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Page 26 — Retail Properties Quarterly — November 2017
net-leased properties.
Grocery-anchored retail
shopping centers, with the
grocer included in the collat-
eral, continue to be the most
sought-after retail product,
particularly by institutional
investors. A limited supply,
coupled with an ever-increas-
ing pool of institutions, pen-
sion funds and real estate
investment trusts solely tar-
geting these assets has driven
yields on these properties
into the low- to mid-5 percent
range. Recent notable trans-
actions in this space include
Bear Valley Shopping Center,
which sold for $46 million,
and the Orchards, which sold
for $38 million. Both shopping
centers are anchored by King
Soopers.
A balanced market with
restrained new development
has not only led to favorable
changes in market rents and
vacancy rates, but also it has
created pent-up demand with
investors looking to purchase
in one of the strongest and
most vibrant midmarket
economies in the country.
Denver continues to be one of
the most appealing markets
for retail investors and, based
on the current market funda-
mentals, it appears that will
remain the case for the fore-
seeable future.▲
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Distribution/Manufacturing
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Government Facilities
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Residential Communities
Retail Centers
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Bowlby
investments provide a more-
risk-seeking investor similar
benefits as a new construc-
tion property, but with the
uncertainty of fewer years
remaining on their lease.
Store sales, proximity to
competition, strength of
the market and many other
factors become much more
significant to investors con-
sidering older stores.
In Colorado, Family Dol-
lar operates approximately
125 stores while Dollar Tree
operates 91 stores and Dollar
General operates 30 stores. All
three retailers have aggressive
expansion plans as it relates
to the state due to favorable
economics and an opportunity
for each to increase their mar-
ket share in our growing state.
With robust expansion plans
in Colorado and its neighbor-
ing states, investors will find
plenty of opportunities to
invest in dollar store properties
over the next several years.
Despite lacking novelty, dol-
lar stores are the brick-and-
mortar retailers of the future.
They have proven to be resis-
tant to e-commerce, economic
downturns and cannibaliza-
tion from their own rapid
expansion.▲
Wright
an inviting atmosphere that
encourages people to hang
around to socialize and be
entertained.
Millennials, for example,
are looking for authentic
environments that respond
to their aspirations. Sustain-
ability is a great example.
Millennials wants sustain-
ability to be present within
the brand of a retail facil-
ity, because they recognize
sustainability in design and
respond positively to it.
They also are attracted to
an atmosphere that feels
like an outdoor living room.
In urban areas, a mix of
unique shopping, entertain-
ment, hotels and exciting
restaurant and bar concepts
tend to bring the crowds and
invigorate retail. Areas like
River North, South Broadway,
Union Station, and suburban
developments like Belleview
Station and Old Town Arvada
have managed create an
exciting retail mix that is
thriving.
Meanwhile, young families
are looking for convenient
access to medical services,
uses oriented to children and
a Main Street environment
for shopping and dining. For
the young family, a retail
destination that combines
activities for kids like karate,
tutoring or gymnastics, with
a fitness use for the parent
and healthy eating options
can create convenience and
activity for the whole retail
project. This can work in
larger retail formats like life-
style centers (Belmar, Streets
of SouthGlenn, Southlands),
but also is a dynamic that
works great in neighborhood
shopping centers.
Another driver of strip
mall demand is convenience,
including drive-thrus and
outparcels. Many restau-
rants, dentists and optom-
etrists are looking to be con-
veniently located in neigh-
borhoods, offering shopping
center owners opportunities
to convert some of their
excess parking to convenient
outparcels or pads.▲
Livaditis
3. Be willing to slay some
sacred cows. No, we aren’t
talking about the petite ten-
derloin steak in our salads,
sandwiches and pizzas. But
we did have to challenge
many of the design and
construction techniques
that were “how Newk’s has
always done things.”
Recognizing that every
possible inch of space in a
restaurant needs to gener-
ate income, we changed
seating areas and added
square footage for takeout,
even while decreasing the
average size of our restau-
rant. We moved doorways,
redesigned our patios and
ended unproductive vendor
relationships. One thing
that will never change?
The open kitchen that sets
Newk’s apart, designed by
founder Chris Newcomb on
a napkin (which he still has,
framed). But we constantly
make sure we keep learning
and creating more efficient
designs for our business.
We also killed a sacred
mantra of the real estate
industry: “Location, location,
location.”
Of course, we know a good
location drives success. But
we found that a “great site”
might not be “great” for us.
We vary in daypart from
most fast-casual chains in
that we don’t offer break-
fast; instead lunch, dinner
and catering comprise our
business. A robust daytime
population drives our lunch
traffic, including our grab-
and-go, pick-up, delivery
and catering. Rooftops and
evening traffic drive our din-
ner business, which includes
a wine and beer license and
a focus on outdoor dining
and families. So, while we
analyze locations using the
same metrics as our compet-
itors – for example visibility,
traffic, access and parking
– we factor in the psycho-
graphics and demographics
of the market.
When taken together,
these three major changes to
our construction and design
schedule allowed us to open
new restaurants as much as
10 days early – delivering up
to $60,000 in top-line rev-
enue. Talk about the early
bird getting the worm! ▲
Cheek
Consumers come for the
experiences the environment
offers and jump into that
mystical omnichannel shop-
ping cycle as a component
of the experience. The “look
what I’m doing” aspect of
the experience, and usually a
social media post that proves
your clout, fuels the need for
personal interaction in cool
places.
As omnichannel shopping
habits become the cultural
norm, online and in-store
purchases will become
integrated as a part of that
purchasing process. Physical
interaction in an experiential
environment will fuel the
need for quality retail design,
and as designers we must
continually adapt to the
changing landscape in the
retail market. ▲
McLennan