September 2-September 15, 2015
—
COLORADO REAL ESTATE JOURNAL
— Page 11B
C
olorado Springs is
in the middle of
recovery from the
2008 housing-inspired real estate
debacle. It is led by the single-
family and multifamily housing
sectors and by retail, while the
office and industrial sectors are
lagging. Lack of dynamic job
growth is the main issue working
against office properties. Also,
having a 13.5 percent vacancy
rate is dampening interest in
speculative office development.
The exception is medical office
development, which grew
in northeast and southwest
Colorado Springs. When looking
at the industrial sector, an 8
percent overall vacancy rate
and a sub-5 percent vacancy
for smaller industrial space
indicates that new development
is in order. However, achievable
rental rates are lower than the
rates investors need to make an
acceptable return.
New retail development
is occurring in different
submarkets. The Sam’s Club
and Walmart at South Academy
Highlands shopping center
triggered additional inline
development in the southwest
quadrant, and when built out
will absorb one of the last major
sites in the area. King Soopers
is building its first marketplace
format at Marksheffel Road and
Constitution Avenue, servicing
the east submarket. Sprouts
announced two stores, one
in Northgate and another at
Barnes Road and North Powers
Boulevard, which will anchor a
20-acre development.
While Colorado Springs has
not seen the major growth
that Denver has, it appears to
be gaining ground, especially
with a recent development that
will spur significant, quality
job growth. The approval of a
Commercial Aeronautical Zone
at the Colorado Springs Airport
triggered announcements of
major employers at the airport.
Sierra Completions announced
an $88 million campus, housing
360,000 square feet of hangar,
manufacturing and office space,
and employing 2,100 skilled
craftsmen and engineers who will
be customizing and completing
wide-body jets from 737s to
jumbo jets for governments,
potentates, corporations
and wealthy individuals. It is
likely that all suppliers will be
required to have a presence
in the market so there will be
a substantial multiplier effect.
Rampart Aviation announced
a significant expansion to its
facility because of the CAZ.
Global Super Tanker Services
recently announced it is going
to base its largest U.S. Evergreen
747 Supertanker, a firefighting
aircraft, at the Colorado Springs
Airport. Because of the CAZ
and the central location, it is
likely additional firefighting
aircraft will be based in Colorado
Springs.
On the housing side, recent
numbers suggest that single-
family detached permits
continue to improve. The
increased permit activity, an
improving economy and a
dwindling supply of finished
lots are driving an increased
demand for developable parcels
throughout the market. Builders
purchased the majority of
large bank-owned sites, and
the development of future
filings of existing communities
picked up significantly in the
past 24 months. The strongest
areas of growth continue to be
northern El Paso County and
northeast Colorado Springs.
Master-planned communities
offer significant square footage
with close proximity to open
space, parks, desirable schools
and nearby retail services. The
southeast Colorado Springs and
Fountain market continues to
offer more affordable housing
options and we believe that
the steady presence of military,
in addition to the projected
growth of the airport, will drive
continued demand in these
areas. The local homebuilding
community remains cautiously
optimistic about a market that
has seen a significant decline
of foreclosures and steady price
gains within the resale market.
Colorado Springs has
significant new apartment
construction, which is driven
by low vacancy within existing
complexes and continued rising
rents. Apartment developers
are absorbing desirable infill
sites that previously may have
been planned for townhomes
and condominiums, as well as
previously zoned commercial
sites. New construction continues
to keep up with demand and
additional sites are in planning
and early construction stages.
In addition to the existing and
planned projects, we are still
seeing new groups enter the
market. We are hopeful that with
rising rents and projected growth
in the Colorado Springs Airport,
we will see more projects in the
southeast Colorado Springs and
Fountain market, where only a
few projects have been built in
the past 20 years.
Also there has been increased
activity from senior housing
groups offering product types
for assisted living, independent
living, memory care and age-
targeted apartments. The
senior housing groups are
focused on infill sites that are
in close proximity to retail,
medical services, hiking trails,
bike paths and golf courses. An
aging demographic combined
with an outstanding quality of
life makes Colorado Springs a
desirable market for these types
of development.
The activity we are seeing
suggests that the greater
Colorado Springs area continues
to be a desirable area for all
types of development. The
preponderance of land sales
has been for land that will be
put into production in the
foreseeable future. There were
very few speculative land sales
that were prevalent leading up to
2008.
James Spittler Jr.
Principal, NAI Highland,
Colorado Springs
Michael Suggs
Principal, NAI Highland,
Colorado Springs
