Downtown Fort Collins is in a season of change

Fall is the season, and the leaves aren’t the only thing changing in downtown Fort Collins.  As is usually the case, change is accompanied by a certain level of excitement, paired with a certain level of anxiety about what the future may hold.   

From our viewpoint, we firmly believe that downtown is not only thriving, but has an even brighter future with an exciting pipeline of planned projects.  Holistically, during the past three years there has been a steady increase in sales and decrease in commercial vacancy. Rampant investment in development and redevelopment of functionally obsolete properties is an absolute indicator of investor confidence in the downtown area. Proven restaurant and retail concepts continue to set a high bar and new-to-market concepts expand the variety of offerings in downtown — the crown jewel of the city and Northern Colorado.

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Other areas in Fort Collins are raising the bar, with a city-wide resurgence of experience-based retail including new development along Harmony Road and the redevelopment up and down College Avenue, namely a $300 million rehab of Foothill’s Mall. CSU is on a tear with upward of $500 million of real estate-based projects completed on campus during the previous three years and has hundreds of millions in the pipeline for continued growth. Development on the perimeter of campus is on par with the university, offering new options for the student population.  So, it is only natural that investment in the downtown area keeps pace with the other areas of the city.  This widespread improvement and development creates a rising tide that lifts all boats, and supports the evolution of the downtown area as people are continuously attracted to the concentration of restaurants, shopping, culture and entertainment offered throughout. Old Town Fort Collins remains the main attraction for locals and tourists alike.

A key factor in Old Town’s healthy stability is the emergence of a “24/7” downtown community. Office, residential, and retail all go hand-in-hand. People living within the downtown area ensures vibrant pedestrian and consumer activity, smoothing out the sales cycles throughout the week and throughout the year. There are more than 5,000 multifamily units in the development pipeline citywide. Projects such as Uncommon, The Mill House, Penny Flats North, 320 Maple, Block One, and Confluence will collectively add around 330 units within the Downtown Development Authority boundary. Fort Collins continues to grow at a rate of approximately 2 percent annually, which equates to more than 2,000 residents each year. This growth will undoubtedly increase the demand for additional housing. Citywide, residential vacancy rates remain extremely low, below 2.5 percent since 2014 and even lower in the Old Town area.

Of course, with rising demand comes rising prices, and this is true in Old Town as it is anywhere. Commercial lease rates have been on the rise, a reflection of heightened demand paired with spiking values and construction costs. Critics argue that this rising cost environment is pushing local businesses out of the downtown core. Although, a wave of new tenant announcements provides evidence to the contrary, it is important to note that the vast majority of new concepts that are popping up in both existing and new locations throughout Old Town are local/regional concepts rather than national chains.

The Downtown Development Authority, or DDA, tracks sales tax revenue in the Old Town area. During the months of June, July, and August, generally the highest sales tax revenue months in Old Town except for the December spike, revenues trend slightly upward year over year. This is remarkable considering that during this same time frame both Safeway and Sports Authority closed their doors thus ceasing to contribute to the sales tax revenues within the DDA boundary. There is also a boisterous pipeline of retail and restaurant amenities coming soon to Old Town including The Elizabeth Hotel, The Exchange, Lucky’s Market, Confluence, Ginger and Baker, and Union – just to mention a few.  A new 323-space parking garage is also under construction in connection with The Elizabeth Hotel to accommodate the growing visitation Old Town Fort Collins is sure to experience as time goes on.

According to data pulled from CoStar, the vacancy rate (comprised of office and retail space) within the DDA boundary has decreased from the already low 4.5 percent in Q1 2015 to as low as 2 percent vacancy going into Q4 2017. 

Jake Arnold and Josh Guernsey are commercial Realtors with Waypoint, a Fort Collins-based real estate firm.  Contact them at 970.632.5050