I-25 is center of commercial real estate action
Interstate 25 isn’t just Main Street anymore. When it comes to big commercial real estate deals in Northern Colorado, it is the center of the universe.
Some of the region’s largest commercial deals in the last 12 months — in terms of both dollars and significance — have taken place along the corridor.
This summer, for example, Martin Lind and his Raindance Aquatic Investment Group closed on a record-setting land deal. Lind and company paid approximately $6.4 million for 60 acres east of I-25 and just south of the new Larimer County Fairgrounds.
Loveland Realtor Dan Stroh said he figures, at $2.50 per square foot, the purchase probably represents the highest price ever for a piece of raw land in Northern Colorado. He said the ground, located adjacent to the Budweiser Events Center, “is a very strategic piece of property.”
Lind has said the land would be ideal for a large hotel-conference center. That brings to three the number of recent pitches for such a facility in the region.
Hospital deal one of biggest
In late 2002, McWhinney Enterprises announced that Poudre Valley Health System would purchase land in the Centerra development at U.S. Highway 34 and I-25 for construction of a new regional hospital. The hospital system closed on the $15.5 million purchase in June.
The approximately 106 acres the hospital purchased should show signs of work on a new medical campus beginning in 2004.
The latter deal is significant not just for its size or dollar terms, noted Cole Herk, broker association/partner with The Group Inc. Real Estate.
The controversy that greeted the announcement of a second, competing hospital in Loveland and the hospital’s location near the Fort Collins-Loveland Airport added significance, Herk said.
Both recent land deals hold major significance for the region in terms of their potential economic-development benefits, Stroh said.
With the hospital, hotel-convention center proposals, employment centers, retail elements and the new fairgrounds all percolating along the corridor, Stroh predicted: “We will become an event-convention center of mid-America, not just Northern Colorado.”
In the same neighborhood, McWhinney Enterprises purchased 92 acres from Cloverleaf Kennel Club, closing on the $4 million deal in June.
Other big deals in the last 12 months include:
n Healy Investment Co.’s $1.667 million purchase of 12 lots at CentrePoint Business Airpark in Loveland.
Slow start to year
Meanwhile, it has been a year that area commercial real estate professionals characterize as having started slowly.
Looking back, Rhys Christensen, a broker with Realtec Commercial Real Estate Services Inc. in Fort Collins, said that between the war in Iraq and the slumping economy, the year “started off bad.”
But it is drawing to a close on a “so-far-so-good note,” Christensen said.
The office sector has probably been the slowest to recover, while retail is doing fairly well and industrial real estate, too, is healing.
Until recently, Christensen said, mortgage and finance, title and appraisal businesses were hot. “They’ve had a record couple of years so they were taking more space and growing,” he said.
That growth slowed dramatically in September when interest rates popped up, Christensen said.
From “gloom and doom” 12 months ago, the commercial real estate market has been stronger than anticipated, Herk noted. “We’ve had positive momentum,” he said.
Like Christensen and others, Herk said office has been the weakest part of the market thanks to the glut of space caused in part by the exodus of high-tech firms.
“Retail has been fairly consistent. It’s dipped a little but not much. The same goes for industrial,” Herk said. “The industrial market has continued to be fairly strong for us.”
One emerging trend could be a shift from sales to leasing, Herk said, particularly if interest rates continue to creep upward. “A lot of the people who were looking to get out and buy have done so,” he said. “I think we’ll see a little bit of a switch back to leasing.”
That speaks to one of the challenges that Linda Perry of Re/Max First Commercial sees in the commercial real estate market right now, which is “getting enough inventory to service buyers’ needs.”
People are “buying and holding because when you look at what they paid interest-rate-wise, they can hold for quite a while in a flat economy,” she said. “There’s no incentive to sell.”
Buyers are particularly in search of leased retail properties and land, Perry said. “The two heavy hitters right now are investment properties — anything income-producing —and land.”
Perry said Colorado’s land prices remain attractive compared with East and West Coast prices.
Land positioning
In the face of a fairly slow commercial market, Stephen Greenlee of Stanford Real Estate, Fort Collins, said he’s turned to speculative land deals as a means of positioning for the next development cycle.
For example, he said, “We do a lot of stuff around Johnstown, where we buy it, entitle it, annex it and then sell it to a developer.”
The move comes by default, Greenlee said. “You can always build offices and retail space when tenants are expanding and new people are coming to town. When the market slows, then you can at least try to go out and control some good sites.”
Greenlee, too, said buyers are in search of viable investment properties. Demand exceeds supply for properties such as small office buildings with two or three tenants or leased retail space. “Those are desirable commercial properties to own and they’re very, very hard to find,” he said.
Interstate 25 isn’t just Main Street anymore. When it comes to big commercial real estate deals in Northern Colorado, it is the center of the universe.
Some of the region’s largest commercial deals in the last 12 months — in terms of both dollars and significance — have taken place along the corridor.
This summer, for example, Martin Lind and his Raindance Aquatic Investment Group closed on a record-setting land deal. Lind and company paid approximately $6.4 million for 60 acres east of I-25 and just south of the new Larimer County Fairgrounds.
Loveland Realtor Dan Stroh said he figures, at $2.50…
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