I-25 land prices motor along in fast lane

Call it the Perfect Swarm — the startling fusion of new housing, employment, retail, entertainment and recreation developments that have lined the Interstate 25 corridor through Larimer and Weld counties.

Accordingly, prices for land for more of the same are rising so fast that it’s hard even for seasoned pros in commercial real estate to fathom.

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Case in point: Crossroads Business Park, pinched between The Ranch, as Larimer County’s vast new fairgrounds is called, and the Shops at Centerra, a 700,000 square-foot, open-air shopping mall that opens late this year.

A Crossroads parcel that sold for $7 per square foot six months ago is worth $10 today, said Nick Christensen, the broker who now might ponder that he could have advised owners to hold the lot another half-year.

Land values have been increasing steadily through the past decade, but in a way that was at least within the realm of reason. But the rate at which they grew in the past year is nothing less than shocking, with Crossroads and Centerra the benchmarks.

Why? For the first time, a combination of the right kinds of developments, in the right places, is taking shape simultaneously, commercial brokers say. For example:

• The Ranch and the Budweiser Events Center, spectacular successes since their opening in 2003.

• The Shops at Centerra, the region’s first so-called lifestyle retail center, and likely to become Northern Colorado’s prime shopping and dining draw.

• Medical Center of the Rockies, a 134-bed regional specialty hospital taking shape at Centerra, just northwest of I-25 and U.S. Highway 34.

• The emergence of residential and recreational centers on the Loveland-Windsor-Timnath cusp, with three new 18-hole golf courses in the works and a slew of new neighborhoods.

“This area is rapidly evolving,´ said Christensen, who two years ago split away from Centerra developers McWhinney Enterprises to form his own brokerage and development concern, Chrisland Inc.

“There’s a larger number of businesses and individuals recognizing what’s happening here. Not everybody fully understands the impact of all the employment and all the housing that’s starting to converge on I-25.”

Sudden rise    The sudden and swift turn of focus toward I-25 is driving land prices higher throughout the northern corridor, from Colorado Highway 7 north to Wellington.

Prices in Larimer County increased, on average, 10 percent during 2004, said Michael Ehler, a long-time I-25 watcher in his work as a broker with Realtec Commercial Real Estate Services Inc.

“In my mind, the corridor has come from agricultural and industrial uses to high-end commercial in the last three years,” Ehler said. “The whole complexion has changed, at least in Larimer County. If you get south, there’s still more industrial and distribution.” Examples abound for how fast and how high prices have increased.

Fort Collins broker Tom Peterson, principal in Stanford Real Estate of Fort Collins, last summer sold two parcels at Johnson’s Corner in Johnstown, one a 23-acre piece to Loveland Auto Auction that went for 75 cents per square foot. The other, five acres, sold to RV Boatel for $2.15 per square foot.

Peterson said if he were selling the two today, the price for both would average “between $2 and $3 per square foot.”

The E-470 effect    On the southern end of the corridor, where the critical new link between I-25 and new E-470 was stitched up two years ago, a threefold rise in four years is documented.

Wheeler Commercial Property Services LLC of Fort Collins managing broker Fred Croci said he and his partner, the late Bill Neal, five years ago contracted for 130 acres at I-25 and Colorado Highway 7 for $10,000 per acre — or 23 cents per square foot. Early last year, the two sold the acreage for $30,000 per acre, just less than 70 cents per foot, tripling the investment.

Croci three years ago also considered, but passed on, a 40-acre site adjacent to the yet-to-be-built Budweiser Events Center for $3.50 per foot. “It’s more than double that now,” he said.

With the emergence of new and improved traffic routes parallel to I-25, soaring land values have spread east and west of the highway. Back to Crossroads: County Road 5 now provides easy access on the east side of I-25 — and buyers are taking notice.

Everitt Commercial Partners’ Tom Livingston said the new Fairgrounds Business Park, on County Road 5 just east of The Ranch, is drawing interest to its ready-to-build retail and light-industrial lots, priced at $3.50 to $6.50 per square foot.

Two are under contract to retailers, one a national chain, and by the standards of the Crossroads-I-25 neighborhood, they are bargains. Similar lots with I-25 frontage are going for $8 to $10 per square foot and up. “What’s attractive about our project is its close proximity to the Crossroads-I-25 intersection, but its not I-25 exposure,” Livingston said.

Land destined for residential development along the corridor also has its hot spots, and cooler ones.

On the fringe    But even in fringe areas of the corridor, where prices have moved more slowly upward, demand is catching up. Wellington, 10 miles north of Fort Collins and thought of as the I-25 corridor’s northern development barrier, is an example.

A 132-acre mixed-use tract on the town’s southern edge, just west of the highway, is on the market for $10.5 million, listed by Ron Young of Re/Max First Associates Inc. of Fort Collins.

Included are 300 residential lots, priced at $51,600 each. Identical lots in Fort Collins would sell for between $65,000 and $70,000, Young estimates. It’s a price gap that will push residential development northward, and pull commercial development along in its wake.

Growth-friendly towns, or those perceived to be, are becoming the greatest beneficiaries of the I-25 land rush. Likewise, the availability of utilities — especially sewer service — will determine which raw landowners will reap the most.

Harrison Resource Corp. president Craig Harrison, who tracks the development of water, sewer, telecommunication and other services more closely than anyone in the region, said those critical ingredients would decide the fortunes of towns angling for I-25 action.

Weld County communities have plumbed the east side from Colorado Highway 119 (Del Camino) on the south to Colorado Highways 60 and 66, increasing values on the east side.

A case that illustrates Harrison’s point best is the I-25 junction with Harmony Road in southeast Fort Collins. Passersby might see the junction as prime territory, and wonder why the next big retail and employment center wouldn’t take shape there. Trouble is, lack of sewer services on the east side of I-25, coupled with floodplain constraints, will keep most developers out.

“For as much development as is going to occur in the region, the Harmony Road interchange is going to look pretty rural,” Harrison said.