Alvey: As times change cities, shopping centers need to work more closely together

As more shopping goes online the dynamic continues to have profound impacts for Arizona cities and towns. That’s because the tax structure in this state means local sales tax revenue is the most critical source for funding community needs, parks, police and fire protection. Taylor Alvey So as shopping center and automobile sales become impacted, two huge drivers of sales tax revenue, local leaders may need to better think how to intersect with these and other businesses. This is an especially timely discussion around the holiday shopping season. We should know. Vestar is the largest Arizona-based shopping center owners. We have millions of square feet of outdoor, lifestyle centers in Arizona cities, with Desert Ridge Marketplace in Phoenix and Tempe Marketplace at the 101 and 202 freeways being the most well-known. We are proud to report that sales tax revenue at each of these centers is up 45 percent and 36 percent respectively over the past five years. Similar stories can be found at most of our other centers.

So how have we done it? How do people see success at these centers but drive by others and see the deleterious impact of the “Age of Amazon?” The lessons are important for cities as well as those in the private sector as they rethink and retool in order to keep critical tax revenue flowing.

After all, if too much activity goes online tax collection can get a lot more complicated if not shortcoming. Many years ago we saw the future that is now coming. And it is not as if we haven’t been impacted. We have. But we have also understood, and most visibly demonstrated at the vibrant properties that are Desert Ridge Marketplace and Tempe Marketplace, that entertainment and excitement must be a part of the mix to keep shoppers coming back and dollars flowing. That’s why we have dedicated marketing staff to bring to life some 300 events per year at each of these centers. From concerts to food festivals we do it all to aid our tenants, giving reason to experience the grounds. When a national “big box” has gone dark in one of our centers we have used it as an opportunity to re-purpose the space and increase sales productivity. In Tempe when two struggling big box retailers closed we backfilled the space with two best-in-class retailers. The move not only increased rental revenue but the sales from the new tenants are five to six times higher compared to the previous retailers. We have also gone much more local than we have in previous years. More attached to the community local tenants are both in line with the tastes of today’s customers and can often more innovatively market themselves to friends and customers in the area. We have worked closely with local artists and art organizations too. We all know what a typical mall or shopping center looks like. So we strive to give ours a different look via the talents of artists known, and unknown. We understand the importance of shade in Arizona and we make smart and ample use of it in our designs.

These and other steps have led many of our newer tenants to achieve best in market numbers. In turn, this has generated the sales tax revenue increases that aid the cities in which we are located.

To some extent we are all in this together as our success is your success. The police officer making a difference in your neighborhood can’t get paid if sales tax dollars are too sluggish. And that is why more local governments and vibrant properties will need to work collaboratively in order to alter regulations and approach as need be, in order to aid each other. Editor’s Note: Taylor Alvey is vice president of leasing for Vestar Development Co. in Phoenix.