Business parks’ rates become tenant-friendly

LOUISVILLE – As with most other commercial developments in Colorado, activity at Louisville’s two principal business parks – Centennial Valley Business Park and the Colorado Technology Center – isn’t exactly booming, driving lease rates in favor of potential tenants.

Brokers who work the two parks indicate rates at the Colorado Technology Center have dropped to a range of $9 to $11 per square foot for office space and $6.50 to $8.50 per square foot for warehouse space. Centennial Valley is around $13 to $14 per square foot for office space.

The Centennial Valley Business Park added a new building in the past year, augmenting its 1.3 million square feet of developed space. Last July, Koelbel and Company opened a 62,000-square-foot flex building at 282 Century Drive. It has already attracted its first tenant, Idol Minds, a video game developer soon to occupy 18,000 square feet in the new facility.

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“We built it for tenants just like Idol Minds, who want to control their environment 24 hours per day,´ said Jeffrey Sheets of Koelbel and Company. “That’s a huge plus for these types of nontraditional tech companies who don’t work from eight to five.”

The deal was negotiated by CB Richard Ellis, who signed another lease in the park in July for Clear Creek Consulting Services, a financial services company, to occupy 20,000 square feet at 285 Century. But broker Frank Kelley says larger deals are becoming the exception rather than the rule.

“The average size tenant in the northwest sub-market has traditionally been over 20,000 square feet in a stable market,” Kelley said. “We’ve seen that shrink considerably during this downturn.”

Looming on the horizon is the upcoming availability of 325,000 square feet at 335 Centennial Parkway. The building, owned by W.P. Carey, is currently occupied by Kable Fulfillment Services, which plans to vacate within a year. The closure will swell the 457,000 square feet currently available in the park and negatively impact a vacancy rate already north of 30 percent including direct lease and sublease space.

On the retail side, the area has benefited from the opening of several restaurants and outlets including The Shops at McCaslin, an 18,424-square-foot Koelbel-developed property that houses Starbuck’s, the Smiling Moose Deli, Solepepper Sports and Key Bank. Nearby, Udi’s Bakery opened its third location at 185 S. 104th St. in July.

Realtors like Kelley are confident that tenants will soon discover the park’s attractions.

“Businesses come to Centennial Valley because the buildings are newer,” Kelley said. “There’s the opportunity to grow that you don’t always find in Boulder, and the operating expenses are also among the lowest among the parks in the corridor. There’s a huge economic advantage to being here.”

Demand for smaller spaces is also prevalent in the 2.2 million square feet of the Colorado Technology Center, where broker Andrew Freeman estimates the vacancy rate at about 16 percent. His company, Freeman Myre, recently negotiated a lease with Vaisala, a local electronics manufacturer, for a 5,000-square-foot warehouse at 197 South 104th St.

“The demand for space ranging from 3,000 square feet to 10,000 feet has been very strong,” he said. “That’s where we’re seeing the most activity. I’m trying to get developers to build more of these types of buildings.”

New office buildings to come online at the Colorado Technology Center within the last year include the 130,000-square-foot facility at 1775 Cherry St. and a 64,368-square-foot office/flex/industrial space at 195 CTC Blvd., built by Denver-based Etkin Johnson Group. The park also is home for the Mariposa Building, a 27,000-square-foot LEED-certified flex building at 685 S. Arthur Ave.

The technology center, first developed in 1980, also benefits from a diversity of product that includes 40 percent industrial space as well as a variety of class A and B office space and some warehouse facilities. The city is encouraging tenants at both parks to better understand one another in other to facilitate joint marketing and other communal business efforts. Louisville is also encouraging any business interested in relocating here.

“One of the things that gives Louisville a leg up is that there are buildings built and waiting for tenants,´ said Bonnie Star, Louisville’s economic development director. “The city council is certainly interested in sharing back income that new businesses bring to us, so any companies that want to come to Louisville and expand are very welcome.”

ConocoPhillips Co. is in the midst of developing a master plan for its global technology and corporate learning center in Louisville that’s slated to open in 2013.

“Their intention is to submit a development proposal to the city in November,´ said Malcolm Fleming, Louisville’s city manager. “They’re making good progress on that.”

The Houston-based energy company (NYSE: COP) plans to use the 432-acre site, formerly the Sun Microsystems Inc./Storage Technology Corp. campus that it bought for $58.5 million in early 2008, as its primary training facility.

It wanted to open the site, at least in some capacity, by as early as late 2011 or early 2012. But because of economic concerns, it’s pushing the date to sometime in 2013. Yet the importance of the site has not diminished, the company said.

While Conoco isn’t releasing much information regarding the site, Tracy Harlow, a company spokeswoman, said everything is on track. She said demolition is slated to be completed near the end of August, which is about four months ahead of schedule, but still doesn’t have a timeframe for ground breaking, she said.

Late last year the company chose design firm HOK, based in St. Louis with an office in Denver, to help develop its master plan.

“Our time with them has been spent discussing the philosophy of the site, the functionality and how it will all work together,” Harlow said.

HOK, which also helped design Sun Microsystems’ 560,000-square foot campus in Broomfield in the early 2000s, is working on the site analysis, which includes looking at the topography and geology of the area.