Grocery giant Kroger is looking to match supersized population growth with plans to debut its superstore concept in a Denver suburb where retail development has lagged far behind its residential boom.
The Cincinnati-based company closed a $3.6 million deal to purchase more than 12 acres along the E-470 thoroughfare at East Quincy Avenue, according to Arapahoe County property records. The long-vacant piece of land in Aurora, Colorado, would ultimately house one of the chain's Marketplace concepts, Kroger's largest-format store design that targets fast-growing neighborhoods and aims to be the one-stop-shop option for nearby residents.
While Kroger plans to spearhead the development for its future 123,000-square-foot King Soopers outpost — almost four times the size of other locations in the greater Denver region — the superstore would anchor a 30-acre center proposed to meet the neighborhood's surging demand for nearby shops and services.
Yet even with the widening gulf between the area's fast-growing residential population and retail options to service it, landing a grocer was crucial to getting the rest of the shopping center development off the ground.
"Without Kroger, none of this would work," said Sedgwick Real Estate Partners Principal Brandon Rogoff, a member of the development team for the larger project. "They're our anchor tenant and critical to the rest of our plans. If you don't have a grocer in this part of town, you don't have much of a retail component."
Following the rooftops
The grocery-anchored project will launch at a crucial point for Aurora, helping to rebalance the retail-residential scale for which housing has long been the dominant player.
Nearly 7,000 multifamily units alone have been developed over the past decade, according to CoStar data, a figure that doesn't account for an echoing spurt of single-family construction. While new housing starts have largely slowed across the Denver area, activity in Aurora is still gaining steam with another more than 2,100 apartment units moving through the city's pipeline.
Retail development in the Denver suburb, on the other hand, has been constricted for years. Only 3,500 square feet of new retail space is currently underway, according to the data, tightening the regional vacancy rate to about 2.5%. By comparison, the decade-long historical average has hovered at about 4.5%.
M4 Developers is the joint venture overseeing the Copperleaf Marketplace project, construction for which will break ground this week. Along with Rogoff, the partnership includes Magna Development Principal Rick Miller and Marc Cooper, the president of Cooper Development.
The trio has already kicked off marketing efforts for the shopping center, which will include a total of 12 single- and multi-tenant buildings and has already landed prelease deals with the likes of PNC Bank, BlackRock Coffee and Advent Health.
Construction on the M4 piece of the center is expected to wrap up sometime this summer with retailers simultaneously moving through the entitlement process so they can open their doors by sometime next year.
"This will all be built in a pocket of town that has been growing pretty rapidly," Rogoff said. "The vast majority of that growth has been single-family homes or multifamily developments, and very little retail has been built along this section of the corridor. When you put Kroger in a location, that's typically considered a best-in-class retailer that makes it possible for the rest of the dominos to fall into place."
Big store, big plans
Kroger's future Aurora outpost fits into the chain's goal of taking a bigger bite from the national grocery market.
By offering everything from pickles to kitchen appliances to clothing, the King Soopers parent has been on a rapid opening streak since opening its first superstore concept in Columbus, Ohio, more than two decades ago. Each location ranges between 100,000 to roughly 140,000 square feet, and the grocer homes in on locations in which it can "meet area growth and rising demand," the company said in a statement.
Last year the company invested heavily in expanding its retail real estate footprint, largely following a blueprint of opening larger locations in "higher-growth geographies that have a track record for generating strong cash flows and returns," interim CEO Todd Foley told analysts earlier this month. He added that Kroger expects to debut another 30 or so locations before the end of this year in addition to the 29 it opened in 2024.
The company, the largest supermarket operator in the United States based on sales, operates more than 2,700 locations.
"We expect new stores to continue to be a meaningful contributor to our long-term growth model and would expect new openings to accelerate beyond 2025," Foley said. "Building out that footprint is an important piece of what we're trying to do [and] is a great lever for us to drive our share. Because we took a couple of years off from some of that growth, I think there's now an opportunity to get back in and build that out."
CoStar Senior Staff Writer Linda Moss contributed to this report.