‘Location, location’ key to land price hikes

The old real estate mantra of “location, location, location” describes the factor that will decide just how high land prices will continue to climb in Northern Colorado.

In Fort Collins, commercial land prices are already bumping the ceiling for new construction, especially along the hot Harmony corridor.

“It’s $4 to $5 a foot for a fully finished site,´ said Peter Kast, a broker associate for Realtec Commercial Real Estate Services Inc. in Fort Collins. “For retail pads, it’s somewhere around $12 to $15 a foot.”

Lease rates are even higher, from $18 to $22 per square foot for residential and $20 to $22 square feet for office space.

“It’s hard to do a new building and not be in these kinds of numbers,” Kast said.

Ronn Frank, a commercial broker with The Group in Fort Collins, said the land that will probably be most in demand in the years to come will be an extension of the Harmony corridor over Interstate 25.

“I think you’ll see the most development out here,´ said Frank, running his finger east over a map through Timnath, Severance and stopping at Eaton.

The real trick, however is what land can be developed along this corridor. “Some of the vacant land out there is simply not for sale or it has development problems,” Frank said.

The biggest development hurdle to most of it is water. Fort Collins is an exception in Northern Colorado in that it allows payment in lieu of water rights before supplying water and wastewater utilities. Weld County communities want water rights.

“The cost of irrigated water converted for domestic use is sky-high because it needs to be treated,” Frank said.

Because of such factors, Frank sees Timnath and an area south of Harmony Road but north of Windsor as the spots that will first be developed. The north Windsor property, which already has sewer services from Windsor, should run around $12,000 an acre. Residential property in southeast Fort Collins Frank has pegged between $25,000 and $35,000 an acre.

The other main spot for available land will be in the northeast quadrant of Fort Collins, especially near I-25. Prices in that area should be around $15,000 an acre, Frank said.

“That’s what Poudre R-1 paid for a new high school they want to build out there 10 or 20 years down the road,” he said. “That’s the highest price paid for land in that area ,and that’s sort of set the price out there. I’m sure farms will sell between $12,000 and $15,000 an acre.”

Residential land prices in southwest and south Fort Collins have taken some serious jumps in the last couple of years, rising from $9,000 to $10,000 an acre to $20,000 an acre this year.

“Multifamily land that was going for $1.50 a square foot out there in south Fort Collins is now around $3.50 a square foot, if you can find it,” Frank said.

In Greeley, Mark Bradley of Realtec’s Greeley office says land prices will probably see a small increase in 2000 over their present rates of $4 to $6 per square foot for retail and $1 to $2 a square foot for industrial. Much of that goes back to Greeley’s requirement that water rights accompany property. Most of the activity in Greeley should continue to be on the west side of town, particularly around the Promontory development bounded by U.S. Highway 34 Bypass, U.S. 34 Business and Colorado Highway 257.

Ron Kohl, broker with Re/Max Optimum Group in Greeley, said land costs for residential property range between $6,000 and $15,000 an acre, depending on amenities, infrastructure and most importantly, water.

“We have plenty of water,” Kohl said “The price simply keeps rising fast.” Cole estimated that land would appreciate between 5 percent and 6 percent over 2000.

In Loveland, commercial sites exist, but they are “spread all over the place,´ said Larry Melton, a broker with Realtec. Depending on location, the parcels range from $1.50 to $3.55 a square foot, with $2.50 the median cost. Retail land prices range between $7 a square foot for lesser-known sites up to $15 a square foot for pad sites in a shopping center. Office space is going for between $4 and $8 a square foot, again depending on location.

The paucity of commercial sites in Loveland will probably mean rising prices through the year as well. “It sure isn’t softening,” Melton said.

Barry Floyd, also of Realtec, said that residential land is under a similar squeeze because the city’s urban growth area has been drawn so tightly. Residential land averages between $10,000 and $20,000 an acre.

“More than that if it’s near a golf course or a lake,” Floyd said.

Floyd foresees land appreciating because the urban growth boundary has limited supply and because it has gotten more and more difficult to move through Loveland’s planning process. “I don’t see double-digit appreciation,” Floyd said, “but I see it somewhere between 2.5 and 4 percent this year.”

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