CREJ - Retail Properties Quarterly - February 2018
Most people start the new year out with a new year’s resolution, but I am going to start with a new year’s prediction: 2018 will be a booming year for Colorado Springs commercial real estate. Yes, the Colorado Springs commercial real estate market is thriving. It’s filled with new development projects to a degree I have never seen since becoming a commercial broker. One significant trend we see right now is reinvestment in the Colorado Springs market spurred by larger development projects. This is resulting in the footprint of our community continuing to expand and rising retail lease rates, up $1.22 per square foot in the last three years. From a retail perspective, we have several exciting developments underway. In the northeast, the dramatic population growth over the last 15 years has changed the Interquest area from “farm land” to a destination with more than 316,000 sf of space under construction. Innovative developments are underway including Victory Ridge, home to the new VIP theatre Icon Cinema, Colorado’s first In-N-Out Burger and the Field of Dreams youth sports complex. Nearby, Interquest Commons has Marriott and Hilton hotels coming, in addition to the newly opened Fuzzy’s Tacos. Interquest Marketplace is finishing up the available retail surrounding Great Wolf Lodge. Activity in the northeast corridor continues to increase, and it isn’t just limited to retail commercial real estate, reinforcing its status as a new trade area within the market. Moving south along Interstate 25, significant retail attention remains on Nevada Avenue. University of Colorado at Colorado Springs continues its expansion, which brings fresh investment into the area. New UCCS developments include an indoor sports practice facility, national cyber security center and a 92,000-sf community arts center. The redevelopment isn’t limited to North Nevada Avenue, as 2018 also brings the continued redevelopment of South Nevada Avenue where Chick-fil-A and several new restaurants, such as Tokyo Joe’s, Mad Greens and Zoe’s Mediterranean, are reimagining the previously underutilized retail corridor located near the Broadmoor. On the west side of the city, Penrose-St. Francis Health Services announced the development of an 80-acre site at Fillmore and Centennial Boulevard. Across the street is a recently announced new development for a retail and restaurant building along with a new 7,000-sf medical building to be located east of Grandview Marketplace. Additionally, since the development of the interchange off I-25 a couple of years ago, there is a new Best Western Plus hotel, IHOP and Les Schwab Tires. Several properties in West Colorado Springs also are up for sale as redevelopment opportunities. Colorado Springs’ downtown historically has struggled to find its niche. However, in recent years the downtown partnership has done a great job being an ambassador for the heart of Colorado Springs, crafting the vision of a thriving arts- and business-friendly center. With the Olympic Museum construction well underway, retail vacancy downtown is near an all-time low at 2.8 percent. Eight new retailers announced openings for 2018 in the downtown market, including brands like Denver Biscuit Co., Atomic Cowboy and Fat Sully’s Pizza. Colorado Springs hotelier Perry Sanders has proposed a Switchbacks Stadium at the entrance to downtown at Antler’s Park. Last, but certainly not least, the push for more downtown living has resulted in a focus on an expanding retail core. In recent years, the Colorado Springs community has really grown and now is reaping the benefits. Colorado Springs is beginning to see interest from franchises looking to expand out of the Denver market and is seeing new investors and developers enter into the market as well. All of this development is impacting local retail lease rates, which have been climbing steadily over the last several years, but still are shy of the lease rates the Colorado Springs market saw in 2007. The highest lease rates in the market are $16.31 per sf in the northeast corridor, which is home to several major new retail developments as discussed earlier. Retail lease rate growth will persist in 2018 due to the continued commercial real estate activity.