The crumbling housing market is stalling demand for retail land in the northern portion of the Denver metropolitan area, and those projects that are finished or near completion are hurting older shopping centers.
Over the past five years, the number of home sales in the area along the Interstate 25 corridor plunged 36 percent to 2,448, according to an analysis by the Genesis Group.
The area includes Broomfield, Thornton, Northglenn, Jefferson County north of Interstate 70, Adams County west of I-25 and the Boulder Turnpike through Louisville, Superior and Lafayette.
Many developers rushed to plant their flags in the land surrounding new housing developments in those areas over the past few years. But now that demand for those homes has dropped off, land contracts are being allowed to expire and projects are on hold.
“Retail ground that has been under contract or contemplated for retail development is not going to happen for three to five years,” said David Larson, a broker with Legend Retail Group. “The saying is ‘retail follows rooftops.’ But rooftops alone don’t go shopping. You need people.”
The metro area’s retail vacancy rate was up slightly to 5.8 percent in the second quarter, according to a report by CB Richard Ellis.
With new shopping centers totaling more than 4.8 million square feet under construction, vacancies – particularly in older properties – are likely to increase.
It’s already happening in some areas.
Since the Shops at Walnut Creek in Westminster opened in 2006, the vacancy rates of three neighboring shopping centers that were fully occupied have drastically increased.
Westbrook Shopping Center was 30 percent vacant in 2006, according to research by Ethan Reed at CB Richard Ellis. The vacancy rate at Standley Shores soared to 74 percent last year, and the Colonnades at Standley Lake was 40 percent vacant.
“That’s a unique situation because the trade areas have shifted,” said Joe Weisinger, a broker with CB Richard Ellis. “More highway exposure was determined to be a stronger draw.”
Weisinger also said national retailers who have pulled out of the market, downsized or consolidated in recent years have also contributed to the slowing retail demand.
“A lot of the vacancy that has come up in our market is largely due to consolidations and downsizing,” said Weisinger, pointing to Media Play, Mervyn’s, Albertsons and Toys R Us.
“You can certainly make the argument that Kohl’s coming to the market with 14 stores accelerated the demise of Mervyn’s,” he said. “You could also make the argument that Wal-Mart’s continued expansion in the grocery market accelerated the closure of a number of Albertson’s stores.”
Staff writer Margaret Jackson can be reached at 303-954-1473 or mjackson@denverpost.com.
5.8%
Second-quarter metro-area retail vacancies, according to CB Richard Ellis
74%
Vacancy in 2006 at Standley Shores shopping center, which had been fully occupied
40%
Vacancy at Colonnades at Standley Lake in ’06
30%
Vacancy at Westbrook Shopping Center in 2006
4.8 MILLION
Square feet of retail space under construction in the metro area
