Commercial momentum builds in Steamboat
Established businesses taking advantage of price reductions, low interest rates
August 5, 2011
Steamboat Springs — Commercial real estate has been a tough sale in the midst of the construction drought, but veteran commercial brokers say the autumn will bring a burst of activity in commercial leasing, particularly on Lincoln Avenue.
Additionally, there are signs that well-established businesses in Routt County are getting ready to take advantage of 50 percent price reductions and low interest rates to move into new spaces.
Jon Sanders, of Ski Town Commercial Real Estate, said this week that he has two commercial sale contracts at The Victoria at the corner of 10th Street and Lincoln Avenue in downtown Steamboat Springs. They include a 900-square-foot second-story law office and the purchase of 1,100 square feet by Sambi restaurant. Sanders said the space being purchased by Sambi owner Jason Lee already was under lease option and comprises the back of the house at the restaurant that opened in late 2010.
A fast start has allowed the restaurant to exercise its option ahead of schedule, he said.
Sanders said the opening of Milk Run doughnut cafe on the 10th Street frontage in The Victoria during the weekend, combined with existing traffic at the 10th Street Barbershop and Sambi, is helping to expand the downtown shopping district.
"When you include Sew Steamboat and their window displays (just east of The Victoria) and Brooklyn's (Pizzeria on the west side of 10th Street), now we've got the traffic we need to push people farther down Lincoln Avenue," Sanders said. "There's a path to walk now."
The success with commercial spaces at The Victoria, which is back in foreclosure this summer, contrasts with the difficulty of selling high-end residential condos on the second floor of the building.
Sanders said he also still needs to fill a large Lincoln Avenue storefront in the building.
Realtor Ron Wendler, of Colorado Group Realty, said he just listed the Riverside Plaza shopping center where Sears is a tenant for sale or rent on behalf of clients Michael Graves and Randall Reed.
The individual spaces in the shopping center (the Steamboat Powersports building is not included in the offering) are for sale at prices ranging from $110 to $150 per square foot. Aggregating all the parts comes to an asking price of $4.7 million, Wendler said, but that amount might be negotiable.
The largest space of 7,000 to 8,000 square feet is a flex space that can be configured to suit a large tenant.
Wendler said one of the sectors of the commercial for-sale market that is drawing significant attention is the diverse live-work inventory, most of it on Steamboat's west side. Typically the units include a downstairs commercial area — often a tall garage or shop area — and an upstairs apartment or condominium.
When the live-work units came through the city planning process, the living space was usually presented as a way to provide housing for a lead employee in a difficult entry-level housing market.
Today, with the number of construction-related businesses on the wane, a growing number of well-established Steamboat residents are looking at the live-work units to provide housing for their adult children, then using the commercial space as a glorified storage unit, Wendler said.
There also are a number of well-established business owners sizing up live-work units and planning to be able to expand their businesses in the future.
"I get calls about live-work units every day," Wendler said. "The challenge is getting from A to Z" — in other words, from showing a property to closing on its sale.
At Mile View Warehouse, he has live-work units with some of the highest interior finishes in the category listed between $350,000 and $400,000. The residential units have hardwood floors and trim and a laundry area.
Retail and restaurants
With two new restaurants in the middle of tenant finishes in the city— Carl's Tavern on Seventh Street and The Rusted Porch in Wildhorse Marketplace — it's something of a mystery to Sanders that existing restaurant spaces with expensive commercial kitchens already in place are tough to fill. The former Giovanni's Ristorante on 11th Street is still waiting for a new tenant. And although he has had strong interest from more than one established Steamboat restaurateur for the former Village Inn space in Central Park Plaza, he said THF real estate won't budge on its lease requirements.
Still, Sanders is optimistic that Lincoln Avenue, where there are fewer than a half dozen open spaces, will see positive turnover before ski season.
"It's going to be a good fall for downtown," he said. "There are some established mountain businesses that are interested in locating downtown."
And finally, on the development front, Sanders said he is aware of a entity that is exploring the possibility of building some student housing in Steamboat.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com