Real Estate: Investors, merchants enticed to buy retail condominiums

FORT COLLINS — Seizing upon high demand from both investors and retailers, owners of retail properties in Northern Colorado are finding a market for their space as retail condominiums.

At least three sites — two in Fort Collins and one in Windsor — have been converted to retail condominiums,

Best known among them is the Opera Galleria complex in downtown Fort Collins. Opera Galleria owner Ed Orr turned the project into both office and retail condominiums last year.

Reaction to the retail spaces on the ground floor has been “unbelievable,´ said Patty Spencer, a broker for Realtec Commercial Real Estate who is marketing the project.

Spencer said the condominium division at Opera Galleria has answered a need in a tight market.

“It seems like for the last two months there’s been nothing for sale downtown,” she said. “And if you look at the way interest rates are now, it makes a lot of sense for people in a stable business” to buy their own space.

“There’s a need,´ said Linda Perry, a broker with Re/Max First Commercial in Fort Collins who is working with the owner of a new retail condominium project. “People want to purchase versus lease.”

Retail condominiums also create an outlet for investors who want to put money into an income-generating property.

Perry said such units are prime for investors who want to execute 10-31 exchanges.

“It’s ideal for somebody having a little excess money who wants to leverage that in buying a triple-net lease property,” she said.

One property represented by Perry is the Covalt Park Central Condominiums, 1606 S. Lemay Ave., near the southeast corner of Lemay and Prospect Road.

The 14,300-square-foot building, formerly a video store, will be divided into six retail spaces by Scoco LLC, which is under contract to buy the property. Prices for the smaller units start at less than $300,000, Perry said.

Scoco’s managing partner, Scott Covalt, said retail condos are gaining popularity and should be more prevalent in Northern Colorado soon.

“I’m looking at doing two others — possibly another one here — in the next six months,” Covalt said.

Another condominium project on the market is the Showtime Video Plaza, 1290 Main St. in Windsor. Five units were put on the market last year, of which one is still available for sale, Perry said.

Real estate’s a beach

LOVELAND — In delivering his annual outlook for Northern Colorado’s residential real estate market on Feb. 2, The Group Inc. Chairman Larry Kendall also took a stab at characterizing the motivating forces for buyers.

One of Kendall’s takes is that buyers want more than a home — they want a vacation property.

Amenities like golf courses, lakes and parks are part of the leverage builders must apply when competing for residents, Kendall said.

He said the 1950s and ?60s were the era of subdivisions, followed by attempts at developing neighborhoods during the 1970s, ?80s and ?90s. Early in the new century, buyers want “resorts,” Kendall said.

He praised projects like Water Valley in Windsor and High Plains Village in Loveland for sensing the hunger of amenities. Water Valley’s developers, for instance, converted former gravel pits into recreational lakes with beaches, then added a golf course. High Plains Village built around a lake, including a trails system and environmental learning center.

“The number one amenity that people want is walking trails,” Kendall said. And they want those trails just outside their doors.

Another driving factor for homebuyers is style. Homeowners are keen on customization and design in their properties.

“The builders who have figured that out are doing well,” he said.

Builders who stick to popular floor plans from previous decades are building the equivalent of a “good leisure suit.”

Competition will be a watchword in the real estate industry this year, Kendall said. While housing demand remains healthy — 2004 stands to be the second-best homes sales year ever in Northern Colorado, according to Kendall — supply is growing.

Builders, sellers and real estate agents must “bring their ?A’ game,” Kendall said.

As for his predictions, Kendall expects total home sales in Northern Colorado of10,400 this year, just short of the 2002 record total of 10,462. All four sub-markets in the region, Fort Collins, Greeley-Evans, Loveland and Windsor will see gains over 2003, with Fort Collins and Greeley-Evans each registering about 3,900 sales.

Expect interest rates to rise by the end of the year, but not astronomically. Kendall referred to the chief economist for the National Association of Realtors, who said mortgage rates would hit 6.5 percent, or about one percentage point higher than current rates.

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