Page 6
— Office Properties Quarterly — September 2016
T
o share observations about
the current real estate and
business climate in Boulder
always is an interesting sub-
ject matter, especially right
now and especially on paper. To
get things rolling, following are just
some noteworthy facts to explain
why Boulder’s market continues to
be hot, and why the lifestyle is still a
driving force behind the market.
• The Best Cities for Entrepreneurs
(No. 1) – Livability, July 2016
• The Best Cities for New College
Grads (No. 7) – Zumper, May 2016
• The Most Walkable Cities in Colo-
rado (No. 2) – Walkscore, May 2016
• The Best Places to Live in Colo-
rado – Livability, May 2016
• The Best Green Cities for Fami-
lies (No. 6) – SmartAssest, April 2016
• The Best Places for STEM College
Graduates (No. 3) – NerdWallet, April
2016
• Most Educated Metro Areas in
the Nation (No. 2) – ValuePengin,
March 2016
• The Best Communities for
Physical Well-Being (No. 1) – Gallup-
Healthways Well-Being Index, Febru-
ary 2016
• The 10 Most Active Cities in U.S.
(No. 1) – trulia, February 2016
• The 10 Fastest Growing Startup
Business Cities in U.S. (No. 5) – Mat-
termark, January 2016
• America’s Best City for Tech Start
Ups (Bloomberg Business Week)
• 10 Best Cities for the Next
Decade (Kiplinger)
• The Healthiest Cities in America
(No. 1) – Niche, August 2016
Given the accolades above, it is
easy to explain the rationale for all
the new projects
recently completed,
under construction
and in the pipe-
line. Perhaps the
most notable of the
completed projects
is Pearl West, the
160,000-square-
foot office and
retail building in
downtown Boulder.
Not only did this
building set the
new high for office
lease rates – mid-
$40s triple net – but also set highs
for retail with a few deals reported
over $75 triple net. The project was
nearly 100 percent preleased by
completion time.
Also recently completed down-
town is the 55,000-sf Wencel Build-
ing. Predominately an office build-
ing, this building achieved strong
preleasing rates in the mid-$30s
triple net and currently is 55 percent
leased as tenants start moving in
this month.
Moving east, you’ll find more
newly completed office buildings,
including 4740 Pearl, which is 61,000
sf and was 100 percent preleased
prior to completion, and 5541 Cen-
tral, a 25,000-sf warehouse con-
verted to office and preleased. Both
buildings achieved strong lease rates
for this easterly Boulder location.
Highlights of some of the under-
construction projects – I’m not going
to mention the 300,000-sf Google
Campus – that have anticipated
delivery dates ranging from 2017 to
2018 include The Boulder Commons
and 5541 Central. The Boulder Com-
mons is a 100,000-sf building located
in the new S’Park Development that
is quoting lease rates between $22
and $25 triple net with no signed
deals announced yet. Meanwhile,
5541 Central is under construc-
tion with a 36,000-sf office building
that was preleased, again with very
strong lease rates for this submar-
ket.
And finally, sitting in the pipeline
are several projects, including the
next big mixed-used development
at 30th and Pearl, The Reve. This will
feature 240 residential units, 100,000
sf of office and 25,000 sf of retail.
The project was approved by the city
and developers are waiting on final
permitting.
Just across the street to the north
is another 100,000-sf office build-
ing planned by Element, as part of
the S’Park project. More central at
28th and Canyon, complementing
the two hotels under construction,
is a 40,000-sf Class A office building.
Specific timing for all these projects
has not been released yet.
Finishing out 2016, all signs are
pointing to a continued strong mar-
ket with exciting new projects in
the ground or waiting patiently for
that elusive building permit to get
going. While I did not have room to
mention all of the projects, it is easy
to drive the city and see the cranes
hovering – always a good indicator
of the economy.
However, a few words of caution
as we go back to school and think
about waxing the skis.
First is the city’s attitude with
new development. Developing in
Boulder is never easy, and now the
City Council is pondering tripling
the current development tax fee
in order to help pave the way for
more affordable housing. There is
no question the majority of us Boul-
derites recognize the need for more
affordable housing, but I’m not sure
the commercial developers need to
solely carry that monetary burden.
Council would be best served to
work on the transportation issues to
keep all our great Boulder compa-
nies in a position to grow and thrive
right here in our backyard.
The other noteworthy item is
subleases. Currently there is over
250,000 sf of sublease space on the
market. Subleases have the poten-
tial to soften the market, at least in
the short term. I would expect to see
some tenants taking advantage of
the sublease space, especially down-
town, as an opportunity to get into
the downtown area at below-market
lease rates. Conversely, I expect
some landlords might be willing to
move off from their current quoted
lease rates in order to compete with
the subleases, especially for shorter-
term deals in the one- to three-year
range.
No real surprises as this market
continues to perform well with
low vacancy, strong lease rates and
record sales price figures per sf, not
to mention the ability to ski the best
mountains in the world less than
two hours away or bike up Flagstaff
for a quick lunch break. Work hard,
play hard. Boulder has that figured
out. Let’s hope we can sustain the
fun.
s
Becky Callan
Gamble
President, Dean
Callan & Co. Inc.,
Boulder
Market Update
