Denver. Retail Conditions and Opportunities Study. Prepared for: City and County of Denver. Prepared by: Economic & Planning Systems

Transcription

1 Denver Retail Conditions and Opportunities Study Prepared for: City and County of Denver Prepared by: Economic & Planning Systems with David, Hicks & Lampert Brokerage June 2013

2 ACKNOWLEDGEMENTS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY City and County of Denver Michael B. Hancock, Mayor Denver City Council Mary Beth Susman, District 5, DRSAC Member City Departments Office of Economic Development Department of Finance Community Planning and Development Denver Retail Strategic Advisory Council (DRSAC) Marc Feder, Feder Commercial Realty Advisors MC Genova, VISIT DENVER Nick LeMasters, Cherry Creek Mall Pat McHenry, Larimer Associates Brian Phetteplace, Downtown Denver Partnership Richard Sapkin, Edgemark Commercial Real Estate Services Mark Sidell, Gart Properties Julie Underdahl, Cherry Creek North BID Joe Vostrejs, Larimer Associates Consultants Daniel Guimond, Economic & Planning Systems, Inc. Chris Leutzinger, Economic & Planning Systems, Inc. Matt Prosser, Economic & Planning Systems, Inc. Steve Markey, David, Hicks & Lampert Brokerage, LLC Scott Kaplan, CBRE Erik Westedt, CBRE

3 Section 1: Introduction

4 INTRODUCTION DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY This study was completed to provide information and insight to guide program development by the City and County of Denver (City) to improve retail shopping opportunities within Denver. The need for both the study and an enhanced retail development program is called for in the vision and strategies of Mayor Hancock s administration, and has been reinforced through the work of the City s Structural Financial Task Force (SFTF). The report of the SFTF emphasized that a strong and growing retail employment base is at the core of Denver s financial health and recommended that the City develop a more comprehensive and robust program to deliver retail growth. The Denver Retail Conditions and Opportunities Study delivers proposed elements of that program, providing analysis to understand the opportunities and challenges of enhancing Denver as a competitive market for retailers and shoppers, while continuing to serve residents and neighborhoods. In cooperation between the Mayor s Office, the Office of Economic Development (OED), the Department of Finance (DOF) and the Community Planning and Development Department (CPD), the City retained Economic & Planning Systems (EPS), with David, Hicks & Lampert Brokerage to complete an analysis and study of the retail conditions and opportunities affecting the Denver market. The study report is provided as recommendations to these primary City clients for their shared efforts to develop strategies to meet the opportunities in Denver. The OED formed the Denver Retail Strategic Advisory Council (DRSAC) in 2012 to provide advice and assistance in promoting retail development and success. DRSAC has been a valued voice in the discussions and review of the analysis underlying this study, along with vetting some of the ideas and recommendations within the report. In the coming months, DRSAC will be a critical sounding board as the City s retail program partners explore the best methods for encouraging Denver s retail market. The EPS Team assignment, which is one part of a larger program initiative, was to: Examine the existing retail conditions and activity to provide information about the changing resident and visitor (customer) needs and demands in the marketplace, and the market capture of current retail centers and stores (by retail category); Review the immediate market strength and conditions of existing retail centers/areas, by category type; Identify existing gaps in the Denver market, both by retail category and by center type; Review and highlight best practices for retail development program design, implementation strategies, and appropriate tools (available currently and missing) for the City s toolkit; and Recommend potential retail program approaches for consideration by the appropriate Denver retail partner city department, quasi-public agency, and private sector developers, brokers or other key stakeholder. This report is intended to be a starting resource for the next stage in the City s retail initiative and strategic program development. With the advice and insights from the DRSAC, private sector partners, public and quasipublic stakeholders, the Mayor along with the City s leadership will work in the coming months to design a successful, impactful retail program. Study Goals Improve the existing retail mix, increase retail sales tax revenue and attract new retailers to the City and County of Denver without compromising existing retail. Fully recognize and capitalize on existing consumer opportunities and identify retail gaps. Add retail as a placemaking element consistent with citywide and small area plans especially in identified mixed-use areas. Economic & Planning Systems, Inc. 1

5 INTRODUCTION DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Retail Aspirations As a bustling metropolis set against the backdrop of the Rocky Mountains, Denver is nationally recognized for its exceptional balance of outdoor lifestyle and urban amenity. With the continued implementation of FasTracks and rapidly expanding transportation options, Denver is also quickly becoming one of the country s most livable cities. This unique combination of assets has attracted an ever-growing population base and increasingly diverse economy as employees and employers alike chose to locate in the region. Over the last decade, new restaurants and retailers have also taken notice, and Denver s downtown and urban neighborhoods are benefiting from an increasingly vibrant mix of shops and eating and drinking options. Thus, Denver has all of the ingredients that make a city a great place for retail. Yet in certain retail segments, Denver lags behind many cities throughout the West as a nationally-recognized shopping destination. In order for Denver to reach the next step in its aspiration of becoming a world class shopping destination, Denver needs to become a great retail city. The fundamental components of any great retail city include having a vibrant downtown shopping environment, strong regional retail destinations, and unique neighborhood business districts. Vibrant Downtown Shopping As the front door to visitors and the focal point of activity for residents and employees, a vibrant downtown shopping district featuring a mix of strong retail anchors, unique retail boutiques, and exciting entertainment, eating, and drinking destinations is essential to any great retail city. Vibrant downtowns successfully balance more traditional street-level storefronts with new infill retail formats and centers that meet the needs and requirements of the full range of store types and retailers. Vibrant downtown retail districts generally have an identifiable retail core, supporting a critical mass of activity, and provide strong connections to adjacent retail streets. Challenged with negative perceptions of public safety, successful downtown retail districts provide an identifiable and functional public realm that softens the urban environment, creates visual coherency, and offers a unique and interactive experience to the shopper. In addition, the most successful downtown shopping districts are supported by a strong downtown residential base. Combined with a unique sense of authenticity, these distinctive attributes allow great downtown Pacific Place, Seattle, WA retail districts to better compete with more traditional regional mall destinations and provide both residents and visitors with a memorable and enduring experience. Neiman Marcus, Union Square San Francisco, CA Denver s successful revitalization projects, including the 16 th Street Mall, Larimer Square, Denver Pavilions, Coors Field, Central Platte Valley/Riverfront Park, and the soon to be completed Union Station, have created vital pedestrian activity and elevated downtown s status as the region s premier destination for eating, drinking, and entertainment. However, downtown still lacks the diverse set of retail stores found in cities with a core of downtown departments stores. In addition, downtown s flagship retail destination (REI) is located in an isolated setting at the edge of downtown, limiting the ability to draw customers to other downtown establishments. The linear pattern of downtown established by the 16 th Street Mall does not allow for a sufficient critical mass of activity at any one segment, limiting its ability to support new downtown retail. As a result, the quality and mix of downtown retail is often cited as needing improvement by both residents and visitors. Strong Regional Anchors and Destinations All great retail cities benefit from strong regional retail destinations throughout the city. This includes traditional shopping malls, lifestyle centers, neighborhood business districts, and distinct retail corridors. While few traditional shopping malls have been constructed nationally in the last decade, urban malls continue to perform Economic & Planning Systems, Inc. 2

6 INTRODUCTION DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY at peak levels and serve as home to many cities top retail attractions. These retail centers not only provide critical format and demographic requirements for some of the most desirable one in the market, specialty, and/or luxury retailers. They often have some of the highest real estate values in the city and anchor activity for a host of other uses, including residential and employment. The best examples of strong regional retail destinations have a defined sense of place, support enhanced densities, and frequently feature the highest levels of vertical mixed-use development outside of downtown. Similarly, regional retail corridors provide the necessary traffic counts to attract and support a critical set of retailers. In great retail cities, these corridors have undergone significant infrastructure (and often transit) investment and have been reinvented from simple high-volume, automobileoriented thoroughfares to highly-functional economic places that support the full-range of transportation modes, land use mixes, and modern urban retail formats. The Cherry Creek Shopping District, including Cherry Creek Mall and Cherry Nordstrom at Horton Plaza, San Diego, CA Creek North, represents Denver s strongest regional retail asset. Cherry Creek Mall is home to Denver s most diverse and highest quality retailers. Cherry Creek North is also host to a strong collection of specialty and lifestyle-oriented retailers. Cherry Creek North has a strong mix of specialty stores, contains the most progressive mixed use projects in Denver and landlords continually update outdated space and users. Both locations within the shopping district could support the density and magnitude of vertical mixed-use development found at world-class shopping destinations. Unique Neighborhood Business Districts Particularly critical to any great retail city are unique neighborhood business districts (NBDs). These districts contain a strong mix of unique and local businesses, balance locally-serving and destination retailers, and serve as the setting for some of a community s highest quality eating and drinking options. Great NBDs have a strong sense of place and defined identity and/or brand. As they are generally embedded within existing residential neighborhoods, these districts have a strong attachment with the local community; however, some of the best neighborhood business districts also provide for the opportunity to mix in retailers that serve a broader, citywide role. All great neighborhood business districts feature strong multi-modal connections to allow for greater neighborhood access, utilize the public realm for retailing opportunities (sidewalk dining, farmers markets, etc.), and work together West Village, Dallas, TX to create parking solutions that do not conflict with local residents. In the best retail cities, NBDs are also supported by a strong business district program with active city and community leadership and with programs in place to encourage new and unique small business entrepreneurship. Denver is home to a strong collection of urban NBDs. Denver s districts are located throughout the city, along large arterials or small neighborhood streets. The majority of retailers in Denver s district contain a mix of eating and drinking establishments and professional services. While some soft good retail (clothing, gifts, books/ music, etc.) exists, the City could do more to encourage local entrepreneurs (and some national stores) to open new retail shops and boutiques. The Challenge The quality and diversity of retail in Denver has made great strides over the last 25 years. Retail in Downtown has grown and increased in quality. Cherry Creek has emerged as a destination for fashion and specialty retailers. New neighborhood business districts continue to emerge and thrive as the city grows. The assets needed for a great retail city are present in Denver, but steps still need to be taken to reach this aspiration. This study outlines the challenges and opportunities facing Denver. Economic & Planning Systems, Inc. 3

7 Section 2: Retail Conditions

8 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Retail Trends Changing Demographics Denver continues to grow, reaching a population of over 620,000 in Within this growth, there are five major demographic shifts that are affecting retail spending patterns. Net Migration of Population Age 25 to 34 The Denver metro area has become a major destination for the Gen Y population in the past five years. From 2008 to 2010, the Denver metro area had the highest in-migration of 25 to 34 year olds in the country. Gen Y has a higher preference for urban, walkable neighborhoods and enhanced retail and entertainment environments which is increasing the market for neighborhood business districts in the city. At the same time, Colorado is also a destination for the Baby Boomer population. Colorado has the fourth highest growth rate of people over age 65. Many of these residents are choosing to downsize their homes, which is changing their buying habits and reducing demand for items to keep up their homes. Although baby boomer spending patterns are changing, they have the time and income for more discretionary spending on natural and organic groceries, dining, entertainment and travel. American Community Survey Data BROOKINGS The city has become more ethnically diverse, which is generating demand for a wider variety of products and retail formats, such as supermarkets and other specialty stores oriented to Hispanic and Asian shoppers. Many of Denver s older, historic neighborhoods are attracting new residents and new development, which is creating demand for new retail options. However there is a limited amount of existing, quality retail space or areas to expand in these historic business districts. Lastly, Denver has been experiencing an infill housing boom in the past five years. Multifamily units have accounted for half of new residential building permits in recent years. In the downtown area alone, 6,700 new multifamily units will be built between 2012 and The retail needs and preferences are different for these smaller households and new retail space will be needed to meet the demand of new residents. Denver MSA Residential Building Permits ( ) City of Denver Capture of MSA Residential Building Permits ( ) Economic & Planning Systems, Inc. 4

9 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Growth in E-Commerce Online retail purchases grew at a 20 percent annual rate over the previous 10 years compared to just 2.7 percent for total retail stores. However, e-commerce sales (non-automotive) still comprise only 6.1 percent of total retail spending. Online shopping is changing the demand for traditional brick and mortar retail which is pushing retailers to alter their store formats and incorporate internet sales and marketing into their business concepts. The line between traditional and e-commerce retailers continues to blur; 12 of the top online retail businesses are actually major retailers including Walmart, LL Bean, JCPenney, Macy s, Staples, Best Buy, and Bed Bath & Beyond. Retail Evolution US E-Commerce Retail Sales 2001 to 2010 The retail industry is and will continue to evolve and become more specialized. The growth in retail stores is becoming bifurcated due to growth of sales at discount and luxury ends of the spectrum as shoppers look for either lower prices or greater quality. The sales and profitability of mid-market stores are being squeezed; this applies to general merchandise and department stores as well as to grocery and supermarkets. Retailers are downsizing stores sizes and becoming more selective. Store size reductions (e.g., Best Buy, Office Depot, Target, Walmart) reflect the need for less showroom space as well as lower sales per square foot. The number of retail chains has been decreasing, due to reduced demand. At the same time, retailers are using larger trade areas resulting in less total stores. Retailers are also developing new store formats or going to alternative or smaller store formats to fit into underserved areas, primarily urban infill sites. Lastly, shoppers prefer retail to be a fun and entertaining experience which is leading to new shopping center formats and retail as a placemaking element. US Total Retail Inventory, 1979 to 2013 Economic & Planning Systems, Inc. 5

10 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Denver Metro Retail Conditions From the mid-1990s to the start of the recession in 2008, national retailers expanded at an unprecedented rate and the amount of space exceeded the growth of housing units needed to support this space. In the Denver metro area, Northfield in Denver, as well as Park Meadows in Lone Tree, The Orchards in Westminster, Streets at Southglenn in Centennial, Belmar in Lakewood, Southlands in Aurora, Colorado Mills in Lakewood, and Flatiron Crossing in Broomfield were built during this growth period. Coupled with the national recession, this growth resulted in a large overhang of space in the metro market that has taken some time to absorb. While over-building of retail space has been a national trend, the Denver metro area also has one of the highest amounts of retail space per capita in the nation and has a higher ratio of space per capita than most of its peer metro areas. Denver metro area has 66 square feet of retail per person while the national ratio is 41 and other peer metro areas are between 45 and 65. Retail development in the metro area has slowed greatly in the past five years. In 2008 and 2009, an average of over 4 million retail square feet was built. In 2012, only 700,000 square feet was built. Retail center vacancy rates in the metro area have fallen to 6.5 percent in first quarter of 2013 from over 8 percent in 2009 and New retailers added to the market in recent years have located in existing space, in buildings replacing existing space, or at stand alone sites. Denver Metro Regional Retail Centers Metro Areas Retail Sq. Ft. Per Capita Denver Metro New Retail Square Feet, 2006 to 2012 Importantly, most of the major retail growth in the metro area over the past decades has occurred outside of Denver. The map below shows the location of several national large and medium format retailers. The map illustrates how much of the retail development has occurred outside of Denver s borders. Economic & Planning Systems, Inc. 6

11 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Denver Retail Conditions Retail Space There is approximately 34 million square feet of retail space in Denver, which is 55 square feet of retail space per capita and is less than the metro ratio of 66 square feet. This means that Denver is closer to the national average and considering the city s higher incomes and spending power, Denver is therefore not significantly overbuilt. The retail vacancy rate in Retail Square Feet Square Feet per Capita Average Rental Rates Vacancy Rate Source: CoStar 34,000, $ % 190,000, $ % Denver was 5.6 percent in first quarter 2013, which is lower than the metro average of 6.5 percent. The average rental rate is $16.97 per square foot which is higher than the metro area average of $ While neighboring cities continue to struggle to address their retail box vacancies, Denver has relatively few vacant boxes. The vacant retail space that does exist is typically of poor quality and in less than prime locations. Thus, Denver is better positioned to be more strategic in targeting sites for retail development. The four major regional retail areas in the city are Downtown, Cherry Creek, Stapleton and Colorado Boulevard. The city retail space is a mixture of space types with far less suburban style shopping centers than the surrounding cities. Major recent retail additions include Northfield at Stapleton anchored by Macy s, JCPenney and Bass Pro Shops, and the Quebec Square power center anchored by Walmart, Sam s Club, and Home Depot. These two centers total over 1.8 million square feet of retail space. There are few traditional shopping centers in the northern and central portions of the city. Much of the retail space in these neighborhoods are in smaller buildings on shallow lots along major arterial corridors, such as Colfax Avenue and Federal Boulevard, or in commercial blocks embedded within residential areas. These types of retail spaces and buildings in the older portions of the city create both advantages and disadvantages. The historic commercial building fabric in older neighborhoods is ideal for neighborhood business districts that serve the surrounding neighborhoods. These districts have flourished in the past decade and can become vibrant entertainment nodes with a mix of eating establishments and specialty retail. The development pattern has left very few parcels that can accommodate larger, more modern retail development projects. Areas along I-25, which runs through the entire city would be ideal for regionally oriented retail centers, but there is a lack of sites suitable for retail development. Major Denver Shopping Centers Retail Market Denver (City) Denver (Metro) Economic & Planning Systems, Inc. 7

12 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Retail Sales Sales tax generated from retail stores and restaurants in Denver grew from $194 million to $226 million from 2008 to 2012, which is an annual rate of 3.8 percent. In 2009, there was a major dip in sales tax due to the recession, but sales tax generation has rebounded strongly since. Denver Retail Sales by Source Denver attracts a significant portion of retail sales from visitors. Approximately 30 percent of retail sales are made by visitors and 10 percent are made by those who work in Denver but do not live in the city. Sales to visitors account for half of all food and beverage sales in Denver. There are five major retail store categories: convenience goods, general merchandise, other shopper s goods, home improvement, and eating and drinking establishments (auto-related stores are excluded) (see definitions in Appendix C). Annual sales tax from eating and drinking establishments increased the most of any category over the past five years. Sales at convenience oriented stores (grocery stores, pharmacies), and certain other shopper s goods stores (clothing stores and miscellaneous retail) grew at a faster rate then the average for all categories. General merchandise store (department stores, supercenters) sales increased by a modest amount and at the lowest rate of any category over the past five years. Denver Retail Sales Tax, 2008 to 2012 The comparison of expected sales from city residents to actual retail store sales illustrates the categories in which the city is under or over performing. The typical Colorado household spends 36.5 percent of income on retail purchases in the store categories included in this analysis. Each household, on average, makes 30 percent of retail purchases on convenience goods and 20 percent at general merchandise stores. Compared to Resident Expenditure Potential vs. Store Sales actual store sales, these two categories only represent 20 percent of net taxable retail sales in the city. The city therefore generates less sales at general merchandise stores, home improvement stores, and grocery stores than would be expected to be generated by residents implying net outflow or leakage that is a greater than the amount of retail sales coming in from non-resident shoppers. Sales at liquor stores, pharmacies, clothing stores, sporting good and hobby stores, miscellaneous retail stores, and eating and drinking establishments are much higher than the expected demand from residents and therefore are attracting sales from people outside the city (net inflow). Economic & Planning Systems, Inc. 8

13 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Denver Subarea Conditions Denver was divided into nine subareas to determine which market areas are performing better than others and which areas are underserved by retail. The subareas are based on neighborhood boundaries, retail center trade areas, and major barriers (A complete analysis is provided in Appendix B). The Central subarea, which includes Cherry Creek, has the most amount of retail space of any subarea with 9.9 million square feet. The Far East-DIA and North Central subareas have the least amount of retail space, with 930,000 and 1.2 million square feet respectively. Subarea Resident Expenditure Potential vs. Subarea Store Sales The subareas that have more actual sales than expected from subarea residents are considered to be (at least in aggregate) served adequately with retail space. The Central subarea not only has the most retail space, but also generates more retail sales than demanded by its residents. Most of the subareas had store sales equal to or slightly greater than expected demand from their residents. Subareas that have less store sales than expected from residents are considered underserved. The Northwest and Southeast subareas were identified as underserved. All of the subareas, except the Northeast and Southwest subareas, are underserved by general merchandise stores. In some subareas store sales aggregations or strong performing store categories mask the retail deficiencies, which is the case for the North Central and Downtown subareas. Both of these subareas are lacking convenience oriented retail, specifically grocery and health and personal care stores. These two subareas are also experiencing a large amount of new infill housing development near downtown. As housing growth continues in the area, the demand for retail to serve everyday shopping needs of the area residents will only increase. Denver Retail Subareas Economic & Planning Systems, Inc. 9

14 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Retail Store Category Strengths and Weaknesses Strengths Convenience Goods 38 percent of convenience goods store sales are a result of sales inflows from people from outside of Denver. Sales at liquor stores and health and personal care stores in the city attract over 60 percent of their sales from non-denver residents. The above average sales are primarily driven by employees, tourists and Denver s central location. Net Actual Sales vs. Expenditure Potential by Store Category Other Shopper s Goods Consisting of clothing, furniture, electronics/appliances, sporting goods and hobby, and miscellaneous retail stores, 38 percent of sales in this category are from non-residents. Specialty stores selling clothing and accessories, electronics and appliances, and miscellaneous retail goods are the strongest performing. Eating and Drinking Establishments Half of the sales at bars and restaurants in Denver come from non-residents. While tourism is a major contributor to this high level of sales inflow, Denver has become the dining destination for the Front Range and is starting to garner national recognition for its dynamic restaurant scene. This boom is driven mainly by locally-owned restaurants. Categories with High Sales Inflow Weaknesses General Merchandise An estimated 65 percent of the retail expenditure potential from residents for general merchandise is spent outside of Denver. The loss of sales to Supercenters and Warehouse Clubs (e.g. Super Target, Walmart, Costco, Sam s Club) outside of the city, in many cases to store locations just beyond the Denver s borders is the highest of any one store type. There is also a large amount of unmet demand for department stores and discount department stores as they are also underrepresented. Home Improvement 40 percent of expenditure potential for home improvement and garden center items from residents is spent outside of the city. Similar to general merchandise stores, purchases are often being made at stores near the city limits. Categories with High Leakage Other Store Types There are also other store categories that are underserved. Furniture/home furnishing stores and sporting goods, hobby, music and book stores have resident sales leakage of over 25 percent. The City of Denver is also missing a number of national retail chains that are present in peer cities, specifically many of the luxury/fashion retailers. Economic & Planning Systems, Inc. 10

15 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Retail Areas of Strength and Underserved Areas Areas of Strength Denver s strongest retail areas are the two existing major retail destinations, Cherry Creek and Downtown. The city s neighborhood business districts are also so a major strength. Cherry Creek Mall and Cherry Creek North together are a premier shopping destination and one of the largest tourist destinations in the State. The Cherry Creek District is the largest generator of retail sales in the city with approximately $800 million in annual sales. Cherry Creek North 2011 sales were $256 million including $160 million in retail goods and $96 million in restaurant and bar receipts. The Mall sales are roughly twice that level with an estimated $525 to $565 million in sales. Downtown is the largest restaurant and entertainment destination in the Rocky Mountain West and has a strong base of clothing and accessory stores. The greater downtown area has more than 5.5 million square feet of retail space and approximately $730 million in retail sales. The 16 th Street Mall is downtown s prime retail core with approximately 1.0 million square feet of space and $300 million in sales. Bolstered by the success of the Larimer Square and Cherry Creek North, a number of smaller neighborhood business districts (NBDs) in the city have become major dining destinations. On average, restaurant and bars constitute only a third of the storefronts in these NBDs, but contribute 60 percent of the net taxable sales from these districts and are major drivers of visitation to these retail areas. Larimer Square and Cherry Creek North are the two best performing dining destinations in the city. Restaurants in these two areas have the highest per store sales of any of the dining areas in the city. Individually, these NBDs are relatively small revenue generators, but collectively, the Top 10 NBDs in Denver account for approximately $400 million in retail sales annually, which is comparable to sales at the major retail centers. Underserved Areas Four subareas were identified as underserved: Downtown and North Central These subareas are lacking retailers providing everyday convenience items including grocery stores, convenience stores, pharmacies, and general merchandise stores. Northwest This subarea is lacking stores in almost every category except grocery stores and eating and drinking establishments. Southeast This subarea is lacking general merchandise and most regionally-oriented retail store categories. Underserved Areas Economic & Planning Systems, Inc. 11

16 RETAIL CONDITIONS DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Other Retail Observations The successful retail areas and strong store categories in Denver are the result of several factors that are retail strengths. Denver has strong retail leaders, especially in entertainment. The urban form and aesthetic of the embedded neighborhood districts has proved to be the ideal fit for creating destination retail areas. The recent surge of housing development in the city has driven up demand for retail growth and change. The workforce in Denver generates 10 percent of retail sales. Lastly, 30 percent of total retail sales and 40 percent of food and beverage sales are from visitors to Denver, both tourist, business visitors and residents of surrounding communities. However, there are underlying factors that have lead to obstacles to successful retail in Denver. The city lacks development ready sites for new regional retail centers, particularly in northern subareas. There is a lack of available Class A retail space and development sites. Large format retailers have located in the communities surrounding Denver due to more attractive sites as well as the strong retail development programs in these cities/towns. Denver has few local retail development companies in the market focused on projects in Denver as compared to other cities. The city has not had an established retail development and recruitment program, which has caused it to miss out on a number of major store location searches and decisions. Surrounding Competition (Example of General Merchandiser Locations) Competing Trade Areas Economic & Planning Systems, Inc. 12

17 Section 3: Retail Opportunities

18 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Denver Retail Opportunity Areas Denver s opportunities for retail growth are reviewed in four locational categories, Regional Expansion Sites, Potential Regional Retail Sites, Emerging Business Districts, and Refill/Redevelopment Sites. Regional Expansion Sites The greatest opportunities for increasing retail sales activity are at the strongest existing regional nodes. Retail is constantly evolving; centers and districts that do not reinvest and regenerate quickly become tired and outmoded, and then lose sales to new competition. Therefore, identifying the opportunities for continued growth and improvement in the city s strongest retail districts should be a top priority. 1. Downtown/16th Street Mall Much of downtown s pedestrian traffic is funneled through the 16th Street supported by the Free Mall Shuttle and pedestrian mall. As a result, 16th Street Mall has been most successful for restaurants and bars serving this population for up to 18 hours a day. The Mall has been less successful developing a diverse mix of retail shopping. Since downtown s four remaining department stores closed in the early 1990s, the retail mix has favored discount retail, oriented to a moderate income population and gift shops oriented to visitors. The 700,000 square foot Pavilions, built in 1998, provided an infusion of lifestyle and entertainment retail, but to date has not generated as much spinoff development as anticipated. The remaining pockets of specialty retail are dispersed throughout LoDo and the Central Platte Valley (CPV). Downtown, therefore has a solid retail core but there are additional opportunities that can be pursued to achieve its potential full potential, such as: Economic & Planning Systems, Inc. 13

19 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Continue to pursue department and other general merchandise anchor stores along or in close proximity to the 16 th Street prime retail core. Redevelop key underutilized buildings and sites for retail and mixed use development including the underutilized Gart s building on California, Cottrell s on Glenarm, and the Shames Makovsky site at 15 th and California. Develop key cross streets between 16 th Street and the Convention Center and Denver Center for the Performing Arts on 14 th Street including Champa and California. Capitalize on the growing concentration of outdoor sporting good and apparel businesses in Lodo and Central Platte Valley. Downtown has evolved into a young, hip residential and retail hub. Tenants such as Patagonia and REI, along with chef driven restaurants and entertainment, reflect these demographics and psychographics. In order to capitalize on this trend, Downtown should continue to differentiate itself from the luxury/ adult image of Cherry Creek. 2. Cherry Creek The Cherry Creek District has been extraordinarily successful in the nearly 25 years since the Mall opened in 1989 and the Cherry Creek North District organized and created the BID and implemented the first streetscape program. Cherry Creek North has continued to evolve with updated streetscape improvements completed in 2011 and the addition of a number of high quality infill and redevelopment projects including Clayton Lane (2006), 300 Clayton (2007), Steele Creek (2009), North Creek (2011), and Fillmore Plaza (2012). The immediate changes anticipated are the implementation of the Cherry Creek North Neighborhood Plan 2012 and a number of additional redevelopment projects including 200 Columbine and the First and Steele mixed use projects. Cherry Creek North Cherry Creek is a luxury destination, as well as a center for the adult/empty nester population groups. It is important to continue to promote a separate and distinct brand for Cherry Creek. Both the Downtown and Cherry Creek trade areas will benefit from a distinct, separate marketing approach. Cherry Creek Mall faces the immediate challenge to reposition the vacant Saks Fifth Avenue Building, which is expected to be developed as additional Mall retail space with improved access to First Avenue. Longer term expansion opportunities include redevelopment of the Safeway/Rite Aid property on the east side of the Mall and additional infill development on the original Mall property on the University Boulevard frontage. 3. South Colorado Boulevard Colorado Boulevard is an important arterial retail corridor with a number of high performing community and power centers serving the eastern portion of Denver. Extending from Alameda on the north to Yale on the south, South Colorado Boulevard is one of the top suburban style retail corridors in the metro area supported by a combination of high density population, high incomes, and office/daytime commuter activity. There has been redevelopment of existing centers and sites on the corridor including the former supermarket at Evans. More redevelopment, however, has occurred in Glendale than in Denver. The corridor suffers from shallow retail parcels that do not fit the modern retail formats and relatively high land prices. The City should find solutions to these challenges that are an impediment to further retail growth. The Colorado Boulevard corridor continues to be a strong retail location with additional opportunities for infill and redevelopment including: University Hospital Redevelopment This 30-acre redevelopment site north on Colorado between 8th and 9th Avenues is planned as a higher density mixed use development. It has the potential to include a significant retail component to serve the adjacent Congress Park and Mayfair neighborhoods. University Hills North Shopping Center Immediately north of University Hills Plaza, this former community shopping center maintains a strong mix of tenants in spite of being a dated property from the 1960s. Economic & Planning Systems, Inc. 14

20 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Colorado Center The Colorado Center property has an opportunity for TOD on or surrounding the RTD light rail station just east of Colorado on Evans. Belcaro Shopping Center King Soopers has discussed the possibility of expanding its store in the Belcaro Center at Exposition. 4. Northfield at Stapleton Northfield is a 1.2 million square foot hybrid powerlifestyle center in Stapleton north of I-70 anchored by Macy s, Super Target, JCPenney, Bass Pro Shops, and Harkins Theater. Completed in 2008, the center s ancillary retail space has underperformed due in part to access constraints that were remedied with the completion of the Central Park Boulevard interchange in The Center and the adjacent I-70 interchange has additional development capacity for regional retail uses serving the northeast portion of Denver. Northfield also benefits from low barriers to development as the property has one owner, is fully served by utilities and now a full service interchange. This location should continue to grow in appeal to national retailers as Forest City moves forward with residential development north of I-70 and as the population and income of the trade area increase. Northfield at Stapleton Entry Sign Potential Regional Sites One of Denver s greatest current constraints is the lack of development ready sites to attract national retailers. The following are vacant or underutilized sites in underserved areas of the city with superior regional access that should be evaluated in greater detail for their potential for regional retail th and Colorado The 30-acre former University of Colorado Medical Center property is a key redevelopment opportunity. A number of retail anchors have been proposed on this site, but plans have not gone forward. Feasibility and site constraints must be considered as new concepts are explored. The property is well located for retail uses and it therefore remains a strong opportunity site. 6. Brighton Boulevard The I-70 and Brighton Boulevard interchange is a viable site for regional retail uses for the underserved North Central, Northwest and Downtown subareas. The National Western Stock Show and the adjacent City-owned Coliseum are the major existing land uses in this area. The availability of land for retail is therefore contingent on the NWSS plans or redevelopment or relocation. 7. I-25 and Broadway The 65 acres of D-4 Development ownership (Broadway Marketplace Shopping Center and the Denver Design Center) along with the remaining 50 acres of the former Gates Rubber Plant (owned by Gates parent company Tomlin) comprise one of the best located land holdings for retail development in the city. Both ownerships are planning for TOD associated with the Alameda and Broadway light rail stations. Major large format regional retail uses should be considered but must fit into a higher densities development. The Gates property in particular may have the potential to build mixed use development at TOD densities east of the tracks and lower density retail uses west of the tracks fronting on Santa Fe Boulevard. Former Gates Plant at I-25 and Broadway Economic & Planning Systems, Inc. 15

21 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 8. I-70 and I-25 The 35-acre former printing plant south of I- 70 between Pecos and I-25 is at the intersection of Colorado s two major national interstates with the greatest traffic volumes in the state. This location has appeal for unique one in the market uses. However, the site has major infrastructure constraints including local access and utilities that would need to be addressed before it is development ready. 9. Lowry Vista This 72-acre site is located on Alameda Boulevard in the Lowry Redevelopment. International Risk Group (IRG) remediated the former landfill in 2004 and completed a general development plan (GDP) in 2010 for I-25/I-70 Opportunity Site mixed use development including retail. The site would have marketability for community and regional retail uses including general merchandise, home improvement, and other shoppers goods stores. The site is also a great opportunity for conventional retail design that is otherwise in short supply in Denver. 10. Belleview Station This TOD is a 42-acre master planned development located north of Belleview and west of I-25 at the Belleview light rail station. The project is at the Denver s border with Greenwood Village. It is planned for 2 million square feet of office, 1,800 housing units, two hotels, and 250,000 square feet of retail. It is one of the city s best opportunity for lifestyle and specialty retail at a transit station outside of downtown. 11. Sun Valley The parking lots surrounding Sports Authority Field at Mile High as well as land near the new light rail station comprise a significant amount of land with I-25 frontage just to the west of downtown that would have great appeal for retail. This area has a heavy demand for parking on only a limited number of days per year. However, their ownership and competing uses make their availability for retail a challenge, in the near term. Emerging Neighborhood Business Districts High quality neighborhood business districts (NBDs) are an important amenity to desirable urban neighborhoods. Most of Denver s most desirable neighborhoods can claim a NBD. For both livability and revenue reasons, the City should continue to promote and nurture the revitalization of older commercial areas into more specialized retail and entertainment districts. Emerging NBDs have stores and restaurants that respond to the changing demographics of the adjacent neighborhoods, but also contain unique local businesses and restaurants that appeal to a larger citywide population. 12. East Colfax East Colfax from York to Monaco has become a more specialized district with newer generation stores and restaurants serving the nearby revitalizing neighborhoods including Congress Park, City Park West, Mayfair, and Park Hill. Businesses along the portion of Colfax from York to Colorado recently formed the Bluebird BID. A number of major new businesses have been established including Marczyk s Fine Foods, Ace Hardware and Sprouts. There remain plenty of sites for new stores to locate in existing retail buildings or for new infill retail or mixed use projects. However, similar to Colorado Boulevard, Colfax is challenged by shallow, small parcels prohibiting many larger users from finding a location and providing services to residents. East Colfax Avenue 13. Federal Boulevard This segment of Federal (Alameda on the north to Mississippi on the south) has developed a critical mass of Asian (mostly Vietnamese) shops and restaurants. This specialized retail cluster has citywide appeal, but could benefit from the addition of an additional retail anchor, more specialty stores, streetscape improvements and district identity improvements. Economic & Planning Systems, Inc. 16

22 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 14. River North (RiNo) The developing area north of downtown extending to I-25 is an emerging commercial and residential mixed use district. Brighton Boulevard and Larimer Street have attracted several new retail business, art galleries and a large amount of new infill housing development. The area has potential for a cluster of retail, restaurant and arts related businesses. 15. South Broadway The City has supported South Broadway as a revitalization district as early as the 1980s. The area from 6 th Avenue south to Alameda is finally gaining momentum as a hip location for edgy local entrepreneurs to open boutiques, restaurants and entertainment venues. This NBD is the most successful district in the city in terms of the portion of sales from retail stores (not restaurants) with 74 percent of the total activity. The intersection of 1st and Broadway is the epicenter of new activity supported by the Mayan Theater and the new Punch Bowl Social (a nationally recognized concept). 16. Central Platte Valley The CPV is an area that is lacking a defined NBD retail street or node. There are pockets of both neighborhood serving and more regionally oriented specialty stores including Platte Street, but a more comprehensive retail development plan and image for the neighborhood should be developed. The Hornet restaurant on South Broadway 17. Welton Street This historic NBD is in the heart of the largely African-American Five Points neighborhood north of downtown. The City has invested an extensive amount of effort and funds into stimulating its revitalization including the Wellington Webb Library and The Point housing development. It retains a mix of other neighborhood oriented business and newer business start-ups. The high level of investment in new infill housing and renovation of older homes in the neighborhood is both increasing area incomes and the prospects for new neighborhood oriented business and restaurants. Refill/Redevelop There are a limited number of vacant large format retail stores and vacant or outmoded shopping center sites in Denver. These stores and centers create the potential for neighborhood or community infill retail/commercial development to better serve the residents of these neighborhoods. 18. Chambers Place Shopping Center This Safeway anchored neighborhood shopping center at 48 th Avenue just east of Montbello has a vacant junior anchor building with 25,000 square feet. The Safeway is an older property with only 40,000 of leasable space, making the entire center is also a redevelopment possibility. 19. Southwest Commons This shopping center is located in Denver immediately north of Southwest Plaza Mall in Jefferson County and contains a number of mass merchandisers commonly found near malls including Jo-Ann s Fabrics and Cost Plus. 20. Alameda Square The 100,000 square foot former home improvement store in the Alameda Square Shopping Center at Alameda and Tejon is vacant and available for re-tenanting. 21. Federal and Evans (former K-Mart) - This 90,000 square foot vacant site has approximately 9.5 acres and could be redeveloped for a range of neighborhood or community serving retail uses including potentially an Hispanic superstore like Pro s Ranch or a large format, general merchandiser. 22. Evans and Monaco (former K-Mart) A K-Mart Holding Company (part of the Sears Company) owns this vacant K-Mart store and property at 2150 South Monaco. This site is a good location for neighborhood or community oriented retail. The vacant King Soopers west of Monaco is being redeveloped for a Walmart Neighborhood Center. Economic & Planning Systems, Inc. 17

23 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Denver s Retailer Targets The list of national retailers looking to expand is lengthy, but also fluid. Many retailers plans change year to year based on overall corporate performance and shifting business plans. Denver s retail tenant recruitment strategy should focus on: Building on existing strengths Target and recruit additional retailers in the store categories and locations of retail strength including fashion/luxury goods and home furnishings in Cherry Creek; general merchandise and outdoor/ active lifestyle in downtown and Cherry Creek; and general merchandisers and mass merchandisers on Colorado Boulevard and at the regional retail opportunity sites. Address market gaps Target and recruit retailers in the store categories that are underrepresented in the city and for which there is leakage to the surrounding cities including general merchandise and home improvement. Capitalize on specialty/niche market opportunities Denver s ethnically diverse population creates buyer demand for retail stores focusing on a specific consumer clusters. A recruitment strategy should identify and pursue these market opportunities. Target profitable and expanding retailers The greatest retail expansion is currently taking place in the store categories, such as luxury fashion and specialized food stores, that have responded to demographic shifts and preferences, and area less impacted by online sales. A number of major retailer opportunities are highlighted in the following list due to their absence or under representation and/or their interest in the Denver market. A full list of tenants can be found in the Technical Appendix of this report. From Left to Right and Top to Bottom: Target store, downtown Minneapolis, MN; Dillard s department store at the Atlantic Station development, Atlanta, GA; Van Maur department store, Beavercreek, OH; Costco storefront Economic & Planning Systems, Inc. 18

24 RETAIL OPPORTUNITIES DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Convenience Goods The grocery store market is growing due to changing demographics and consumer preferences. There are additional store opportunities for ethnic grocers and natural food markets including: Pro s Ranch Hispanic Superstore H-Mart Asian Supermarket Trader Joe s Natural Foods Grocer General Merchandise Denver is underserved in general merchandise stores with considerable leakage to the suburbs. The following successful chains are opportunities to open their first store in Denver or expand to underserved neighborhoods: Von Maur Department Store Dillard s Department Store Kohl s Department Store City Target and Super Target Super Center Costco Warehouse Club Mass Merchandisers The following mass merchandisers also represent opportunities due to leakage and interest by these retailers in the Denver market: Conn s Electronics Dicks Sporting Goods Sporting Goods Lowe s Home Improvement Menard s Home Improvement Scheels Sporting Goods Specialty Stores Based on a survey of specialty retailers found in Denver s peer cities including Seattle and Dallas, there are several candidate apparel, home furnishings, and jewelry/accessory stores not present in the Denver. Below is a list of potential retailers that may be attracted to Denver. In addition, a list of over 40 additional luxury retailers present in other cities is provided in the Technical Appendix. Specialty and Apparel Areosoles Build A Bear C Wonder CB2 Club Monaco delia's Disney Fuego Hanna Andersson Intermix Lego Original Penguin Pottery Barn Sperry Topsider Splendid TopShop UniQlo ZARA Outdoor/Active Lifestyle Adidas Sport Billabong Burton Columbia Sportswear ecco Helly Hanson mont-bell Moosejaw Mountain Hardwear Marmot Merrell New Balance Economic & Planning Systems, Inc. 19

25 Section 4: Retail Blueprint

26 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Program Development Observations Great retail cities take a variety of approaches to support the retail sector, ranging from relatively hands off to very intentional. They require strategic planning, leadership, adaptability, and careful coordination among a variety of public and private partners. There is no one right program or organizational structure. The optimum city staffing for implementing a retail program should be based on identified city needs and the strengths of existing public and private entities with a role in retail development and recruitment. Denver has no strategic program or policy for growing the retail sector to date. The City s economic development initiatives have focused primarily on recruitment of new office and industrial based firms, as well as retention and expansion of existing businesses. The retail sector has been secondary, particularly because of the lower wage rates associated with most retail jobs. However, the importance of the retail sector has grown for a number of reasons: Denver has become a regional draw in a number of specialized retail sectors, including fashion, outdoor lifestyle apparel and sporting goods, and restaurants and entertainment uses. The collective impact of these attractions generates significant inflow of retail spending and sales tax revenues for the City. There is greater recognition of the importance of having retail goods and services conveniently located near and within the city s neighborhoods to add to the quality of the neighborhood. The most desirable areas of the city have close-by grocery and other convenience goods stores and restaurants and specialty merchants in walkable neighborhood business districts. A significant portion of Denver households do not have retail stores close by, resulting in retail sales leakage and the loss of associated sales tax revenues. This is particularly true in the northern subareas of the city. The City is increasingly dependent on sales tax revenues for fiscal viability. Retail store sales taxes account for approximately 25 percent of general fund revenues and will continue to are a grow as other sources, including employment and property taxes, have been increasing at a slower rate. For these multiple reasons, EPS recommends the City take a more proactive stance toward growing and attracting new retail business. EPS outlined its recommendations for an overall vision, specific objectives and specific strategies based on a review of programs and policies of other cities programs and the opportunities identified in the analysis. Larimer Square Economic & Planning Systems, Inc. 20

27 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Conceptual Vision The City and County of Denver seeks to attract new retail businesses and investments in existing and new retail centers and districts to serve the needs and desires of residents and visitors, increase city retail sales tax revenues, and improve the quality and livability of its neighborhoods, transit oriented developments, and neighborhood, community, and regional centers. Objectives to Achieve the Vision EPS recommends six retail development and marketing objectives designed to help the City achieve the above vision and its goals for retail expansion and enhancement. For each objective, a series of high priority strategies are recommended. 1 Ensure that all Denver residents have the opportunity to buy the full range of retail goods and services within the city 2 Support the expansion of Denver s existing regional retail destinations 3 Attract additional regional retail stores and centers 4 Cultivate and expand Denver s neighborhood business districts 5 Promote Denver s brand as the premier destination for outdoor/active lifestyle retailers 6 Maintain and grow Denver as the entertainment destination of the Rocky Mountain West Economic & Planning Systems, Inc. 21

28 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 1 Ensure that all Denver residents have the opportunity to buy the full range of retail goods and services within the city In addition to being underserved in large-format retailers, several subareas are lacking in the full range of convenience-oriented goods that are necessary for everyday living including grocer and drug stores. Without the addition of new retail in these areas, existing and future residents will be increasingly forced to leave their neighborhood, as well as the city, to acquire retail goods. To prevent this growth in retail leakage, the City should actively recruit new retailers in convenience-oriented store categories to these subareas, as well as revitalize existing outmoded neighborhood retail space to accommodate new tenants. Create a recruitment strategy for convenienceoriented store categories in underserved areas. The City should actively market underserved retail areas to convenience-oriented store categories, including grocery, health and beauty (pharmacies), as well as smaller-scale home improvement and/or eating and drinking establishments that serve neighborhood needs. The subareas with the most need include Downtown and North Central. Opportunity to attract new quality national Hispanic-oriented supermarkets offering discount and specialty food items also exists in the West subarea. Create tools and policies for retailers in underserved store categories. In addition to marketing, the City should investigate using financial tools to target underserved store categories. This includes structuring criteria specific to convenience-oriented retailers, as well as evaluating the use of the recently established Colorado Fresh Food Financing Fund to target new grocery and supermarket stores. Provide support for the renovation of outmoded retail centers and stores and technical assistance in underserved neighborhoods. Many of the underserved subareas possess existing neighborhood retail centers that feature a significant amount of deferred maintenance and are outmoded for today s retailers. The City should create financial tools that promote the reinvestment of these Ross and Slyderman food chart, 16th Street Mall centers in order to fit the needs of new tenants. In addition, the City should expand its technical assistance services to encourage local entrepreneurs to open new retail establishments to meet the needs in the community where national retailers are unwilling to locate. South Federal Blvd retail Economic & Planning Systems, Inc. 22

29 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 2 Support the expansion of Denver s existing regional retail destinations The City should take every measure to help support and promote its existing regional destinations. These assets are often the most desirable locations for new retailers to locate, and thus, should be given considerable attention in communications with brokers, developers, and national retailers for high priority tenants and developments. As many of these regional assets have existing points of contact, the City should clearly define the roles of communication between OED and public and private partners. Determine the roles and staffing for OED to serve as the primary point of contact for retail development. As existing regional destinations, Downtown (Downtown Denver Partnership), Cherry Creek Mall (Taubman), Cherry Creek North (Cherry Creek North BID), and Northfield (Forest City) already have their own retail promotion and marketing efforts in place. Thus, establishing definitive roles with external partners will be particularly critical in order to avoid the duplication of efforts and miscommunication with potential retail targets. For areas outside of these large private-ownership or special districts, OED should be the primary point of contact for retail development, including new store recruitment, retail center development, local public and private improvements, and ongoing support of existing retailers. Develop information marketing materials for retail recruitment and promotion. OED should develop trade area profiles and customized market studies for tenant recruitment, and all regional retail assets should be highlighted as major shopping destinations in tourism outreach efforts. OED should also compile a comprehensive inventory of key retail sites and buildings in each of the regional retail nodes to track ongoing performance and identify tenant opportunities in support of recruitment efforts. Provide appropriate development assistance and incentives for identified retail stores and/or categories. Specifically, sales tax sharing is an effective tool for assisting in attracting key retailers to a specific location. OED should have pre-established criteria for the use of any tools in order to provide transparency and consistency to public and private partners. OED should support the expansion of all regional assets, providing development assistance incentives and polices where appropriate. This is particularly true for identified targeted retailers and/or retail store categories. 16th Street Mall Clayton Lane, Cherry Creek North Economic & Planning Systems, Inc. 23

30 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 3 Attract additional regional retail stores and centers Despite strong regional assets, Denver is currently underserved by regional retail uses and should encourage the development of new regional stores and centers. This includes the addition of general merchandise, furniture, home improvement, and other large-format retailers with significant sales tax generation potential. Attracting these types of retailers requires the identification and creation of regionallyaccessible sites, as well as establishing a business-friendly reputation to the national retail and brokerage community. Identify potential sites for regional retail uses and one in the market retailers. An evaluation of potential new regional retail sites that could serve identified underserved areas and also possess the qualities (acreage, regional access, demographics, etc.) desired by new retailers yielded two potential locations; a northern location along I-25 between 6 th Avenue and I-70 and a midtown location along I-25 near the intersection with Broadway. The City should factor the potential for new regional retail uses in its future planning efforts in these areas, including the evaluation of necessary property assemblage, remediation, and regional infrastructure improvements. H&M, Denver Pavilions Actively recruit additional general merchandise retailers and major retail sales tax generators. As noted, the city is underserved in general merchandise, furniture, and home improvement retailers and has limited large retail sales tax generators. In order to attract these types of retailers, the City should be proactive in its marketing efforts and incentive policy, and identify specific criteria and tools focused on large sales tax generators. Market Denver as a business-friendly retail destination to the retail development and brokerage community. In order to establish its vision and commit to creating great places; the City should clearly communicate to the brokerage and retail community that it is willing and able to think creatively to accommodate new large-format retailers, including working to meet financial and physical needs of priority stores and categories. This involves meeting regularly with the local retail brokerage and development community, as well as attending national showcases such as the ICSC RECon Marketplace. City Target, Seattle, WA Economic & Planning Systems, Inc. 24

31 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 4 Cultivate and expand Denver s neighborhood business districts While more traditional retail formats are important for providing necessary goods and services to residents and generating sales tax dollars to the city, neighborhood business districts are critical to supporting local entrepreneurship, as well as providing unique shopping, entertainment, and dining destinations to residents and visitors throughout the city. In aggregate, the city s strong collection of established and emerging neighborhood business districts also generate a substantial sales tax revenue to the city and should continue to be cultivated and expanded as critical retail assets. Create a coordinated citywide marketing program to promote local businesses and neighborhood retail districts. The city currently has a mix of programs used to market its neighborhood business districts, including neighborhood profile brochures, as well as various business district profiles on Visit Denver s tourism website. In order to successfully market its neighborhood retail districts, the City needs a coordinated effort that includes a consistent set of marketing materials and separate business district website that effectively communicates the unique identity of each district, as well as highlights shops, restaurants, and local entrepreneurs. Establish a citywide neighborhood business district program eligible to all neighborhood business districts. The city currently has two primary financial tools targeted to assist neighborhood business districts, as well as more traditional national programs including Enterprise Zones and CDBG funds. While these are important, the City should evaluate the potential to expand some form of eligibility to all neighborhood business districts through a qualifying process in order to support local entrepreneurship throughout the city. In addition to expanding assistance to neighborhoods of all economic status, the City should continue to expand the amount of available tools and technical assistance. Platte Street, Central Platte Valley Little Man Ice Cream and Linger Restaurant, LoHi Talulah Jones, East 17th Avenue Fancy Tiger Clothing, South Broadway Economic & Planning Systems, Inc. 25

32 RETAIL BLUEPRINT 5 DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY Promote Denver s brand as the premier destination for outdoor/active lifestyle retailers As Colorado s front door, Denver s nationally known as a premier outdoor activity destination, and this reputation should continue to be promoted. This includes developing a strong cluster of outdoor lifestyle retailers and advertising the Denver brand to national retailers and visitors. Develop a list of desirable targeted outdoor/active lifestyle retailers not present in Denver, including fashion, apparel, and sporting goods retailers, and market Denver to these retailers in recruitment efforts. Denver s outdoor lifestyle brand should span several retail categories, including fashion and apparel, sporting goods, and even health food retailers. The City should develop a list of the most desirable retailers not currently present in Denver, and target these retailers in its recruitment efforts. Designate a retail node as the regional hub for outdoor/active lifestyle attractions, including identified development sites and/or store locations. In order to attract a cluster of similar retailers, the City should designate a retail node, or nodes, that serve as the regional destination for outdoor lifestyle shopping. This includes identifying existing buildings, sites, streets, and store locations. The co-tenancy requirements of these retailers is strong and will require a critical mass to be successful. REI Flagship store, Central Platte Valley Hold fashion and retail showcase events during outdoor lifestyle conventions and sporting events including the SIA Snow Show, International Sportsman Expo, USA Pro Challenge, and Colorado Crossroads Volleyball Tournament. The City of Denver should leverage the national visitation of its large outdoor lifestyle events to include the promotion of its outdoor lifestyle retailers. This includes holding fashion shows at targeted sporting events and industry conventions. It also includes elevating the status of the city s existing fashion industry by holding premier fashion events that integrate traditional fashion and apparel with outdoor lifestyle retailers, as well as the growing fashion truck scene. Patagonia, 15th Street, LoDo Economic & Planning Systems, Inc. 26

33 RETAIL BLUEPRINT DENVER RETAIL CONDITIONS AND OPPORTUNITIES STUDY 6 Maintain and grow Denver as the entertainment destination of the Rocky Mountain West With the magnitude of sports teams, cultural amenities, music venues, and growing collection of world-class eating and drinking establishments, Denver has established itself as the premier entertainment destination of the Rocky Mountains West, attracting 11 million visitors per year from the length of the Front Range and frequent visitors from states such as California, Arizona, and Texas. As the city s primary retail strength, the City should continue to grow and develop this desirable market niche. Market available financial tools to local eating and drinking restaurateurs. Eating and drinking businesses have experienced the most significant growth of any retail category over the last five years. Local chefs are beginning to receive national acclaim and a growing group of world-class chefs are beginning to migrate to Denver, attracted by its increasing urban sophistication and laid-back attitude. Yet, few restaurants have utilized small business assistance programs. To maintain the city s momentum and elevate its stature as a world-class dining destination, the City should actively market available tools to and support local and national restaurateurs. Continue to support restaurant promotion programs such as EatDrinkDenver.com and Denver Restaurant Week. Denver Restaurant Week has successfully expanded into a renowned eating and drinking event, promoting dining options throughout the city to local and regional residents. In addition, VisitDenver recently launched an independent eating and drinking website that successfully highlights Denver s strengths, such the local brewing industry, growing street food scene, and strong neighborhood dining destinations. The City should closely evaluate how this effort should be incorporated into its own promotion of retail and neighborhood business districts. Build on Create Denver program and art events such as First Friday. The City has recently recognized the importance of its local arts and culture destinations and has two art districts, Sante Fe Arts District (certified) and RiNo Arts District (prospective) qualified with the Colorado Creative Industries program. The City should continue to support these districts, as well as include additional growing districts such as the Golden Triangle and Tennyson Street. The City has also established its own program, Create Denver, which promotes the city s creative industries and provides financial assistance through a revolving loan fund. First Fridays continues to provide an important opportunity for residents and visitors to interact with the local arts scene and generate retail sales dollars to artists and galleries. Work with Visit Denver to market Denver s entertainment attractions on a regional and national level. The city s strong collection of local arts districts and word-class downtown cultural amenities, including the DAM, MCA, Clyfford Still Museum, and Denver Performing Arts Center should be promoted as regional and national attractions in coordination with VisitDenver s efforts. Leverage and expand food and beverage festivals such as the Great American Beer Festival, Civic Center Eats, The Big Eat, and DSTILL. The city continues to add exciting new Eating and Drinking-focused events. The city s largest events, including the Great American Beer Festival, should better leverage national visitation to highlight and promote local restaurants to a national audience with simultaneous eating and drinking programs and opportunities. Identify ways to reduce and maintain low barriers to entry for restaurant and beverage businesses including food carts, breweries, and local food manufacturers. Denver is home to a growing collection of startup businesses in the food and beverage industry that are developing national reputations for quality. These businesses are thriving by creatively finding affordable and accessible entry points to sell goods and services, such as food carts and former industrial locations supporting small breweries and food manufactures. The City should evaluate its ability to continue to provide low barriers to entry in order to support and grow the industry among local entrepreneurs. Prost! Brewing, Central Street Economic & Planning Systems, Inc. 27

34 Appendix A: Retail Toolkit

35 RETAIL TOOLKIT APPENDIX A Retail Program The implementation of the identified retail objectives will require the City to take a more proactive role in retail development and marketing. The following program roles and responsibilities are recommended based on a review of the City s existing public and private organizational capabilities, as well as the best practices of other cities. Marketing Retail Recruitment A primary function of the retail program is marketing and outreach to targeted retailers including stores in underserved retail categories and desirable national retailers considering expansion to Colorado and Denver. The City should coordinate and work with existing business district organizations for recruitment where they exist including DDP, Cherry Creek BID, Taubman Company (Cherry Creek Mall) and Forest City (Stapleton). For the rest of the city, OED should be the primary point of contact. These functions include attending national retail events, hold meetings with national retailers, providing market and demographic data, customized market studies and data on available sites and locations. Neighborhood Business District Support The existing and emerging NBDs are one of the city s retail strengths. These districts however are largely comprised on local entrepreneurial businesses and restaurants that often need help with organization and marketing, such as the formation of BIDs and identifying retail gaps and opportunities. The retail program should continue to provide outreach and business assistance to these districts. Because many of the City s programs are housed in OED, it is the logical place for the retail marketing function to be housed. The following business assistance coordination functions are anticipated: Develop a comprehensive package of retail specific business assistance materials to be provided to interested businesses including both brochures and web site materials. Market the City s small business assistance programs to existing business districts and retailers. Assist new retail prospects seeking financial or technical support to access City programs and incentives. Targeted Marketing Profiles With a more comprehensive retail sales and retail space inventory, the City would also be in a position to provide customized retail market data for prospective retailers and developers. This could be in the form of customized trade area socioeconomic profiles for an identified retail location and/or a competitive market study for a retail store category that is underserved in the city as a whole or in a specific subarea. Market data should also be provided for neighborhood business districts. OED already has neighborhood profiles of 12 neighborhood business districts on its website. These profiles provide pertinent summary information on demographics, retail conditions, and map business locations. These profiles should be updated and expanded to cover a number of the emerging business districts where there is a greater opportunity for new business location. Central Marketing Website A separate dedicated retail website with links to the city s main website is recommended. Several cities have dedicated websites featuring comprehensive profiles of all neighborhood business districts, including highlights of local businesses and entrepreneurs, as well as various programs and financial tools. Philadelphia (Be In It Be On It), Seattle (Only In Seattle), and Portland (Venture Portland) all have stand-alone websites communicating a brand for the city retail destinations. Economic & Planning Systems, Inc. A-1

36 RETAIL TOOLKIT APPENDIX A Tools and Support Financial Analysis and Tools As with existing economic development functions, the retail program will need to provide information and outreach on the city s business and financial assistance programs as well as specific financial analysis of project need. These functions are currently provided by OED with assistance from Finance. These analyses and support should be made a priority for assisting in both retail development and retail store opportunities. The City should explore the use of effective best-practice tools, specifically sales tax sharing, land-holding programs, and retailer center reinvestment financing, to provide support for market-making centers and retailers to locate and invest in emerging market locations. The establishment of new tools should be undertaken in partnership between Finance and OED. A number of these programs may also utilize innovative use of existing tools, e.g., TIF and special districts, and public-private partnerships (P-3s), and thus may require partnerships between OED and Finance, DURA, and private developers. Data Research and Analysis A primary function of a new retail marketing and outreach initiative will be to provide city-wide and project specific retail market area and targeted market research. An important component of market trend data is tracking annual retail sales by retail NAICs category based on sales tax data. Colorado has a distinct advantage over other states because most large home rule cities collect their own sales tax data and are therefore able to compile reports for customized geographies, for example sub-areas or major retail centers. Sales tax data can and should also be used to track the sales performance of major retail centers and districts and identified subareas of the city including the city s most important retail districts, Cherry Creek, Downtown, Northfield, and Colorado Boulevard. Retail Site and Space Inventory The City should compile and maintain an inventory of available space database provided by major retail brokers including size and lease rates. Many cities have an online retail inventory of available retail sites for prospective retailers and developers. The inventory can either be provided through an interactive web map (City of Lone Tree), by submitting search criteria through an online form, enabling city staff to track site requests (City of Dallas), or calling the city directly (City of Colorado Springs). Further, the City should embark on an analysis to identify potential retail-led development sites to encourage the identification of prime sites for future retail centers in Denver, especially in underserved neighborhood areas. With this information, the City can more effectively attract the attention/interest of national retail developers. Development Review Ombudsman Our review of the best practices from other cities revealed that a key consideration for encouraging new and innovative retail businesses to locate is an effective, speedy development review process. The City could help applicants navigate the City s development review process and ensure timely review of projects through an ombudsman role on the retail team. Denver s existing review process frequently starts with an initial meeting between the project team and representatives from each of the reviewing agencies, such as land use, engineering, traffic, building services, fire department and utilities. Denver s approach has been to coordinate and streamline the development review process for improved timeliness, and progress in this direction should be continued and encouraged. Economic & Planning Systems, Inc. A-2

37 RETAIL TOOLKIT APPENDIX A Staffing and Organization The above retail program functions will involve multiple City departments and will therefore require a highly coordinated internal team. The City should therefore clearly define the roles and responsibilities for carrying out each function. The City should ensure that specialized retail experience and knowledge is an attribute of internal team. The retail team must have an understanding of private sector retail development, marketing, leasing and brokerage, and should be responsible and accountable for the following: Serving as the point of contact for recruitment and retention efforts and responsible for coordinating all City of Denver retail oriented business assistance programs and incentives. Coordinating with and supporting the existing retail marketing functions provided for downtown by the Downtown Denver Partnership and for Cherry Creek by the Cherry Creek BID. Coordinating the city s retail recruitment outreach functions including participating in the ICSC RECon Marketplace and other national events. Providing information on business assistance and incentive programs to retailers and retail development projects, and coordinating the fiscal outcome analysis and approval process. Directing development and maintenance of a City retail website and compiling trade area demographic information and targeted market research. Forest Room 5, 15th Street, LoHi Economic & Planning Systems, Inc. A-3

38 RETAIL TOOLKIT APPENDIX A Financial and Incentive Toolkit The retail development environment is highly competitive. Denver has been successful in attracting destination entertainment and specialty retail uses desiring a downtown or Cherry Creek location. It has been less successful capturing its appropriate share of more standard shoppers goods and convenience goods retailers providing everyday goods and services to a residential-based trade area. In the past, the suburban cities surrounding Denver have been more aggressive at developing retail shopping centers and attracting major stores including larger format department, discount department, superstores, and home improvement centers. As a result, there is a pattern of shopping centers outside of the city, but close to its borders, that is capturing a sizeable portion of retail expenditures by city residents and reducing the city s potential sales tax capture. The city would benefit from a more comprehensive package of incentive tools in order to be actively engaged in retail development and recruitment. Some of the existing incentives and business assistance programs are summarized in this section along with options for additional incentives to be used for retail competition or addressing project feasibility gaps. Toolkit Criteria Cities use retail tools and incentives to accomplish specific economic development goals. These typically include sales tax generation, attracting unique and highly-desired major tenants, attracting grocers or other anchor retailers to underserved neighborhoods, or to address regional competition (protect sales tax base). Cities frequently take a reactive approach to using these tools, responding to new retail opportunities as they emerge and then figuring out what can be offered. However, a more proactive approach to the use of retail tools allows for greater alignment with a city s retail vision and other economic development policies and provides political justification and transparency for public assistance. Retail tool criteria can range from extremely general to extremely specific. The key when establishing retail tool criteria is to define specific metrics that can be tested, while maintaining sufficient flexibility in the internal decision-making process. Cities generally use a combination of criteria to focus on their retail objectives. Retail tool criteria often include the following: General Economic Development Objectives The most general (and most flexible) example of retail criteria are economic development objectives that are found in most economic development policies and are not specifically related to retail. General objectives include job creation, positive fiscal or economic impacts on the local economy, spurring additional economic growth, or resulting in a higher and better use. Financial Need Many cities only use retail tools where there is an identified financial need. In other words, the project would not happen but for the financial assistance, eliminating the potential to line the pockets of retail developers. The but for test is generally most applicable to retail projects, as many desirable retailers receive financial assistance regardless of need in a competitive retail environment with other cities vying to provide the lowest cost opportunity. Geographic Locations Many cities focus retail tools on general or specific geographic locations such as identified revitalization areas, neighborhood business districts, or underserved areas. Other cities have established a defined retail priority area. Frequently, the retail priority area is a block or collection of blocks in the city s downtown central business district. In this case, retail incentives are generally targeted to attract specific tenants rather than support new retail projects, but can be used for both. For example, Washington DC has an identified Retail Priority Area for several blocks along H Street that uses TIF for tenant improvements to retailers that sell home furnishings, apparel, or general merchandise goods. Other cities with defined retail priority areas include Portland (Downtown Retail Core), Dallas (Main Street District Retail Activation Strategy), and Houston (Houston Downtown Mixed-Use Retail Core). Washington D.C. Encourage commercial development in the District of Columbia, expand the tax base through the use of tax increment financing, and provide economic assistance to encourage development of retail facilities in the District of Columbia in Retail Priority Areas. Economic & Planning Systems, Inc. A-4

39 RETAIL TOOLKIT APPENDIX A Retail Store types/categories Some cities have established criteria targeted at specific retail store types or categories. Store types include one in the market or new to market retailers, major anchor tenants, tenants that frequently co-locate with other desired retailers, or simply specialty or local businesses. Other cities focus on specific store categories and/or merchandise, such as apparel, home furnishings, general merchandise, grocery, or eating and drinking. The store types and categories should be based on the strengths and weaknesses of a given market and align with the city s retail vision and objectives. Sales Thresholds As retail policies are frequently focused on increasing sales tax collection, many cities establish minimum retail sales thresholds that must be met in order to receive financial assistance. For instance, in Oklahoma City retail incentives are focused on retailers with average annual sales exceeding $20 million. This sales threshold represents an average to above average department store ($200 per square in sales for 100,000 square foot store). Thus, this threshold provides some flexibility in the evaluation process, as it prioritizes large sales tax generators, but not necessarily the top performer in a given retail category. Sales Inflow/Leakage Many cities desire to attract new retail in order to attract new retail customers from outside of the city (sales inflow), while also prevent the leakage of sales by city residents to other adjacent communities (sales leakage). Thus, retail criteria frequently includes language regarding the ability for the project or retailer to serve as a regional destination that attracts new retail customers to the city, as well as the ability reduce leakage. Sales Cannibalization - While a new retail project or tenant can increase retail sales in a city, a portion of the sales often represents sales that would have occurred otherwise at other retail destinations in the city (sales cannibalization) as a result of similar or competing merchandise or services. Thus, many cities limit eligible retail incentives to net new sales, or the additive sales that occur as a result of a new retail project or tenant. Some cities estimate the specific amount of net new sales through a cannibalization study, while others simply include the desire to minimize the impacts of cannibalization when applying their retail toolkit. Pacific Ocean Marketplace, Alameda Square Shopping Center Clayton Lane, Cherry Creek North Economic & Planning Systems, Inc. A-5

40 RETAIL TOOLKIT APPENDIX A The City currently uses a combination of tax increment financing (through DURA) and special districts to provide financial incentives for retail development. Existing Financial Tools Urban Renewal Authority (URA) Urban Renewal Authorities (URA) are designed to address blighted economic conditions through the use its redevelopment powers including land assembly and tax-increment financing (TIF). TIF allows new property taxes from all taxing entities, as well as new local sales, and/or lodgers tax generated in the URA district to be earmarked for public improvements in the district. URAs have a limited life of 25 years, after which the increase in property tax is returned to the City s General Fund. URA tax dollars can either be applied to project costs as a pay as you go model, or future tax dollars can be bonded against to fund upfront capital costs. Tax increment financing in URAs is a very effective financing tool as it leverages the incremental property taxes of not only the city but also all taxing entities including Denver Public Schools. Property tax TIF is also a relatively predictable revenue stream that can be used to finance revenue bonds for project related improvements. An additional advantage for retail projects is the City can also TIF the future local portion of sales tax under its home rule powers. Its greatest limitation is that there are large areas of the city that would not easily qualify for an URA area. An additional disadvantage is that setting up an URA is time consuming as it requires a blight study and creation of an urban renewal plan. DURA currently has 21 URAs in the city and additional 12 TIF districts located throughout downtown. Example: Denver Urban Renewal Authority (DURA) Downtown Development Authority A DDA is a district-based quasi-public agency governed by a council-appointed board designed to improve economic areas specified as a central business district. Similar to a URA, a DDA also has the ability to utilize TIF, including property, sales, and/or lodging tax, but does not have the power to condemn property. Once TIF is initiated by a DDA, it has a limited life span of 30 years (with the option of more limited TIF for up to 50 years). In addition to TIF, a DDA can assess an additional mill levy of up to five mills for operating purposes. Denver recently established the DDRA around the 31.5 acres surrounding Denver Union Station (DUS). All TIF revenues from the DDRA are pledged to help pay off the RRIF loan for the DUS project. Given the statutory guidelines, it is also unlikely the city could establish a second DDA area. Example: Denver Downtown Development Authority (DDDA) Title 32 Metropolitan District (Metro District) A Metro District is an independent special district formed to develop and/or operate two or more public infrastructure improvements such as roads, utilities, parks, or public parking. A metro district is most often created by a land developer (but requires the city s approval of the service plan) to apply an additional mill levy to future development to create a revenue stream to help pay for infrastructure costs. There is a statutory maximum of 50 mills but no time limit on duration of the district. Metro districts are an effective financing tool for many development projects. There are limitations to the mill levy that can be imposed on retail tenants without negatively impacting lease rates and project NOI. This financing tool also is not effective for recruiting individual major retail targets. There are over 50 metro districts in the city including large scale districts in Stapleton, Central Platte Valley, and Gateway. Metro Districts are also often used as a partial public financing for retail and other infill redevelopment projects. Metro districts were created for the Gates Broadway redevelopment (Cherokee), Alameda Station redevelopment (D-4 Development), and Denargo Market (Cyprus Development) redevelopment. Examples: Madre Metro District (Belleview Station TOD) BMP Metro District (Alameda Station TOD) Economic & Planning Systems, Inc. A-6

41 RETAIL TOOLKIT APPENDIX A Improvement Districts (PIDs/LIDs) A public improvement district (PID) in a county (general improvement district in a city) is a public infrastructure district that applies additional property tax levy to a specific improvement area to pay for new public infrastructure. PID/GIDs are commonly used to fund shared infrastructure facilities. A PID can cover multiple public infrastructure goals and can be structured to address capital improvements such as parking garages, pedestrian improvements, and/or storm water management. Local (county) or special (city) improvement district is a public infrastructure district that assesses specific improvement costs to abutting property. A LID does not assess property tax, but rather charges an assessment of a specific capital improvement project. A LID is best applied for very specific infrastructure costs relating to a very specific set of abutting properties that directly benefit from the improvements. LIDs/SIDs are not separate governmental entities. Thus, they are under full control of the governmental entity. Example: South Broadway LID Business Improvement District (BID) A BID is a district-based quasi-public or private agency governed by a board of directors that can be appointed by the mayor, elected by the district, or assumed by an existing URA, DDA, or GID board. BIDs are by commercial property owners (requires 50 percent of non-residential property) in a contiguous (or noncontiguous) area to provide necessary services such as planning, managing development activities, promoting or marketing, business recruitment, and/or maintenance. BIDs are generally more operationally-focused than URAs or DDAs and act as a type of manager of a business district, similar to a retail mall manager. BIDs have the power to assess costs of service to local property owners through either an additional property tax (mills) or a special assessment charge. BIDs are important management tools for existing business districts addressing clean and safe, marketing and promotions, events, and economic development. They do not have the revenue generating potential for specific recruitment incentives or gap financing. There are currently six BIDs in the city: Cherry Creek, Cherry Creek North, Downtown, Old South Gaylord, Colfax, and West Colfax. Examples: Cherry Creek North BID Gaylord (Street) BID Economic & Planning Systems, Inc. A-7

42 RETAIL TOOLKIT APPENDIX A The City s existing financial tools are effective for their intended purposes. DURA has used TIF to address retail project feasibility issues within its urban renewal areas including projects like the Denver Dry Goods redevelopment and Denver Pavilions in downtown. Special districts, especially metro districts, have also been used by developers of retail and mixed use projects to help with financing, often jointly with urban renewal TIF. The City could provide project specific financing gap assistance to individual retail prospects outside of URAs. A specific program approach has not been established. For a program to be affect should be consistent and reliable. The following additional financing tools are widely used in Colorado for retail projects. EPS recommends that the City avail itself of these financing mechanisms to be strategically used on a limited basis for projects meeting the City s retail development targets. Additional Financial Tools Sales Tax Sharing Sales tax sharing enables the city to pledge a portion of the new sales taxes generated by a new retailer or retail development towards eligible public improvements. In practice, the city would forgo a portion of the future sales tax (typically no more than 50 percent) on an annual basis up to an agreed upon maximum contribution. The amount of sales tax that can be applied is generally limited to net new sales tax, or sales tax revenue that would not have occurred but for the location or renovation of the business. These agreements are commonly for a maximum number of years and a total amount cap whichever comes first. Sales tax sharing can be accomplished through a development agreement under the city s home rule powers. A more formalized sales tax revenue sharing agreement is referred to as an Enhanced Sales Tax Incentives Program (ESTIP) and is where the city adopts it retail development and recruitment priorities and its criteria for the use of incentives as part of its City Code. The adoption of criteria for the use of sales tax sharing is recommended. Examples: Front Range Village (Fort Collins) Public Improvement Fee (PIF) A public improvement fee (PIF) is a fee imposed by developers on retail/service tenants used to fund public improvements. The fee is generally imposed as a percent of a retail transaction, similar to a sales tax, but is considered part of the bill of sale, and is thus subject to sales tax. The fee is administered through covenants on the retail lease and is usually collected by the City for a metro district established as part of the project. Because the additional fee (0.5 percent to 2.0 percent but averaging 1.0 percent on recent projects) can result in a higher effective overall tax rate, a retailer or retail project can potentially be at a disadvantage to competitive retail destinations that do not include a PIF. For this reason, PIFs are usually used for major regional retail projects with no immediately adjacent competition. In some cases, cities have agreed to a credit PIF which foregoes a portion of the existing sales tax rate to offset the cumulative impact of the PIF. This is effectively a sales tax sharing variation and is generally temporary. PIFs can be combined with TIF and/or special district revenue to support revenue bonds to front the upfront cost of public infrastructure at the project. PIFs have been used as a financing tool on a number of major retail developments and redevelopments in the Denver region. Examples: Belmar, Colorado Mills (Lakewood) River Point (Sheridan) Retail Sales Fees (RSF) Similar to a PIF, a Retail Sales Fee (RSF) is a fee imposed by developers on retail tenants as a percent of a retail transaction. However, an RSF is generally a lower rate than a PIF and is used exclusively for retail operations, primarily in the form of marketing, events, and promotions. As with PIFs, RSFs are administered through covenants on the retail lease and collected by a metro district or similar entity as part of a retail project. Example: Promenade at Centerra (Loveland) Economic & Planning Systems, Inc. A-8

43 RETAIL TOOLKIT APPENDIX A The City offers a number of financial assistance programs oriented toward small businesses, some focused specifically on retail uses and districts and others oriented toward a wider range of business types. OED s JumpStart 2013 Strategic Plan proposes the use of a handful of new programs and tools not currently provided by the City. The City s existing programs are first summarized, followed by recently formed or proposed programs. Existing Business District Assistance Tools Revolving Loan Fund (RLF) The Denver Office of Economic Development has a revolving loan fund that provides up to 25 percent of projects costs for a startup business. The goal of the fund is to create permanent jobs and retain existing jobs for low and moderate income Denver residents, provide economic opportunities in targeted industrial and commercial areas, and stimulate redevelopment in deteriorated commercial areas. To qualify for an RLF loan, a business must be located in the RLF target area and the majority of new jobs must be made available to low and moderate income Denver residents. The maximum loan amount is $350,000, with the target of one job for each $35,000 investment, or 10 jobs for the maximum loan amount. Neighborhood Business Revitalization (NBR) Loan Program The NBR program works by assisting entrepreneurs in starting up or expanding a business in targeted business neighborhoods throughout the City of Denver. The primary goals of the NBR program are to stimulate revitalization of aging neighborhood commercial districts, provide economic opportunities for new and expanding business, enhance the quality and level of goods and services available in low and moderate income residential neighborhoods, and create permanent jobs for low and moderate income Denver residents. To qualify for an NBR loan, the new business must be located in one of Denver s targeted NBR commercial districts (currently 8 districts). The business must provide locally-serving goods and services and create permanent jobs for low and moderate income residents. NBR loans provide up to 50 percent of project costs and can be used for real estate acquisition, new construction, rehabilitation, equipment purchases, and working capital. There is no stated loan maximum. Create Denver Revolving Loan Fund The Create Denver Revolving Loan Fund (CDRLF) offers creative enterprises in the City and County of Denver access to affordable and flexible business capital to increase income and build assets. Funded through Community Development Block Grant monies, the CDRLF supports Denver s creative economy with small amounts of capital provided at reasonable rates, combined with recommendations for business improvements. Creative enterprises are defined as non-profit organizations and for-profit businesses producing or selling fine art, photographic and graphic art, performance art, handcraft and design and media. CDRLF loans range from $5,000 to $30,000. Economic & Planning Systems, Inc. A-9

44 RETAIL TOOLKIT APPENDIX A In addition to the wide range of small business assistance programs available to new and existing retail and restaurant businesses in the city, there are a number of new or proposed programs that may be useful for business assistance moving forward. Additional Small Business District Assistance Tools Fresh/Healthy Food Fund A healthy and/or fresh food fund is a fund established to facilitate the development of healthy food markets in underserved communities. Fund participants can obtain financing for capital projects and related predevelopment activities, including real estate acquisition, construction or rehabilitation, leasehold investments, equipment and infrastructure. The fund can assist for-profit, nonprofit, or cooperative food markets located in underserved areas, meeting income and/or food desert metrics. Generally, projects often must accept food stamps/vouchers and meet minimum square footage requirements (such as 66 percent floor area for general food, 50 percent nonprepared and 30 percent perishable). The HFHC Fund in New York provides low-interest financing between $250,000 and $5.0 million. Other fresh food funds are active in Pennsylvania, Washington D.C. and California. Modeled on these examples, the State of Colorado recently established the Colorado Fresh Food Financing Fund (CO4F) capitalized with $10.0 million in foundation grant dollars. The loan and grant fund will provide financial incentives for grocery stores and other food retailers in underserved communities throughout the state. The fund will be administered by the Colorado Housing and Finance Authority (CHFA). To date, specific eligibility requirements have not been defined. Matching Grant Program As part of JumpStart 2013 s program to support underperforming retail neighborhoods in Denver, OED is creating a program to fund up to 50 percent of store improvements, re-merchandising, or retail lessee rent abatement (up to $15,000 per business) for businesses located in identified underperforming retail neighborhoods. This fund is being setup now; however, the tool is similar to matching grant programs used in many other cities. In Portland, local retailers or national retailers in specific store categories and locations (URAs or downtown retail core) can receive a grant for up to 75 percent of storefront improvements ($32,000 maximum). Matching grants are also provided to fund feasibility studies for up to 80 percent of predevelopment costs ($12,000 maximum). Targeted Loans While Denver s RLF program provides low-interest debt to small business in targeted areas, some cities also provide low-interest loans for specific costs to open a new store or location at any location. These costs include tenant improvements, equipment purchase, property development and/or rehabilitation, property acquisition, and working capital. Loan terms for each specific cost are different. For example, the Portland Development Commission provides up to $2.0 million earmarked for tenant improvements at new small businesses located in urban renewal areas at prime + 3 percent amortized over 10 years, while loans are available citywide for the purchase of working capital with a maximum of $100,000 at prime + 4 percent amortized over 7 years. Economic & Planning Systems, Inc. A-10

45 Appendix B: Subarea Profiles

46 CENTRAL SUBAREA APPENDIX B Demographic Character The Central subarea has the highest population of Denver s subareas. This subarea contains many of the most stable and oldest neighborhoods in the city and has the highest housing density of any of subareas, as well as a higher percent of renters than homeowners. The household income of the subarea residents is diverse but overall has one of the highest average household incomes of the subareas. Residents are younger than the average for the city, with 50 percent of the residents under the age of 35. Tapestry Segments Subarea Demographics 2012 Population 126,244 Population Density (per acre) Households 70,900 Housing Unit Density (per acre) 6.76 Avg. HH Size 1.72 Avg. HH Income $65,552 Employment 108,290 Employment Density (per acre) 9.50 Percent of Residents by Age The most prevalent Tapestry Segments are Metro Renters and Metropolitans. These tapestry segments are younger, either renters or own older homes, typically enjoy more experience oriented retail environments and make a higher percentage purchases online. Retail Conditions The Central subarea is home to the premier retail area in the state, Cherry Creek Mall and adjacent Cherry Creek North. Cherry Creek is the luxury retailer destination in the metro area and is the preferred location for most of the upscale apparel, home furnishings and specialty retailers in the market. Colorado Boulevard is a major commercial corridor that is the location of many larger format, regionally serving retailers. The other two commercial corridors, Broadway and Colfax Avenue, are becoming major entertainment oriented retail districts with several restaurants, bars and unique specialty retailers. The subarea also has several neighborhood business districts that are community gathering points, with a mixture of convenience oriented retailers and restaurants. Neighborhood Districts: 6th Avenue Bluebird District Bonnie Brae Capitol Hill/Colfax Old South Pearl South Gaylord Street University and Evans Uptown/17th Avenue Key Retailers: Macy s Nordstrom Neiman Marcus Whole Foods (3) Sam s Club Crate & Barrel Home Depot King Soopers (3) Retail Market Retail Square Feet 9,916,417 Square Feet per Capita 79 Average Rental Rates $22.46 Vacancy Rate 3%

47 CENTRAL SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance Central subarea has the most retail sales of any of the subareas with 30 percent of the city total Over half of subarea store sales are made to people who do not live in the subarea (inflow) General merchandise and home improvement store categories have sales significantly less than the expected demand from residents The neighborhood business districts make up 25 percent of restaurant and bar sales in the subarea Advantages Superior regional access and proximity to I-25 Cherry Creek is the luxury retail destination in the metro area Dense neighborhoods with high incomes Major shopping destination for out of town visitors Three major arterial corridors; Broadway, Colfax, and Colorado Premier Retail Area (Cherry Creek) in Denver Metro Area Main shopping destination for most City residents Strong neighborhood business districts Barriers Small parcel sizes along arterials limit opportunity for larger format stores and centers Lack of sites for new major retail destinations Large amount of sales leakage to Glendale, especially for general merchandise Demand for higher density housing potentially in competition for potential regional retail locations Subarea Opportunities Cherry Creek Cherry Creek Mall has the immediate challenge to redevelop and reposition the vacant Saks Fifth Avenue Building which is expected to be developed as additional Mall retail space with improved access to First Avenue. Longer term expansion opportunities include redevelopment of the Safeway/Rite Aid property on the east side of the Mall and additional infill development on the original Mall property on the University Boulevard frontage. 9 th and Colorado The 30-acre former University of Colorado Medical Center property is under contract to be sold for a redevelopment project. A number of retail infill anchors have been proposed by previous proposers on this site and all have been rejected due to feasibility constraints or community opposition. The property is well located for infill retail uses and it therefore remains a strong opportunity site. I-25 and Broadway The 65 acres of D-4 Development ownership (Broadway Marketplace Shopping Center and the Denver Design Center) along with the remaining 50 acres of the former Gates Rubber Plant (owned by Gates parent company Tomlin) comprise one of the best located land holdings for infill retail development in the City. The Gates property in particular may have the potential to build mixed use development at TOD densities east of the tracks and lower density retail uses west of the tracks fronting on Santa Fe Boulevard. South Broadway This City supported revitalization district is gaining momentum as a hip location for edgy local entrepreneurs to open boutiques, restaurants and entertainment venues. The intersection of 1st and Broadway is the epicenter of new activity supported by the Mayan Theater and the new Punch Bowl Bowling alley as anchor uses. East Colfax A number of major new businesses have been built on East Colfax including Marczyk s Fine Foods, Ace Hardware and Sprouts. There remain plenty of sites for new stores to locate in existing retail buildings or for new infill retail or mixed use projects. However, similar to Colorado Boulevard, Colfax is challenged by shallow, small parcels prohibiting many larger users from finding a location and providing services to residents. Economic & Planning Systems, Inc.

48 DOWNTOWN SUBAREA APPENDIX B Demographic Character The Downtown subarea has traditionally had very few residents. However, Downtown is becoming a rapidly growing residential location, especially in the Central Platte Valley. Downtown employment is over 100,000 and has the highest employment density of any subarea. Most residents of Downtown live in multifamily buildings, are young (60 percent are under the age of 34), have high incomes (average household income of $71,000) and live alone or with one other person (average household size of 1.6 persons per household). Tapestry Segments Subarea Demographics 2012 Population 17,061 Population Density (per acre) 8.98 Households 9,798 Housing Unit Density (per acre) 6.05 Avg. HH Size 1.59 Avg. HH Income $71,574 Employment 101,234 Employment Density (per acre) Percent of Residents by Age The most prevalent Tapestry Segment is Metro Renters, which is young, educated and predominately apartment renters. This tapestry segment typically enjoy experience oriented retail environments, spend retail dollars on clothing and eating and drinking and make a higher percentage purchases online. Retail Conditions 16th Street Mall is one of the major retail destinations in the City, anchored by the Denver Pavilions. Larimer Square is the premier eating and drinking destination in the City. The Santa Fe Arts District is location of the most vibrant arts scene with several small art galleries and has largest First Friday event in the City. The redevelopment of Union Station provides the opportunity to build more retail destinations in the City and anchor the end of the 16th Street Mall. The Broadway corridor north of 6th Avenue is also a major retail arterial that is primarily occupied by eating, drinking and entertainment establishments. The majority of the retail in Downtown is also entertainment oriented. Neighborhood Districts: Larimer Square Union Station Santa Fe Arts District Key Retailers: Patagonia H & M Forever 21 Sports Authority Rockmount Ranch Wear Tattered Cover Retail Market Retail Square Feet 5,685,397 Square Feet per Capita 333 Average Rental Rates $20.87 Vacancy Rate 3%

49 DOWNTOWN SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance The majority of retail sales in Downtown are made to visitors 63 percent of the retail sales in the Downtown subarea are from eating and drinking establishments Sales at eating and drinking establishments in Downtown account for a quarter of all the eating and drinking sales in the City Clothing and accessories stores, sporting goods and hobby stores, and miscellaneous retail stores are the strongest retail store categories The Downtown subarea residents are underserved in most other store categories including convenience goods and general merchandise Advantages Largest employment base in the State Location of the majority of the major entertainment, cultural and art attractions in the State 16th Street Mall is the most visited tourist attraction in the State Growing residential base with high incomes Barriers Lacks major retail anchors Lack of sites for new major retail destinations Overlapping trade area with Cherry Creek is often stated as reason more retailers are not located in downtown Large format retailers cannot fit in Downtown, with urban formats required for most potential stores The length and linear orientation of 16th Street Mall makes it difficult to cluster retailers to create significant retail cluster Subarea Opportunities 16 th Street Mall Much of downtown s pedestrian traffic is funneled through the Mall supported by the Free Mall Shuttle and the adjacent pedestrian mall for strolling and circulation. As a result, 16 th Street Mall has been most successful for restaurants and bars serving this population for up to 18 hours a day. The Mall has been less successful developing a diverse mix of retail shopping. The 700,000 square foot Pavilions, built in 1998, provided an infusion of lifestyle and entertainment retail, but it has not generated as much spinoff development as anticipated. Specific recommendations for 16th Street include: Continue to pursue department and other general merchandise anchor stores close to and connected to the 16 th Street prime retail core. Redevelop key underutilized buildings and sites for infill retail and mixed use development including the vacant Gart s Fast Food building on California, Cottrell s on Glenarm, and the Shames Makovsky site at 15 th and California Develop key cross streets between 16 th Street and the Convention Center and Denver Center for the Performing Arts on 14 th Street including Champa and California. Central Platte Valley/Union Station The CPV is an area that is lacking a defined NBD retail district. There are pockets of both neighborhood serving and more regionally oriented specialty stores including Platte Street, but a more comprehensive retail development plan for the neighborhood should be developed. Capitalize on the nascent concentration of outdoor sporting good and apparel businesses in the CPV. LoDo and CPV has evolved into a young, hip residential and retail hub. Tenants such as Patagonia and REI along with chef driven restaurants and entertainment reflect these demographic and psycho-graphics. Further, it can be and should be distinguished from the luxury/adult image of Cherry Creek. Economic & Planning Systems, Inc.

50 FAR EAST-DIA SUBAREA APPENDIX B Demographic Character The Far East and DIA subarea is a mixture of industrial uses, suburban single family housing and airport related development. Green Valley Ranch and Montbello neighborhoods are newer suburban style areas with the majority of residents being families. The Montbello neighborhood is the oldest portion of the subarea and has a diverse mixture of residents of different races. The average age in this subarea is 28 years old, due mainly to the large amount of young families with kids under 18. Tapestry Segments Subarea Demographics 2012 Population 63,122 Population Density (per acre) 1.80 Households 18,326 Housing Unit Density (per acre) 0.55 Avg. HH Size 3.44 Avg. HH Income $61,262 Employment 30,916 Employment Density (per acre) 0.88 Percent of Residents by Age The most prevalent Tapestry Segment is Up and Coming Families and other similar household types, which is one of the youngest tapestry segments and are typically homeowners with young kids on the urban fringe. Retail purchases are typically for children s goods and supplies, home garden supplies and basic household furniture. Retail Conditions The Far East - DIA subarea is on the eastern fringe of the City and metro area. The retail stores in this subarea are either located in one of the three neighborhood shopping centers along 48th Avenue or retail oriented to the hotels located in the subarea. The retailers in the neighborhood shopping centers serve the local neighborhoods and include service commercial uses such as dry cleaners, banks, salons. There is a significant number of casual chain restaurants supporting the limited service hotels along Tower Road and along 40th Avenue between Pena Blvd and Chambers Road. These neighborhoods shop outside the subarea at either the Gateway Town Center in Aurora or the Northfield/Quebec Square stores for general merchandise goods, other shoppers goods, and home improvement goods. Key Retailers: King Soopers Walmart Neighborhood Market (Coming Soon) Safeway Retail Market Retail Square Feet 997,619 Square Feet per Capita 15 Average Rental Rates $22.52 Vacancy Rate 1%

51 FAR EAST-DIA SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance The Far East subarea inflows sales due to sales at DIA The subarea has sufficient convenience goods retail space to meet resident needs General merchandise and home improvement are underrepresented in the subarea due to the proximity to centers outside the city with these types of retailers Advantages Airport travelers drive retail sales particularly eating and drinking Major planned travel and employment oriented developments along Pena Blvd and Tower Road will drive up demand for retail Barriers The Gateway Town Center on Tower Road at I-70 in Aurora is the location of the regionally oriented retail serving the area Small number of people in trade area Lack of sites along major roads Large number of competitive sites and developments near subarea Subarea Opportunities Airport Related Retail Demand for retail oriented to the hotels and business parks along Pena Boulevard and Tower Road will continue to grow as activity at the Airport increases, the commuter rail line opens, and more businesses locate in the area. Specific areas for retail development in should be planned so they can best capture demand from growing travel and employment base. New development should be clustered retail near, transit stations, hotels and office buildings in area at locations with the highest density and visibility. Chambers Place Shopping Center This Safeway anchored neighborhood shopping center at 48 th just east of Montbello has a vacant junior anchor building with 25,000 square feet. The Safeway is an older property with only 40,000 of leasable space so the entire center is also a redevelopment possibility. The property owner and retail brokers should be engaged to locate a anchor tenant for vacant box. Possible users include relocating existing Safeway as part of a renovation of center, lower end general merchandise retailer such as Family Dollar or Dollar General, or apparel stores such as Ross, Dress Barn, etc.. Economic & Planning Systems, Inc.

52 NORTH CENTRAL SUBAREA APPENDIX B Demographic Character The North Central is a diverse mixture of household types, races and incomes. The majority of the subarea consists of historic single family neighborhoods, newer residential development near downtown and industrial uses along I-70. This subarea has the lowest average household income of the nine subareas. The distribution of ages in the subarea matches closely with the city average. However there is a slightly higher proportion of younger residents ages 19 to 34 than in the city average, which are likely due to the number of apartments built close to downtown. Tapestry Segments Subarea Demographics 2012 Population 41,584 Population Density (per acre) 7.18 Households 16,515 Housing Unit Density (per acre) 3.12 Avg. HH Size 2.38 Avg. HH Income $39,516 Employment 28,383 Employment Density (per acre) 4.90 Percent of Residents by Age There is no prevailing Tapestry Segment in the subarea. The Old and Newcomers segment, which makes up nearly 20% of the subarea, is a great description of portions of this subarea. Old Newcomers is a segment typically found in transitional areas. Retail Conditions The North Central subarea has a lack of retailer serving this area, The area has recognized by the City as a Food Desert meaning its residents lack access to fresh produce and groceries. There are no major shopping centers in this subarea and most resident leave the subarea to do the majority of their shopping. There is one traditional grocery store in the subarea, Safeway at 20th and Park Avenue on the border of the subarea and serving residents of the Central, North Central and Downtown subareas. There are few major arterial roads in this subarea which means most of the traditional shopping centers have not been built here. Colorado Boulevard borders the subarea on the east and has high traffic volumes but there are very few parcels that have retail or are big enough for new retail development. There is growing development demand along Brighton Blvd, Blake Street, Walnut Street and Larimer Street stemming from downtown that has spurred retail growth in the form of restaurants and bars, the emerging RINO arts district, and the TAXI development. The National Western Stock Show and Denver Coliseum are the middle of this subarea and soon to be commuter and light rail stops. Neighborhood Districts: Ballpark Neighborhood RINO Arts District TAXI Development Welton Street/Five Points Key Retailers: Safeway Retail Market Retail Square Feet 1,196,597 Square Feet per Capita 29 Average Rental Rates $13.97 Vacancy Rate 1%

53 NORTH CENTRAL SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance The Safeway store on Park Avenue accounts for an estimated 80 percent of the grocery store sales in the subarea At least half of grocery store sales potential from residents is being spent outside the subarea The gas stations, convenience stores and liquor stores in the subarea are capturing a significant amount of inflow sales Eating and drinking sales are twice as high as resident expenditure potential; however the numbers are inflated due to wholesaler and catering establishments The building material sales are strong due to a concentration of wholesale and specialty material shops located north of downtown Advantages Regional access and frontage on I-25 and I-70 Proximity to downtown Redeveloping areas, especially Brighton Blvd allow for advanced planning Barriers Limited number of streets with favorable traffic volumes Lack of sites for new major retail destinations Poor demographics make up Subarea Opportunities Brighton Boulevard The I-70 and Brighton Boulevard interchange is a viable site for regional retail uses for the underserved North Central, Northwest and Downtown subareas. The National Western Stock Show and the adjacent City-owned Coliseum are the major existing land uses in this area. The availability of land for retail is therefore contingent on the NWSS plans for redevelopment or relocation. I-70 and I-25 The 35-acre former Denver Post printing plant south of I-70 and west of I-25 is at the intersection of Colorado s two major national interstates with the greatest traffic volumes in the state. This location would therefore have appeal to unique one in the market uses. However, the site has major infrastructure constraints including local access and utilities that would need to be addressed before it is development ready. River North (RiNo) The developing area north of downtown extending to I-25 is an emerging commercial and residential mixed use district. The amount of residential infill has been unprecedented over the last 10 years. The area has potential for a cluster of retail, restaurant and arts related businesses with major activity occurring currently on Brighton Blvd and Larimer Street. Economic & Planning Systems, Inc.

54 NORTHEAST SUBAREA APPENDIX B Demographic Character The Northeast subarea is mixture of older (pre-1970 s), predominately single family neighborhoods and two major redevelopments, Stapleton and Lowry. There is also a mixture of affluent neighborhoods and neighborhoods with lower incomes. The average household income of the subarea is $67,999, which is among the highest of the nine subareas. The subarea has lower housing unit density of 2.46 but there are pockets of higher density housing. Sixty percent of the households are homeowners. The residents are generally older than the City average with many families with older kids. Tapestry Segments Subarea Demographics 2012 Population 81,979 Population Density (per acre) 5.67 Households 33,270 Housing Unit Density (per acre) 2.46 Avg. HH Size 2.33 Avg. HH Income $67,999 Employment 45,907 Employment Density (per acre) 3.17 Percent of Residents by Age The most prevalent Tapestry Segments are Metropolitans and Trendsetters. These tapestry segments are typically younger singles or married couples, either renters or own older homes, typically enjoy more experience-oriented retail environments, price competitive fashion stores, and make many purchases online. Retail Conditions The Northfield and Quebec Square regional shopping centers in Stapleton added a large amount of regionally oriented retailers to the subarea. The Stapleton and Lowry redevelopment projects have also added neighborhood oriented retail, such as grocery stores, that support the surrounding neighborhoods which previously have been underserved. Aside from the new retail developments at Lowry and Stapleton, there is a small amount of retail space in this subarea. Colfax Avenue is the major retail arterial in the subarea but has only recently re-emerged as a retail destination for subarea residents despite the presence of nearby stable and affluent neighborhoods. The older neighborhoods have traditionally had their retail needs met by the retailers at Cherry Creek, Colorado Boulevard or outside the City. Some small, historic neighborhood districts, including Colfax Avenue, are re-emerging as retail nodes anchored mostly by small and local businesses that serve the surrounding neighborhoods. Neighborhood Districts: 3rd and Holly 9th and Colorado 23rd and Kearney 29th Street Town Center East Colfax Lowry Town Center Oneida Park Key Retailers: Bass Pro Shop Super Target Walmart Sam s Club Home Depot Macy s JCPenney King Soopers (2) Harkins Theatre Retail Market Retail Square Feet 3,944,865 Square Feet per Capita 47 Average Rental Rates $19.39 Vacancy Rate 5%

55 NORTHEAST SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance Northeast subarea is one of the few subareas that has more general merchandise sales than resident expenditure potential The department stores and super centers in Northfield and Quebec Square attract half of their sales from outside the subarea and mostly from outside the City (Aurora and Commerce City There is lack of stores in the other shoppers goods categories, except apparel. There is significant leakage of grocery store sales outside of the subarea or to other store categories (e.g. super centers) Advantages Regional access and frontage on I-70 Neighborhoods with appealing demographics (Park Hill, Hale, Montclair, Hilltop) Regional centers with major national tenants Growing neighborhoods (Stapleton, Lowry) Barriers Limited number of sites for larger format retailers within the middle of the subarea, major centers are on the edges of the subarea Cherry Creek and Colorado Blvd trade areas overlap with large portions of subarea Poor demographics of neighborhoods surrounding subarea outside of Denver Opportunities and Action Steps Northfield at Stapleton Northfield is a 1.2 million square foot hybrid power-lifestyle center in Stapleton north of I-70 anchored by Macy s, Super Target, JCPenney, Bass Pro Shops, and Harkins Theater. Completed in 2008, the center s ancillary retail space has underperformed due in part to access constraints that were remedied with the completion of the Central Park Boulevard interchange in The Center and the adjacent I-70 interchange has additional development capacity for regional retail uses serving the northeast portion of Denver and a larger trade area extending into Aurora and Commerce City. Northfield also benefits from low barriers to development as the property has one owner, fully served by utilities and has a new interchange. This location should continue to grow in appeal to national retailers as Forest City moves forward with residential development north of I-70 and as the population and income of the trade area increase. Lowry Vista This 72-acre site is located on Alameda Boulevard in the Lowry Redevelopment. International Risk Group (IRG) remediated the former landfill in 2004 and completed a general development plan (GDP) in 2010 for mixed use development including retail. The site would have marketability for community and regional retail uses including general merchandise, home improvement, and other shoppers goods stores. The site is also a great opportunity for conventional retail design that is otherwise in short supply in the City of Denver. Economic & Planning Systems, Inc.

56 NORTHWEST SUBAREA APPENDIX B Demographic Character The Northwest subarea is a rapidly changing yet shrinking subarea. The subarea decreased in population by over 5,000 people but increased in households by 1,600 in the past 12 years. The subarea is mostly single family homes but a portion of the Highland neighborhood near I-25 has seen an increase in multifamily apartments and condos. The subarea has attracted many young professionals between the age of 25 and 34 in the past decade, which replaced the older residents and Hispanic families that have traditionally lived in the subarea. The subarea has a collection of senior living developments and residents over 65 years old make up 12% of the population. Tapestry Segments Subarea Demographics 2012 Population 58,099 Population Density (per acre) 9.51 Households 26,299 Housing Unit Density (per acre) 4.64 Avg. HH Size 2.16 Avg. HH Income $47,370 Employment 22,246 Employment Density (per acre) 3.64 Percent of Residents by Age The most prevalent Tapestry Segment is Metropolitans. This tapestry segment are well educated people who prefer to live in older city neighborhoods, singles who live alone, or married couple families, and are predominately white. The majority of residents live in homes built before Many retail purchases are made on maintaining or remodeling their older home. Retail Conditions The retail space in the Northwest subarea is mostly in older buildings in small neighborhood commercial nodes that were located along the original trolley lines serving this area or along the two commercial corridors 38th Avenue and Federal Boulevard. The Highland Garden Village redevelopment, which replaced the old Elitch Gardens Amusement Park, was at least partially responsible for stimulating a revival of this subarea. The commercial space in the Highland Garden Village redevelopment is minimal but is anchored by a Sprouts grocery store (originally a Sunflower Market). The old commercial nodes in the subarea have re-emerged in recent years as destination bar and restaurant areas, with the Highland Square (32nd and Lowell) node being the longest standing. Most of the retail in the subarea is oriented to the local residents. There is significant retail centers on the west side of Sheridan outside the City that capture many of the sales of the Northwest subarea residents. Neighborhood Districts: Platte Street Highland Square LoHi Tennyson Street Key Retailers: REI Sprouts Safeway (2) Walgreens Retail Market Retail Square Feet 2,644,573 Square Feet per Capita 47 Average Rental Rates $18.18 Vacancy Rate 2%

57 NORTHWEST SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance The Northwest subarea is underserved by retail in most store categories Eating and drinking has become a destination use with the strength of the neighborhood districts The subarea is adequately served by convenience oriented retail including grocery stores, with leakage occurring mainly to retailers on the border of the subarea There are only two retailers in the general merchandise category and most of the sales potential for this category is lost to retail outside of the City Advantages Regional access from I-70 and I-25 and close proximity to downtown Two major arterial corridors which are largely underutilized Eating and drinking destination for the City and metro area Urban neighborhoods experience investment from new homeowners and developers with improving demographic make-up of residents Rapid development of multifamily housing near I-25 Barriers Small parcel sizes and quality of buildings along Federal and 38th arterials limit opportunity for larger format stores and centers Lack of sites for new major retail destinations Several competitive retailers located on or near border of subarea outside of the City Opportunities and Action Steps Sun Valley The parking lots surrounding Sports Authority Field at Mile High as well as the vacant land surrounding the Aquarium comprise a significant amount of land with I-25 frontage just to the west of downtown which would have great appeal for retail. These sites have heavy demand for parking for only a limited number of days per year. However, their ownership and competing uses make their availability for retail a challenge. Neighborhood Business Districts The entertainment oriented businesses (bars and restaurants) in the subarea s neighborhood business districts have turned the area into a destination in the metro area. The growth of these districts should be encouraged through use of incentives to allow for renovation of older buildings and creation of new spaces for new retailers especially along arterial corridors. The City should also aid in marketing efforts for subarea and support formation of business improvement districts and organized business owner districts or organizations to guide and protect retail nodes. Arterial Corridors The two main arterial corridors in the subarea, Federal and 38th Avenue, have the potential to be the location of more retail uses. The City should identify larger development opportunities along Federal and 38th Avenue to find locations for larger retailers or organized centers to add retailers to serve subarea residents. Also the City should identify ways to assemble sites and aid redevelopment, and identify retailers that fit the neighborhood needs or existing retailers looking to expand. Economic & Planning Systems, Inc.

58 SOUTHEAST SUBAREA APPENDIX B Demographic Character The Southeast subarea has the second largest highest population of the City s subareas and has a relatively high population density despite having a largely suburban housing stock. This subarea has a higher percent of renters than homeowners. The household income of the subarea residents is diverse and the average annual household income is $61,519. Residents are on average older than the City average, with a higher proportion than the City average of residents in the age cohorts over 55 years of age. However, there is also higher proportion of residents between the age of 20 and 24 than the City average. Tapestry Segments Subarea Demographics 2012 Population 100,503 Population Density (per acre) 9.69 Households 51,502 Housing Unit Density (per acre) 5.39 Avg. HH Size 1.93 Avg. HH Income $61,519 Employment 57,219 Employment Density (per acre) 5.52 Percent of Residents by Age There is a wide range of Tapestry Segments in the Southeast subarea. There is a collection of younger tapestry segments such as the Young and Restless, but there is also segments indicative of retirees and empty nesters. The subarea is largely transitional due a consistently changing resident base and has several pockets of differing types of residents. Retail Conditions The Southeast subarea is one of the few subareas that has more suburban style commercial corridors and shopping centers due to when the area was developed. The retail space in this subarea primarily exists along four main arterial commercial corridors; Leetsdale Drive/Parker Road, Colorado Boulevard, Evans Avenue and Hampden Avenue. Several of the older shopping centers on these corridors have reached the end of their original lifespan and have been repurposed. There were three first generation shopping malls, with indoor corridors, in this subarea, all of which have since been redeveloped into more contemporary centers. Two of these centers are on Hampden Avenue. Tiffany Plaza was redeveloped into a power center anchored by Whole Foods, and Tamarac Square which is currently being redeveloped into a Super Target. K-Mart recently closed its store at Monaco and Evans. Key Retailers: Best Buy Whole Foods Super Target (opening soon) Scandinavian Designs Safeway King Soopers Retail Market Retail Square Feet 4,634,488 Square Feet per Capita 46 Average Rental Rates $14.70 Vacancy Rate 5%

59 SOUTHEAST SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance The Convenience Goods retail in the subarea is strong and is attracting sales from outside the subarea and city. The grocery stores in the subarea are well located, abundant and serve residents outside the areas well as within, Whole Foods in particular. The closing of the K-Mart at Evans and Monaco results in there being virtually no general merchandise retailers in the subarea. The new Super Target being built at Tamarac and Hampden will be a major improvement for the city and subarea but there will still be leakage of sales. There is demand for additional retailers in the other shoppers goods categories, which typically include large and mid box format stores The subarea is leaking sales in the home improvement category Advantages Regional access from I-25 Four major arterial corridors with larger redevelopment opportunities than older portions of the City Large vacant stores are an opportunity to attract new retailers Recent investment by retailers along Hampden Avenue Belleview TOD has ability to attract significant retail component due to its location Barriers Subarea is within trade area for three regional shopping mall centers (Cherry Creek, Park Meadows, Aurora Town Center) which may limit the opportunity for regional retailers Opportunity sites require redevelopment of existing centers which may make them less competitive Limited opportunity sites on I-25 Subarea Opportunities South Colorado Boulevard Colorado Boulevard is an important arterial corridor with a number of high performing community and power centers serving the east portion of the City. Colorado Blvd is one of the top suburban style retail corridors in the metro area supported by a combination of high density population, high incomes, and office/daytime commuter activity. The corridor s challenge is it suffers from shallow retail parcels that do not fit the modern retail formats and relatively high land prices. The Colorado Boulevard corridor continues to be a strong retail location with additional opportunities for infill and redevelopment in the subarea include; the University Hills North Shopping Center, which is a former community shopping center that still maintains a strong mix of tenants in spite of being a dated property from the 1960s, and the Colorado Center property, which has an opportunity for TOD development on or surrounding the RTD light rail station just east of Colorado on Evans. Belleview Station This TOD is a 42-acre master planned development located north of Belleview and west of I-25 at the Belleview light rail station. The project is at the City s border with Greenwood Village. It is planned for 2 million square feet of office, 1,800 housing units, two hotels, and 250,000 square feet of retail. It is the City s best opportunity for lifestyle and specialty retail at a transit station outside of Downtown. The City should work with developer to make a successful TOD with retail to be used as model for other TOD s in the City. Evans and Monaco (former K-Mart) A K-Mart Holding Company (part of the Sears Company) owns this vacant K-Mart store and property at 2150 South Monaco closed in This site could also be a good location for neighborhood or community oriented retail. The City should attract a major retail anchor(s) to site to catalyze redevelopment. There are opportunities for anchor retailers in the general merchandise, apparel, home furnishing, sporting goods/hobby, and home improvement categories. The City should consider the use of incentives to attract an anchor and/or aid in cost of redevelopment. Economic & Planning Systems, Inc.

60 SOUTHWEST SUBAREA APPENDIX B Demographic Character The Southwest subarea is a low density, suburban residential area. The subarea residents are on average older than the City average and over 40 percent of residents are 45 years old or older. The area is predominately middle aged householders with older children, older singles or empty nesters, but there is a concentration of 20 to 24 year olds in the subarea s apartment communities. Despite a predominately single family housing stock, 40 percent of households are renters. The average household income is $66,569. There is a relative high percentage, 32 percent, of Hispanic residents. Tapestry Segments Subarea Demographics 2012 Population 37,462 Population Density (per acre) 6.85 Households 15,461 Housing Unit Density (per acre) 2.99 Avg. HH Size 2.38 Avg. HH Income $66,569 Employment 8,605 Employment Density (per acre) 1.57 Percent of Residents by Age There is no prevalent Tapestry Segment in the subarea. Young and Restless and Enterprising Professionals tapestry segments have the highest percentage of any segment but are not indicative of the rest of the subarea. The subarea has large mixture residents types. Retail Conditions There are two main retail areas in the Southwest subarea. Bear Valley Shopping Center at Sheridan Blvd and Highway 285, which is anchored by a larger format King Soopers Marketplace and Home Depot. This center serves the major convenience oriented retail center for most of the west side of Denver. Along Wadsworth Blvd from Belleview Avenue to Bowles Avenue, there is a collection of several large shopping centers serving the southwest portion of the metro area. The Wadsworth corridors is anchored by the Southwest Plaza Mall at Bowles Avenue in unincorporated Jefferson County. The majority of the land along Wadsworth is not in Denver, however the portions that are in the city have several major retailers located on them including the city s only Costco, Wal-Mart, Sam s Club, and Home Depot. These retailers serve a trade area that is almost entirely made up of people who do not live in the Denver. Retail Market Retail Square Feet 2,019,071 Square Feet per Capita 54 Average Rental Rates $16.38 Vacancy Rate 8% Key Retailers: Costco Wal-Mart Sam s Club Home Depot King Soopers Sprouts

61 SOUTHWEST SUBAREA DENVER RETAIL STUDY APPENDIX B Current Performance General merchandise retailers in the Southwest subarea account for 37 percent of the category s citywide sales Home improvement sales account for 15 percent of the Citywide sales in this category Residents in the subarea are well served by retail; however half of resident purchases are made at retailers located outside in the city Advantages Largest collection of supercenters and warehouse clubs in the city Two major home improvement stores Part of a larger regional retail node in the southwest portion of the metro are with four major retail centers along Wadsworth Blvd. Major portion of sales from people who do not live in the city Contains large retail parcels that can easily be repurposed if original user leaves Barriers Retail serves very few city residents Wadsworth corridor is aging and competition for viable anchors may increase as the corridor evolves Large amount of competition from surrounding communities for retailers to fill vacant retail spaces Subarea Opportunities Southwest Commons This shopping center is located in Denver immediately north of Southwest Plaza Mall in Jefferson County and contains a number of second tier mass merchandisers commonly found near malls including Jo-Ann s Fabrics and Cost Plus. There is a vacant medium size space in the development that could attract a national retailer. Wadsworth Corridor The Wadsworth Boulevard is a major retail destination for residents of the southwestern portion of the metro area and is anchored by the Southwest Plaza Mall in Jefferson County. Denver currently has some major retailers located along this corridor, including Costco and Wal-Mart. The City should ensure that the retailers currently on the corridor are able to continue to compete and remain viable uses. When opportunities to refill vacant space or revitalize centers occur, the City should be proactive in aiding the shopping centers along the corridor in identifying new tenants and making improvements to the centers. Economic & Planning Systems, Inc.

62 WEST SUBAREA APPENDIX B Demographic Character The West subarea is the third most populated subarea and has the highest population density of any of the subareas at people per acre. However the housing unit density is near the City average. Over 70 percent of the residents in the West subarea are of Hispanic origin. The West subarea has a high average household size, The subarea has the lowest per capita income of the subareas, but the average household income is not the lowest of the subareas. 34 percent of the subarea residents are under the age of 18, which is nearly double the city average. The tenure of residents is split evenly between renters and owners. Tapestry Segments Subarea Demographics 2012 Population 98,367 Population Density (per acre) Households 31,039 Housing Unit Density (per acre) 3.76 Avg. HH Size 3.16 Avg. HH Income $42,427 Employment 29,414 Employment Density (per acre) 3.33 Percent of Residents by Age The most prevalent Tapestry Segments are Industrious Urban Fringe and NeWest Residents. These tapestry segments are typically large, multigenerational Hispanic households. These households make a high portion of retail sales at general merchandisers such as Target and Wal-Mart and spend mostly on goods for their family and children. Retail Conditions The West subarea is served mainly by older shopping centers along Federal Boulevard and Sheridan Boulevard. Most of the convenience oriented purchases of the residents are made at stores within the City. There is a small collection of Hispanic oriented retailers and centers along Federal Boulevard, but not nearly as many as the demographic profile of the subarea would suggest. The subarea has only neighborhood shopping centers with no regional centers. The main general merchandiser in the subarea was K- Mart on Evans before it closed in There is a large collection of Asian oriented retailers and restaurants on Federal between Alameda and Mississippi and in the Alameda Square Shopping Center. Although, there is a very small Asian population in the subarea, Asian-oriented businesses serve a citywide trade area. Neighborhood Districts: Federal Boulevard Morrison Road Key Retailers: Pacific Ocean Marketplace Walgreen s Safeway King Soopers Retail Market Retail Square Feet 3,102,461 Square Feet per Capita 32 Average Rental Rates $11.75 Vacancy Rate 10%