Q4 2019
Greetings! Happy Holidays! In this issue we're covering the decline of brick-and-mortar retail stores, what's proving to be successful in retail and The Foundry's progress on securing tenants.
The Shifting Landscape of Retail
It’s not new news that big box retailers and enclosed shopping malls across the country have been struggling to maintain sales, as well as keep their doors open. Several large brands have announced hundreds of store closings in 2019 , including Walgreens, Payless Shoes, Kmart, Sears, Office Depot, Lowe’s, CVS Pharmacy and Walmart, to name a few.

In Larimer county the current vacancy rate for retail is 4.7%, up 0.8% from 2018, whereas in Weld county the vacancy rate for retail is 2.0%, down 1.3% from 2018. The continued rise in online shopping and consumers’ need for a wider selection of products have played a large part in the decline of sales for brick-and-mortar locations. Sales for this years’ Cyber Monday reached $9.2 billion , a 17% increase from 2018, whereas Black Friday sales in brick-and-mortar locations dropped 6.2% compared to 2018. The steady increase in gross rents has also impacted businesses’ ability to stay open. The average market rent per square foot in Larimer county increased 1.1% from 2018 and in Weld county increased 1.5% from 2018.

Source: CoStar
Local Vacancies

The multiple store closings have left buildings and shopping malls vacant for extended periods of time as landlords and developers search for new, attractive tenants. Five years after its $313 million dollar renovation, The Foothills Shopping Center in Fort Collins, is struggling to fill its space with 30% of the storefronts still empty. Hop Grenade, located on the Foothills Plaza, just announced it's closing their doors at the end of the month due to struggling foot traffic and too much competition from other craft breweries.
Health & Wellness Taking Over

Service driven and experiential retailers continue to open new locations, offering customers experiences online shopping cannot. Traditional gyms and boutique fitness concepts are on the rise, catering to multiple generations as the health and wellness industry continues to grow . Boutique fitness concepts such as Pure Barre, Orangetheory Fitness and CYCLEBAR have been popping up across Northern Colorado, which occupy a smaller square footage than the traditional gym.

SCHEELS , located in the Johnstown Plaza, has been successful since the location's opening in 2017 by going above and beyond the typical sporting goods store, offering a café, Ferris wheel, golf simulator and mini-bowling alley. Family friendly activities like what SCHEELS offers gets the consumer to stay in the store longer, thus increasing sales. SCHEELS broke ground on their second Colorado location in Colorado Springs earlier this year.
Vatos Tacos and more on their way to The Foundry
The Foundry, downtown Loveland

As of mid-November, The Foundry , downtown Loveland’s major redevelopment project, has secured an additional tenant, Vatos Tacos and Tequila . The Mexican restaurant will occupy a 3,740 square foot retail location that faces the plaza. At the end of November construction began on the new location for Mo’ Betta Gumbo , a current downtown Loveland favorite. The Southern-style restaurant will fill a 3,700 square foot end cap. Colorado Coffee & Café was announced back in August and will be located in a 2,000 square foot space. Construction for Mo’ Betta Gumbo and Colorado Coffee & Café is anticipated to be completed by the end of January, with Vatos Tacos’ construction completed by the beginning of March. With Vatos Tacos’ signed lease, this brings The Foundry’s 15,000 square foot commercial space to 61% leased.
CoStar Market Reports - Larimer and Weld County