In an age of big-box stores, small retail projects thrive in Colorado Springs

Small retail projects are becoming a big part of Colorado Springs’ shopping scene.

At prominent intersections and along some high-profile corridors, developers have opted against large-scale shopping centers anchored by department stores, groceries and other big boxes and instead are thinking small.

Big-box anchored projects remain popular with shoppers and aren’t going away. Among the area’s more recent large-scale developments, a King Soopers shopping center opened a year ago at Constitution Avenue and Marksheffel Road on the Springs’ east edge, and a Walmart Supercenter and Sam’s Club in Fountain debuted in 2015.

Likewise, smaller strip centers always have been part of the retail landscape, lining Academy Boulevard, Fillmore Street, Austin Bluffs Parkway and other major Colorado Springs roadways.

But as large national retailers shutter brick-and-mortar stores and even go out of business, small projects that don’t rely on big-box anchors are becoming popular alternatives for developers and consumers. And because small retail projects are being developed near fast-growing neighborhoods, they typically include restaurants and service providers — tax preparers, fitness facilities, physical therapy centers and the like — that appeal to homeowners and families who are just a walk or bike ride away.

“A lot of these smaller retailers are finding they want to be very visible to an existing neighborhood and traffic and very convenient to that,” said John Winsor, a commercial broker with Olive Real Estate Group. “If people are going home or going to work, it’s an easy stop, it’s an easy decision to go in and out.”

Winsor co-developed the already opened Dublin Commons II and the still-under-construction Dublin Commons III. They followed the first Dublin Commons building, which was developed by a separate group; the three projects are southeast of Powers and Dublin boulevards on the Springs’ northeast side.

Combined, the three buildings are smaller than a single Safeway grocery. Still, they have a variety of fast-casual and sit-down restaurants to go with services such as a beauty salon, massage therapy and Pilates.

A mix of offerings in small retail buildings is especially attractive to homeowners who want to avoid the hassle of driving to large commercial centers, said John Egan, a broker with NAI Highland in the Springs. He’s also developing Dublin Heights Plaza, a 10,000-square-foot, multitenant building under construction at Dublin and Marksheffel Road. His project is full, and if he had another 6,000 square feet, he could fill it, Egan said.

“We’re going back to the neighborhood,” Egan said. “Instead of going to this big central mall, we’re coming back to these little, almost, suburbs or these little boroughs, in a way. Which I think is cool.”

Nothing Bundt Cakes is a specialty bakery that’s enjoyed strong sales since it opened five years ago in University Village Colorado, said Alyssa Cihak Lopez, who owns the local franchise with her parents, Rick and Regina Cihak. University Village is a sprawling, 650,000-square-foot retail center on North Nevada Avenue, where anchors Lowe’s Home Improvement Warehouse, Kohl’s and Costco Wholesale Club help drive customer traffic.

Nothing Bundt Cakes is in a stand-alone building at University Village and the storefront is hard to miss, Cihak Lopez said. Yet she’s heard from customers who’ve been to University Village multiple times and didn’t know her store was there, she said.

When Nothing Bundt Cakes’ owners opened a second location a year ago on the northeast side, they bypassed the King Soopers-anchored Ridgeview Marketplace and First & Main Town Center, where big boxes include J.C. Penney and SuperTarget. Instead, Nothing Bundt Cakes chose a storefront at Dublin Commons II.

The building is highly visible, Cihak Lopez said; it faces Powers Boulevard and can be seen easily by the thousands of cars that pass by daily. Its tenants include restaurants Over Easy, Salsa Brava and Mod Pizza, who attract diners that come by Nothing Bundt Cake for dessert, she said.

Sales at the two Nothing Bundt Cake locations have been comparable, but customer demographics are somewhat different, Cihak Lopez said.

The University Village location gets plenty of attention from business people who might come to the regional center and its dozens of stores and restaurants on their lunch hour, she said. But the Dublin Commons II store draws many customers who come from nearby neighborhoods that line the Powers corridor, and they buy items for birthday parties, family gatherings and other special events.

“At the Dublin Commons location it’s not uncommon to see people walking over from the neighborhood just east of us, because it’s a bike ride or a stone’s throw away, especially during the summer,” Cihak Lopez said. “People are just on foot versus kind of trying to fight parking or something like that.”

At the same time, the dining and service choices at small retail buildings are popular because they can’t be purchased online, Winsor said.

“A lot of these smaller strip centers are internet competitive,” he said. “You’re seeing more restaurant types of uses, which they can’t get on the internet. You’re getting exercise facilities. You’re seeing those kinds of services that benefit both from heavy traffic that’s driving by day to day, as well as that immediate neighborhood.”

While smaller centers don’t have big-box or even junior- box stores, they still might have people generators that take the place of traditional anchors, said Mark Useman of brokerage Colorado Springs Commercial. He markets the InterQuest Commons retail development southwest of InterQuest and Voyager parkways on the Springs’ far north side.

Apartment complexes feed customers to smaller retail projects, Useman said. And at InterQuest Commons, three hotels are planned that will generate customers for the restaurants, stores and service providers in the project’s smaller multitenant and free-standing buildings, he said.

“They serve kind of as a minianchor, in the sense they bring people in all the time,” Useman said of the hotels. “Those people need services and they need food. And so, the retailers like hotels, which is what you’re seeing. You’re seeing high density and multifamily and hotels taking the place of some of the traditional retail anchor activity.”

Despite rocky times for retailers, traditional shopping center anchors haven’t disappeared.

“We will see them again,” Useman said. “We still have to have grocery stores, right? People can buy some stuff online, but most people go physically to a grocery store. But there’s not a big need yet in certain areas of Colorado Springs to place new grocery stores.”

And with competition from Amazon and other online retailers, and after taking financial hits during the Great Recession, fewer department and discount store retailers are looking to add buildings with large footprints, said Springs real estate developer John Gatto. He recently opened a Best Western Plus Fillmore Inn west of Interstate 25 and Fillmore Street as part of his small retail project at the site.

“There are only so many locations for those anchors,” Gatto said. “They’re more regionally driven, so that they serve a larger, geographical area. Whereas, the smaller retail buildings, as the neighborhoods grow, they serve the immediate needs of those neighborhoods.”

Large retailers also have shifted strategies, Egan said. They don’t necessarily build stores near their rivals just to compete, and they hesitate to overbuild in a market that leads to one of their stores cannibalizing another, he said.

“That’s the change — the tenants themselves saying, ‘I don’t know if I want to go in and split our market anymore when it’s already been split,’” Egan said. “That’s why I don’t see a lot these large-box developments happening anymore like they did in the early 2000s.”

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