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February 2018 — Retail Properties Quarterly —

Page 27

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both traditional and e-com-

merce retail strategies.

Other retailers are pio-

neering solutions that

incorporate e-commerce

strategies into new concepts

that most likely will require

more industrial space in

the future. For example, the

recently introduced 3,000-sf

Nordstrom Local keeps lim-

ited inventory on site with

the opportunity to purchase

selections online. With off-

site storage nearby, custom-

ers can expect same-day

delivery of their products to

the store or their homes. It

is yet to be seen how this

type of model will affect the

demand for new industrial

space, but it is certainly a

trend to watch.

As retail continues to

evolve in Colorado and

throughout the country,

companies will continue to

figure out new and innova-

tive solutions to meet the

changing demands. And

while this evolution might

take many different forms,

it’s becoming increasingly

clear that retail will rely

heavily on the flexibility and

functionality of the industri-

al market moving forward.

V

Good

Continued from Page 20

as Macy’s and Sears, continue

to downsize their portfolios

to reduce overall store count.

Developers across the country

are dealing with this issue –

when a department store clos-

es, it creates co-tenancy issues

for the inline shop tenants.

However, the silver lining

is that the location of these

department stores typically

is great real estate because

they often are the dominant

sites with great visibility and

access within their centers.

This aids the redevelopment

and repositioning of these sites

tremendously. A long-term

view of replacing these large

boxes with a mix of uses that

enhances and supplements

the existing tenant mix cer-

tainly will serve to enhance the

strength of these centers going

into the future.While it can be

painful and capital intensive

in the short term, performing

these types of repositionings

ultimately adds value for the

center, the owner/developer

and the community.

Rather than buying into

the media hype regarding the

“retail apocalypse,” we view

this as yet another transforma-

tion of the industry. Certainly,

it is a formidable challenge, but

out of change comes opportu-

nity.

V

McFarland

Continued from Page 21

and return business for the

team.

Help your tenants by hiring

a pro.

Consider hiring a retail

consultant to provide an

outside perspective to your

tenants on ways they can

improve their business. This

could include details such

as merchandising, décor,

floor plans or even go to the

extreme of training employ-

ees. While online retail is

incredibly convenient, it

lacks the human touch that

shoppers look forward to

experiencing when they

visit quality stores. Help

your tenants find the ways

to make their stores places

people want to buy from by

bringing in someone who

can help them succeed.

Finally, an encourag-

ing fact for retail property

owners and their tenants

to remember: Although

e-commerce is on a steady

increase (up 15 percent from

third-quarter 2016 to third-

quarter 2017), third-quarter

e-commerce sales only

amounts to 9.1 percent of

total retail sales, according

to the U.S. Census Bureau

News from the Department

of Commerce. Based on this

data, we are still a brick-

and-mortar society that

loves to go out and shop.

It’s up to you to get creative

and attract shoppers to your

property.

V

Vivinetto-Suter

Continued from Page 23

There are three primary

retail uses that generate

almost 80 percent of sales

tax generation for the area;

clothing and accessories,

home furnishings and res-

taurants/hospitality. In the

last year, these categories

have increased by 14.2 per-

cent, 17 percent and 20.5 per-

cent, respectively.

As of the third quarter, total

retail sales tax collections

for the district were up 7.5

percent versus retail sales for

the same period in 2016. This

is the fourth consecutive year

of annual increases in collec-

tions with the area consis-

tently outperforming the city

and county of Denver.

In 2018, six major construc-

tion projects are projected to

finish. These developments

will add 201 hotel rooms,

236 residences, 110,000 sf of

office space and over 50,000

sf of new or renovated retail

space.

National retailers are tak-

ing notice. In the past 18-plus

months, several stores and

restaurants have opened or

announced plans for entry to

the Colorado market within

the BID boundaries.

Recent announcements

and first-to-market concepts

opening include Frye Boots,

Hedgerow, Vineyard Vines,

Quality Italian, CB2, Soul

Cycle, 801 Fish and a Bonobos

Guide Shop. Other exciting

retail developments include

the new two-level flagship

for Design Within Reach and

the 25,000 sf of retail for ANB

Plaza along Second Avenue.

Several more announce-

ments of new stores and

restaurant concepts are

expected.

V

Phetteplace

Continued from Page 24

asset and are looking to

retail consultants to help

creatively reposition their

properties.

Vacant department stores

and big boxes often are

reborn as another depart-

ment store (as much as 20

percent of the time) and

family clothing uses (15

percent). Entertainment

uses also are dominant with

full-service restaurants (14

percent), amusement and

recreation (10 percent), and

theaters (8 percent) rounding

out the top five reuses.

In the Denver market, our

vacant boxes, whether gro-

cery (Albertsons, Safeway

and Walmart neighbor-

hood markets) or other uses

(Sports Authority, Gander

Mountain), are appeal-

ing most to fitness (Chuze,

VASA, Crunch Fitness, Planet

Fitness) and entertainment

uses (Main Event, Bowlero

and some theaters).

Denver’s retail market

continued to expand in 2017

– with absorption and rental

rates trending up and vacan-

cies trending down; however,

the market remains bifur-

cated. Because of limited

new supply, there is high

demand for second-gener-

ation space in well-located,

Class A retail centers, which

are full and thriving. Despite

competition for premium

space, Denver has attracted

international retailers (IKEA,

Uniqlo and H&M) as well as

national ones (Whole Foods’

new flagship store in the

Union Station neighborhood,

Trader Joe’s, Cabela’s and

Alamo Drafthouse). Con-

versely, aging Class B and

C centers with poor demo-

graphics, often with vacant

anchor space, continue to be

challenged.

Despite the many disrup-

tions and concerns about the

future of retail, 2018 is fore-

cast to be a year of evolution

and opportunity for retailers

nimble enough to develop

viable, new business models

with emphasis on customer

experience, technology tools

and rightsizing brick-and-

mortar stores.

Raymond Cirz presented at

the 2017 Counselors of Real

Estate Annual Convention in

Montreal in September.

V

Cirz

Continued from Page 4