Two property developers have their sights set on building competing 100-store outlet centers on Tucson’s northwest side, just a few short freeway miles from each other.
And both are jockeying to get built first — with one of the developers saying flat out that the market can’t support both.
Indiana-based Simon Property Group plans to develop and open a 360,000-square-foot, single-level center called Tucson Premium Outlets at Interstate 10 and Twin Peaks Road in Marana.
About two miles north, Florida-based AWE Talisman wants to build an outlet center — also with more than 100 stores — at the southwest corner of I-10 and Avra Valley Road.
Neither company is saying what retailers they’ll feature, but both have stores such as Nike Factory Stores, Coach, Old Navy Outlets and more in common at their other U.S. locations.
Some economic development officials are optimistic both could succeed despite being so close together, but others think the arrangement won’t work.
The CEO of AWE Talisman, James Schlesinger, is upfront that he doesn’t want the competition. It’s a race to see who gets built first, he suggests.
“One of us will be the successful site,” Schlesinger said.
The Twin Peaks edge
Zoning permits have been approved for the Twin Peaks site, and Marana town staffers have been meeting regularly with Simon Property Group to work on development and construction issues, said Gilbert Davidson, Marana town manager.
However, Simon Property Group has not closed on the land, which is owned by Vintage Partners, said Ryan Mahoney, planning director for the town.
“We are awaiting submittals for block platting, engineering and traffic study,” he said. “Once platted, they will move forward with site-specific issues like development and improvement plans.”
Town officials welcome the project. “We’re seeing really positive growth in Marana and now we’re seeing these retail projects come along,” said Rodney Campbell, Marana town spokesman. “When you talk about 100 retailers going in, that’s going to create a lot of opportunities. And it’s good for sales tax dollars for the town.”
The new outlet center is seen as just the beginning, with the possibility of other businesses such as an auto mall, hotels and restaurants popping up nearby as well.
“In a lot of ways, the outlet mall is the beginning of a real significant project here,” Campbell said. “The impetus to get things started here ... that’s why we put the Twin Peaks Interchange there, with an eye toward the future.”
That location is a “very important critical crossroads” that connects to Tangerine over to Oro Valley, Davidson said. “It has direct connectivity that allows a broad range to go to that site. Avra Valley isn’t in that sort of ideal location.”
“Simon Property Group literally have indicated people will travel up from Mexico through the corridor to shop at the stores,” Davidson added.
Construction is projected to begin early this summer, and the center is expected to open in summer of 2015.
The Avra Valley site
Meantime, AWE Talisman expects to break ground on its project in late spring or early summer, Schlesinger said.
The Pima County Board of Supervisors approved a development agreement with the company in December, allowing the project to finally clear a hurdle it had faced for three years, Schlesinger said.
The agreement calls for setting aside an estimated $89 million for a wildlife corridor between the Tortolita and Tucson mountains.
Other public improvements — 30 acres of wildlife habitat; two miles of river park from Avra Valley Road to Twin Peaks Road; and road, water and wastewater improvements — are expected to cost AWE Talisman about $33 million.
AWE Talisman has received its development concept permit and is close to getting a site construction permit for the Avra Valley site, said Arlan Colton, planning director for Pima County.
The county will still need to approve a building permit, which could happen in the spring, Colton said.
The developer also still has to purchase the property from its current owner, I-10 Avra Valley Mining and Development. AWE Talisman expects to complete the land purchase in May, Schlesinger said.
A “Big head start”
Having two outlet centers so close doesn’t concern officials such as Ed Stolmaker, president and CEO of the Marana Chamber of Commerce.
“The people that are doing the malls are doing their homework,” Stolmaker said. “To invest in the Avra Valley location and the Twin Peaks location, they have to have the numbers to make it work for investors to make it happen. ... And I’d assume they’re both aware of each other.”
The success of both centers depends a lot on how different they are, Marana spokesman Campbell said. “Obviously, it would be hard to accommodate both malls with the same stores. I would guess if they’re different enough, they could both succeed.”
Campbell believes Tucson Premium Outlets in Marana will open first, since ground should be broken by June or July. He also said some of the infrastructure is already in place from a previous project that was planned there until the recession scuttled it. “They have a really big head start,” he said.
Schlesinger, by contrast, says his company’s project will not only open first, but will be the only outlet center in the area because he’s skeptical of the Marana project’s timeline. He said he thinks the other project will take longer than expected. He also disagrees with the idea that two neighboring outlet centers with similar stores can succeed. The two would have to compete for shoppers as well as retailers.
“There’s not enough population to warrant two centers. There’s a major overlap in stores,” Schlesinger said. “And tenants do not like that.”
“We’re very confident our center will be the one they want to be involved with,” he said.