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Page 18 — Retail Properties Quarterly — November 2016
D enver is growing. All you
have to do is look up any-
where in the urban areas
of downtown and the con-
struction cranes dotting
the sky are inescapable. High-rise
apartments have been cropping up
on what seems to be every remain-
ing piece of land downtown. This
influx of new residential growth
has helped fuel demand for restau-
rants and retail services to serve
the growing population, but with
this growth there are the inevitable
growing pains that come with it.
The rise in dense mixed-use
development has pushed land
prices to historic levels and rental
rates for retail spaces downtown
continue to rise. There are many
retail and restaurant tenants operat-
ing in Denver’s downtown neighbor-
hoods that are beginning to express
concern that the real estate market
and rising rental rates are outpacing
their ability to increase sales.
The millennial demographic,
which is driving this urban growth,
is paying more of its income toward
housing. And while these younger
renters are looking for entertain-
ment value and new experiences,
they also are looking for ways to
stretch their dollars. This has creat-
ed fierce competition for restaurants
and retailers, not only with regard
to the number of new concepts and
restaurant trends they offer, but also
for ways to keep providing value,
which is making it harder to grow
and be profitable.
At times, lost in all the excite-
ment of downtown Denver’s growth
is the growth of the suburbs. A trip
through southeast Aurora, Parker,
Caste Rock, Arvada,
Westminster and
Commerce City
will tell you that
construction of
new homes in the
suburbs is boom-
ing. The movement
of young families
heading out of
the city and into
the suburbs is
not necessarily a
new thing, but the
attributes these
suburban migrants are looking for is
changing and driving the decision-
making of retailers and restaurants.
The majority of households
formed by young adults won’t take
up residence in urban areas, accord-
ing to a recent study by the Urban
Land Institute, “Demographic Strate-
gies for Real Estate.” Instead, they
will gravitate to so-called “surban”
areas. ULI’s report states “surban”
areas bring the best of urban living
to a more affordable suburban envi-
ronment. The report predicts that
79 percent of new households over
the next decade will settle in these
areas.
With the limited supply of good
available locations, the increase in
rental rates and the constant pres-
sure from competitors, more retail-
ers and restaurants are looking to
the suburbs for future growth plans.
We saw something similar from
breweries a few years ago. There
was rapid growth in the number
of breweries opening in downtown
Denver, which made for intense
competition for space. In response,
breweries turned their attention
to the suburbs where spaces were
easier to come by, competition was
near nonexistent and there was a
customer base who was eager to
spend money closer to home.
Most recently, we worked with cli-
ents such as Hunter Bay, a Montana-
based coffee roaster, and Cherry
Hills Sushi Co. Initially both were
looking for locations in Denver’s
urban neighborhoods, but ended up
outside the city’s core. Both compa-
nies found a prominent location in
Olde Town Arvada at a reasonable
lease rate and a demographic that
was eager for their business. But, it’s
important to note, not all suburbs
are created equal.
The trend of people, especially
young families, moving from urban
areas into the suburbs is nothing
new. It is a trend that has persisted
since the 1950s in the U.S. What
is changing is what these young
families and suburban migrants are
looking for or, more importantly,
what they are looking to bring with
them from their cute little bunga-
lows and Denver squares in Wash
Park, City Park and the Highlands
neighborhoods.
The traditional aspects of the sub-
urbs that still attract people from
John Livaditis
President, Axio
Commercial Real
Estate, Denver
Retail Trends
Downtown Littleton has the advantage of already having charming older buildings, wide
sidewalks and a dense concentrations of historic buildings that possess the physical char-
acteristics of a urban setting.
A NEWLY BUILT CORNER RESTAURANT
AVAILABLE IMMEDIATELY
1600 PEARL
Pearl Street | Boulder, CO
at
Newly built restaurant space includes all kitchen equipment
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Corner location on Pearl Street is directly across from Boulder’s largest parking garage
Contact
David Workman
Director, Real Estate Services O 720.484.5162