Costco set to anchor new Queen Creek development
Costco Wholesale Corp. has a store under construction in Queen Creek, with an expected opening this fall.
The 165,000-square-foot project, complete with a gas station, is being built on 13 acres at the northwest corner of Queen Creek and Ellsworth roads. Infrastructure work is underway in preparation of vertical construction, said David Larcher, president and CEO of Phoenix-based Vestar. Costco is the anchor tenant for Vestar’s 300,000-square-foot Queen Creek Crossing, which also is under construction. “We have two other large anchors we’ll be announcing in the next 30 days,” Larcher said.
Without naming those two new anchor tenants, Larcher said they will be a hobby store and furnishings store; both projected to open in early 2023. Closest Costco is eight miles away in Gilbert Carson Brown, manager of The Legacy Group that sold the 13 acres to Costco, is working with Vestar in a joint venture on Queen Creek Crossing.
“Vestar is a first-class developer and we’re excited to see this project be brought online,” Brown said.
The closest Costco is about eight miles away in Gilbert, Brown said. “We’re extremely excited for Costco to be in Queen Creek,” Brown said. “We think they will be a tremendous asset to the town and it makes it a lot more convenient for all of Queen Creek residents and San Tan Valley residents to do their shopping.”
With the State Route 24 extension being built in the area, Queen Creek is the center of all the action, Brown said.
“Queen Creek is the hottest market in the Valley in terms of retail and residential growth,” Brown said.
Sprouts will anchor another Vestar retail project Queen Creek Crossing is one of three retail centers Vestar is working on, with a total development cost of about $152 million for all three projects, Larcher said. Plans call for breaking ground in about three weeks on the first phase of the 240,000-square-foot Vineyard Town Center, also in Queen Creek, to be anchored by a Sprouts that will open next spring at the northwest corner of Gantzel and Combs roads.
Construction for the second phase will start in mid-2023 and open in the second quarter of 2024, he said.
Phase II will include a department store, though Larcher would not yet reveal that tenant.
These Queen Creek retail centers come at a time when homebuilders are scooping up huge parcels of land to build thousands of homes in the area and South Korea based LG Energy Solution Ltd. won 650 acres in a state land bid with plans to build a battery facility.
The town of Queen Creek also is seeking proposals from developers to build a mixed-use project in its downtown core on about seven acres next to its library and Communiversity.
Third Vestar project in the works in Peoria
In the West Valley, Vestar is working on The Shops at Lake Pleasant Road in Peoria, a 90,000-square-foot retail center to be built on about 13 acres at the northwest corner of Happy Valley Road and Lake Pleasant Parkway.
With several restaurants, that center also will include a medical center. In addition, Larcher told the Business Journal he’s working on several other new shopping centers in Phoenix and Buckeye.
These are the first projects Vestar has kicked off since it opened the 900,000-squarefoot Queen Creek Marketplace in 2008. That center, which is between the other two Queen Creek shopping centers it is developing, is anchored by a Target, Kohl’s, Harkins Theater, Trader Joe’s and TJ Maxx.
“The Vineyard project we’ve actually been working on that for 15 years,” Larcher said. “It’s been a long time coming.”
As metro Phoenix has grown over the past 10 years, major retailers are realizing that they haven’t built stores in the past 12 to 14 years and need to catch up to the growth, he said.
In 2020, 17% of all retail sales were online as the coronavirus pandemic kept shoppers out of stores, Larcher said. “However, since the reopening of the stores, that number has retreated back down to 13% of retail sales,” he said.
Valley is a key market for new retail development
Retail centers built today need to offer a value proposition to customers that include convenience with the least amount of friction for that shopping experience, he said.
“We make sure we have a strong connection the community we’re located in,” he said. “It’s a whole new world. But retailers have changed the way they sell to customers and engage the customers.”
Vestar’s 1.2 million-square-foot Desert Ridge in north Phoenix is nearly 100% leased, said Jeffrey Axtell, executive vice president and regional manager for Vestar.
Sales at Desert Ridge in 2021 were up 18% over 2019 sales, while traffic was up 14% during that same period, he said.
The company’s 1.1-million-square-foot Tempe Marketplace at the southeast corner of Loop 202 and McClintock Road is showing similar outcomes, he said.
“Phoenix is one of the only markets in the country where these major retailers have made a choice to do new ground-up development,” Larcher said. “It’s really not happening anywhere else except maybe a bit in Texas and Florida, but that’s it.”
He attributes that to the strong fundamentals of the Valley’s high-quality jobs that have been brought to the community in the past five years.