The search for space
High Country Business Review
Nicole Magistro was willing to wait, and patience paid off.
Magistro, co-owner of The Bookworm, a popular Edwards bookstore, knew a couple of years ago that she had nearly outgrown a space she owns in the Vail Valley’s bustling midsection. So she started looking.
Edwards is a busy place, so there isn’t a lot of commercial space available. So she put out feelers, kicked tires, and stayed busy in her old space until the right place came along.
“We knew the rates, and what we could afford,” Magistro said. “There were spaces available, but they weren’t the right spaces.”
A few months ago, the right space, at the right price, came up in the Riverwalk center. She moved this spring, and opened the new store in late May.
“We’ve been very pleased,” Magistro said. “Riverwalk was our first choice, but not our only choice.”
Magistro had her old storefront in the Edwards Village Center leased before she had to put it on the market. Highlife Properties, a real estate and mortgage company, had been just upstairs in the Edwards Village Center, and jumped at the chance for some first-floor space.
Magistro leased space in Riverwalk, but has the first option to buy if the space ever comes up for sale. She cut the same deal at her old space at Edwards Village Center.
“We have the right of first refusal on a sale, and three five-year options to renew our lease,” said Kris Bruce, a partner in Highlife Properties.
That’s the way it goes in hot spots. When prime space comes up, it’s not available for long, and the people who land the prime spaces try to lock them up for as long as possible.
Edwards, of course, is hot. Places like Bridge Street in Vail, and the core areas of Breckenridge and Frisco are hot, too.
Gypsum, around the new Costco store, is starting to boom, too, with new construction set to open more storefront space. In Frisco, a new hospital is heating up interest in commercial property throughout town.
“In two years, people will be asking themselves why they didn’t buy now,” said Dan Burnett, a broker with Summit Resort Group.
Avon is starting to see new development. Aside from Traer Creek Plaza, a stone’s throw from Wal-Mart and Home Depot, the construction of a Westin hotel and other projects is starting to fuel interest in new and existing commercial space.
“We’re seeing a metamorphosis there,” said Demitrius Poulios, a broker with Remonov and Company. “It’s in the stage where Vail was a few years ago. Avon’s poised for some real redevelopment.”
While there are existing and budding hot spots, there are areas where brokers work on optimism. Dillon is one.
Burnett said the current commercial vacancy rate in Dillon is hovering around 20 percent. But, he said, that may be about to change.
“I think Dillon will fill relatively rapidly,” Burnett said. There are a couple of reasons, he said.
First, the hospital in Frisco has spurred a boom in residential sales.
“With the hospital here, people are willing to consider Summit County as a rival for Vail,” Burnett said. “And now I have doctors coming to me looking for space near the hospital.”
As Frisco fills up, the overflow will hit Dillon, he said.
Another change Burnett believes has come to the high country is being driven by new residents who no longer blindly jump in the car for a weekend shopping trip to Denver.
“Five years ago, if you lived in the Vail Valley and needed a lawn mower, you would go to Denver,” Burnett said. “Now you buy one at Wal-Mart, or Home Depot or Costco. Summit is shifting rapidly toward that right now.”
The result of the changes the big stores bring will be even more pressure on commercial property. While there’s still room to build in Gypsum, and Avon and Vail continue to redevelop, space is tight in Edwards, and Burnett said there’s little room for new space in most of Summit County.
While commercial space can be hard to come by, available space is close to nonexistent for companies that need warehouse or yard space.
“In Frisco, it can be almost impossible to find warehouse space,” said Jason Swinger, a broker with Breckenridge Real Estate Company. Companies that don’t already have space often find themselves going as far as Fairplay or Kremmling, Swinger said. In the Vail Valley, a handful of new warehouses have been built in and around Gypsum, but some companies go as far as Dotsero, more than 40 miles from Vail, for storage yard space.
While retail space is anywhere from limited near resorts, brokers interviewed for this story said there is some office space available. Much of that, though, is off street level. In places like Vail, street-level office space is tightly regulated. That space is reserved for sales tax-producing retail businesses.
Limited ground-floor space for offices is why Bruce and her partners jumped at the chance to move into the Bookworm’s storefront in Edwards Village Center.
While Magistro raves about the foot traffic at her new store’s Riverwalk space, Bruce is just as happy to have the number of potential walk-by clients Magistro used to have.
While commercial real estate values aren’t riding the same rocket as residential property, prices are rising. That has Burnett worried.
“You can’t be a young entrepreneur here any more,” Burnett said. “If I was a young person looking to start a business here, I’d keep on going.”
One problem is prices. Another is the preferences of landlords.
“We look for a tenant that’s already established and has a good business,” Swinger said. “It’s hard to take on a start-up. As a landlord working with a newer company, you’re taking on additional risk.”
So what are the elements of a deal that’s good for both a landlord and tenant?
Magistro and Bruce, who recently signed leases, got some security in the form of renewal options the first shot at buying their space if it comes up for sale.
“You want something that’s a win-win for everyone,” said Tom Harned, a long-time broker in Eagle. Harned built a building on Eagle’s Capitol Street about 10 years ago, and all the space is rented virtually all the time.
But he said, his location was made even better when Eagle County built it’s new administration building in the early 1990s and closed the south end of Broadway, Eagle’s historic main street. That move routed much of the town’s commuter traffic right past his lot.
“It’s the best thing they ever did for us,” he said.
It’s always about location.
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