Centennial’s Streets at SouthGlenn on track to get more housing as retail sector scrambles amid challenges

City leaders in Centennial expressed strong and unanimous support Tuesday night for a plan to allow The Streets at SouthGlenn shopping center to add a lot more housing while curtailing the amount of square footage dedicated to shopping — a reflection of the rapid adjustments that commercial property owners here, and nationwide, continue to make amid ongoing upheaval in the retail sector.

The council did all but take a final vote, which won’t occur until Monday. But it was clear from comments from every council member Tuesday that they will be voting in favor next week.

Centennial’s discussion comes less than a month after Littleton narrowly approved a redevelopment plan for the Aspen Grove shopping center that will allow up to 2,000 residential units where none exist now. It also allows retail space to be reduced by half.

And just last month, East West Partners announced plans to pump life into a 13-acre area west of Denver’s Cherry Creek Shopping Center, an effort the developer said will include a “significant residential” component.

David Garcia, policy director at the Terner Center for Housing Innovation at the University of California at Berkeley, said what is happening in metro Denver is part of an “emerging trend” in the country, where the changing retail landscape is dovetailing with an acute housing shortage in many urban areas.

Earlier this year, several lawmakers in California introduced legislation to make it easier to convert commercially zoned property into residential use to address the state’s housing shortage, he said. Metro Denver has its own housing crunch to deal with.

“There is such a demand for housing,” Garcia said. “It follows the trend of trying to put existing land to the highest and best use.”

At The Streets at SouthGlenn, a 77-acre outdoor shopping district laid out on a street grid with familiar brands like Whole Foods, Best Buy and Snooze, the maximum number of allowable housing units would go from 350 to 1,125, while the minimum amount of retail space as outlined in the shopping center’s agreement with the city would drop from just over 900,000 square feet to 621,000 square feet.

There are approximately 750,000 square feet of retail at The Streets at SouthGlenn now and just over 200 housing units, said Don Provost, founding partner at Denver-based Alberta Development Partners. The shopping center, owned by Alberta, opened a dozen years ago at the southwest corner of East Arapahoe Avenue and South University Boulevard, replacing the long-forlorn SouthGlenn Mall that sat at the location for decades.

He said the reconfiguration at SouthGlenn is necessary in a retail environment that has been battered by consumers moving their dollars online, a phenomenon that has only quickened during a pandemic that complicates face-to-face transactions.

“There has been an acceleration in the last 15 years, and especially in the last five years, with online shopping,” Provost said. “We want the existing retail (at SouthGlenn) to thrive. The core of the retail remains.”

The plan to add hundreds of homes to The Streets at SouthGlenn largely revolves around finding a way to best fill space opened up by a recently shuttered Sears store at the site, and a Macy’s that is set to close in March — two big box retail formats that have fallen out of favor among shoppers.

Alberta is partnering with Northwood Investors, which owns the empty Sears building. Construction on the new housing could begin late next year, with new residents moving in in 2023 or 2024, Provost said.

“We need to look at enhancing the long-term viability of SouthGlenn,” he said.

And that means determining what the mix of shopping, entertainment and residences needs to be to “make that retail more productive,” said Neil Marciniak, Centennial’s economic development director.

The Streets at Southglenn contributes around $3 million a year to Centennial’s overall $40 million sales tax haul, Marciniak said. While he said cities “live and die” by their sales tax collections, their shopping centers have to evolve with the larger market.

“What is that appropriate mix to prepare for the future?” Marciniak said. “All shopping centers need to be looking at their tenant mix, their land use mix. Consumers want an experience.

“The mixed-use model across the country is a difficult formula to figure out.”

And not an always easy sell. Alberta consulted with neighbors for three years or so before putting their plan before Centennial City Council. Despite providing setbacks and tiered building heights to make new apartment buildings less intrusive to the surrounding neighborhood, not all residents are happy with Tuesday’s outcome.

Linda Nixon, chair of the Southglenn Civic Association, still worries about too much density and the traffic those new residents will produce. The shopping center is largely surrounded by single-family homes built in the 1970s and 1980s.

“You’re talking a lot of cars,” she said. “It’s going to totally increase traffic.”

But Andrew Spaulding, a long-time resident of the area long before there was a city of Centennial and who worked at the former Southglenn Mall, said Alberta worked diligently with the community to blunt impacts.

“We’re hoping it is less intrusive than other developments in the city, where they build right up to the street,” he said. “It’s one of those — it’s coming, how do we soften it? I think ultimately, it will be a benefit to the community.”