Page 2 — Retail Properties Quarterly — November 2021 Contents Letter from the Editor W hat a difference a year can make.The third quarter marks the second consecu- tive quarter of positive net absorption (over 282,000 square feet) in the retail market, and year-to-date absorption is more than double the total recorded at the same time last year, per CBRE’s metro Denver retail report. Further, the overall quar- terly sales volume of $320.2 million was more than double the recorded volume for third-quarter 2020, according to CBRE research. Pulling back from the statistics, the general retail head- lines seem lighter this year too – and for good reason. Only one major department store, Belk, has filed for bankruptcy this year, and it doesn’t have a footprint here (and hasn’t announced any store closures nationwide.) In 2020, J.C. Pen- ney, Neiman Marcus, SteinMart and Lord &Taylor all filed for bankruptcy, and all reduced their footprints, with SteinMart and Lord &Taylor liquidating their remaining stores, according to an article by Sarah Helwig on Page 6. After years of diminishing foot traf- fic, competition from e-commerce and now a pandemic, there’s a belief among investors, developers, managers and tenants alike that those remaining in business are sleek, adaptable and situated to succeed. In some ways, it seems the pandemic simply hurried the pace for struggling retailers to exit and ushered in faster evolutions for those still open. As a result, there’s a new phrase making the rounds when talking about surviving retail tenants: battle tested. During the September Colorado Real Estate Journal retail conference, several panelists spoke to how the onset of the pandemic shook up the market. For a fewmonths after March 2020, it seemed inappropriate to even talk about buying and selling. It wasn’t until August 2020 that product started being reintroduced back to the market after it was clear there were tenants still pay- ing rent, said Cushman &Wakefield’s Jon Hendrickson. “Ever since you had the story of tenants paying their bills, you had something to sell,” he said. Those fewmonths of no activity ush- ered in a wave of pent-up demand that has been “truly insane” and turned out to be very good for the market, another panelist said. Driving much of the demand are buyers with deep pockets, according to panelists, as more and more multifam- ily sellers are buying retail product.This is especially true for passive single- tenant assets, which always have been attractive for people getting out of mul- tifamily. Additionally, panelists said as people move toward retirement, they are looking for real cash yield and pas- sivity, both of which are driving atten- tion to retail. “The net-operating incomes are bat- tle tested,” said Newmark’s Riki Hashi- moto. “Tenants have lived through a pandemic. People believe in those sales factors. People are not only say- ing they’re aggressive on retail, they’re showing it.” Michelle Z. Askeland 303-623-1148, Ext. 104 Battle-tested tenants Evaluating COVID-19’s impact on the Denver area Riki Hashimoto and Frazier Cavness What’s working for retail: 2021 CMBS loan trends Sarah Helwig Extraordinary net lease demand drives competition Zach Wright Financing follows as market enjoys a rapid rebound Peter Keepper Front Range eateries are taking it to the streets Stuart Zall Reciprocal easement agreements are evolving Tal Diamant and Blake Hansen Considerations before a cannabis tenant moves in Jay Virdi and Lindsay Shapiro Building strong shopping center teams in the 2020s Pamela Kelly Town Center at Aurora thrives by embracing trends Joel M. Boyd Hire a general contractor early for restaurant builds Rich Snyder Trends in action: Reinventing the shooting range Ryan Weller 4 6 8 10 12 14 15 16 17 18 19