Vail Valley commercial real estate: A shortage of space
Lack of supply is most pronounced in Vail’s resort villages
- .45%: Commercial vacancy rate in Vail Village and Lionshead.
- 2.7%: Vacancy rate in the middle valley — Avon, Edwards and Beaver Creek.
- 2.2%: Vacancy rate in the western valley.
- Source: NAI Mountain Commercial.
EAGLE COUNTY — The valley’s commercial and residential property markets are similar in some ways — availability is tight and nothing is what you’d call “cheap.”
There are some differences, of course.
If you think the residential property market is tight, there’s a positive dearth of available commercial space available — either office or retail.
That lack of supply is most pronounced in Vail’s resort villages. According to data from NAI Mountain Commercial the vacancy rate in Vail Village and Lionshead is .45%.
That’s essentially full occupancy.
The vacancy rates positively leap in the middle of the valley — 2.7% — and the western valley — 2.2%.
But those vacancy numbers tell only part of the story.
According to the most recent figures from NAI, rents in Vail Village and Lionshead surpassed the previous peaks of 2007 a few years ago. Rents are close to those previous-decade peaks in the western valley. But they’ve yet to fully recover in the middle of the valley, including Beaver Creek.
Then there’s the type of space available.
Erich Schmidt of NAI noted that mid-box retail space is particularly tough to fill in smaller markets. The old Office Depot space in Avon has been vacant for a few years now, with few prospects for filling it.
“People still like to go into stores,” Schmidt said. “But it needs to be smart retail — people like experiences.” And he added, if a retailer isn’t providing a top-notch experience, people will take their dollars elsewhere.
After a burst of commercial space transactions between 2016 and 2018, Schmidt said sales have tapered off this year.
“There’s not a lot out there (for sale) now,” Schmidt said. And, he added, there isn’t a lot of small retail space available for either sale or rent.
Schmidt said there’s only one space now available in the Traer Creek Plaza building just west of Walmart, and it’s a relatively small 850 square feet.
Jennifer Kaplan of Yellow Dog Pilates recently moved from Edwards into a larger space in Traer Creek Plaza. In an email, Kaplan said she moved to add indoor cycling, and needed more space, more visibility and better parking, along with a more central location.
“Based on my needs for parking and the fact that my business uses louder music, it was challenging to find a space,” she wrote.
In a recent survey, the Vail Valley Partnership found that about 25% of local business owners are looking to move into bigger spaces.
President Chris Romer said the relatively low desire for more space might be a reflection of the valley’s employee shortage.
According to the Vail Valley Partnership’s most recent surveys, 40% of respondents had open positions, and 75% reported plans to grow.
It’s about the workforce, still
But it’s hard to grow without employees, and Eagle County is at essentially full employment now. The most recent state data shows the county’s unemployment rate at 1.9%
Despite that apparent demand, it’s unlikely the valley will see much more in the way of supply any time soon.
Given construction costs and rents, Schmidt said there’s little real-world demand for more commercial space. And, he added, if someone wanted to build commercial space, there aren’t many places to build, particularly from Edwards East. Schmidt said it will be interesting to see if a 240-unit apartment complex just west of Traer Creek Plaza will spur retail development in the currently-empty area between Traer Creek and the rodeo grounds.
While commercial space is scarce, Schmidt said Eagle County isn’t unique. Other areas of the state are facing similar problems.
And, Romer said, construction costs aren’t just a Vail Valley problem.
“Construction costs are just crazy all over the state,” he said.
Eagle County Schools added six mental health counselors and the district will add two more school resource officers, according to the school district’s 2019-2020 budget book. The district also aised starting pay and gave staffers a 2.3% cost-of-living raise.