By  on August 8, 2007

PHOENIX — Retail competition is heating up in the desert.

Development continues to boom in this city, the second fastest-growing in the U.S. among those with populations over 500,000. Stores from Barneys New York and Nordstrom to Juicy Couture, Louis Vuitton and Salvatore Ferragamo are looking to capitalize on the growth of the metropolitan area, as well as that of nearby cities Scottsdale, Gilbert, Chandler and Peoria, Ariz. There are currently about 15 regional malls and mixed-use properties with large retail components in the works around the area — many of them upscale.

"We're something of a retail mecca," boasted Rick Kidder, president and chief executive officer of the Scottsdale Chamber of Commerce. area — many of them upscale.

"We're something of a retail mecca," boasted Rick Kidder, president and chief executive officer of the Scottsdale Chamber of Commerce. "Success here is very real. Communities are always vying for sales tax cash cows, for retail that generates sales tax revenue. For some communities, that's Wal-Mart. For us, that's Barneys [New York] and Prada."

The sheer number of projects would be considered overambitious if applied to any other U.S. city, particularly in light of the fact that home sales nationwide have recently flatlined. And the region's growth is creating problems that historically accompany urban sprawl, including traffic congestion and increased crime. But despite questions whether the region can support all the stores flocking in, the mood remains bullish.

"If it weren't for our hot summers, we'd probably have 20 million people here," said Kidder.

Developers seem to agree and are rushing to establish a foothold in the region. Phoenix-based Westcor, which was acquired by Santa Monica, Calif.-based mall development company The Macerich Co. five years ago, is the area's dominant operator of shopping centers with 11 regional malls and 16 specialty and power centers in greater Phoenix.

Still, Westcor executives know they will have to work double-time to stay on top, as the population and wealth in the region continue to balloon, luring more outside developers. Westcor currently has five retail and mixed-use projects in development in the metro area, as well as four more in neighboring counties.

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