Colorado-Real-Estate-Journal_400263

Page 4 — Retail Properties Quarterly — May 2024 www.crej.com MARKET UPDATE F or those naysayers who believe retail is dead, the current Denver retail market would beg to differ. No lon- ger the cow town of years past, Denver has developed into an economically diverse, midsized city as demonstrated by the residen- tial and business growth over the last decade. Major companies now include Denver on their target list for potential headquarters, regional hubs, and distribution locations. Compared to the coastal markets, Denver is more affordable and offers a very desirable quality of life for employees, which has helped put Denver on the short list. Retailers expanding in California, Nevada, Arizona and Texas now look at the greater Denver market sooner rather than later. The more sophisticated retailers no longer pass it by, demonstrated by new entries such as Gucci, Joybird, Boffi, Buck Mason, Veronica Beard, Shin- esty, Parachute and Natuzzi Italia (opening this spring). Multiple retailers, entertainment brands, fitness operators and res- taurants are competing for quality space, which has led to high retail rents, but that has not yet proven to be a deterrent. Vacant boxes are suddenly in high demand. Tradi- tional retailers such as (Floor & Décor, Home Goods, Ross, Nord- strom Rack, Michaels), boutique grocery (Sprouts Farmers Mar- ket, Trader Joe’s, and independent markets such as Taza Mart), fit- ness (Vasa, Chuze, Crunch, and Planet Fitness) and enter- tainment/leisure concepts (Lucky Strike, Pickup USA, SkyZone, Epic Pick- leball) are all viable backfill options. “Eatertainment” continues to be one of the hotter retail trends in the U.S. retail market, and Denver is no exception. Topgolf, Chicken & Pickle, Flight Club, Holy Moly and Puttshack have all committed to the market. In addition, a few newly created concepts are looking at Colorado as a good test market. The common feedback when discussing the market with these concepts is that the demographic profile of the greater Denver area offers a good mix of what they are looking for. In addition to new to market retail concepts, Denver-based companies are also in growth mode and many have set their sights on markets outside of Colorado. Denver has long been the incubator for a vari- ety of restaurants like Smashburger, Modern Market, Qdoba, Chipotle, Noodles & Co. and Snooze. Larger concepts such as Camp Pickle, Pindustry, Lava Island and Slick City are good examples of newer Colorado-based retailers that have successfully executed on their local real estate strategy and are now interested in franchising their brand for multistate expansion or have plans to expand corporately beyond Colorado. Low vacancy and high demand are good for existing centers, but there is a concerning shortage of new development. CoStar estimates that only 6% of the current develop- ment pipeline is speculative and much of that is ground-floor retail in mixed-use projects in urban set- tings. In the more traditional subur- ban neighborhoods, developers are focused on anchored projects, most of which are still a couple of years out. There is demand for build-to- suit and multi-tenant space, but those projects are not penciling. As a result, developers are focused on traditional ground lease or pad sale deal structures, which limit oppor- tunities for concepts that are inter- ested in expanding, but do not have the ability to self-develop. With current interest rates and cap rates climbing, investor demand is cooling, which is a concerning trend. There is no question that Denver is experiencing retail suc- cess, but there are obvious head- winds that we will need to navigate. Time will tell the true impact these headwinds will have on the mar- ket in the long term, but as long as anchors like Costco, King Soopers and Dick’s continue to execute on their expansion plans, retail in Col- orado over the next couple of years will continue to hold strong. s tami.lord@srsre.com Denver retail market is on fire: Is it good or bad? Don't settle for an outdated or ine cient space. Let us help you transform your space into a dynamic environment that re ects your brand and impresses your customers. 303.744.6106 jordyconstruction.com R E A D Y T O R E M O D E L ? . . Tami Lord Senior vice president, SRS Real Estate Partners Low vacancy and high demand are good for existing centers, but there is a concerning shortage of new development.