KANW-FM

A Sigh Of Relief For A Rebounding Shopping Center

Oct 21, 2011
Originally published on October 25, 2011 4:50 am

Last fall at troubled strip mall in Phoenix, a few brave business owners opened in a virtually empty complex called Bethany East during a decidedly bad economy. In March of this year, the center fell into foreclosure and new buyers stepped in. It's been a turbulent year on this corner, but things are finally looking up for the tenants.

The upswing is apparent at Zipps Sports Grill, which was an empty shell in the shopping complex during last year's World Series — just another unused space on Phoenix's distressed real estate market. But this year a sizeable crowd takes in October baseball at the new restaurant.

Operations Manager Jeremey Higgins says Zipps poured its first beer in the spring. It brought this corner a jolt of life it hadn't seen in years.

"If you came for the playoff game for the [Diamondbacks] on ... Friday night, the whole entire parking lot, including places you shouldn't be parking, was completely full," Higgins says.

The turnaround at Bethany East has been fast. In August a gym moved in, followed by a nursery and a gymnastics center. There's also a new barber and a yogurt shop, and another restaurant is on the way.

In the rougher times, there were days when Claudine Dimitriou, owner of a spa in the complex, feared she wouldn't make it.

"You have to be honest as a business owner; you never really know how it's going to work out, even with all of this," she says.

Dimitriou opened her day spa last December when the pocket-sized storefront was practically alone in this complex with room for about 18 tenants. As the building languished in foreclosure and eventually changed hands, Dimitriou was left wondering if she made the right decision.

And who wouldn't worry? Dimitriou invested her entire life savings of $80,000 into the business. Today, the complex is almost full. All that extra foot traffic might help her turn a profit by Christmas. With so much on the line, she had to survive.

Dan Mercer, who works for the commercial real estate firm Grubb & Ellis, tips his hat to the small shops that stayed afloat without a large anchor tenant to draw customers.

"It's close to impossible," he says.

Shopping centers like this usually need that anchor, he says, and without it they suffered during the downturn. Each quarter since 2007, vacancy rates have inched up to nearly 17 percent among shopping centers in the Phoenix retail market, but there's a reason why little shops may have held on — and it has something to do with location, of course.

"Rooftops drive retail but you've got to have people in those rooftops," Mercer explains.

In other words, if the Bethany East shopping center were farther out in the suburbs, it would not be doing as well. The center is actually just a few miles from downtown, and these denser urban areas are more attractive to big tenants.

But to sign the 21,000-square-foot gym or the million-dollar sports bar, the landlord still had to offer months of free rent and money for renovations. Mercer says those incentives are critical.

But the little guys, like Richard Hancharik won't get as much help. He opened a yogurt shop about a month ago and like others here he used a huge portion of his personal wealth to get it running.

"To do it right, you're looking at about $200,000," he says.

The landlord offered some money to remodel but it was a fraction of Hancharik's investment.

"This is all on the owner, and I think that's why I respect, and I get respect from the other ... small business owners, because they have to do the exact same thing," Hancharik says.

In fact, you'll find coupons for his yogurt at the gymnastics center and gym members get a discount at the day spa. In this economy, these entrepreneurs know they'll need allies and more optimism to survive another year.

Copyright 2017 KJZZ. To see more, visit KJZZ.

RENEE MONTAGNE, HOST:

In Phoenix, Arizona, a dying strip mall is coming back to life. The Bethany East Center was virtually empty. But a few brave business owners took a risk and moved into the mall. It hasn't been easy. In March of this year, the mall fell into foreclosure, and new buyers stepped in. Now the outlook is improving, as Peter O'Dowd of member station KJZZ reports.

(SOUNDBITE OF CROWD CHATTER)

PETER O'DOWD, BYLINE: During last year's World Series, this sports bar was an empty shell, another unused space on Phoenix's distressed real estate market. This year, a sizeable crowd takes in October baseball.

UNIDENTIFIED MAN: Count in Beltre's favor. He'll look for something to drive here on this cold night.

O'DOWD: Operations Manager Jeremey Higgins says Zipps Sports Grill poured its first beer in the spring. It brought this corner a jolt of life it hadn't seen in years.

JEREMEY HIGGINS: If you came for the playoffs game with the D-Backs on that Friday night, the whole entire parking lot, including places you shouldn't be parking, was completely full.

O'DOWD: The turnaround at Bethany East has been fast. In August, a gym moved in, followed by a nursery and a gymnastics center. There's a new barber, a yogurt shop. And another restaurant is on the way.

CLAUDINE DIMITRIOU: Thank God.

(SOUNDBITE OF LAUGHTER)

DIMITRIOU: I was so relieved. I was like, oh, my God. OK, we're going to make it.

O'DOWD: There were days when Claudine Dimitriou feared she wouldn't make it.

DIMITRIOU: You have to be honest as a business owner. You never really know how it's going to work out, even with all of this.

O'DOWD: She opened her day spa last December, when the pocket-sized storefront was practically alone in this complex with room for about 18 tenants. As the building languished in foreclosure and eventually changed hands, Dimitriou was left wondering.

DIMITRIOU: Did I make the right decision?

O'DOWD: And who wouldn't worry? Dimitriou invested her entire life savings, $80,000, into the business. Today, the complex is almost full. All that extra foot traffic might help her turn a profit by Christmas. With so much on the line, she had to survive.

DAN MERCER: It's close to impossible.

O'DOWD: Dan Mercer works for the commercial real estate firm Grubb & Ellis. He tips his hat to the small shops that stayed afloat without a large anchor tenant to draw customers. He says shopping centers like this usually need that anchor, and without it, they suffer during the downturn. Each quarter since 2007, vacancy rates have inched up to nearly 17 percent. But there's a reason why little shops may have held on. And, of course, it has something to do with location.

MERCER: Rooftops drive retail. But you have to have people in those rooftops.

O'DOWD: So in other words, a similar shopping center out in the burbs is not going to be doing as well.

MERCER: That is correct.

O'DOWD: Dimitriou opened her day spa just a few miles from downtown. Denser urban areas are more attractive to big tenants. But to sign the 21,000-square-foot gym or the million-dollar sports bar, the landlord still had to offer months of free rent and money for renovations. Mercer needs one word to describe how important those incentives are to revitalize a defunct shopping center.

MERCER: Critical.

RICHARD HANCHARIK: Raspberries, blackberries, strawberries. You name it, we got it. Chocolate chips, almonds.

O'DOWD: But the little guys, like Richard Hancharik, won't get as much help. Hancharik opened this yogurt shop about a month ago. Like others here, he used a huge portion of his personal wealth to get it running.

HANCHARIK: To do it right, you're looking at about $200,000.

O'DOWD: The landlord offered some money to remodel, but it was a fraction of Hancharik's investment.

HANCHARIK: This is all on the owner, and I think that's why I respect - and I get respect from the other store owners, the small business owners, because they have to do the exact same thing.

O'DOWD: In fact, you'll find coupons for his yogurt at the gymnastics center. Gym members get a discount at the day spa. In this economy, these entrepreneurs know they'll need allies - and more optimism - to survive another year. For NPR News, I'm Peter O'Dowd, in Phoenix. Transcript provided by NPR, Copyright NPR.