Title
Terminal 4 Lobby Retail Solicitation Request for Contract Award (Ordinance S-51761) - District 8
Description
Request to authorize the City Manager, or his designee, to execute a lease agreement with Paradies Lagardere @ PHX, LLC for the development, operation, and management of a retail concession in the Terminal 4 Lobby at Phoenix Sky Harbor International Airport for 10 years with no options to extend. Further request to authorize the City Treasurer to accept all funds related to this item.
Report
Summary
On May 1, 2024, the Phoenix City Council authorized the Aviation Department to issue a Revenue Contract Solicitation (RCS) for a retail concession in the Terminal 4 Lobby.
The goals of the RCS were to optimize sales and revenue over the term of the lease, provide quality and unique retail merchandise to passengers, emphasize local culture in the design of the facility, and select respondents with experience operating successful retail concessions in the U.S. and/or abroad.
Procurement Information
The Aviation Department issued this RCS on July 15, 2024, in accordance with Administrative Regulation 3.10. Two responses were received and were deemed responsive and responsible.
An evaluation panel evaluated the responses based on the following criteria established in the RCS:
Proposed Concept and Merchandise Plan (0-250 points)
Design and Quality of Tenant Improvements (0-225 points)
Management, Marketing, Operations, and Technology Plans (0-175 points)
Experience and Qualifications of the Respondent (0-150 points)
Proposed Business Plan (0-100 points)
Financial Return to the City (0-100 points)
The evaluation panel reached consensus scoring and ranking for each respondent based on the above criteria:
Respondents Points
Paradies Lagardere @ PHX, LLC. 940 points
Marshall Retail Group, LLC. 870 points
The evaluation panel recommended contract award to: Paradies Lagardere @ PHX, LLC.
Public Outreach
The solicitation process included all standard and required outreach efforts, including advertising in Aviation industry publications.
Contract Term
The term of the lease will be 10 years with no options to extend.
Financial Impact
The estimated annual revenue to the City will be the established Minimum Annual Guarantee (MAG) or percentage of gross sales, whichever is greater. MAG for the first year will be $250,000. The MAG will be adjusted annually thereafter at 85 percent of the prior year's annual rent or 100 percent of MAG for the first lease year, whichever is greater.
Concurrence/Previous Council Action
The Business and Development Subcommittee of the Phoenix Aviation Advisory Board recommended approval of this item on February 6, 2025, by a vote of 3-0 and the Phoenix Aviation Advisory Board recommended approval of this item on February 20, 2025, by a vote of 7-0.
Public Outreach
This solicitation process included all standard and required outreach efforts, including advertising in Aviation industry publications and conducted targeted outreach efforts to attract interest.
Location
Phoenix Sky Harbor International Airport - 2485 E. Buckeye Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.