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DENVER-Although the prolonged economic downturn has suppressed retail sales, retailers continue to expand in the Denver area, according to the latest retail forecast by Marcus & Millichap. The report notes that large infill redevelopment projects, such as Stapleton, Fitzsimmons and Lowry have been tremendously successful and are drawing strong retail interest.

Investors also are eager to invest in Denver, the report notes. Strip and neighborhood centers are especially in high demand. On average, new space commands cap rates in the low to mid 8% range, while older, unanchored centers trade in the mid to high 9% range.

For single-tenant sales, the 2002 median price per sf was $122. Although that is down 36% from a year earlier, it is not as dire as it sounds, the report notes. The drop was due to the mix rather than eroding prices. A larger proportion of older assets sold, dampening the overall median prices, the brokerage firm point out. This year, the company expects the overall retail vacancy rate to rise to 8.1%, a 10 basis point increase over the year-end 2000 level.

And despite the slight drop in vacancies, Marcus & Millichap is forecasting a 2.5% increase in rents, pushing the average to $17.17 per sf. Also, more investors are likely to take profits this year as the economy struggles, the company notes. But increasing sales activity will still fall short of buyer demand, according to Marcus & Millichap, putting further upward pressure on prices in 2003.

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