The tight commercial real estate market along the U.S. 36 corridor has prompted the development of one speculative office building and the purchase of nearly 50 acres of land for future industrial build-to-suit development.
International real estate firm Hines last fall started construction of Eos at Interlocken, a 186,000-square-foot office building in Broomfield, and Denver-based Etkin Johnson Group recently purchased 48.85 acres of ground at Colorado Technology Center in Louisville.
The northwest and west office submarkets were the least affected by the economic downturn and continue to have the lowest vacancy — 11.5 percent — in the metro area, according to a year-end report by Cassidy Turley Fuller Real Estate. The average asking lease rate of $20.57 also remained stable, dropping only 6 percent from its peak in 2008.
“Class A vacancy is very tight up there,” said Jay Despard, a vice president at Hines. “In the newer buildings, the vacancy is under 6 percent.”
There are a number of tenants, including several from outside of Colorado, that are interested in leasing the entire building, Despard said. There also is plenty of demand from companies looking for 25,000 to 65,000 square feet of space.
“There are very few large blocks of space,” said Ted Harris, managing director of the tenant representation brokerage Studley. “If were were looking for 100,000 square feet, you would have nowhere to go in the northwest market.”
The northwest and Boulder industrial market also performed well in 2011, with vacancy dropping from 8.1 percent to 7.5 percent, according to the Cassidy Turley Fuller report. That’s prompted growing confidence from developers, though it’s likely to be at least a year before any significant construction activity occurs, the report states.
“There’s been a significant amount of demand over the last three months — it’s like a light switch went on,” said Andrew Freeman, president of Freeman Myre Commercial Real Estate in Boulder, who specializes in industrial properties. “We’ve had a significant amount of activity with companies expanding. This has all happened pretty quickly. It feels like developers will take a look at this market and start building spec.”
The 580-acre Colorado Technology Center has an impressive roster of tenants, many of which are expanding. Racquet-sport specialist Babolat, for example, recently increased its space from 30,000 square feet to 80,000 square feet; and Pearl Izumi is considering building a facility that is up to 20,000 square feet larger than the 92,000 square feet it currently occupies, said Bonnie Star, Louisville’s economic development director.
“Our prices are reasonable, and it’s perceived as a high-quality community to be in,” Star said. “We also have the reputation of being business friendly. Council has approved every incentive package that’s come before them.”
Meanwhile, ConocoPhillips has requested a year-long extension to the April deadline for submitting its final development plan for StorageTek’s former 432-acre campus, Louisville City Manager Malcom Fleming said. The company needs the extra time because it is splitting into two business units.
“Once that is completed by the end of June, they’ll start moving on their development plans,” Fleming said.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
