Title
Request to Issue Terminal 4 Lobby Retail Revenue Contract Solicitation and Extend Current Retail Contract
Description
This item requests the Transportation, Infrastructure, and Planning Subcommittee to recommend City Council approval to issue a Revenue Contract Solicitation (RCS) for a single Terminal 4 Lobby Retail Space at Phoenix Sky Harbor International Airport, and to extend Lease No. 116300 with NewsWatch & Partners @ PHX, LLC f.k.a. NewsWatch, Inc./ a.k.a Delstar Companies, Inc. on a month-to-month basis until the new contract is awarded.
THIS ITEM IS FOR CONSENT ACTION.
Report
Summary
The goal of the RCS is 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 merchandise offerings, and select a respondent with experience operating successful retail concessions in the United States and/or abroad.
This 1,715 square foot pre-security location will provide essential merchandise as a convenience, news, and gift store including reading materials, sundries, pre-packaged snacks, bottled/canned beverages, high tech accessories, souvenirs, gifts, and other miscellaneous merchandise.
The new solicitation is scheduled to be issued on or about May 2024, with an estimated award in January 2025. The retail contract for this location is currently with NewsWatch & Partners @ PHX, LLC a.k.a. NewsWatch, Inc./ a.k.a Delstar Companies, Inc. (now owned by Paradies Lagardere) and will expire before the completion of the new solicitation and new lease execution. Extending the contract will ensure retail merchandise is available to airport passengers as well as continue to provide revenue to the Aviation Department.
Procurement Information
The Aviation Department intends to conduct an RCS to select a vendor for the contract.
Responsive and Responsible Respondents will be evaluated according to the following criteria:
- Proposed Concept and Merchandise Plan
- Design and Quality of Tenant Improvements
- Management, Marketing, Operations, and Technology Plans
- Experience and Qualifications of respondent and partners (if any)
- Proposed Business Plan
- Financial Return to the City
The highest ranked Respondent will be recommended for the concession lease award. The Aviation Department intends to issue this solicitation on or about May 2024, with an estimated contract award in January 2025. The City's Transparency Policy will be in effect with the release of the RCS and throughout the process.
Contract Term
The term will be 10 years with no renewal options.
The extension of the current lease with NewsWatch will be month-to-month and terminate upon the new lease execution through the solicitation process.
Financial Impact
Rent will be the Minimum Annual Guarantee (MAG) or percentage of annual gross sales, whichever is greater. After the first year, MAG will be established at 85 percent of the prior year's annual rent or 100 percent of the MAG for the first year, whichever is greater. Rent shall not be less than the first year's MAG.
Concurrence/Previous Council Action
The Business Development Subcommittee recommended this item for approval on March 7, 2024, by a vote of 3-0.
The Phoenix Aviation Advisory Board recommended the item for approval on March 21, 2024, by a vote of 9-0.
Public Outreach
This process will include all standard and required outreach efforts and conduct 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.