Colorado-Real-Estate-Journal_461156

Page 12 — Retail Properties Quarterly — May 2025 www.crej.com I n an investment landscape marked by uncertainty and shifting economic indicators, a resilient bright spot has emerged for real estate inves- tors: single-tenant net-lease prop- erties in Colorado and the broader Rocky Mountain West. As we navi- gate through mid-2025, a unique confluence of market conditions has created what might be the most favorable buying opportunity for STNL investments in recent years. The combination of expand- ed cap rates, moderated competi- tion and the region’s economic resilience makes now an ideal time to act. n The shifting investment land- scape. While much of the com- mercial real estate sector continues to grapple with volatility, retail properties – especially those with essential service-oriented tenants – have demonstrated remarkable sta- bility. National retail vacancy rates remain impressively low at 4.1%, defying expectations in a market that has seen its share of retail bankruptcies and closures. What makes today’s market par- ticularly compelling for investors is the cap rate expansion we’re wit- nessing. After years of compressed cap rates that challenged yield- seeking investors, the pendulum has begun to swing in the buyer’s favor. This adjustment hasn’t been driven by weakness in the under- lying assets but rather by broader market recalibrations and interest rate movements. “The current spread between average STNL cap rates and the 10-year Treasury offers investors a risk premium that hasn’t been available for sev- eral years,” noted industry analyst Sarah Johnson. “This isn’t just a marginal improve- ment – it’s a mate- rial shift in invest- ment dynamics.” n Rocky Mountain resilience. The economic fundamentals of the Rocky Mountain West provide an especially attractive backdrop for STNL investments. Despite nation- al economic uncertainties stem- ming from trade policy shifts and interest rate fluctuations, regional businesses have maintained nota- bly positive outlooks. The Federal Reserve Bank of Kansas City’s regional economic reports indicate that while busi- ness capital plans have moderated somewhat, they remain fundamen- tally optimistic – a telling indicator of the region’s underlying econom- ic strength. Colorado, in particular, continues to benefit from popula- tion growth, diversified industry sectors, and strong consumer spending metrics that outpace national averages. This regional economic resilience translates directly to the perfor- mance potential of STNL proper- ties. When tenants operate in mar- kets with strong consumer bases and robust infrastructures – as Col- orado’s urban centers provide – the investment proposition becomes even more compelling. n The STNL advantage in uncertain times. The appeal of STNL proper- ties lies in their unique combina- tion of attributes that become even more valuable during periods of economic uncertainty: 1. Passive management structure: With tenants handling most prop- erty expenses and maintenance responsibilities, investors can avoid the operational complexities that burden other real estate classes. 2. Long-term income stability: Typical lease terms of 10-20 years provide predictable cash flow through multiple economic cycles. 3. Diversification potential: The accessibility of STNL investments allows investors to spread capital across multiple property types, locations, or tenant sectors. 4. Simplified financing: Lend- ers typically view well-located STNL properties with credit ten- ants favorably, often resulting in more attractive financing terms compared to other commercial real estate. n Supply constraints creating opportunity. One of the most com- pelling reasons to act now is the limited supply of quality retail assets. New retail development remains at historic lows – only 44.8 million square feet under construc- tion nationally – creating a supply demand imbalance that continues to support rent growth and asset values. The market is seeing significantly less new product coming online than would be expected given consumer demand. This supply constraint is especially pronounced in high-barrier-to-entry markets throughout Colorado and the Mountain West. This limited supply dynamic becomes particularly important when considering the expansion of cap rates. Unlike previous periods where cap rate increases might signal declining asset quality or demand, today’s market presents a rare opportunity where yields have improved while the underlying fundamentals remain strong. n Tenant quality driving perfor- mance. The tenant landscape for STNL properties has evolved signif- icantly. Quick-service restaurants like Chipotle, Shake Shack and Raising Cane’s continue aggressive expansion plans, particularly in high-traffic corridors. Health care- related tenants are growing their footprints across the region, and service-based retailers continue to demonstrate resilience against e-commerce pressures. Particularly noteworthy is the evolution of drugstores and auto parts retailers. Though the average drugstore footprint decreased in 2024, sales per square foot surged by 11.3%. Similarly, auto parts retailers benefited from consumers keeping vehicles longer, resulting in a 3.7% increase in gross sales per sf. Now is the time to buy RockyMountainWest STNL 3615–3625 W. Bowles Ave. Littleton, CO 80123 1,072 – 1,500 SF Available Peter Kapuranis ext. 103 Columbine Valley Shopping Center Retail Space for Lease 9106 W. 6th Ave. Lakewood, CO 2,519 SF Available Matt Landes ext. 101 Meadowlark Hills Union Exchange Building 8933 E Union Avenue Greenwood Village, CO 80111 Executive Suites Available $400.00/month Peter Kapuranis ext. 103 Westlake Plaza 1479 W. Eisenhower Blvd Loveland, CO 80538 1,800 - 2,181 SF Available Anchored by Safeway Matt Landes ext. 101 Alameda Square 12790 – 12792 W. Alameda Parkway 1,200 – 2,500 SF Available Below Market Rents Peter Kapuranis ext. 103 J&B Building Company Call 303.741.6343 ext. 100 or visit our website: www.jandbbuilding.com STNL Matt Call Founding principal, NavPoint Real Estate Group Please see Call, Page 24