Borrowing a Charles Dickens title, Colorado is “A Tale of Two Cities,” or more accurately, two markets. High density infill markets show strong leasing activity in terms of absorption, rental rates and down time, while lower density rural areas still lag in recovery. Urban markets such as Denver, Boulder and Englewood are returning to earlier days where spaces are quick to fill with an average down time of six months, a waiting list of prospects and increasing rents. For example, a recent side shop vacancy at King Soopers-anchored Belleview Square in Englewood was backfilled with a waiting list of five tenants before the retailer had even closed their doors. On the other hand, secondary and tertiary markets such as Falcon, Colorado Springs and Greeley are slower to lease up with an average down time of 12-15 months and little rent growth. Acquisition activity has not yet recovered, and very few Class A properties are on the market. However, development activity is picking up.
Active retail categories include quick service restaurants, health and dental, discounters and mattress stores. One of the interesting trends is the boutique pet store concept occupying less than 4,500 square feet, which seems to be harvesting an untapped market. Top players include Unleashed by PETCO and Kriser’s. Anchor tenants who have been dormant are now beginning to look at properties and even ink deals, including Walmart, T.J.Maxx, Hobby Lobby and Dick’s Sporting Goods. New retailers opening concepts in Denver this year include IKEA, PGA Golf Superstore and H&M, which should open the door for additional locations.
From our perspective, Regency’s 21 Colorado properties average 90 percent occupancy. The region, which represents 5 percent of Regency Centers’ total GLA nationwide, realized the company’s second highest same store NOI growth last year as well as first quarter 2011. Rent growth is improving over the prior year, but still lags other areas of the country.
On the development side, Regency Centers recently opened a new center and is about to embark on two new projects this year. In February, Regency opened Northgate Village (pictured at right), a 140,000-square-foot neighborhood center anchored by a 120,536-square-foot King Soopers in Greeley. The anchor’s first Marketplace super center and the largest King Soopers in the state experienced their highest grand opening sales. T.J.Maxx will begin construction of their 25,000-square-foot store at Centerplace of Greeley III in Greeley next month, which will boost side shop leasing activity. Plus, a new King Soopers-anchored center in Englewood will begin construction this year with side shop retailer demand already outpacing limited side shop space for this strong infill site.
— Will Damrath is vice president and regional officer for Regency Centers. He oversees a portfolio of 21 operating properties and new developments in Colorado, totaling 2.1 million square feet, which is nearly 5 percent of Regency Centers’ total GLA.