Mission Trace Shopping Center, a 200,000-square-foot shopping center in Thornton, recently hit a milestone.
The center is 100 percent occupied for the first time since it was built 30 years ago.
“It is unheard of for a 200,000-square-foot property to be 100 percent leased,” said Corey R. Wagner, executive vice president of Aurora-based Western Centers Inc., which owns and operates Mission Trace, as well 19 other properties throughout Colorado.
The center was built in 1985.
Mission Trace is shadow-anchored by King Soopers. Other tenants include Ace Hardware, Old Chicago, Carpet Mill, Empire Beauty School, Sally Beauty, Garlic Knot, Credit Union of Colorado, Subway and New Hope Christian Church. The church, with 16,000 sf, is the largest tenant in the center.
Western Centers has owned Mission Trace for the past 12 years and managed it for about 15 before that.
“We’re really thrilled that it is 100 percent leased,” Wagner said.
A number of factors contributed to the milestone, he said.
First is Western Centers’ philosophy of working with tenants during hard times and not trying to squeeze every cent out of tenants during healthy markets, such as the Denver area is experiencing today.
Even during the Great Recession, the occupancy level at Mission Trace never fell below about 85 percent, Wagner said.
By contrast, it was not unusual for other similar-sized centers to see their occupancy rates plummet to 50 percent or 60 percent, especially if they were anchored by a midsized national tenant that went out of business or dramatically downsized across the country, he noted.
“We’ve been pretty successful, across the board and not just at Mission Trace, of really working with our tenants,” Wagner said.
If they think a tenant just needs time to get back on its feet, Western Centers is willing to work with them on concessions tailored to their specific needs, he noted.
“We believe it is generally less expensive to keep tenants than to replace them,” Wagner said.
“In many of our centers, we have tenants who have been with us for 10, 15 years or more,” Wagner said.
“We consistently identify ways to help our tenants within all of our shopping centers thrive, and our recent efforts at Mission Trace is emblematic of how effectively our team manages and operates our properties,” Wagner said.
At Mission Trace, the renewal lease historically has been about 95 percent.
And when vacancies come up, they tend to be replaced quickly.
“We had a couple who had been there for years and were leaving because they decided to retire,” Wagner said.
“We had tenants lining up to take their space,” Wagner said.
Part of it is the center’s strong demographics.
Within a 3-mile radius, there are 44,116 households with a median income of $70,077, according to Costar. And average daily traffic volume is 34,000.
Western Centers does not try to squeeze every penny from a retailer when it comes time to renew a lease.
“If the market is $30 per square foot and a long-time tenant is paying $15 per square foot, we won’t double their rent when it is time to renew their lease,” Wagner said.
On the other hand, Western Centers does evaluate the market and the tenant can expect to see a bump in rent, he noted.
“There are business considerations, of course,” Wagner said.
Also, contributing to the 100 percent occupancy at Mission Trace, Western Centers refinanced the debt on the property.
Western Centers used some of the proceeds from the 20-year loan with FirstBank to put new roofs on all of the buildings, upgrade the HVAC system, as well as upgrade storefronts and the parking lot.
Out-of-state banks, life insurance companies and CMBS lenders were eager to refinance Mission Trace.
“I want to highlight how great it was to work with FirstBank,” Wagner said.
“It is great to be able to sit across from someone at a local bank who really understands the market,” Wagner said.
“Nick Job at FirstBank was just great to work with,” he said.
Given its strong performance and great location, Western Centers fields a lot of calls from prospective buyers.
“We have buyers knocking on our door every day,” Wagner said.
“We’ve owned this property for a long time and expect that we will continue to own it for a long time,” Wagner said.
“This would be an asset that would be pretty hard to replace,” he said.
Western Centers was founded in 1991 by Arnie Meranski.
Western Centers owns 19 other Denver area properties in addition to Mission Trace.
It also owns properties in La Junta, Fraser and Firestone.
Featured in CREJ’s Jan. 2-Feb. 2, 2016, issue