An Introduction To Market Update 2009

Transcription

An Introduction to Market Update 2009
The brokers of Realtec are pleased to present to you, our customers,
clients and friends, the enclosed information and data relating to
commercial real estate activity in the communities of Fort Collins,
Loveland, Greeley and the Northern Colorado region. Integral to
the investigative process of researching and compiling this information is the collaborative effort involving our brokers and those
individuals and companies with whom we work on a daily basis in
the areas of appraisal, finance, development and construction. Their
cooperation in assisting us in this annual effort has proven invaluable.
Despite the close proximity of our respective communities, each of
the three major Northern Colorado cities has its own characteristics
and idiosyncrasies that make it unique. Market Update 2009 examines the ever-changing activity in the product categories of office,
retail, industrial, investment and land. As you may ascertain from
a review of this data, relative to a particular market segment, each
city has its own strengths and weaknesses.
In order to better serve the growing communities of Fort Collins,
Loveland, Greeley and the Denver Metro Area, Realtec Commercial Real Estate Services, Inc. has grown as well, from its original
start 20 years ago as a single person firm to a company with five
offices comprised of 33 brokers and a support staff of 12 skilled
professionals. As a company, we have endeavored to attract the best
and the brightest commercial real estate practitioners, always striving to improve our capabilities. The dynamic growth experienced
by our area has presented many challenges and opportunities. It is
our hope that this Market Update information will provide a better
understanding of Northern Colorado commercial real estate and
enable you to make informed business decisions.
Thank you for your relationship with Realtec, we appreciate your
business, and look forward to continued success in 2009 and beyond.
1
Why Realtec?
Client surveys consistently indicate the top two reasons why clients do business with Realtec are
“trust” and “results”. In order to achieve a successful outcome, a trusting relationship with a
broker is imperative. Commercial real estate is inherently complex, requiring competence, collaboration, and commitment from your broker. Realtec brokers have the training, experience,
and dedication needed to produce results.
Our National Network
Local Focus, National Reach
• Realtec represents owners and landlords whose commercial real estate interests are predominately along the Front Range and Southern Wyoming; however, our buyer/tenant relationships consist not
only of local clients, but include a vast array of national and international companies and franchises. Realtec’s national memberships, affiliations and designations provide direct contact with the top brokers, buyers, developers, and lenders in major metropolitan markets throughout the United States.
• In addition to the Certified Commercial Investment Member (CCIM) and Society of Industrial and Office Realtors (SIOR) designations, Realtec is affiliated with the National Association of
Industrial and Office Properties (NAIOP), the International Council of Shopping Centers (ICSC),
LoopNet, CCIMnet, and the Northern Colorado Commercial Association of Realtors (NCCAR). Realtec’s website enables buyers, sellers, tenants, and brokers to access our listings and inventory from
national and international locations.
2
Market Presence and Coverage
• Number 1 in sales and leasing volume for the past 13 years as reported by the Northern Colorado Business Report
• Thirty-three (33) brokers in five (5) offices serving Colorado’s Front Range: Fort Collins –
South, Fort Collins – Downtown, Denver, Greeley and Loveland
• Realtec’s commercial database is the most comprehensive in northern Colorado, categorizing
available properties as well as sold and leased transactions
Office
Office
2008 Top 10 Office Leases
Tenant
Address
City
SF
Class
Constant Contact
Precision Dr.
Loveland
50,000 B
Greeley Medical Clinic
2500 Rocky Mountain Ave.
Loveland
40,000 A
Enterprise Rent-A-Car
4800 Wheaton Dr.
Fort Collins
26,000 B
Riverside Technology
2950 E. Harmony Dr.
Fort Collins
11,300 A
University of N. Colo
Loveland
12,653 A
Big Thompson Med. Group
2701 Madison Square Dr.
Loveland
12,496 Medical
I.C.E./GSA
4645 W. 18th St.
Greeley
11,000 B
TMG Marketing
1020 28th Ave., 2nd Floor
Greeley
10,959 B
Stantec
2950 E. Harmony Rd.
Fort Collins
10,000 A
VA Outpatient Clinic
2509 Research Blvd.
Fort Collins
9,998 Medical
Fort Collins Office Lease Rates
Source: Realtec (annual, per sf, triple net, average per class)
Value
Class B
Class A
Medical
$25
$20
$15
$10
$8.50
$12.00
$16.00
$17.00
$8.50
$11.00
$16.00
$18.00
$8.00
$11.00
$21.00
$20.00
$9.00
$12.00
$20.00
$20.00
$9.00
$13.00
$20.00
$20.00
$5
2004
2005
2006
2007
2008
$-
Office Sales
Fort Collins
# of sales
Total SF
Average Size
Average Price/sf
4
Fort Collins Net Absorption
2007 vs.2008
53
357,138
6,738
$126.62
47
244,471
5,202
$150.66
Source: Realtec
250,000
225,609 sf
200,000
150,000
Greeley
# of sales
Total SF
Average Size
Average Price/sf
20
114,687
5,734
$77.80
17
211,685
12,452
$93.61
Loveland
# of sales
Total SF
Average Size
Average Price/sf
27
93,727
3,471
$176.82
12
59,917
4,993
$135.86
98,292 sf
100,000
67,751 sf
50,000
0
(50,000)
(29,775 sf)
2004
(28,316 sf)
2005
2006
2007
2008
2008 Top 10 Office Sales
Identification
Location
City
Chase Bank Bldg.
822 7th St.
Greeley
129,248
$9,950,000
$76.98
Comlinear Bldg.
4800 Wheaton Dr.
Fort Collins
50,000
$5,250,000
$105.00
OCR Bldg.
2923-2929 Ginala Dr.
Loveland
12,658
$3,700,000
$292.31
Paragon
3540 JFK Pkwy.
Fort Collins
18,058
$2,850,000
$157.82
Crossroads Plaza
4025 St. Cloud Dr.
Loveland
9,936
$2,444,256
$246.00
Price
$/SF
Office/Retail Bldg.
1611 S. College Ave.
Fort Collins
24,351
$2,300,000
$94.45
Office/Retail Bldg.
619-627 S. College Ave.
Fort Collins
16,894
$2,208,000
$130.70
State Land Board Bldg.
3842 S. Mason St.
Fort Collins
22,934
$2,200,000
$95.93
Keller Williams
3780 Garfield Ave.
Loveland
26,529
$2,080,000
$78.40
Office/Retail Bldg.
223 Linden St.
Fort Collins
8,500
$1,742,000
$204.94
Greeley Office Lease Rates
Loveland Office Lease Rates
Medical
$10
$5
$5
2005
2006
2007
2008
2004
$-
Medical
$8.00
$11.00
$20.00
$22.00
$10
Class A
$8.00
$12.00
$21.00
$23.00
$15
$7.50
$11.00
$14.25
$16.00
$15
$8.50
$12.00
$14.50
$16.50
$20
$8.00
$12.50
$16.00
$17.50
$20
$8.00
$13.50
$16.50
$17.00
$25
$7.50
$10.50
$14.00
$15.50
$25
Class B
$7.50
$12.00
$17.50
$22.00
Value
$7.50
$12.00
$16.00
$20.00
Class A
Class B
$7.50
$11.00
$16.00
$20.00
Value
$-
SF
2004
2005
2006
2007
2008
Greeley Net Absorption
Loveland Net Absorption
Source: Realtec
Source: Realtec
300,000
300,000
256,918 sf
277,647 sf
200,000
250,000
128,911 sf
100,000
200,000
67,886 sf
187,217 sf
167,247 sf
150,000
0
121,967 sf
(100,000)
(74,076 sf)
100,000
75,988 sf
50,000
(200,000)
(249,687 sf)
(300,000)
2004
2005
0
2006
2007
2008
2004
2005
2006
2007
2008
5
Office
2008 New Office Construction
Fort Collins
Project
Building/Park
Location
Multi-Tenant
Harmony Corporate Center
2950 E. Harmony Rd.
SF
70,000
Multi-Tenant
Harmony One
3003 E. Harmony Rd.
59,720
Multi-Tenant
Front Range Village
2720 Council Tree Ave., Bldg. A
30,527
Multi-Tenant
Front Range Village
2721 Council Tree Ave.
30,394
Multi-Tenant
Front Range Village
2720 Council Tree Ave., Bldg. B
19,152
Multi-Tenant
Fox Meadow Business Park
2105 Bighorn Rd.
14,885
Multi-Tenant
Villagio
2510 E. Harmony Rd.
14,000
Anderson Consulting
Shores Office Park
375 E. Horsetooth Rd., Bldg. 5
13,158
Bank of Choice
Bank of Choice Center
4532 Boardwalk Dr.
12,880
Keller Williams
Villagio
2580 E. Harmony Rd.
12,033
VA Outpatient Clinic
Centre for Adv Technology
2509 Research Blvd.
9,998
United Western Bank
Villagio
2420 E. Harmony Rd.
4,804
Project
Building/Park
Location
Multi-Tenant
Lundvall Building
2105 Clubhouse Dr.
Multi-Tenant Office
Pinnacle Park
5112 W. 20th St.
5,841
Multi-Tenant Office
Pinnacle Park
5100 W. 20th St.
4,761
Greeley
SF
24,000
Loveland
Project
Building/Park
Location
Rangeview 3
Centerra
SF
60,000
Western State Bank
Western State Bank
808 W. Eisenhower Blvd.
12,500
2534 Medical Campus
2534
4450 Union St.
13,288
Multi-Tenant
Foxtrail Office Park
1650 Foxtrail Dr.
13,000
Medical Multi-Tenant
2534
4795 Larimer
11,643
Medical Multi-Tenant
2534
4775 Larimer
11,643
Multi-Tenant
Crossroads Business Park
4120 Clydesdale Pkwy.
10,130
Multi-Tenant
Ridgeview at 2534
5255 Ronald Reagan Blvd.
10,000
Multi-Tenant
Ridgeview at 2534
5245 Ronald Reagan Blvd.
10,000
US Bank
2534
4949 Larimer Pkwy.
6,111
Addison Ave. Credit Union
VanDeWater
Hwy 34 & Mountain Lion Dr.
5,400
Building/Park
Location
Windsor
Project
Chase Bank
SF
16th Ave. & Main St.
4,334
2008 Office Under Construction
Fort Collins
Project
Building/Park
Location
PVH Office Bldg
PVH Lemay Campus
1107 S. Lemay Ave.
61,957
Mitchell Block
Downtown Fort Collins
262 E. Mountain Ave.
36,000
4645 Ziegler Rd.
10,942
Cache Bank and Trust
JP Morgan Chase Bank
6
Front Range Village
2820 E. Harmony Rd.
SF
4,195
Greeley
None Reported
Loveland
Project
Building/Park
Location
SF
North Medical Office Building
Centerra
Rocky Mountain Ave.
80,000
Constant Contact
Centerra
Precision Dr.
50,000
Orthopaedic Center of the Rockies
Boyd Lake Village
NEC Horstman & Hwy. 34
37,000
Sky Pond Office Bldg.
Centerra
Skypond Dr.
30,000
Windsor
None reported
2009+ Office Proposed Construction
Fort Collins
Project
Building/Park
Location
HTP One
Harmony Technology Park
SE Harmony Rd.
SF
80,000
Redtail Ponds
Redtail Ponds Office Campus
Conejos Dr.
70,440
Greeley
Project
Building/Park
Location
Mixed-Use Park
College Park
NWC 20th St. & 47th Ave.
SF
70,000
Mixed-Use Park
Tuscany
4501 Tuscany Rd.
64,493
Office Park
Pinnacle Park
20th St. & 51st Ave.
57,800
Office Park
West Point Park
9th St. & 51st Ave.
50,000
Office Park
Fox Run
18th St. & 61st Ave.
40,000
Office Park
Sunset Ridge
12th St. & 59th Ave.
40,000
Office Park
Mountain Vista West
20th St. & 83rd Ave.
30,000
Office Park
College Green
28,802
Office Park
Horizon Pointe
3109 35th Ave.
18,000
Office Park
Hiland Park Office Complex
12,000
Office Park
Boomerang Business Park
4th St. & Dundee Ave.
Project
Building/Park
Location
Office
Boyd Lake Village
Eisenhower Blvd. & Boyd Lake Rd.
The Office at 2534
2534
1200 Exposition Dr.
85,863
Office
2534
2200 Thompson Pkwy.
56,300
Building 12
Crossroads Plaza
I-25 & Crossroads Blvd.
30,000
Office
US 34 East & I-25
2855 E. Highway 34
25,000
Office
SWC Taft & 402
1607 S. Taft Ave.
22,000
2534 Medical Campus
2534
4400 Union St.
17,000
Building 6
Crossroads Plaza
I-25 & Crossroads Blvd.
13,273
Office
Crossroads Plaza
4025 St. Cloud Dr.
12,000
Landmark at 2534
2534
2534 Medical Campus
2534
4400 Union St., Bldg C
Project
Building/Park
Location
Mixed Use Park
Touchstone Business Center
SEC 14th Ave. & Main St.
6,400
Loveland
SF
110,000
10,000
10,000
Windsor
SF
83,705
7
Office
Fort Collins
Synopsis:
•Lease rates declining except Medical
•Increased concessions from landlords
•Negligible demand in small tenant market
•Purchase price per square foot increased (from
2007) due to Class A sales
Greeley
Synopsis:
•Slightly fewer sales and slower leasing vs 2007
•Vacancy is up 2 pts with negative absorption
•Construction at near halt in ‘08
•2nd half 2008 experienced lease rate softening
•2,000-3,000sf space has competitive inventory,
fewer choices for large users
•Cost-conscious mood set in late ‘08
•Total ‘Proposed Construction’ square footage
pared back significantly due to demand and
financing
Loveland
Synopsis:
•Effective lease rates continued their slide
•More sublease properties on the market as
businesses struggle with economy
•Sublease rates as much as 30-40% lower than
direct rates
•Landlord incentives in many deals
•Sales volume is down 60%. Per sf price is down
28% year over year
•Several examples of new construction sitting
vacant for 12-24 months
Forecast:
•Very little new construction
•Green buildings and retrofits are increasingly
important
•Mixed use will prove popular at Front Range Village
•Will remain a “Buyers/Tenant” market
Forecast:
•Investor purchases will be few in 1st half of ’09
from tight qualifying standards for financing
•2009 will favor tenants and buyers
•Relocations will center around layout efficiency
and cost savings
•New construction not likely until mid 2010
•Landlords should consider temporary
incentives to avoid vacancy
Forecast:
•400,000 SF still offered as proposed development
•Oversupply will curb new development
•Incentives will continue
•Effective lease rates will continue to slide for
first ½ of 2009
•Economic conditions are creating a pent up
demand for breakout in 2010
Building Permits
Office Vacancy Rates (%)
Fort Collins
Source: Realtec
Greeley
Source: Cities of Fort Collins, Greeley and Loveland, In Millions
Loveland
Fort Collins
$70
25
Greeley
Loveland*
$60
20
$50
$40
15
$30
10
$20
5
8
$15.6
$9.0
$25.6
2004
2005
2006
2007
*Includes both Retail & Office
$14.1
$0.62
$22.3
$15.5
$23.1
$51.2
$-
$18.5
$4.6
$58.4
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
$23.7
$14.9
$46.1
14.5%
17.3%
8.5%
12.6%
15.7%
9.4%
11.1%
18.9%
11.5%
12.7%
19.7%
7.24%
12.3%
10.8%
7.7%
9.8%
11%
11%
11.7%
10.7%
14.7%
10%
9%
11%
6.9%
16%
6.7%
13.8%
10%
9%
0
$10
2008
Retail
Retail
2008 Top 10 Retail Leases
Tenant
Center
Location
City
SF
Toys R Us/Babies R Us Front Range Village
4250 Corbett Dr.
Fort Collins
60,088
Front Range Village
4417 Corbett Dr.
Fort Collins
45,834
Miramont Lifestyle Fitness University Center
Fort Collins
37,041
Sports Authority
ARC
Loveland Marketplace
3133 N. Garfield
Loveland
28,030
Sprouts Grocery
Front Range Village
4417 Corbett Dr.
Fort Collins
24,288
Ultimate Electronics
Front Range Village
4417 Corbett Dr.
Fort Collins
24,000
Dollar Tree
Harmony Marketplace
NWC Harmony Rd. & McMurry Ave. Fort Collins
21,218
Staples
Front Range Village
4417 Corbett Dr.
Fort Collins
20,350
DSW Shoes
Front Range Village
4431 Corbett Dr.
Fort Collins
14,488
DirectBuy
Harmony School Shops 2226 E. Harmony
Fort Collins
14,000
Fort Collins Lease Rates
Source: Realtec (per sf, triple net, inline space)
$25-32
$20-25
$14-18
$18-24
$12-16
$15.00
$12-18
$15-20
$20.00
$10-14
$11-15
$15-18
$25.00
$23-32
$20-30
$18-24
$30.00
New
$20-28
Prime
$20-30
Secondary
$35.00
$10.00
$5.00
$2004
Retail Sales
10
51
621,624
12,189
$223.69
46
686,643
14,927
$213.01
Greeley
# of sales
Total SF
Average Size
Average Price/sf
49
333,563
6,807
$151.27
20
155,565
7,728
$90.57
Loveland
# of sales
Total SF
Average Size
Average Price/sf
2006
2007
2008
2007 vs.2008
Fort Collins
# of sales
Total SF
Average Size
Average Price/sf
2005
Source: Realtec
800,000
757,555 sf
700,000
600,000
500,000
400,000
300,000
280,527 sf
200,000
95,325 sf
100,000
14
82,750
5,910
$202.85
21
194,709
9,272
$154.69
0
(100,000)
(14,280 sf)
2004
2005
(48,983 sf)
2006
2007
2008
2008 Top 10 Retail Sales
Property/Anchor
Location
SF
JC Penney
135 Bockman Blvd.
98,615
$11,846,000
$120.12
Jax Outdoor Shop
910 Eisenhower Blvd.
97,318
$8,625,000
$88.63
Kmart Plaza
129,236
$8,000,000
$61.90
Market Square Center
3810-3840 W. 10th St.
38,343
$7,700,000
$200.00
Walgreens
1300 14th St.
14,628
$7,040,000
$481.27
Wild Oats
200 W. Foothills Pkwy.
52,067
$7,000,000
$134.44
Walgreens
2268 Harmony Rd.
14,457
$6,170,000
$426.78
Harmony Market
925 E. Harmony Rd.
27,212
$5,267,000
$193.55
Honda of Greeley
4535 W. 29th St.
18,518
$4,164,500
$225.00
Sidewayz Marine
234-272 N. College Ave.
24,185
$3,135,000
$129.63
Greeley Lease Rates
Loveland Lease Rates
$10.00
$5.00
$5.00
2004
2005
2006
2007
2008
2004
$9-15
2005
2006
2007
$8-14
$12-18
$14-22
$18-24
$18-26
$22-32
$-
2008
Source: Realtec
Source: Realtec
400,000
$14-18
$15-18
$15.00
$10.00
$-
$10-15
$8-13.50
$11-16
$14-18
$20.00
$10-14
$20-24
$30.00
$25.00
$8-14
$8-12
$15.00
$8-14
$14-18
$18-20
$20.00
$8-13
$12-18
$25.00
$14-18
$18-22
$18-24
$30.00
$18-26
$21-28
$35.00
New
$25-35
Prime
$35.00
$22-32
Secondary
New
$18-26
Prime
$/SF
Secondary
Price
1,000,000
916,554 sf
371,907 sf
800,000
300,000
600,000
200,000
110,821 sf
100,000
400,000
112,506 sf
342,588 sf
241,964 sf
200,000
0
304,338 sf
0
(55,688 sf)
(100,000)
(200,000)
(91,440 sf)
(200,000)
(166,645 sf)
(400,000)
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
11
Retail
2008 New Retail Construction
Fort Collins
Anchor/Tenant
Center Name
Location
Target/Lowe’s
Front Range Village
Harmony Rd. & Corbett Dr.
Office Depot
Harmony School Shops
2226 E. Harmony Rd.
77,153
Multi-Tenant
Villagio
2580 E. Harmony Rd.
18,837
Multi-Tenant
Penny Flats
SWC Mason Ct. & Cherry St.
15,000
FedEx/Kinkos
Villagio
2510 E. Harmony Rd.
14,000
Peloton Cycles
Freestanding
3027 E. Harmony Rd.
10,697
East Moon
Villagio
2400 E. Harmony Rd.
10,282
Rustic Oven
Villagio
2350 E. Harmony Rd.
9,427
McCallister’s Deli
Villagio
2550 E. Harmony Rd.
7,397
Multi-Tenant
2120 E. Harmony Rd.
7,365
Advanced Auto Parts
Freestanding
1023 N. College Ave.
6,916
SuperSuppers
Villagio
2580 E. Harmony Rd.
6,148
1,742
Freestanding
504
Anchor/Tenant
Center Name
Location
Sam’s Club
Freestanding
3247 23rd Ave.
Jr. Anchor / In-line space
Centerplace III
4500 Centerplace Dr.
47,025
Sports Authority
Centerplace III
42,238
30,068
Subway
Human Bean
SF
645,024
Greeley
SF
135,000
Best Buy
Centerplace III
Multi-tenant
St. Michaels
SWC Hwy. 34 & 65th Ave.
6,000
Kum & Go
Cedarwood
7027 W. 20th St.
3,395
Dairy Queen
Centerplace III
2,800
Sonic Drive-in
Sunset Ridge
5906 W. 10th St.
1,622
Anchor/Tenant
Center Name
Location
Gebhart Subaru
Centerra MotorPlex
3880 Test Cir.
14,985
TREK
The Plaza @ 2534
4880 Thompson Pkwy.
12,000
Serious Texas BBQ
Longview Plaza
201 W. 71st St.
7,396
Nordy’s
Eagle Crossing
4360 St. Cloud Dr.
7,179
Crossroads Liquor
Crossroads Plaza
4130 Clydesdale Pkwy.
5,851
Anchor/Tenant
Center Name
Location
Multi-Tenant
Water Valley Village
1357 Water Valley Dr.
12,860
Hunan Taste
Strip Retail
1580 Main St.
10,000
Loveland
SF
Windsor
12
SF
2008 Retail Under Construction
Fort Collins
Anchor/Tenant
Center Name
Location
SF
Wal-Mart
Timnath Retail Dev.
NEC & SEC Harmony Rd. & I-25
Ultimate Electronics
Front Range Village
4417 Corbett Rd.
24,000
Sprouts Grocery
Front Range Village
4417 Corbett Rd.
24,288
Anchor/Tenant
Center Name
Location
Discount Tire
JAX
994 E. Eisenhower Blvd.
6,901
Comfort Dental
Peakview
SWC Hwy. 287 & 64th St.
6,535
Kum & Go
Freestanding
115 Knobcone Dr.
3,391
Center Name
Location
200,000
Greeley
None Reported
Loveland
SF
Windsor
Anchor/Tenant
Dairy Queen
Shops at Westwood
KFC/A&W
Freestanding
5,329
1590 Main St.
Fort Collins
Greeley
Source: City Governments, In Millions
Loveland
Fort Collins
16
Greeley
Loveland
70
14
60
12
50
10
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
$64.6
$39.7
$30.7
$64.4
$40.2
$29.2
$63.4
$38.4
$26.9
$59.6
$37.6
$24.5
$58.2
$34
$22.9
$56.3
$32.8
$21.8
$56.6
$28.5
$21.2
$56.9
$28.5
$19.7
0
$53.6
$26
$17.9
8.8%
13.8%
8.4%
8.8%
9.5%
5.5%
5.6%
6.7%
3.9%
6.6%
6%
2%
5.6%
4.5%
1.8%
10
6.6%
8.2%
5.8%
2
7.9%
8.5%
3.1%
20
9.4%
7.3%
3.1%
4
8.1%
7.9%
4.3%
30
9.6%
8%
7.7%
6
$49.2
$24.1
$16.6
40
8
0
3,600
Retail Sales Tax Collections
Retail Center Vacancy Rates (%)
Source: Realtec
SF
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
13
Retail
2009+ Proposed Retail Construction
Fort Collins
Anchor/Tenant
Project Name
King Soopers
North College Marketplace NEC College Ave. & Willox Ln.
King Soopers
Location
SF
175,000
NWC College Ave. & Carpenter Rd.
150,000
Multi-Tenant
Riverwalk
SWC Harmony Rd. & I-25
145,600
Multi-Tenant
Peakview
Mulberry St. & Greenfield Ct.
130,000
Foothills Mall Expansion
Foothills Mall
225 E. Foothills Pkwy.
100,000
Safeway
Pineview
NWC Harmony Rd. & Shields St.
100,000
Multi-Tenant
Presidio
SEC Harmony Rd. & Lady Moon Dr.
80,000
Multi-Tenant
NEC Harmony Rd. & Timberline Rd.
6,000
Multi-Tenant
Fox Pointe Plaza
301 E. Boardwalk Dr.
5,000
Burger King
Timberline Commercial
NWC Nancy Grey Ave. & Timberline Rd.
2,500
Multi-Tenant
NEC Harmony Rd. & Timberline Rd.
2,000
Project Name
Location
SF
Loveland
Anchor/Tenant
Multi-Tenant
The Plaza at 2534
SEC I-25 & Hwy. 34
450,000
Multi-Tenant
Eagle Crossing
NEC I-25 & Crossroads Blvd.
400,000
Multi-Tenant
2534 Town Center
SEC I-25 & Hwy. 34
330,000
Multi-Tenant
Grandview Plaza
NEC Hwy. 34 & Denver Ave.
144,000
Multi-Tenant
Van De Water Plaza
SWC Hwy. 34 & Sculptor Dr.
96,999
Multi-Tenant
Promenade
NEC I-25 & Hwy. 34
46,000
Multi-Tenant
Longview
NWC Hwy. 287 & 65th St.
42,260
Multi-Tenant
Peakview
SWC Hwy. 287 & 64th St.
10,700
Multi-Tenant
Thompson Valley
TBD Eagle Dr.
8,000
Multi-tenant
34 Marketplace
NWC Denver Ave. & Hwy 34
6,534
Project Name
Location
SF
180,000
Greeley
Anchor/Tenant
King Soopers
Northgate Village
71st Ave. & W. 10th St.
Multi-Tenant
Fox Run
5906 W. 10th St.
Multi-Tenant
St. Michael’s
SWC Hwy. 34 Bypass & 65th Ave.
Project Name
Location
SF
1600 Main St.
189,819
56,000
6,000
Windsor
Anchor/Tenant
Walmart
14
Unknown
Jacoby Farms
1630 Main St.
155,181
Multi-Tenant
New Ptarmigan Centre
West Gate Dr.
5,260
Multi Tenant
Retail/Residential
212 4th St.
2,160
Fort Collins
Forecast:
•Absorption figures will fall dramatically in 2009 as most new
retail construction is deferred indefinitely
•Landlord concessions will continue to exert downward
pressure on effective rents across the market
•Focus on infill redevelopment of existing and soon to be
vacant “big box” centers
•Occupancy value in existing properties will aid in the absorption
of standing inventory, but at a slow pace through 2009
•Sales tax anticipated to remain steady, though now spread over
more retailers than in 2008
Synopsis:
•2008 had a high level of absorption, related almost entirely to
Front Range Village and Villagio in the Harmony Corridor. The majority of these leases were signed prior to 2008
•Despite positive absorption for 2008, sales tax collections
had virtually no change
•Anticipated abundance of “Big Box” vacancy on College Ave.
(Wild Oats, Wal-Mart, Linens & Things, Circuit City, Toys R
Us, Mervyn’s, JC Penny’s and Sutherlands)
•Landlord incentives are not being publicly marketed, but do
show up in “closed” statistics
•Total number of sales transactions increased slightly from
2007, while total dollar volume decreased slightly
•Downtown retail lease rates and vacancy rates remain stable
Greeley
Synopsis:
•Some retail construction carried over from 2007, but only one
new retail permit was pulled in 2008
•Many retail development plans have been shelved until
retailers regain momentum
•New entrants to the market in 2009 may include King
Soopers at Northgate Village
•The focus continued to be on west Greeley throughout 2008
Forecast:
•Vacancy rates are expected to remain static in relation to 2008
as no major new construction is planned and no major
closings are expected.
•Landlords continue to offer lease concessions to retain retail
tenants who may be experiencing a downturn in sales
•Downtown retail values approaching threshold where
redevelopment may begin to take place
•Retail site selectors are focusing more on traditional fundamentals
Loveland
Synopsis:
Forecast:
•Absorption over the course of the year consisted almost
•Absorption figures will remain relatively flat in 2009
entirely of previously started projects
•Recommend lease concessions to retain retail tenants who may
•Very little new retail construction occurred in 2008
be experiencing a downturn in sales
•City of Loveland continued expansion efforts with development
•Value in existing secondary properties will attract both
incentives, sales tax re-structuring, and public-private partnerships
owner/users and tenants
•2008 Sales tax revenues reflected continued stable year over
•Falling construction costs will soften lease rates for new and
year growth
prime space
•Increase in number of owner/user purchases
•Downward pressure on prices for well-positioned secondary
•Total lease transaction volume decreased dramatically from 2007
properties will spur re-development
•Landlord incentives continue to exert downward pressure on
effective rents
Building Permits
Source: Cities of Fort Collins, Loveland and Greeley, In Millions
Fort Collins
$70
Greeley
Loveland*
$60
$50
$40
$30
2005
2006
2007
*Includes both Retail & Office
$14.6
$0.74
$22.3
$55.0
$16.4
$25.5
2004
$2.8
$6.6
$51.2
$-
$4.5
$5.5
$58.3
$10
$13.9
$11.0
$46.1
$20
2008
15
Industrial
Industrial
2008 New Industrial Construction
Fort Collins
Tenant
Building/Park
Location
Self Storage
Timberline Commercial
2103 Joseph Dr.
SF
55,000
Multi-Tenant
Freestanding
3050 Lake Canal
7,550
Loveland
Tenant
Building/Park
Location
Multi-Tenant
FCL Airpark
5837 Lockheed Ave.
SF
Clark Construction
South Loveland
S. Garfield Ave.
16,500
Multi-Tenant
Boise Village
1560 Taurus Ct.
11,550
Multi-Tenant
FCL Airpark
Lear Dr.
9,600
King Construction
Boise Village
1540 Taurus Ct.
9,240
14,400
Greeley
None Reported
Windsor
Tenant
Building/Park
Location
Guardian Self Storage
Windsor Tech. Park
760 Garden Dr.
SF
81,000
Vestas
Roof Joint Bldg.
1140 Eastman Park Dr.
66,732
Vestas
Mold Shop Bldg.
62,100
Vestas
Shimoda Bldg.
35,422
Waterjet Wonders
Diamond Valley Tech. Park
365 Logistics Dr.
8,007
2008 Industrial Under Construction
Fort Collins
Tenant
Building/Park
Location
Custom Blending
Harmony Tech. Park
3461 Precision Dr.
SF
36,000
Greeley
Tenant
Building/Park
Location
SF
Leprino Foods
Former Western Sugar Site
1302 1st Ave
500,000
Generation II, LLC
Greeley Tech Center
2234 117th Ave
39,125
Spradley Barr Body Shop
Galley Green
2829 W. 30th St.
16,575
Building/Park
Location
Loveland
Tenant
SF
Airplane Hanger
FCL Airpark
Gulf Stream Ct.
12,800
Airplane Hanger
FCL Airpark
Gulf Stream Ct.
12,800
Airplane Hanger
FCL Airpark
Gulf Stream Ct.
12,800
Windsor
Tenant
Building/Park
Location
SF
Hexcel
Broe Industrial Park
Eastman Park Dr.
100,000
NORCO Volleyball
Highland Industrial Park
7385 Greendale Rd.
29,235
LA Woodworks
Highland Industrial Park
4476 Bents Dr.
17,618
2009+ Proposed Industrial Construction
Fort Collins
Tenant
Building/Park
Location
SF
Small Engine Lab Expansion
Vine Dr.
Vine Dr.
40,000
Kaufman & Robinson
Blue Spruce
Blue Spruce Dr.
10,000
Tenant
Building/Park
Location
SF
Spec.
Centerra Industrial Park
Centerra
100,000
Tenant
Building/Park
Location
SF
Spec.
Greeley Tech. Center
117th Ave.
Loveland
Greeley
40,000
17
Industrial
2008 Top 10 Industrial Leases
Tenant
Location
City
SF
AVA Solar
9586 I-25 Frontage Rd.
Longmont
126,384
HEXCEL
31815 Great Western Dr.
Windsor
100,000
JBS Swift
2600 2nd Ave.
Greeley
24,767
A&B Valve & Piping
2111 2nd Ave.
Greeley
20,000
Direct TV
6770 CR 18
Johnstown
17,000
BAE Systems
546 SE 8th
Loveland
16,800
DHL
5874 Langley Ave.
Loveland
15,295
Larimer County
Teledyne Building
Fort Collins
15,000
Universal Well Sites
6771 E. 45th St.
Loveland
14,080
LP Broadband
320 Gateway Dr.
Johnstown
13,600
Fort Collins Lease Rates
Source: Realtec (per sf, triple net)
Warehouse
R&D
$7-9
$7-10
$7-10
$10
$7-10
$7-10
$12
$4.5-6
$4.5-6
2004
2005
2006
$4.5-6.5
$4-6
$6
$4.75-7
$8
$4
$2
$-
Industrial Sales 2007vs. 2008
Fort Collins
# of sales
Total SF
Average Size
Average Price/sf
50
300,731
6,015
$78.67
32
379,881
11,872
$70.48
Greeley
# of sales
Total SF
Average Size
Average Price/sf
7
759,881*
108,554
$18.27
14
285,035
11,876
$16.76
Loveland
# of sales
Total SF
Average Size
Average Price/sf
13
367,584
28,275
$94.26
28
195,363
6,977
$79.29
*Includes former HP facility 270,000 sf
18
2007
2008
Source: Realtec
250,000
200,000
210,018 sf
196,768 sf
150,000
126,351 sf
100,000
71,371 sf
50,000
0
(50,000)
(52,000 sf)
2004
2005
2006
2007
2008
2008 Top 10 Industrial Sales
Location
City
SF
170 Kensington Dr.
Fort Collins
58,154
$4,147,500
2421 International Blvd.
Fort Collins
56,915
$3,628,700
$63.76
903 Buckingham St.
Fort Collins
30,000
$3,000,000
$100.00
4800 Innovation Dr.
Fort Collins
25,945
$2,200,000
$84.79
701 Automation Dr.
Windsor
26,750
$2,200,000
$81.24
320 Gateway Dr.
Johnstown
23,000
$1,975,000
$85.87
2125 Citrine Ct.
Loveland
22,900
$1,950,000
$85.15
5717 Byrd Dr.
Loveland
9,960
$1,850,000
$185.74
6615 Powell St.
Loveland
16,525
$1,800,000
$108.93
4562 Denrose Ct.
Fort Collins
13,440
$1,500,000
$111.61
Warehouse
$2
$8-12
$9-13
$4-9
$4-7.5
$4-9
$4-5
$4-6
$4-6
$6
$2-3.5
$2.5-3.75
$4-4.5
$2-3.5
$2-3.5
$4-4.5
$4-5.5
$8
$2-3.5
$4
R&D
$7-10
$10
$4-9
$10
$4.4-8.5
$12
$9-13
R&D
$12
$6
$71.32 Source: Realtec (per sf, triple net)
Source: Realtec (per sf, triple net)
$8
$/SF
Loveland Lease Rates
Greeley Lease Rates
Warehouse
Price
$4
$2
$2004
2005
2006
2007
2008
$-
2004
2005
2006
2007
2008
Source: Realtec
Source: Realtec
350,000
700,000
600,000
300,000
576,063 sf
295,522 sf
250,000
500,000
200,000
400,000
150,000
195,712 sf
146,056 sf
100,000
300,000
50,000
0
200,000
113,548 sf
100,000
132,121 sf
(50,000)
(24,411 sf)
(100,000)
0
(5,340 sf)
(150,000)
(1,791 sf)
(100,000)
(146,898 sf)
(200,000)
2004
2005
2006
2007
2008
2004
2005
2006
2007
2008
19
Industrial
Fort Collins
Synopsis:
•Vacancy rates increased from 4.8% (2007) to
6.5% (2008)
•Landlords were able to keep lease rates from
decreasing significantly during 2008
•New construction was limited to self storage
facilities and a larger industrial user in the
Harmony Tech Park
•Expected speculative industrial construction
was shelved in 2008
•Industrial space that remains in demand: dock
high, fenced outside storage, high cube,
properties over 10,000 sf
Greeley
Synopsis:
•Greeley area vacancies increased by three
percentage points in 2008 with a total market
size of over five million square feet
•The slowdown in the construction industry
led to some of the increased vacancies which
were partially offset by an increased need by the
oil and gas companies
•Fourth quarter overall activity slowed significantly
Loveland
Synopsis:
•Vacancy rates have increased
•Some new construction space remains vacant
•The current vacancy rate is 7.33%
•No speculative construction is anticipated in 2009 Denver
Synopsis:
•Vacancy rates for north Denver market is 7.5%
•Warehouse lease rates are $3-5 NNN
•Significant negative absorption (584,900) sf
Forecast:
•Lease rates will soften in 2009 and incentives
may be needed for longer term leases
•Rates will range between $5.25 - $6.95 NNN
•Vacancy rates will increase from 6.5% to 7.5%
in 2009
•Fort Collins industrial new construction will
remain flat until we begin seeing the benefits of
“green technology” business and job growth
•Fort Collins industrial offerings are well
positioned to fill the needs of the alternative
energy segment in 2009/2010
Forecast:
•Market will remain soft for at least the first half
of the year
•Recovery in the area will be fueled by more
primary job growth in the area (Vestas, JBS
Swift, Laprino etc) and a return of residential
construction activity
•Lease rates will remain flat or soften during 2009
Forecast:
•Industrial buildings are “holding their own”
when compared to other sectors
•Landlords will have to offer incentives and may
be faced with reduced rental rates
•Showings have experienced a drop off in activity
Forecast:
•Lease rates will continue to soften, incentives
are needed to entice longer term tenants
•Vacancy rates will trend upward while the
recession runs it’s course
•Denver will continue to be a key strategic
regional warehousing and distribution hub
Building Permits
Industrial Vacancy Rates (%)
Fort Collins
Source: Realtec
Greeley
Source: Cities of Fort Collins, Greeley and Loveland, In Thousands
Loveland
Fort Collins
12
Greeley
Loveland
$18
$16
10
$14
8
$12
$10
6
$8
4
$6
2005
$4,437
$3,550
$4,624
2004
$515
$724
$9,749
$-
$275
$301
$4,906
6.5%
9.3%
7.3%
4.7%
6.4%
4.8%
4.1%
8.6%
5.4%
3.7%
9%
3.2%
4.7%
8.1%
2.9%
4.8%
7.1%
3.8%
4%
4.4%
5%
5.2%
6.1%
7.5%
2.4%
10%
4.5%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
$2
$10,325
$353
$15,947
20
4.6%
6%
2.6%
0
$5,170
$2,735
$5,982
$4
2
2006
2007
2008
Investment
Investment
2008’s Top Investment Sales
Office
Address
City
822 7th St.
Greeley
4800 Wheaton Dr.
Size
Price
Price/SF
129,248
$9,950,000
$76.98
Fort Collins
50,000
$5,250,000
$105.00
3540 JFK Pkwy.
Fort Collins
18,058
$2,850,000
$157.82
4025 St. Cloud Dr.
Loveland
9,936
$2,444,256
$246.00
3780 Garfield Ave.
Loveland
26,529
$2,080,000
$78.40
223 Linden St.
Fort Collins
8,500
$1,742,000
$204.94
1175 58th Ave.
Greeley
15,000
$1,700,000
$113.33
4850 Innovation Dr.
Fort Collins
10,841
$1,500,000
$138.36
1212 E. Elizabeth St.
Fort Collins
8,220
$1,200,000
$145.99
3755 Precision Dr. 2
Loveland
8,869
$1,115,690
$125.80
3950 JFK Pkwy., Bldg. 8
Fort Collins
6,124
$1,070,000
$174.72
Retail/Mixed Use
22
Address
City
Size
Price
Price/SF
135 Bockman Dr.
Fort Collins
98,615
$11,846,000
$120.12
Fort Collins
129,236
$8,000,000
$61.90
3810-3840 W. 10th St.
Greeley
38,343
$7,700,000
$200.82
1300 14th St. SW
Loveland
14,628
$7,040,000
$481.27
200 W. Foothills Pkwy.
Fort Collins
52,067
$7,000,000
$134.44
2268 Harmony Rd.
Fort Collins
14,457
$6,170,000
$426.78
925 E. Harmony Rd.
Fort Collins
27,212
$5,267,000
$193.55
126, 132, 140 W. Mountain Ave.
Fort Collins
12,191
$2,309,234
$189.42
Fort Collins
16,894
$2,208,000
$130.70
1005 W. Stuart St.
Fort Collins
16,000
$2,150,000
$134.38
6427 Carmichael St.
Fort Collins
8,140
$1,800,000
$221.13
3025 W. 10th St.
Greeley
6,792
$1,745,000
$256.92
Fort Collins
6,916
$1,698,083
$245.53
4025 S. Mason St.
Fort Collins
15,385
$1,550,000
$100.75
1113 W. Drake Rd.
Fort Collins
6,814
$1,500,000
$220.14
6606 Avondale Rd.
Fort Collins
6,000
$1,325,000
$220.83
4650 Centerplace Dr. #502
Greeley
6,165
$1,150,000
$186.54
Fort Collins
2,895
$1,125,000
$388.60
Fort Collins
6,825
$1,110,000
$162.64
Fort Collins
2,895
$1,100,000
$379.97
3701 S. Mason St.
Fort Collins
6,940
$1,085,000
$156.34
165 E. Boardwalk Dr.
Fort Collins
6,392
$1,084,000
$169.59
1005-1021 S. Lemay Ave.
Fort Collins
6,000
$1,070,000
$178.33
National Cap Rates and Spreads (Source: Integra Realty Resources)
Office
12
Industrial
12
Retail
12
10
10
10
10
8
8
8
8
6
6
6
6
4
4
4
4
2
2
2
2
0
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
10-Year Treasury (Annual Avg.)
R&D
Office/Warehouse
Bulk
Manufacturing
Office SUB
Office CBD
Apartment
12
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Neighborhood Strip
Community Center
Regional Mall
Suburban Multi-Family
Urban Multi-Family
Northern Colorado Investment Real Estate Cycle
1 1st Stage within the phase
3
2
1
Larimer Apartments
Weld Apartments
1
1
2 2nd Stage within the phase
3 3rd Stage within the phase
2
Fort Collins Retail
3
3
1
2
Recovery
• Decreasing vacancy rates
• Minimal new construction
• Moderate absorption
• Low/moderate employment growth
• Neg/low rental rate growth
Loveland Retail
Greeley Retail
Fort Collins Industrial
Greeley Industrial
Loveland Industrial
Fort Collins Office
Loveland Office
Greeley Office
2
Expansion
• Decreasing vacancy rates
• Moderate/high new construction
• High absorption
• Moderate/high employment growth
• Med/high rental rate growth
HyperSupply
• Increasing vacancy rates
• Moderate/high new construction
• Low/negative absorption
• Moderate/low employment growth
• Med/low rental rate growth
Recession
3
• Increasing vacancy rates
• Moderate/low new construction
• Low absorption
• Low/negative employment growth
• Low/negative rental rate growth
23
Investment
2008’s Top Investment Sales, Continued
Industrial
Address
City
Size
Price
Price/SF
170 Kensington Dr.
Fort Collins
58,154
$4,147,500
$71.32
701 Automation
Windsor
26,750
$2,200,000
$81.24
100 Commerce Dr.
Johnstown
21,173
$2,200,000
$103.91
320 Gateway Dr.
Johnstown
23,000
$1,975,000
$85.87
6615 Powell St.
Loveland
16,525
$1,800,000
$108.93
4562 Denrose Ct.
Fort Collins
13,440
$1,500,000
$111.61
4563 Denrose Ct.
Fort Collins
14,000
$1,460,000
$104.29
1400 E. Mulberry St.
Fort Collins
17,420
$1,300,000
$74.63
Apartments
24
Address
City
Units
Price
Price/
Unit
4470 S. Lemay Ave.
Fort Collins
248
$19,500,000
$78,629
1001 50th Ave.
Greeley
228
$15,440,000
$67,719
1050 Hobbit St.
Fort Collins
120
$11,300,000
$94,167
700 E. Drake Rd.
Fort Collins
188
$11,000,000
$58,511
155 Briarwood Rd.
Fort Collins
281
$9,500,000
$33,808
1023 Oxford Ln.
Fort Collins
141
$8,000,000
$56,738
2162 30th St.
Greeley
174
$4,690,000
$26,954
2162 30th St.
Greeley
168
$4,510,000
$26,845
915 E. Drake Rd.
Fort Collins
102
$4,350,000
$42,647
3400 W 16th Street
Greeley
96
$4,055,000
$42,240
1001 Robertson St.
Fort Collins
48
$2,665,000
$55,521
125 W. Meldrum St.
Fort Collins
24
$2,040,000
$85,000
112 Rutgers Ave.
Fort Collins
29
$1,425,000
$49,138
3100 Palm Ct.
Fort Collins
24
$1,330,000
$55,417
632-636 N. Shields St.
Fort Collins
24
$1,075,000
$44,792
500 Frey Ave.
Fort Collins
12
$835,000
$69,583
201 E. S. 1st St.
Johnstown
13
$835,000
$64,231
801 & 807 Aztec Dr.
Fort Collins
8
$634,000
$79,250
2416 Clearview Ave.
Fort Collins
8
$510,000
$63,750
1 Aspen Drive, L & V
Loveland
12
$500,000
$41,667
2137 27 Ave. Ct.
Greeley
9
$450,000
$50,000
Apartment Overview
The major factor in Northern Colorado’s sales numbers for 2008 resides
in two portfolio sales. Gold Crown sold three properties containing 623
units for an average of $30,016 per unit. One property was located in
Fort Collins, while two properties were located in Greeley. AIMCO also
sold five properties containing 907 units for an average of $64,478 per
unit. The AIMCO portfolio was part of a nationwide sale of over 20
properties. Four of the properties were located in Fort Collins and the
fifth was located in Greeley and sold to a different buyer.
Overall
The apartment market trends for 2008 in the Northern Colorado area
ended on a modest note after a strong push through three quarters of the
year. After experiencing increases in the average rents and decreases in
average vacancy and concessions, the market took a small step backward
in the fourth quarter. However, almost all of the softening was a result
of weakening numbers in the Greeley and Loveland markets, while Fort
Collins appears to be maintaining, if not improving, it’s solid performance.
These major portfolio sales drove the market statistics to a sharp decrease
in the price per unit for Larimer County, from $92,135 per unit in 2007
to $58,836 per unit in 2008. Conversely, Weld County saw an increase
with units averaging $32,097 in 2007 and climbing to $45,508 in 2008
thanks to Country Club West selling 288 units at $64,477 per unit.
Overall, the Northern Colorado apartment market continues to display
strong underlying fundamentals compared with other markets within
Colorado and around the country. As the country is seeing unprecedented job losses, this region has faired better than most. However,
vacancy has been slightly affected by tenants doubling or tripling up – or
moving in with their parents. Currently, there is only one market rate
property under construction, Settler’s Creek Apartments, with 225 units
planned. While other projects are being considered, it remains to be
seen if they can get out of the starting blocks in this challenging financial
environment.
Rent
Despite negligible decreases in average rent in the fourth quarter, the
Northern Colorado apartment market saw an overall 2.5% increase in
gross rent for 2008. Effective rents (gross rent less concessions) posted a
larger increase at 3.6% or $26, over the fourth quarter of 2007.
Vacancy
Sales
After three quarters of low vacancy, Northern Colorado apartments
should see a slight increase in the fourth quarter. This should keep vacancy numbers in line with vacancy in 2007 and very strong in relation
to other Colorado markets and the nation as a whole. The vacancy rate
in the region is hovering around 5.8%, led by Loveland at 4.93% followed by Fort Collins at 6.17% and Greeley at 6.3%.
Northern Colorado enjoyed steady sales of apartments throughout 2008,
ending the year with 21 transactions (8 units or greater) which was 1
more than 2007 and 1 below 2006 with 22. The overall sales volume
was $108,704,000, off somewhat from 2007 which retains the sales volume record at $114,058,675. However, the total number of units selling
increased by 45% with 2,017 units trading ownership.
Source: Realtec
Weld
Larimer
1600
$90
$80
1400
$70
1200
$250
$60
1000
$200
$50
800
$150
$40
600
$30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2006
2007
748
1269
241
1154
189
0
1524
$291
$112
$325
$190
$421
$154
$329
$137
$207
$188
$10
$-
$202
$20
200
$179
$50
$180
400
$178
$100
2008
$-
2006
2007
$45,508
$300
Weld
$58,837
$350
$100
$32,097
$400
1800
$92,135
$450
Source: Realtec
Larimer
Weld
$47,418
Larimer
Apartment Sales – Average Price/Unit
Apartment Sales – Units Sold
Source: Larimer & Weld Counties, In Millions
$64,235
Improved Commercial Sales History
2008
25
Investment
Looking Back
At this time last year, this report recognized
the credit challenge imposed by the subprime mortgage meltdown but believed that
individual residential borrowers, some banks,
and derivative-packaging financial institutions would be the only ones to experience
the consequences of questionable lending
and securities practices. Not withstanding
regional economic differences and cycles, a
year ago the broad fundamentals of commercial real estate were sound from a supply and
demand viewpoint. The impending institutional failures (starting with Bear Stearns
and Lehman,) followed by distressed sales,
seizures and re-organizations of the remaining institutional giants were totally unanticipated. All of this and more has begun to
have a systemic effect on the commercial real
estate market globally, nationally and even
locally.
Market Dynamics
Availability of capital reduced
• CMBS as a source of almost 50% of loan funds
two years ago is currently non-existent. Zero.
• Commercial banks with federally approved deposit to loan ratios will pick up some of the slack
with 60% to 70% loan to value ratios, 1.25 to 1.3
debt coverage ratios, personal or credit guarantees
with five to fifteen year terms. “Relationship Banking” becomes more prevalent.
• Debt Maturities in 2009 for some product types
may be challenging. Look for workouts, joint venture equity, preferred equity or participating debt
and other forms of equity capitalization and debt
sources to help salvage a deal or to start fresh.
• Owner-financing at market terms is becoming
popular, desirable and even necessary in some cases
to complete transactions.
Office
• Owners of investment grade office properties
facing lease renewals or vacancies are negotiating
a 10% to 30% reduction in lease rates from 2008
to attract or hold tenants. In a higher sublease and
vacancy market, tenants have choices and successful Landlords are very competitive.
• Demand for Class A is low to nil. There is
activity in Class B, flex/office space both from net
new tenants and existing tenants downsizing and
adjusting to new economic conditions.
• Expect cap rates to increase in range from 8% to 9%.
26
Looking Forward
The Northern Colorado commercial real estate
market will weather the storm as well as any region in the country but we will experience some
of the effects of the national and global economy. While some segments will be less affected,
almost all will be faced with challenges and realities of reduced demand, higher vacancies, asset
re-valuation and credit constraints. Owners will
employ aggressive strategies to attract and retain
tenants and buyers and tenants will begin to see
selected opportunities in some market segments.
The bright spot is that well-priced and underwritten investment grade real estate is still an
attractive alternative to stocks, bonds and money
market investments. Cap rates in all categories
have increased for the first time in eight years.
Demand for high occupancy, good credit, longterm leased buildings will remain be strong, but
availability is diminished. For buyers, prudent
risk evaluation and securing long term fixed rate
debt is more critical than ever before.
Retail
• Cap rates are expected to increase in all retail
categories depending primarily on credit analysis
of tenant which has increasingly become more
difficult.
• Regional vacancies have slightly increased from
a year ago and renewal rates and backfill rates
for most retail categories are flat to down 15%
depending on location and type.
• Redevelopment and back-filling of regional
malls, empty big boxes and restaurants provide
both a challenge and opportunity.
Industrial
• Industrial has the least investment grade opportunities but the best underlying fundamentals of
the three categories even with increases in vacancy
rates.
• Some product types are in short supply and not
subject to lease rate discounts and tenant retentions are stable.
• Cap rates will remain level or increase slightly
(8.25 to 10% range) in this region contrary to
larger cap rate increases in metro areas in other
parts of the country.
Bright Spots
• Health, medical, bio-sciences, selected technology, alternative and clean energy, selected TARP
recipients, and fearless entrepreneurs.
Land
Land
2008 Land Sales
Address
City
3420, 3470 15th St.
Loveland
NWC WCR 23 & 70
Windsor/Severance
NWC WCR 23 & 70
4400 Blk. JFK Pkwy.
Acres
Type
7.68 Comm.
Dev/Undev Sale Price
Price/Unit
Dev.
$4,260,595
$12.74/sf
116.13 Ag.
Undev.
$2,739,227
$23,588/ac
Windsor
75.30 Ag.
Undev.
$1,054,200
$14,000/ac
Severance
191.43 Ag.
Undev.
13.60 Multi-family Dev.
$3,793,427
$19,816/ac
$3,485,000
$5.88/sf
41.66 Comm.
Dev.
$3,300,000
$1.82/sf
Fort Collins
2527 NW Frontage Rd. Loveland
1302 1st Ave.
Greeley
150.00 Comm.
Undev..
$3,150,000
$21,000/ac
4308 E. CR 36
County
107.93 Ag.
Undev.
$3,079,000
$28,528/ac
N. CR 5
Loveland/Johnstown
76.00 Res.
Undev.
$2,964,338
$39,005/ac
N. CR 3
Loveland/Johnstown
89.00 Res.
Undev.
$2,663,600
$29,930/ac
Taft Ave. & CR 54
LaPorte
72.52 Ag.
Undev.
$2,200,000
$30,336/ac
5440, 5550 Byrd Dr.
Loveland
7.60 Comm./Ind. Dev.
$2,308,900
$7.00/sf
4327 JFK Pkwy.
Fort Collins
3.20 Comm.
$1,175,354
$8.43/sf
Fort Collins
28.l3 Multi-family Undev.
$1,216,500
$.99/sf
TBD Ziegler Rd.
Dev.
Single Family Starts
Fort Collins
Fort Collins Land Prices
Source: Northern Colorado Homebuilders Association
Loveland
Greeley/Evans
Rural Larimer
Rural Weld
3500
Apartments
$6,000-$10,000/unit
3000
Retail Pads
2500
Industrial
2000
$3.00-$5.00/sf
Residential
1500
$15,000-$80,000/ac
Single Family Lots
1000
1026
857
942
680
2621
747
741
791
773
3090
469
417
392
482
2112
423
215
278
418
1194
310
144
61
159
584
500
0
$15.00-$20.00/sf
2004
2005
2006
2007
2008
$70,000-$100,000/lot
Estate Lots
$100,000-$250,000/lot
Estimation of Surplus Land 1990-2008
28
Fort Collins
Greeley
Loveland
Annexed Acres
Absorbed Acres
Surplus/Deficit Acres
7,505
8,359
(854)
10,744
3,319
7,425
8,072
4,262
3,810
Fort Collins Land Absorption
Source: Realtec, In Acres
Residential
Commercial
250
2007 $ Value
Permits Issued
2008 $ Value
Percent Land Ac.
Permits Issued Change Absorbed
Retail
$55,074
$14,676 (73)%
30.1
Office
$15,581
$14,092 (10)%
13.6
$515
$4,437 762%
3.2
Government/Misc.
$34,969
$28,325 (19)%
36.3
Total Commercial
$106,139
$61,530 (42)%
83.2
Industrial
200
2008 New Residential Construction Summary
150
Unit Type
100
216
45
163
49
97
75
94
142
88
83
50
0
2008 New Commercial Construction Summary (In Thousands)
Unit Type
2004
2005
2006
2007
2008
Total Units
2007
Total Units
2008
Percent Land Ac.
Change Absorbed
Single Family Attached
45
14
(69)%
1.8
Multi Family
186
437
135%
36.4
Total Multi Family
231
451
95%
38.2
Single Family Detached
363
250
(31)%
50.0
Mobile Home
0
0
-
Total Single Family
363
250
(31)%
Total Residential
594
701
18%
0.0
50.0
88.2
Total Commercial
83.2
Total Land Absorption
Greeley Land Absorption
171.3
Unit Type
2007 $ Value
Permits Issued
2008 $ Value
Percent Land Ac.
300
Retail
$16,472
$740
(95)%
0.3
Office
$9,017
$624
(93)%
0.5
250
Industrial
$724
$3,550
39%
5.1
Government/Misc.
$257
$0
-
0.0
200
Other
$5,139
$12,173
136%
2.9
Total Commercial
$31,609
$17,086
(46)%
9.0
Residential
Commercial
150
100
199
45
108
20
53
40
23
9
0
253
31
50
2004
2005
2006
2007
2008
Loveland Land Absorption
Total Units
2007
Total Units
2008
Percent Land Ac.
Change Absorbed
Single Family
152
60
(61)%
20
Multi Family
16
29
81%
3.6
Total Residential
168
89
(47)%
23.6
Total Commercial
9.0
32.6
Unit Type
Residential
Unit Type
Commercial
2007 $ Value
Permits Issued
Retail/Office
250
Industrial
Total Commercial
200
2008 $ Value
Permits Issued
Percent
Change
Land Ac.
Absorbed
$25,596
$22,333 (13)%
$9,749
$4,624 (53)%
23
7
$35,345
$26,958 (24)%
30
150
100
2004
2005
2006
2007
40
30
70
72
139
82
199
151
0
227
72
50
2008
Unit Type
Total Units
2007
Total Units
2008
Percent
Change
Land Ac.
Absorbed
Single Family
215
107
(50)%
28
Duplexes
66
31
(53)%
6
Apartments
0
97
Total Residential
281
235
(16)%
40
6
Total Commercial
30
70
29
Land
Windsor Land Absorption
Residential
Commercial
140
120
2008 $ Value
Percent Land Ac.
$4,967
$3,302 (34)%
4.8
Industrial
$36,678
$26,478 (28)%
26.5
Total Commercial
$41,645
$29,780 (28)%
31.3
100
80
60
143
11
62
22
43
36
75
20
40
31
40
0
2007 $ Value
Permits Issued
Retail/Office
160
20
Unit Type
2004
2005
2006
2007
2008
Unit Type
Total Units
2007
Total Units
2008
Percent Land Ac.
Change Absorbed
Single Family
224
119
(47)%
Multi Family
0
0
-
Total Residential
224
119
(47)%
0.0
39.7
Total Commercial
31.3
71.0
Trends and Forecast - Our predictions for 2009
Water
With no development pressure and a good snow-season, prices should remain relatively low.
Residential
Expect limited but continued interest in sites for apartments and age-restricted housing. Anything
else? No. Based upon absorption of lots from the second quarter of 2007 to the same period in 2008,
one study suggested there was a 7 ½ year supply of developed lots in northern Colorado and a 70year supply of “paper” (entitled but not yet developed) lots. Lots of lots.
Retail and Office
Even in the very-best locations, site development will not be needed.
Industrial
The demand/supply balance remains: the few owner-users in the market will find lower land prices
and construction costs. If the alternative energy sector continues to grow, the Great Western Industrial Park in East Windsor will again benefit.
Prices
While previously affecting only developed single family lots and “paper” lots, price reductions
broaden to all types of land. Who will the buyer be? Very few owner-users and an increasing number of investors. What do they
have in common? They demand “deals” – 50% (or more) reductions in prices from the record highs
set in 2005. Who will be financing land deals? As most lenders will not touch such loans, we may see
a return of owner financing, even in subordinated positions.
When will the turn-around come?
Best case: second half of 2009.
Worst case: 2011+
Most Likely: 2010
30
39.7
While the fundamentals may not warrant it, there is already evidence of heightened spirits, pent-up
demand and re-positioning for future growth. Northern Colorado is populated by entrepreneurs and
risk-takers, people that love this area and want to make it better. Tough times over? No, not yet. But
the time is now and it is time to take advantage of upcoming opportunities as they present themselves. We’ve been given lemons – let’s add the vodka.
Land Synopsis
Why were we so happy to see 2009? Because 2008 was over.
Here are some notable items that the year brought us.
Fort Collins
The City regained some luster: Front Range Village has enjoyed success, the Harmony Corridor filled up (at least in the short term), and Downtown remains vibrant. Plus, development
within Loveland and Johnstown was not in the news everyday as it was in 2006-2007 (what a
relief for Fort Collins).
With the Urban Renewal Authority encompassing nearly 525 acres, the North College Corridor is one to watch. Will the 123,000 square foot King Soopers be built at College and
Willox?
The rumors say yes.
And where can we put 4,800 new residents by 2020, add 1,800 dwelling units and build a
75,000 to 125,000 square foot neighborhood center? All within the newly annexed South College Corridor; at least that is what the City’s plan forecasts.
Timnath discovered that Fort Collins could play world-class hardball when it comes to stopping annexations on the west side of the I-25/Harmony Road Interchange. Fort Collins
discovered that Wal-Mart could build stores serving Fort Collins residents without actually
building in the city (North Loveland in 2007 and Timnath in 2009).
Greeley
Materials companies are searching for acreages having aggregate (sand and gravel). This may
be for land banking until the market returns or speculation that the national stimulus package
will promote infrastructure repairs/replacements.
Alternative energy was good to Weld County. Windsor got the industry’s attention with Vestas, but what about Grover? The newly completed 274-turbine wind farm is one of Colorado’s
largest.
Greeley-Evans was no longer in the forefront of home foreclosures; some believe we have
finally found the bottom.
The Hwy. 85 corridor was attracting users related to the area’s energy producing sector but
with oil slipping under $40 a barrel that stopped. At year-end, 2,340 drilling permits (oil/gas)
were issued in Weld County second only to Garfield’s 2,888 permits.
And who is now the big cheese in Town? Leprino with its acquisition, demolishment and redevelopment of the Western Sugar complex.
Loveland and Johnstown
Ever increasing City fees further eroded the economics of new commercial development in
Loveland. However this is probably secondary to the declining rents and tightening mortgage
underwriting. Loveland’s financial investment at the I-25/Hwy. 402 Interchange may stimulate development of the City’s southern Gateway, but Johnstown’s east side of the Interchange
will likely develop first.
In-fill development within the East Eisenhower Corridor will continue, but at an almost unnoticeable pace. The same is true for the North Garfield/Hwy. 287 Corridor; while the new
Wal-Mart is doing quite well, the usual adjacent development has not followed. However, the
asking and bidding prices for land (of any type) remained wide resulting in very little activity.
The reality: a 20 to 50% deterioration of land values.
31
We Are Realtec
Cheri Bengford
Nick Berryman
Fort Collins - Broker Assistant, Peter Kast
•16 years of real estate and property
management experience
•Native Colorado resident
Greeley - Broker
•BS - Business/Management,
Colorado State University
•5 years brokerage experience
•President of Greeley’s Commercial
Brokers Group
•Small business manager
•Weld County Planning Commission
LeAnne Bodine
Mark Bradley, CCIM
Greeley - Broker Assistant/Office
Manager
•BA - Communication, University of
Northern Colorado
•5+ years commercial real estate experience
•Commercial construction admin. experience
•Marketing/human resources/safety
•Licensed Broker Assistant
Greeley - Partner/Broker
•BS - Finance, Colorado State University
•Certified Commercial Investment
Member (CCIM)
•30 years of sales, business and
•10 years commercial brokerage experience
•Industrial and Investment specialist
Erik Broman
Rick Callan
Fort Collins - Broker
•BA - Business, Concentration in Finance
and Real Estate, Colorado State University
•2 years experience in the sale of
multi-family properties in Northern
Colorado and Southern Wyoming
FC Downtown - Broker
•Masters - Business Administration
•20+ years of business operations and
administrative experience
•Northern Colorado Association of
Realtors (NCCAR)
•Licensed Colorado Real Estate Broker
since 2002
Angie Carney-Graves
Joan Chase
Fort Collins - Broker Assistant,
Rhys Christensen
• 25+ years real estate and property
•Licenced Broker Assistant
Fort Collins - Broker Assistant, Jason Ells
Office Manager
•Background in property management,
real estate law, ethics and fair housing
•18 years real estate experience
•Licenced Broker Assistant
Rhys Christensen, CCIM
Jeffrey Doran
Fort Collins - Partner/Broker
• BA - Economics, Simpson College
Member (CCIM)
•International Council of Shopping
Centers Member (ICSC)
•General contractor 1978-84
•25+ years real estate experience
• BBA - University of Iowa
•MBA - University of Colorado
•Investment, Industrial and Office specialist
•25+ years experience in business
ownership, marketing and strategic planning
•CCIM candidate
•Foothills Rotary International
33
34
Brandon Dreiling
Dan Eckles, CCIM SIOR
Greeley - Broker
•Owner and operator of a property
management company for 10+ years
•Land and Development speciality
•Northern Colorado Commercial
Association of Realtors (NCCAR)
FC Downtown - Partner/Broker
•BS - Business Management, Colorado
State University
Member (CCIM)
•Society of Industrial & Office Realtors
(SIOR) designee
•Industrial & Problem Property specialist
•30+ years experience in investment real estate
Michael Ehler, CCIM MAI
Jason Ells
Fort Collins - Partner/Managing Broker
•BS - Business Administration, University
of Florida
Member (CCIM)
•Member, Appraiser Institute (MAI)
•Land and Project Feasibility specialist
•25+ years experience
•BS - Finance and Real Estate, Colorado
State University
•Past President, NCCAR
•Local Legislative Affairs Committee
•CCIM candidate
•Chamber Board of Directors
•2008 Young Professional of the Year
Debi Good
Steve Griffith
Fort Collins - Administrative Assistant
•4 years commercial property
•20+ years administrative experience in
commercial and residential real estate
Greeley - Broker
• BFA - Southern Methodist University with
graduate work in Industrial Administration
Centers Member (ICSC)
•15+ years real estate development and
brokerage experience
•Land, Investment, Office and Industrial
specialist
Nate Heckel
Fae Hicks
•BS - Finance and Real Estate, Colorado
State University
•International Real Estate Society
Member (ICSC)
•Investment specialist
•$75 million in acquisition experience
Loveland - Broker
• BS in Public Administration, University
of Wyoming
•Colorado Graduate, School of Banking,
Boulder, CO
•30+ years finance and real estate experience
•9 years real estate Sales and Leasing
specialist
Peter Kast, CCIM SIOR
Peter Kelly
•BA - Colorado College
•MA - Fuller Theological Seminary
Member (CCIM)
(SIOR) designee
•Land, Office and Retail specialist
• BA - Western State College, Business
Administration
Centers (ICSC) member
•Land, Retail and Office specialist
•CCIM candidate
Brittany Lundvall
Brian Mannlein
FC Downtown - Receptionist
•Student at Colorado State University
•Majoring in Public Relations with a
minor in Business
•BS - Engineering, University of Iowa
•6 years experience in commercial real estate
•2+ years specializing in multi-family
properties in Northern Colorado and
Southern Wyoming
•CCIM candidate
Keith Masenheimer
Ken McCrady
Denver - Broker
•BS - Business Management, Penn State
•Denver Metro Commercial Association
of Realtors (DMCAR)
Loveland - Broker
•BA - Business, University of Northern
Colorado
•20+ years in marketing and marketing
management
• Business owner
•9 years commercial brokerage experience
Larry Melton, CCIM
Jim Mokler, CCIM SIOR
Loveland - Partner/Broker
•MS - Human Development, Colorado
State University
Member (CCIM)
•Land & Improved properties sales specialist
•25 years brokerage and valuation experience
Member (CCIM)
•2003 Colorado Society of Industrial &
Office Realtors (SIOR) Chapter President
•Investment, Industrial and Land specialist
•Instrument rated private pilot
Chris Mooney
Annah Moore
Denver - Partner/Broker
•BS - Business, Marketing emphasis,
Montana State University
•8 years commercial real estate experience
•CCIM candidate
Patrick O’Donnell
Tomoko Olsen
Loveland - Broker
• BS - Business Management, Daniel
Webster College
•6 years diverse experience in commercial
real estate
•16 years experience contract negotiations,
business management and government
compliance program management
•CCIM candidate
Fort Collins - Broker Assistant, Jeffrey
Doran & Steve Stansfield
•8 years customer service experience
•Background in website maintenance and
community volunteer work
Aki Palmer
Jim Palmer
• BS - Finance and Real Estate, Colorado
State University
•Member, Urban Land Institute
•Office, Retail and Investment specialist
•Over 7 million square feet of brokerage
experience
•BS - Real Estate Finance &
Construction Management, University
of Denver
•Board of Directors for The Family
Center/La Familia
Matthew Patyk
Tom Reznik
•BS - Finance, Arizona State University
•Tenant Rep. specialist
•Former owner/partner of Strategic Real
Estate Partners, LLP in Scottsdale, AZ
Loveland - Partner/Broker
•BS - Technology Education and Training,
•Investment and Retail specialist
•Emphasis in buyer representation
•23 years diverse experience in
commercial real estate
•BS - Finance, Augusta College, Rock Island, IL
•Certified Commercial Investment Member
(CCIM)
(SIOR) designee
•Former President of CM Commercial Real
Estate in Denver
•Denver Metro Commercial Association of
Realtors (DMCAR)
35
Katrina Sase
Patty Spencer
Fort Collins - Marketing
•BA - Communication, University of
Wyoming
•Emphasis public relations and marketing
•Senior Advocacy Foundation Board
member
Steve Stansfield, CCIM SIOR
Larry Stroud, CCIM SIOR
Fort Collins - President/Broker
•BS - Business Marketing, Colorado State
University
Member (CCIM)
(SIOR) designee
•Founder of Realtec
Kate Struzenberg
Elizabeth Sunshine
•BS - Public Relations, Colorado State
University
•CCIM candidate
•Old Town, Retail and Office specialist
•20+ years experience in business
management, marketing and sales
•Member of the Board of Directors:
Downtown Development Authority, Beet
Street Local Development Co.
•Masters - Business Administration,
Member (CCIM)
•Society of Industrial and Office Realtors
(SIOR) designee
•Downtown Dev. Authority Board - Past Chair
•Office, Investment and Land specialist
Greeley - Broker
•BA - Communications, Business emphasis,
University of Northern Colorado
•13 years experience in real estate investing
•Experience with residential income
propeties, multi-units, medical office
buildings, land and 1031 exchanges
•CCIM candidate
•Weld County Housing Authority Commissioner
Fort Collins - Marketing
•BFA - Art, Graphic Design concentration,
•Corporate identity and page layout
specialist
•American Institute of Graphic Arts
(AIGA) member
Maureen Tomlinson
Jack Trethewey
Loveland - Office Manager/Broker Assistant
•15 years administrationand management
experience
•Loveland resident for 33 years
•Business owner for 5 years
Loveland - Broker
•BS - Business/Finance, University of
Wyoming
•28 years real estate experience
•8 years concentrated experience on
Industrial and Commercial investment
Ken Voss
Melissa Wacker
Loveland - Broker
• BA - History with additional work in
Economics and Biblical Studies, John
Brown University, Siloam Springs, Arkansas
•15 years legal research, business management
and business development experience
•CCIM candidate
Renee Wehrung
Greeley - Broker
• 9 years commercial real estate experience
•Business administration
•Sales and marketing background
36
FC Downtown - Office Manager, Broker
Assistant & Property Manager
•BS - Marketing & Accounting,
•5 years tax and corporate accounting
experience
•Board of Directors: Adoption Dreams
Come True

An Introduction To Market Update 2009

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