CREJ - Retail Properties Quarterly - August 2016
Colorado Springs and the Pikes Peak region is teeing up for unprecedented development growth. Every time you turn around it seems a new development is announced, and not just pie-in-the-sky hopeful developments, but solid projects backed by experienced developers with funding sources in place. It is a fun time to see the city changing and see how all of these projects will propel the retail landscape. From new retail developments to multifamily housing in downtown to new hotels and restaurants, water parks and museums, the list of exciting projects goes on. Development plans are submitted, dirt is moving and cranes are up. Here is a quick rundown of some of the projects happening in and around Colorado Springs. New retail developments. Retail demand intensifies as the population of the Colorado Springs’ metropolitan statistical area continues to grow, currently upward of 679,000, according to the 2015 American Community Survey. This year, eight grocery-anchored developments were announced or opened, including the King Soopers Marketplace at Marksheffel and Woodmen roads, The Sprouts Center at Powers Road and Barnes Boulevard, The Sprouts Center at Voyager Parkway and North Gate Boulevard, The Sam’s and Walmart Development at Interstate 25 and Academy Boulevard, Save-A-Lot at Carefree Circle and Academy Boulevard, and three Natural Grocer relocations. There also is the rumored opening of another King Soopers Marketplace at the Current Factory site at I-25 and Woodmen Road, with more, feasibly, to come. With this, many surrounding unanchored or shadow-anchored developments are following to meet demand and are landing some great tenants. A few new tenants announced or entered the market, including MOD Pizza, Sierra Trading Post, Mad Greens, LaVida Massage, C.B. & Potts, Fuzzy’s Taco Shop, Modern Market, ViewHouse, Zoes Kitchen, Mellow Mushroom, and Bad Daddy’s Burgers. This list doesn’t include all the local concepts that recently arrived, such as Bonny & Read Seafood in downtown, TILL Kitchen on North Powers, 503|W on W. Colorado Avenue, Walter’s Pizzeria and Tap House, Colorado’s Best Coffee, Tea & Sandwich E-Café, Soluxe Salon, The Burrowing Owl, The Principal’s Office and Brooklyn’s on Boulder. As well as the many new breweries: Bristol Brewing Co., CogStone Brewing Co., Iron Bird Brewing Co., Fieldhouse Brewing Co. and Triple S. Brewing Co. In short, deals are getting done in the Pikes Peak region, more so than in previous years. Our retail team alone has leased over 270,000 square feet of retail space in the last 12 months. Vacancy remains low, hovering around 5.6 percent and retail lease rates are climbing. We are optimistic this momentum will continue, and we suspect this will be supported by positive job growth and a boost in tourism. Job and business growth. Colorado Springs has begun to improve the business climate and recent job announcements are a reflection of that. Sierra Completions selected a property near the Colorado Springs airport to locate its headquarters. The company plans to construct four 90,000-sf hangar facilities and create an estimated 2,100 local jobs over the next five years – jobs in the $80,000 per year range. With their contractors and vendors required to be nearby, there is a three-times net effect of these 2,100 jobs. Numerous other tech companies have announced more jobs, and projects like the Catalyst Campus and Epicentral are set to attract even more. New housing developments. With all these new jobs comes a need for more housing. In downtown, more than 440 apartment units are coming on line in the next year. This includes 33 units at Blue Dot Place (412 S. Nevada), which opened in January, 169 units under construction at 106 S. Wahsatch Ave., 187 units planned at 609 S. Cascade Ave., and 48 units at 22 Spruce St. Additionally, single-family building permits are up and student housing developments are on the rise as University of Colorado Colorado Springs continues to massively expand. Hotels and tourism. For years, the Pikes Peak region leaned on military and defense as its primary economic driver; however, tourism is keeping pace, thanks to a State Regional Tourism Grant awarded to the city of Colorado Springs. The grant project, living under the pseudonym of “City for Champions,” is focused on four projects: The United States Olympic Museum, Colorado Sports and Event Center, UCCS Sports Medicine and Performance Center, and The U.S. Air Force Academy Gateway Visitor Center. These projects are estimated to attract about 1.2 million visitors each year. More hotels are planned to accommodate. While the Antlers Hotel and the Mining Exchange are established, quality hotels in downtown, a 10-story, 165-room hotel is under construction on Cascade Avenue and Bijou Street. To the north, off I-25, two competing hotels/ water parks are underway: The Colorado Grand Hotel, part of the Bass Pro development at Polaris Point, which boasts 400 rooms and 60,000-sf water park, and Great Wolf Lodge with 311 rooms and a 65,000-sf water park at Interquest. The bottom line is the retail market in the Pikes Peak region is strong, and it is an excellent time for developers and tenants to invest in the area. The backdrop will continue to evolve with positive developments over the next 12 to 36 months.