CREJ - Retail Properties Quarterly - May 3, 2017
Of all the asset classes, the retail market consistently seems to be subject to the most changes. The rise of online shopping, the ease of Amazon and the power of social media have made it even more challenging to get a product that's just right for the market, regardless if it is soft good, hard good or food. The internet has provided consumers with lots of options and the ability to compare prices in a matter of seconds. This has forced the brick-and-mortar stores to focus on the shopping experience and the synergy of who your next-door neighbors are and what they are selling. The good news for landlords is while the ease of internet shopping is growing, the likes of Amazon also are demonstrating the value of brick and mortar for some store concepts. However, even with all that in mind, the basic fundamentals of retail real estate have remained largely the same – location and economics. There is still a large population of consumers who want to touch and feel before buying as well as those who really appreciate the value in the local or special retailer. In Boulder we are experiencing the gamut with box store closings, national retailers coming and going, local stores modifying their concepts all while the vacancy rates still remain healthy at less than 9 percent. With the emphasis on local retailers, outside of Twenty Ninth Street mall, Boulder still has felt the effects of the junior box stores and national chains closing their doors. That list includes Sports Authority and Whole Foods plus smaller stores like Crocs, American Apparel and the Flip Flop Shop on the Pearl Street Mall, in addition to several other national chains shuffling in the Twenty Ninth Street mall shopping district. However, because change is the constant in the retail world, it means there are always new opportunities for the next retailer to make its mark. Downtown Boulder is no exception with exciting national retailers and concepts opening their doors in downtown Boulder for the first time, including Capital One Café, Experimac Boulder, Le Pops, North Face, Odd Molly, Eurika and Elison. Boulder also is witnessing a national trend in which some local or existing retailers are feeling the need to change with the times and reinvent themselves or add more locations to better serve the marketplace. For example, Full Cycle, a longtime Boulder bike shop, is undergoing a remodel to add a café serving wine and beer. Other local retailers trying to adapt to the changing retail climate include Poshsplat, Ku Cha House of Tea, Fjallraven, Alpine Modern Café, Boulder Cycle Sport , John Atencio jewelers and Lucky’s Market. Away from Boulder’s more frequented retail shopping areas is The Hill, a small area across from the University of Colorado campus that is always struggling to find the right mix, but big changes underway could mean greater long-term stability. Yes, The Sink, Illegal Pete’s, Starbucks and 7-11 have demonstrated they can survive the dormant four months when the students vanish, but the list is few and far between. However, there are three hotel projects in the planning department that could become game changers for the students and surrounding neighbors. One of the hotel concepts will tear down the tired University Hill shopping center at Broadway and University and replace it with a 160-room hotel including some retail/restaurants space. The University of Colorado has its own hotel and conference center planned near Broadway and Grandview with 140 rooms. The smallest addition will be local developer/owner with plans to convert the University Inn to a 45-room boutique hotel in between The Hill and downtown area along Broadway. No question a changing landscape is occurring in Boulder’s retail market, but the positive news is when one door closes, it does not take long for a new door to open. Local boutique stores still are the favorite, but with the increase in rents and the attractive Boulder demographics, national retailers are looking for those opportunities to find a missing void for shoppers. Vacancy rates appear to be trending slightly upward for the balance of the year within the city limits of Boulder with a certain spike to occur on The Hill once those hotels are under construction.