CREJ - Retail Properties Quarterly - September 2015
T here’s no denying it. Restau rants and breweries are pop ping up everywhere around Denver. It seems that all you hear about these days are the -- new restaurants and breweries that are dominating the Denver marketplace. There are even websites solely dedicated to tracking new restaurant openings. However, these areas still need traditional service retailers as complementary pieces to provide a necessary tenant mix. Although you may not read about it in the news, traditional service retailers are, for the most part, expanding rapidly and boding quite well in the marketplace. Retailers like AT&T, Wells Fargo, Rite Aid and Supercuts are opening several new locations throughout the Denver metro area. This activity goes largely unnoticed; it’s simply not as fun as talking about the new restaurant down the street. When was the last time you met your friends at the neighborhood drug store to hang out for the evening? Despite the fact that their story is not being told, traditional retailers provide essential benefits and services for neighborhoods and shopping centers that restaurants cannot. There’s no doubt that trendy restaurants make good tenants and provide value to neighborhoods and shopping centers. Everyone loves a new restaurant, and they are essential in generating activity and bringing life to an area. One example is Tennyson Street in Denver Highlands. Over the past 15 years, this neighborhood blossomed into a restaurant mecca and a desirable place to live. The restaurant scene and the skyrocketing housing prices go hand-in-hand; restaurants create a sense of place and can help develop a neighborhood’s identity while attracting new homeowners to the area. Because of all this good publicity from restaurants, it’s no wonder why landlords, shopping center owners, government officials and the average consumer want more of them. Despite all of the activity and excitement restaurants generate, they tend to be a higher-risk tenant. Restaurants cannot provide the stable financials that some traditional retailers can. Restaurants also require significantly more parking, impacting adjacent retailers and, ultimately, the surrounding neighborhood. Take a look at Denver West Shopping Center, which largely is dominated by restaurants. Parking has been a challenge since the project opened, and consumers may opt to go down the street to avoid it all together solely because of the parking situation. Enter traditional retail. Traditional retailers can lower the risk financially and alleviate the demand for parking. These retailers often are an afterthought for consumers until they find themselves driving further than they want to for simple conveniences. Who wants to sit in traffic to go to the bank, buy dog food or get a manicure? The Denver metro area and Colorado are booming with growth – metro Denver has seen the fastest-growing home prices of large U.S. cities, according to several reports. Traffic is becoming more congested and the distance people are willing to travel is decreasing, which is especially true for millennials, the key demographic group for almost all retailers in the area. This warrants a need for convenient service retailers in neighborhoods. At the end of the day, people need and expect services at their fingertips, even though the idea of this is less attractive than a trendy new restaurant. So what is the best mix for a neighborhood? As we saw with Tennyson Street and upcoming developments like East Bridge at Stapleton, restaurants trigger the activity and generate a sense of community and place. Now we are seeing traditional retailers coming in to fill in the gaps. For instance, Natural Grocers is opening up a new location at 38th Avenue and Tennyson Street, the central point of the Highlands. Traditional retail and restaurants not only can coexist, but also can create synergy for neighborhoods, consumers, developers and landlords. Both types of retailers are necessary and essential for a well-balanced shopping center and community. With artful planning and architecture, all tenants can coexist. Union Station is a great example. Chef-driven restaurants like Mercantile and Stoic & Genuine create enthusiasm and a place for new residents to dine, and service providers like Wells Fargo and King Soopers provide key conveniences to an area starving for services. Restaurants generate gathering places and define communities and cultures. Traditional retailers help balance the risk, can alleviate parking issues and, most importantly, provide the necessary conveniences consumers notice only when they are not readily available. Despite the talk centered on new restaurants, traditional retail proves it is just as important to both established neighborhoods and new developments. After all, we all need more than a craft beer and great cheeseburger to survive.