Eagle County commercial property still stumbling?
EAGLE COUNTY, Colorado – While the Vail Valley’s residential real estate market continues a steady climb from the depths of the 2009 market collapse, a smaller, but more visible, section of the market is still lagging in places.
Using numbers from the first 11 months of the past three years – in order to have a consistent point of comparison – commercial real estate sales for the past three years have been steady, but unspectacular. In 2012, 69 commercial sales were completed, the same as the same period in 2011, and just one less than the 70 completed sales in 2010.
By comparison, there were 127 completed sales in the first 11 months of 2008.
While the number of sales has fallen by roughly 46 percent from the 2008, there’s a less dramatic swing in the average sale price of those units – only about 30 percent.
Depending on location, prices are about flat from 2008 to today.
Mike Pearson, the managing broker of NAI Mountain Commercial, is the listing broker on the two-building Nottingham Station in Avon – which has Burger King and Starbucks as its most visible tenants. That property is on the market for $6.2 million. Pearson said that’s probably close to what the asking price would have been in 2008, mainly because of the property’s location and the stability of its tenants.
But Nottingham Station is retail space in the eastern half of the valley. Pearson said that’s where the commercial real estate market is strongest. The story is different for office and warehouse space valley wide, and the retail market is softer west of Edwards.
Scott Schlosser of Eagle Valley Realty is the leasing manager for the Eagle Crossing shopping center, home of The Back Bowl, Pazzo’s and other shops. He said he’s confident he may have the entire center leased soon. But, he said, it’s been a struggle.
“We’re still oversaturated,” Schlosser said. Correcting that could “take years,” he added.
On the other hand, Schlosser said the retail space at Eagle Crossing is drawing plenty of interest, especially since the landlords are interested in getting successful businesses into the center. To do that, the landlords are willing to work with potential tenants.
“We want to get to the point where we’re both successful,” he said.
The story is a bit different in Avon, where Pearson runs the leasing for Chapel Square, where Fiesta Jalisco occupies the most visible corner.
There were a number of empty storefronts at Chapel Square in 2009 and 2010, but that’s changed. Pearson said he expects the shopping center to be fully leased by the end of March. And, he added, those tenants will all be paying “fair market” rent.
Pearson said there’s a balancing act between having a property leased at any cost and leaving storefronts dark. Leasing at lower rates can occupy space, but at the expense of a “higher quality” tenant that might be a better fit for the property.
“If I’ve got to wait, so be it – my responsibility is to the landlord.”
Given the current interest in retail space from Edwards to the east, waiting is worth the effort right now.
But office space is a different story, Pearson said – there’s still far more supply than demand throughout the valley. The same is true, to a lesser extent, for warehouse and storage space, although space from Edwards east is renting and selling more quickly.
While commercial space is a different kind of market than residential property, Schlosser said there is a tie-in between the two.
The current relatively low inventory of residential property means contractors are starting to get busier, Schlosser said. More consumer confidence is leading to more people deciding to start businesses, and those people need space, especially for retail businesses. That, in turn, creates buyer demand for income-producing property.
Pearson listed the Nottingham station property in October of last year, and said he’s confident he’ll have a buyer sooner than later.
“We’ve already had a lot of interest and multiple offers,” he said.
Business Editor Scott N. Miller can be reached at 970-748-2930 or firstname.lastname@example.org.