Western Real Estate Business

JUL 2018

Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.

Issue link: https://westernrealestatebusiness.epubxp.com/i/1001516

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Page 29 of 32

www.REBusinessOnline.com Western Real Estate Business • July 2018 • 29 NEW MIXED-USE RETAIL, INDUSTRIAL PROJECTS DRIVING GROWTH IN DENVER AREA By Alicia Rhymer, Vice President, Retail Development, United Properties Retail and industrial developments are both undergoing major shifts. A quick summary of the trends might show that big is out for retail, with big box retailers continuing to close up shop across the country. Small, nimble and convenient is in, with fast casual restaurants, personal neighborhood services, pet care and fitness proving to be definite bright spots in the retail sector. For example, pet services and dry cleaning added 45,300 jobs over the past year (a 3.1 percent increase), while fitness and recreation centers added 21,000 jobs (a 3.4 percent in- crease). On the industrial development side, we're seeing that heavy indus- trial, so often tucked away in distant and expansive developments, is out. There is increasing demand for a flex- ible office/warehouse mix, fueled in large part by ecommerce companies. Ecommerce-only continues to grow, with the Census Bureau showing that ecommerce sales climbed 10.3 percent in 2017 over 2016, and early 2018 data representing growth of 12 percent over 2017. We are responding to these trends with a hybrid model that combines small retail and light industrial de- velopments. Calling it our "next gen mixed-use," these sites blend light industrial, office and retail in one de- velopment — and represent one of the next new growth areas in commercial real estate. Differentiating 'Next Gen' from Traditional Mixed-Use Traditional vertical mixed-use devel- opments represent a well-established and successful approach for commer- cial real estate developers. What we're seeing in the Denver market is a strong interest in small one-acre retail pad sites that are ground level, sometimes freestanding and prominently placed next to major roads. Developing retail pad sites as part of larger developments is nothing new — they have been going up in the empty parking lots of major malls for decades. Activating these retail pad sites adjacent to light industrial is the key differentiator for this next-gen mixed-use. Next-gen mixed-use starts with a site that offers excellent visibility and access along major commercial ar- terials. These are key attributes that small- to mid-sized retailers seek. Most industrial tenants want conve- nient access to major thoroughfares as well. It, therefore, turns out that retail and industrial users generally want similar site attributes — just on a different scale. The businesses in in- dustrial buildings typically don't offer on-site amenities for their employees, such as day care, a gym or cafeteria. Having retailers on location that offer these services makes it easy to access them, which is an added bonus for busy workers. Attracting a Diverse Group of Retailers Diverse retailers are attracted to these next-gen mixed-use sites, in- cluding coffee shops and fast-casual restaurants. One of our latest develop- ments in the Denver market contains a Starbucks, F45 Training, Cheba Hut and Fuzzy's Taco Shop. These retail- ers boost their businesses by drawing their clientele from the employees in the adjacent light industrial and office developments, residents in surround- ing communities and customers trav- eling by arterial highways. Other retailers securing space in next-gen mixed-use sites include small-group training and fitness stu- dios, convenience stores and even car washes. Child care and early child- hood education centers are also in- trigued by the opportunities that these locations provide, given the adjacency to the workplaces of busy families. We've seen growing interest for these next-gen, single-tenant, build- to-suit projects in the Denver market. We have built a pipeline of 20 acres of retail over the past 18 months. This was primarily through the develop- ment of freestanding retail pad sites along the perimeter of larger industri- al developments. Projects in Arvada, Aurora, Broomfield and Stapleton are currently underway. While this approach is being pio- neered successfully in the Denver market, it's also likely the next-gen mixed-use concept will find strength and success in other growing markets. As the retail market continues to shift, developers may find next-gen mixed- use is the right growth area for their developments. Workers of light industrial business- es want more convenience, retailers want to be where the customers are and both want quick access to major arteries. Next-gen mixed-use brings the two together, creating new op- portunities for commercial real estate developers to respond to the chang- ing market demands and offer just the right mix that retailers and businesses are looking for. n Enterprise Business Center, located at East 40th Avenue and Central Park Boulevard in Stapleton, Colo., features 3.3 acres of retail in front of a large flex/industrial development. Retail tenants include a drive-thru Starbucks, Cheba Hut, F45 Training, Fuzzy's Taco Shop and a New Horizon Academy. 7-Eleven and Swisslog recently moved into Interpark, a flex/industrial project that will comprise 240,577 square feet across two buildings once it's completed in 2018. Located just off US-36 in Broomfield, Colo., the project is United Properties' first development in the northwest corridor. Tower Business Center, located at 38th Avenue and Tower Road in Aurora, Colo., offers retail pad sites that complement 450,000 square feet of industrial space. 7-Eleven and Ronny's Car Wash have signed on for one-acre pad sites.

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