January 6-January 19, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 13
Larimer & Weld Counties
by Jill Jamieson-Nichols
Northern Colorado commer-
cial real estate occupancies are
tight, and rent growth in most
cases will be steady through the
new year.
“We’ve had steady growth,
and for the most part, we think
that these statistics are going to
stay basically the same,” CoStar
Group’s Charles Shapiro said at
the Colorado State University
Everitt Center for Real Estate’s
2016 forecast in Loveland.
Speaking to Fort Collins-
Loveland’s 4.68 percent office
vacancy rate, Shapiro said,
“You look at the major markets
around the country for office
vacancy rates, you’re going
to see 12 percent – Denver, 14
percent – and those are actu-
ally pretty good vacancy rates.
Here, we’re seeing very little.
This is full employment.”
The average office rental rate
of $21.76 per square foot gross
should tick up to $22.50 in 2016
as vacancy rates fall to the mid-3
percent range, Shapiro said.
CoStar projects the Fort Col-
lins-Loveland retail market
will see even stronger rental
rate growth, rising from $15.10
to $16 per sf triple net, partly
because of new product being
delivered – including 644,000 sf
at Fort Collins’ Foothills mall.
The two cities currently have a
combined 4.93 percent vacan-
cy rate, which is expected to
decrease in 2016.
Forecast panelist Steve Kawu-
lok of SVN/Denver Commer-
cial Real Estate said the mall is
bringing in restaurants that are
new to the market, and existing
restaurants and retailers likely
will be impacted. “I think in
the short term, as a lot of these
stores reopen or open in the
market, it will have a slight
drag on some of the retailers
until the population catches up.
I don’t see it as anything dras-
tic, but I think the competition
will be felt along the College
(Avenue) corridor and the other
shopping locations,” he said.
In the industrial sector, Fort
Collins-Loveland has only 2.3
percent vacancy, and CoStar
predicts rental rates will climb
from $7.78 to $8.25 per sf triple
net this year.
CBRE’s Kyle Lundy said a
lack of concrete tilt-up con-
struction, coupled with strong
demand for quality space, make
McWhinney’s development of
an 83,890-sf speculative build-
ing at Centerra in Loveland a
“good strategic play.”
Greeley, the area most impact-
ed by the energy industry, con-
tinues to see very low vacancy,
1.43 percent. Rental rates aver-
age $8.63 per sf and are expect-
ed to move to $9 per sf this year.
The city’s office vacancy is
just over 5 percent. CoStar pre-
dicts a modest decline this year.
The average rental rate should
increase from $16.36 to $17 per
sf.
Greeley retail, according to
panelist Nathan Klein of Love-
land Commercial, is a study in
contrasts. Space in and around
the Centerplace shopping area
is commanding rents in the
high $20s to low $30s per sf
triple net, while rates within
a mile in any direction tend
to be in the teens. “There’s a
huge, huge gap in the market
between what’s exciting and
what’s not,” Klein said.
CoStar forecasts Greeleyʼs
vacancy rate will decrease from
2.21 to 2 percent this year, with
rates increasing from $11.09 to
$11.30 per sf triple net.
“Apartments through the
region are on a roll,” said Sha-
piro, who noted the apartment
market has performed “incred-
ibly well” throughout Colora-
do’s Front Range.
“We’re going to see some
challenges in Denver at the top
of the market, but up here, we
think it’s going to be a great
market,” said Shapiro.
Fort Collins’ apartment
vacancy rate should continue
to decrease from 5.22 to 5 per-
cent, with the average month-
ly rent for properties with 50
or more units increasing from
$1,175 to $1,235. Loveland, with
6.63 percent vacancy, will see its
vacancy rate increase from 7.07
to about 10.5 percent in 2016 as
new product comes to market,
but vacancies should decline
thereafter, CoStar expects.
Loveland’s average rental rate
is $1,270.80, higher than that in
Fort Collins due to newer prod-
uct. It will continue to increase
this year, to approximately
$1,325.
Greeley, meanwhile, has a
vacancy of only 1.53 percent
and lower average monthly
rent, $922.54. CoStar thinks that
numberwill increase to $965 this
year, with vacancies remaining
low. Some new product is being
delivered, and some developers
are weighing whether to build,
given uncertainty in the oil and
gas industry, Shapiro said.
Also at the forecast event,
Dr. Eric Holsapple, chairman
of the CSU Real Estate Coun-
cil and former Everitt Center
director, outlined a number of
risks, opportunities and game-
changers for Northern Colora-
do commercial real estate this
year. Among the risks were the
time and cost of construction,
lack of available product, oil
and gas impacts and the gen-
eral economic cycle.
“I think 2016 represents a sig-
nificant turning point where
we’re not going to see vacancy
rates spike or anything like that,
because there’s still a lot of oil in
the Wattenberg Field that needs
to be extracted and sold … but
it’s going to be a rocky road for
the next couple of years,” said
panelist Jon Vaughan of Foster
Valuation.
The Everitt Center forecast
also included an in-depth resi-
dential forecast by John Covert
of MetroStudy, along with a
panel of industry experts.
Weld County saw a 40 percent
increase in housing starts over
the last year, the second-high-
est number of starts along the
Front Range, and smaller com-
munities such as Johnstown-
Milliken, Erie-Frederick and
Wellington are seeing healthy
activity due to lower prices and
greater availability of finished
lots.
According to MetroStudy, the
median price for a single-family
detached home in Fort Collins-
Timnath is $325,000, and that is
projected to grow to $350,000
this year. Loveland-Berthoud
has a median price of $313,000,
which MetroStudy believes will
increase to $335,000, and the
median home price in Greeley-
Evans is expected to rise from
$265,000, $285,000.
Other News
n
Rhonda
and
Stanley Wells
purchased a 10,059-square-
foot industrial building at 565
Logistics Way in Windsor for
$124 million, or $124.27 per
square foot. The property sold
at a 7.25 percent cap rate.
The sellers were
Frank
and
Lynn Pinteric
of
Waterjet
Wonders,
which creates mar-
ble and porcelain floor tile
medallions and borders. They
leased back the building from
the new owners.
Annah Moore
of
Realtec
Commercial Real Estate Ser-
vices,
who represented the
sellers in the transaction, said
the building is quality, con-
crete tilt-up construction with a
“really nice showroom.”
“It was a good example of
the demand we have for leased
investment properties,” she
said, “This was a quality build-
ing in a good location with a
solid tenant. There is certainliy
demand for more properties
like this that have a lease in
place.”
Larry Hawe
of
SVN/Denver
Commercial
represented the
buyers.
n
Pawnee Leasing Corp.,
a business equipment leasing
company, signed a lease for
11,372 sf of office space at 3801
Automation Way, Suite 207, in
Fort Collins.
“They had outgrown their
current building, and there
were no viable options for
expansion there,” said
Annah
Moore
of
Realtec Commer-
cial,
who represented the ten-
ant.
Peter Kast
and
Peter Kel-
ley
of
CBRE
represented the
landlord,
HEO LLC.
n
The Perfect Setting
leased
4,567 sf of retail space at 650 E.
29th St. in Loveland.
Julius Tabert
of
CBRE Inc.
represented the tenant. He and
Cobey Wess
of
SVN/Denver
Commercial
represented the
landlord,
BH 29th St. LLC.
s
Kyle Lundy of CBRE speaks about the commercial real estate market at the CSU Everitt Center’s forecast event.
Dr. Eric Holsapple, chairman of the CSU Real Estate Council, addresses the audience.
