Retail remains lucrative even in this market INSIDE Retail investment opportunities are being driven by strong fundamentals and capital Market update The Popup Denver program sets out to meet the demands of a changing retail climate 16th Street Mall PAGE 14 Three topics dominate conversations about grocery-anchored investment activity Grocery activity PAGE 6 August 2022 PAGE 4 R etail real estate has been proven to be a secure investment opportunity during unpredictable eco- nomic cycles. However, dur- ing the COVID-19 pandemic, many retailers were forced to shut down stores because of strict pandemic regulations, resulting in a signifi- cant decline in customers. Because of this, investors now feel uncertain about investing in retail real estate. However, there has been significant improvement in the overall retail market following the resumption of in-person activities for business and leisure. During the final weeks of 2021, the omicron variant was rapidly spreading. But despite the threat of the omicron variant, our research found that retail prop- erties remained stable and con- tinued to recover. Pent-up customer demand for unique shopping experi- ences and a robust economy fueled the retail sector’s growth during the fourth quarter of 2021. As a result, vacancy rates are currently at their lowest in years, and rents are rising at an unprec- edented rate. Furthermore, asking rents for shopping centers across the country grew while vacancies plummeted to near pre-pandemic levels and net absorption reached the previous quarter’s high-water mark. We anticipate that investors will seek retail real estate to protect themselves from potential future economic disruptions. The retail industry is rebounding quite well from the major disruptions caused by the pandemic. Vacancy rates have steadily decreased because of strong demand and a lack of new supply. The national retail center vacancy rate fell to 6.1% in the second quar- ter, a decrease of 20 basis points quarter over quarter and 100 basis points over the last year. This was the lowest rate reported since 2007. Meanwhile, in Denver, the retail real estate market has been per- forming well post-pandemic. Den- ver had a record-breaking quarter for retail property sales in the first quarter. The cumulative value of transactions involving properties valued at $3 million or more was $461.8 million, more than four times the amount recorded in first- quarter 2021. Retail real estate also performed strongly in the second quarter, rein- forcing our upbeat outlook for the rest of the year, despite economic challenges such as decades-high inflation, rising interest rates and Please see Outlook, Page 18 Laura Krashakova CEO, Smart Capital Center More investors are becoming increasingly interested in the retail real estate market due to its low entry barrier, high yields and strong returns, diverse tenant base, and long- term leases and rent incentives, which make it a solid investment to fight against the headwinds of the current economy.