Low vacancies spur new development

Low vacancy rates in all sectors of commercial real estate have sparked a flurry of new construction throughout Larimer and Weld counties.

Indeed, some new office construction in Larimer County is the first of its kind in almost 10 years.

And if current trends and predictions hold true, there should be no shortage of building activity in the months and years to come. That is tempered, however, by a changing political tide, particularly in Larimer County, that is fostering some resistance to growth.

Still, new businesses and tenants renegotiating leases or moving into new space may find increases in rental rates that reflect the strength of the real estate market.

In both Fort Collins and Greeley, growth along major corridors – and in downtown Greeley – will be unprecedented.

“It will be a feeding frenzy,´ said Chuck Bowling, a broker/associate partner of The Group Inc. of Fort Collins, referring to office and retail growth along the Harmony Road corridor in Fort Collins.

Likewise, Greeley will continue to lure business, and the city’s downtown will experience a rebirth.

“Many of us feel downtown Greeley looks a lot like downtown Fort Collins did 10 years ago,´ said Michael Ehler, broker/owner of Realtec Greeley, a commercial brokerage.

Fleetside Pub and Brewery, owned by some of the same investors as Fort Collins’ CooperSmith Brewery and Billiards, is open at 721 10th St. And Rio Grande Mexican Restaurant will open a Greeley site at 825 Ninth St. by early next year.

In Fort Collins, construction of new office buildings continues, with one at 300 E. Horsetooth Road near the Fort Collins Marriott Hotel even being done on a “spec” basis by Bogaard Construction Inc. of Fort Collins. Spec buildings are built on the speculation that they’ll be occupied.

The 12,278-square-foot, $1.2 million building is internally financed by Bogaard Construction, said Victor Bogaard III, a partner in the company and owner of the new office building.

Bogaard Construction’s parent company is based in Santa Cruz, Calif., and reports earnings of approximately $30 million annually. This is the company’s first venture in Fort Collins.

“There seems to be a lot of interest” in the office project, Bogaard said. It is being jointly marketed by Veldman Morgan Commercial Inc. and Kast Real Estate Services Inc.

Bogaard said he initially was concerned about competition from the 1st Choice Bank Building, a nearby office and retail project at Horsetooth Road and College Avenue also under construction. That project will have 13,000 square feet of available space.

“But we got ours off the ground first,” he said. “And I feel it will be more for retail users, and we’re for office.”

Bogaard’s building should be complete by November. The bank building likely will be ready in March or April.

David Sitzman, president of Sitzman-Mitchell & Co., said office property owned and managed by his company is “about 100 percent full. We’re building a couple of new office buildings.”

One, north of the Marriott, was 100 percent leased prior to construction. It’s a 5,000-square-foot professional office building. Construction of a second nearby building could begin this fall.

Other office projects include the pending addition of two professional buildings to the Spring Creek Medical Office park. The buildings already exist in the center near Shields Street and Drake Road.

Developer David Veldman, president and managing broker of Veldman Morgan, said the 11th building site has been sold to an emergency-care doctor.

“We anticipate an emergency-care clinic to be built there in the future,” he said.

It would be approximately 4,300 square feet. The final site is planned as an 8,000-square-foot office-condo project where individual units could be purchased by physicians.

The OakRidge Business Park, near the southeast corner of Harmony Road and Lemay Avenue, also is ripe for commercial construction.

Sitzman-Mitchell and the Everitt Cos. are developing a 112-unit Courtyard by Marriott there that could open in the late winter or early spring of 1996.

Carrabba’s Italian Grill, a chain based in Tampa, Fla., intends to open a 6,000-square-foot restaurant next to the Courtyard by Marriott.

Nearby, Everitt has PUD approval for a 21,500-square-foot strip center with frontage on Lemay. Negotiations are under way with two anchor-type tenants that could occupy 7,000 square feet and 5,000 square feet, respectively.

And Baker Instrument Co. is planning a new 40,000-square-foot building on McMurray Avenue in the business park.

Fort Collins’ retail popularity continues, too, with companies such as The Men’s Wearhouse now scouting for a first-time location in the city.

And while there already are more restaurants per capita in Fort Collins than in most other cities in the United States, new chains continue to favor the city.

The Chesapeake Bagel Bakery is opening its first Northern Colorado franchise in Fort Collins this month at the northeast corner of Harvard Street and College Avenue. The chain was founded in 1983 in the Washington, D.C., area, where there are about 40 stores. The bagel bakery has 45 stores elsewhere around the United States.

Local franchiser David Robinson said 125 restaurants might be open nationwide by the end of the year. Robinson and his wife, Gina, have franchise rights for Larimer, Weld and Boulder counties.

The local shop will offer bagels, bagel sandwiches, baked goods, soups and salads and seating for about 40 people. Additionally, a full complement of coffees and gourmet coffees will be served.

“It’s a concept that’s very timely,” David Robinson said.

The Robinsons will wait to see how the first store is received before announcing plans for other outlets in Northern Colorado.

Additionally, Taco Cabana is planning its first Fort Collins store at Harmony Road and College Avenue. Larry Clark, a managing partner of the local franchise holding company, said the group also has an option on land in Loveland for a restaurant.

The first Northern Colorado Taco Cabana opened in late August in Greeley.

On the industrial side, Miscio and Stroud Inc. is planning an industrial condo project on East Lincoln Avenue near the Fort Collins airpark.

It will include 21 1,500-square-foot units in two buildings. Tenants such as heating, venting and air-conditioning companies, landscapers and automotive users will be sought.

Units are going for $58 per square foot, or $87,000 apiece.

“It’s not a bad deal,´ said Ron Kresl, broker associate at Miscio and Stroud.

Likewise, Greeley continues to lure new business.

A Total convenience store and a self-storage unit project are being built at the northwest corner or 47th Avenue and 10th Street. The self-storage project is owned by Roche Constructors Inc.

On the northeast corner of the same intersection, a mixed-use project is being planned to host retail, office and residential uses.

If current deals come together, said Larry Stroud, broker associate/partner with Miscio and Stroud, noted California planner Peter Calthorpe will help design the project.

Calthorpe is doing similar work in Boulder and Broomfield on “new-town” concepts that integrate residential dwellings with neighborhood retail and office uses.

In Loveland, the outlet mall continues to lure businesses attracted to the high volume of shoppers. In addition to the Loveland outlet mall, McWhinney Colorado Enterprises of Loveland and Koll Corp. of Newport Beach, Calif., will construct the 260,000-square-foot Loveland Factory Stores. The $27 million project will begin with spring construction of a 120,000-square-foot first phase.

“We have a number of tenants lined up,´ said Chad McWhinney, president of McWhinney Colorado Enterprises.

Additionally, a Courtyard by Marriott will open in the spring of 1996. A sculpture park, Chamber of Commerce office and Visitor’s Center and a Lone Star Steakhouse & Saloon also will be built on the McWhinney property.

Smaller projects planned in the area include a Texaco station and a Wendy’s restaurant. Another 70 acres nearby are under contract for 300 single-family homes.

Closer to town, Moore Progressive Realtors is constructing a new office building at U.S. Highway 287 and 37th Street.

Commercial construction in Loveland is becoming more expensive, however. The city’s new fee schedule may cost developers up to 10 percent of the cost of their building project, said Barry Floyd, broker at Realtec Loveland.

“We believe they are the highest in Northern Colorado,´ said Larry Melton, sales associate for the same firm. “Our town doesn’t want anyone new here. They want to keep what they’ve got.”

Focusing on retention and expansion of existing businesses apparently is working for Loveland. Group Publishing Inc. is constructing more than 70,000 square feet of new space in the city, and other major employers such as Woodward Governor Co. and Colorado Memory Systems continue to grow.

Floyd noted that the last three to five years in Loveland have been phenomenal for commercial growth, but that there now is “quite a movement” to slow it down.

The same political tide is affecting Fort Collins and even towns such as Berthoud, though some building projects continue to get under way.

Fort Collins’ Sitzman-Mitchell is making its inaugural entry into the Berthoud commercial market with the construction of some retail shops on the west edge of the town.

The center will be anchored by a Toddy’s supermarket and include a Pizza Hut, Neighborhood Grill and Berthoud National Bank. The initial phase is 32,000 square feet, and a second phase likely will encompass 35,000 square feet.

In Windsor, a new retail project called the Shops at Westwood is being developed by the Everitt Cos. At the southwest corner of 12th and Main streets.

“It’s the first new commercial building there in probably 20 years,´ said Tom Livingston of Everitt. “It will include traditional retail and some office space.”

On the industrial side, a project called the Windsor Tech Business Center is trying to attract commercial and light-industrial users who need a centralized location between Greeley, Fort Collins and Loveland. It’s located at Colorado Highway 257 and Garden Drive.

Tech Center developer Chris Ruff said many Windsor residents now are more aware of development – particularly because of a 3,000-acre annexation being considered – but that Windsor still is a good place to do business.

The tech center, located in an enterprise zone, offers 12 lots on about 18 acres. Tenants include an auto-body shop and ice distributor. An engineering company, karate school and telephone service company will go in another building.

Ruff said buildout likely will be between 120,000 square feet and 170,000 square feet and take five to seven years. Land in the center is running at $1.25 to $1.45 per square foot.

Rick Archibald of The Group Inc. of Loveland said he knows of perhaps five retail and five office vacancies in the tourism hot spot.

“There’s a need for additional retail and office space in our community,´ said the 10-year resident of Estes Park. “But the reality of that is that the land supply is very limited.”

Additionally, one source said, there’s a strong sentiment by many current resident to close the door to newcomers and new developments.

There is, however, a 35-acre mixed-use project under review that would bring commercial and multifamily uses east of town on U.S. Highway 34.