Q2 2012 Denver, Colorado Retail Submarket Trends

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Q2 2012 Denver, Colorado Retail Submarket Trends

City of Denver

  • Redevelopment of Lower Downtown (LoDo), the adjacent Central Platte Valley (CPV), and the Highlands neighborhood to the northeast has brought with it the active development of retail, chiefly in the form of upscale restaurants and boutique shops. Mixed-use redevelopment has been a major theme elsewhere in the city as well.
  • Union Station TOD. After years on the drawing board, the redevelopment of the 19.5-acre Union Station site that fronts Wynkoop Street in the LoDo-CPV area is showing new movement. The project all told could run to more than 4 million square feet of mixed-use commercial (mainly office) and residential development.
  • More. Office and apartment buildings currently are under development at the site.
  • Commentary—CBD renaissance. “The Union Station Alliance’s winning proposal is a LEED Gold restoration that will be anchored by a 130 room hotel, a retail center, public plaza, and a train hub connecting Amtrak with regional trains and buses,” as reported by Inhabit.com. “The location of the station, smack in the heart of Denver’s popular LoDo neighborhood, helps weave together all the elements needed for a thriving downtown renaissance.”
  • Also in the greater downtown area, the 16M mixed-use development at Market and 16th streets “near the white-hot LoDo area” will have 15,000 square feet of ground floor retail along with a 130,000-square-foot office component and apartments, according to the Denver Business Journal and Downtown Denver Partnership (DDP).
  • A few miles east of downtown, the mixed-use redevelopment of the recently evacuated University Hospital site at E. 9th and Colorado Boulevard also will be a major endeavor.
  • Plans. Plans for the $150 million, 28-acre hospital redevelopment call for a 40-store retail component, a 325-unit apartment project and other elements.
  • More. Fuqua Development, following its separation from The Sembler Company, will “control” development planning, which is “in progress,” according to Ross.
  • More. In an announcement that generated considerable fanfare, specialty grocer Trader Joe’s has selected an adjacent site at 8th and Colorado for its first Colorado store.
  • More—controversy. A proposal to develop a Walmart store at E. 11th and Albion at the former hospital site has run into resistance. Without the Walmart anchor, a Fuqua executive informed the Journal at the end of July, “the development likely would stall.”
  • Block 162: A 75,000-square-foot assemblage of vacant ground located along 15th between Welton and California streets downtown, known as Block 162, was acquired by NAI Shames Makovsky. Approximately 1 million square feet of mixed-use development are planned, DDP reported in August 2012.
  • The old Tamarac Square shopping center on E. Hampden east of I-25 will be redeveloped as a Target-anchored center, according to Ross.
  • Nearby, the former hotel site on E. Hampden at I-25 will be redeveloped by D. H. Friedman Properties as restaurant and small shop space.
  • A 120,000-square-foot Walmart is under construction at the former Lakeside mall site off W. 44th Avenue in northwest Denver. THF Realty is the developer. North Denver Tribune has reported a 2013 scheduled opening. “Future phases will include as many as four junior anchor spaces,” according to Ross.

Swedish clothier H&M opened a store in November at downtown’s renovated

  • Denver Pavilions on the open-air 16th Street Mall. The local store “had record sales when it opened,” The Denver Post reported soon after.
  • An H&M store in the upscale Cherry Creek Shopping Center mall is expected to open this September 13, the Journal reported in late August (another H&M opened in August in north suburban Broomfield, as described below).
  • More. A Saks Fifth Avenue anchor store, evacuated in January 2011 at Cherry Creek, remains empty.
  • Reis reports 25,000 square feet of retail under construction since September 2011 at the Glendale Riverwalk multi-use development in the tiny city of Glendale (a municipal enclave surrounded by Denver about four miles southeast of downtown). The city and Integral Real Estate Development are the developers.
  • More. “The Riverwalk will be the centerpiece of a 1-million-square-foot waterfront commercial development for year-round activity,” as described recently by The Denver Post.
  • As illustrated by the examples above, the large Midtown-Central Business District (CBD) submarket, which includes a large area surrounding downtown proper, embraces a number of distinct market areas.
  • First half 2012 net absorption of community-neighborhood center space in this geographically large submarket was negative 11,000 square feet. The second quarter total alone, however, was positive 43,000 square feet.
  • Second quarter sector vacancy was 8.3%, down 60 basis points from a quarter earlier, up 30 year-over-year.
  • Respective average asking and effective rents were $19.26 psf and $17.25 psf, each up 0.5% for the quarter, each up 0.3% since year-end following respective gains of 0.9% and 0.6% in 2011.
  • Outlook. The additional negative net absorption projected for the community-neighborhood center market for the remainder of 2012 would result in an 8.5% year-end vacancy rate. Growth rates of 0.5% and 0.6% are forecast for the average asking and effective rents for the year. A moderately better performance is expected for this sector across the board for 2013.

Suburban South

  • Reis’ suburban South and suburban Southeast submarkets lie on the west and east sides, respectively, of the I-25 highway. Large-format project development along the I-25-south corridor has been dominated by the west side of the highway (the South submarket), but these projects are often located on or near the I-25 submarket borderline.
  • Like Midtown-CBD, the large South submarket embraces a number of functionally distinct market areas.
  • Given the completion a few years ago of the FasTracks light rail line along I-25, which terminates at Lincoln Station (Lincoln Avenue, Douglas County), TOD mixed-use development has been a major factor in this area. Huge volumes of retail and other forms of development have taken place to the near west of the highway in the area between Orchard Road and Belleview Avenue in Greenwood Village.
  • The biggest recent news in Denver area retail was the July 27, 2011 opening of the 415,000-square-foot IKEA store near Park Meadows Mall (I-25 and County Line Road near the County Line Road and Dry Creek stations) in the South submarket. The IKEA is Colorado’s first.
  • Continuum Partners and Regency Centers have broken ground at Hampden and University in south Denver for Kent Place, the redevelopment of the former Denver Seminary, reports Ross. A King Soopers anchor grocery store will be accompanied by 20,000 square feet of “high-end shop space.”
  • Belleview Station. Following years of economy-driven delay, development at Belleview Station is “starting in earnest” with a 352-apartment/retail complex, according to a recent report in the Denver Business Journal. Planning includes 250,000 square feet of retail along with 2.2 million square feet of office space and residential components.
  • Update. A fall 2012 start of construction is planned for an 110,000-square-foot Cabela’s store recently announced for Coventry Development Corporation’s RidgeGate Commons development along I-25 at RidgeGate Parkway in Lone Tree, Castle Pines Connection reported in July. A summer or fall 2013 opening is planned.
  • Reis put first half 2012 community-neighborhood shopping center space net absorption in the South submarket at negative 10,000 square feet along with no new supply.
  • Second quarter vacancy was 12.5%, unchanged from the quarter before, up 40 basis points year-over-year.
  • Respective average asking and effective rents were $19.52 psf and $16.88 psf, down 0.3% and 0.2% for the quarter following similar losses the quarter before.
  • Outlook. Modest net absorption over the remainder of 2012 accompanied by no new supply additions is expected to shave 40 basis points from the vacancy rate by year’s close. Modest losses are projected for the asking and effective average rents for the year.

Suburban Southeast

  • Drawn by the expansion of suburban communities along the I-25 and E-470 corridors over the years, retail development has been substantial in the Southeast.
  • Reis’ research has confirmed plans for the 100,000-square-foot second phase of the Village at Centennial community center at Arapahoe Road and Potomac Street in Centennial, near Centennial Airport. A construction timeline was not available per the date of this report.
  • A total of 1.25 million square feet of retail have been proposed for the $1.7 billion Horizon Uptown mixed-use residential-commercial project intended for a 500-acre site near the I-70/E-470 interchange in Aurora. Australia-based Lend Lease Corporation is the developer. Progress has been slow.
  • Reis reports construction of 550,000 square feet of retail not yet complete at the Gardens on Havana retail center, part of the mixed-use redevelopment of the old Buckingham Square Mall at Havana and E. Mississippi in Aurora. Target and Kohl’s are among the operating anchors.
  • More. Originally a joint venture by Weingarten Realty Investors and Miller Real Estate Investments LLC, operating as Miller-Weingarten, the project was recently “bought outright” by Miller, as reported by the Journal.
  • Reis put total first half 2012 community and neighborhood center space net absorption in its Southeast submarket at negative 7,000 square feet. The total for second quarter alone was positive 23,000.
  • Second quarter vacancy was 13.9%, down 30 basis points from a quarter earlier, up 80 year-over-year.
  • Respective average second quarter asking and effective lease rates were $14.71 psf and $12.56 psf, down 0.9% and 0.8% for the quarter following smaller losses the quarter before.
  • Outlook. Additional modest negative net absorption is expected for the community-neighborhood shopping center market for the remainder of 2012 as the vacancy rate adds 10 basis points by year-end. Additional losses are expected for average rents over the remainder of the year.


  • Reis’ Northeast submarket extends to the Highway-36 corridor in the suburban northwest. Accordingly, Thornton and parts of Westminster and Broomfield are included. Areas of Broomfield and Westminster also are included in the firm’s Northwest submarket.
  • Prior to the recession, the main focus of retail development shifted from the southeast to the north, where large volumes were built, including FlatIron Crossing mall in Broomfield. Other projects remain in planning stages or, having started, were subsequently delayed.
  • Newly added to Reis’ list of planned-proposed projects are the 336,000 square feet of retail proposed for the 250-acre Victory Crossing (formerly Prairie Gateway) mixed-use development at E. 56th Avenue and Quebec Street, Commerce City.
  • More. The sports-oriented development will be located adjacent to an existing Dick’s Sporting Goods store, a stadium for the Colorado Rapids professional soccer team and a sports complex. Kroenke Sports and Entertainment is the developer.
  • Denver International Airport has selected a proposal by L.C. Fulenwider Inc. to develop the first “aviation station” at 61st Avenue and Peña Boulevard along the FasTracks East rail line, the Denver Business Journal reported in August.
  • More. The Fulenwider site “is part of the airport’s ‘gateway plan’ for [its] entrance.” Fulenwider’s proposal includes plans for a hotel park and conference center. The site has space for retail and residential development.
  • Thornton’s city council approved a deal that will bring a Cabela’s store to a 63-acre site at 144th Avenue and I-25, the Journal reported in July. The store is being developed by THF Realty Inc. doing business as Thornton Development LLC. The city is providing an incentive package valued at $27 million.
  • A 123,000-square-foot King Soopers MarketPlace grocery store opened in the Reunion neighborhood of Commerce City during the second quarter, reports Ross.
  • By storm. H&M opened a store at FlatIron Crossing in Broomfield in August. With two other stores (one open, one to open in September, as described), the Swedish clothier “is taking the metro area by storm,” the Journal noted in an August report. H&M will occupy an 18,000-square-foot space formerly used at Flatiron by Eddie Bauer.
  • Reis reports first half 2012 net absorption of community-neighborhood shopping center space in its Northeast submarket at positive 17,000 square feet. The second quarter total was positive 25,000.
  • Second quarter vacancy was 13.7%, down 30 basis points from a quarter earlier, down 10 year-over-year.
  • Respective average asking and effective rents were $16.40 psf and $13.99 psf, up 0.9% and 1.0% for the quarter following the first quarter’s smaller gains.
  • Outlook. Additional positive net absorption over the remainder of 2012 along with no new supply is expected to lower the vacancy rate to 13.4% by year-end. Gains at about 2.0% are projected for average rents for the year all told.


  • The city of Westminster is demolishing the Westminster Mall to allow development of a 1.2-million-square-foot “mixed-use city center,” as reported by Ross. The Denver Post has referred to the mall as “blighted.”
  • Update. Demolition of the mall’s Sears building commenced in early August 2012, the city reported at the time. Plans for the redevelopment will be released this fall.
  • A 600,000-square-foot retail component remains under construction at the Arista Place mixed-use development in Broomfield, Reis reports.
  • The eventual development of 1.3 million square feet of regional center retail space is proposed for the massive Candelas master planned development in Arvada.