Real-estate experts predict office glut in Fort Collins

Leading economic indicators

Real-estate experts predict office glut in Fort Collins

Carol Wood

Business Report Staff Writer
Big changes in the commercial real-estate market in Fort Collins this year will center on the availability — and perhaps oversupply — of office space. Other sectors, industrial and retail, likely will not see such drastic movement.
"What˜s surprising is the amount of existing (office) space right now," said Steve Stansfield, broker with Realtec Commercial Real Estate Services Inc. in Fort Collins.
That, coupled with more than 250,000 square feet of new office space that conceivably could come on line this year points toward a much softer office market.
"We˜ve been absorbing about 250,000 square feet to 300,000 square feet of office a year," Stansfield noted.
But with the inventory that came on line during the fourth quarter, plus what˜s scheduled to be built, 1998 may be soft. Much of what˜s expected to become available this year will be offices now occupied by government agencies throughout the city. They will be vacating those quarters for a new campus near the end of the year.
For tenants and those shopping for space, that may mean some slight incentives and cuts in lease rates.
Builders and lenders should take note that brokers believe office vacancy rates in Fort Collins may bump up above 10 percent during the year. That figure now is about 6 percent.
Retail and industrial markets in Fort Collins should not see such significant changes, experts say. The retail market currently has strong occupancy — about 95 percent — and a significant amount of large industrial space was absorbed during 1997. There still are quite a few small industrial vacancies, however.
In Greeley, the commercial market is expected to remain fairly steady.
"We have a little softness in the office market now," said Michael Ehler of The Group Inc. of Greeley, "but Greeley continues to grow steadily.
"There are no sizable gluts, nor any big demands for space," he said. "The growth we see in Weld County will be residentially oriented."
Greeley˜s office vacancy rates are approximately 8.3 percent now, while its retail vacancies are at 4.1 percent. Industrial square footage in Greeley is more than 96 percent full.
Dan Stroh, broker at Stroh & Company Realty & Auctions Inc. of Loveland, said that city˜s commercial market also is fairly steady.
"Fort Collins has more aggressive developers, and Loveland has always been a little more conservative," he said, noting that Loveland has less speculative construction and more build-to-suits and construction for owner-occupants than Fort Collins.
"Our office vacancy rates remain a little more constant — around 5 percent," Stroh added.
He expects this year will continue to see a steady, strong commercial market in the Loveland area.
Retail development in the city will center around projects at U.S. Highway 34 and Interstate 25 near the Rocky Mountain Factory Stores and the new Target that will be built nearby.
Retail and industrial vacancy rates in Loveland now are in the 3 percent to 4 percent range.

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