Colorado Mills Rebounds After Hailstorm by Michelle Z

February 2018

The Beck Group As flooring, ceiling tiles, roofing and drywall all needed to be replaced, the reopened Colorado Mills features a refreshed, contemporary look while still preserving some of its legacy features. Colorado Mills rebounds after hailstorm by Michelle Z. Askeland “Colorado Mills sustained extensive declined to comment on the cost of reopening on Nov. 21, the scope and damage to the entire center from a the damage. pace of the project was unprecedent- When golf-ball-sized hail hit Lake- historic hailstorm,” said Les Morris, Once the cleanup was completed, ed. Compared to a standard project wood and the surrounding areas May spokesperson for Simon Property Simon partnered with The Beck of this size, John Chisholm, Denver’s 8, the storm shattered records as the Group, which owns the shopping Group, an integrated architecture and operations manager with The Beck costliest hailstorm in the state’s his- center. “Subsequent to the storm, the construction firm, to manage the proj- Group and the integrated project tory, with auto and home insurance center evacuated and closed its doors ect and design-build teams. leader for the Colorado Mills restora- claims of $1.4 billion, according to the to the public while multimonth resto- Nine months later, the majority of tion project, estimates that the work Rocky Mountain Insurance Informa- ration work took place.” Colorado Mills is open, and crews are was finished in half the time typically tion Association. One of the most Immediately following the storm, wrapping up a massive construction required. publicized structures damaged was Simon Property Group assessed the project that required, at times, more “I’ve never seen anything like it,” Colorado Mills, a 1.1 million-square- damage and hired a company to han- than 550 tradesmen. Chisholm. “I mean, we didn’t do any- foot shopping center near Interstate dle cleanup. Simon, a publicly traded In the span of roughly four months, thing different than we’ve done in the 70 West and Sixth Avenue. Many recall company, which owns retail proper- from when new construction started the viral videos of the flooding. ties in 37 U.S. states and Puerto Rico, July 31 to the majority of the mall Please see Page 25 INSIDE

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Industrial demand Space activation District spotlight Industrial space is becoming an increasingly A developer shares insights to capitalize on Cherry Creek North celebrates another year important real estate component for retailers. retail trends to help projects succeed. of increased sales tax collections. Page 2 — Retail Properties Quarterly — February 2018 www.crej.com Contents Letter from the Editor 2018 will bring nimble retailers opportunities Raymond Cirz and Carolyn Martinez 4 Tracking employment Strong holiday sales propel healthy expectations few themes run throughout try, men gained retail jobs, accord- Ryan Bowlby and Drew Isaac 6 this issue of Retail Proper- ing to a study by the Institute for ties Quarterly and, for the Women’s Policy Research. Women’s Retail growth on deck for Colorado Springs 8 most part, these observa- share of all retail trade jobs fell Whitney Johnson A tions are positive for the from 50.4 to 49.6 percent, the study retail market. found. New rooftops energize Colorado Springs retail For example, I learned in an arti- “We’ve seen many news reports Jay Carlson 10 cle authored by experts from HFF, of the decline in retail jobs, but on Page 16, that for every company few have noted that the picture in Investors’ herd mentality is beginning to shift closing one store, retail is much different for women 2.7 companies are Peter Keepper and Michael J. Salzman 12 and men,” said a statement from opening one. Also, Heidi Hartmann, IWPR president. in 2017, there was As retail landscape changes, look to positive trends “The majority of the losses in retail a net gain of more comes from general merchandising Jason Schmidt 14 than 4,000 stores stores, where men have actually opening, the arti- gained jobs.” A collection of investor sentiments and trends 16 cle states. She goes on to acknowledge that Chad Murray, Mark Williford and Andrew Yaroma Further, holiday there is very little known about sales were up locally and nation- what’s driving this trend – for ally. According to a market update 4 ways to make a national owner hyperlocal example, could it be women are on Page 6 from Marcus & Millichap, Rick Turner 18 exiting retail jobs to enter higher- 95 percent of all holiday shop- paying industries or could it be pers bought some merchandise Are we witnessing an apocalypse or resurrection? because men sell durables and from brick-and-mortar stores, and Allen Ginsborg 19 families are finally catching up on spent a total average of $842 on gifts this season. But that’s not all delayed purchases on cars, furni- Industrial space can support new retailer needs – these shoppers also splurged on ture and household appliances? If Ryan Good 20 nongift-related items during the this is the reason, Hartmann won- same period, spending an average ders if durables are the future of Space activation key to create successful centers additional $261 on entertainment, general merchandise stores. Bryan McFarland 21 personal services and food-related I’m curious to follow employment purchases. numbers in the next few months A new retail rises as consumer lifestyles change While these statistics bode well, as retailers realign after the holi- Matt Writt 22 one negative statistic also caught day season. In addition to watching my attention while researching this the gender component, I’ll also be From click to cha-ching: Enticing online shoppers issue. The retail industry lost the keeping my eye on how the minimum wage increase continues to Ilene Vivinetto-Suter 23 most jobs from November 2016 to November 2017 in the 15 industries impact retailers. As of January, the the U.S. Bureau of Labor Statistics new minimum wage in Colorado is Small businesses thrive in Cherry Creek North tracks. However, this statistic alone $10.20. Brian Phetteplace 24 isn’t news – retail lost the most jobs the previous year as well. What is Michelle Z. Askeland new is the gender disparity. Despite [email protected] overall job loss in the retail indus- 303-623-1148, Ext. 104

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Feet Englewood Marketplace Allen Ginsborg, Principal Hampden & Englewood Pkwy RSpace Is Your Place [email protected] Englewood, CO NewMark Merrill understands community and focuses on creating experiences 98,228 Sq. Feet and meeting places that bring together merchants and community Ross Carpenter, Senior Leasing Associate members to meet and create. RSpace is Village at the Peaks’ new pop-up meeting [email protected] and event space. Danaria McCoy, Director of Operations NewMarkMerrill.com [email protected] Page 4 — Retail Properties Quarterly — February 2018 www.crej.com Market Update 2018 will bring nimble retailers opportunities etail sales have been 65 or older is just this trend and announced as of third-quarter 2017. declining for several years half that of those changed their busi- This thinning has led to high vacan- nationwide, particularly in headed by people 40 ness models to cre- cies at many shopping centers. department stores. A look at to 54 years of age. ate a dynamic and While bankruptcy declarations R U.S. department store per- Most agreed that user-friendly online often precede closure announce- formance from 1993-2017 highlights online sales have a presence; the most ments, many smaller inline retailers sales decelerating since 2000. A closer significant impact. prominent exam- (whether located in regional malls look shows that the downward trend Back in 1993, online ples include retail or strip centers) that did not invest has accelerated in recent years, since retail purchases giants Walmart and in a significant online presence are the Great Recession began mid-2008. accounted for just 1 Nordstrom. impacted negatively by missed oppor- There are many possible explana- Raymond Cirz, percent of the total, Carolyn Department tunities with customers. Examples tions for declining retail sales, which CRE whereas in 2017 Martinez Senior managing Director, retail, stores – traditional include Office Depot, American Eagle were discussed thoroughly at The director, Newmark online transactions Newmark Knight anchors for regional Outfitters, Bed Bath & Beyond, Game- Counselors of Real Estate Annual Knight Frank, New peaked at 9 percent Frank, Denver malls – have been Stop and Finish Line, all of which Convention, held in Montreal in York overall. closing at historic announced store closings last year. September. Some attendees pointed Department rates, with over 300 announced in Inline retailers can be particularly to the overabundance of per-capita stores historically have been the 2017, mainly from three major retail vulnerable to online competition, retail square footage in the U.S, which slowest in creating a viable online chains (Macy’s, J.C. Penney Co. and as barriers to entry are much less is at least twice that of Europe and presence, which may explain why Sears). With only approximately 1,100 strenuous for online retailers than Canada. Others blamed the country’s their store sales have been so nega- regional malls in the country – and brick-and-mortar establishments. aging population, noting that spend- tively impacted by online retail. Some that number is rapidly declining – a Look at the successes of Fabletics, All- ing in households with heads aged forward-looking stores have bucked significant portion of malls are affect- bird, Athleta, Birchbox and others for ed. inspiration. Online retailers can focus There is a historic and ongoing their operating costs on advertising trend of shuttered malls being trans- and building a brand name, deciding formed into mixed-use communities later if having a physical presence in to create a work-live-play atmosphere a community is the appropriate next with office, retail, hospitality and step. Conversely, a brick-and-mortar residential components. In Colorado, presence requires significant upfront we have seen this evolution of older investment in retail space and per- malls. Villa Italia, the megamall built sonnel, the highest budget line items in 1966 in Lakewood, was demolished along with merchandise. in 2001 to make way for the lifestyle Since declining retail sales is not community Bel Mar. Southglenn a new topic, much conversation Mall in Centennial, which originally throughout the retail industry, par- opened in 1974, was closed in 2006 ticularly in commercial real estate and succeeded by The Streets at circles, has focused on how to man- SouthGlenn, another mixed-use life- age this decline, with ample discus- style community. sion around troubled mall redevelop- Declining retail sales have affected ment and tenant remerchandising. more than just department stores. Retail operators know that proactively Inline shops, predominantly in reconfiguring their tenant mixes is the electronics and apparel sec- critical to maintaining a healthy tors, have felt pressure as well, with Newmark Knight Frank approximately 6,000 store closings Please see Cirz, Page 27 www.crej.com February 2018 — Retail Properties Quarterly — Page 5

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Cherry Creek – 101 Cook St. Downtown – 555 17th St. University Hills – 2805 S. Colorado Blvd. 303.376.3800 303.376.5460 303.376.3840 midﬁrst.com Page 6 — Retail Properties Quarterly — February 2018 www.crej.com Market Update Strong holiday sales propel healthy expectations s Denver’s population growth and food-related Market made As preleasing activity in the Den- and consumer spending out- purchases. Based announcements for ver metro area stays robust and pace national levels, investors on current projec- expansion. Restau- retail demand increases, vacancy and retailers target Denver and tions, retail sales are rants of all types rates will post a 20-basis-point A its attractive business climate projected to increase expand at a signifi- decline this year, pushing the rate for future opportunities. The metro’s another 4.5 to 5.5 cant rate in Denver to 4.8 percent. Demand drives the retail market in 2017 was underpinned percent in 2018. and are highly average asking rent to $19.14 per by record-low unemployment that was In addition to this sought after by square foot, up from $18.21 per sf near 2.4 percent. Denver’s workforce year’s predicted landlords and con- at the end of 2017. Neighborhoods expanded by 1.6 percent last year, or rise in retail sales, sumers alike. While in Cherry Creek and areas along by more than 22,000 new hires. Robust Ryan Bowlby the new tax law’s Drew Isaac these tenants often Colorado Boulevard extending from Senior associate, First vice president employment growth, particularly associate director, favorable treatment investments, require more expen- Alameda Avenue to Colfax Avenue among degreed positions in the health National Retail of pass-through Marcus & sive tenant improve- continue to capture the highest care and information technology Group, Marcus & income makes own- Millichap, Denver ment packages, they average asking rents, while some industries, lured many new inhabitants Millichap, Denver ing investment real consistently drive northern suburbs and parts of to the Mile High City. The influx of resi- estate more attrac- traffic to neighborhood centers and Aurora will be on the lower end of dents obtaining high-wage jobs helped tive, while providing consumers with are in high demand by a consuming the spectrum. These strengthening push the median household income more disposable income. Shopping public that now spends more on dining retail metrics indicate a healthy and over $75,000, encouraging a 4.8 percent center investors, as well as real estate out than it does on groceries. Discount improving market, which should boost in retail sales. This jump follows investors of all types, will benefit from retailers remained another strong retail continue in 2018. a 2.8 percent increase in 2016. At a time the recent changes to the tax code. The segment with the additions of several The Denver metro area’s healthy when much has been written about the recent changes have reduced corpo- Family Dollar and Save-A-Lot stores. business environment continues to demise of retail, the thriving economy rate tax rates on a portion of income The retail expansion in these segments outpace the nation’s and attracts has continued to entice retail investors that flows from so-called pass-through offset much of what was predicted to national investors. Decreasing and retailers to the greater Denver area. entities. Furthermore, real estate inves- be a “retail apocalypse” in 2017. The vacancy rates should persist while Nationally, the 2017 holiday sales tors will be able to depreciate capital city’s growing economy will put retail’s rents are projected to increase in figures saw the largest year-over-year investments in their property on an doom on hold once again. shopping centers across the Denver increase since 2011, with 95 percent of accelerated basis. These changes will This year, Denver’s employment metro area. Retail sales saw strong holiday shoppers buying merchandise increase the after-tax cash flow that growth will outstrip the nationwide gains in 2017 and should see con- from brick-and-mortar stores. Depend- can be achieved from purchasing and rate while strengthening its labor pool tinued growth in 2018. While there ing on the source, the holiday sales operating investment real estate. Lastly, with the addition of 24,000 employees. has been significant concern over increase was somewhere between and just as important to retail own- The energy sector will gain traction this the future of retail in the internet 4.5 and 6 percent; the higher end of ers, cuts to personal income tax rates year as businesses create employment era, the underlying fundamentals that range would put it as the largest will increase consumers’ disposable opportunities for new drilling fields remain healthy and improved in boost since 2005. The most significant income, creating additional upward east of the metro and existing fields a year when many were predict- increases were seen in electronics, pressure on retail sales. in northern Denver near Interstate 25. ing doom. The recent changes to appliances and home furnishings. In In 2017, a multitude of fitness centers Despite the inflow of energy-related the tax code will benefit shopping addition, per a recent survey conducted found their way into the metro area, positions, the tech sector remains the centers not only from an ownership by the International Council of Shop- with VASA Fitness being one of the anchor behind the city’s expanding perspective, but also by providing ping Centers, holiday shoppers spent most active, typically backfilling former workforce. As population growth con- consumers with more disposable an average of $842 for gifts, while the Safeway/Albertsons locations in neigh- tinues its strong, upward trend due to income to spend on retail, entertain- increasedDenise traffic Leal also| 303.692.8838 drove consumers |[email protected] borhood shopping centers. Grocers the recent supply of jobs, household ment and personal services. While to nongift-related1/2 page - rst purchases available during right hand pagetargeting health-conscious consum- formation exceeds the national mea- there may be some headwinds due the fullholiday color period. Holiday shoppers ers continue to expand. Natural Gro- sure by a wide margin, which will to increasing interest rates, the spent an additional $261 (on average) cers opened two new locations, while induce demand in the metro’s retail Denver retail market should register on entertainment, personal service Sprouts Farmers Market and Lucky’s market. another strong year in 2018. www.crej.com February 2018 — Retail Properties Quarterly — Page 7

Present

2018

Thursday, February 8, 2018 The Hyatt Regency Aurora-Denver Conference Center l 13200 E. 14th Place, Aurora, CO 80011

12:00 p.m. - 12:25 p.m. 1:30 - 2:00 p.m. 3:15 - 4:00 p.m. Check In, Registration and Networking Restaurant Panel Investment Panel Susan Lintonsmith - President and Chief Executive Oicer, Steve Shoflick - President & COO, Miller Real Estate 12:25 - 12:30 p.m. Quiznos Investments Welcome and Opening Remarks Frank Bonanno - Principal, Bonanno Concepts Thomas M. Yockey - President, Broad Street Realty Carl Schmidtlein - Principal, Galloway Kelly Greene - President, Urban Legend Gary J. Dragul - President, GDA Real Estate Services, LLC Diana Fiore - 2018 Chapter President, Rocky Mountain Moderator: Pat McHenry - Partner, Larimer Associates Paul DeCrescentis - President, DePaul Real Estate Advisors Shopping Center Association Allen Ginsborg - Managing Director & Principal, 2:00 - 2:45 p.m. NewmarkMerrill Mountain States 12:30 - 1:00 p.m. Networking Break Moderator: Matthew J. Henrichs - Senior Vice President, Broker Market Update & Forecast Food & Beverage in Expo Hall Retail Capital Markets, CBRE Michael McCormick - President, McCormick Equities, Inc. Brian P. Shorter - Managing Partner, SullivanHayes 2:45 - 3:15 p.m. 4:00 - 4:45 p.m. Brokerage The Future of Retail Space Development Panel Tiany Colvert - Commercial Broker | Retail, NAI Highland, LLC Jerey Sheppard - Principal, Roth Sheppard Architects Bryan McFarland - Principal, Development, Alberta Moderator: Jon Weisiger - Senior Vice President, CBRE Development Partners, LLC Rick Turner - Director of Real Estate, Colorado, Kimco Realty 1:00 - 1:30 p.m. Erika K. Shorter - Director, Colorado Acquisitions, Evergreen Changing Colorado Consumer and Jimmy Balafas - Principal, Kentro Group Retailing Trends Bradley T. Kornfeld - Managing Partner, The Kornfeld Tom Shane - Owner, Shane Co. Companies, LLP Ashley Stiles - Vice President, Development, Northern Colorado, McWhinney Moderator: Kristoer Kenton, AIA, NCARB, LEED AP - Director of Architecture, Partner, Galloway

Space is limited to 350! $85 per person Checks, Visa, MasterCard and American Express accepted. REGISTER NOW! Four hours of continuing education credit have been applied for

For more information, including exhibitor and sponorships opportunities, please call Jon Stern at 303-623-1148 ext. 101 or e-mail [email protected] Page 8 — Retail Properties Quarterly — February 2018 www.crej.com Market Update Retail growth on deck for Colorado Springs ost people start the new Moving south year out with a new year’s along Interstate 25, resolution, but I am going significant retail to start with a new year’s attention remains M prediction: 2018 will be a on Nevada Avenue. booming year for Colorado Springs University of Colo- commercial real estate. Yes, the rado at Colorado Colorado Springs commercial real Springs continues estate market is thriving. It’s filled its expansion, with new development projects to which brings fresh a degree I have never seen since Whitney investment into becoming a commercial broker. Johnson Associate, retail the area. New One significant trend we see right services, CBRE, UCCS develop- now is reinvestment in the Colora- Colorado Springs ments include an do Springs market spurred by larger indoor sports prac- development projects. This is result- tice facility, national cyber security ing in the footprint of our com- center and a 92,000-sf community munity continuing to expand and arts center. The redevelopment isn’t rising retail lease rates, up $1.22 limited to North Nevada Avenue, as per square foot in the last three 2018 also brings the continued rede- years. From a retail perspective, we velopment of South Nevada Avenue have several exciting developments where Chick-fil-A and several new underway. restaurants, such as Tokyo Joe’s, In the northeast, the dramatic Mad Greens and Zoe’s Mediter- population growth over the last 15 ranean, are reimagining the previ- years has changed the Interquest ously underutilized retail corridor area from “farm land” to a destina- located near the Broadmoor. tion with more than 316,000 sf of On the west side of the city, space under construction. Innova- Penrose-St. Francis Health Services tive developments are underway announced the development of an including Victory Ridge, home to the 80-acre site at Fillmore and Centen- new VIP theatre Icon Cinema, Colo- nial Boulevard. Across the street is rado’s first In-N-Out Burger and the a recently announced new devel- Field of Dreams youth sports com- opment for a retail and restaurant plex. Nearby, Interquest Commons building along with a new 7,000-sf has Marriott and Hilton hotels com- medical building to be located east ing, in addition to the newly opened of Grandview Marketplace. Addi- Fuzzy’s Tacos. Interquest Market- tionally, since the development of place is finishing up the available the interchange off I-25 a couple retail surrounding Great Wolf Lodge. of years ago, there is a new Best Activity in the northeast corridor Western Plus hotel, IHOP and Les continues to increase, and it isn’t Schwab Tires. Several properties in just limited to retail commercial West Colorado Springs also are up real estate, reinforcing its status as a new trade area within the market. Please see Johnson, Page 26 Granby Business Center 62543 US Highway 40, Granby Colorado 80446

Priced to Sell Two Fully Leased Condo Units to Credit Tenants No Landlord Responsibilities 2 Commercial Condominium Units The Granby Business Center was developed in 1999 and converted to ofﬁce condominiums in 2004. The project consists of 12 units and approximately 23,704 square feet of space in the development.

Unit A is occupied by Comcast with a lease term through June 30, 2020. The lease has annual 3% increases.

Unit J is occupied by Thomas A Mason Companies with a lease term through June 30, 2022. The lease also has annual ﬁxed rate increases.

This investment has very minimal landlord responsibilities, the commercial HOA provides all the exterior maintenance, the tenants are responsible for all interior maintenance.

• Purchase Price - $504,000 - 2 condo units free and clear • Property Size – 23,704 Square Feet • Condo Units - 12 • Unit A - Comcast 3,050 square feet • Unit J - Thomas A Mason Painting 3,074 square feet. • Price per Square Foot - $82.30 • Net Operating Income o Year One - $45,345 • Capitalization Rate o Year One – 9.00% • Occupancy – 100%

10555 East Dartmouth Avenue, Suite 360 Corey R. Wagner Garrett P. Walls Aurora, Colorado 80014 303-306-1000 Ext 126 303-676-8206 Direct WesternCenters.com [email protected] [email protected] www.crej.com February 2018 — Retail Properties Quarterly — Page 9

Present 2018 Single Tenant NNN

Thursday, March 8, 2018 The Hyatt Regency Aurora-Denver Conference Center l 13200 E. 14th Place, Aurora, CO 80011

12:00 p..m. - 12:25 p.m. 1:30 - 2:00 p.m. 3:15 - 3:45 p.m. Check In, Registration and Networking 1031 Exchange Panel Retailer Panel Scott R. Saunders - Senior Vice President, Asset Panelists TBD 12:25 - 12:30 p.m. Preservation Inc. Moderator: Bob Kaplan - Vice President, Regional Manager, Welcome and Opening Remarks David McCurdy, CFP - Senior Vice President, Midwestern Marcus & Millichap Bob Kaplan - Vice President, Regional Manager, Marcus Region, EXCHANGERIGHT & Millichap Je Hertz - Senior Vice President-1031 Exchange Specialist, 3:45 - 4:45 p.m. Cantor Fitzgerald Capital Developer Panel 12:30 - 12:45 p.m. Moderator TBD Tyler Carlson - Managing Principal, Evergreen Defining the Industry Jimmy Balafas - Principal, Kentro Group 2:00 - 2:45 p.m. Drew Isaac - First Vice President and Director, Net Leased Lucy Dinneen - Managing Partner – Rocky Mountain and Properties Group, Marcus & Millichap Networking Break - Northwest Regions, Cadence Capital Investments Food & Beverage in the Expo Hall Chris Allen - Development Partner, Verdad Real Estate 12:45 - 1:30 p.m. 2:45 - 3:15 p.m. Moderator: Jon Hauser, CCIM - President, Drake Real Estate Broker Panel Services LLC Jason Schmidt - Executive Vice President, JLL Finance Panel Matthew J. Henrichs- Senior Vice President, Investment David A. Lederhos - Commercial Real Estate Finance Properties | Retail & Net Lease, CBRE Executive, Mutual of Omaha Bank Kevin Matthews - Managing Director, SVN Denver Sara Croot - Client Manager, Chase Commercial Term Lending Commercial John Markovich - Senior Vice President, FirstBank John Witt - Partner, Brokerage Services, NavPoint Real Brandon Rogers - Principal, Terrix Financial Corp. Estate Group Moderator: Phillip Gause - Vice President, Marcus & Zach Wright - Associate Advisor, Pinnacle Real Estate Advisors Millichap Capital Markets Moderator: Drew Isaac - First Vice President and Director, Net Leased Properties Group, Marcus & Millichap

Space is limited to 200! $85 per person Checks, Visa, MasterCard and American Express accepted. REGISTER NOW! Four hours of continuing education credit have been applied for

For more information, including exhibitor and sponorships opportunities, please call Jon Stern at 303-623-1148 ext. 101 or e-mail [email protected] Page 10 — Retail Properties Quarterly — February 2018 www.crej.com Market Spotlight New rooftops energize Colorado Springs retail ast year was another year of Springs has filled the north and south ends of Colo- Vacancy rates in retail centers is recovery for the entire Colorado in against the west- rado Springs as well as in the last 6.5 percent in anchored centers and Springs market and, specifically, ern boundary of few undeveloped parcels on the east 14 percent in unanchored centers. in the retail segment of the the Banning Lewis side of town, and retail has followed. Average retail rents have broken the L commercial real estate market. Ranch property, King Soopers opened one of its new $12 per square foot, triple-net mark Retail development follows roof- which is gener- “super” stores at Marksheffell and for the first time since 2009. Many tops, specifically new rooftops. Most ally defined by Constitution in 2017, which was one older centers that sold recently are cities on the Front Range of Colorado Marksheffell Road of the only anchor retail stores to being refaced and redeveloped to grow to the east, as the mountains running north and open last year. accommodate the shrinking demand define the limits of development to south the entire Other areas of new retail activity for retail. In 2017, Chapel Hills Mall the west. In addition to the west- Jay Carlson length of the city. took place along the north Powers at the north end of Colorado Springs Managing broker ern boundary, Colorado Springs has and co-founder, The Banning Lewis Boulevard corridor between Consti- went into foreclosure, reflecting an eastern boundary known as the Front Range Ranch property tution and Briargate Parkway; along the changing status of the national Banning Lewis Ranch, a 30,000-acre Commercial LLC, will define the resi- Interstate 25 at the Interquest exit demand for brick-and-mortar retail property that has changed hands Colorado Springs dential growth of around the new Great Wolf Lodge centers. and been divided over the years, Colorado Springs redevelopment; and at the Northgate In 2017, only two retail proper- but which still is predominantly for the next 50 years. Infrastructure exit around the Bass Pro Shop in ties over 100,000 sf sold in the area, undeveloped. This has caused home costs have been the prohibiting fac- the Polaris Point retail development. but more than 23 properties under developers to hopscotch across this tor in developing this property, but An urban renewal project on South 100,000 sf sold. Capitalization rates property to the east and build in the city and county governments are try- Nevada Avenue south of downtown on retail properties have been falling Falcon area. ing to make changes that will allow is starting to open new retailers and here; cap rates were about 8 percent Over the last 15 years, this area has this property to be developed and redefining the area with trendier in 2016, 7.5 to 7 percent in 2017, and grown dramatically with hundreds of provide adequate infrastructure. residential redevelopment coming as will be in the 6’s in 2018. Even in the new rooftops and the retail develop- So, most of the new residential well. 6 percent range, cap rates in Colo- ment to follow it. Residential devel- development in the last few years in Downtown is seeing a resurgence rado Springs offer a 1 to 2 percent opment on the east side of Colorado Colorado Springs has taken place at of development, with Oscar Blues benefit to those currently available in opening its new restaurant, while the the Denver retail investment market. Atomic Cowboy, Denver Biscuit Co. Experts say there is only a 15-day 2017 Colorado Springs general market statistics and Fat Sully’s New York Pizza are supply of residential inventory in • Population of Colorado Springs: 465,000 coming to the Trolley Garage redevel- Colorado Springs. Our retail vacancy • Population of the Colorado Springs metropolitan statistical area: opment on South Tejon Street. The rates are approaching 5 percent on 698,000 U.S. Olympic Hall of Fame is under average. Denver workers are buying • Total home sales: Up 7 percent over 2016, while 2015 and 2016 were construction west of downtown and homes in the Colorado Springs area both record years. there are more than 600 residential and commuting to their jobs because • Single-family new construction permits: 3,405 permits, up 8.2 units in the pipeline in the down- of home prices in Denver. There is an percent over 2016 town area. abundance of opportunity for retail • Unemployment rate: Less than 4 percent In 2017, retail development led the developers and residential develop- • Overall average commercial vacancy rate: 7 percent way in new commercial structures. ers in Colorado Springs in 2018 and • Overall average commercial lease rate: $12.48 per square foot, triple Most of the new development was into the next decade. net in smaller multitenant buildings and But do you know what Colorado • Retail absorption in 2017: 355,000 square feet most of the new tenants were fast- Springs residents are most excited • Apartment vacancy rate: 5 percent casual restaurants either new to the about in 2018? In-N-Out Burger is market or expanding after an entry opening its first Colorado location Front Range Commercial LLC in the last few years. here this year.

El Five Restaurant, Denver

RETAIL CONSTRUCTION DELIVERED BY EXPERTS SO YOU CAN FOCUS ON BUILDING YOUR BUSINESS. catamountinc.com www.crej.com February 2018 — Retail Properties Quarterly — Page 11

Retail Properties Quarterly - Financing Sources Matrix

TYPE OF CAPITAL SOURCE OF CAPITAL EXPLANATION RATES/SPREADS LTV/COVERAGE TERM AMORTIZATION FOCUS TRENDS

• Most competitive at lower to moderate leverage with strong sponsor • Grocery-anchored centers • Non-Recourse 150-210 bps over the • Flexible prepayment penalties available for small LIFE INSURANCE • Insurance premiums • Up to 65% LTV 5-30 • Power Centers • Longer-term fixed comparable US 25-30 Years pricing premium COMPANY • Annuity and GIC sales • 1.25x Minimum DCR Years • Top tier credit tenants rate loan Treasuries • At right leverage (~60%) lenders can do Interest Only • Major metro areas • Co-tenancy clauses and tenant credit worthiness are critically important

• Most competitive at higher leverage in secondary and • Neighborhood Centers tertiary markets • Sales of mortgage- • Non-Recourse 200-275 bps over the • Up to 75% LTV • Strip Centers 5, 7 & 10 • 10 years interest-only under 65% LTV CONDUIT (CMBS) backed securities • Longer-term fixed greater of swaps or • 1.25x Minimum DCR 30 Years • Second tier credit tenants Years • 5 years interest-only under 70% LTV through public markets rate loan treasuries • 8.0% Minimum Debt Yield • Local credit tenants • Secondary/Tertiary Markets

• Standards are tightening for Sponsors with no deposit relationship • Most competitive for Sponsors with established • Single-Tenant (NNN) • Recourse (some non- banking relationships and strong borrower history that Up to 7 • Freestanding Retail • Corporate Debt recourse available) 200-300 bps over Interest Only to are willing to accept recourse BANK • Up to 75% LTV Years • Neighborhood Centers • Deposits • Shorter-term fixed bank cost of funds 25 Years • Establishing a deposit relationship is becoming a Fixed • Local credit tenants and floating rate loans requirement • Secondary/Tertiary Markets • Primarily recourse loans, with non-recourse available to strong sponsors at low leverage • More flexible (open) prepayment terms

• Grocery-anchored centers • Non-Recourse • Up to 85% LTC • Power Centers DEBT FUND / BRIDGE • Private Capital • Shorter term bridge LIBOR + 300-600 bps 1 - 5 • Pricing depends on leverage level, property quality, • Going-in 1.0x DCR Interest Only • Credit tenants LOAN • Institutional Capital loans for acquisition (some w/ floors) (3+1+1) and Sponsor strength • Value-Add Transactions and/or repositioning • Recapitalizations

• Junior financing • Neighborhood Centers • Preferred equity offers higher funding than • Up to 85% LTC MEZZANINE/ • Private Capital secured by a pledge Mezzanine Interest Only • Strip Centers mezzanine, but at a higher cost • 1.10x DCR 2 - 10 PREFERRED EQUITY • Institutional Capital of, or participation in 8%-12% (in most cases) • Second tier credit tenants • Minimum investment is typically 5MM but can start as ownership interest • Secondary/Tertiary Markets low as 1MM when paired with senior position

Essex Financial Group - Recent Retail Transactions

Tamarac Shopping Center Eastbridge Plaza Lake Mary Village Denver, CO Denver, CO Lake Mary, FL $12,300,000 Permanent Loan $7,800,000 Permanent Loan $19,975,000 Permanent Loan Life Insurance Company Life Insurance Company Debt Fund

JEFF RIGGS PETER KEEPPER COOPER WILLIAMS MIKE JEFFRIES ED BOXER MICHAEL SALZMAN ALEX RIGGS PRESIDENT / PRINCIPAL MANAGING PRINCIPAL PRINCIPAL PRINCIPAL PRINCIPAL VP OF LOAN PRODUCTION VP OF LOAN PRODUCTION (303) 843-0440 (303) 843-6002 (303) 843-4581 (303) 843-9220 (303) 843-9256 (303) 843-6015 (303) 843-4027 [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Page 12 — Retail Properties Quarterly — February 2018 www.crej.com Investment Market Investors’ herd mentality is beginning to shift he availability of capital A big portion of increasing retail pied by a grocery store are drawing for most retail centers is those that filed sales. more customers on a weekly basis strong, despite all the nega- for bankruptcy The cloud over because fitness customers typi- tive headlines in the media last year were retail since Ama- cally visit more than once per week. T in 2017 about retailers clos- overleveraged and zon acquired Accordingly, some destination res- ing stores, filing bankruptcy due failed because Whole Foods taurants and entertainment con- to overexpanding, and declining they overexpanded appears to be lift- cepts are viewed as good replace- sales from online competition and and missed the ing, especially ment tenants in enclosed malls that changing consumer trends. There is demand in a short considering the big can be redeveloped vs. traditional a herd mentality in retail more than period of time ver- picture of bricks- mall anchors like Macy’s. other property segments because Peter Keepper sus a slow bleed Michael J. and-mortar sales. For the most part, underwriting Managing this property type has experienced Salzman standards and financing terms for principal, Essex from online com- Vice president, loan After seeing a few the most change over the last few Financial Group, petition. production, Essex commercials on quality grocery-anchored centers decades. Denver The National Financial Group, Chewy.com, the and infill neighborhood strip centers For example, the retail equity Retail Federation Denver online pet food haven’t changed. Most of these cen- and mortgage investor herd was reported that retailers had their retailer, one might ters are internet resistant because spooked when Amazon announced best holiday season since 2010, and think PetSmart and Petco stores are the majority of tenants provide a it was acquiring Whole Foods last total retail sales in November and going to consolidate and downsize convenient service or amenity to the year. Suddenly everything retail December were up 5.5 percent over the average store size; however, it neighborhood. Strip centers with seemed to be in turmoil. This cre- the prior year. However, department turns out PetSmart just announced a strong occupancy history with ated an even darker cloud and store sales were down 1.1 percent in it’s buying Chewy.com, which could tenants like a drop-off dry cleaner, triggered more conservative under- December. Sales at nonstore retail- give the company an advantage of liquor store, corner gas station/con- writing, particularly for retail cen- ers, which mainly consist of online stocking pet food at bricks-and-mor- venience store, nail salon, fitness ters occupied by junior or major retailers, increased 12.9 percent. tar stores with same-day delivery. tenant and some local restaurants tenant(s) with flat or declining The bricks-and-mortar retail sales Amazon bought Whole Foods to gain have become more of a preferred sales attributed to competition growth is reported to be driven by an entry into the grocery market, property type as they have infill from e-commerce. As we enter 2018 building material stores and restau- but also bought Whole Foods for the locations surrounded by residen- though, the herd mentality is slowly rants. Most big-box retailers, many excellent locations and logistics of tial rooftops that can’t be replaced. shifting, and there’s a realization in Class B malls, skewed the total the bricks-and-mortar stores. Tra- There is no delivery service or that online sales could likely hit a bricks-and-mortar sales increases ditional bricks-and-mortar retailers drone that can pick up a 12-pack of cap of retail total sales. downward. like PetSmart are figuring out how to Heineken and my dry cleaning faster Many retail industry experts have Consumer confidence has been execute “omnichannel” marketing by than I can go down the street. estimated that we’ll reach a cap strengthening and the recent pas- increasing their online sales. Retail centers with grocery of 20 to 25 percent online retail sage of the new tax legislation is Another interesting theme as we anchors that have a top-three mar- sales as a percentage of total sales. estimated by many economists to enter 2018 is the changing lender ket share usually have the same They’re projecting bricks-and- result in a spending spree as cor- sentiment toward fitness tenants, type of inline tenant line up as strip mortar retail properties are simply porations are anticipated to spend grocery stores and restaurants. centers, but with more national going through an evolution phase. tax savings on rewarding employees Lenders didn’t like fitness tenants franchisee tenants. Insurance Some suggest we have too much with salary and bonus increases in 10 years ago because they had high companies as lenders will offer big-box and mid-sized bricks-and- a tight labor market. Recent articles tenant improvement build-out costs the lowest rates on these types of mortar retail due to overbuilding in the Wall Street Journal men- and they were perceived to lack the properties for fixed-rate terms of over the past few decades. Many tion the savings rate of American consumer visits that is created by a five years or longer at an average national retailers made a mistake consumers is at an all-time low grocery store. Today’s reality is that loan to value of 65 percent. Current by overexpanding and created way and when we get more cash, there some centers with a 60,000-square- too much supply as their demise. has been a direct correlation with foot fitness center formerly occu- Please see Keepper, Page 26

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3855 Lewiston Street, Suite 100 (303) 657-9700 Aurora, CO 80011 AskBrinkmann.com www.crej.com February 2018 — Retail Properties Quarterly — Page 13

OF IT ALL

Join us 2018 Economic Update Thursday, March 1st New Location! Curtis Ballroom at The Landmark Lunch: 11:30am – 1:00pm FEATURED SPEAKER: Sam Bailey, Vice President of Economic Development Corporation Denver Metro Chamber of Commerce COST - Member: $45 / Non-Member: $60 REGISTER TODAY: www.rmsca.net

RMSCA HAPPY HOUR Thursday, February 8th Following the CREJ 2018 Retail Summit & Expo Hyatt Regency Aurora Denver Convention Center. Visit the RMSCA booth inside the Expo for your complimentary ticket.

AN ENGAGING FORUM FOR SHOPPING CENTER INDUSTRY PROFESSIONALS Become a member now at www.rmsca.net. Page 14 — Retail Properties Quarterly — February 2018 www.crej.com Investment Market As retail landscape changes, look to positive trends he morning of Aug. 28 tive wage growth, The 2017-2018 projects are largely remains that convenience and vis- marked a new paradigm 2017 holiday made up of occupied buildings ibility are inherent in retail and it for retail real estate when sales were excel- with tenants such as Scheels, represents the best real estate in a Amazon announced its lent. According to Sam’s Club, Walmart and King marketplace. “Main and Main” has T purchase of Whole Foods. Mastercard, the Soopers. The current market is tended to last for generations and E-commerce’s menacing effects on holiday shopping disciplined, operating at a fraction this will continue even if the sig- brick-and-mortar retail had been season for in-store of the historical base. Given the nage and services provided change discussed for years. However, this retail in the U.S. demeanor in retail and its tenants, for the next generation. This will was the decisive tipping point for was up 4.9 percent controlled expansion will continue. apply in Denver where the econ- the industry to take notice. Prior to as compared to Despite the positive trends, there omy is more diverse than in past this event, retail investment sales Jason Schmidt 2016. is no denying that the landscape Executive vice generations, and employment and in Denver of large-format shopping president, JLL, This is more in retail is changing. Building on population trends are robust. centers were in the sub-7 percent Denver consistent with past bankruptcies, several retailers In contrast, retail sales vol- cap range, a phenomenon first what we are expe- with stores in the Denver market ume has been consistently down. realized in 2013 with the sub-6 per- riencing in Denver as evidenced filed for bankruptcy in 2017. These According to our research, national cent sale of South Denver Market- by retail fundamentals. Since 2009, include The Limited, Gordmans, volumes declined 21.4 percent place and, more recently, the sale there has been a clear positive RadioShack, Gander Mountain and last year; CoStar statistics shows of Aspen Grove at 6.2 percent. trend. Overall, vacancy has stayed Payless ShoeSource. a similar 20 percent for Denver In September, soon after the under 5 percent and 2017 ended at Given the positive fundamentals using a yearly third-quarter com- Whole Foods transaction, Sam 4.5 percent. Rental rates continue and the controlled expansion, what parison. The emotional reaction Zell said on CNBC, “Investing in to rise, quoted at $17.81 per square is the lasting impact of e-com- to e-commerce has pushed buy- the (retail) space right now is like foot at the end of 2017, a 5.95 per- merce? According to eMarketer, ers to hedge risk into core offer- catching a falling knife.” His rea- cent increase from 2016. The mar- 90 percent of purchases remain in ings consisting of urban or grocery sons: Excess inventory and the ket also had nearly 1 million sf of stores. Additionally, retailers are retail where cap rates will continue effect of e-commerce. Zell high- absorption in the fourth quarter adapting to customers by blend- lighted U.S. inventory as 4 to 5 alone. ing the online and in-store experi- to compress. Given the historical times more per capita than in The most meaningful statistics ence. In fact, Amazon opened its lack of urban retail and grocery Europe. Additionally, the U.S. Cen- for the health of Denver’s retail is first bookstore in 2015 and now has operators’ tendency to own their sus will show that retail space in new construction. In the last 35 dozens with plans to expand. Other stores, these types of deals are dif- the United States grew 180 percent years, Denver has experienced an e-commerce companies are open- ficult to find in Denver. Debt also from 1970 to 2010, while the popu- average of over 3.5 million sf of ing their first physical stores as remains favorable for this class, lation grew 52 percent. annual construction. This number they experiment with omnichannel enticing owners to hold assets. Zell’s comments are bold given has been contained in recent years. distribution, some examples being Value-add and opportunistic assets the nature of the national econ- For a five-year period, including IndoChino, Bonobos and Warby are uncommon as a result of the omy. The national gross domes- 2010 through 2014, the average Parker. elongated performance of local tic product has been growing for annual construction was 1.2 mil- As some retailers disappeared, retail trends, contributing to the eight years, and unemployment is lion sf. In 2015 and 2016, the aver- others are finding equilibrium. continued decline in the sales vol- under 5 percent. According to JLL age was 1.7 million sf, and 2017 The face of retail is changing, but ume. As emotions settle, the sup- research, the national retail vacan- ended at 2.2 million. This number the need for it is not fading. Since ply/demand imbalance will favor cy rate in the third quarter, just likely will increase in 2018 as 1.9 2014, 17 malls across the country sellers. Buyers will widen their after Zell’s statement, was 4.5 per- million sf was under construc- simply took the word “mall” out scope, creating new opportunities cent – decisively healthy. Bolstered tion at the end of last year, but the of their names to start catering to for owners in Denver to maximize by an 18-month build up in posi- upward trend likely will taper. the changing marketplace. The fact proceeds. www.crej.com February 2018 — Retail Properties Quarterly — Page 15

ORIGINAL “WAXMAN CAMERA” PROPERTY FOR LEASE ONLY As retail landscape changes, look to positive trends 911-919 15th Street, Denver, CO 80202

BUILDING DETAILS: • First floor and two upper floors, plus • Excellent building signage opportunities - basement Building will have “wow” factor for signage • Approximately 3,250 SF per floor, Rentable • Long Term Ground Lease also entertained or 9,750 SF above ground* • Tenant Finish Allowance and Free Rent • Interior dimensions vary per floor ranging available to qualified tenants from 2,791-3,010 useable SF • 1 block from Colorado Convention Center and • Zoning: Downtown Theatre District (”D-TD”) Performing Arts Center • Taxes: Approximately $19,238 (2017) • Across the street from the Telecommunica- • Built in 1920, subsequent remodels tions Center of Denver - AT&T, CenturyLink, • No parking included, but building is adjacent Denver Main, and 910Telecom to parking lot available for daily rental • Massive fiber optic intersection

THE INFORMATION ABOVE HAS BEEN OBTAINED FROM SOURCES BELIEVED RELIABLE. WHILE WE DO NOT DOUBT ITS ACCURACY WE HAVE NOT VERIFIED IT AND MAKE NO GUARANTEE, WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ABOUT IT. IT IS YOUR RESPONSIBILITY TO INDEPENDENTLY CONFIRM ITS ACCURACY AND COMPLETENESS. THE INFORMATION CONTAINED HEREIN (INCLUDING, WITHOUT LIMITATION, PRICES AND RENTAL RATES) IS SUBJECT TO CHANGE AND/OR WITHDRAWAL WITHOUT NOTICE. SEPTEMBER 2017

Jeffrey Hirschfeld [email protected] • 303.454.5425

1528 Wazee Street Denver, CO 80202 O 303.623.0200 F 303.454.5400 www.antonoff.com Page 16 — Retail Properties Quarterly — February 2018 www.crej.com Investment Market A collection of investor sentiments and trends etail real estate continues ments and trends of States, private capi- properties as men- to feel the impacts of nega- note. tal, consisting of tioned above. tive headlines and shifts in • Buyer-seller equity fund advis- • Operations and consumer trends as the ever- reconciliation. Com- ers, operators with leasing. Out-of-mar- R changing landscape works to pared to a decade capital sources and ket equity investors find a stable footing. In 2017, there was ago, commercial high net-worth continue to seek a 21.3 percent decrease in total retail real estate prices individuals, has out local operating investment sales volume as compared are 20 percent high- increased every partnerships with to 2016, according to Real Capital er for all property year since 2014, best-in-class retail Analytics. This follows a 13.7 percent types nationally, reaching 61 percent operators in order decrease in volume from levels in Chad Murray according to RCA. Mark Williford in 2017, according Andrew Yaroma to enter a desirable Director, HFF, Director, HFF, Analyst, HFF, 2015. The decrease in sales volumes Denver The gap between Denver to RCA. In Denver, Denver market, such as is not solely in retail, but has been sellers’ expecta- private capital Denver, without the felt across most asset types including tions of pricing and what buyers accounted for approximately 80 per- need to establish an office and multifamily. The decrease were willing to pay for their perceived cent of all retail transaction volume in office. The ability to attract and main- in sales volumes year over year is risk gradually lessened throughout the metro area for transactions over tain tenants in this rapidly changing reflective of a shift in investor senti- 2017. Retail properties remained on $5 million, according to HFF research. retail landscape is more important ment. This also signals an opportunity the market longer as the two views With record amounts of capital to than ever, so high-quality manage- for those groups willing to wade in began to gravitate toward each other. deploy and a growing appetite for real ment and leasing teams are in high against the current and dive head first Well-located retail, value-add and estate as an asset class, the private demand. into investing in retail real estate. grocery-anchored retail were in high- equity sector is set to be the lead play- • Financing. Sellers of retail real The retail industry continues to est demand, not as subject to longer er of real estate investment in 2018. estate in 2018 are asking the ques- evolve as the needs and desires of marketing periods. In the coming • Real estate investment trusts. Retail tion of how prospective buyers will consumers change. This is the cycle year, the bid-ask gap is anticipated REITs have maintained high occu- finance acquisitions, in the midst of retail. The current shifting of retail to continue to shrink as the market pancy rates, despite retailer bankrupt- of the challenges of retail. Well- is similar to the introduction of the gains more comfort with retail real cies and store closures, by attracting conceived mixed-use, high-density, regional mall in the 1950s or the estate headline risk and the changing new tenants, including those provid- infill, “internet proof” tenancy, and emergence of the discount depart- retail environment. ing services and offering experiences, grocery-anchored centers with qual- ment store in the 1980s. Within the • Capital formation. Advisers and according to Nareit’s 2018 Economic ity sponsorship continue to generate current shifts are healthy and positive equity funds continue to raise capital Outlook. Overall, occupancy rates of attractive financing from traditional statistics on actual store openings and for retail real estate and many are properties owned by retail REITs was banks, life insurance companies and closings: forming strategies to pursue out-of- 95.7 percent as of third-quarter 2017 commercial mortgage-backed securi- • For every company closing a store, favor retail assets such as power cen- and has remained above 95 percent ties lenders. These lending sources 2.7 companies are opening one. ters with big-box exposure, and shop- since 2013. With healthy retail fun- are underallocated in retail and will • There were more than 4,000 net ping centers in secondary markets. damentals, REITs’ focus in 2018 will compete aggressively to finance the store openings in 2017, and another The deployment of this capital has be strategic portfolio optimization best centers. Riskier retail centers 5,000 are projected to open in 2018. been slow to occur but is expected through identifying and disposing of with box risk, lack-of-credit tenants, Financial markets have largely start- to pick up over the first half of 2018. noncore assets. Portfolio optimiza- or significant rollover are being under- ed to price the associated negative Experts within the real estate industry tion will focus largely on dispositions written with those risks in mind, lim- retail risk into individual asset valua- are in broad agreement that private of lower-quality assets or assets with iting leverage and requiring additional tions and investors are still attracted capital will be a principal driver of low-growth profiles. These disposition capital from the sponsor. Capital to to well-conceived, well-positioned new investment in real estate in 2018, strategies represent additional oppor- finance retail real estate remains for retail real estate assets. Through dis- according to a recent report from tunity for private capital to enter those able to obtain the best quality cussions with investors of retail real PWC. As a percentage of total retail certain markets and deploy value-add assets and those with equity to lessen estate, we have compiled a few senti- transaction volume in the United or repositioning strategies for retail the risk to the lender.

EKS&H provides ﬁve-star service and an unmatched client experience. To help you improve business outcomes and enhance stakeholder value, our real estate practice includes industry-speciﬁc audit, tax, technology, and consulting solutions.

To learn more, please contact RJ McArthur at [email protected] or 303.740.9400.

www.eksh.com www.crej.com February 2018 — Retail Properties Quarterly — Page 17

Park Hill Commons 2898 Fairfax Street, Denver

•Park Hill’s newest redevelopment project! A pedestrian-friendly, RTD-served, live/work/play community

•Featuring Fairfax Row townhomes, the Studios, the Ofﬁces, and the Shops

•The Shops will offer a mix of Class A restaurants and retail stores surrounding The Square, an open park and gathering place for residents and visitors, in the center of the project.

•Projected completion Fall 2018

•Park Hill is one of Denver’s oldest and largest neighborhoods. South of I-70 in close proximity to Stapleton/Northﬁeld.

Bob Bramble | Direct: 720.382.7306 | [email protected] or Charles Nusbaum | Direct: 720.382.7311 | [email protected]

5570 DTC Parkway, Suite 150, Greenwood Village, Colorado 80111 Website: www.dunton-commercial.com

CAM Services is Proud to Offer the Following Quality Services Power Sweeping Signage Repair Parking Lot Sweeping Curb & Sidewalk Repair Snow Removal Parking Blocks Day Porter Services Construction Clean-up Tenant Finish Water Damage Clean-up Interior/Exterior Building Property Security Maintenance Temporary Fencing Power Washing Barricades Power Scrubbing Rubber Removal Fence Repair GSE Maintenance $10 Million Insurance Event Services Umbrella Silt Fence Storm Water & Erosion Fully Bonded Control ...and much more! Phone: 303.295.2424 • Fax: 303.295.2436 www.camcolorado.com 24 Hours A Day, 7 Days A Week! State of the art equipment, with GPS tracking for your convenience. Multiple Service Discounts Available Page 18 — Retail Properties Quarterly — February 2018 www.crej.com Owner Insights 4 ways to make a national owner hyperlocal he success of a retail center is the build-out and dependent upon the amount of grand opening pro- foot traffic that comes through cesses. This could be National retail chains attract shoppers, its doors. As a large, publicly a retailer’s first time T traded landlord, we don’t want running a business, but ensuring that there is a mix of both to have the appearance of operating a so knowing it has a shopping center from our headquar- resource to turn to ters in New York. Good landlords will will help build good- national and mom-and-pop shops not truly try to embed themselves into the will. Help it adver- community and have a vested interest tise, and share news only will provide shoppers with one-of-a- in the surrounding region to ensure Rick Turner of its progress and Director of real their centers are attracting local cus- estate, Kimco grand opening on kind offerings, but also will help support tomers. Realty, Aurora your corporate social Following are four ways that a media. For example, shopping center owner can become many of our small businesses are the local economy. hyperlocal. interviewed and featured on our blog. 1. Create a well-balanced tenant mix. 3. Become one with the community. Also, work with the city. If a center A common misperception is that Sponsor fundraisers and events, and Parking is even more important. is undergoing a redevelopment, lis- large, national retail owners kick aside host events that are educational and There should be adequate parking for small businesses in favor of national fun for area residents. This fosters ten to and address any resident and shoppers, even in high-demand sea- tenants. That’s simply not true for a good relationship and will further municipal concerns. Pull together and sons. If potential shoppers must circle any successful owner. National retail make your location a true destination, offer the center as a resource if need- the lot a few times to find a spot, they chains attract shoppers, but ensuring not just a quick shopping trip. We have ed. For example, one of our Florida might become frustrated and leave that there is a mix of both national centers that are the start or finish for centers was just a block away from without setting foot in a store. and mom-and-pop shops not only will marathons, a spot for mobile blood the tragic Pulse mass shooting. This Lighting is another aspect of the provide shoppers with one-of-a-kind donations, or part of a route for charity Orlando site became the headquar- shopping experience that should not offerings, but also will help support the bicycle rides. Another popular commu- ters for press conferences, and retail- be overlooked. A well-lit center not local economy. These smaller shops nity draw is hosting safety days, where ers had extended hours and donated only looks more inviting at night, are the heart of the community and local firefighters and police officers their services to first responders and but also creates a safer environment, what really make our centers stand come to a center to give safety dem- those helping in the aftermath. After- which is important in any commu- out and be successful. When leasing onstrations, hand out bike helmets, ward, we planned and erected trib- nity. We replaced lighting to improve space, remember that diversification is allow visitors to take pictures with the utes to those victims. energy efficiency and light quality essential, so don’t place two nail salons firetrucks and police cruisers, and get 4. Make sure that shopping is a pleas- at hundreds of our shopping centers in one shopping center. These retailers to know the residents they serve. ant experience. First impressions mat- through our Illumi-Nation Program, should complement each other, not At our Highlands Ranch Shopping ter and a shopping center owner is launched in 2014. compete with each other. Center, we regularly host local pet responsible for the critical impression Ultimately, there are a lot of differ- 2. Set retailers up for success. In the adoptions and are planning music con- made in the first few minutes after a ent ways to engage with the com- same vein, once you attract a smaller certs for the warmer weather in 2018. shopper arrives. Landscaping should munity and position your shopping retailer to the center, make sure it is Holiday events also are a popular draw. be attractive and well maintained. center for success. Determine the set up for the long haul. This means At our other shopping centers across Those pops of color can grab a per- method that works best for your cen- working with the retailer to set fair, the country, our holiday events include son’s eye as they drive by. Our distinct ter’s tenant mix and your surround- manageable lease agreements that are Halloween parades, tree lightings, ice palette is green, purple and yellow ing customer base, and set out to in line with the market. carving competitions, menorah light- with a few other native plants mixed provide a shopping experience unlike Once the lease is signed, assist with ings and more. in. any other in the area.

2785 Speer

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COLORADO | TEXAS mpconstruct.com Park Regency Assisted Living [email protected] www.crej.com February 2018 — Retail Properties Quarterly — Page 19 Retail Trends Are we witnessing an apocalypse or resurrection? pon reading his obituary in physical store base the newspaper, Mark Twain as pick-up and famously replied, “The delivery locations. reports of my death have Walmart already U been greatly exaggerated.” has more than That’s how 2017’s constant head- 1,000 pick-up loca- lines about the collapse of brick- tions open. The and-mortar retailing in America are company’s 11,500 starting to feel as 2018 opens a new U.S. locations are chapter in the history of the shop- located within 10 ping center industry. Allen Ginsborg miles of 90 per- To be sure, there is too much Managing director cent of the U.S. and principal, retail space per capita in America mountain states, population, so the and there are many retailers (Toys NewMark Merrill proximity for the R Us, Sears, Payless ShoeSource Cos., Longmont last mile of deliv- and Gymboree, to name a few) who ery is unparalleled have not yet identified a way to by any retailer, including Amazon. keep up with changing consumer Walmart also is purchasing stand- habits as well as Amazon can. alone online retailers like ShoeBuy, Retailing in America is an active Bonobos and Moosejaw to further dog fight. Some retailers are going broaden its platform. to be eaten, some will be maimed Target has taken a slightly differ- and many will be victors. ent approach. While also investing NewMark Merrill Cos. As of mid-January, there have in digital platforms and fulfillment As of mid-January, there were several positive sales reports from name-brand mer- been several positive sales reports through its acquisition of Shipt and chants, as identified on the holiday same-store sales comparison chart. from name-brand merchants, as Grand Junction, Target has focused identified on the holiday same- on improving the in-store customer cago area stores. This seems like a cold-pressed juice while meeting store sales comparison chart. experience by remodeling more match made in heaven for Kohl’s, with a personal stylist, who will So, while some retailers are than 100 stores last year. The com- whose stores are 40 percent too big, help them select and order clothing struggling, others have taken the pany is committing to remodel 325 and for Amazon, who is leading the from the website. Customers can Amazon challenge and are fighting stores in 2018 and over 1,000 by pack among e-tailers going to brick even get a manicure before heading back by reimagining and redefining 2020 for a cost of $7 billion. Sales and mortar with its purchase of to an evening event while they wait what the face of retail will look like at these next-generation stores Whole Foods. for same-day tailoring on the new in the future. increased by as much as 4 percent My personal favorite innovation dress that was delivered that morn- Omnichannel selling is here to last year. At the same time, Target is Nordstrom’s new Local concept, ing. The new Local store is near two stay, so the best merchants are is opening smaller-format stores which opened in October in West full-sized Nordstrom locations and investing heavily in various plat- in urban infill areas where larger Hollywood. The store is 3,000 square caters to the busy lifestyle of the forms to reach consumers. Walmart stores cannot penetrate. Target also feet, compared to the company’s company’s customers who want purchased Jet.com for $3.3 billion is rolling out same-day delivery in typical 140,000-sf full-sized foot- ease of access and returns, but also last year to further develop and New York City. print. Local carries no dedicated personal service and attention. deploy this app across all mobile Kohl’s has taken yet another inventory. Instead, customers can Apple’s most recent concept is platforms. The company’s goal is approach by agreeing to test selling pick up and return online orders, creating “Town Square” stores like to provide as wide an array of mer- Amazon products and accepting have clothes tailored, and enjoy a chandise as Amazon, using the returns in 82 Los Angeles and Chi- glass of wine, cup of espresso or Please see Ginsborg, Page 26

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Accelerating success. Page 20 — Retail Properties Quarterly — February 2018 www.crej.com Retail Trends Industrial space can support new retailer needs he retail industry is evolv- sales forecast to ing, and while the growth of grow by 10 percent e-commerce has not made annually and to traditional retail obsolete, as top $500 billion by T once predicted, it has forced 2020, demand for the entire industry to adapt to high-quality, well- changing consumer behaviors and located industrial meet a new set of expectations. real estate will With almost any product available remain steady. for online purchase, consumers are Last year alone, less likely to drive to a store, park, Ryan Good Executive vice the Denver metro walk in, make a selection, stand president, partner, area delivered 5.4 in line, pay and then drive home, Etkin Johnson Real million square feet unless there’s a compelling reason. Estate Partners, of new industrial As a result, retailers are introducing Denver space – the high- new solutions that offer customers est since 2001 – both the ease of online shopping as according to CBRE. Looking at 2018 well as memorable in-store experi- and beyond, Denver’s strong indus- ences that reinforce their brands. trial and logistics market is well This evolution also means that positioned to continue providing retailers in Colorado and across the type of proximity to consumers the country are thinking differently and accessibility to major transpor- about their real estate needs. One tation arteries that the retail indus- CBRE emerging trend is the growing reli- try needs. Deliveries of industrial space in the Denver market, compared with population growth for the area. ance on the industrial market for • How industrial space can be used. manufacturing, storage and dis- Advances in e-commerce have cre- ready for shipment at a moment’s date immediate and future growth. tribution solutions as companies ated a new kind of retail experience notice. employ more e-commerce strate- that allows consumers to get what The warehouse houses manufactur- gies. they want, when they want it. Con- Amazon aside, smaller operations ing, distribution and office func- • Future demand for industrial space. sider the evolution of Amazon, for also are driving demand for indus- tions, as well as a showroom that Regardless of how companies are example. trial space. As companies continue doubles as a retail staging area. choosing to adapt to changing In 2005, Amazon introduced to grow in Colorado, many are find- Similarly, WishGarden Herbs – consumer demands, the industrial Amazon Prime, which offers free ing success through e-commerce Colorado’s herbal remedies expert market is starting to play a major two-day shipping on most prod- retail strategies that require more – relocated to the Colorado Tech- support role in the retail revolution ucts. More recently, the company space for their operations. nology Center from Boulder in and will continue to do so in the introduced Prime Now, which guar- For example, Fenix Outdoor 2014 to expand its manufacturing coming years. antees free two-hour delivery in Imports (the parent company and distribution operations due to E-commerce users typically select cities, including Denver. This behind popular outdoor brands increased consumer demand across require up to three times more type of on-demand consumerism including Fjällräven) nearly doubled the country. This woman-owned, industrial space than a traditional has created a feeding frenzy and, to the number of its Colorado employ- family run company has grown retail supply chain user, accord- keep up with demand, Amazon has ees a couple of years ago, necessi- from a small startup to a nationally ing to CBRE’s 2018 U.S. Real Estate constructed dozens of fulfillment tating a move into a larger industri- recognized company by employing Market Outlook. The report goes on centers across the country to store al/flex space in the Colorado Tech- to predict that with e-commerce thousands of products that are nology Center that could accommo- Please see Good, Page 27 www.crej.com February 2018 — Retail Properties Quarterly — Page 21 Retail Trends Industrial space can support new retailer needs Space activation key to create successful centers he one constant in retail is curated shopping change. Whether managing centers. What through fluid financial mar- e-commerce can- ket cycles, the natural life not offer is the T and death cycles of specific human interaction retailers as shopping habits change, and experiences or adapting and repositioning a that consumers development project midconstruc- crave. tion to adjust to the market or ten- Our most suc- ant realities, change management Bryan cessful centers always has been paramount in the McFarland here in Colorado retail development world. Principal, focus on develop- Reading the headlines today, one development, ing public com- could easily surmise that bricks- Alberta munity spaces and and-mortar retail is rapidly on the Development then activating Partners LLC, decline (see Retail Apocalypse!) Greenwood Village those with year- with the end not too far over the round events. horizon. Sales of commodities such While great archi- as electronics, office supplies and tecture creates the framework for books are migrating online. Class B these spaces, we focus on mature and C malls that primarily feature landscaping, a variety of water “middle ground” retailers that are features and fountains, fireplaces neither luxury nor value oriented/ and comfortable seating that are all Wonder Works Studio Centers should focus on developing public community spaces and then activat- discount are under severe duress, accented by a comprehensive floral ing those spaces with year-round events, such as this movie night at The Streets at and many, if not most, will be repo- program. SouthGlenn. sitioned over the next five to 10 The real key is activation of the years and beyond. The department space. Programs such as summer that add value to the in-store expe- residential over the right mix of store model also is challenged with concert series and farmers markets rience. Stores are deploying wire- retail and adding an office compo- retailers like Sears and J.C. Pen- in the shopping center’s parks and ney Co. on a severe downturn. This plazas (with those spaces convert- less beacons that send promotions nent to help drive daytime demand could mean that a 1-million-square- ing to ice rinks in the winter time) to nearby shopper’s smartphones, for our restaurants is key to suc- foot retail center might reposition serve to draw the community as along with augmented reality apps cess. Retail uses that include gro- to have that leasable retail area they embrace these events and that allow customers to visualize cery, theater, fitness, entertainment reduced and convert the balance to make them their own. clothing or how furniture might and food help to generate the traffic a mix of amenities that bolster the The goal here is experiential look in their home. These new tools and recurrence of visits that will property and restore vibrancy to the retail, creating the opportunity for add interactivity and fun to the benefit the balance of the shopping center. the consumer to socialize, linger physical store. center and are fairly well insulated While it is no secret that pres- and thrive, and, ultimately, spend To this end, as we look to our from the e-commerce threat. sures from e-commerce, and par- more time shopping. It is critical development pipeline here in Colo- One of our challenges with two of ticularly Amazon, along with other for retailers to focus on creating rado, we are focused on creating our existing centers here in Colo- online shopping is impacting the an experience that simply cannot active, vibrant, mixed-use develop- rado is addressing the demise of the physical store dynamic, we are be duplicated online. Omnichannel ment projects that incorporate 21st department store. Retailers, such strong believers that it will never retail is a great example of retailers century technology today’s consum- replace well-designed, properly rolling out innovative technologies er expects and requires. Combining Please see McFarland, Page 27

RETAIL SERVICES Site condition assessment Agency permitting/entitlements Roadway Pedestrian access Pavement management/evaluation Infrastructure Site renovation solutions Utility design/coordination Build-to-Suit Retrofit site design Traffic Landscape Design Peer review ENR RANKINGS #21 of the Top 500 US Design Firms #8 for Highways #16 for Water Treatment and Desalination #6 of the Top 100 Pure Design Firms #8 for Solar Power #18 for Sanitary and #2 for Retail #9 for Transportation Storm Sewers #2 for Multi-unit Residential #10 for General Building #29 for Water Supply #7 for Airports #16 for Mass Transit and Rail #43 for Sewer and Waste RETAIL CLIENTS IKEA Darden Starbucks CVS Pharmacy LA Fitness Kohl’s Bank of America Target Kroger Chick-fil-A Macy’s Discount Tire

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WE ARE Denver: 4582 S. Ulster St., Ste. 1500 • Denver, CO 80237 • 303.228.2300 ONE OF FORTUNE COMPANIES MAGAZINE’S TO WORK FOR Colorado Springs: 2 N. Nevada Ave., Ste. 300 • Colorado Springs, CO 80903 • 719.453.0180 Page 22 — Retail Properties Quarterly — February 2018 www.crej.com Retail Trends A new retail rises as consumer lifestyles change ne of life’s few certain- For example, at ties is change. Change is Park Meadows, everywhere around us and you can valet park it should not be surpris- your car and just O ing our retail landscape feet away are Yard is changing rapidly too. Who in House and Perry’s the aviation business would have Steak House. This thought passengers could sim- makes it easy ply have boarding passes without to enjoy a quick assigned seats? Who in the auto- beer or two with motive business thought five years Matt Writt buddies at Yard Vice president, ago that self-driving cars would retail, JLL, Denver House, stroll over be highly likely by 2020? Huge to Arhaus to pick shifts are occurring across almost up a couple items every type of business as we work and meet your date for a great din- smarter and speed of connectivity ner at Perry’s. A highly efficient to our colleagues is instantaneous. lifestyle model! Note: Many malls We see it in how companies are now are called lifestyle centers … building their offices in more open, maybe a coincidence, but lifestyle collaborative manners and adding centers are a better description for amenities never dreamed of before. how we trade as consumers. Retail All done in an effort to retain the experiences are daily occurrences best and brightest. rather than a big planned outing. Park Meadows So why should retail be immune? Entertainment and fitness are Food and beverage along with entertainment are becoming a much larger part of the As retail property owners from other categories seeing tremen- tenant mix for successful shopping centers. regional malls to neighborhood dous growth in Colorado’s retail companies like AMC and Landmark plan. Belmar Shopping Center is grocery-anchored centers renovate, sector. Theater chains are adding Theatres in our area. a great example of this. If current redevelop and re-tenant, some significant upgrades to their seat- Fitness companies of all shapes trends persist with e-commerce trends in strategy are emerging. ing and food and beverage options and sizes are vying to control geog- and the resizing of many retailers, Food and beverage along with to accommodate the clientele’s raphy through the Denver metro. A more opportunities to add these entertainment are becoming a desire for a higher level of product. newer center that exemplifies how integrated lifestyle components much larger part of the tenant mix. Examples of this can be seen with well this category fits is Cornerstar will surface in existing centers. Shopping Center. The standalone One thing that hasn’t changed 24 Hour Fitness is a great looking a bit in retail is it all comes down building that blends well with the to the operator. Company culture, shopping center. The full parking training, being fiscally disciplined Entertainment and fitness are other lot looks great too! and being a partner continue to Another evolution is retail be what separate the best retailers categories seeing tremendous growth becoming something not retail at from everyone else. all. As projects are being contem- As Bob Dylan said, “We all gotta plated, built or redeveloped; multi- serve someone.” In retail, you need in Colorado’s retail sector. family residential, hotel and office to wake up and ask yourself: Who uses are a part of almost every am I going to serve today. www.crej.com February 2018 — Retail Properties Quarterly — Page 23 Management From click to cha-ching: Enticing online shoppers etail property owners and type of shopping. their tenants are feeling Create a balance the pain as online shop- and give shoppers ping options “click away” at a few “comfort” R their profits. It has become shops, but then far too easy for consumers to buy mix it up with almost anything from their key- those perfect local board or smartphone, as opposed ideas that entice to going out to buy. Following are a return trip to suggestions to help build and your marketplace. maintain an environment that is Ilene Vivinetto- Some of the most enticing to shoppers to help you Suter successful shop- Retail and fashion and your tenants compete. consultant, Retail ping districts will • Create an experience. With so Fashioned, Denver have a few brand many shopping options, consumers stores mixed in value experiences over things. One with locally owned shops and res- way to create an experience is by taurants. Draw patrons in with making a visit to your marketplace brand recognition and keep them an event, even a tradition. Con- coming back with unique shops sumers will make a point of visit- and local chefs. ing your property if you turn it into • Are you photo ready? In a day a destination. when we need to snap a picture For example, during the holi- of everything we do, everything days, turn storefronts into holiday we eat, everything we buy – for displays – remember the days of sharing in posts with friends – Larimer Square Many successful shopping districts have a few brand-name stores mixed in with children’s faces pressed against it’s important to make sure your locally owned shops and restaurants, all of which help make the area a destination. store windows? Create midsum- property is photo ready for this mer events that will draw people to free advertising. Flowers, clean from their suburban friends. They have a perfect dinner spot and a your retail center for warm weath- sidewalks, outdoor seating on a shop differently. Walk your neigh- place for a night cap? er shopping. Think of fun ways to warm day, clean beautiful shop borhood and see what people are • Turn your tenants into a team. entertain visitors (who says you fronts, even a few clever sidewalk doing, how are they are dressed, Encourage your tenants to become can’t have performers along your boards will end up on hundreds of and notice if they shop as couples walkways?). Cultural festivals, food Instagram posts. So many of our a team by hosting tenant meetings festivals, family festivals – all of shopping and dining choices come or in groups with friends. By gain- and gatherings. By understanding these things create an experience from images that we have seen ing this understanding you will what is and isn’t working for oth- that online shopping can’t provide and shared on the different social be able to create the right mix of ers, everyone can benefit. It also and keep consumers coming back media outlets. Make your property shops and dining for your retail will help to save time by not pur- to your marketplace for more. a memorable photo spot and you center. In order to keep your traf- suing ideas that haven’t worked • Mix it up. Don’t create a vague will have instant advertising that fic flowing, ask questions such in the past. By providing tenants shopping experience for your con- will draw in new visitors and keep as: Can you cater to consumers at with this type of forum, they will sumers by showing them the same your regulars coming back. all times of day? Does your space better understand one another’s shops and restaurants that they • Cater to your demographic. Not have a place for a good breakfast shops, which will lead to cross rec- can find anywhere. Malls were every good idea will work in every gathering? Is afternoon shopping ommendations, and increase sales their own ecosystem and consum- shopping district or neighborhood. in abundance? Can business people ers have become bored with that Urban customers are very different grab a cocktail after work? Do you Please see Vivinetto-Suter, Page 27

REGIONAL RETAIL/COMMERCIAL DEVELOPMENT OPPORTUNITY WINDSOR, CO

• 18.25± Acres zoned General Commercial, which allows for an PROPOSED array of retail & commercial uses. RESIDENTIAL

FORT COLLINS • Close proximity to Interstate 25 PROPOSED PTARMIGAN RETAIL/COMMERCIAL COUNTRY (76,000± VPD) with convenient CLUB regional access.

COUNTY ROAD 5 • Hard corner site at signalized 76,000± VPD 76,000± AVAILABLE: intersection with 1,305'± of 18.25± ACRES frontage along Highway 392. 20,000± VPD State Highway 392 • Adjacent to Ptarmigan Country Club and proposed residential development.

• Estimated Household Income of

LOVELAND $136,113 within a 3 mile radius.

JUST OFF INTERSTATE 25 ALONG HIGHWAY 392 IN N. CO

Representatives:

Jake Hallauer, CCIM Ryan Schaefer Chrisland Real Estate Companies 970-305-8113 970-295-4819 Phone: 970-663-3150 [email protected] [email protected] www.ChrislandRealEstateCompanies.com Page 24 — Retail Properties Quarterly — February 2018 www.crej.com Retail Highlight Small businesses thrive in Cherry Creek North he city of Denver contin- hotels, restau- ues to see incredible levels rants, living, office of investment. This year and retail spaces is expected to be another coming online. We T record year with several are working close- major development projects under ly with public and construction or planned that will private partners add to the city’s growth and trans- to ensure that the formation. area continues to In Cherry Creek North, this trans- be the number one formation is even more profound. Brian destination for Cherry Creek North, the 16-block Phetteplace premier shopping, Director of area extending from University economic as well as the Boulevard to Steele Street and development, top destination First to Third Avenues, has long Cherry Creek in Denver to live, been known as the home for inde- North Business work and stay.” Improvement pendent and luxury retailers in District, Denver The BID works Colorado. The area boasts over 2.46 to support its million square feet of office and local, national retail space, more than 5,000 park- and international retailers. Begin- ing spaces and businesses employ- ning in 2008, the BID financed and Ryan Dravitz ing over 7,300 people. Cherry Creek managed the design and construc- Six major construction projects in Cherry Creek North will be completed in 2018, North’s total commercial assessed tion of an $18.5 million streetscape adding 201 hotel rooms, 236 residences, 110,000 square feet of office space and over valuation has doubled over the renovation project called “The New 50,000 sf of new or renovated retail space. past five years. With a Walk Score North.” The improvements were of 95, Cherry Creek North is the designed to retain and attract visi- are the foundation of the business that provided new insight into con- most walkable area in the city of tors, to protect and preserve the community and give the area its sumer perceptions and spending Denver. The larger Cherry Creek area’s character, and keep it a com- unique character. patterns in the district. According area employs 18,000 and is home petitive retail environment. The “There is no question that Cherry to the results, visitors to Cherry to more than 7,000 residents. streetscape frames and supports Creek North is what it is because Creek North are highly educated: The Cherry Creek North Business an active and attractive public it is an authentic space that has 48 percent have a college degree Improvement District has been realm that continues to draw new organically grown over time,” said and 26 percent have an advanced the management entity for the investment and new businesses Rosella Louis, founder of The Brass degree. Visitors also have high 16-block area since its establish- and enhances the visitor experi- Bed: fine linens & furnishings. “It annual household incomes with ment in 1989. The BID’s mission ence in the area. is the kind of place where you can 44 percent earning over $100,000. is to actively plan, manage and Today, Cherry Creek North is the buy a simple lunch or a gourmet Respondent’s top reasons for visit- promote Cherry Creek North as a largest home of small businesses dinner, a pair of flip flops or a dia- ing the district were shopping or premier destination for shopping, in the Rocky Mountain region. Of mond bracelet … a place where dining and the average number dining, living, working and visiting. its 250 retailers, 70 percent are independent retailers and nation- of visits per month was between “Cherry Creek is widely known as independently owned and oper- als coexist. And now a place where one and five. Overall, Cherry Creek the city’s premier shopping desti- ated. Long-standing retailers many people live and work, it’s North was ranked highly by visitors nation,” said Julie Underdahl, presi- continue to celebrate milestone why we’ve thrived here for almost for its landscaping, feeling of safety dent and CEO of the Cherry Creek anniversaries that range 20, 25 and two decades!” and overall cleanliness. North BID. “The area is evolving as 30-plus years of doing business In summer 2017, the district con- a mixed-use destination with more in the area. These entrepreneurs ducted a Visitor Intercept Survey Please see Phetteplace, Page 27

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Continued from Page 1 After the storm, a temporary roof was immediately deployed. A perma- past – you’re putting up drywall, you’re nent new roof is now nearing comple- painting it; you’re putting up ceiling tion; it features a better hail protection tiles; you’re putting in light fixtures; system than the original 2002 roof. all that type of stuff, which is all the Remarkably, only four of the more than same, but in a completely different 100 original skylights were damaged sequence of work and timeframe.” and needed to be replaced. The biggest challenge from a project The interior of the mall is nearing management perspective was securing completion as well, with flooring in the manpower, he said. They needed the common areas accounting for the to get enough tradesmen to the site at final step. The original wood, carpet a very quick pace in order to meet the and concrete floors are being replaced project’s outlined goal to be reopened with tile and carpet, along with a few before Black Friday. Not only were designated polished concrete sections, they dealing with an extremely tight Chisholm said. construction labor market, but also “Work on the common areas will the project required work in practi- continue during evening hours extend- cally every part of the retail center. The ing into 2018, and more retailers will most in-demand trade: drywallers. At open during this timeline,” Morris said. times, there were over 350 drywallers “As a result of the storm restoration, on site, he said. the new concept for Colorado Mills will Remarkably, of the more than 100 skylights in the mall, only four had to be replaced. At the busiest times of the proj- provide a refreshed, contemporary look ect, from August through the mall’s while still preserving some of its legacy reopening, there were more than 550 features.” The exterior of the shopping center media accounts share more infor- workers on site. Overseeing all of that Between the common areas and will be the final step in the restora- mation on which tenants are open. was a team of about 18 supervisors, tenant spaces, the construction crews tion project. This will ramp up as the All said, the timeline from the project managers and safety crew hung over 200,000 sheets of drywall, weather gets nicer and is slated to closing to reopening is something members. Since reopening in Novem- replaced more than 12,435 light fix- be completed by the second quarter, with which everyone is proud to be ber, the numbers have come down tures, replaced 100,000 ceiling tiles Chisholm said. associated. quite a bit, but there still are crews and painted more than 7.5 million sf The shopping center owner was “Our team at Simon and Colo- on-site finishing the project, Chisholm of wall space, according to The Beck thrilled to reopen with the support rado Mills worked incredibly hard said. Group. of more than 100 stores and eater- to reopen the center and continues ies, which have been opening on a to be dedicated every day,” Morris rolling basis since Nov. 21, Morris said. “We are so grateful to our team, said. “As the largest outlet and value partners and community for work- Construction statistics from Colorado Mills restoration project retail shopping destination in the ing with us through this process. We The effort to reopen Colorado Mills involved a massive undertaking, high- state, additional retailers will open look forward to holding a celebration lighted by Simon Property Group and The Beck Group’s shared project statis- throughout 2018 to return us to pre- once all work is complete.” tics. The project required: storm occupancy closer to 200 stores One silver lining coming from • Building the new roof, which is the size of 21 football fields; and restaurants,” he said. the project is realizing what can be • Replacing over 100,000 ceiling tiles, which if they were lined up side by Several of the tenants with exte- accomplished when you put your side would span from Denver to Colorado Springs; rior entrances reopened earlier than mind to something. “We got a lot of • Hanging more than 200,000 sheets of drywall, which is equivalent to 183 Nov. 21 – with the SuperTarget and work done in a really short amount acres; the United Artist movie theater lead- of time,” said Chisholm. “We – the • Painting more than 7.5 million square feet of wall space, which is like ing the pack. Meanwhile, a few inte- Beck team and the 500-plus trade painting 14,285 average-sized bedrooms; and rior tenants opted to take the time workers who were working their • Replacing 12,435 light fixtures. to do a full redesign and have yet to tails off out here – were all amazed open. The center’s website and social by what we accomplished.” Page 26 — Retail Properties Quarterly — February 2018 www.crej.com

Johnson Continued from Page 8 Olympic Museum construction well more downtown living has resulted local retail lease rates, which have underway, retail vacancy downtown in a focus on an expanding retail been climbing steadily over the last for sale as redevelopment opportu- is near an all-time low at 2.8 per- core. several years, but still are shy of the nities. cent. Eight new retailers announced In recent years, the Colorado lease rates the Colorado Springs mar- Colorado Springs’ downtown his- openings for 2018 in the downtown Springs community has really grown ket saw in 2007. The highest lease torically has struggled to find its market, including brands like Denver and now is reaping the benefits. rates in the market are $16.31 per niche. However, in recent years the Biscuit Co., Atomic Cowboy and Fat Colorado Springs is beginning to see sf in the northeast corridor, which downtown partnership has done a Sully’s Pizza. Colorado Springs hote- interest from franchises looking to is home to several major new retail great job being an ambassador for lier Perry Sanders has proposed a expand out of the Denver market and developments as discussed earlier. the heart of Colorado Springs, craft- Switchbacks Stadium at the entrance is seeing new investors and develop- Retail lease rate growth will persist in ing the vision of a thriving arts- and to downtown at Antler’s Park. Last, ers enter into the market as well. 2018 due to the continued commer- business-friendly center. With the but certainly not least, the push for All of this development is impacting cial real estate activity. Keepper Continued from Page 12 in a major metropolitan statistical uses. They’re the most challenging center even at a very high debt yield area. Commercial mortgage-backed because they usually have co-ten- unless there is a redevelopment plan fixed rates average 4 to 4.5 percent securities lenders or debt funds usu- ancy clauses tied to major tenants to replace the struggling tenants for 10-year fixed-rate terms, up 50 ally are the best sources for these with declining sales and susceptible that’s realistically achievable within basis points compared to a year types of properties. CMBS lenders to a “domino effect.” They often have two to three years. Debt funds, CMBS ago. These rate increases are almost can lend up to 75 percent loan to anchor tenants like J.C. Penny Co. or lenders and banks are the best can- solely due to Treasury rate increases, value on power centers in some sit- Sears and one of these anchors may didates for these types of invest- as lender spreads have remained uations and debt funds may be able own its store, which makes it more ment opportunities. mostly unchanged. to finance more if there is a viable difficult to redevelop due to uncer- Overall, we expect investor senti- Power centers, which typically redevelopment plan that can be tainty about controlling the entire ment toward retail will continue to contain a combination of big-box, achieved within two to three years. site. There is capital for Class B improve in 2018 as we continue to midsize and strip retail, are not Class B quality malls in second- malls and big-box power centers, but develop a better understanding of good candidates for insurance com- ary and tertiary locations as well as the investor needs to have a detailed consumer habits. In the meantime, panies in 2018 unless they have a power centers with big-box retailers plan to replace any of these types of there is plenty of mortgage capital strong occupancy history, credit selling products that are easier and tenants with a destination- and/or available, but real estate inves- tenants, increasing sales and good cheaper to purchase online are a dif- entertainment-type concept or high- tors with loans maturing this year demographics in an infill location. A ferent story. These properties are in er alternative use. There are virtually should get started early, especially if power center that fits this descrip- major need of a redevelopment plan no nonrecourse lenders interested they own one of the more challeng- tion is unusual and is likely located and likely with higher alternative in financing a Class B mall or power ing subsectors of retail.

Ginsborg Continued from Page 19 can hang out to engage in person with America is the open laboratory of ideas retailers flock to hub destinations Apple products, take a class on photog- that competition among retailers pro- favored by millennials. the one it opened in Chicago last fall raphy, learn to code or just see what’s motes. Yes, several of today’s retailers Mark Twain also said, “It’s not the to replace the flagship North Michigan new. Considering only 10 percent of and a fair amount of their space will size of the dog in the fight, it’s the Avenue location. The store is designed iPhones are purchased in stores, creat- disappear over the next decade, but size of the fight in the dog that mat- as an indoor plaza, complete with trees ing Apple playgrounds makes all the well-located shopping centers with ters.” I’m betting that the retailers and comfy seating. It’s a cross between sense in the world for millennials who innovative merchants who focus on I’ve mentioned have plenty of fight a gathering place, retail store and an crave experiences, especially if they customer service and exciting experi- in them to challenge Amazon and education center. For example, think center it around their phones. ences will continue to thrive. Sales per each other to deliver what the con- of an Apple park as a place where you What I love most about retailing in square foot may even increase as great sumer demands.

www.crej.com February 2018 — Retail Properties Quarterly — Page 27 Good Continued from Page 20 ited inventory on site with evolve in Colorado and the opportunity to purchase throughout the country, both traditional and e-com- selections online. With off- companies will continue to merce retail strategies. site storage nearby, custom- figure out new and innova- Other retailers are pio- ers can expect same-day tive solutions to meet the neering solutions that delivery of their products to changing demands. And incorporate e-commerce the store or their homes. It while this evolution might strategies into new concepts is yet to be seen how this take many different forms, that most likely will require type of model will affect the it’s becoming increasingly more industrial space in demand for new industrial clear that retail will rely the future. For example, the space, but it is certainly a heavily on the flexibility and recently introduced 3,000-sf trend to watch. functionality of the industri- Nordstrom Local keeps lim- As retail continues to al market moving forward. McFarland Continued from Page 21 they often are the dominant in the short term, performing sites with great visibility and these types of repositionings as Macy’s and Sears, continue access within their centers. ultimately adds value for the to downsize their portfolios This aids the redevelopment center, the owner/developer to reduce overall store count. and repositioning of these sites and the community. Developers across the country tremendously. A long-term Rather than buying into are dealing with this issue – view of replacing these large the media hype regarding the when a department store clos- boxes with a mix of uses that “retail apocalypse,” we view es, it creates co-tenancy issues enhances and supplements this as yet another transforma- for the inline shop tenants. the existing tenant mix cer- tion of the industry. Certainly, However, the silver lining tainly will serve to enhance the it is a formidable challenge, but is that the location of these strength of these centers going out of change comes opportu- department stores typically into the future. While it can be nity. is great real estate because painful and capital intensive

Vivinetto-Suter Continued from Page 23 incredibly convenient, it increase (up 15 percent from lacks the human touch that third-quarter 2016 to third- and return business for the shoppers look forward to quarter 2017), third-quarter team. experiencing when they e-commerce sales only • Help your tenants by hiring visit quality stores. Help amounts to 9.1 percent of a pro. Consider hiring a retail your tenants find the ways total retail sales, according consultant to provide an to make their stores places to the U.S. Census Bureau outside perspective to your people want to buy from by News from the Department tenants on ways they can bringing in someone who of Commerce. Based on this improve their business. This can help them succeed. data, we are still a brick- could include details such Finally, an encourag- and-mortar society that as merchandising, décor, ing fact for retail property loves to go out and shop. floor plans or even go to the owners and their tenants It’s up to you to get creative extreme of training employ- to remember: Although and attract shoppers to your ees. While online retail is e-commerce is on a steady property. Phetteplace Continued from Page 24 is the fourth consecutive year the Colorado market within of annual increases in collec- the BID boundaries. There are three primary tions with the area consis- Recent announcements retail uses that generate tently outperforming the city and first-to-market concepts almost 80 percent of sales and county of Denver. opening include Frye Boots, tax generation for the area; In 2018, six major construc- Hedgerow, Vineyard Vines, clothing and accessories, tion projects are projected to Quality Italian, CB2, Soul home furnishings and res- finish. These developments Cycle, 801 Fish and a Bonobos taurants/hospitality. In the will add 201 hotel rooms, Guide Shop. Other exciting last year, these categories 236 residences, 110,000 sf of retail developments include have increased by 14.2 per- office space and over 50,000 the new two-level flagship cent, 17 percent and 20.5 per- sf of new or renovated retail for Design Within Reach and cent, respectively. space. the 25,000 sf of retail for ANB As of the third quarter, total National retailers are tak- Plaza along Second Avenue. retail sales tax collections ing notice. In the past 18-plus Several more announce- for the district were up 7.5 months, several stores and ments of new stores and percent versus retail sales for restaurants have opened or restaurant concepts are the same period in 2016. This announced plans for entry to expected.

Universal Protection Service provides the best security solutions, personalized customer service and unmatched Cirz value available. We now also offer our clients Safety Act Continued from Page 4 (Sports Authority, Gander new flagship store in the protection from the Department of Homeland Security. Mountain), are appeal- Union Station neighborhood, Universal offers an expansive range of security solutions, asset and are looking to ing most to fitness (Chuze, Trader Joe’s, Cabela’s and consultations and investigations for properties of retail consultants to help VASA, Crunch Fitness, Planet Alamo Drafthouse). Con- every type, including: creatively reposition their Fitness) and entertainment versely, aging Class B and properties. uses (Main Event, Bowlero C centers with poor demo- Airports Vacant department stores and some theaters). graphics, often with vacant Corporate Campuses and big boxes often are Denver’s retail market anchor space, continue to be Distribution/Manufacturing reborn as another depart- continued to expand in 2017 challenged. Facilities ment store (as much as 20 – with absorption and rental Despite the many disrup- Government Facilities percent of the time) and rates trending up and vacan- tions and concerns about the Healthcare Facilities family clothing uses (15 cies trending down; however, future of retail, 2018 is fore- Office Buildings percent). Entertainment the market remains bifur- cast to be a year of evolution Petrochemical Facilities uses also are dominant with cated. Because of limited and opportunity for retailers full-service restaurants (14 new supply, there is high nimble enough to develop Residential Communities percent), amusement and demand for second-gener- viable, new business models Retail Centers recreation (10 percent), and ation space in well-located, with emphasis on customer Educational Facilities theaters (8 percent) rounding Class A retail centers, which experience, technology tools out the top five reuses. are full and thriving. Despite and rightsizing brick-and- For more information call In the Denver market, our competition for premium mortar stores. Lorie Libby at 303-901-9037 vacant boxes, whether gro- space, Denver has attracted Raymond Cirz presented at www.universalpro.com cery (Albertsons, Safeway international retailers (IKEA, the 2017 Counselors of Real and Walmart neighbor- Uniqlo and H&M) as well as Estate Annual Convention in hood markets) or other uses national ones (Whole Foods’ Montreal in September. Page 28 — Retail Properties Quarterly — February 2018 www.crej.com

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