Multifamily housing booming in Broomfield

Editor’s note: Construction Quest is a series of five installments that focuses on commercial construction projects in the largest cities and towns in Boulder and Broomfield counties.

The first installment focuses on Broomfield. Subsequent installments will feature Boulder, Longmont, Louisville/Superior and Lafayette/Erie.
BROOMFIELD – Community Financial Credit Union bought land for a second branch in Broomfield nearly six years ago, just in time for the economy to go south and the housing market to grind to a halt.
But with construction starting to gain steam, the credit union has resurrected its plans at 13625 Huron St. A new $1.3 million, 9,535-square-foot is slated to go under construction by early June, with an end-of-year opening targeted.

New housing activity in particular has helped fuel Community Financial’s leaders’ optimism. The credit union’s only other branch is at 119th and Main streets near the core of the city. But the new location figures to capitalize on Broomfield’s continued growth to the north.

“A lot more things are happening in that direction again,” Community Financial’s president and chief executive Greg Hill said recently. “It slowed, and it’s picking back up pretty heavily. … Now that that development has started up again, we decided it was time to go ahead and build on it.”

In a city where the commercial construction scene is dominated by new apartments and little else, such a tale is one Broomfield leaders would love to see become a trend as the need for services to support the city’s steadily growing population of 58,000 continues to increase.

New apartment units are flooding Broomfield — the U.S. Highway 36 corridor in particular – like few, if any, places in the Denver metro area. Last year, Broomfield issued permits for “only” 540 new apartment units after a 2012 gushing of 1,777 permits. Broomfield’s planning department projects that it will issue 1,166 more this year as another wave of new projects gain steam.

But while there have been a few new nonresidential commercial buildings completed over the past couple of years, only five such projects are in the pipeline with Broomfield’s planning department – Community Financial, a standalone emergency room, a senior living facility, a hotel and a gas station. None is under construction.

Vacancy rates
One thing slowing the advent of new projects in Broomfield is vacancy rates. According to numbers from the city’s economic development office, retail vacancy is 11.5 percent. Office vacancy is 14.2 percent. And the latter ranges as high as 20 percent depending on which real estate analyst is defining the segments and crunching the numbers, said Jay Despard, managing director for development firm Hines’ office in Denver.

Hines in the fall of 2012 completed Eos at Interlocken, a 186,000-square-foot class A office building. But the company just last month announced it had finally landed its first tenant, with AirCell taking 112,000 square feet.

Hines has three more similar buildings planned and entitled near Eos. But while the company could turn another one out in as little as 10 months, Despard said it’s unlikely that Hines would build the next one on speculation. Broomfield rents aren’t quite strong enough yet.

While he said base rents need to be more than $20 per square foot to make a new building affordable for a developer, he said there is enough existing large-block space empty right now with rates in the mid- to upper teens that potential tenants have plenty of choices. Even Eos goes for about $19.50 per square foot.

Quick transformation
The shining light, Despard said, is that Broomfield’s office-space market has the ability to transform quickly.

“The market seems like it’s starting to turn up there,” Despard said. “It’s a small enough market that if a few positive things were to happen it could change very quickly for the better. The minute that stuff starts filling up, you pretty quickly run out of options out there.”

The rapid rise in apartments filling in around areas like Interlocken and the Arista development could actually help attract more businesses to those areas as they gain a sense of place, both Despard and Broomfield’s community development director Dave Shinneman said.

And plenty of apartments are coming. Thirteen apartment projects with a combined 2,938 units are either under construction or going through the planning process with the city, with a seemingly insatiable demand along U.S. Highway 36 thanks to easy access to both Boulder and Denver and an increasingly urban feel.

Arista Uptown, a 272-unit complex wrapped up construction last June and had a quick lease-up to the mid-90s percent occupancy range, where it has held steady, said Bobby Smith of Smith/Jones Partners of Denver.

Scottsdale, Arizona-based development firm The Wolff Company is getting set to break ground later this month on Dry Creek Valley, a 360-unit apartment complex just south of Arista. Rob O’Dea, a spokesman for Wolff, said the firm “absolutely” believes there’s room for more apartments in Broomfield thanks in large part to pent-up demand from the recession that still hasn’t been met.

“If there is any overbuilding it will be on a much smaller scale than has historically been seen,” O’Dea said. “This cycle’s been overdue.”

Shinneman, the community development director, said the city’s planning department monitors every apartment complex that is built to see whether units are being occupied.

“So far they are,” Shinneman said. “We’re asking those questions (about demand) of every development that comes in.”

Future growth
If the U.S. 36 corridor is Broomfield’s current boomtown, then the Interstate 25 corridor where Broomfield has large swaths of buildable land to the northeast is the next frontier. Planned build-out for Broomfield, which had about 38,000 residents in 1990, is 95,000, with much of that growth to be to the north.

As single-family housing developments like Anthem ramp back up, Shinneman said the hope is that commercial development will follow to the north as well, joining things like Community Financial Credit Union and a planned Marriott Courtyard hotel that is slated to go in next door to Children’s Hospital’s North Campus near I-25 and Highway 7.

The city has done extensive work on infrastructure and planning for water needs in that area in anticipation of more projects heading that way.

“Now we can start to service developments up there in that area in ways we haven’t in the past,” Shinneman said.

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