Previous Page  10 / 28 Next Page
Show Menu
Previous Page 10 / 28 Next Page
Page Background

Page 10

— Retail Properties Quarterly — February 2018




El Five Restaurant, Denver


ast year was another year of

recovery for the entire Colorado

Springs market and, specifically,

in the retail segment of the

commercial real estate market.

Retail development follows roof-

tops, specifically new rooftops. Most

cities on the Front Range of Colorado

grow to the east, as the mountains

define the limits of development to

the west. In addition to the west-

ern boundary, Colorado Springs has

an eastern boundary known as the

Banning Lewis Ranch, a 30,000-acre

property that has changed hands

and been divided over the years,

but which still is predominantly

undeveloped. This has caused home

developers to hopscotch across this

property to the east and build in the

Falcon area.

Over the last 15 years, this area has

grown dramatically with hundreds of

new rooftops and the retail develop-

ment to follow it. Residential devel-

opment on the east side of Colorado

Springs has filled

in against the west-

ern boundary of

the Banning Lewis

Ranch property,

which is gener-

ally defined by

Marksheffell Road

running north and

south the entire

length of the city.

The Banning Lewis

Ranch property

will define the resi-

dential growth of

Colorado Springs

for the next 50 years. Infrastructure

costs have been the prohibiting fac-

tor in developing this property, but

city and county governments are try-

ing to make changes that will allow

this property to be developed and

provide adequate infrastructure.

So, most of the new residential

development in the last few years in

Colorado Springs has taken place at

the north and south ends of Colo-

rado Springs as well as in the last

few undeveloped parcels on the east

side of town, and retail has followed.

King Soopers opened one of its new

“super” stores at Marksheffell and

Constitution in 2017, which was one

of the only anchor retail stores to

open last year.

Other areas of new retail activity

took place along the north Powers

Boulevard corridor between Consti-

tution and Briargate Parkway; along

Interstate 25 at the Interquest exit

around the new Great Wolf Lodge

redevelopment; and at the Northgate

exit around the Bass Pro Shop in

the Polaris Point retail development.

An urban renewal project on South

Nevada Avenue south of downtown

is starting to open new retailers and

redefining the area with trendier

residential redevelopment coming as


Downtown is seeing a resurgence

of development, with Oscar Blues

opening its new restaurant, while the

Atomic Cowboy, Denver Biscuit Co.

and Fat Sully’s New York Pizza are

coming to the Trolley Garage redevel-

opment on South Tejon Street. The

U.S. Olympic Hall of Fame is under

construction west of downtown and

there are more than 600 residential

units in the pipeline in the down-

town area.

In 2017, retail development led the

way in new commercial structures.

Most of the new development was

in smaller multitenant buildings and

most of the new tenants were fast-

casual restaurants either new to the

market or expanding after an entry

in the last few years.

Vacancy rates in retail centers is

6.5 percent in anchored centers and

14 percent in unanchored centers.

Average retail rents have broken the

$12 per square foot, triple-net mark

for the first time since 2009. Many

older centers that sold recently are

being refaced and redeveloped to

accommodate the shrinking demand

for retail. In 2017, Chapel Hills Mall

at the north end of Colorado Springs

went into foreclosure, reflecting

the changing status of the national

demand for brick-and-mortar retail


In 2017, only two retail proper-

ties over 100,000 sf sold in the area,

but more than 23 properties under

100,000 sf sold. Capitalization rates

on retail properties have been falling

here; cap rates were about 8 percent

in 2016, 7.5 to 7 percent in 2017, and

will be in the 6’s in 2018. Even in the

6 percent range, cap rates in Colo-

rado Springs offer a 1 to 2 percent

benefit to those currently available in

the Denver retail investment market.

Experts say there is only a 15-day

supply of residential inventory in

Colorado Springs. Our retail vacancy

rates are approaching 5 percent on

average. Denver workers are buying

homes in the Colorado Springs area

and commuting to their jobs because

of home prices in Denver. There is an

abundance of opportunity for retail

developers and residential develop-

ers in Colorado Springs in 2018 and

into the next decade.

But do you know what Colorado

Springs residents are most excited

about in 2018? In-N-Out Burger is

opening its first Colorado location

here this year.


New rooftops energize Colorado Springs retail

Market Spotlight

2017 Colorado Springs general market statistics

• Population of Colorado Springs: 465,000

• Population of the Colorado Springs metropolitan statistical area:


• Total home sales: Up 7 percent over 2016, while 2015 and 2016 were

both record years.

• Single-family new construction permits: 3,405 permits, up 8.2

percent over 2016

• Unemployment rate: Less than 4 percent

• Overall average commercial vacancy rate: 7 percent

• Overall average commercial lease rate: $12.48 per square foot, triple


• Retail absorption in 2017: 355,000 square feet

• Apartment vacancy rate: 5 percent

Jay Carlson

Managing broker

and co-founder,

Front Range

Commercial LLC,

Colorado Springs

Front Range Commercial LLC