Louisville?s CTC ?active? despite downturn

LOUISVILLE — Parts of the Colorado Tech Center look at bit like a ghost town — fading for-lease signs stand out front of massive industrial office, research and development, and warehouse buildings that are waiting for tenants. But with vacancy rates hovering around 21 percent, brokers say leasing in the Louisville industrial park is more active than in most parts of Boulder County.

?Looks are deceiving. That park actually has a lot of activity,? said Frank Kelley, who co-manages CB Richard Ellis’ north office and is subleasing 78,000 square feet at 321 S. Taylor Ave. ?That kind of space is not as mired in the current recession as the multi-story office space along the U.S. 36 Corridor.?

Most commercial brokers consider a 7 percent vacancy rate to be equilibrium in the flex-space market. In Northern Colorado, the rate is currently closer to 12 percent. ?Which is not bad,? Kelley said. ?There is price competition at 12 percent, but not a lot of subleases are available.?

CTC’s vacancy rate is comparatively high because several large speculative projects begun before the downturn hit are just now being completed. In mid-December, Freeman Property Advisors Inc. estimated about 400,000 square feet was vacant out of 1.9 million square feet of industrial office, R&D and warehouse space in CTC, and buildings were still under construction. Walls were just going up on a 105,000-square-foot building for The O’Connor Group that is 70 percent leased by Thermo BioStar, and Chrisman Construction was just putting the finishing touches on two buildings on CTC Boulevard.

?Everybody started these projects before the downturn,? said David Jensen, Chrisman’s chief operating officer. ?Everybody was aware the economy was slowing, but sometimes you have to take that initial step and go for it. I’d be surprised to see someone breaking ground out there in the next three or four months.?

Jensen says inquiries have been brisk on the more industrial single-story property, which now is about 50 percent leased. The building next door is about 30 percent leased. ?The two-story is a little slower, because it’s more of an office-type building.?

Chrisman also is bidding on an owner-occupied building, Jensen said.

Trevor O’Connor, a second-generation CTC booster and director of marketing for The O’Connor Group, said he doesn’t expect to build on the 14 acres his company owns any time soon. ?Unless we go out there and find a build-to-suit client, we won’t be adding any inventory to the park,? he said. ?I think most people would like to see some absorption of the existing square footage.?

Colorado Group broker Audrey Berne is quick to point out that CTC is reflective of national industrial-park trends. ?If it were only CTC that would be one thing, but this is a national and regional thing that’s going on. It has nothing to do with the park,? said Berne, whose listings include 31,000 square feet of new construction at 397 S. Taylor, where moving allowances and three months of free rent are being dangled before prospects.

?I’ve had five or 10 showings in the past month and a (request-for-proposals) for 6.7 acres of land I have listed,? Berne said. ?Everyone’s fishing, because the market is down. But the activity at CTC is at or above most of the business parks in Boulder County.?

O’Connor concurs. ?Things are already starting to pick back up. We’ve seen a lot more activity in the last 30 days. I know of at least seven solid companies that are looking for space in the 10,000- to 100,000-square-foot range.?

Lease rates at CTC range from $10 to $15 per square foot, depending on the quality of the space.Northwest ParkwayFive years ago, Berne called CTC the sleeper among Boulder County industrial parks. Clients needed some serious convincing before they would even consider a look at the Louisville park, she said. ?Now it’s been discovered, but maybe only 40 percent,? she said. ?Here’s what’s gonna kick it: The Northwest Parkway. In less than two years, this park will be less than 24 miles to the international airport.?

The Northwest Parkway, the local link in the 470 beltway, should be done in December 2003. Its completion will take care of two of CTC’s weak spots ? access and visibility.

CB Richard Ellis’ Kelley said beyond the location, location, location mantra is the access, visibility and retail amenities axiom. CTC competes with the Lafayette Corporate Campus, which has good visibility and good access on U.S. Highway 287, and with the Church Ranch Business Center, which has good visibility, is on U.S. Highway 36 and has quick access to retail amenities.

CTC has reasonably good highway access now that 96th Street to U.S. 36 has been improved, but the entrance to the Northwest Parkway will be less than a mile from either entrance to CTC and will give tenants a straight shot to Denver International Airport. ?To me, it will do for CTC what Pena Boulevard did to make DIA accessible to everything. I don’t think we’ve seen anything yet,? Berne said.

The increased traffic on the new road will boost the visibility for CTC. ?The turnpike is still the address, and the visibility there is probably going to outweigh the Northwest Parkway for 10 years,? Kelley said. ?But the Colorado Tech Center definitely benefits.?

This leaves only the issue of the retail amenities to be resolved, which Berne said is merely a perception problem. ?There are amenities in Interlocken, but on a practical basis, they’re not physically closer to the end user than they are at CTC. You still have to get in your car and drive 10 minutes for lunch,? Berne said.

CTC does have some retail zoning, but Berne said restaurant and convenience-goods businesses are tough to encourage within the business park’s walls because operators worry they won’t have enough customers. ?Those kinds of uses like to bulk together where they have high volumes of traffic,? she said.

Retail is more likely to sprout up across Dillon Road, in Broomfield, where Etkin Johnson is listing a mixed-use development. Etkin Johnson officials were unavailable for comment, but other brokers said they don’t expect the Broomfield project to get under way for three to five years.

O’Connor says the new road also will open access to labor pools in Thornton and Northglenn. ?The Northwest Parkway is going to be a huge benefit to everyone there,? O’Connor said. ?I was meeting with a client out there last week, and that was a major part of the discussion ? when it is going to be completed and where it is going to go exactly. Any time you’ve got a direct shot to a major airport like Denver International Airport, it’s a benefit to most tenants.?Chunks of landThough commercial interest rates are at a low, land speculation at CTC has slowed considerably from last year. ?Last year, there was a feeding frenzy of land sales. From October of 1999 through 2000 I was closing on a piece of land almost every month in CTC,? Berne said. ?You just don’t see land speculation when there’s an excess of supply. But as soon as those absorption numbers start to go up, land buying will resume.?

Today, improved land is listed at $3.50 to $5 per square foot. ?December 2003, that’s when everybody will have finally woken up,? Berne said. ?Land adjacent to a thoroughfare shouldn’t be selling for $3.50 a foot. I think it will be $5 by the time the Northwest Parkway opens.?Polishing the imageWhile buildings in the original CTC filing, near the corner of 96th Street and Dillon Road, are beginning to show their age, the City of Louisville has enacted architectural controls that have improved the look of buildings in the north and central parts of the park. ?The way I look at it, you can build a nice facility out there and with the requirements set by the city of Louisville, you can draw image-conscious clients. But the rate you’re going to put in front of any CFO for a building basically across the street from Interlocken could save them millions over the term of a lengthly lease. They’re gonna look real hard at it,? O’Connor said. ?The CTC is one of the least-expensive alternatives for doing business on the Boulder-Denver Corridor.?

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