In one Highlands Ranch shopping center, a frozen yogurt shop went out of business last September. Then a nearby bike store closed its doors. The last week of November, a neighboring chiropractic …
In one Highlands Ranch shopping center, a frozen yogurt shop went out of business last September. Then a nearby bike store closed its doors. The last week of November, a neighboring chiropractic business of 18 years moved.
“That was where my business first opened,” said Dr. Jason McTavish, owner of Eastridge Chiropractic, which used to be in Village Center West, an outdoor shopping mall near the intersection of South University Boulevard and Highlands Ranch Parkway. “That was all I knew.”
The popular destination, with chain stores like King Soopers and TJ Maxx, lost three tenants at the end of 2017: Eastridge Chiropractic, Adrenaline Cycles and BTO Self Serve Yogurt.
The spaces won’t stay vacant for long: Jimmy John’s, a national restaurant chain, will soon replace Eastridge Chiropractic. A Bank of America ATM will fill BTO Self Serve Yogurt’s spot. Adrenaline Cycle’s former location remains empty.
The issue reaches farther than one shopping center — in Highlands Ranch, it isn’t unusual to see one business leave and another take its place.
A handful of business owners in Village Center West pointed to rising rent costs as a reason for the departure of businesses. In the third quarter of 2017, the average lease rate for commercial office space in Highlands Ranch was $27 per square foot, according to Douglas County documents. That’s more than Castle Rock, at $25.61 per square foot, and the Denver metro area, at $25.79, but less than Lone Tree, at $28.88 per square foot.
Still, the vacancy rate of office space in Highlands Ranch is one of the lowest in the region, pointed out Andrea LaRew, president of the Highlands Ranch Chamber of Commerce. In the third quarter of 2017, the rate was 6.7 percent, which is less than Castle Rock’s 7.8 percent and the Denver metro area’s 9.9 percent. But the rate remains higher than some nearby communities, including Lone Tree and Parker.
From what LaRew has seen, the cost of renting retail space in Highlands Ranch is comparable to other areas in the south metro Denver area. She noted other factors that draw businesses to the community.
“I think Highlands Ranch remains a desirable location for retailers due to the demographics of the area, the ease of access and the projected growth along the (Santa Fe Drive) corridor,” LaRew said.
Some business owners have seen the effects of rising rental costs in recent years.
Five years ago, McTavish saw five businesses leave Village Center West, he said.
“Rate increases scared most of the people out,” McTavish said.
McTavish had different landlords at the shopping center since he first opened his office in 1999. But five to seven years ago, when KIMCO Realty took over, he noticed a hike in his rent and service charges, he said. KIMCO, a real estate investment trust, is one of North America’s largest publicly traded owners and operators of open-air shopping centers, according to its website.
At the end of his three-year lease in 2017, McTavish said he was paying roughly $5,500 a month in rent and maintenance charges for his 1,400-square-foot space. Facing an increase in rent and complications with his rental agreement, he moved to a quieter location near Town Center, at 9090 S Ridgeline Blvd, where his rent is “half as much.”
Rick Turner, leasing representative for KIMCO, said the company’s leasing prices are either “in-line or slightly cheaper” than other properties in the market, comparing the shopping center to newer commercial properties off Lucent Boulevard. Turner did not return requests for specifics of any rent increases.
“Highlands Ranch is a very desirable part of the market,” Turner said.
A search on loopnet.com, an online commercial real estate marketplace, reveals the varying rent costs of retail properties across the community. In Town Center, a 1,309-square-foot retail space is running for about $3,000 a month. On Timberline Road, near Lincoln and Quebec, a 1,360-square-foot office space costs $2,720 a month.
For at least one business owner, the location of his space trumped a recent increase in rent.
Last year, Patrick Evans, owner of Rocket Fizz, spent six months contemplating leaving Village Center West when his lease was up.
He decided to re-sign for five years, despite the “significant increase” in rent. He said he wanted to avoid the approximately $50,000 it would cost to move. Standing in his store, filled with every type of candy imaginable, trinkets and funky artwork, he explained how he wants to keep his store because he plans on giving the business to his two kids someday.
Also a deciding factor was the location in central Highlands Ranch, which most of the day bustles with cars and people.
“I enjoy the area,” Evans said. “I couldn’t do this business in this community anywhere else.”
He foresees fewer “mom-and-pop shops” in the shopping center, but Turner assures that there will remain a mix of local and national tenants.
In the shopping center are national chains, like Ace Hardware and Petco, as well as franchises, like Jimmy John’s. Turner pointed out that restaurant chain Cuba Cuba is original to Colorado. And a handful of locally owned businesses remain.
“You have to have a good mix,” Turner said. “We are trying to make sure we are putting in uses that are good for the community and that are good for our existing tenants as well.”