Unico: Finding the right retail tenant mix is key for downtown Boulder’s landlords

BOULDER — Maximizing Pearl Street Mall’s potential as a lively regional retail and dining hotspot requires that Boulder landlords avoid the urge to push rental rates to their upper limits at the expense of fostering the right mix of tenants. 

“We have been in an environment of rising rents and that’s made it hard for local retailers,” said Austin Kane, the Colorado regional vice president with Seattle-based real estate investment firm and Boulder commercial property landlord Unico Investment Group LLC.

“What we are trying to do is identify the best tenants, regardless of what they are able to pay in rent, and structure a deal that makes sense for both parties,” he said. “We want the lessee to be able to maintain its business and enjoy success, which allows us to be able to collect rent through the entire lease term. You may not be able to collect every single dollar that’s out there on the table if you want the right group of retailers occupying your space and adding to the streetscape of downtown Boulder.”

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Unico in 2012 bought a majority stake in a portfolio of 14 downtown Boulder buildings owned by J. Nold Midyette that amounts to 354,000 square feet on or around the Pearl Street Mall.

“We’re huge believers in Boulder,” Kane said, “and Pearl Street is the most iconic and recognizable part of downtown Boulder. Over the years, Pearl Street has had its share of t-shirt shops and those kinds of uses — I’m not sure that’s the highest and best use for some of those spaces — but as retail evolves we are trying to drill down on the proper mix of tenants.”

Pearl Street has seen its share of tenants struggle to find success within that mix, leaving large empty storefronts along highly visible portions of the mall. 

High-profile spaces have been vacated by the likes of Cheesecake Factory Inc. (Nasdaq: CAKE) and Ted’s Montana Grill, which combined for a loss of more than 100 jobs. 

“Part of the issue is the mercurial nature of retail in general,” Kane said. “Retailers are having to reinvent themselves and find new ways to stay relevant. We’ve seen some high profile closings over the past couple of years, and we’re living through a changing retail environment.”

Boulder’s relatively strict regulatory environment can pose unique challenges for retailers. However that’s less of a concern along Pearl Street than it is in other parts of the city, Kane said. 

Pearl Street is “such a natural fit for retail, and I think the city is committed to helping it flourish,” he said. 

It’s not always lack of foot traffic or costly red tape that causes Pearl Street Mall storefronts to close. In some cases, such as the recent closure of Lazy Dog Bar & Grill, landlords are eyeing redevelopment possibilities, and in other cases business owners simply retire and move on.

“We’re trying to backfill [those vacated spaces] in as thoughtful a way as possible,” Kane said. “We’re looking for tenants who we think will be able to survive and run their businesses successfully through the full terms of their leases. We want a good mix of food and beverage, soft goods, and services.”

While Unico is touting its work to bring in national retailers such as Patagonia, which is moving into a 5,000-square-foot space at 1630 Pearl Street in November, landlords can’t forget about local shops and restaurants, Kane said. 

The soon-to-open Avanti Food & Beverage food hall, which will occupy the former Cheesecake Factory space, is a good example of Unico working with the local business community to bring a tenant that better fits Boulder’s eclectic sensibilities and independent spirit. 

“We want to continue to sprinkle these kinds of uses throughout our portfolio because this is the kind of thing that keeps Boulder feeling authentic,” Kane said.