Second-home owners continued to flex their biceps in the local economy during 2004, and the Steamboat business community awakened fully to the monetary effect generated by people who spend just a part of their year in the Yampa Valley.
A study of four neighboring counties made it plain that second-home owners account for about one-quarter of the economy in Colorado mountain towns. The study, conducted by the Northwest Council of Governments, projected that many of those vacation homeowners are planning to shift to full-time residency.
"We've been finding out some incredible things about second-home owners," Gary Severson told an audience in Craig in February. "Second homes are an industry in themselves. We think second homes pump more into local economies than the ski areas are."
The study of Grand, Summit, Eagle and Pitkin counties didn't include Routt County, but community leaders found that its lessons would apply locally. It became increasingly apparent that the second-home owners' spending habits would be a force to reckon with in Routt County through the remainder of the decade.
In Summit County, where Severson lives, there are about 23,000 homes. Of that number, 67 percent are owned by people who indicate Summit County is not their primary residence. The number is even higher in Breckenridge, were 80 percent of homes are second homes, Severson said.
The 2000 Census reported that 47 percent of the homes in Steamboat were second homes, or vacation homes. The second-home trend will continue for at least another decade, Severson predicted until the baby boom generation moves through the prime second home buying age group of 55 to 65.
Understanding the market
As the effect of second-home owners was being weighed, the growth of new and existing shopping centers was creating waves in the community. The Steamboat Springs City Council passed an ordinance that prohibited single-tenant buildings of more than 20,000 square feet between downtown and the base of the ski area. At the same time, it required that single retail buildings of more than 12,000 square feet must go through a more subjective planning process that requires them to provide a greater level of public benefit.
The new measure was a reaction, in part, to four new or expanding commercial centers clustered within less than a mile of one another along the U.S. Highway 40 corridor.
International retailing expert Carl Steidtmann, who fits the description of part-time Steamboat resident, told people in attendance at the annual economic summit that the prospects of true big box retailing coming to town are zilch. Yet, he said, national retailers will make a mark.
"The chances of true big-box (retail) coming here in their current configuration of 100,000 square foot standalone stores is essentially zero," Steidtmann said. "There's not enough population density -- there's not enough there, there."
National retailers are in the midst of reconfiguring their current prototype stores to fit smaller markets. They will use emerging inventory management technology to offer nearly the same range of products they do now, but in smaller stores that could fit markets such as Steamboat, Steidtmann said.
Commercial construction blossomed at the intersection of U.S. 40 and Mount Werner Road during the year, and more commercial development was on the horizon as the year ended. The nation's biggest sporting goods chain opened in mid-December when Gart Sports opened its doors in Wildhorse Marketplace. Almost simultaneously, it was revealed that the nation's largest pharmaceutical chain, Walgreens, would like to open on the west side of U.S. 40 at Steamboat Crossings North. The big unknown at year's end was what tenants would occupy the 28,000 square feet of retail space in Central Park South, near completion across the parking lot from City Market grocery store and WalMart.
Central Park South and Steamboat Crossings North are being developed by Michael Staenberg and Stan Kroenke, partners in THF Real Estate of St. Louis, Mo. Their local leasing agent, Jim C. Hansen, has been tight-lipped about the tenants said to be in negotiation for a space in the center.
Jim and Susan Larson of Alpenglow Ventures completed the remodeling of the existing Fish Creek at Sundance shopping center and finished the permitting process for a new commercial center on the north side of Anglers Drive.
A commercial property expert told a local audience in September that Wildhorse Marketplace and Central Park South developments alone could need to generate $35 million to $45 million in annual sales to support their tenants when fully leased. Kevin Chandler, a commercial appraiser with lengthy experience in Florida and the Midwest, was careful to point out that not all of the sales for tenants of the two commercial centers will have to be taken from existing sales. A 2002 consumer preference study revealed that residents make 50 percent of their purchases outside Routt and Moffat counties. Chandler said it's possible that new businesses will capture a portion of those sales leaking from the economy.
Realtor Jim Cook, who consulted on the Fish Creek at Sundance remodeling, says he's confident second-home owners would spend more in the valley if there was greater diversity of shopping.
Maintaining a mix
Steamboat will continue to need a strong presence of independent retailers because national retailers are unable to offer shopping that differentiates one town from another, Steidtmann said.
Steamboat's independent retailers play an essential role in creating a sense of place in the community as well as defining public spaces, Steidtmann added.
Retail business was grabbing the headlines all year, but local economic observer Scott Ford pointed out that it's really health care and construction that carry the economic water in Steamboat. Employment in those industries represents much larger payrolls than that of retailing, he said.
Steidtmann supported Ford's thesis. He thinks Steamboat can handle more retail, based on his observation that retail employment accounts for just 11.6 percent of total employment here.
"I really expected to see retail employment in Steamboat to be higher than the national average," Steidtmann said. "I was quite surprised. Retail in Steamboat is probably underserved. We will see more -- the important thing is the quality and nature of development and that (new) retail reflects the place Steamboat really is."
Independent businesses here need to collaborate to create customer networks based on the common denominator of the "Steamboat experience," Steidtmann said.
Changes on the retailing scene galvanized business owners in the city's downtown shopping district to launch "Main Street Steamboat," the local version of a national movement intended to save historic downtowns from empty storefronts.
Steamboat isn't typical of the blighted downtowns that have received the Main Street overhaul in other communities. But downtown businesspeople want to make sure the commercial district bounded by Yampa and Oak streets, with Lincoln Avenue in the middle, remains attractive to residents. They reason that visitors will follow residents to restaurants and shops. Large shopping centers may spring up along the highway, but town is where visitors and residents will find a "sense of place" that defines Steamboat.
Main Street for residents
Tom Ptach of Pilot Office Supply is president of the board of directors of Main Street Steamboat. Longtime restaurateur Tracy Barnett, who sold Mazzola's Italian Restaurant this year, was hired as temporary executive director of the group.
"The main emphasis of this project is on our residents -- to make downtown Steamboat the heart and soul of our community and a place that is valued by our residents." Ptach said.
Main Street received a promise of start-up funding from the city and gained more momentum and financial stability when the Downtown Business Association agreed to merge its membership with Main Street.
Main Street's initiatives include protecting and enhancing historic buildings. Its board seeks to manage the mix of retail and dining establishments so they benefit one another. At year's end, an Internet survey was being taken to provide the basis for creating a new "brand" for downtown.
The emergence of several new residential projects in the heart of downtown hold the promise of expanding the built-in market for downtown retail and dining.
Waterside Village is under construction at the corner of Eleventh and Yampa streets, which was once occupied by a miniature golf course. Cook is planning another commercial/residential project at the other end of Yampa Street and has similar plans on Lincoln Avenue, where the Nite's Rest Motel will be torn down.
Real estate sales here continued to push through new frontiers in 2004. By the end of October, dollar volume had topped $342 million and broken the single-year record set in 2000. A Steamboat ski-in, ski-out townhome sold for more than $2 million in December, and a single-family lot in a modest residential neighborhood sold for $187,000. In November, 38 percent of the single-family lots on the market were listed for prices ranging between $500,000 and $1 million, and there was just one small lot in Old Town listed for less than $100,000.
Real estate prices, the increasing economic influence of part-time residents, the impending arrival of more nationally branded retailers, the perceived need to revitalize downtown and an increase in urban housing all suggested in 2004 that the pace of change in Steamboat Springs has accelerated.