CREJ

November 2018 — Retail Properties Quarterly — Page 29 www.crej.com find itself relegated to a more region- al, niche player in the industry. In the DBRS Viewpoint database, analysts found 13 grocery-anchored properties (refer to in the chart on Page 21) across Colorado; 38.5 per- cent belonged to performing loans, an additional 38.5 percent were included in “paid in full” loans and only 23.1 percent were in loans operating at a loss. This shows that Colorado’s grocery-anchored prop- erties are performing well as far as structured loans go. However, 71.4 percent of the active loans are facing a declining net cash flow, which may hint at some trouble in the future. For real estate investors, the posi- tive news is that upscale, specialty grocers like The Fresh Market tend to have smaller spaces, ranging from 20,000 square feet to 30,000 sf, com- pared with traditional grocery stores’ more than 50,000 sf. This may make it easier to backfill the space without having to incur the cost to demise or reconfigure the space. In addition, upscale chains like The Fresh Market tend to lease space in more affluent areas, which also may make back- filling those vacant spaces easier. Despite headwinds, there may be little risk of spoilage from smaller chains like The Fresh Market. s Dittmer Continued from Page 21 take five weeks.) For many types of businesses, it’s important to open at a specific time of year for maximum impact, so having an accurate esti- mate for the date of opening is cru- cial. Initiating an honest conversation with your tenants about their level of knowledge and familiarity with the design and construction process will alleviate many problems before they occur. Some standard questions to start with are: • Have the tenants ever built out a space? • Do they know how long permits take in that municipality? • Do they know how utilities work and have the necessary forms? • Do they have an architect? • Do they need contractor names? • Initial and follow-up communication. The best time to have this talk with the tenant is before the lease is signed – even if the landlord work isn’t done. Why so soon? Because in a perfect world, the goal is for tenants to begin their own work as soon as the landlord work is finished. This ensures there is minimal time with the space sitting empty. Generally, the amount of time it takes for the landlord to obtain per- mitting for drawings and finish con- struction is approximately the same amount of time it takes for the tenant to begin working with an architect, design the space, get it permitted and get a contractor on board.When there is no landlord work, it’s best for the tenants to have their design team in place, even before the lease is signed to minimize the time from signing to opening. After your initial conversation with the tenant, email your tenant or send a letter to confirm what was discussed. This is an opportunity to present in writing any design and construction guidelines the tenant may be lacking, reiterate timelines on permitting, pro- vide utility forms and let the tenant know about anything unique regarding the municipality you’re dealing with. Following up with the tenant on a regular basis – even weekly – is a prac- tice that can save time and money for both parties in the long run. A landlord usually will have more experience and connections. By checking in on the tenant’s progress and offering a help- ing hand, the landlord often can catch issues early, keeping the tenants from becoming fire drills that significantly delay the ultimate goal of moving the client in. • Win win. Certainly, your role as a landlord doesn’t oblige you to do any of this – but it will benefit you and your tenant. Not only will it help in the beginning phases when the priority is opening, but also the trust it builds between you and your tenant will be conducive to a productive partnership throughout the property management relationship. s Kawulok Continued from Page 22 to them, which may be work ideals not historically found in construction environments. Millennials want flex- ible schedules, innovative settings, clear growth paths and autonomy. Contractors are pioneering culture changes to meet the millennial demand. New construction technologies, such as those required by many retailers, also are attracting millennials to the construction industry. If you’ve ven- tured into any retailer or fast-casual restaurant over the past year, you’ve likely noticed technological shopping enhancements, including scan-and- go technology, self-service checkouts and even modern conveniences like “social media friendly” backdrops for snapping and sharing photos. The network cabling, audio-visual require- ments and environmental-friendly features of today’s retail stores require advanced engineering, sophistication and careful planning. This is the type of work that’s attracting millennials to the construction industry. • Meeting retailers’ tight deadlines. Once retailers settle on a location, they have tight deadlines to meet lease agreements, holiday shopping routines and employee hiring start dates. A rampant issue for general con- tractors today is hiring subcontractors that have the bandwidth to bid the work and the workforce to build the project on tight deadlines and acceler- ated schedules. Building strong relationships with reliable subcontractors and treating them well is how general contractors are succeeding in today’s demanding retail construction environment. The future success of the construction industry, especially in this tight labor market, relies on the industry’s ability to change attitudes, change tradition- al cultures, learn new technologies, and a willingness to train good people and reward them for hard work. s Willingham Continued from Page 23