Location, location, location …
After a slow couple of years, the downvalley commercial real estate market is showing some signs of economic optimism.Two new commercial real estate projects are starting up in Eagle; and local commercial real estate experts say prime location spaces are in demand. Numerous commercial landlords are still sitting on a good bit of space, however, hoping demand will catch up with supply.More than a year after the project’s approval, Avon-based Masthead Development will break ground on a new commercial facility that includes a bowling alley on a lot west of the Eagle Diner on West Chambers Avenue. Meanwhile, Wright & Company, another Avon-based firm, is well along in construction of a new commercial building at Eagle Ranch.Masthead Development owns two Market Street commercial buildings in Eagle: the Eagle Market Center, which houses Z-Deli, and the Eagle Ridge Center, where the Treasures consignment store is located. Masthead’s real estate specialist, Scott Schlosser, says not long after the Market Center was built, his company determined western end of the Eagle Valley downvalley had more than enough second-floor office space. As a result, Eagle Ridge has just street-level retail. The same is true with the Eagle Crossing shopping center. The new building will have a basement instead of a second floor. That basement will hold the bowling alley.”We had to do a basement there anyway,” says Schlosser. “It worked out well for everyone.”While an operator has signed up to run the bowling alley, the main floor is a different story.”Pre-lease’ situation”It’s hard to pre-sell retail space,” Schlosser says.On the other hand, he adds, Masthead has been talking to several potential tenants and is in a “pre-lease” situation with some. Meanwhile, the second floor space in the Market Center is now being used as Masthead’s downvalley headquarters.Much the same is true of the new commercial center at Eagle Ranch, across from the Capitol Theatre. Henry Reed of Wright and Company says the second-floor space at the new building has some offices, most of which will be used for Eagle Ranch’s administrative functions. The rest of the upstairs will be residential space. The building’s main floor will house the Eagle Ranch sales office, as well as retail space. Prospective tenants include a liquor store, a restaurant and shops.Reed says the current inventory of available commercial space didn’t deter Wright and Company. And, he adds, the company is proceeding with a five-year plan to build even more space.Exceptions to the rule?The two new projects may be an exception to existing conditions, though. The fact of the matter is there’s a lot of space available, and that availability has at least started to affect some lease rates.”I’m working out some very aggressive pricing as we speak,” says Bob Warner, whose Avon-based firm owns a large building at the Airport Gateway Center in Gypsum. With the closure of Eagle Valley Hardware earlier this year, the first floor of that building is now empty. That’s why Warner is now adjusting rates.For Warner, who does business throughout the valley, the Eagle and Gypsum markets are a reflection of those in the upper valley.”Vail’s got space available, and Edwards does, too,” says Warner, adding that the market now is a reflection of the analysis he and other developers did in the late 1990s.”Let’s say hypothetically I saw a need for 60,000 square feet,” says Warner. “Well, three other developers saw the same thing, so instead of 60,000 feet we have 240,000 now.”That abundance of commercial buildings, combined with a subsequent slowdown in the national and local economies, has left quite a bit of space available.Mallie Kingston, a broker with Prudential Gore Range Properties in Gypsum, has a listing for office space in the Eagle Tech Center, which was built by Johnson Kunkel and Associates a few years ago. She says there’s still quite a bit of office space available on eastern Chambers Avenue in Eagle.Overbuilt in Gypsum?Kingston also represents the owner of the Dakota Square building in Gypsum, where the Prudential office is located. There are four main-floor retail spaces available in that center, as well.Kingston said there’s been some interest in Dakota Square, but guessed that Gypsum may simply have too much available space right now.”A lot of people want to be in Eagle,” said Kingston. “People may be willing to drive from Eagle to Gypsum, but people think if they’re in Eagle, maybe they can get people to drive down from Edwards, too.”In addition to Dakota Square, there’s space available in virtually every commercial center in Gypsum. Kingston says the Gym is for sale, as is the building Manny Medina recently built and opened for his M&M Auto Parts. In addition, much of the second floor in the building that houses Marko’s and Mac’s Liquor is available.Given the space available, though, Kingston says she hasn’t seen much movement on pricing. However, she adds, “People may be dealing,” since she’s had prospective tenants tell her they’ve been offered space for less than the rate at Dakota Square.While the market for commercial property remains sluggish, Kingston says there has been an increase in “tire-kicking” interest from potential clients.”I think a lot of people can’t figure out what they want to do yet,” she says.Location, location, locationWhile location doesn’t seem to matter in Gypsum, it does to an extent in Eagle.When Tom Harned built a new building at the corner of Second and Capitol streets in Eagle several years ago for his Black Bear Real Estate Company, he built extra office space. While that space turns over from time to time, Harned says, he rarely has space available for very long.”I wish I had 10 buildings like this,” said Harned, adding he probably wouldn’t build a similar project given today’s conditions. Still, he says, “The right kind of stuff is staying relatively full.”Tim Cochrane, director of the Eagle Valley Chamber of Commerce, agrees. As part of planning for a face lift in Eagle’s downtown core, Cochrane has helped investigate current conditions there.”In downtown Eagle, at least, space is mostly full and sales are OK,” he says. “What you aren’t seeing right now is a lot of large retail space available.”Kingston says businesses that need space are starting to build their own facilities.Even that, though, has its risks. Tammy Jones, co-owner of Eagle Valley Tile & Carpet, says her family’s business has been sitting on an entire building for nearly two years. After outgrowing the old building, which they owned, the Joneses built a new structure, thinking they could lease out the old one.”Then Sept. 11 came along and you know what happened,” Jones says.The increased overhead of an extra building is no fun, says Jones.You just put your nose to the grindstone and work that much harder,” she says.
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