CREJ

November 2016 — Retail Properties Quarterly —

Page 11

• Struggling department store

sales,

• Limited new fashion and apparel

expansions,

• More value-oriented retailers,

• Bankruptcies and/or store clos-

ings, and

• Smaller store footprint sizes.

We have shifted paradigms as far

as how much brick-and-mortar retail

we build and what the new brick-

and-mortar shopping experiences

consist of. That semi-esoteric big

picture explanation sets the stage for

the new retail product recently built

or in progress in Northern Colorado.

This new retail product is heavy on

some, or all, of the following:

• “Eater-tainment” – casual dining,

theaters, arenas, art, civic uses and

gathering places;

• Recreation – health clubs, recre-

ation centers, ice skating rinks, etc.;

• Value-oriented retailers;

• Daily needs – groceries, drug

stores, convenience stores, fast-casu-

al dining; and

• Alternative nonretail uses –

apartments, hotels, churches, librar-

ies, etc.

This sets the stage for some practi-

cal examples in Northern Colorado.

In July 2012, Alberta Development

Partners and Walton Street Capital

acquired the 750,000-square-foot

Foothills Mall in Fort Collins from

General Growth Properties. Soon

thereafter, Alberta announced plans

for a hybrid mall on site – one part

outparcel shops, one part entertain-

ment district and one part enclosed

mall.

Consistent with the above-

described trends, the outparcel

shops (including a well-received

junior anchor in Nordstrom Rack)

and entertainment district leased

relatively quickly and at top-of-

market rates. There are 11 new res-

taurants on site and a Cinemark Cin-

ema. There are 400 new apartments

being built on site by McWhinney

and there is a youth activity center

and ice rink, providing recreation

and experience.

Despite a beautiful remodel of

what was retained of the enclosed

mall, this area has struggled to reach

good occupancy. The majority of the

local population, somewhat unaware

of the consequences of changes in

shopping habits, is left dissatisfied

about the unfulfilled promise of an

upscale fashion apparel shopping

experience.

I hear similar sentiments from

Longmont residents regarding Vil-

lage at the Peaks. Residents long for

new fashion and apparel options but

do not fully appreciate the evolv-

ing retail landscape. Often I explain

to them what a good job Newmark

Merrill did in responding to market

demand. There were not enough

fashion apparel retailers who were

willing to expand in that market to

build another fashion mall. Ultimate-

ly, over 90 percent of the 480,000-sf

center is leased by responding to

tenant demand in the form of daily

needs, value-oriented users, restau-

rants and entertainment.

Like Foothills, the centerpiece of

Village at the Peaks is a state-of-the-

art Regal Cinema – accompanied

by several new dining options, such

as Bad Daddy’s Burger Bar, Fuzzy’s

Taco Shop and Parry’s Pizza. Wyatt’s

Wet Goods is a fantastic local liquor

superstore with an excellent selec-

tion and great prices (or so I’ve heard

… wink, wink). Gold’s Gym generates

little to no sales tax but generates

traffic from people moving in and

out of there regularly. There will be

co-tenancy benefits with fast-casual

restaurants and daily needs retailers

such as Whole Foods, which was a

coup for Longmont and will gener-

ate strong daily traffic once open.

And – while not Costco, as many

had unrealistically hoped with two

other Costco stores nearby – New-

mark Merrill secured a value-focused

membership club for Longmont by

bringing a new Sam’s Club store to

the community.

Speaking of Costco, Timnath

(population of approximately 2,000

and growing) continues to capture

sales from nearby communities and

build on its daily needs retail port-

folio at Interstate 25 and Harmony

Road. Pad sites near Costco and

Wal-Mart, developed by Goldberg

Properties and Republic Investment

Group, have seen good activity due

to demand from daily needs retailers

and restaurants such as Les Schwab

tires, Taco Bell, Starbucks and Fred-

dy’s Frozen Custard, all of which

opened in 2016. Chick-fil-A is not far

behind with an anticipated opening

in 2017.

Eight miles south of Timnath at

I-25 and U.S. 34 in Johnstown, a

mammoth 250,000-sf Scheels All

Sports Store is taking form on land

Chrisland Real Estate Cos. sold to

Scheels and Carson Development.

Expected to be one of the largest

retail stores in Colorado and the sec-

ond-largest sporting goods store in

the world, this two-story, 85-foot-tall,

part department store, part sporting

goods store is well under construc-

tion within Johnstown Plaza at 2534.

Scheels anticipates opening prior

to October 2017 and will bring an

entirely new shopping experience to

Colorado.

Experience abounds as shoppers

approach the entrance and walk

past enormous bronze sculpture

from renowned Loveland-based

artists the Lundeen family. Once

inside, customers will walk through

a 16,000-gallon saltwater aquarium

and gaze upon an 85-foot atrium,

complete with a 65-foot-tall working

Ferris wheel. Mouthwatering aromas

of fudge and lattes from Grandma

Ginna’s Café spill into nearby spaces.

Golf simulators, basketball hoops

and laser-shooting galleries enter-

tain young and old alike. Lest you

forget there is a retail store amongst

these activities, rest assured, there

is something for everyone to buy at

Scheels.

The first floor is well merchandised

with an excellent selection of fash-

ion and apparel, including “specialty

shops” for all types of shoes, casual

attire, active wear, seasonal apparel

and team sports merchandise. The

second level essentially combines

a Dick’s Sporting Goods with a Bass

Pro Shops for an unmatched selec-

tion of sporting goods. It is worth

mentioning that Scheels is a pri-

vately held, employee-owned com-

pany, with some of the highest-paid

employees in retail striving to deliver

excellent customer service.

Perhaps it takes a store of this

magnitude with this type of experi-

ence, diversity of product offerings

and customer service to get shop-

pers excited about brick-and-mortar

retail. If so, how will the market

evolve further if other retailers begin

to follow suit?

These are questions for another

day. In the meantime, industry and

government would be wise to plan

on less brick-and-mortar retail per

capita, focus on making daily needs

retail as convenient and viable as

possible, and create more entertain-

ing places with a diverse and com-

plimentary mix of uses.

Market Update