More than beer brewing in Northern Colorado

We love our beer in Northern Colorado, but it is not the only thing brewing right now.

It is hard to drive around Northern Colorado without seeing the effects of what many are calling a real estate “boom.” The real estate downturn of 2008-‘11 seems a distant memory as the development activity in our market has taken off at a frantic pace. One may wonder, why all the sudden activity? Here are five reasons…to name a few:

Low interest rates are offsetting high construction costs to make new development feasible. Interest rates for real estate loans are at historically low levels, with debt for some property types still below 4 percent. These low rates are playing a major role in the feasibility of new projects, and helping to counter relatively high construction costs and still-recovering lease rates.

Pent-up demand. Our local economy is healthy, and people and businesses are increasingly looking to locate here. The Larimer County unemployment rate is hovering around 3.5 percnet, compared with the Colorado rate of 4.2 percent. Larimer County has added more than 6,200 new residents in the 12-month period leading up to July 2014. In 2011 and 2012 combined, there were only 24 new construction permits pulled in the city of Fort Collins, for a total associated value of less than $50 million. In 2014 alone, there were 31 permits pulled for a total associated value of $250 million. Strong demand, driven by employment and population growth, paired with an already limited supply of existing product have contributed to the boom in new development we are seeing today.

Public projects are serving as a catalyst for private projects. Private investment is following in the path of recently made public improvements. The Mason Street Corridor has spurred multi-family development such as Max Flats, Mason Street Flats and Old Town Flats. These projects represent 209 high-end apartments that would not have been developed if not for the Mason Street Corridor, which provides convenient transportation to many nearby amenities. In addition to the corridor, public projects such as the renovation of Old Town Square, plans to add additional parking to the downtown area, and numerous Downtown Development Authority-funded improvements have played a major role in attracting private projects such as Galvanize on Linden Street, a new Fort Collins downtown hotel to be developed in a joint venture by Bohemian Cos., McWhinney and Sage Hospitality, and Encompass Technologies’ new headquarters.

Public/private partnerships are serving as another catalyst. Urban-renewal authorities, the DDA and Public Improvement Districts have undeniably been a phenomenal catalyst for new development. The redevelopment of Foothills Mall has been the most widely publicized and has sparked renewed interest in the mid-town Fort Collins Corridor. The Square, a Midtown shopping center adjacent to the mall, has been revitalized with the additions of Trader Joe’s and Sierra Trading Post, and Palmer Properties’ recent acquisition and plans to renovate the office buildings at 2900, 3000, and 3030 S. College Ave. are great  examples of renewed interest in properties surrounding public/private partnerships. Other great examples of recent public-private partnerships are the Woodward Governor campus development and the new King Soopers center on North College Avenue. Woodward has played a major role in bringing plans for a downtown hotel to life. The 162-room hotel at 354 Walnut St. is slated to open in early 2017.

Colorado State University is investing.  A massive wave of new projects by CSU continues to positively impact Northern Colorado. The new football stadium is a $220 million project. Additionally, CSU recently secured $171 million in bond financing for projects that will include a 152,000-square-foot biology building on West Pitkin Street and East Drive, a 105,000-square-foot medical center at the corner of Prospect and College, and an 85,000-square-foot buildout of academic space at the new stadium. CSU’s push to increase student enrollment has been the driving factor behind our recent surge in student housing inventory, with approximately 2,100 more student housing beds already scheduled to hit the market over the next few years.

There is no question as to whether there is a real estate boom taking place. However, in stark contrast to the unbridled speculative development widely seen in 2006-‘07, this boom seems to be deeply rooted in good employment fundamentals, the public and private sector working in concert with one another, and large-scale capital infusion by large institutions.

So maybe the thing to do now is grab a brew and celebrate what is now a vibrant and robust real estate market in Northern Colorado. 

Greg Roeder is a broker with Brinkman Partners. Contact him at greg.roeder@brinkmanpartners.com or 970-213-2095.

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