Boulder County Industrial Market Remains Stable
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By Jason P. Kruse, CCIM, Principal, Managing Broker
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7/26/2009 |
While retail and office lease rates have been declining, the Boulder County industrial market has remained relatively stable. Several factors account for this. First, the industrial market is not being impacted to the same degree as is the office market by the increase in sublease space. The new large-scale office and retail projects in downtown Boulder have negatively impacted the office market by creating a temporary excess of supply. Second, the lack of new industrial product construction of over the last seven years has helped keep vacancies in check. Finally, there continues to be lease renewals as well as an influx of new companies: the Boulder County industrial market is benefiting from growing companies such as Scarpa North America, Guard Transmission, ServePro, and Sea to Summit.
While the lease market has remained stable, it is fair to say that sales of industrial properties in 2009 are few and far between. Cap rates have risen slightly, causing prices to fall. There are still bargains for vacant properties and there will continue to be bargains as some owners, with reserves exhausted, are forced to stop making their loan payments. Additionally, as loans come due, some owners will not be able to meet the increased equity requirements.
There is strong activity in smaller size spaces, under 10,000 square feet. Several leases have been completed in the second quarter of 2009 in this size range. According to the Xceligent database, there are approximately 40 industrial buildings in Boulder County that can accommodate a tenant in excess of 40,000 square feet. For a company that wants to purchase an industrial building in this size range, there are fewer choices. Properties that are leasing the fastest are in good condition and offer a competitive lease rate with an efficient floorplan.
There are some niche markets that tend to fill quickly as well. Both wet-lab and spaces suited for a commercial kitchen are attractive in this market. The spaces that don’t have a “spec suite” or are not in a finished condition tend to be vacant for longer periods of time.
The area least effected by the lack of demand is Longmont. GE Energy has moved into 152,000 square feet; Creative Foam is moving to Longmont in August, leasing 69,676 square feet at 1800 Pike Road; and, Serious Material leased 37,000 square feeet at 6268 Monarch Park Place in January. According to Wendi Nafziger at the Longmont Area Economic Council, the vacancy rate in Longmont is currently at 13.2% and continues to decline.
Economic forecasters predict that the local economy will steadily move upward in the third and fourth quarter of this year, barring any major negative events. Fortunately, the industrial market should see relative stability through the balance of 2009.
Jason P. Kruse, CCIM
Principal, Managing Broker
The Colorado Group, Inc.
For more information, or to discuss your particular interests, please contact Jason Kruse at 303-339-5049 or jason@coloradogroup.com.
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About The Colorado Group, Inc.:
Founded in 1980, The Colorado Group is Boulder County’s top performing commercial real estate team. The independent brokers at the Colorado Group average in excess of 21 years of experience and offer an extensive array of commercial real estate services, including land and building development, commercial sales and leasing, property management, and residential sales and relocation services. For more information, visit http://www.coloradogroup.com.
Contact Information:
Call: 303-449-2131
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