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The Surprise Towne Center at Bell Road and Grand Avenue feels like it has had better days when driving into it.
A quick glance around the shopping center would show patrons that Starbucks pulled out of the intersection. Lane Bryant also closed up shop. Century 21 said sayonara. Soon Stein Mart and Pier 1 Imports —both of which filed for Chapter 11 bankruptcy protection earlier this year — will join them in leaving vacant buildings.
But Rick Hearn, vice president of leasing at Vestar, managers of the 1 million-square-foot complex, said good days are still ahead despite a global pandemic and a major paradigm shift on how retail businesses operate.
“Retail is gonna probably need 18 to 24 months to recover from this,” Mr. Hearn said. “It’s just not gonna happen quickly.”
He remains optimistic about what’s going on at Surprise’s busiest shopping center as well as the second busiest in Arizona based on geofencing data that tracks cell phones.
Residents could be in line for a slew of new businesses to replace ones heading for the exits.
In addition to ATL Wings, which opened in June, the shopping center is expecting Bath and Body Works to take the place of Lane Bryant, just east of Target.
And Mr. Hearn has a laundry list of possible tenants for the other vacant or soon-to-be empty buildings.
They include discount retailers, such as Five Below or Dollar Tree, another apparel shoe store, a furniture retailer, a sporting goods store or even a wine dealer.
Mr. Hearn threw out possibilities such as Total Wine, PGA Superstore, REI, Nordstrom Rack, Old Navy, Burlington, Marshals, T.J. Maxx and DSW.
“Any one of those could be perspective tenants for this intersection,” Mr. Hearn said. “We try to make sure that we are doing it methodically. We’re trying to make sure we’re doing it thoughtfully.”
That’s Mr. Hearn’s job for Vestar, which also controls the Scottsdale Pavilion, Desert Ridge Marketplace in north Phoenix, Tempe Marketplace and a total of 77 shopping centers in nine Western states.
“This type of project is in our wheelhouse,” Mr. Hearn said about Surprise Towne Center. “To this day, it remains one of the most active retail intersections in the state of Arizona.”
Renewing leases
Ten current tenants recently extended leases as they battle the pandemic and a shift in consumer habits to more online business.
Jeff Love, general manager at Streets of New York, one of the businesses that re-upped, said they had lost business from COVID conditions but have adjusted.
The restaurant at 13736 W. Bell Road has offered buy-one-get-one pizzas on Mondays and Tuesdays and BOGO pasta on Fridays. Mr. Love said that helped to save the business.
“We’re constantly changing it up,” Mr. Love said.
Things began to really pick up at the restaurant on Aug. 28.
“It was the best Friday we’ve had since COVID started,” Mr. Love said. “People are just getting out more. I think people have just been cooped up all these months. They want to dine out. They want to interact. They want to be out, not looking at the same four walls.”
Mr. Love said he had to kick out a customer recently who made a big deal about wearing a mask, the new law of the land when entering restaurants.
“If I didn’t close the door on his face, I’d probably still be arguing with him,” Mr. Love said.
Other businesses in the shopping center to extend their leases include Michael’s, Best Reflexology, Minh T. Nails, Ross, Sprint and West Coast Dental.
They’re not the only ones staying. Across the street at Surprise Marketplace, Bed Bath & Beyond, Barnes & Noble, Best Buy all have resigned leases. Vestar also owns that center.
“Why would tenants in arguably the worst retail period of all time like to stay?” Mr. Hearn asked rhetorically.
“This is too dynamic of an intersection,” adding the shopping center’s location, making it able to survive the loss of big-boxes such as Stein Mart.
“If you choose Ross or if you choose Barnes & Noble or Target or Lowe’s or Home Depot, these are some of the strongest performers in their portfolios,” Mr. Hearn said.
Many of those big-box stores never closed.
“There are some national tenants that do very well in these circumstances, all the essential businesses,” Mr. Hearn said. “So, the Walmarts, the Targets, the Home Depots are saying ‘We’re not negatively impacted by this.’ As a matter of fact, you could argue their sales were bolstered by it.”
Why they stay
Not everyone is seeing a big business boost, however.
Smallcakes, 13706 W. Bell Road, is navigating a rough time made tougher by the loss of two of its anchors. Both Century 21 and Starbucks pulled out in the spring, leaving a void on either side of them.
“We’re hanging in there,” co-owner Beto Garcia said. “It’s definitely affected us, especially with Starbucks gone. We had so much traffic because it compliments coffee, what we provided.”
Smallcakes was hurt by the loss of the real estate office as well because Mr. Garcia said his bakery regularly produced welcome packages for its clients. But that stopped when the real estate office shuttered in late February.
Mr. Garcia said he’s heard rumors that Lens Crafters, which is right around the corner, is also considering another location in Surprise.
“That leaves two small businesses on that corner,” Mr. Garcia said. “Pizza Hut is a big franchise. They’ll find a new location and survive. They can be in a warehouse, and it doesn’t matter.”
Hot Bagels and Deli, which is next door to where Starbucks was, is also having a rough go at it, Mr. Hearn said.
“They’re hurting a lot, especially when the Starbuck’s closed,” Mr. Hearn said. “But then again, you got to look at their product line, and you got to look at their accessibility, how they market their business. I mean, there’s a lot of things that go into it.”
Owners from Hot Bagels and Deli weren’t immediately available to comment for this story.
“It didn’t help that you’ve got a vacant Starbucks on one side,” Mr. Hearn said. “And then, sadly, even in this market, the Century 21 closing, it’s kind of operating on an island by themselves.”
Needing help
Mr. Garcia said he fought to keep his restaurant open in the early days of the COVID shutdowns this spring.
He said the city didn’t consider cupcakes “essential.”
“I had to beg and plead just to provide curbside service as long as I didn’t allow anybody in my building,” Mr. Garcia said.
He said if the city disallowed curbside service, he would have shut down the business completely.
Instead, he was open to serve the Dysart Unified School District, which at the end of last school year put in an order for 2,100 cupcakes.
“That was definitely a big blessing,” Mr. Garcia said.
It took staff three days to make that many cupcakes. The Garcias rented a minivan, insulated the windows, put dry ice in the back and turned on the AC full blast to deliver them to the school district when they were done.
But because people aren’t hosting big events these days, Smallcakes is losing a big chunk of its custom cake business. Those cakes can cost about $150.
“That’s our money maker,” Mr. Garcia said.
Mr. Hearn said they’ve had to be “very good business partners” with some of the tenants during this time.
“There are a lot of similarities to 9/11, and a lot of similarities to 2008 and the crash, and you’re just doing what you can to survive,” Mr Hearn said.
Mr. Hearn said Vestar has tried to help with rent deferrals in some cases and abatement packages.
“They can’t pay when they’re closed,” Mr. Hearn said.
The company has been flexible with restaurants switching to curbside pickup during the times in-dining crowds were banned.
“Whatever creativity we could do to help,” Mr. Hearn said. “I don’t care who you are. You lose six months, half a year, and arguably the rest of this year is probably going to be very slow.”
Although Mr. Hearn said some businesses received rent deferrals, Smallcakes wasn’t one of them.
“The leasing company wasn’t giving us a break at all,” Mr. Garcia said. “We’ve been trying to negotiate our lease for at least a year now.”
He said he pays $4,800 a month for his space, which he considers high for the Valley. He said a comparable spot of his size in Old Town Scottsdale would be about $1,000 less, despite its better location there.
It leaves him wondering why prices are so high here.
“I haven’t been able to get a straight answer,” Mr. Garcia said. “I’ve talked to mayor, I talked to our city councilman and all they can tell me is Surprise is growing and that’s why.”
Future games
The paradigm shift in consumer shopping was already happening before COVID-19, Mr. Hearn said.
“Then the pandemic just nuclearized it,” he said.
With consumers now used to curbside and drive-thru service, Vestar is open to creating new “out parcels” in the parking lot for other interested retailers, such as coffee houses like Dutch Bros.
“I know there’s interest from other retailers who want to be here,” Mr. Hearn said. “This is one of the strongest flags in the western part of the city.”
Vestar may be able to create more retail in the parking lot because less parking spaces are needed with ride-sharing taking more people to shopping centers these days.
The company is also going to use creativity to fill the vacant spaces.
“Pier 1, Stein Mart, Famous Footwear, Payless Shoesource these particularly retailers were already in some sort of decline,” Mr. Hearn said. “I think you’ve got to be very honest about Office Max and Staples. Is there room for two of them? I don’t know that answer.”
Office Max has a location in the shopping center two doors to the northwest from Stein Mart.
Mr. Hearn said there also are longterm questions about the viability of Bed Bath & Beyond and Barnes & Noble.
On the other hand, some companies are doing extremely well in the shopping center. Mr. Hearn said Ross, Best Buy and Ulta are “unbelievably strong.”
ATL Wings opened in June between Allstate and Tom Yum Thai at the northeast corner of the Towne Center side of the shopping center. The Valley-based wing company makes 20 homemade sauces.
The 5,000-square-foot Bath & Body Works — not to be confused with the Bed Bath & Beyond next door — will be open in time for the holiday shopping season.
To learn more about the shopping center and get regular updates, visit surprisetcmp.com.
Former NAU Lumberjack who loves going to concerts (or I did), watching sports (or I did) and hanging out with friends (oh, never mind). I also enjoy backgammon, surfing and men who are not afraid to cry.
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