Commercial outlook promising for New Year

Ever since the dotcom bust two years ago, investors have been looking for a safe place to put their money. And commercial real estate is one investment option that has people lining up to get on board.

“Investment property is really hot right now,´ said Peter Kast, a broker associate for Realtec Commercial Real Estate Services Inc. in Fort Collins, which deals in commercial real estate. “They are buying everything in Northern Colorado they can get.”

Out of the major segments in the commercial real estate market — office, retail and industrial — the one doing the best is retail. Kast is quick and to the point about it. “Retail,” he said, “has the best vacancy rates.”

That retail is growing is beyond dispute. In the mid-1980s, Loveland residents were driving to Fort Collins to do their shopping. Twenty years later, the traffic flow is starting to go the other way.

Now, merchants in Fort Collins are seeing the Prime Outlets in Centerra at Interstate 25 and U.S. Highway 34 on Loveland’s east side as a real competitor. But it’s not just Centerra. Loveland also has a Home Depot and the Thompson Valley Town Center. “The north end of Loveland is seeing a resurgence in retail activity,´ said Bob McConnell, part owner of Colorado Commercial Real Estate Brokers Group in Loveland

McConnell said owners of smaller retail businesses increasingly desire their own space. That’s why McConnell and his partner, Rick Archibald, are building a 4,000-square-foot office building at 2521 Lincoln Ave. in Loveland, otherwise known as U.S. Highway 287. Their plan is to “condo-ize” it, or divide it into small offices. “There is an interest in people wanting all their own units,” he said.

Low interest rates help

Helping fuel that desire are the lowest interest rates in decades. “Oh, they are incredibly good right now,´ said Jerry Chilson, a broker with Realtec’s Greeley office . “I think the commercial interest rates are down around 6 or 7 percent.”

Commercial growth is particularly noticeable in Greeley, with major projects such as Center Place, a 273,610-square-foot retail project at 47th Street and U.S. Highway 34, anchored by Target and Safeway, and that will include an Outback Steakhouse and a Red Robin restaurant.

Bruce Willard of Austin and Austin, another commercial real estate broker in Greeley, agrees with Chilson that projects such as Center Place are helping to spur commercial development. “I think we may have had a lot of pent-up demand in Greeley,” he said.

Prime retail space is now pricing at $15 to $28 a square foot in Fort Collins. The spread is from $18 to $22 a square foot in Loveland and $16 to $22 in Greeley.

And new lifestyle malls planned for East Harmony Road in Fort Collins and Centerra in Loveland are both scheduled to break ground in 2004, adding to the region’s ever-growing retail space.

on Facebook on LinkedIn