Larry, the fire breathing dragon, has made an unwelcome visit to Boulder County. Larry has one goal and one goal only! TO BRING A BLODDY AND TRAGIC END TO THE COMMERCIAL REAL ESTATE MARKET. Villagers of the county are wary of Larry trying to anticipate his every move. Larry has several friends, the largest being the Boulder city government. When Larry sleeps, which is rare, it’s usually under the city and county building at 1777 Broadway. Three recent developments have helped Larry. The first is the building moratorium which could prohibit any development for an 18-month time frame in a 2.5 square mile area (in a nutshell the boundaries are east of 28th Street, west of 55th Street, north of Arapahoe and south of Valmont).
According to the state of Colorado’s website, Opportunity Zones may help address some challenges:
• Promoting economic vitality in parts of the state that have not shared in the general prosperity over the past few years
• Funding the development of workforce and affordable housing in areas with escalating prices and inventory shortages
• Funding new infrastructure to support population and economic growth
• Investing in startup businesses that have the potential for rapid increases in scale and the ability to “export” outside the state of Colorado
• Upgrading the capability of existing underutilized assets through capital improvement investments
Larry likes to stay up really late when the city council discusses important issues. At one of the city’s new and “emergency” regulations for some the properties in the BC-1 and BC-2 zones. Larry’s friends at the city would prohibit lodging uses and change previously permitted uses, such as residential, schools, office and medical to conditional uses which would require a costly and lengthy use review. In doing this, this goal of the city is to “preserve commercial retail uses in the zoning districts by restricting residential, and other ground floor uses.” City council raised concerns the residential development may be detrimental to the existing “commercial charter” of some areas in the city. This makes Larry happy because he likes it when the city determines what is best, not market forces. Villagers are puzzled with the cities long-standing affordable housing issue and how this might help that cause??
The biggest looming issue is the upcoming property tax valuations. Not later than May 1st, the assessor will send Notice of Valuations to all property owners. Larry promotes increased property taxes because commercial leases in Boulder County are mostly triple net leases, meaning that the increases in taxes are paid by the companies that occupy the buildings. The increase in property taxes, specifically in downtown Boulder, has caused an exodus of companies who are seeking lower expenses.
On the bright side, Larry has some opponents that will keep the Boulder commercial real estate market free of his fire. A skilled labor force, high quality of life and a growing economy are all positive factors. The difficulties and costs of new developments further increase the value and price of existing buildings. While you are driving around Boulder, enjoying the Pearl Street Mall or on a hike, be on the lookout for Larry. His new years’ resolution is the see that the commercial real estate market perishes!
Article by Jason Kruse, Principal/Broker Associate with The Colorado Group, Inc.