by Joshua Guernsey on September 23, 2016
Our firm recently was asked to take part in a blog that addressed the changing real estate landscape in Northern Colorado. Although the blog was focused on our local restaurant industry, the author posed a great question: Are we witnessing the evolution of the Northern Colorado market, whereas the horsepower behind national chains is progressively overtaking resource-constrained, locally owned businesses?
Anyone who has dared to venture south on Interstate 25 on a Friday afternoon can begrudgingly attest to the changing dynamics in Northern Colorado. The swelling population and employment growth in our region has not only turned a 45-minute drive to Denver into a white-knuckled hour and half if you are lucky, it has undeniably changed our real estate landscape as well.
Good or bad, due largely to the evolution of our market, Northern Colorado is now very much on the radar of employers, retailers, restaurant chains and developers with headquarters located outside of our region. Recent announcements from Comcast, Scheels, national restaurant chains at Foothills mall, national platform real estate companies and a slew of out-of-state multi-family and student-housing developers puts a bold font, exclamation point and thumbs up emoji on the changing real estate landscape in Northern Colorado.
On the surface, it might seem to most that the trend line in our market is forever changed. However, digging a little deeper, there may be more to the storyline.
For the past 10 years, our company has tracked all users that we know to be looking for space in the market (‘Users in the Market’ or tenants and buyers of commercial real estate). We designate each of these users as ‘Homegrown’ or ‘New to Market.’ Homegrown is best described as any firm that originated/was founded in Northern Colorado. New to Market consists of any firm that originated elsewhere and is expanding into our market.
Annually, over a 10-year period, between 70 percent and 80 percent of the companies within our database have been designated as Homegrown (the majority), and 20 percent to 30 percent of the companies have been designated as New to Market (the minority). In reviewing our current list of Users in the Market, Homegrown companies comprise just more than 70 percent of our database, thus remaining a vital, if not dominant, piece of the Northern Colorado real estate economy.
Additionally, for every newsworthy announcement from a New to Market company, we cannot overshadow the innumerable success stories from Homegrown firms. New Belgium continues its phenomenal success story by expanding its Fort Collins “mothership.” Otterbox’s start out of a garage and ascent to international prominence. Madwire Media’s rapidly growing impact in the market, and the success stories behind locally founded restaurants such as The Egg and I and Blue Agave/Palomino.
So, yes, our real estate market is evolving. Are New to Market companies a key contributor to that evolution? The answer is also, “yes.”
However, the storyline is not about a changing of the guard, but rather a well-balanced rising tide of opportunity. CA/Nimsoft hires new employees, while a former HP engineer creates a startup company at Galvanize. BJ’s Restaurant & Brewhouse establishes itself on Harmony Road, while locally owned DC Oaks Brewpub and Eatery is under construction just down the road. Sprouts Farmers Market offers convenience, while the Old Town Farmers Market offers an alternative for consumers.
The reality is that Homegrown and New to Market companies face many of the same headwinds: Hurdles such as rising construction costs, a tight labor force, accelerating changes in technology and an increasingly competitive landscape will challenge Homegrown and New to Market companies alike.
The bar is being raised. Everyone must fine-tune their craft. The end result? Northern Colorado will enjoy more diversity in choices, better quality, a higher level of excellence and even more to offer in how we live, work and play.
Joshua Guernsey is a partner with Brinkman Partners. He can be reached at 970-672-1019 or via email at email@example.com.