Is labor more readily available in Phoenix than in other markets around the country?
Actually, getting the labor there is a challenge and costs are high. There’s so much other construction going on. Computer chip manufacturers and electric car makers have put in more than $25 billion of investment. And, with the population growing, there’s all the residential construction. Over a million people have moved into the metro over the past 10 years. We hold our projects for the long term, and they have to be win-wins for both tenant and developer. Retailers have started understanding that they’re going to have to pay higher rents. If they’ve promised Wall Street they’re going to open 100 stores, Wall Street is looking for them to do it.
The outlook for physical retail was presented as dim during the first year of the pandemic. But today, strong retail brands are battling for prime space. What’s your current assessment of the COVID affect?
There’s two things. Vestar has always been in open-air centers and COVID validated that open-air centers are where people want to be. They want to be outdoors for interaction with other people and experiences and events.
Secondarily, the pandemic reinforced for retailers that online alone or physical alone doesn’t work. Success comes through a symbiotic relationship between one and the other. Retailers have told us that when they opened a store in one of our centers, the online sales around that store increased. When they closed stores, online sales decreased.
Tough to do valuable social events online also, yes?
Events are crucial. We have 20 people in our marketing department that put them together. Last year we held events that drew two million people. At The Gateway in Salt Lake City, we held a big event with Kanye West that drew 20,000. People come to hang out and spend their time and money. We worked hard with municipalities to create sip-and-stroll programs. We build partnerships around events and do coupon and redemption programs. We’re not creating a shopping center, we’re creating a social interaction place.