Page 14 —
COLORADO REAL ESTATE JOURNAL
— June 15-July 5, 2016
Retail
Market Update
by John Rebchook
No question about it. The Den-
ver area retail market is strong.
Kenneth A. Himel, a retail
broker at David Hicks Lampert,
doesn’t think any of the brokers,
developers and restaurateurs
speaking at 2016 Retail Summit &
Expo will question the strength of
the market.
Himel will moderate a panel on
the state of the market and 2017
outlook at the half-day confer-
ence June 16. Registration opens
at 7:15 a.m. at the conference at the
Inverness Hotel and Conference
Center.
The conference, sponsored by
the Colorado Real Estate Jour-
nal, is expected to be attended by
350 people tied to the real estate
industry.
But assessing the strength of the
retail market is a “loaded ques-
tion,” according to Himel.
“There is no question that the
market is strong, but it is different
than the last time we had a strong
market,” before the Great Reces-
sion, he said.
The large-format, soft-goods
brick-and-mortar developments
no longer are driving the market,
he said.
“We aren’t seeing these million-
square-foot centers anymore; they
are not the driving force,” Himel
said.
Rather, themarket is being driv-
en by urban infill restaurants and
entertainment retail, he said.
“Really, retail is being driven
by the strong economy nation-
wide and I think the Colorado
economy is a little ahead of that,”
Himel said.
“We are seeing a lot of job
growth,” he noted.
The popularity of Amazon.com
has changed the retail landscape.
“Absolutely,” Himel said. “That
is especially true for hard goods
like TVs and books and basket-
balls – any other stuff you don’t
have to try on before buying,”
Himel said.
How do retail developers com-
pete?
“It means creating more of a
sense of place,” Himel said.
The proliferation of breweries,
a trend that kicked off in Den-
ver in 1988 when now Gov. John
Hickenlooper opened Wynkoop
Brewing in LoDo, before Lower
Downtownwas LoDo, is a perfect
microcosm of the retail scene.
“Breweries are really going back
to our roots and by that I mean
when America was still a young
country,” Himel said.
“We have just passed the num-
ber of breweries in the U.S. that
we had in the early 1800s,” Himel
said.
“That is pretty amazing,” he
said. “It used to be that every
little town had its own brewery,”
which was the focal gathering
place for the community.
Himel said he is looking for-
ward to the conference to learn
the perspective of others on the
panels. Panels will focus on res-
taurants, grocery trends, lending,
investment brokerage, retail as
investments and developments.
He expects a number of panel
members will be more bullish
than he is.
“I am very suspicious of this
strong market,” Himel said.
“I look at the numbers of what
people are paying for property in
and near downtown and when I
look at where the rubber hits the
road, I worry about who will be
able to afford to pay the rents”
needed to support the purchase
price, he said.
Not that the retail market’s
strength is doomed to peter out.
“I think that creativity is going
to be how we survive,” Himel
said.
“Anyonewho thinks our indus-
try is going to change back to the
way it was is mistaken. So we
have to make sure this entertain-
ment retail industry is turned into
a long-term scenario and not a
quick fix.”
One thinghe isn’tworriedabout
is that millennials are spending so
much of their income on rent that
they won’t have the disposable
income to spend on restaurants,
bars and, of course, at breweries.
“No, absolutely not,” Himel
said.
“There are two things behind
that. No. 1, the American psyche
has completely changed. When I
was a kid, our family went out to
eat maybe every six months or so.
There had to be a special occasion,
like a birthday.
“Today’s families go out a mini-
mum of five to seven times a
week. That does not change,”
when people graduate from col-
lege and enter the work world.
“No. 2, I just read an article that
more young adults are still living
with their parents than at any time
in history.”
By saving money on rent, they
will have the money to hit bars
and restaurants, he said.
Other Broker Update: State of
the Market and 2017 Outlook
panel members include:
• JimLee, vice president, CBRE;
• Bryan Slaughter, vice presi-
dent, SullivanHayes Brokerage;
• Justin Kliewer, managing
director, Newmark Grubb Knight
Frank;
• Tony Pierageli, senior vice
president, SRS Real Estate Part-
ners; and
• Stuart Zall, president, Zall Co.
Restaurant Panel
• Robert Thompson, CEO/
founder, Punch Bowl Social;
• Pete Turner, founder, Illegal
Pete’s;
•Mark Rogers, president, Roar-
ing Fork Restaurants, doing busi-
ness as Cheddar’s;
•BryanDayton, proprietor,Oak
at fourteenth andAcorn Denver;
• Richard F. Well, senior consul-
tant, National Real Estate Consul-
tants; and
• Moderator: Jay B. Landt,
senior vice president, retail, Col-
lier’s International.
Grocery Market Trends
• Joel Starbuck, manager of real
estate at King Soopers/City Mar-
ket;
• Moderator: Howard Gerelick.
Lender Panel
• Peter Keeper, principal, Essex
Financial Group LLC; and
• John Markovich, senior vice
president, FirstBank;
• Moderator: David J. Link,
managing director, Northmarq
Capital.
Investment Broker Panel
• Riki Hashimoto, executive
managing director, Newmark
Grubb Knight Frank;
• Jason Schmidt, executive vice
president, JLL;
• Brad Lyons, senior vice presi-
dent, CBRE/Capital Markets; and
• JonHendrickson, senior direc-
tor, Capital Market/Investment
Sales &Acquisitions, Cushman &
Wakefield;
• Moderator: Garrette Matlock,
senior vicepresident, investments,
Marcus &Millichap.
Investment Panel
• Michael Podboy, chief invest-
ment officer, InvenTrust Proper-
ties Corp.;
• David Malin, vice president
acquisitions & development,
Vestar;
• Allen Ginsborg, managing
director and principal, NewMark
Merrill Mountain States;
• Daniel Sutherland, vice presi-
dent of Capital Transactions, DDR
Corp.; and
• Deborah Godfrey, director of
Acquisitions, Ramco-Gershenson
Properties Trust;
• Moderator: Mike Winn, vice
chairman, institutional properties,
CBRE/Capital Markets.
Development Panel
• Peter Cudlip, principal, Alber-
ta Development Partners LLC;
• JamesMcCandless, director of
retail, Continuum Partners;
• Tyler Carlson, principal, Ever-
green Devco Inc.;
• David Goldberg, principal,
Miller Real Estate Investments;
and
• Jon Hauser, president, Drake
Real Estate Services LLC;
•Moderator: WilliamDamrath,
vice president, market officer,
Regency Centers.
s
by Jill Jamieson-Nichols
Denver has one of the hottest
commercial real estate markets in
the country, and there’s still run-
ning roomacross product types.
Those were takeaways from the
State of Real Estate 2016, Cushman
&Wakefield’s May 25 market out-
look at the Ritz-Carlton, Denver.
“Denver is absolutely a dynamic
market. It’s certainly one of the best
places to be in the United States
today,” said Robert Sammons,
C&W northwest regional research
leader.
Unemployment is at a historic
low 2.7 percent, and construction
jobs have made up for the loss of
jobs intheoil andgassector,hesaid.
Office rental rates increased 22.6
percent – and vacancy dropped
540 basis points – over the last five
years and continued to climb, by
7 percent, over the last 12months.
“There’s more than enough
demand to fill the buildings we
have in the pipeline,” ToddWheel-
er, vice chairman at Cushman &
Wakefield inDenver, said of the 2.6
million square feet of office space
under construction. Wheeler said
he thinks Denver is in the fifth
year of a nine-year office market
expansion.
What the city hasn’t seen is
“game-changing” corporate relo-
cations, said Doug Wulf, who
moderated a question-and-answer
sessionwithC&WDenver brokers.
Denver-Boulder today is a major
technology hub and, like other
technologymarkets, is likely to run
into labor shortages, according to
Sammons.
He also believes retail and mul-
tifamily will be bright spots in the
market due to an estimated 50,000
increase in population in each of
the next three years. The drum-
tight industrial market will remain
so, he said.
Asked in which “inning” they
think the various property types
are, brokers generally chose the
sixth to seventh. An exception was
R.C. Myles of the Denver-based
Capital Markets group: “I would
say eighth, but we’re going to go
into extra innings,” he said.
Responding to moderator ques-
tions about their various product
types, Denver brokers made the
following observations:
•With regard to housing, “There
is no affordability here,” said land
broker Mike Kboudi, noting the
average price of a newhome in the
Denver area inApril was $535,000.
The multifamily market is not
overbuilt, he said, noting units will
continue to be absorbed due to
scarcity of condominium product
and people’s inability, because of
high rents, to save for down pay-
ments on homes.
• Restaurants continue to pop
up in Denver, with “great” loca-
tions and infill locations attract-
ing new and chef-driven concepts,
according to retail specialist David
Fried. Fried saidDenver TechCen-
ter West is a great opportunity for
new concepts because it’s gener-
ally underserved, yet overserved
by chains.
• “That gold rush has definitely
come and gone,” C&W industrial
broker Kirk Vanino said of the
impact on the industrial market
from legalized marijuana. With
Denver putting a cap on growth of
that industry and Commerce City
and Aurora outlining “very, very
specified” green zones, “It’s not
going to drive prices like it did in
2014-2015, which was dramatic,”
he said.
Cushman & Wakefield Prin-
cipal Economist Ken McCarthy
provided an overview of the
global and U.S. economies, not-
ing that, “Millennials are going to
continue to dominate what goes
on in the U.S. economy for the
next several years.” With most in
their 20s, “They want to be in
an environment where they can
have fun,” McCarthy said, add-
ing, “The companies that want to
hire them are coming right along
with them. That’s why we’re see-
ing job growthmore in urban than
in suburban environments, and
obviously that has huge implica-
tions for real estate,” he said.
s
The demographics reveal what
is not only happening in RiNo,
but also how it fits into the bigger
picture.
There are a mere 85 people liv-
ing within a 0.1 mile radius.
Stretch that to 1.5 miles, and the
population grows to 45,736. That’s
a 53,696 percent jump.
Of course, the 1.5-mile radius
includes all of downtown and
picks up some nearby neighbor-
hoods.
Yet the population of RiNo is
sure to grow with the current and
future delivery of apartments, row
homes, townhomes, retail and
office, according to Riesing.
“It’s themost sought-after urban
market in Denver,” Riesing said
about RiNo.
“And the projected growth is a
reflection of that.”
Other News
n
Denver-based
Bow River
Capital,
a lower middle-market
investment firm, has closed its first
dedicated real estate fund, the $64
million Bow River Capital Real
Estate Fund I.
“We have been successfully
investing in real estate for 20 years,
and we are delighted to offer our
investors a dedicated fund prod-
uct that capitalizes on opportuni-
ties we see in the market,” said
Blair Richardson,
BowRiver Cap-
ital managing partner.
The fund will seek opportunis-
tic investments in a broad range
of commercial and residential real
estate by investing in property-
level equity, as well as perform-
ing and nonperforming real estate
debt. It will focus primarily on
investment opportunities in its
“Rodeo Region,” a geographic
area that encompasses the U.S.
Rocky Mountains; the Midwest,
South and Southwest; and por-
tions of Western Canada.
s
RiNo
