Retail Space Highly Coveted in Denver’s Urban Submarkets
DENVER — According to the latest Marcus & Millichap Retail Market Report, Denver’s retail sector will continue to outperform in 2019 as market fundamentals stick to their improving paths. Rent growth is on track to retain its stability, while vacancy is scheduled to decrease for the 10th year in row. During that time, the market’s average vacancy rate will have fallen by an annual average of 45 basis points, illustrating the widespread demand for retail space.
Conditions in the urban core will remain exceptionally tight, particularly downtown and in Cherry Creek and the Colorado Boulevard Corridor. Sub-3 percent rates will restrict retailers’ ability to establish a presence in the area, putting rental rates at a premium for the limited available space. Asking rents in southern sections of the metro including Lone Tree and Centennial will push closer to asking rates in and around the core as the supply-demand scale balances out.
Completions will be distributed to multiple pockets throughout the metro this year as developers look to capitalize on limited space availability. The Highway 36 corridor is set to receive the most supply, while neighborhoods in Central Denver get much-needed space to help alleviate pressure. Northern areas along I-25 will also welcome builders, further developing the Front Range Urban Corridor. Newly constructed shopping centers in high-growth, outer-ring suburbs will continue to attract many national retailers, supplying additional stability to owners as proven omni channel models bolster their tenant blends.
• The recent light-rail addition in North Lakewood is propelling economic growth in this part of the market. Investors are taking advantage of the area’s new apartment developments and strong household growth by acquiring highly visible retail locations with a variety of national tenants. With this area still revitalizing, pricing is relatively affordable.
• The Highway 36 corridor remained a popular section as Boulder’s rapid growth is provoking stout household formation in northwestern regions of the Denver metro like Broomfield and Westminster. Neighborhood and community centers near the area’s expanding subdivisions are producing extensive options for a wide range of retail investors.
• Strong consumer interest in the Park Meadows Mall is driving investment to surrounding retail centers. Well-paying jobs at nearby medical centers and business parks provide the area with strong spending power. Most assets in this part of the metro are turnkey, keeping bidding competitive and cap rates compressed.