Denver, or perhaps Dallas, has more square feet of retail space per capita than any other city in the U.S.
I first heard that when I was the real estate editor of the Rocky Mountain News in the early 1980s.
I heard that Denver was either No. 1 or No. 2 multiple times in the years following.
The last time I wrote that Denver was first or second in retail square footage per capita was in 2002, when Moody’s, to the dismay of just about everyone in Denver, declared the Mile High City as having the worst commercial real estate market in the U.S.
While I was skeptical at first that Denver topped retail square feet per capita, I began to consider it gospel when no one ever questioned the assumption.
That is why a table in the 2019 Emerging Trends report released last week caught my eye.
The table, on page 15 of the 115-page report released by the Urban Land Institute, showed that Denver topped the list as far as a loss of retail square feet per capita from 2007-2018.
Alas, there was no discussion or analysis of why Denver lost the most retail square feet per capita.
Nor did the report address whether Denver still has the most retail square feet per capita, even with the drop. Interestingly, Denver’s longtime competitor for the title of the most square feet per capita, Dallas, was third from the bottom of the 20 metropolitan statistical areas ranked in Emerging Trends.
I turned to economist Patty Silverstein, a longtime observer of Denver’s economy and real estate market, for an answer.
“My thought, on this whole retail side, is that we have seen a very minimal amount of new retail space added,” said Silverstein, principal and president of Development Research Partners.
“Yet, we have seen a strong increase in our population. What I’m getting at is that our population has been growing at a faster pace than our retail. That would lead to a per capita decline in retail square feet. We’re adding about 50,000 new people per year and our retail square footage isn’t growing anywhere near that amount,” continued Silverstein, who also is the consulting chief economist for the Metro Denver Economic Development Corp. and the Denver Metro Chamber of Commerce.
A CBRE report shows that about 1.53 million sf of retail space is under construction in the Denver area.
That sounds like a lot, until you dig deeper and realize that with an existing base of 80.3 million sf of retail space, another 1.5 million sf increases the base by less than 2 percent.
With a few “notable projects” in Thornton, Castle Rock and 9thand Colorado in Denver, there aren’t that many big blocks of retail being added, Silverstein pointed out.
“There is also a great deal of retail opening in small spaces, or refurbishing existing space” to accommodate retail.
For example, the new Target in downtown is in former retail space, “So, it isn’t adding new retail square footage to the market” by filling vacant space, she said.
I asked Silverstein if brick-and-mortar retailers are declining because of competition from Amazon.
“I think it is Amazon and any of the online retail marketplaces,” Silverstein said. “Online retailing is influencing new retail development. Some stores have a physical presence and at the same time may be growing their online presence even faster, so they don’t need as much retail square feet.”
And there are some retail operations that Amazon can’t undercut.
And restaurant and retail sales in the city and county of Denver have remained healthy, typically rising by 5 percent to 6 percent each year, she said.
The drop in retail square feet per capita in Denver is not a sign of “retail Armageddon,” according to Silverstein.
“I would hesitate to say whether the drop in retail square feet per capita is a good thing or a bad thing,” Silverstein said.
“I think it is just a recognition of our buying habits and is demonstrating a better utilization of the space we have.”