The Denver Market Has A Split Personality

DENVER—Denver is simultaneously a stable market and a growth market, according to Allen Ginsborg, managing director and principal of NewMark Merrill Mountain States. Ginsborg has been active in the Mountain States region retail market for decades—long before Denver became a hotspot for commercial real estate investment—and has learned the intricacies of the agricultural and energy market turned infill-urban destination. In 2006, he founded the Mountain State division of NewMark Merrill Companies with his 30+ year business partner Sandy Sigal, the CEO and president of the company. The duo has developed a hands-on investment strategy to meet the retail real estate needs of Colorado communities in all product types, from small neighborhood centers to power centers. We sat down with Ginsborg to learn more about the firm’s strategy and how the company has built their strong development and management platform in the evolving Denver market. We learned that a strong strategy works in any market. The Mountain State region has recently become a popular investment market, but you have been active in the market for much longer. Why did you start investing in the Mountain States, and how have you seen the region change?

Allen Ginsborg: I began building real estate in the Colorado Market in the early 90’s, while operating my California based real estate business, when the Home Depot asked me to design and implement their new store entry into the state. I have been active here ever since, including moving my family to Colorado 20 years ago to enjoy its great quality of life and future business potential. I’ve had a front row seat to watch the economy transition from primarily energy, mineral and agricultural production to a broadly diversified mix of small business, technology, biomedical, tourism, financial services and aerospace, in addition to its traditional roots. This has softened the impact of the economic cycles in Colorado that hit the state hard in the 80s and the early 90s. Today our market is drawing record numbers of highly educated Gen Y professionals attracted to our quality of life, economic strength and highly entrepreneurial culture. Tell me about your investment strategy here, and the impetus for that strategy.

Ginsborg: Colorado is both a growth and infill market, which has allowed us to enter communities where older existing shopping centers no longer fit changing demographics, especially where agricultural communities are adjusting to the growing influx of Gen Y employers and residents. In some ways, this change reminds me of watching Orange County, California become the economic nerve center it is today from the asparagus and cauliflower fields across from my childhood home. Our Colorado strategy includes ground-up projects, like rebuilding the Village at the Peaks in Longmont, repositioning existing centers we own, like the Arvada or Ft Collins Marketplaces, and third party work, like our successful rebranding of the Citadel Crossings in Colorado Springs. Our strategy is three-fold: building new projects, acquiring existing centers and third-party work for owners needing our hands on in-depth expertise, which is typically available at more passive property management companies. I don’t have a size criteria. We’re very scalable, so we can make sense out of a $100 million+ project down to a small on or two acre corner if it makes sense. What does your current portfolio look like, and how are you looking to grow or change the portfolio?

Ginsborg: Right now, we have1.5 million square feet in Colorado in five centers. I’m evaluating several new projects. Within the next five years, I expect our portfolio to double, depending on the economy. However, we don’t set a goal and force fit projects to meet it. We search for the right jewel in the rough that fits our criteria, which include communities that want to be a true partner, unmet or mismatched merchant demand and long term economic viability. Any current projects that you can share?

Ginsborg: Two projects immediately come to mind. First, we are in the midst of re-tenanting and reformatting our Broomfield Marketplace, which we hope to complete in early 2017. We are also upgrading the tenant mix at a property that we own in Arvada to include a new Skyzone Trampoline Park, which is a perfect fit for the diverse regional tenant mix at this center. When you own and operate shopping centers for the long term, enhancements tend to be very incremental: upgrading a tenant here, adding better signage there, redesigning parking to flow better and so on. Our goal is to do something every few months to improve our projects and increase the sales of our merchants, whose success defines our ability to do great things for our communities. Why is this region important to your overall goals as a company?

Ginsborg: The current strength of the Denver economy is providing us with prime opportunities and Colorado’s intrinsic appeal is going to be strong for many years, even if the economy cools down. I think our overall strategy works in any market. It looks particularly great at this moment, because Colorado has had a healthy run of growth and employment. However, we have been able to find good opportunities through all market cycles. Our focused strategy, decades of experience, near-neurotic discipline and strong financial capitalization will continue serving us well, no matter what comes down the road. Are you looking to be active in any other markets?

Ginsborg: I wouldn’t do anything in a different time zone or that is more than an hour’s flight from Denver, which includes a lot of states in the Rocky Mountain region. Our success is based on being close enough to take an extremely hands-on relational approach with our merchants and communities. Any last thoughts?

Ginsborg: There is one idea I’d like to promote. There are so many ways shopping center owners and builders can do good things in our shopping centers. Whether it is helping low income families help educate their children to break the poverty cycle, raising money for the Humane Society or Sponsoring a race to help cure cancer, we can make a big difference through our good work. It used to be really common to see significant community engagement by the shopping center industry, which seems to have faded due to the great recession. The good things we do in our communities may do nothing to improve our bottom line, but they can make all the difference to the top line by making our communities better places to live, work and play.