”

Vintage Partners’ Scholl, however, said that the fact that Simon is ready to start construction and to close on the land purchase shows it must be comfortable that it has tenants in hand.

“Simon seems very bullish to us,” and has told Vintage Partners it has both committed and signed tenants although it hasn’t shared names, Scholl said. They are likely not to disclose any until they hold a formal groundbreaking ceremony that hasn’t yet been scheduled, Scholl said.

In today’s commercial real estate marketplace, most lenders require that a certain percentage of spaces be preleased, usually 50 percent at the minimum, before approving a development loan, said Nancy McClure, a first vice president for the CBRE commercial firm.

“This developer, with this track record and the formula they work with, allows some latitude,” McClure said. “I would be shocked if someone of that caliber would build without commitments.”

NoT room for two

Finfrock and McClure agreed that it’s unlikely the market can support two outlet malls, particularly so close together.

“I think there will be someone who will come to the forefront and be the one that becomes the one and only premium outlet mall. A lot of what they are banking on is getting a lot of traffic coming up from Mexico,” McClure said. “There’s not enough room in our market for two and I don’t think you’d have enough retailers to justify our having two.”

While more than one outlet mall exists in the Phoenix area, its population is four times that of Pima County, McClure and Finfrock said.

“A friend of mine said, ‘Doesn’t it make a difference having all these people coming up from Mexico?’” Finfrock said. “Yeah, it adds to the equation. He has a valid point, but with a million people living here with an average income of $50,000 to $55,00 per household, that matters a hell of a lot more than half a million people living in Sonora with the average household income of I don’t know what it is but it can’t be very much.”

Simon, the country’s largest shopping center developer, has a distinct advantage but AWE has background in the business as well, Finfrock said. Besides the question of which developer has the best relationships, he said, “It’s also which site is the best site and which one will they get the best deal on.”

Contact reporter Tony Davis at tdavis@tucson.com or 806-7746. Follow Davis on Twitter: @tonydavis987.

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