Page 8
— Land & Development Quarterly — July 2016
Market Update
M
ost Colorado Real Estate
Journal readers know that
the Colorado Springs com-
mercial market has lagged
behind Denver since the
downturn began in 2007. For those
years between 2007 and 2015, job cre-
ation was subpar and consequently
the demand for new construction in
almost all segments also was subpar.
In the land market, a large percent-
age of the transactions that did occur
included a lender as the seller. Prices
were low and buyers took advantage
of the weakened market.
Probably the biggest story up to 2014
was the large amount of single-family
residential land that had been fore-
closed, which was slowly and quietly
being absorbed at very attractive pric-
es by homebuilders and land devel-
opers as the banks cleaned house.
A handful of local players with good
foresight took advantage of the situ-
ation and built up a solid land inven-
tory that is now paying big dividends
in the current robust housing market.
As the single-family builders and
developers built up their holdings, a
healthy market in land sales for apart-
ments and senior housing develop-
ment also was taking place. Of these
deals, the majority on the apartment
side have occurred on the north side
of the market. Multiple projects have
been going up or are in the pipeline,
including within the Briargate master
plan, along the North Powers corridor,
in the Interquest area and adjacent
toWoodmen Road. Conversely, only
a few projects have been built on the
south end of the market, including the
submarket in Fountain serving Fort
Carson. And while the north end of
the city has higher rents, the opportu-
nity remains for any
developer that can
build a lower-priced
product to serve the
southern half of the
market, including
the military commu-
nities at Fort Carson
and the three Air
Force bases.
As with most
other markets,
senior housing
development has
been active. A hand-
ful of large continu-
ing-care retirement
communities projects have gone up or
are in planning along with individual
projects for senior apartments, assist-
ed living, skilled nursing and memory
care. These projects have been spread
relatively evenly throughout the city.
This market remains active.
On the single-family side, 2,739
permits were pulled in 2015 (a 23
percent increase over 2014) and all
indicators point to between 3,000 and
3,300 for 2016. The average over the
last 15 years has been 3,100 starts per
year but a closer look shows three
different periods with an average of
4,600 for the years 2000 to 2006, only
1,453 for the years 2007 through 2011
and 2,519 from 2012 to 2015. Existing
home inventory is at a record low so
the expectation is that we will exceed
3,000 starts annually for the next three
to five years. Even at this rate, we are
only building about 60 percent of the
units that were built during the peak
years of the last cycle.
On the commercial side, things are
getting better but more job creation
is still needed. There were 8,600 new
jobs were created in the last fiscal
year compared to just over 46,000 for
the same time period in metro Den-
ver. This appears to be in balance in
that Denver is essentially five times
the size of Colorado Springs. But this
is the first year since the downturn
began in 2007 that we have held our
own. That said, there are high hopes
in place for strong job creation near
the airport with the newly enacted
“Commercial Aeronautical Zone”
as well as new employment related
to a rapidly growing University of
Colorado Colorado Springs campus, a
growing sports medicine sector and
a cybersecurity sector that plays off
the strengths of the large military and
defense contractor components in
Colorado Springs.
In looking at the growth patterns,
they more or less remain the same as
they have been for years. Growth is
pushing north along Interstate 25, east
into Banning Lewis Ranch and Falcon,
and southeast into El Paso County and
the suburbs of Fountain,Widefield
and Security.
The north end of the market from
Briargate to Monument is seeing solid
growth and, not surprisingly, also is
seeing the impact of Denver employ-
ees moving south to take advantage
of excellent schools, dramatically
cheaper housing and a commute up
I-25 that is easy compared to many in
Denver.
The east side of the city also is
expanding. TheWoodmen Heights
area and various master plans along
theWoodmen Road corridor and
Marksheffel Road are building out.
Banning Lewis Ranch as well as the
Falcon submarket are doing very well.
Finally, the FountainValley area
south and southeast of the airport
continues to develop with the most
affordable housing in our market.
With the residential market expand-
ing, retail developers are following.
After a number of years with almost
no anchored centers built, 2016 and
the next three years finally will see
new centers coming out of the ground.
Office and industrial continues to
lag and rents need to grow before it
makes sense to add inventory. How-
ever, if 2015’s job gains continue the
next few years, there will be demand
for new office and industrial product
in 2017 and beyond.
After an abnormally long down
cycle, the worst is behind us. And land
prices remain relatively cheap. Apart-
ment land has been trading between
$9,000 and $12,000 per door. Indus-
trial land can be had in many parts of
the city for under $2 per square foot.
Office and retail sites typically range
from $3 to $7 per sf; retail pad sites
from $12 to $20 per sf.
In a nutshell, Colorado Springs
remains an affordable community
with all the attributes of a medium-
size city with a world-class city only
50 miles up the road. Our strengths
are in a low cost of living, a great qual-
ity of life, a beautiful setting below
Pikes Peak and a well-educated popu-
lation. It’s a great city to raise a family.
There are issues but, in most cases,
they are relatively minor compared
with many other markets.We have
always been a boom-and-bust econ-
omy and for the time being we have
gotten past the last bust. For those
of us in the commercial real estate
market, things are good.We look for-
ward to at least another three years of
respectable growth.
s
Craig A.
Anderson
Principal/broker,
NAI Highland LLC,
Colorado Springs
Proud member of the Denver legal
community since 1985.
Deep roots reach higher.
Developing deals, navigating complex regulatory hurdles, responding to disputes,
growing an enterprise – experience the difference that law elevated makes.
“One of the top real estate firms”
–
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