CREJ - Retail Properties Quarterly - February 2016
The impact the millennial generation is having on the commercial real estate world was a common theme addressed by all the panels at the 2016 Development & Construction Summit held by the Colorado Real Estate Journal in January. For retail, this largely relates to creating shopping or dining experiences. The theme is addressed throughout this issue of Retail Properties Quarterly as well. Creating unique spaces – whether it’s designed to make you re-imagine how to think of shopping malls, designed to change your perspective of a certain industry or designed to encourage a flow of people around a unique space – can positively impact the retail experience. As developers push to embrace these new parameters, certain areas are benefitting. “There was a shift after the recession to higher-density projects in high-growth areas,” said Will Damrath, vice president, Regency Centers. Demand is high for quality inline and mixed-used space that is 10,000 square feet and smaller, said a Q4 2015 CBRE Marketview report. Several mixed-use projects with ground-floor retail are coming on line this year, including 1777 Wewatta, Dairy Block and 2450 S. University Blvd. Restaurant retailers are seeking to capitalize on this experiential trend with their own twists on unique dining options, such as the farm-to-table and many fast-casual spots populating the metro area. Kelly Greene, president of Urban Legend Retail Group, writes more about this impact in his article on Page 16. With the plethora of restaurants in the metro area, more research is required on every restaurateur before leasing, said Damrath. Regency Centers predominately deals with grocery-anchored shopping centers and says some of the most active tenants are restaurants. One example he gave was for a vacant space that garnered interest from a Mexican restaurant and a burger restaurant. Before coming to a decision, the team researched the businesses’ other locations, finances, competitors as well as their credit. They ended up forgoing the one with better credit because they believe the other shop would activate the corner better, he said. As the market stays hot, developers said the challenge with high-density projects and smaller boutiques is that the total volume put in place is down, and it is expected to stay down. From an overall market perspective, the retail market is strong and the outlook for 2016 is positive. In 2015, investment activity totaled nearly $1.1 billion, which was a 66.1 percent increase from 2014, according to the CBRE report. The annual retail absorption was positive at 578,805 sf, and the average direct asking lease rates – $17.19 per sf triple net – were up 8.8 percent year over year. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104