Jeff Brotman, chairman of Costco, has received thousands of letters from Colorado Springs residents, asking for a branch of the upscale, members-only store in the city. In 2007, those residents will get their wish.
Costco and Lowe’s will anchor a 700,000-square-foot retail center, designed to renew one of Colorado Spring’s “blighted” areas. Each store will be 150,000 square feet. Construction is expected to start early in 2006.
“We’re waiting on the developer,” Brotman said. “We have thousands of members who are driving to other cities to shop. It’s obviously an underserved market there, and we did the research and think we’ll be very successful in Colorado Springs. There’s a demand for an upscale retailer like Costco.”
Costco, which operates as a warehouse, prides itself on the quality of its merchandise. The retailer sells everything from caskets to wine at its locations. Lowe’s, a home-improvement store, already has two stores in Colorado Springs. A third is under construction on Powers.
The development covers land between North Nevada Avenue, Austin Bluffs Road and Interstate 25, said Kevin Kratt, owner of Kratt Commercial Properties, one of the developers creating the project.
“It’s an underserved area,” Kratt said. “It has its own market and it’s a growth area. The people in the western part of town don’t have anything like this. We’ll have a little bit deeper market penetration because of I-25 – it’s accessible at two interchanges.”
While stores have signed agreements to anchor the site, Kratt and his partner, Tom Cone, still have work to do – including finalizing the purchase of some of the 90 acres to be used in the development. The two also are recruiting other businesses.
“We are talking to other retailers about the location,” Kratt said. “Your usual suspects – some stores that don’t yet have a place in the market, some national restaurant chains. We’re also talking to local retailers; we’d like it to have a local feel.”
Stores in the area will compete with Wal-Marts being built in the north and east of Colorado Springs, but Kratt believes the retail development will meet the challenge.
“We have excellent support from the city, from the university (of Colorado at Colorado Springs),” he said. “The faculty, staff and students will come down to eat and shop there on breaks from class. There are apartments at either end. There’s nothing like this on Garden of the Gods or Rockrimmon (roads). We’re very confident that it will do well.”
With stores like Costco and Lowe’s as anchors, the development is getting off to a good start. Lowe’s had $365 billion in sales in 2004 and ranks 50th on the Fortune 500.
Costco’s success has translated into high stock dividends and continued expansion. The retail chain operates 452 warehouses around the world. By the end of 2005, it plans to have 10 new stores opened. The Springs store is one of 30 it plans to start in 2006, according to the store’s Web site, www.costco.com.
The ambitious plan has grown as Kratt and Cone received support from UCCS and the city. Both entities want to see the area redeveloped.
“When they started looking at redevelopment, they thought about houses, apartments,” Cone said. “It was too expensive, with all the additional work needed at the area. When we investigated Costco coming here, we thought it would just be 20 or 30 acres. But it has taken on a life of its own. It kept evolving to clean up the area. From a civic standpoint, we realized that we had to clean it up, revitalize it.”
The cost of redeveloping the area will be paid for by the development itself, Kratt said. The city will use sales tax revenue from the development to pay for water, sewer and other improvements required to revitalize the district.
“It had to be a development this extensive, it was the only way it could pay for itself,” he said. “The TIF provided by the city is the perfect mechanism for this type of improvement.”
Kratt and Cone are planning an ambitious project. Instead of bringing in bulldozers to flatten the ground, they will use the natural topography of the site to create three tiers of stores.
“We’re having it terraced – a lower level even with North Nevada, a mid-grade and another lower grade even with I-25,” Kratt said. “It will ensure good visibility for all the tenants. You’ll be able to see the entire development from I-25.”
In the next six months, Kratt and Cone will sign a contract with the Urban Renewal Commission to develop the site, finalize purchases from current owners and have the city rezone the site as retail. They are also developing plans to improve North Nevada Avenue.
“It will be six lanes, with a raised median, with flowers, lamps and benches,” Kratt said. “We really plan to make this site one of the best in the city.”