CREJ

Page 24 — Office & Industrial Quarterly — December 2021 www.crej.com INDUSTRIAL — OUTDOOR STORAGE I n 2016, I started working on a new development near Den- ver International Airport that required the acquisition of a parcel of land upon which my client was to build thousands of parking spaces and a relatively small building of about 10,000 square feet. Scale aside, I quickly learned that to the north and west of Peña Boulevard in Commerce City, storage parking that required an outdoor storage zoning designa- tion was not allowed, so we focused on parcels south and east of Peña Boulevard in Aurora where zoning in developments like Porteos could accommodate outdoor storage. I thought: How could Commerce City, whose name underscores a decades-long track record of wel- coming business – heavy industry and otherwise – be turning away companies with outdoor storage needs? And what if other business- es didn’t have the opportunity to cross the street for the zoning they needed? Since then, I have worked with landscapers, contractors, engineer- ing firms, mechanics, car dealer- ships, animal care companies, trucking companies and the like for their outdoor storage acquisitions, and I can tell you these are hard searches for nothing fancy. Most of these uses are not stereotypically dirty or noisy, but municipalities require a zoning designation for the outdoor storage that speaks more to heavy industry than the outdoor use itself. Moreover, municipalities rarely issue more of these designa- tions, so buying raw land and building from scratch is often not an option. My clients usually are among many buy- ers lined up on the property’s first day to market, compet- ing to pay the ask- ing price or more at levels that are pushing values to new highs after we have stretched the geographic boundaries of our search to disappointing distances. Buyers and tenants are then cal- culating the increase in fuel costs, hourly wages, and vehicle wear and tear that they will incur because they now will be 5, 10 or 15 miles farther from their target audience. In this sense, the problem becomes one not only of demand exceeding supply but also of the waste caused by moving farther away from one’s target audience. Unfortunately, these companies have a tough road ahead. Earlier this year, Adams County proposed regulatory amendments that would limit outdoor storage for industrial properties in unincorporated loca- tions. Currently, certain Adams County industrial zoning designa- tions allow for outdoor storage on the lesser of 80% of property’s acreage or 10 acres. The new pro- posal calls for permissible outdoor storage on between 25% and 50% of the property’s land area, allegedly with no grandfather clause to pro- tect existing businesses that have enjoyed the current allowances for years. Months into the process, the county delayed a November vote on the new zoning policy after an October survey found that 80% of businesses polled opposed the amendment. So why has the scarcity of out- door storage become an increas- ingly acute trend? There are at least two explanations: First, there is the sentiment that outdoor storage is unsightly and so communities should protect themselves against such tarnish. In the case of Adams County, the regulatory amendment is said to have been born from the local growth in new housing devel- opments that would be exposed to nearby industrial activity. Second, when land becomes more valu- able, the highest and best use often becomes maximizing the building square footage rather than the yard space. Take River North, for exam- ple, where properties previously used for heavy industry now regu- larly sell above $200 per land square foot. As a result, the small indus- trial buildings on large lots make way for new developments that maximize the building-to-land ratio and the height allowed by zoning. As central neighborhoods like RiNo Outdoor storage users feeling the NIMBY pinch Alexander F. Becker Principal, Real Estate Consultants of Colorado LLC CoStar Group The 1980s steel-sided warehouse with a half-acre yard … obsolete or priceless? Please see Becker, Page 32