Page 10
— Retail Properties Quarterly — May 2017
www.crej.comRetail Trends
R
etail is dead. Long live
retail!”While headlines
about the retail indus-
try are screaming, this
exclamation represents
a turn of phrase first used to com-
municate the continuity of royal
power. One king, declared dead, is
followed by the next in line bound to
rule and transform the country. And
few things have transformed more
aggressively in the last decade than
the retail industry and its indel-
ible connection to commercial real
estate.
Upon announcing the closure of
100 Macy’s stores last August, for-
mer CEO Terry Lundgren provided
some eye-opening statistics about
America’s retail conundrum: we
are vastly overstored. Per capita in
the U.S., developers have built 7.3
square feet of retail space (versus
1.7 sf in France and 1.3 sf in the
U.K.). And, since 1995, the number
of shopping centers in the U.S. has
grown by more than 23 percent
(and gross leasable area by almost
30 percent), while the population
has grown by less than 14 percent,
according to retail analyst Robin
Lewis.
We are seeing the results. For the
first quarter, Quantum Real Estate
Advisors Inc. reported declining
lease rates at malls (from $20.32 per
sf in 2016 to $19.85 per sf), while
rates increased in neighborhood
environments (up to $15.63 per sf).
While no single retail category
has been immune
to the all-powerful
growth of online
retailing, malls are
disproportionately
affected because
mainstays such as
apparel, footwear
and accessories
comprise the top
sellers online.
Independent retail
analyst Jan Rogers
Kniffen projects
that 50 percent of
all retail not tied to
bars and restaurants will go online
by 2030.
So far this year, we have already
seen nine major retail bankruptcies,
which is as many bankruptcies as
all of 2016 combined. Contributing
factors are numerous and include
increased consumer spending on
experiences, rather than buying
things. Travel and hotel occupancy
is up, and in 2016, for the first time
ever, Americans spent more money
in restaurants and bars than at gro-
cery stores.
•
Urban center investments.
Also
for the first time since the 1920s,
growth in U.S. cities is outpacing
growth outside of them. As millen-
nials and empty nesters increas-
ingly move into urban centers, more
retail investors are looking at street
retail, and those with a portfolio
of these assets are adding to them
with enthusiasm. Even smaller
markets such as Columbus, Ohio,
and Savannah, Georgia, are at the
magnified end of leading investors’
telescopes.
•
Street retail convenience and
magic.
For millennials and others,
street retail convenience frequently
wins out versus destination shop-
ping. Driving to, parking at and
navigating the mall environment is
not as appealing as a quick car ride
or – better – walking a few blocks
to meet daily needs. Some retailers
are leaving malls with urgency to
capture better neighborhood foot
traffic. A preferred local developer
for one of the nation’s largest cel-
lular providers said that he’s been
instructed to relocate 36 of 38 stores
from malls to street retail region-
ally.
At its best, street retail evolves as
community gathering points and
thoroughfares with daily-use retail-
ers like banks and coffee spots lay-
ered over with restaurants, bars and
grocers. A set of favorable specifica-
tions precedes development and
are highly valued in urban cores or
corridors:
•One-mile population range of
20,000 to 30,000 people, or 500,000
people within 5 miles;
•Annual income of more than
$50,000;
•Pedestrian friendly, broad side-
walks and detached lawns;
•Mature trees and landscaping or
the ability to add these elements;
and
•Proximity to public transporta-
tion.
A long view, swift calculations
and gut instinct combine to create
street retail magic. Transformations
are impactful and profitable when
the right tenants match consumer
demand. The ability to recognize
early site potential can be the key
to affordable transactions that bank
land for the future. Neighbors wel-
come progress on underutilized
parcels.
By contrast, there may be signifi-
cant costs associated with remnant
parcels in near-mature or mature
neighborhoods. This land generally
is smaller with a higher barrier to
entry and requires a creative blue-
print for structures and foot traf-
fic. Because retail follows rooftops,
residents are more engaged in the
development process. Still, even in
these more challenging scenarios, it
can be worth the investment to find
a home for retail tenants in these
communities.
Street retail in Denver has helped
enhance neighborhoods, including
North Denver (Lower Highlands,
Highlands, Sunnyside and Berk-
ley), River North, Baker, and the
East Colfax/17th Avenue and Colo-
rado Boulevard corridor. It’s not by
chance that the ultra-hip bakery
Voodoo Doughnuts opened its first-
ever location outside of Oregon
in Denver at Colfax and Hum-
Amid market challenges, street retail thrivesJay Landt
+1 303 283 4569
jay.landt@colliers.comLisa Vela
+1 303 283 4575
lisa.vela@colliers.comJason F. Kinsey
+1 303 283 4598
jason.kinsey@colliers.comBrady Kinsey
+1 720 833 4618
brady.kinsey@colliers.com4643 South Ulster Street
|
Suite 1000
|
Denver, CO 80237
+1 303 745 5800
|
+1 303 745 5888
fax
www.colliers.com/denverThis document has been prepared by Colliers International Denver for advertising purposes only. The
information contained herein has been obtained from sources we deem reliable. While we have no
reason to doubt its accuracy, no warranty or representation is made of the foregoing information.
Terms of sale or lease and availability are subject to change or withdrawal without notice.
LAND FOR SALE
FOR LEASE
WESTCREEK
DEVELOPMENT
SWC E-470 & South Parker Road
VANTAGE POINT
East Cottonwood Drive &
South Parker Road · Parker, CO
VISTA RIDGE COMMONS
Highway 7 & Bonanza Drive · Erie, CO
c o l l i e r s i n t e r n a t i o n a l
Colliers International Denver Retail Team is pleased to present
these land offerings. Contact us for more information!
FOR SALE
FOR LEASE
FOR SALE OR GROUND LEASE
28.4 ACRES
1,200–
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&
Jason F. Kinsey & Brady Kinsey
Jay Landt & Lisa Vela
Jay Landt & Lisa Vela
Jimmy Balafas
Co-founder/
managing
principal, The
Kentro Group,
Denver
“
Please see 'Balafas,' Page 25