Denver Retail Space for Lease- Market Update

01/06/2014

There is quite a wide range of character and variety in the Denver retail space for lease market. 

Navigating through the process of choosing a neighborhood or submarket in Denver to setup a location can be a painful progression.  Weighing cost, demographics, visibility, access, timing, terms, and aesthetics can make one Denver retail space for lease seem better than another space, but it certainly does not always seem black and white what the best decision is. 

Denver Retail Space For Lease

The fun thing about retail space is that the real estate itself has such a large impact on the viability of the business.  An easy example to reference is a restaurant, one I’ve seen in the River North neighborhood in Denver.  They opened up for business about four months ago.  If you went inside the place, you would have been extremely surprised at how nice it was.  Wood paneling, great features, quality lighting, excellent menu, and all of the things you may expect in a moderately upscale sit down restaurant. 

The problem is, of the Denver retail space to lease available, they went with a building that had a very industrial feel to it.  From the front of the building though, it didn’t have the LoDo type “industrial” appeal, with a brick exterior, high ceilings, and plenty of natural light.  Instead it simply looked more fitting for a continuation of the self-storage location next door.  Inherently, there is a major issue from the start. 

Getting people in the door is hard enough, so the appeal from the entry way is beyond important.  Just like when people meet, first impressions will leave a lasting impression on someone.  Sure enough, three months after opening their doors, there was a notice that they had closed it down already.  If the owner had only focused just as much on finding a great Denver retail space to lease as he/she did with the décor, menu, etc…, I think there would have been a successful establishment in place. 

Other items to consider are the demographics of the neighborhood.  While RiNo does have a mix, most of the residential space is multifamily.  Of these condos and apartments, I think it’s safe to assume the majority of the doors house a younger demographic.  Judging by the area’s successful restaurants and watering holes, lower cost seems to be a driver of success. 

Near the Riverfront Park area at 16th and Little Raven you see a much different trend, which makes sense given the condos in that area rank among the most expensive residential real estate in Denver on a per square footage basis.  Anyway, that’s enough on this anecdote, but the point being is that you can’t simply assume that just access, cost, aesthetic appeal, etc… alone will lead to making a simple decision on picking a Denver retail space for lease. 

All factors need to be accounted for and weighted to make a wise decision.  The consequences of not doing so can be devastating.  In this example, without knowing much about the project, given the finishes and size of the establishment, the construction cost was certainly in the six figure range.  That may have been split between the tenant and the landlord, but both parties now have a very sour taste in their mouth to say the least. 

Here is a look at of some of the notable neighborhoods with Denver retail space for lease (rents are quoted on an annual basis): 

  • Uptown
    • Character:  A great mix of local mom and pops.  Slightly older buildings with mostly restaurants and bars filling the retail space.   
    • Rents:   $24/ square foot triple net.
    • Trends: Expect decreased demand, significant increase in vacancy.
  • River North
  • Lower Downtown
    • Character: LoDo has become a much safer and more desirable Denver retail space to lease destination over the last 15 years.  With the Union Station developments soon to be completed, expect LoDo to be the new center of the city.  This will certainly impact rents and demand for available space.  Most of the new space is set to be office and multifamily, but expect mixed use and 1st floor retail as well.  Lodo probably has the highest density of late night destinations than anywhere in the city. 
    • Rents: $19/ square foot triple net.
    • Trends: Steady growth as new product is delivered. 
  • 16th Street Mall
    • Character:  For some time 16th street mall has been a central hub for activity, events, gatherings, and culture.  The Denver retail spaces for lease here mostly have a similar feel with a variety of storefronts, restaurants, and higher end workout facilities.    
    • Rents:  $35/ square foot triple net. 
    • Trends: To remain fairly steady over the next couple years. 
  • Capitol Hill
    • Character: Variety of older, interesting, and historic buildings.  Parking is always an issue in Cap Hill, but there is plenty of foot traffic and access to rooftops in walking distance.  Full mix of types of businesses here. 
    • Rents: $20/ square foot triple net.
    • Trends: Minor increase in vacancy, to be absorbed by new product. 
  • Highlands/ LoHi
    • Character: It’s probably safe to finally say Highlands is getting past the “up and coming” phase.  Young family and younger to middle-aged professionals demographic.     
    • Rents: $24/ square foot triple net.
    • Trends: Vacancy to hang around 4%. 
  • Cherry Creek
    • Character: Plenty of upscale destinations and higher-end Denver retail space for lease. 
    • Rents: $24/ square foot triple net. 
    • Trends: Right around the lowest vacancy in town at about 2%, which will continue downward with positive absorption. 

If you are curious what the differences are between triple net, modified gross, and full service gross leases, find our post on the subject here…  This article is done with the subject of Denver office space in mind, rather than Denver retail space to lease, but the basic principles of triple net and full service gross leases still apply. 

We hope this information on Denver retail space to lease has been helpful. 

For information on Denver office space rentals click here.

For information on Denver industrial space for lease click here.