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Page 8 — Retail Properties Quarterly — November 2016
T here have been some pretty
impressive national rank-
ings and headlines for Colo-
rado Springs over the recent
years. A few include being
named the fifth-best place to live
by U.S. News and World Report;
No. 1 “Big cities to live in,” accord-
ing to Money; No. 5 “Best Cities to
Live, Work and Play,” according to
MSNBC; and No. 9 on America’s
best bang-for-the-buck cities and
No. 10 “Best Places for Business and
Careers,” according to Forbes.
Please refer to Chart A to sum-
marize these findings. By the way,
we also were recognized for top 10
cities for best teeth, but that’s just
heaping it on … but it’s true.
We are a very proud city that is in
the midst of one of the most excit-
ing times since I have lived and
worked here. We have put together
the strongest, most cohesive unit of
governing bodies and citizen efforts,
which has resulted in tremendous
new growth and revitalization in
key areas of our community. I have
been a resident of Colorado Springs
since attending Colorado College in
1978. I began my commercial real
estate career in 1983 and have seen
the city grow from approximately
215,000 people to almost 500,000,
with close to 700,000 people living
in El Paso County.
We have always been a city
blessed by our close proximity to
Pikes Peak and the Front Range. Not
too many cities can boast a drive (or
bike ride) that is literally minutes
to work or the mountains. But tre-
mendous views are not enough, and
more people means a little longer
drive time.
In the past few
years, we took
some of our core
strengths and are
implementing
plans to maxi-
mize them. One
example of this is
our long-standing
association with
the U.S. Olympic
Committee. The
committee’s head-
quarters have been
relocated to the
heart of down-
town with a long-term commitment
and we have rebranded Colorado
Springs as “Olympic City USA.”
We also are close to com-
pleting the funding for a new
60,000-square-foot Olympic Muse-
um that will be located on the
southwest side of downtown and
open in 2018. This state-of-the-art
facility will generate other commer-
cial redevelopment for downtown
and be another significant tourism
draw for Colorado Springs.
Further north, the combined
efforts to redevelop North Nevada
Avenue with the creation of an
urban renewal district spurred the
tremendous growth of the Univer-
sity of Colorado Colorado Springs.
Since 2006, UCCS has almost tripled
its enrollment and constructed
numerous buildings on its 500-acre
campus. While on the opposite
side of Nevada Avenue, develop-
ers turned one of our city’s most-
degenerated areas into one of the
city’s most significant and success-
ful retail developments: University
Village Colorado.
On the south end of Nevada Ave-
nue, south of downtown, another
long-awaited redevelopment effort
has begun. Multiple new retail,
restaurant and residential develop-
ments will replace old and, in some
cases, abandoned properties. This
area has been very attractive to
retail and restaurateurs alike but
there simply haven’t been proper-
ties available that would interest
them.
The 2008 downturn – well OK,
more like a bungee jump – defi-
nitely impacted our retail market.
However, Class A retail never took a
very big hit with market rents and
vacancies dropping only slightly.
Class B and C retail properties were
hit hardest and really only started
to feel the positive effects of a mar-
ket recovery last year. This year,
retail vacancy has dropped to 9.2
percent, the lowest in eight years,
while lease rates are at the high-
est average since 2008, according to
Turner Research.
Last year we saw a significant
uptick in new commercial devel-
opment. This has been fueled by
record-setting home sales, con-
sistent year-over-year city sales
tax increases and significant job
growth. This produced our lowest
unemployment rate since 2006,
currently at 3.9 percent, which is
significantly better than almost 10
percent at the start of 2011.
The pace of homebuilding
through the first half of 2016 is at a
10-year high. Not surprisingly, new
commercial development generally
follows where the new homes are
being built; primarily north and east
of town. Also, historically, the high-
est average incomes have been in
the southwest end of town, but over
the last 10 years, with the growth
north, the highest average income
levels are now on the north and
east ends of Colorado Springs.
The challenge from a retail or
restaurateur’s perspective is while
incomes increase the further north
you go, the population counts
decrease. So some of the areas
where new commercial properties
are being developed do not have the
densities retailers typically want.
For those areas, it is important
for businesses to go in with the
capability to wait for the market to
catch up, while hopefully reaping
the benefits of being “first in” and
establishing themselves.
The challenge from a developer’s
perspective is keeping the rental
rates at levels that are sustainable
for businesses, given the high costs
for land and construction costs.
Certainly helping this are the low
John Winsor
Director, The Retail
Group, Olive Real
Estate Group Inc.,
Colorado Springs
Market Update
Olive Real Estate Group
Chart A is a summary of Colorado
Springs’ recent rankings and headlines.