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Phoenix Desert Sky Mall planning mercado

Max Jarman
10/10/2010

The Arizona Republic

The shuttered Mervyns store at Desert Sky Mall in west Phoenix offers a chance for Westcor to expand its efforts to connect with Latino businesses and consumers.

The developer and mall operator has been orienting the 900,000-square-foot regional center toward Hispanics for about five years, with moderate success, and is now redoubling its efforts.

Westcor has hired a well-known national operator of Hispanic retail centers to spearhead the effort in converting the old Mervyns into a Latin marketplace called Mercado de Los Cielos, which is set to open in early December.

The 77,000-square-foot mercado will contain 220 small spaces for tenants that range from beauty salons to carnicerias, or meat markets, and include flower shops, fast-food stalls, bakeries and many other retail businesses.

Westcor estimates that the population in the vicinity of the mall at 75th Avenue and Thomas Road is 70 percent Hispanic.

"It's a traditional marketplace," said Jose Legaspi, whose Montebello, Calif.-based firm, the Legaspi Co., has been retained by Westcor to develop a vision and marketing strategy for Desert Sky. "It's a retail concept the Hispanic community understands and is comfortable with."

Indeed Latin marketplaces, or mercados, at the Phoenix Marketplace on West Thomas Road near 67th Avenue and the Park N Swap on East Washington Street near 40th Street attract hundreds of retailers and thousands of customers each week.

Legaspi, whose firm develops and manages retail centers in Hispanic markets around the country, noted the mercado at Desert Sky will function as an anchor tenant, drawing customers to the center who, in theory, will patronize other mall tenants.

"It's the oldest shopping concept upgraded to mall quality," Legaspi said.

The mercado also will function as an incubator, grooming tenants that can be transitioned into traditional mall space.

Desert Sky manager Zeke Valenzuela said that there were a number of existing tenants at the mall who were found at area swap meets.

It's a concept that is working at Legaspi's La Gran Plaza in Fort Worth, Texas, and Plaza Fiesta in Atlanta. Both were struggling retail centers in areas whose demographics had become heavily Hispanic.

Legaspi added mercados to the centers and "virtual" anchors in the form of a steady stream of Latin-oriented festivals, entertainment and cultural events to boost occupancy at both centers to near 100 percent.

Occupancy at Desert Sky is about 80 percent, which includes a number of tenants on temporary, or short-term, leases.

Legaspi will bring his concept of a virtual anchor to Desert Sky with regular performances geared to make the center a magnet for Hispanic consumers from a broad trading area.

He also plans to make cosmetic changes to the 30-year-old mall to make it more appealing to Hispanic shoppers.

"Hispanic consumers shop as a family unit, and we will have features that appeal to children and the extended family," Legaspi said. They will include play areas for children and resting areas with comfortable furniture and big-screen televisions for families.

"There will be much more outreach to Hispanic consumers and retailers who want to sell to them," Legaspi said.

Arizona's Hispanic population represents a huge retail market. The Arizona Hispanic Chamber of Commerce estimated last year that the Hispanic purchasing power in Arizona stood at $31 billion, up from $24 billion in 2006 and could grow to $46 million by 2013.

Much of that is centered in metro Phoenix, where more than 1.1 million Hispanics live.

But it's a market characterized by specific customs, beliefs and buying patterns that prove challenging for some retailers.

Westcor rolled the plan out to other merchants at Desert Sky on Thursday and drew a generally positive response, according to Stephanie Goodin, the mall's marketing director.

"The knee-jerk reaction that it's just more stores to compete with," said Vijay Chowdhury, owner of Glass Cage Sports. "But if it brings more traffic, I'm in favor of it."

Elana Wight, campus administrator for the mall's International Academy College of Hair, acknowledged that salons in the Mercado de Los Cielos could compete with the services offered by her students. But she added that the increased foot traffic will make up for it and probably bring in additional students as well as more salon customers.

"The change will be great for us," she said.

Jim Benson, a spokesman for Dillard's, the mall's largest tenant, declined to comment on the changes until he knew more about them.

Desert Sky Mall opened in 1981 to serve the bustling West Valley. It was developed by Westcor and J.C. Penney Co.'s JCP Realty, which continue to share ownership of the center.

Initial anchors included Sears, J.C. Penney, Montgomery Ward and Diamond's (now Dillard's). Mervyns opened in 1993 as the demographics of west Phoenix were shifting from White middle class to lower-income Hispanic consumers. J.C. Penney closed in 2000 and Montgomery Ward in 2001.

Westcor has moved to reposition the center as a Hispanic-oriented marketplace. In 2007, it leased the former J.C. Penney space to La Curacao, a Latin-focused department store.

Westcor also attracted Latin theater operator Cinema Latino to take over a six-screen complex at the mall that was operated by Harkins Theatres.

"We've made good progress," Valenzuela said.

Westcor is a subsidiary of Macerich Co. and operates 19 malls and retail centers in Arizona than contain about 17 million square feet of space.

Several other Westcor malls in the Phoenix area have undergone similar demographic shifts - notably Metrocenter in north-central Phoenix and Fiesta Mall in Mesa. The company relinquished a management contract for Metrocenter last year and has been studying ways to reposition Fiesta Mall to respond to the changing demographics.

Reach the reporter at max .jarman@arizonarepublic.com.

Read more: http://www.azcentral.com/business/articles/2010/10/10/20101010biz-desertsky1010.html#ixzz1KGoOLogq

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