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Page 22 — Retail Properties Quarterly — February 2015
A s I think about retail in Col-
orado, two specific trends
come to mind – shopping
centers have made an effort
to upgrade and big-box
retail is downsizing.
There has not been much new
shopping center development, but
there have been many redevelop-
ments of existing centers. Shopping
centers and strip malls provide an
ease of use and single-stop conve-
nience for a quick shopping outing.
Usually, a stop at the anchor retailer
is followed by a visit to a small shop
next to it and then you are on your
way. It is a great model that leads
to success for all retailers involved.
However, success for all is based on
success for one, the anchor tenant.
Time and time again, centers that
lose the anchor tenant struggle to
maintain business.
Courting a new anchor tenant can
require extra work. In order to com-
plete the deal, the anchor tenant
may want upgrades. The request for
a new façade for the anchor tenant,
and the rest of the center, is becom-
ing a typical scenario.
At centers like Villa Monaco in
Denver and Westminster City Cen-
ter, the new face-lifts are spurring
development. The center becomes
attractive not only to shoppers, but
also to new retailers who want to
get in on the action. The bottom line
is having a successful anchor tenant
and adding a new look can make
or break a shopping center. Think
about how many times customers
shop at the anchor store, and then
visit several of the small shops on
their way out.
Speaking of anchor tenants, the
grocery saturation
is still ongoing
with King Soopers
leading the way.
Walmart, Whole
Foods, Safeway,
Trader Joe’s and
Sprouts are fol-
lowing suit, and
soon Winco Food
also will have a
presence in the
Colorado market.
Smaller footprints,
which give the
impression of a
smaller local grocer, appear to be
the focus of these stores. However,
there are exceptions, such as the
new King Soopers, built by Maxwell,
at Broadway and Littleton, which
is 20,000 square feet larger than its
traditional stores.
The market also is busy with
urban, mixed-use properties. Quick-
serve restaurants and smaller users
are very popular, and we are seeing
lots of multitenant ground-up sub-
urban projects. The sites with better
visibility are in high demand, while
the market in general is experienc-
ing lower vacancy and higher rental
rates.
The larger developer/shopping
center owners have a strategy of
approaching underperforming big-box
retailers, renegotiating leases and tak-
ing back some space. This approach
allows those owners to lease smaller
space to smaller users, therefore gain-
ing more rent for their center.
The other theme we are see-
ing from large big-box retailers is
subleasing space to retailers to sell
their product inside of the main
tenant. JCPenney has subleased
space to Sephora, a skin care, make-
up and fragrance retailer. Walmart
has similar set ups with health care,
tax filing and eyeglass stores locat-
ed inside the large retailer. Sub-
leases enable the big-box retailer to
maximize return on investment – it
costs space, but the stores are able
to collect rent on it.s
Developer Spotlight
Chris Strom
Director of business
development,
Maxwell Builders,
Denver
Renovation of Villa Monaco shopping center at South Monaco Parkway and Evans
Avenue with anchor-tenant Walmart.
The Villa Monaco renovation continued throughout the center, providing a clean,
updated look.