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Industrial Sales Activity Strong – Vacancy Rates Decline

General Highlight:

  • Industrial sales activity was strong, driven by owner-users.  Across all property types, vacancy rates declined in most areas.

Industrial & Flex:

  • The largest area industrial leases were less than 10,000 SF.  Glasrock leased 7000 SF in Fort Collins and RockSol Consulting leased about 5,000 in Loveland.  While Longmont’s industrial vacancy rate was only 8%, another 10% of the stock is available, but occupied.  This 8% to 18% differential is indicative of large sublets available in this region. The Seagate campus has 470,000 SF of sublet space available, which accounts for much of this available, but still occupied, space.
  • As a portfolio sale, the largest sale was the city of Loveland sale of the former Agilent plant to Cumberland & Western Resources out of Kentucky for $5 million.  This will be the future site of the NASA/ACE technology park, which should be a major demand driver in the region for the next decade.  This research oriented business park may draw tenant occupancy beginning in 2012.
  • Largest area individual building industrial sale was the former Barvista building in Johnstown, which sold for $5.1 million to a Canadian energy industry modular structure company.  Martin Marietta purchased the LaFarge cement plant in Lafayette for $2.3 million.
  • Two former Kodak buildings in Windsor sold to BROE companies as part of a land transaction.  Re-use of those buildings is unknown, and Kodak is demolishing one million square feet of adjacent buildings.  BROE will be able to expand their Great Western Industrial Park with the purchase from Kodak.

Office:

  • Boulder was very active on the leasing front.  Real Good Solar leased 35,000 SF on south Boulder Rd., 14,000 SF was leased on 28th St. and Southwest Research leased 6,000 SF on Walnut St.  Four other leases were inked in the 5,000 SF region in the Boulder metro area.  A 5,000 SF lease at the Robertson St. Medical Park was signed in Fort Collins during the month, while Rabo AgriFinance out of the Netherlands expanded their financial services arm in Loveland’s Crossroads business park.
  • Major office sales were highlighted by the Loveland Class A Sky Pond property, which sold to a Colorado investor, for a total price of $8.35 million
  • Boulder, Longmont and Fort Collins’ metro areas have held close to the $20 PSF average gross rental rate on offices throughout the year, and all hover at, or below, 10% vacancy rate.  Loveland and Greeley have exhibited rates 15 to 20% below the other northern CO metro areas.

Retail:

  • Retail property in December were highlighted by the bank-owned $1.6 million former theatre complex, which traded at $42 PSF in Loveland at the entrance to Wal-Mart, and a 7,000 SF new strip center, also in Loveland, which sold for $1,850,000, or $273 PSF.  That retail property is anchored by The Boot bar and grill, and is located in the Crossroads business park.
  • On the leasing front, Longmont has led all areas through the year.  Longmont’s retail vacancy rate dropped 300 basis points to 5%.  Larger box retailers impact the market most dramatically in this community.
  • Leases of note include the Charles Schwab office in the Front Range Shopping Center in Fort Collins, and the Chocolate Café in downtown Fort Collins.

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