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Canadians Buying Fort Collins Multi-Family Buildings…
General Highlight:
Land transactions highlight the month, which is a real change from the activity of the past recessionary years! Of course, multi-family properties are still in high demand for investors.
Industrial & Flex:
On the leasing front, 32,000 square foot tenant PharMerica renewed their lease on Sunset St. in Longmont. Tebo Development signed up a 19,000 square foot warehouse tenant at their Aspen Ridge building in Lafayette.
In the 5 metro areas of northern CO, industrial properties in Boulder and Fort Collins have been backfilling vacancies in 18 months or less on average. Greeley leads all five communities this year with almost 200,000 square feet positively absorbed in the industrial sector.
Office:
A multi-tenant office building in Lafayette, near Arapahoe and 95th, sold for $170 per square foot, at $1.25 million.
While leasing activity was strong in greater Boulder metro, the area has actually had negative absorption so far this year in the office category. New tenants have not absorbed all square footage put back on the market by tenant downsizing, actions.
Retail/Hospitality/Multi-Family:
Settlers’ Creek apartments in Fort Collins, a 229 unit development built in 2009, was sold for $32.2 million as part of a six property nationwide portfolio trade to a Canadian REIT (Morguard). The $121,500 per unit selling price was accompanied by a 7% capitalization rate on net income. The REIT had underlying finance costs of 3.51% to 4.86% across the portfolio.
Land:
Residential development land has become a hot commodity if well located. A 135 acre parcel platted for 450 lots, sold in fast-developing Erie sold for $1.09 per square foot. The pricing works out to about $14,000 per paper lot, for single family development purposes.
A 255 acre mixed use development parcel that sold at the Johnstown/ I-25 interchange, showed that some distressed land is still available. This parcel sold for $0.29 per square foot to a New York based company. Half of the parcel is slated for residential development.
On the higher price per square foot realm, a 6,300 square foot downtown Boulder infill lot sold for $1.9 million. 909 Walnut will likely be a mixed use, multi-story development.
Retail:
The downtown Boulder Armory building, occupied by retailer Urban Outfitters, sold for $6.3 million, or $531 per square foot. The east end of Boulder’s central business corridor is gaining momentum with the Eleventh and Pearl redevelopment just getting underway, and other nearby re-development activities.
Fort Collins’s Palmer Design strip center sold a $1.5 condominium interest at $290 per square foot. Loveland leads the five metro areas with a low 4% vacancy rate. It has absorbed over 147,000 square feet so far this year. Longmont’s retail activity has slowed after an active 2012.
Office Activity Slowed, But Industrial and Retail Active
General Highlight:
While office activity slowed this last month, industrial and retail activity weren’t following suit. Energy, health care, social services, and technology industries continue to be active in the commercial real estate activity of the tri-county area. Redevelopment plays were also featured.
Industrial & Flex:
Weld county continues to generate energy industry leases of note. This month, E & B Oilfield services located close to the current concentrated exploration area in Nunn CO, in about 5,000 square feet.
Another energy industry purchase occurred in Fort Collins, where R&B Resources purchased 22,436 SF of industrial condominium space for $1,050,000.00, or $77 PSF. One to watch, too, is a $4.5 million purchase of the Hudson Tyreville recycling plant. A CA firm, Gallo Exploration, Inc., purchased the 118 acre site and 20,000 SF facility.
An interesting, but functionally challenging, property sold in Berthoud. At $1.325 million, is sold less than $15 psf. The former Champion Homes modular building manufacturing site sold to a group planning on redeveloping the 78 acre industrial site. Similar major redevelopment plans are coming from a purchase of an older car wash facility on north College Ave. in Fort Collins. Spirae, Inc. will take on the building for redevelopment to be located close to the CSU Engines Lab which has generated a lot of new technology companies. Purchase price was $1,655,000.00.
Fort Collins is the tightest market, with only 3.5% of its 12 million square feet vacant. Rents are rising in most of the metro areas.
Office:
Health care leasing was a story here, with 9,000 SF leased by APRIA in Greeley. Closely related is continuing social services activity, where the Center for Family Outreach leased 5,000 SF in Fort Collins. Mountain Sage schools leased 15,000 SF in a flex building in Fort Collins.
37,000 SF of office was sub-leased by Spectralink, at Flatiron North in Boulder, leaving about 8,000 SF left on the market from that offering.
The five metro areas have all slowed the trend of positive absorption seen in 2012. Most hovered at a break-even, or static level so far this year.
Retail/Hospitality/Multi-Family:
This sector has taken on vibrancy in the first quarter. Almost 300,000 SF of positive absorption in the five metro area of the three counties, has occurred.
Brinkman Partners bought a neighborhood shopping center in Loveland on 29th St., for $3.1 million, or $84 PSF, at a reported 8.55% cap rate return. The two properties have deferred maintenance and were about 76% leased at time of sale.
Vacancy & Rents Lines Cross –> Movement Towards a Landlord Market
General Highlight:
The “crossing of the lines” in the office market has now occurred in four of the five northern CO metro areas. As vacancy drops, rents are increasing. Look to our individual metro reports to see this graphically. Greeley, Fort Collins, and even more pronounced in Longmont and Boulder have seen this shift from Tenant market, to emerging Landlord market.
Industrial & Flex:
Warehouse rents are a relative bargain in the area in Greeley, where the high percentage of class “C” stock impacts the area average rate of $5.00 PSF, NNN. Energy companies continue to look for space in the area. Bonanza Creek Energy purchased an industrial building formerly hosting a drywall company, for $60 PSF, totaling $785,000.
Another typical energy industry purchase occurred in Frederick, where Sitewise Industries purchased a 14,000 SF building with 5 acres yard space at $1.15 million.
Left Hand Design purchased a Longmont building on Miller for $1.9 million, or $50 PSF
Fort Collins is the tightest market, with only 4% of its 12 million square feet vacant. Rents are rising for the remaining space. Boulder has absorbed 60,000 SF this year already. Longmont’s warehouse availability doubled with the closure of the Butterball Turkey plant, while the flex property type has had good activity.
Office:
Health care purchases grabbed the major headlines. Griffin-American REIT II, Inc. purchased the Condordia campus medical center in Greeley for $15,050,000.00. Ur-locical Choice purchased a medical office condominium at Foothills Medical campus in Boulder for $1.3 million. In Fort Collins ECA Properties purchased a stand alone building on Drake Rd. for $1.3 million.
8,000 SF of office was leased at the Campus at Longmont, while McWhinney Companies placed a 5,000 SF tenant at their Loveland Centerra Rangeview properties, CSU rented 7,000 SF near campus in Fort Collins, and Boulder featured leases of 4,000 SF at the downtown Randolph building, and 6,000 SF at the 3223 Arapahoe building.
The average lease size is increasing recently from what has been experienced in the past recession era. The deal sizes noted above are “trending” now.
Retail/Hospitality/Multi-Family:
A mirror image of sorts marks Fort Collins and Boulder metro areas. Both stand at 6% vacancy, 70,000 SF absorbed, and rents rising rapidly as supply diminishes. Breckinridge Brewery bought a downtown Fort Collins property for $2.4 million to establish a restaurant. The Colony Square retail center in Louisville was sold to investors for $3.4 million and a 8.75% cap. Rate projected return.
The Loftus Group finalized a purchase of the vacant Safeway Store in Louisville at $1.55 million, $28 PSF, to facilitate a redevelopment play. Stephen Tebo purchased the high travelled corner property on Folsom and Canyon for $1.1 million. It had been operating as a coffee shop.
Industrial activity takes the stage after last month’s multi-family and investment property end of year blast.
Industrial & Flex:
Warehouse leasing and sales were active, primarily in the energy sector of Weld county.
A lease of note was the 31,000 SF Border States Industries lease on 4th St. in Greeley. Greeley started the year with almost 40,000 net SF of industrial space absorption. Two other approx. 10,000 SF leases were executed on E. Mulberry, Fort Collins, and Weaver Business Park in Longmont.
ABC Supply bought the 6,400 SF facility it had previously rented in Fort Collins. Sitting on a 5 acre parcel of ground on Canal St., the property traded for $830,000, and approx. $130 PSF.
Fort Collins average rates closed to within 3% of the metro Boulder rate, at $6.34 PSF, NNN, reflecting the tightening of the Fort Collins metro market.
Two 8,000 SF leases, approx., were inked with Tree Care Unlimited in LaSalle,
Office:
Poudre Valley Health Care purchased the Marina Plaza medical office building they occupied in Windsor, for $3.7 million. They occupy all of the approx. 27,000 SF.
Boulder weighed in with an 8,500 SF office lease at 5500 Central Ave.
Retail/Hospitality/Multi-Family:
A retail sale of note in Estes Park occurred, as First State Bank sold 165 Virginia, a multi-tenant facility, to a private value-investor. The building reportedly was sold for $35 PSF, at $930,000 total.
Bacco Mediterranean Restaurant leased a 4,500 SF restaurant building in Poudre Plaza, Fort Collins.
Land/Redevelopment:
Meritage Homes looks to continue it’s successful home sales path in Lafayette by purchasing 6 more acres in Silver Creek subdivision of Lafayette.
The Boulder International Hostel near the university, sold for $4.4 million to what is likely a redevelopment play of the property.
Investors Drawn to Office & Multi-Family Properties at End of the Year
General Highlight:
Investors were drawn to office and multi-family properties at the end of the year.
Industrial & Flex:
The largest industrial lease of the month was warehouse oriented, but in a flex building: 17,000 SF in The Campus in Longmont. Reported lease rate was $8.00 PSF.
An industrial purchase of note was the $1.4 million tenant to ownership trade at 320 Gateway in Johnstown. The bank owned warehouse sold to the 50% occupant tenant for $49 PSF. Two former SuperVac buildings in Loveland sold to non-industrial users. 42,000 SF was purchased by The House of Neighborly Service at $70 PSF, and Innovage Greater Colorado Pace bought 20,000 SF next to it at $63 PSF.
Boulder had only 1.2 million vacant SF out of an 18 million SF inventory (7% vacancy), while Fort Collins tightened to only 400,000 SF out of a 12.3 million SF inventory (4% vacancy).
Office:
Boulder had several larger trades in the office arena. An $11.9 million price was paid by a San Francisco investor for 1900 15th St. in the CBD area, reportedly for an in-place 6.5% capitalization rate of return. A multi tenant building on Aurora St. in Boulder traded for $3.9 million for 18,000 SF. Meanwhile, a Denver developer bought the much watched Eleventh and Pearl re-development site. The developer paid the CA based sellers $13.5 million for the proposed 125,000 SF redevelopment site in downtown Boulder.
Boulder also led the five metro areas in absorption over the year, with a 225 basis point drop to 8% vacancy rate. MMA Design leased 10,000 SF in Boulder on 55th St., at a facility where the ask rate was $11.50 PSF. A medical office user leased over 6,000 SF in Niwot at the United Medical Center, with a rate starting at $10.00 PSF.
Fort Collins experienced a 150 basis point absorption in office product, while Longmont trailed only Boulder with 200 basis points.
Retail/Hospitality/Multi-Family:
Retail sales were active in Fort Collins. A multi-tenant retail center in downtown Fort Collins sold to an investor for $2 million, or $243 PSF. The Best Western hotel across from the university in Fort Collins sold for $4.3 million to a Fort Collins operator.
Multi-family trades have always been news-worthy through this last year, and December was no different. The 254 unit Prana apartments in Lafayette, sold to a CA buyer for $36.1 million at a reported 7.3% capitalization rate.
A smaller 20 unit Greeley multi-family complex sold for $1.4 million to a Utah based buyer at a reported 9% cap rate.
Loveland, Fort Collins and Longmont all experienced 100-125 basis point absorption last year, and feature vacancy rates in retail around 5-6%.
Flex properties Filling Up with Increased Tech-Sector Activity
General Highlight:
Flex property activity highlighted the comeback of technology firms to the region.
Industrial & Flex:
The largest leases of the month were in the flex category: 10,000 SF in Fort Collins on Midpoint, and 8,300 SF to Minute Key on Walnut in Boulder, both properties owned by WW Reynolds. 9,600 SF was leased on Kansas Ave. in Longmont, owned by Etkin Johnson Company.
A 37,500 SF Fort Collins property sold to a tenant occupying the building, Organic Earth, at $64 PSF, $2.4 million. A multi-tenant flex property sold to a California investor in Longmont, on Kansas Ave., for $63 PSF, $1.7 million.
Fort Collins, Loveland and Greeley metro areas have all absorbed over 100,000 SF of vacancy this year. Fort Collins inventory is extremely low, with vacancy now at 4% after 160,000 SF of 2012 absorption year to date.
Boulder and Longmont have experienced the most lease activity (5% and 4% of total base square footage respectively), but absorption remains less than 1% at both locations. Lots of trading spaces, apparently…
Office:
Boulder has fared better in the office category, with almost 300,000 SF of year to date absorption. Greeley metro comes in second year to date with 220,000, much of which came from new-build projects for the energy sector, and call center activity.
Retail:
Retail sales for once were quiet, though the Comfort Suites in Fort Collins sold for $4.1 million or $62,000 “a key”, to a California operator.
In time for the holiday shopping season, Fort Collins ( 140,000 SF) and Longmont ( 100,000 SF) have absorbed the most vacant space.
Public announcements of major mall remodeling were made by Alberta Partners for the Foothills Fashion Mall in Fort Collins, and by NewMark Merrill for the Twin Peaks mall in Longmont. Both projects are aiming for 2014 “re-openings”, and will include outdoor plazas and pedestrian shopping areas, as well as enhanced interior space.
Land:
A 2.1 acre retail site was sold to O’Reilly’s Auto on Garfield Ave. in Loveland, for $5.89 PSF.
Several residential sites were put under contract in northern CO, as builders begin to take on non-developed land to satisfy high housing demand in the region. With most developed lots now accounted for, non-developed land is receiving attention. Watch for more land activity in the future.
Continued Investor Interest in the Tri-county Region
General Highlight:
Large portfolio trades dominated the retail and flex sales sector, signaling continued investor interest in the tri-county region.
Industrial & Flex:
A 34 property portfolio trade in Longmont cemented the area bullish outlook for Goff Capital Partners. The Campus at Longmont comprises over 1.13 million square feet, and was 70% occupied at time of sale. Total acquisition cost was $58 million, establishing an approximate $50 per square foot basis in the properties.
Fort Collins and Greeley metro areas have absorbed over 130,000 SF of vacancy this year. Fort Collins inventory is extremely low, with vacancy now at 4%. Almost no larger warehouse space is available in this metro area. Boulder is also tight with only 6% vacancy. Boulder’s absorption is flex dominant, while Fort Collins has been light industrial and warehouse oriented.
Office:
Medical office buildings are in high demand. 1000 Alpine, a multi-tenant medical building in Boulder, sold to the Mental Health Center of Boulder County for $5.3 million, or about $180 psf.
The R&D centers of the region, Fort Collins and Boulder, have seen over 100 basis point reductions in vacancy, and almost 400,000 SF absorption between the two university cities this year to date.
Retail:
Retail portfolio sales included the 1.2 million Flatirons Crossing 75% repurchase by Macerich of Santa Monica CA for approximately $300 million at an in-place capitalization rate of 6%. Kimco Realty of New York purchased 89% of the Greeley Commons 139,000 SF center for $23.4 million.
Loveland’s Sportsman’s Warehouse sold in a portfolio of six stores across the nation, at an 8% capitalization rate, and $115 PSF.
Loveland is the tightest market at only 4% vacancy. Perhaps this activity is why Bass Pro Shops announced a new store in the Centerra development.
Longmont has been active as well, reducing vacancy rates to 5%, with a 150 basis point drop over the last twelve months, and 110,000 SF absorbed this year.
Land:
A 74 lot residential development on Kechter rd. in Fort Collins sold for $20,000 per lot, partially developed. A homebuilder from Arizona, Meritage Homes, made the purchase. Area homebuilding has gained much energy of late.
Flexing its muscle, the long dormant “flex” property type led the way in the region.
Industrial & Flex:
Flex became the property type of note, as most of the larger leasing activity centered in the Boulder and Longmont areas in this category.Leading the way was 19,000 SF at 1951 S. Fordham in Longmont, 8,400 SF on Airport Blvd. in Boulder, and E Source Companies taking 35,000 SF in Boulder on 38th St.
The energy industry continued to absorb space, though in smaller square footages.Tetra Tech took 4,350 SF on Highway 66 and I-25, Longmont, while Construction Zone took 3,400 SF in Fort Lupton.Energy contractors tend to like no more than 5,000 SF properties that offer several acres of outside truck and equipment storage and parking area.
The entire tri-county region has absorbed over one half million square feet of space this year.Save for the “too large for the current market” properties: Boomerang/former HP and former RR Donnelly in Greeley, Kodak plant in Windsor, Butterball Turkey in Longmont, and the soon to be revitalized Rocky Mountain Center for Innovation and Technology in Loveland, the industrial vacancy rate would be near 5% across the board.
Office:
Owner occupied purchases were the story in this category.A new charter school in Fort Collins, Colorado Early College, bought a 25,000 SF OREO property from FirsTier Bank, Wyoming, for $115 PSF and will occupy it after retrofit to a school.FMS Bank out of Fort Morgan bought the former New Frontier Bank headquarters in Greeley, for $2.525 million, or $118 PSF, for their new Weld county operations bank center.
The region has also shown similar absorption to the industrial sector, in this office category.Approximately 500,000 SF positive absorption has occurred this year in office properties.
Retail:
Retail leases included a 7,500 SF Crazy Jack’s Saloon placement on So. College in Fort Collins.
Land:
Boulder County purchased acreage and building at 1100 Main in Longmont for $10.8 million.
Flexing its muscle, the long dormant “flex” property type led the way in the region.
Retail Centers Offered as Pure Yield Investments are Also Trading
General Highlight:
Retail centers offered as pure yield investments are also trading. The $58 million Harmony Marketplace (Fort Collins) transaction to AmCap out of Connecticut is the most recent example.
Industrial & Flex:
Boulder has trended 100 basis points of absorption every year since 2009, with this year being no exception. The area is absorbing 150,000 SF per year in this type of property.
Greeley has added 300 basis points to inventory over the past few years, primarily due to large properties that are “too large for the market”, discussed in previous months (ex-Kodak, ex-HP plant, etc).
Large leases in August included Anadarko’s 50,000 SF lease in Platteville, which is larger than most of the energy industry transactions in the area. Woodward leased 46,000 SF on highway 34 in Windsor, taking on a former car dealership to re-purpose for manufacturing purposes.
Office:
Greeley is finally showing some positive absorption after a multi-year period of stagnation and inactivity. Typical tenancies are small spaces.
McWhinney placed 17,000 SF of medical use in their medical office building by the MCR hospital. NetApp leased 7,000 SF on Airport Blvd. in Boulder.
The Maxim building in the CBD area of Boulder sold for $7 million, $450 PSF. FMS bank out of Fort Morgan bought a bank building on 35th in Greeley for $2.5 million, $120 PSF. US-Reports bought a Loveland building in the airpark for $1.25 million, at $100 PSF.
Retail:
Retail sales included The Pontiac-Chevrolet dealership in Longmont for $6 million, $200 PSF. A neighborhood strip center in Fort Lupton on Dexter, sold at an 8.6% Cap. Rate for $1.75 million, or $110 PSF to a private investor.
Shopping Malls in the Region Continue to Sell for Turn-Around Opportunity
General Highlight:
General Growth sold the Fort Collins Fashion Mall for $40 million to Alberta Partners, backed by a Chicago Illinois capital partner – Walton Capital.
Industrial & Flex:
Boulder, Fort Collins and Longmont have combined for over ½ million square feet of absorption in this property class this year. Vacancy rates keep narrowing, with flex property leasing picking up this quarter.
Frictionless World leased 18,000 SF at the Colorado Tech Center, Louisville. Upslope Brewery leased 12,500 SF in Flatiron Park, Boulder. Nor-Sky Pet Supply leased 8,000 SF in Loveland off Denver Avenue. The Campus at Longmont had another 12,000 SF flex lease during the month, also.
Office:
Fort Collins continues a slow, but steady absorption. The city had over 12% vacancy in 2009, and is now down to only 8%.
Spreads between “available” space and “vacant” space have diminished slightly to 400 basis points across most of the metro areas. This shows some reduction in area office space volatility. 500-700 basis points were commonly found a few years ago.
The largest office lease last month was Bull Frog’s 9,600 SF transaction at the Flatiron Park West in Boulder. Wells Fargo Financial Advisors took 7,000 SF in Fort Collins on McMurray St.
Retail:
Additional retail sales included a $16.1 million mixed use property at 10th and Pearl in Boulder, for $346 PSF. Western Meadows retail center in Longmont sold for $3.75 million at $234 PSF, where a bank facility on Boardwalk in Fort Collins sold to Warren Credit Union for $1.95 million at $162 PSF.
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