The Challenges and Benefits of Commercial Tenancy in Colorado Springs
Colorado Spring’s strong economic upturn has led to declining commercial vacancy rates despite this year’s forecasted 5.6 percent rise in new building starts. Supply is low. Demand is high. When supply is low and demand is high, it’s a seller’s market. In a seller’s market, lease rates tend to go up and financial incentives tend to go down, leaving commercial tenants scrambling to find prime real estate locations with the type of lease and amenities that fit their needs.
Hoff & Leigh’s vast knowledge of the Colorado Springs agile marketplace enables them to maintain the largest listing inventory of space for most small-to-medium sized businesses. That knowledge positions us to help you find those elusive commercial properties offering the leases and incentives that fit your parameters.
Market Sector Challenges
Defining parameters, selecting a tenant broker, finding the right location and getting the lease that is in the best interest of your business–those are normal challenges facing commercial tenants. Market sector challenges add a new dimension to the norm. Commercial building starts are often hampered by escalating costs and labor shortages which means that often new square footage is put on hold or not started at all. This means less available real estate in Colorado Springs’ hot market and all-time high absorption rates hovering around 95 percent per year. Higher absorption rates justify more expensive leases.
Here’s a quick breakdown of Colorado Springs’ 3 main commercial real estate market challenges:
Retail Space: Vacancy rates are hovering between 6 and 7 percent. Yet there has been about 2 million square feet of retail building space added. Many of the businesses are established SMBs, like boutiques and mom-and-pop shops, as Colorado Springs retail space lease prices are more affordable than in larger cities to the north.
Industrial Space: Larger industrial space has a higher vacancy rate than the smaller industrial space. The difference is about 3 to 1. There’s not a huge market for square footage under 15,000 in this sector. Industrial development is costly. For developers to recoup their investment, rent and lease prices have to be set high.
Office Space: The office market has yet to fully recover from the last Great Recession, partly due to co-working space and home offices. Despite the rising local economy, office construction is not going to happen on spec because lease rates haven’t risen enough to justify the high development/construction costs. Hoff & Leigh intimately knows the existing office inventory and can advise and find creative solutions to meet a tenant’s desire for quality space.
Finding Benefits in a Tough Market
Market challenges fluctuate with population growth and economic outlook. Having a local brokerage office circumvents such market sector challenges as we can navigate through local issues and trends that perhaps your stakeholders have not considered. It is a collaborative process, an agile relationship, and an integrated team approach that connects us with the landlords that may have vacancies that may not yet be listed.
Secondly, tenants are kept in the loop as every iteration in the leasing process provides you with sound decision-making strategies. We will use tools like comparative market analyses to help you better understand what commercial spaces are available and their costs. It is even more important for us to collaborate with you to make sure that the space you want is the space that fits your company’s need.
Leases are about much more than a good lease rate. There may be other nuances to the lease document that could cause the tenant grief down the road. Hoff & Leigh has negotiated thousands of leases. We can help tenants avoid those pitfalls.
Despite Colorado Springs’ low supply and high demand, there are specific benefits of leasing commercial real estate. There is less upfront cost than buying investment space, tax benefits, and flexible lease options. We can negotiate the best lease for your company because our reputation is one that helps us build professional networks and credibility.