Counties diverge in commercial real estate

The business of commercial real estate in Northern Colorado this year will not deviate drastically from 1996’s activity.

However, Weld and Larimer counties will continue to follow different patterns of commercial growth.

As for office space, Greeley is witnessing a flight to the western portion of the city, where new office buildings are under construction and more planned.

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That has left the downtown area with a 15 percent to 20 percent office vacancy rate, said Michael Ehler, commercial broker with The Group Inc.

In Fort Collins, the office market is full but relatively flat.

“We’re going to see a decline in the office market over the next few years,´ said Dave Veldman, president of Veldman Morgan Commercial.

For instance, large-user tenants including Symbios Logic and the federal government will be vacating blocks of space as they occupy newly-constructed facilities during the next several years.

Federal agencies alone occupy more than 400,000 square feet of office space in the Fort Collins area. While not all of that will be vacated when the government’s Natural Resources Research Center is built, a sizable portion still will become empty.

“Most of (the empty spaces) will require large tenants, and we’re simply not a market of large office users,” Veldman said.

Thus, Larimer County could see a decline in office values and an increase in vacancies.

Commercial construction in Larimer County also could taper somewhat, especially as Fort Collins officials consider further tightening of development requirements and restrictions.

“Small and medium-sized businesses can’t wait 18 months to two years for a building,´ said Steve Kawulok, commercial broker with The Group Inc.

He speculates that several smaller companies, those employing 30 or fewer, could help absorb some office space when they want to move to Fort Collins but won’t wait to construct a new building.

“Several companies are considering the area,” he said. “There’s probably a dozen firms like that.”

Retail activity in Weld County likely won’t change much this year, except in communities such as Johnstown and Windsor where service businesses will follow the increasing number of rooftops.

The consensus for retail in Fort Collins is that vacancies will remain low in the near term. However, if all the projects planned along Harmony Road come together, there may be a surplus of space, Kawulok said.

Retail lease rates also are likely to stay high this year.

“There’s a fair amount of continuous activity out there,” he said.

Industrial markets in Larimer County and Greeley were relatively quiet last year. The ability to respond to industrial demand in Fort Collins likely will remain slow because of the same city policies affecting new commercial construction elsewhere.

Conversely, southwest Weld County is a hotbed for industrial users. Areas including Del Camino and the Frederick environs remain very active and will continue so this year.