CREJ

Page 4 — Retail Properties Quarterly — May 2021 www.crej.com T here’s no disputing Colo- rado’s retail sector faced many challenges in 2020 that included several store closures across the state because of the COVID-19 pandemic. This year, with the successful roll- out of vaccines across our state, we’re starting to see optimistic signs of recovery. Specific retail concepts and unlikely locations are thriving despite the disruption caused by the pandemic – and after a solid year of doing very little of anything, consumer confidence is on the rise as Colorado residents anxiously count down to living nor- mal lives again. n Colorado trends and growth. The trend of millennials moving out of urban cores toward the sub- urbs accelerated with the onset of the pandemic. Significant net out migration trends started to emerge in large northern cities throughout the U.S., which has contributed to more suburban opportunities, especially in well-located areas that boast access to transportation hubs, retail restaurants and fitness ame- nities. Because of this migration, we’re seeing retailers make sig- nificant investments in these loca- tions, such as Clark’s Market, which signed a lease for 25,000 square feet in Lowry, its first Front Range loca- tion and seventh in Colorado. It will join Target, which signed a 30,000- sf lease in late 2020, as co-anchor of the Exchange at Boulevard One retail complex, which is under con- struction. Quick-service and value retailers have fared well throughout the pan- demic with 7-Eleven, Dollar General and Sonic Drive-In being the top three retailers announc- ing significant expansion plans, according to Cush- man & Wakefield’s U.S. Retail Market Outlook report. 7-Eleven is plan- ning 6,300 new locations across the country while Dollar General and Sonic Drive-In announced expan- sion plans of 1,000 new locations each. Locally, several quick-service restaurant concepts have locked eyes on Colorado to expand their brands, including: • Smashburger, whose company leaders plan to open more than 40 new stores in 2021 including a loca- tion in Denver. • Fajita Pete’s, which has more than 30 new locations in the pipe- line and plans to open five new locations throughout Colorado. • Gyro Shack, which is planning to open upward of 18 new locations over the next two years across Colo- rado, Arizona, Utah, Idaho, Nevada, Montana, New Mexico and Wyo- ming. n The net impacts of the pandemic. The retail sector already was fac- ing a unique set of challenges prior to the onset of the COVID-19 pan- demic. Once the virus took hold of the U.S. in early 2020, those retail- ers already struggling had an even smaller chance of recovery. As one of the hardest hit from the initial impacts of the pandemic, the retail sector reported 8.3 million retail and restaurant jobs lost in March- April 2020 and nearly 15,000 retail store closures totalling a stagger- ing 24 million sf of space vacated nationwide over the course of the year. Demand for retail space plunged double that of the Great Recession only rivaled by soft leas- ing volumes, though we did start to see leasing pick up toward the end of 2020. n The recovery; albeit uneven. Despite last year’s daunting figures, it’s not all doom and gloom. While consumer spending all but halted when lockdowns initially took effect, the distribution of stimulus checks in the months following coupled with the economy slowly reopening prompted a sharp uptick in retail sales across concentrated segments of the sector. Cushman &Wakefield reports an uneven recovery across the retail spectrum with sporting goods, elec- tronic and mail order, and building materials being the top three cat- egories making full recoveries from the initial impacts of the recession. In fact, they exceeded their sales volumes compared to the year prior. In these three retail segments, sales compared as a percentage from January 2020 through February 2021 recorded increased sales volumes of 122%, 120% and 119%, respectively; while apparel and restaurants saw a slower recovery rate at 89% and 83%, respectively, over the same period. Retail outlook offers a complex path forward Market Update Ken McCarthy Principal economist, retail research lead, Cushman & Wakefield Cushman & Wakefield The retail recovery is highly uneven. The percent of retail sales recovered is shown above, which is defined as retail sales in February as a percentage of what they were in January 2020, per the Census Bureau. Please see McCarthy, Page 24