A 211,000-square-foot lease renewal is always news, but this time it’s a headline-maker for stakeholders of the downtown business community.
Houston-based El Paso Corp.– Western Pipeline (and its predecessor, Colorado Interstate Gas Co.) has been a tenant in the Colorado Square Building at 2 N. Nevada Ave. since shortly after the structure was built during the mid-1990s.
Today, the company employs about 500 people who not only commute from all parts of the city, but also play a key role in the vitality of downtown’s retail-restaurant-entertainment district.
While few would dispute the immediate negative economic impact of losing a marquee firm to another part of town, possibly outside the city limits, the departure could have had even greater economic consequences to the central business district and city as a whole, said University of Colorado at Colorado Springs economist and senior instructor at the College of Business Fred Crowley.
“Restaurants would obviously be affected — especially when you consider that at least one-third of the company’s employees probably go out to lunch on a daily basis. That’s thousands of dollars a day in revenue that generates sales tax for the city,” he said, adding that other areas such as parking, banking and retail purchases also would be affected.
But even more important than jobs lost in the service sector or fall-off in retail sales, Crowley said, would be the stultifying affect on the city’s brand, its reputation as a vital commercial district.
“What you might see would be the departure of a bank or two,” he said. “After all, these employees deposit their pay checks, they use ATMS and other services. And then there are the hotels for off-site meetings. With commercial rents hit hard in some areas during this recession, I imagine the owner was anxious to offer a pretty good deal. And if El Paso [Corp] has elected to move north along I-25 and outside the city, not only do you lose sales tax, but part of your downtown moves. It could be very significant.”
Downtown Partnership executive director Ron Butlin saw the announcement as a vote of confidence in the downtown community.
“Talks began last year — they were very engaged from the beginning,” he said. “For us it’s all about the employees, the activity and keeping the lights on. I can’t imagine a building of that size sitting dark.”
Company spokesman Richard Wheatley said El Paso Corp. was pleased to be able to renew its lease for another five years – and had been aided in the process by the Downtown Development Authority which also offered attractive incentives to keep the corporation downtown.
“This is the fourth lease extension since we moved into the building in 1994. Colorado Springs is a key location for us – and the decision to stay in a central location rather than to move north to somewhere like Briargate works well for all of us.”
Grubb & Ellis/Quantum Commercial Group broker Michael Palmer represented the building owner, New Colorado Square LLC, on the lease renewal as a consultant. Kent Mau of Sierra Commercial Real Estate represented El Paso Corp.
News about completed commercial leases continues, despite broader economic trends. While large deals no longer attract easy financing, day-to-day Pikes Peak region lease or sales activity throughout the office, industrial and retail sectors is alive and doing relatively well.
CBC LLC has purchased the 38,327-square-foot Criterion Business Centre at 8570 Criterion Drive in the Briargate business campus for $2.6 million.
The locally owned investor group, comprised of a general contractor, a landscaping company and a plumbing contractor, will occupy about 10,000 square feet of office space.
Broadcomm Corp. also is located in the office/flex space building, leaving 8,840 square feet for lease.
“They bought the building at a very favorable price,” said Mike Helwege, who along with Bach Commercial Real Estate broker Steve Bach, represented the seller, Campbell Financial Ltd. “It’s a newer facility — built in 2007 — with great access to all major highways.”
Paul Cohen represented the buyer.
The nine commercial brokers who make up Keller Williams Commercial are celebrating the company’s fifth anniversary this year. The department within Keller Williams Real Estate opened for business Sept. 1, 2004, and was started by brokers Charlie Madson and Dick Liccardi, who had moved from Hoff & Leigh.
Based on this week’s report, they’re maintaining a growing book of business in both commercial leasing and sales. Here’s a recap of the firm’s latest closed deals:
Billet Racing Products has leased 3,000 square feet of industrial space at 3415 Fillmore Ridge Heights. The company and the landlord, RAB LLC, were represented by Rob Rolley and Liccardi.
Bankers Title has leased 2,221 square feet at 127 Kelly Johnson Blvd. from NET/REIT. Rolley and Liccardi represented the owner and Rob Hernandez of CameronButcher represented the tenant.
Flynn Accounting has leased 2,054 square feet at 5555 Erindale Drive. Rolley and Liccardi represented the tenant and the landlord, Liccardi Family Partners L.P.
Sick Stix, a company Liccardi described as “100 percent lacrosse,” has opened at 1350 N. Academy Blvd. Rolley and Liccardi represented the tenant and Charlie Madson represented the landlord, R.H. Investors Inc.
K&C Investments LLC has leased 1,512 square feet at 3710 Sinton Road. Rolley and Liccardi represented the tenant and landlord, Visiontrust International Inc.
Muscles in Motion has leased 1,152 square feet at 210 E. Dale St. Rolley and Liccardi represented the tenant and the landlord, Marge Milne.
There’s more work in the pipeline for G.E. Johnson Construction Co. — this time in the high country.
Originally constructed during the 1960s, the 17,000-square-foot, three-story Rams-Horn Lodge in Vail will be partially demolished to allow for the addition of a fourth floor and the expansion of existing floors.
The renovated Rams-Horn will be built with a “tabletop” structural steel system, a building concept utilized by G.E. Johnson on the award-winning Manor Vail project, said spokesman Al Slattery.
Fritzlen Pierce of Vail is the project architect.
Municipalities, counties and private developers will want to review the latest Producer Price Index figures released by the U.S. Bureau of Labor Statistics which indicate that building costs have dropped significantly compared to a year ago
Associated General Contractors of America chief economist Ken Simonson said in a news release this week, that developers considering new projects might find some “deals” from suppliers and contractors anxious to keep their crews busy.
“The producer price index for inputs to construction industries, a weighted average of the costs of all materials used in every type of construction, increased 1.1 percent in August compared to the previous month,” Simonson said. “The monthly increase was caused by a 17 percent increase in the cost of diesel, a 6.8 percent jump in steel prices and an 11 percent rise in copper prices compared to July.”
That said, however, the overall trend for construction costs remained negative — down 7.4 percent compared to a year ago. Pointing to a 41 percent downshift in the cost of diesel, a 36 percent drop in steel prices and a 14 percent downward trend in copper prices, with more declines predicted since the end of August, he encouraged deal makers to seize the moment.
“Prices haven’t been this competitive for construction services in a long time, but once the domestic and global economy heats up, they are likely to rise again,” Simonson said.
Becky Hurley covers real estate for the Colorado Springs Business Journal.