CREJ - Land and Development - July 2016
It has been a challenge to keep up with all the awards bestowed on Northern Colorado in the past year or so: No. 1 Best Small Town to Visit, Estes Park, Smithsonian Magazine; No. 2 Small City for Jobs, Greeley, Forbes; Best Places to Live in the West, Loveland, Sunset magazine; Next Top City for Tech Jobs, Fort Collins, Fast Co.; and No. 3 in the nation for Colorado State University’s Veterinary Medicine Program, U.S. News & World Report. And these are just the recent “notables.” Why? We have jobs offered by a diversified economy well represented in the bioscience, creative, energy, agriculture, health and information tech sectors. A few of the major employers are Woodward, UCHealth, Anheuser Busch/InBev, Banner Health, Intel, HP, Kaiser Permanente, Vestas and Owens-Illinois. Of equal importance is our tradition of small-business and creative entrepreneurs, many of which began as spinoffs from CSU, such as Water Pik, plus our enviable high quality of life provided by the arts, education, health care, recreation and climate. Oops – forgot beer. As well, downtowns. Yes. Downtowns. Fort Collins has had a vibrant downtown for some years and that is now happening in Greeley and Loveland. And under all this activity is land. Commercial. These “100 percent” locations remain in demand for retail: Interstate 25 and U.S. Highway 34; West Greeley at Centerplace (anchored by Target, Safeway and Kohl’s) and St. Michael’s (Discount Tire, Kum & Go, general retail and restaurants); and I-25 at Harmony Road, Timnath, anchored by WalMart and Costco. Outside of such developments, there has been little new retail. Asking prices for commercial sites have escalated but there have been limited number of actual sales. Industrial. Although there is little inventory and only limited new construction, rents are increasing only modestly. Land prices are up but, again, moderately – over the past year prices are trending toward $4 per square foot, an increase of about 50 cents per sf. The decline of oil and gas prices has had only a minimal impact to the Weld County industrial market.
Single-family. While escalating housing prices set records monthly, demand remains strong to intense. In Wellington, 10 miles north of Fort Collins and long known for affordability, prices increased over 13 percent year-to-date, reaching an average of nearly $306,000. The inventory of finished lots is very limited in the more active submarkets of Fort Collins and Loveland. Many of the new subdivisions being developed or planned are in Timnath, Windsor and Severance. There are few home sites remaining for less than $65,000 in Northern Colorado with most in the $75,000 to over $100,000 price range. Affordability is gaining much attention in both Larimer and Weld counties. There would be many more new developments if it weren’t for water. In many jurisdictions 3-acre-feet of water is required for each acre of land to be developed. Three years ago, an acre-foot of Colorado-Big Thompson water was about $10,000 – today is it nearly $50,000. This and the ever-increasing development fees results in “starter” homes priced at $300,000 rather than $250,000. Multifamily. Over 2,000 attached units, market-rent and student oriented units have been built each year over the past three years. While rents approach $2,000 per month for the new, upscale units, vacancies remain historically low. However, in existing projects, those “free rent” signs are appearing. Land prices range from $12,000 to $15,000 per unit for the larger projects. Within downtown Fort Collins, land prices for multistory apartment buildings are $100 per sf. Some deals. So far in 2016, these transactions characterize the growth in Northern Colorado. • Sheels All Sports purchases 23.6 acres in the southwest quadrant of I-25 and U.S. Highway 34 (the 2534 development in Johnstown) for $13.17 million for a 250,000-sf “shopping adventure” sporting goods store. • Alberta sells for $6.42 million 11.93 acres located along the eastern boundary of the Foothills Mall, a $350 million redevelopment project in Fort Collins. There are 450 units of apartments planned, which is $14,256 per door land cost. • In northwest Loveland, 245 acres were acquired for $3.6 million for a mixed-density residential project that may total 850 units; the price of $14,694 per acre is at market for this large parcel. • Competition between providers remains strong as UCHealth paid $2.81 million for 21 acres for a new hospital; for an owner-user, the $3.07 per sf purchase price is reasonable. Outlook. Colorado added over 100,000 new residents last year but built only 25,000 new dwellings. And another million or more people are expected by 2040. In Northern Colorado, it is expected the population will double to a little over 1 million. In terms of the demand for land, the prospects are nothing short of excellent long term. There will be more booms and more busts, but the trend line is strongly positive.