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Colorado-Based Investors Get In On Multi-Family Asset Action
General Highlight:
Colorado-based investors got in on the multi-family asset action this last month, for a change. Ram’s Village, near Colorado State University in Fort Collins, traded for $31.1 million or $87,000 per unit (356 total), to a CO based buyer. Loveland based McWhinney Companies bought a multi-family tract of land in Fort Collins on Timberline road for $3.55 million, or about $11,000 per door, for development purposes. They look to continue their foray into the multi-family market.
Industrial & Flex:
Fort Collins and Longmont have absorbed enough space to drive their collective vacancy rates down 100 basis points.
Greeley area rates don’t compare as strong relative to the other metro areas of our region, but if you take away the “too large for the market” properties, Greeley industrial vacancy would be quite lower. March’s Talking Points addressed this factor.
Office:
Fort Collins and Boulder metro areas lead the region in absorption (about 100 basis points each), and in the lowest vacancy levels, at 7% and 8% respectively.
An office condominium in the CBD district of Boulder (Walnut St) sold for $1.3 million, or $435 PSF. A mixed use retail and office property in CBD district of Fort Collins (Oak St) sold for $995,000, or $75 PSF. The wide variance in pricing had to do with building efficiencies, age and condition, and tenant mix.
Retail:
Investors continued activity in this sector. A $2.65 million three-tenant casual food service center on Troutman in Fort Collins sold to a Colorado buyer. Tenants include TCBY, Tokyo Joes, and Garbanzo’s restaurants.
Another Walgreens sale in the sector occurred in Boulder on 28th St., for $7.4 million, or $500 PSF, to a Florida buyer.
Sierra Trading Post Opens its Fort Collins Technology Campus
Sierra Trading Post Press Release : Sierra Trading Post – a multichannel retailer known for great deals on great brands – announces the grand opening of its new Fort Collins Technology Campus (FCTC) at 2002 Caribou Dr.
“Too big for the market” Describes Spikes in Vacancy Rates
General Highlight: “Too big for the market” might describe some spikes in the vacancy rates across the region.
Industrial & Flex:
The “former Agilent plant” in Loveland has been purchased and is being restored by a Kentucky based investor (Cumberland and Western). The RR Donnely plant in Greeley is now on the market after their departure. Properties slated to be demolished at the former Kodak plant are theoretically on the market. All of these properties are likely “too big for the market”. They are not readily demised to smaller spaces more typically sought in northern CO (200,000 square feet and less). Consequently, Loveland showed vacancy of 15%, and the Greeley area showed 20% rates.
More typical of the recent market activity, was Mountain Molding’s 11,000 SF flex property lease at the I-25 Longmont interchange, a Boulder area flex lease on E. Walnut for 9,600 SF, and two Colorado Technology Center flex leases in Louisville at 8,600 and 7,600 SF.
A Texas transportation services firm (oil and gas industry) bought a site on north I-25 Frontage rd. for $1.1 million. This was a $166 PSF purchase, but included a sizeable yard/excess land. An excavating company bought nearby for $600,000, or $90 PSF.
Office:
Fort Collins and Boulder continued to slowly absorb space, and both posted 8% vacancy rates. Loveland joined them in terms of positive absorption, but was a couple percentage points higher in terms of vacancy.
Backfill time is lowest in Fort Collins and Boulder at 19 months on average, whereas the other three communities range upwards of 32 months to backfill a vacancy
Retail:
Investors continued to have a healthy appetite for national credit tenant properties. The Carrabas restaurant on McCaslin Blvd. in Louisville was sold along with a portfolio of 15 similar properties across the country to a private equity group (Cole) as part of a $98 million transaction.
A Walgreen’s store in Greeley sold to a Massachusetts based investor for $5.7 million of $452 PSF.
A former automobile dealership was sold to Conscience Bay Motors in Boulder for $4.3 million, or $150 PSF. The site is scheduled for a re-development play.
Industrial and Flex were most active. Two mall sales on the retail side.
General Highlight: With the extra day for leap year you might think activity would go up! However, only the industrial & flex showed reasonable activity.
Industrial & Flex:
The largest area flex lease was a 43,000 SF deal at the Campus at Longmont, on Pike Rd. Aspen Laser & Technology also leased 11,000 SF at the same campus.
A Prospect East Research Park property on Midpoint signed up a 10,500 SF flex tenant in February.
On the warehouse side, an industrial property on Zurich St. in Fort Collins landed the two largest leases at 13,500 and 10,400 SF.
Kaiser Medical purchased a class A flex property at 4901 Big Thompson in Loveland to anchor their northern CO expansion move. The property sold for $4.8 million, or $158 PSF.
Office:
Generally a slow month in the region for office properties. Of singular note was Kaiser Medical’s second excursion into northern CO, as they signed a 21,000 SF lease at the Harmony Corporate Center in Fort Collins. Kaiser is reportedly also looking for space in the Greeley region, which will establish them in three additional northern CO this year.
Retail:
Perhaps some post holiday blues in the retail sector should be normally anticipated. Both the Boulder and Fort Collins metro areas have experienced some negative absorption this year. Some retailers consolidate or close right after the holidays. Loveland countered this trend, however, with almost 50,000 SF absorbed in the two months of 2012.
What do you do with aging retail malls? In our area, two sales of note might lead to an answer. The Twin Peaks Mall in Longmont, with 462,000 SF, sold for a price less than $20 PSF. Meanwhile, the Greeley Mall at 505,000 SF just auctioned off at $6.1 million, or a mere $12 PSF. Both sales reflect the massive investment expense to rehabilitate and restore the properties. Sales pricing almost reflects ground value only.
At the other end of the spectrum, the Walgreens store in Loveland sold for $5.8 million, and $365 PSF, in an investor purchase. Triple net single tenant properties occupied by strong tenants such as Walgreens remain in high demand for investors seeking higher yields on their money than can be had in money market instruments. JP Morgan/Chase Bank bought a nice office/bank at 2950 Pearl St. in Boulder for $3 million, and $434 PSF.
Owner-User Purchases Dominate on the Sales Side; Absorption Slips
General Highlight: Owner-user purchases dominated the sales side, while leasing absorption slipped in some areas.
Industrial & Flex:
The largest area industrial lease was a 20,000 SF Loveland lease to a gymnastics gym.
A large land sale from Kodak to BROE companies in Windsor highlighted the sales side. BROE is working with partners to develop a rail terminal to service the fast emerging oil and gas industry in the area. Trucking firms have been extremely active in the area and it is logical to expect rail service as the next step in hauling materials in and oil out. The two former Kodak buildings onsite will likely be demolished or repurposed for the transportation hub being created.
Almost 100,000 SF of industrial space was absorbed in January between the Boulder, Fort Collins, and Greeley metro areas. Only Longmont and Loveland stagnated in this measurement in January.
Two owner-occupied purchases were of note this month. A food produce distribution company purchased a $3 million Erie based temperature controlled warehouse facility at $62 PSF. A pharmaceutical research firm, Pre-Clinical Services, purchased its place of tenancy on Webster Street in Fort Collins for $1.4 million, $63 PSF.
A self-storage facility in Greeley sold for $30 PSF, at $1.1 million for 277 units.
An investor bought a vacant flex property in the Colorado Tech Center in Louisville for $1.4 million, or $45 PSF. This shows the market trend of 33% price discounting for vacant, vs. occupied properties that has been typical for our market.
Office:
For the first time in months, office absorption turned slightly negative. Only Boulder posted positive absorption (36,000 SF), while the other four metro areas had 22,000 SF of negative absorption between them.
GE Analytics negotiated a 29,000 SF build to suit expansion of their Gunbarrel, Boulder location, with their landlord.
WW Reynolds negotiated an 18,000 SF lease at their Lake Centre campus in Boulder, on Airport Boulevard.
On the sales side, Home State Bank purchased its current place of tenancy in downtown Fort Collins for $3.1 million.
Retail:
Retail activity continues to be centered on smaller storefront activity. Fort Collins shows vacancy levels now at 7%. With average lease rates of approximately $12.50 PSF, this activity has largely been in absorption of class B or C space. Loveland and Longmont both are now posting vacancy levels at 5% or below, and maintain average lease rates above $15.00 PSF nnn.
Images leased a former tire store on Mountain Ave. in downtown Fort Collins, absorbing 8,000 SF. Typical leasing activity has been this size or smaller throughout the region, as larger box retailers and new developments were filled last year, on the larger size.
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.
Boulder County Office Activity Led the Regional CRE Market Headlines
Industrial & Flex:
The largest area industrial leases were both in the 12,000 SF range. Slager Trucking leased space along US Highway 34 between Greeley and Loveland, at the former Yellow Freight depot facility. Nugent Movers leased 6,300 SF at the intersection of Harmony Rd. and I-25, and a light industrial user leased 12,000 SF at 1341 Sherman in Longmont.
1812 Boxelder in Louisville sold right before foreclosure auction to an entity related to Etkin Companies. The property in the Colorado Technology Park had more industrial qualities to it than most in the area, as it had been used for welding operations in the past. $1.85 million, at $54 PSF.
4745 Walnut sold as a flex building, for $1.725 million, $83 PSF in Boulder.
Office:
Boulder was very active on the leasing front. Vacancy levels fell 100 basis points to 10%.
During November, six major leases accounted for over 140,000 SF of new rented space. This included 38,000 SF at 4780 Pearl East, 21,000 SF at 363 Centennial, 19,000 SF at 1100 McCaslin, and 18,000 SF at 6328 Monarch Place.
Lease rates for the new activity ranged from $9.75 – $13.50 PSF, plus triple nets.
Major office sales were highlighted by the $32 million Coal Creek Business Park portfolio sale to Founders Properties LLC, at an average price of $157 PSF.
Loveland featured another investment sale of a Class A property, as 6125 SkyPond sold for a 7.7% CAP rate, for a total price of $8.35 million. A local entrepreneurial investor purchased this property that had three professional services tenants.
A medical office/clinic providing cancer care services sold for $2.4 million to Poudre Valley Health Care systems, on the grounds of the south campus of the large medical provider in Fort Collins. Sales price was just over $300 PSF.
Boulder and Fort Collins’ metro areas have both absorbed about 160,000 SF of office space this year to lead the region.
Retail:
The region is enjoying sub 10% retail vacancy (with Greeley slightly higher at 11%). During November, the metro areas were stable with little new activity of note.
The flex market is starting to have activity. On the leasing front, the Longmont market had two of the month’s larger leases in flex properties. Monarch Park Place had an 18,000 SF lease, and Kansas Ave. had a 10,000 SF lease.
A Longmont portfolio sold for about $30 million split between a 150,000 SF Nelson Rd. property, a 92,000 SF Miller Rd. property and a 58,000 Pike Rd. property. Buyer was Fortress Credit, in an investment play.
Greeley featured a warehouse sale of 17,000 SF on 2nd Ave. A crane business and building was sold to a Denver based trucking concern. Real estate allocation was $1.5 million.
The largest lease transaction occurred in Frederick, on Miller Dr., off the highway 52 interchange with I-25. A Longmont based manufacturer, Premier Manufacturing, greatly expanded its footprint at the former Spartan Medical facility, a class A grade facility with about 45,000 SF.
Longmont and Loveland metro areas had 16% vacancy levels, while all others were below 7%. With the pending sale of the former Agilent campus in Loveland to the ACE/NASA project, Loveland will drop to these lower levels,too.
Office:
Office sales were robust due to one large portfolio transaction. A 19 building, 743,000 SF portfolio at Flatiron Business Park in Boulder was sold to Goff Capital Partners for about $70 million dollars. The properties had approximately 20% vacancy levels. Selling prices ranged from $70 PSF to $120 PSF. Some of these buildings were purely office, and some had flex and R&D building characteristics.
An office property at Hover Business Park on 17th in Longmont, sold for $120 PSF, at $1.5 million. JP Morgan Chase Bank bought the property.
Fort Collins leads all areas in absorption with almost 160,000 SF this year, while Greeley trails with a negative 50,000 SF.
Vacancy levels across all metro areas hovered near 10% and were either stable or slightly falling this month.
Retail:
The region is enjoying sub 10% retail vacancy. The large developments have masked the weaker small retailer property. Longmont has only 5% vacant available space, and others range from 6%, to 11% on the upper end for Greeley.
“Main Street” type sales included a former auto dealership on Lincoln Ave. in Loveland, where a 33,000 SF building sold for only $800,000. Another auto service related buyer purchased a 5000 SF facility in Frederick, on county road 13, for $650,000.
The largest retail deal was the $7.4 million sale of the Walgreen’s store on 28th St. in Boulder. This investment property sold for about $400 PSF.
Lease deals in October included the 5,000 SF Sears Home Appliance transaction in Superior Marketplace and the 4,000 SF “The Library” lease in Greeley’s University Center. Most others were less than 3,000 SF as smaller retailers started finding space in the market again.
All markets are still taking 18-24 months to backfill, so the positive absorption is good news for landlords, though perhaps not at the velocity they would hope for.
Check Out September’s Talking Points Today!
Industrial & Flex:
By the end of the third quarter, Industrial property is showing positive absorption of about 300,000 SF across the 60 million square feet in the region ( a 0.5% positive trend).
The Boulder metro area and Longmont metro areas are the leaders in absorption and sales activity.
Very few warehouse sales of substance in the area. A class C warehouse sold in Boulder at 5680 Valmont, for $800,000, or $47 PSF
In the flex property type, a 55,000 SF flex property in the Gunbarrel Business Park of Boulder sold for $3.6 million, or $65 PSF. The sales price was a 31% discount from ask price.
On the leasing front: Pollard Motors leased approximately 10,000 SF of warehouse space, and Crossfit Roots leased the same amount of flex space, both in Boulder.
With the exception of the Loveland area, all regions featured sub 10% vacancy rates.
Office:
The lead regions for absorption so far this year are Fort Collins, Loveland and Longmont, with 2% positive absorption each. Fort Collins led in total square feet, with approximately 165,000 feet out of 6.8 million SF absorbed.
The largest “sale” was the foreclosure sale of 371 Centennial Pkwy in Louisville, to Bank of America. The 73,000 SF building was vacant at time of sale.
FirstBank bought a 6000 SF class C multi-tenant office (Sunburst Professional Bldg) adjacent to its Loveland Eisenhower Blvd. location. It paid $104 PSF and picked up additional parking for its corner location.
Boulder featured the two largest lease signings. OPX Biotechnologies leased 16,000 SF at the Flatiron West office park for $11.50 PSF, and Cardinal Peak signed at the same rate in Lafayette for 12,000 SF at 1380 Forest Park Cr.
Backfill time for vacant space is averaging 20 – 24 months across the region.
Retail:
On the strength of several big-box developments, the region is enjoying sub 10% retail vacancy. The large developments have masked the weaker small retailer property.
Sales of note include the Fort Collins Best Buy, which sold in portfolio with properties across the nation for a blended rate of $66 PSF. National Retail Properties in Florida purchased the building. A former Saab dealership property in Fort Collins was sold for $1.65 million, or $167 PSF. An Applebees restaurant long term lease property was sold in Fort Collins for $309 PSF, and a reported capitalization rate of 8%. It was the second sale of the property in the last 18 months.
Lease deals in September included the 4,500 SF TCBY transaction for $16 PSF on Garfield St. in Loveland. Most others were less than 3,000 SF as smaller retailers started finding space in the market again.
In all, 900,000 SF of retail space has absorbed this year, spurred by the new WalMart complex which opened earlier this year in Longmont.
Boulder Leads the Region in Absorbtion & More in August Talking Points
INDUSTRIAL / FLEX:
Boulder leads the region in absorption (positive 240,000 SF), with the Loveland area next at 75,000 SF positive absorption this year The Fort Collins area had two large leases of note. Cargill leased 17,000 SF at I-25 and highway 14 for a steel plate distribution facility. Rail access was critical to this placement. Colorado equipment leased 18,000 SF nearby on highway 14 (Mulberry Ave.) for their regional center. The greater Loveland area would show the lowest vacancy and availability rate if one factored out the new ACE/NASA research park site (former Agilent). The city of Loveland is still searching for a park operator in conjunction with the CAMT association group after Minneapolis based United Properties dropped their offer for the site. With 1.4 million SF of vacant industrial space in Loveland, the resultant non-ACE statistical vacancy would drop to about 500,000 SF. The greater Longmont metro area is also enjoying some new leasing activity. Funovation, (builds laser tag equipment) moved into 11,000 SF on Sunset Dr., and Sundrop Fuels occupied 12,500 SF at The Campus at Longmont. The just announced 2012 Butterball turkey processing plant closure will open up a large amount of industrial space, however. Though Greeley area leasing activity was mild this last month, half of the leases were to oil and gas related companies for spaces below 5,000 SF in general. A multi-tenant mixed-use investment property at 1990 59th St. in Greeley sold for $2 million, at a 9% capitalization rate. The sale was part of a multi-property transaction and the property was occupied by local origin tenants Available space rates continue to be about twice the rate of vacant space on the market. This rather high amount of availability shows that many companies are moving, consolidating, or planning on expansion at a new location, or shutdown at their current location. This rate has risen over the year from ~ 5% (500 basis point) spread, to 8% (800 basis point) spread now.
OFFICE:
All the metro areas except Greeley have enjoyed positive office absorption year to date. Fort Collins leads all areas with almost 125,000 SF absorbed in 2011. Boulder’s leasing activity in general was “hot” by regional standards. Boulder leasing activity across all property types in July and August alone created 180,000 SF of positive absorption, compared to 230,000 SF in all of 2010. Boulder leases included Indra’s Net at LakeCentre Business Park, and Juwi Wind at Pearl East, both at about 7,000 SF.
RETAIL:
All metro areas have enjoyed positive absorption in the retail sector this year. Much of this is due to big box type retail openings in the Longmont and Greeley areas. An automobile dealership building sold on Main St. in Longmont for $1.1 million, or $45 PSF. The property was built in the mid-1960’s. The Black Diamond Marketplace on I-25 Frontage Road outside Longmont sold for $1.6 million to an investor. Tenants include Starbucks and Qdoba restaurants. The historic Windsor Mill changed ownership back into the hands of a previous owner in an off-market deal. The property had once received a grant for renovation, though never done.
SVN/The Group Commercial, LLC · 2020 Caribou Drive, Suite 201 · Fort Collins, CO 80525 · Phone 970.207.0700 · Fax 970.282.0785
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