The coronavirus pandemic and the ensuing fallout has created all sorts of woes among businesses across Chandler—from supply issues and difficulty hiring to restrictions and closures. But despite all of that, the city of Chandler is seeing the lowest retail vacancy across the city since 2007.

“Our five-year average was 7.5% vacancy; now we are at [approximately] 5.5%,” said Micah Miranda, economic development director for the city of Chandler. “We are in a very good position. And it’s something we are going to keep focusing on as we are looking to drive new retail construction and repositioning of existing retail space.”

As of the latest year-to-date data from the city of Chandler, the citywide retail vacancy was at 5.6%, down from 8.5% in 2020. The highest vacancy in the city was reported in 2010 and 2012, with 11.4% vacancy.

Miranda said many factors have contributed to the decrease in vacancy, including making sure the city has worked with landlords and tenants over the difficulties of the last few years and using space from old big-box stores that have closed in new ways.

The city is also examining its over-saturation of retail space, Miranda said. When the population in Chandler boomed in the late 90s and early 2000s, the city took a “four corners” approach to retail—placing retail anchored by grocery stores and other big-box entities on all four corners of intersections.

“We’ve been looking to reduce the amount of overall retail product and have understood we are over-retailed on a per capita basis,” Miranda said. “We are being diligent in the limited amount of retail needed. Developers understand that and we are working with property owners to reposition some of these empty big-box spaces for residential or medical offices, where we are undersupplied.”

Helping retailers through pandemic

Michael Pollack, president and founder of Pollack Investments, said he has been working with tenants in his shopping centers to ensure their needs were being met throughout the pandemic.

“It was very difficult throughout the pandemic,” Pollack said. “The fact that we are seeing occupancies quite this high is a direct result of a lot of hard work from a lot of people, and a lot of cooperation in making sure that the businesses get what we can give them to succeed.”

Pollack owns about a million square feet of retail in what he describes as “neighborhood centers” in Chandler alone. His name can be seen on retail centers along Alma School Road. He said his properties across neighboring cities Tempe and Mesa are doing well, but that there has been a lot of cooperation among businesses, landlords and the city to ensure the success of retailers.

“The city is helping [get] permits quicker [and get] answers quicker,” Pollack said. “Mayor and City Council, they are both attuned to small businesses and how important they are to our community. Without taking that into consideration, we could have a lot of problems with occupancy. We were able to guide people through [the pandemic] and get answers when we needed them.”

Retail construction boomed around the turn of the century, and over the past several years only a few new retail projects have been added in Chandler. 2021 brought two new projects.

One thing Pollack noted that helped the retailers in his Chandler centers was the addition of lighting in the parking lots during the pandemic.

“A lot of the time after the sun went down, the centers and businesses would look dark, and it wouldn’t look like they are very alive,” Pollack said. “The city added bright lighting and were great at encouraging us to use additional landscape light to give it that alive feeling, and that has probably helped to reduce the vacancy rate substantially. Now they have businesses that are not only open during the day and at night, but people driving or walking by know that they are open at night.”

Maintaining low retail vacancy

Pollack said overall his company saw about 1% of its tenants leave during the pandemic. A feat, he said, that would not have been possible had it not been for their consistent rent prices. According to data from the city of Chandler and CoStar, average rent in 2022 is around $17 per square foot.

“A lot of these shopping center [tenants] have been with us for years,” Pollack said. “We keep our rents extremely affordable. We keep our prices at a level that nobody wants to leave us, and nobody wants to compete with our pricing. We lost 10 or 15 tenants out of a thousand.”

Pollack noted service-oriented tenants have seen a lot of success. Miranda said the city is also eyeing destination retail opportunities to fill some of the spaces that have been left vacant over the years. Scheels, he said, is a good example—the sports retailer is set to open at Chandler Fashion Center in fall 2023 and is taking over a vacancy left by a department store.

“That destination retail is an amenity for the city,” Miranda said. “Scheels will serve all of Arizona. That’s an iconic retailer. We also have the Crayola Experience at the mall, another destination. Then Cooper’s Hawk Winery opened just outside the mall. We continue to lean into that trend and promoting shopping local.”

Terri Kimble, president and CEO of the Chandler Chamber of Commerce, said one of the reasons the city is seeing lower retail vacancy is due to city officials rethinking retail centers that have lost their anchor.

“We don’t necessarily need retail on every corner,” Kimble said. “It’s looking at what is the best use for that space. Also, it’s worth noting that our buying habits have changed and I think retailers have embraced that and gotten creative.”