The downtown Safeway building will have a new tenant by Jan. 1 after sitting vacant for more than a year,
24 Hour Fitness plans to install a swimming pool and basketball court as part of about $8 million in renovations and improvements on the site, 460A S. College Ave.
"They've been trying to find a space in downtown for years and this one works," said Eric Holsapple, a principal with LC Real Estate. "I think they will get a lot of demand for it."
LC Real Estate purchased the building that also houses Mulberry Max liquor store, in 2015 for $8.8 million. Safeway, which had been part of the site since 1988, closed in February 2017.
The prime downtown site generated interest from other health clubs and redevelopers.
Holsapple said his first priority for the site was "to put food in there," he said. But "with Lucky's Market going in across the way (in the former Sports Authority site), people didn't feel like there was a demand for two" grocers. And Safeway, which continued to pay rent on the space, "didn't really want another grocer in there," Holsapple said.
LC Real Estate is investing about $5 million into the building for a new roof and HVAC system, and 24 Hour Fitness is putting in another $3 million to turn the grocery space into a health club. The building, built in 1988, "is still in good shape," with about 250 parking spaces in its below-ground and surface parking lot, Holsapple said. The property still has some redevelopment opportunities that could involve 24 Hour Fitness, but the timing isn't right, he said. "We are about 10 years into the (economic) expansion cycle. By the time the project got approved and built, "we weren't confident enough (in the cycle) to do a major construction project now," Holsapple said.
LC Real Estate put about $500,000 into the parking structure when it bought the property, Holsapple said.
24 Hour Fitness representatives declined to comment for this story. It has another Fort Collins club at 2208 E. Harmony Road.
The fitness chain signed a 15-year lease with LC Real Estate.
FORT COLLINS — Developers are hesitant to take on large residential projects in Northern Colorado despite there being an increasing demand for them, citing deterrents of higher construction costs and water-tap fees, and the lengthening of the entitlement process.
Realtors and developers on Tuesday at BizWest’s CEO Roundtable on Real Estate said that the short supply of homes coupled with the growing population is driving up home costs in Northern Colorado, impacting companies trying to recruit workers and putting a damper on economic development for the area.
“A homeowner is in good shape, because equity is at an all-time high,” said Brandon Wells, president of real estate brokerage The Group Inc. “Current conditions — being undersupplied with costs that are too high — is driving home value appreciation,” he said. “We are approaching double-digit appreciation.”
Wells and Nathan Klein, a partner with LC Real Estate Group, said homebuyers entering the Northern Colorado market from the Bay Area are bringing “a lot of cash” and the prices here don’t bother them. But people coming from the Midwest are concerned about prices here. In the meantime, the high prices are creating a generation of renters.
“We’ve no product to fill that gap,” Wells said. “The entitlement process is now up to three years before a developer can bring a project to market.”
Kris Pickett, manager of consulting firm Olsson Associates, said it is difficult to find lots on which to build; plus, there isn’t a new wave of developers to take on the challenges.
“There’s no money to be made as a developer,” Klein said. “Every input is costing more — water, asphalt, wood … and water is a significant undertone here … there needs to be more efficient water-distribution systems.”
Kevin Brinkman, chief executive of real estate development firm Brinkman, is concerned over President Trump imposing tariffs on imported steel and aluminum.
“It’s amazing how much steel is used in constructing a building,” Brinkman pointed out.
Stu MacMillan, owner of MacMillan Development, said right now is a difficult time to develop, because of water driving up costs. He also said in Fort Collins, there is an abundance of requests to develop student housing.
Connie Dohn, co-owner of Dohn Construction Inc., said a shortage of skilled construction labor force adds to the length of time it takes to complete a project, increasing costs.
“There aren’t a lot of young people entering the building trades, and we have to pay more than what they (inexperienced) are worth,” she said.
Dohn believes there are opportunities in the condominium market, but because of the state’s construction-defects laws, it is difficult for a developer to get insurance to cover a project.
“There is a greater risk is this lower end of the market,” she said.
The CEOs in the room agreed that a reform of construction-defects laws passed last year to help spur condominium development fell short of its goal.
Wells is fearful that proposed slow-growth initiatives will exacerbate the problems of high housing prices. “We need to solve the condo market problem, he said.
The hottest sector for commercial construction has been in industrial and warehouse buildings.
Steve Kawulok, managing director of SVN/Denver Commercial LLC, said industrial lots are selling in the region, being termed as “spillover from Denver,” as land costs increase in and around that city.
Kittie Hook, a broker with Newmark Knight Frank in Denver, predicted development sprawl from Denver “has already begun to move north” and will continue.
Kawulok observed that a lot of commercial property is being snapped up more and more by outside capital.
“One out of four buyers are bringing in fresh money, and one-third of the dollars being spent is by outside buyers, adding a new dimension,” Kawulok said.
Klein said larger investment groups, such as real estate investment trusts, are more apt to invest and build here, because they don’t require the same return on investment as a local developer.
Josh Guernsey, a principal at Waypoint Real Estate, said the office market is tight, but lease rates haven’t been going up that much. He also said companies are downsizing space to keep rates lower.
Guernsey believes technology is allowing companies to work with less space.
“Now, a person’s office can be in their iPad.”
Guernsey said companies in the past may have leased space to provide 225 square feet of space per worker, but when they rework their lease, they drop that to 175 square feet per worker. “It’s a substantial cost-savings,” he said.
Mark Bradley, owner of Realtec Commercial Real Estate Services in Greeley, said as companies recovered from the recession, “they squeezed space and created open office concepts to save money.”
New construction of office space in Northern Colorado is almost nonexistent, Klein said, because construction costs are up and lease rates are not keeping pace.
“Current lease rates don’t warrant new construction,” he said.
Steve Schroyer, director of real estate for Blue Ocean Enterprises Inc., said buying dilapidated buildings and repurposing them is becoming harder to do.
“It’s a tough environment. With increasing construction costs, it’s hard to complete a project and hold down rents.”
Coming soon in Fort Collins, LC Home is working on building their never-before-seen floor plan, called the Winter Park
The latest 2-story plan designed by LC Home
will be debuted for the first time in the Spring Creek neighborhood in southeast Fort Collins.
This new layout emphasizes efficient space, while also a contemporary open feeling. Of the 8 homes
that will be built, all will have 3 upstairs bedrooms with an open loft area, and 2 of the plans will include a finished basement with a 4th bedroom, bathroom, and open living area.
The large covered front porch is not obstructed or crowded by a large garage door, as it is situated in an alley-style configuration
. Each home will back to a private road, which will access the spacious 2-car garage. Apart from the added privacy, this design brings a warm, welcoming feeling to the front of the home.
The Winter Parks are situated on lots ranging from 4,800 - 5,600 SF and are the closest homes in the neighborhood
to the park, the south facing lots will abut the community park, and give owners an open, green view out their front door. The plans will feature some new interior products from LC, such as HanStone Quartz countertops, contemporary designed lighting packages, and Evoke flooring.
The first 4 homes have now been started, and are in the framing stages. One of the first homes to be ready, located at 1915 Charles Brockman
, has been priced at $440,000.
Presales are open for reservation, with the first home scheduled to be completed by April of 2018
. Come in and lock in a Winter Park
now before they are gone!
For more information on this plan or any of our communities, you can reach out to Alec Martinez via call, email, or text at: