Fort Collins interchange sees real estate activity

The interchange at Interstate 25 and Colorado Highway 14 has proven to be a relative hotbed of real estate activity in recent months, with some of the largest building sales in the region during the past year.

Two new traffic lights on Highway 14 just east of I-25 are harbingers of increasing activity at Interchange Business Park. Otter Products LLC, the makers of the OtterBox mobile device cases, closed Dec. 30 on the former Thunder Mountain Custom Cycles facility for $3.2 million. The company started looking at the 34,000-square-foot facility more than a year ago, with original plans to consolidate the entire company to the site.

“When we looked at buildings, this was by far the best-built building,´ said Otter President and CEO Curt Richardson. He added that the ability to triple the size of the facility onto the additional two acres was also a big plus.

The purchase was delayed after the bank Otter was working with was acquired. Richardson noted the delay was a blessing in disguise. The new facility is already packed, serving as only a warehouse/shipping-receiving center. The site would have been much too small for the 130-employee company. Richardson knew going into the latter part of the year that Otter would need another site.

The company closed on a building on Meldrum Street and will break ground on a major renovation in April. Richardson said he knew the I-25 site wouldn’t be able to house the rapidly growing company in its entirety.

“We didn’t think we’d fill it up in three months,” Richardson said of the new facility.

Otter has the opportunity to expand at its new warehouse facility. Richardson said the company will wait to get its systems relating to inventory in place before deciding when to move forward with an expansion. Some inventory will eventually be kept in Europe and Asia, where Otter is focused on increasing its market share.

Otter might soon have a new neighbor. Envirotest Systems Corp. is nearing the purchase of a lot in Interchange Business Park. The company operates 14 Air Care Colorado emissions testing centers from Longmont to Castle Rock under contract to the state. Envirotest officials were unable to comment on detailed plans, as negotiations were not yet finalized.

Among top 10 deals

The Otter purchase ranks among the top 10 commercial deals in Larimer County for 2009, according to the county’s property purchase records. The No. 1 deal of the year occurred on a facility adjacent to the Interchange Business Park.

In August, Broe Real Estate Group purchased an industrial building at 3620 Weicker Drive for $8.9 million. The property is just west of I-25 and north of Highway 14.

“The No. 1 thing that was attractive is that the building is on our railroads,´ said Rich Montgomery, vice president of industrial development for Broe. “The building is set up to have rail service.”

Montgomery explained that the facility was not on the market, but Broe approached the owner about selling. In addition to being located on the railroad, the facility is being leased by several companies that tie in with Broe’s other operations. Montgomery said the company had already been developing a relationship with New Belgium Brewery Co., which uses part of the building as a warehouse and refrigerated storage. Broe and New Belgium have been discussing how the brewery could integrate rail shipping to further enhance its commitment to sustainability.

“We’re working to grow them into a rail user,” Montgomery said.

Other tenants include Saint-Gobain, which stores beer bottles for the Fort Collins Anheuser-Busch facility, and Hydra Trucking Inc., which transports bottles for Anheuser. The brewery is also a big customer of bottle maker Owens-Illinois, which is located in Broe’s Great Western Industrial Park development in Windsor.

Montgomery said the facility represents an opportunity to find synergies that tie in with the rail line. He added that while there is no expansion possibility for the property, there are many surrounding parcels that could become future targets. For now, however, much of the property in the surrounding area is not developable due to a federally defined floodplain. In 2006, the Federal Emergency Management Agency greatly extended the boundaries of the Boxelder Creek Watershed’s floodplain area, which now encompasses 5,000 acres south of Larimer County Road 70.

Floodplain mitigation

In May 2008, Larimer County received a $3 million grant from FEMA to mitigate the floodplain. The Boxelder Stormwater Authority was formed to implement three water projects aimed at taking much of the property out of the floodplain. The first project will cost about $4 million and be funded with the grant, local matching funds and fees charged to the property owners in the floodplain. The total cost for all three projects is estimated at $10.5 million and will likely require the sale of bonds to complete.

“The purpose (of the projects) will be to reduce the flow at the intersection of I-25 and Highway 14, particularly on the west side,´ said Rex Burns, director of the Boxelder Stormwater Authority.

He pointed out that the projects are aimed at mitigating potential damage to existing facilities, which are required to carry costly flood insurance due to their inclusion in the floodplain area.

There is no set timeline for the projects yet. Burns said there will probably be a mid-year reassessment of costs and that the engineering phase is underway.

Jim Mokler and Dennis Sinnett, who own the Interchange Business Park, also purchased 47 acres on the northeast quadrant of the interchange. The property is in the floodplain, but Mokler and Sinnett aren’t unaccustomed to a long development timeline. The duo originally assembled the properties for the Interchange Business Park in 1999 and still have a couple of vacant lots available. The development has seen some marked success recently, not only with the Otter Products and Envirotest facilities. It is also home to Abound Solar’s research operations.

Mokler is hopeful that the timeline for finalizing the Boxelder projects will correspond with the recovery of the commercial real estate market. He envisions the development as a perfect location for membership retailer Costco, which was rumored to have been staking out a Northern Colorado location before the downturn. However, Mokler said the market will dictate what happens with the property.

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