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— Retail Properties Quarterly — November 2016

CONTENTS

Letter from the Editor

Retail rent growth still enjoying long runway Justin Krieger and Tom Ethington New developments propel Springs’ retail John Winsor Retail follows 3 trends in Northern Colorado Ryan J. Schaefer Examining the forces behind record sales volumes Matthew Henrichs Life companies shift focus for new year Michael Salzman Why retail property owners should use Co-PACE Grant Nelson and Keirstin Beck Auto retail adapts to changing consumer habits Michelle Z. Askeland Retail helps bring an urban feel to suburbs John Livaditis New shopping habits force retailers to evolve Tom Rockstad Park Meadows thrives by bucking national trends Pamela J. Kelly Insights into Arvada Marketplace’s redevelopment Erin Bremen 6 8 10 12 14 15 16 18 20 21 22

F

ood and beverage outlets are

among the fastest-growing cat-

egories in retail centers, accord-

ing to a CBRE Group national

report. Several other pieces

of this report about restaurant retail

caught my attention as well.

Restaurants have fared better than

any other retail type

since the reces-

sion, according to

the report. And,

given that last year

the government

reported that restau-

rant sales surpassed

grocery sales for the

first time in the U.S., it makes sense

that this industry is thriving.

Millennial dining habits support this

growing demand, but it was surprising

to see that older generations actually

spend more money overall at res-

taurants than millennials.The report

notes that “This implies more growth

for restaurants as millennials age and

earn more.”

Following this logic, it also makes

sense why CBRE selected Denver as

one of the secondary urban markets

that is best positioned for restaurant

spending

growth.We

certainly are

leading the way when it comes to fast

casual.The number of quick-service

restaurants in Denver increased by 67

percent in 2015 compared to the previ-

ous year, according to CBRE research.

In the report, Denver joined Min-

neapolis, Baltimore and Philadelphia

as the best-positioned cities for res-

taurant spending growth, thanks to

reported high job, income and popula-

tion growth in each city.

I found the four up-and-coming res-

taurant formats identified in the report

to be extremely interesting, because

Denver has already embraced many of

them. All four formats appeal to mod-

ern diners looking for diversity, conve-

nience, uniqueness, relative affordabil-

ity and experiential focus, the report

stated.The formats include:

• Food trucks

• Food halls

• Celebrity-chef restaurants

• “Grocerants” – grocery stores that

offer prepared foods and made-to-

order meals.

While restaurants still are a gamble

– thanks to high failure rates and sub-

stantial tenant improvement require-

ments – the report identified one way

retail owners are taking a chance.

“One solution CBRE has seen prop-

erty owners undertake is to forego

immediate repayment of build out

costs or to keep base rents low in

exchange for an ownership stake in

the restaurant,” the report said. “In that

approach, the property owner received

a share of that restaurant’s profit even

after the initial investment is repaid,

thus providing the property owner a

return on its assumption of risk”

I’m curious how Denver restaura-

teurs, and those who rent to them,

will continue to be on the forefront of

dining experiences, embracing new

formats while also celebrating what

already works well.

Whether you love the fast-casual

environment, love to explore hip new

spots or love to pick your meal from

whichever truck is parked nearest you,

one thing is certain – anyone living in

Denver who is not exploring the res-

taurant scene is missing out. Happy

dining!

Michelle Z. Askeland maskeland@crej.com

303-623-1148, Ext. 104

Demand for dining out

designing

excellence

creating

value

developing

opportunities

full service architecture and engineering

denver | fort collins | colorado springs | 303.692.8838

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www.f-w.com Denise Leal | 303.407.6724 |dleal@f-w.com 1/2 page - first available right hand page