Downtown office owners stand their ground

GREELEY – Four years ago when ConAgra Beef Co., now Swift & Co., decided to move its offices out of downtown Greeley to the Promontory Business Park, Drew and Ty Notestine realized their roles as downtown landlords would be drastically altered.

In the short term, the Notestine brothers, who operate the Bank One Building where ConAgra had its administrative offices, had to swing into action to find replacement tenants – ConAgra represented nearly 20 percent of its space.

Over the long term, the Notestines knew they faced the prospect that west Greeley – especially the sparkling new Promontory project – would be a serious ongoing rival for business.

Occupancy at the seven-story Bank One Building, which has since been reflagged as the Chase Building, is back up to a stout 95 percent.

Still, Drew Notestine and other downtown Greeley landlords cast a wary eye to the west.

“We fight that every day,” he said of the appeal of west Greeley.

Some landlords aren’t fighting the fight nearly as well.

The downtown office market in Greeley, which covers about 650,000 square feet of private leaseable space, is about 10 percent vacant, according to Realtec Commercial Real Estate Services. That’s not a troubling level, but enough to call the market “soft,” according to Bob Tointon, a longtime downtown landlord and chairman of the Greeley Downtown Development Authority.

“That’s just generally the case,” Tointon said.

Tointon knows from personal experience. The owner of the restored Kress Building, 813 8th Ave., Tointon’s tried to lease the 7,700-square-foot office space above the Magnus restaurant for a year.

Other buildings with high-profile office space are sharing that empty feeling. For instance, there’s an 8,800-square-foot vacancy in the restored Shaw Dry Goods Building, 800 8th St., and an empty basement in the Jerome Building, also on 8th Avenue.

Signs of resurgence are scant, but there are signs nonetheless.

Mark Bradley, a broker for Realtec Commercial Real Estate, who also keeps an office downtown, said the downtown office market has been stable for “about a year.”

The market might have bottomed out a year ago, punctuated when accounting firm Anderson & Whitney relocated to West 11th Avenue.

Bradley attributed part of the Jerome Building’s struggles to “absentee landlord issues.”  Buildings around the 8th Street Plaza, between 8th and 9th avenues, are waiting to capitalize on the new look of the plaza.

“I think we knew that would be a little bit of an uphill battle,” he said of the plaza area.

Bradley thinks a push for retail and restaurant business might create the impetus that’s needed for the broader commercial market. Rental concessions for a “regional draw” restaurant – Bradley suggested P.F. Chang’s China Bistro as a possibility – might be required.

“If someone like P.F. Chang’s changes could be enticed to come downtown, the effect they would have on the overall market would be good … And Greeley’s in a good position. The city and the economic development group are willing to cooperate on things like that. Some of buildings’ owners recognize that as well.”

Positive signs are emerging with the opening of the new Ice Haus center, a public ice arena on 8th Avenue that’s drawn recreationalists into the city center.

Restaurateurs have remarked about the spinoff effect of a youth hockey tournament at the Ice Haus in late October, Tointon said. Late afternoon and early evening business has also picked up during the busier skating periods at the Ice Haus, he said.

Such activity, Bradley believes, is one step toward delivering the mix of entertainment and services that also draw office users. It’s a gradual process, he said.

“What turned Fort Collins around?” Bradley said rhetorically. “Can you say it was X or Y? I think what turned Fort Collins around from an office-market standpoint was the entertainment, the restaurants, and also the fact that other services were offered there.”

Drew Notestine concurred.

“The DDA is working on attracting destination business,” he said. “I think that’s what it’s going to take – new businesses that people are going to come to, not because it’s downtown, but because they want to come to that business.”

At the same time that west Greeley is gaining in popularity, there is a paradox that could work in downtown’s favor, Notestine believes.

“With the cost of new construction (on the west side), they probably can’t sustain the (lease) rates we can sustain here,” he said. “They can’t compete on price per square foot.”

Office rates across Greeley range from a low of $8 per square foot gross to $20 per square foot triple net – a lease in which the tenant also pays taxes, insurance and maintenance costs. At the Chase building, which commands some of the highest rents in the downtown district, rents top out at $12 per square foot triple net.

Such a spread between prices downtown and new buildings on the west side could begin to win over price-sensitive lease shoppers, Notestine contends.

Downtown Greeley also enjoys the fruits of government activity. The Weld County Courthouse and city of Greeley administration buildings make downtown the prime location for attorneys and other professionals who interact with government agencies.

“Downtown Greeley still has a perception with some people that they don’t want to be here,” Notestine said. “Those who are here, based on our retention, I think really like it.”

on Facebook on LinkedIn