New construction moves at moderate pace

BROOMFIELD – Cautious optimism is the watchword in all corners of Broomfield as construction continues as a moderate pace on several new projects and developers anxiously wait for signs of economic improvement. But as soon as the capital comes back, developers are eager to pull the trigger on buildings, malls and other commercial developments poised to go vertical.

Among the larger projects already in motion are a 123-suite hotel and a 297,000-square-foot Class A office building that is leading a handful of projects planned for the Interlocken area. Nearby, Arista continues to evolve from a development into a neighborhood as residential buildings fill up.

“The commercial market is clearly struggling, but it’s showing signs of life,´ said Assistant City and County Manager Kevin Standbridge. “We’re encouraged by the projects that are under way now and the ones on which we know various people are already working.”

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Arista’s progress includes the recent opening of the Aloft Hotel at Arista, a 140-room, 5,658 square-foot boutique hotel managed by the Starwood Group. Upcoming additions will include Kevin Taylor, a high-end steak house that will open in May 2010 and a 1,000-seat, eight-screen movie tavern scheduled for completion early next year.

A bank, pizza parlor, coffee shop and hair salon are already open or opening soon, which represent a moderate win for Arista’s retail equation. While the current office space at Arista, which totals about 120,000 square feet, is 95 percent leased, its retail component has been sluggish.

“It’s fair to say that the retail is not as far along as we would like,´ said Edward Barsocchi of Barsocchi and Company. “We would love to see it teeming with tenants and shoppers but it’s going to take a little longer in this economy.”

The development is also hoping to see improvement in traffic from a pending change in management at the Broomfield Events Center, which anchors Arista. In August, the city hired Peak Entertainment LLC to run the sports and entertainment facility. Peak is a partnership between Kroenke Sports Enterprises and Anschutz Entertainment Group.

“I think it’s a very positive move,´ said local developer Garrett Baum, who recently became a partner in Arista. “The entertainment industry has evolved and a lot of it is controlled by a handful of companies that also produce the shows. By teaming up with these two groups, you assure the booking so that you’ll see more days and evenings of entertainment, sports and shows that will only benefit Arista.”

The city also expects positive results from some decisive and significant infrastructure projects scheduled to come online in the next two years. They include a new connection for 120th Avenue across U.S. 36 and an RTD Transit Stop that is currently being constructed at Arista. The city is also testing the feasibility of a publicly-financed toll road, the Jefferson Parkway, to connect the Northwest Parkway to Highway 93.

Elsewhere, retail has been impacted at Flatirons Crossing as the mall continues working to transform its outdoor village area into a more efficient configuration. Parts of the mall are showing some signs of life as the Container Store and Forever 21 recently filled up two of three floors available in the space formerly occupied by Lord and Taylor.

However, plans to relocate the Village Tavern and Bloom restaurants have been delayed until next year while some property near the restaurants has been transformed into a playground area while development plans are in limbo.

“There is a plan but it’s slowed because of the economy,” Standbridge said. “I think they’re trying to make it a pleasant place to be while we wait for the economy to come back.”

Construction is under way at the nearby Interlocken Advanced Technology Park, where the Central Park Tower at 385 Interlocken Crescent casts a longer shadow every day. The 297,000-square-foot, 11-story, Class LEED-certified office building is scheduled to open in July of 2010. Now all the building needs is tenants.

“It’s still under construction and the entire building is available,´ said Chris Phenecie of CB Richard Ellis, who is seeing some comforting stability in the office market but not the upsurge in activity most brokers would like to see. As of July 2009, the office vacancy rate in Broomfield was at 12.5 percent.

“Slow is the word,” Phenecie said. “A general lack of activity in the market is preventing a whole lot of news from happening but the glass-half-full side of the equation tells us that clients aren’t going out of business every day. Vacancy rates aren’t going up.”

Nearby the office park, a new Hyatt Summerfield Suites developed by Pittsburgh-based Oxford Development Co. is under construction at Parkway Circle. But other projects, such as a 192,000 square-foot building at 250 Interlocken and an 180,000 square-foot building at 575 Interlocken, are on hold.

“Financing is still a critical issue for any development right now and unfortunately, the money sources from a year ago have ground to a halt,´ said Don Dunshee of the Broomfield Economic Development Corp. “Until that capital comes back, developers are left waiting. “

Nevertheless, Baum is actively pursuing tenants for 575 Interlocken and intends to break ground as soon as the promise of tenants and construction funds is more secure.

 “I’m bullish on the Interlocken area,” he said. “The vacancy rate is significantly below the southwest and Denver markets. It is a smaller market but as we saw after the dot-com bust, a smaller market is typically better positioned to come back quicker.”

Broomfield East

For many of the regional and national developers interested in cracking the fertile Broomfield commercial market, all roads lead east as potential opportunities emerge adjacent to the Anthem residential areas and the planned ConocoPhillips campus in Louisville as well as in the sector’s promising business parks and retail centers.

“Broomfield has a great reputation as a visionary city,´ said Troy McWhinney, executive vice-president and co-founder of McWhinney Enterprises, which purchased 935 acres of the Anthem development from Pulte Homes in 2008. “We appreciated the way the city has done business in the past and we thought that growing south toward Denver was the logical move.”

McWhinney has rebranded the property, located at the nexus of I-25 and the Northwest Parkway, as North Park. The mixed-use project has been approved and tentatively allows for more than 17 million square feet of mixed-use space and approximately 6,000 residential units.

“We’ve designed the plans for North Park to accommodate multiple types of uses so that we can react to market changes very quickly,” McWhinney said. “We’re focusing a very large portion of the land on commercial uses and we feel we’ve picked an extremely well-located parcel of land for that purpose.”

Here, commercial development follows the old adage, “Retail follows rooftops.” Even in the middle of a dismal housing market, Anthem is still building – and selling – homes, as evidenced by the city’s most recent building reports.

“Anthem is continuing to pull residential permits at what we feel is a fairly vigorous rate, given the times,´ said Assistant City and County Manager Kevin Standbridge.

North across Highway 7, other large mixed-use developments are taking shape as plans for Palisade Park, a 1.5 billion-square-foot development on 154 acres, and Preble Creek, a 506-acre development with approval to build up to 5.8 million square feet of commercial and industrial space on 416 acres, begin to solidify.

Both properties are being developed by Urban Frontier LLC. The company hopes to start building infrastructure elements such as water and sewer facilities at Preble Creek within the next few months. Meanwhile, at Palisade Park, construction has been completed on the first of three buildings that will comprise the north campus of Children’s Hospital.

“Palisade Park has really surprised everyone,´ said Garrett Baum of Urban Frontier, LLC. “The progress that Children’s Hospital has made is amazing.  They have already occupied nearly 50,000 square feet and can build up to 250,000 square feet. We’re expecting them to break ground in the near future on their next phase.”

The developer has also secured the franchise from Marriot International Hotels for a 156-room Residence Inn and a 115-room Courtyard Hotel east of Children’s Hospital and recently celebrated the opening of a facility for Sun Drop Fuels Inc., a clean-energy company working on a futuristic method of using solar energy to produce fuel.

The clean energy sector, like the emerging market for data center space, has become a hot commodity for municipalities throughout the Boulder-Denver corridor. Just last year, another clean energy company, Renewable Energy Systems Americas Inc., moved its corporate headquarters to Broomfield and city officials would love to attract similar firms.

The energy sector is appealing in part because of the imminent construction of the new ConocoPhillips facilities in nearby Louisville. Demolition is already complete on the 432-acre site formerly occupied by StorageTek and the campus could open by 2013.

“After the initial announcement last year, a lot of energy companies started showing interest,´ said Dunshee of the Broomfield Economic Development Corp. “We’re seeing more of that activity and I’m sure that once ConocoPhillips’ plans become more defined and reach the public that we’ll see a spike in the types of businesses that want to be close to our local universities.”

Office space continues to be a hot commodity at sites like the 195,000-square-foot Broomfield Corporate Center, home to TIAA-CREF’s Information Technology Group, where less than 20,000 square feet of available space remains. However, one sector that may not see an increase in the near future is industrial space. The vacancy rate for industrial space in Broomfield recently jumped after two properties totaling nearly 140,000 square feet hit the market in July, bumping the total available to 485,248 square feet and increasing the rate to 9.91 percent.

“We’re in much better shape than the rest of the metro area except for that industrial segment and that has only changed recently,” Dunshee said. “There’s been a significant bump in those numbers but the brokers say there are still plenty of showings going on.”

The jewel in the city’s retail crown may be a new 196,000-square-foot Wal-Mart Super Center to be located on the north side of 120th Avenue between Sheridan and Lowell. The project was approved in 2007 to redevelop the former site of Barber’s Poultry Inc. Construction began on the Wal-Mart building in July, which will facilitate traffic improvements. Local officials also expect the store to draw a significant amount of customers to itself as well as nearby Broomfield Corners, a 16,009-square-foot retail center.

“That’s going to be a significant store for Wal-Mart because you’re right there on Highway 287, where 50,000 cars a day are coming through,” Dunshee said. “It will be a great boost to Broomfield and bring in a lot of new sales tax dollars in much the same way as the new King Soopers, a store that is doing very well.”