Market Update – Q2 2023 – Denver Retail

Denver’s retail market has staged a quiet, yet strong comeback, giving the sector runway to withstand a potential slowdown in the year ahead. Contributing to this comeback was the significant lift in consumer spending coming out of the pandemic. Denver’s retailers now have a fresh set of headwinds to contend with in 2023. High inflation, rising consumer debt, and a high interest rate environment are weighing on purchasing power, creating challenges for local retailers. But today’s retail market is entering into this uncertain season from a position of strength. 

New leasing activity has remained in line with the longterm average for the past seven quarters. While a handful of retailers in Denver have announced store closures, move-ins are significantly outpacing moveouts, and net absorption has remained in positive territory since mid-2021. That has resulted in a year-over-year vacancy change of -0.4% to 4.1%, nearing record lows. 

At the same time, Denver’s construction pipeline remains subdued, and the projects that do move forward overwhelmingly consist of freestanding build-to-suits. 

Only 10% of the current construction pipeline is speculative. Denver’s multifamily construction boom is driving the demolition of obsolete retail product across the metro, particularly in dense areas where high land prices justify redevelopment. Retail inventory has grown at the slowest pace of major asset types in Denver, helping to restore balance in the market. 

Tight fundamentals have supported rent growth, and rents are up 1.6%. While nominal rents have improved, a high inflationary environment means that rents are still falling in real terms. The areas of Denver recording the highest annual rent growth are suburban areas, particularly in North and East Denver. Downtown rents are in positive territory year-over-year, but performance is heavily bifurcated in the submarket and properties in 
the core CBD continue to struggle. 

Investment activity has slowed since the beginning of 2022. With interest rates projected to remain high, this trend is expected to continue through 2023 as the challenging investment market continues to sideline a growing number of investors. 

Close

Enter Your Information To Request The Offering Memorandum

Industry Role
Close

We are ready to assist you.

Please fill out the form and we will be in touch shortly.

By providing a telephone number and submitting the form you are consenting to be contacted by SMS text message. If you wish to initiate inbound SMS text messages, please contact your individual broker for their direct number. Message and data rates may apply. Reply STOP to opt out of further messaging. Blue West Capital, LLC may use text messaging for client communications only and does not use text messaging for marketing or promotional matters. Please see Privacy Policy for further information.

Contact Information

400 S. Colorado Blvd | Suite 590
Denver, CO 80246

info@BlueWestCapital.com

720-989-1031