Rancho Sahuarita seeks incentive to build

©Sahuarita Sun

The Sahuarita Town Center should be a great location to be in retail business, now and for the next 20 years, a Rancho Sahuarita consultant said in a report given to the town.

There is a significant shortage of retail space relative to the demands of consumers in the area now, and that shortage is expected to continue during the next 20 years, Eric S. Lander of Canyon Research Southwest in Tempe said in a 36-page analysis.

The report was prepared for Rancho Sahuarita and was received by the town on Sept. 8. It was submitted to support the developer’s request for a $38-million incentive from the town.

“The initial phase of development will commence in late 2011 or early 2012 with completion of Home Depot store and accompanied retail space. The medical, professional office and mixed-use buildings are the last project components to achieve build-out,” the report says.

Home Depot would anchor a power center west of Interstate 19 and would kick off a 20-year, 2.7-million-square-foot Town Center development that will feature three hotels totaling 390 rooms, medical and professional offices, movie theaters, apartments and mixed uses that might include townhouses or condos above stores.

The Town Center occupies 356 acres south of Sahuarita Road, running west from La Villita Road to La Canada Drive, and includes the existing Town Hall, Police Department and Municipal Court buildings.

It is zoned for mixed use, which means it can go commercial, residential or any combination of the two.

Competitive retail market conditions are favorable for feasible short-term development at the Sahuarita Town Center site,” the report says.

However, Rancho Sahuarita developer Bob Sharpe has told Town Council members the project hinges on his receiving the incentive.

Vice Mayor Phillip Conklin wrote in an e-mail message “Bob told me that he can not afford to do it without an incentive.”

Town Council member Scott Downs said he was told that Rancho Sahuarita makes a larger profit margin on residential development than on commercial, and the developer might build homes instead of stores without the incentive.

Rancho Sahuarita community liaison Tom Murphy said in an e-mail “we have no plans to develop the Town Center without an Economic Development Agreement with the town,” adding “individually, neither the Town, nor Rancho Sahuarita, nor future commercial users have the financial ability to fund all of the essential improvements required to make the Town Center vision a reality.”

The incentive request will be covered in more detail in next week’s Sahuarita Sun.

The Town Center development could be a bonanza for the town, generating billions in retail sales, which would mean $146 million in tax revenues for the town over 25 years, and $278 million over 40 years, the study says.

If the project goes through as envisioned in the Canyon report, just over half the total space, or 1.4 million square feet, will be devoted to retail.

The Town Center would include the following uses, in square feet: 133,500 for entertainment space; 789,500 in the power center; 327,300 in neighborhood retail; mixed use buildings totaling 167,400, including 38,921 of retail; light industrial 201,000; medical office 135,000; hotel and other lodging 145,800 and professional and office space 131,000.

However, the 1.4 million square feet of retail may not be enough to meet future consumer demands. As the report says, “By the year 2028, the trade area is estimated to garner retail sales sufficient to support 1.6 million square feet of retail space.”

By the end of 2008, there will be 156,000 square feet of retail in the Rancho Sahuarita Marketplace, anchored by Fry’s grocery store, but consumer demand would support 175,000 square feet, the report says.

Currently, local consumer demand for building materials and supplies is $69 million, but actual retail sales locally are only $22 million, leaving a $47 million “opportunity gap” in the market, the report says.

The gap for convenience stores with gas stations is another $46 million; grocery stores, $29 million; full service restaurants, $28 million, and so on, including another $63 million in lost sales for clothing and accessories. limited-service restaurants, pharmacies, electronics, appliances and auto parts.

What happens is that shoppers go elsewhere, including various Green Valley and Sahuarita shopping centers and the 1-million-square-foot power center at Irvington Road and Interstate 19 in Tucson.

Earlier this year, the local market was so tight that there was a 93.6 percent commercial occupancy rate, with the only major vacancies to be found in the Green Valley Village (formerly mall), where about 49,000 square feet out of a total of 168,000 square feet were empty.

Existing retail development within a seven-mile radius is limited to five shopping centers totaling some 750,000 square feet, all to the south, while the million square foot Tucson Spectrum at Irvington Road is the closest major competitor, but it is 14 miles away.