Phoenix retail landlords have begun to eschew national chain brands in favor of local mom-and-pop retailers. There has been a retail evolution this cycle as the popularity of ecommerce has created demand for unique brick-and-mortar concepts. It is a trend that has become commonplace in major markets, but the need for boutique retail concepts in secondary markets like Phoenix shows the ubiquity of experiential retail. Landlords are starting to see local retailers as a way to drive traffic and sales growth.

“Over the course of the last 15 years there has been a homogenization of retail chain stores expanding from coast to coast, and as a result a majority of the shopping centers tended to look the same across America,” Jenny Cushing, VP of leasing at Vestar, tells GlobeSt.com. Millennials, who are now driving retail sales and who grew up with that offering, have developed an appetite for something more varied and unique.  Local tenants offer a flavor and specialization that chain stores cannot replicate and it's the individual expression these operators provide that are driving traffic to our centers.  This is validated by the fact that we are seeing higher sales volumes from local restaurateurs than the chains.

Generally, the benefit of larger chains is better credit and stability; however, today that is changing. Still, there it is important to properly vet smaller retailers. “In today's retail environment and with the ever-changing economic turbulence these chains are facing, it's a delicate balance,” adds Cushing. “We carefully underwrite each tenant looking at their business acumen, financial wherewithal and creditworthiness. This process is the same for a 2,500-square-foot tenant as it is for a 25,000-square-foot tenant.  Assumptions are no longer made on the viability of their success and one cannot rely simply on the reputation of a retailer, big or small.  It continues to be one of the many challenges a landlord faces today.”