industrial spaces Boulder

Where Have All The Industrial Spaces Gone?

December 23, 2016 12:13 pm

Where have all the industrial spaces gone?

Not long ago, much of East Boulder was filled with industrial spaces that cost between $8-12/SF gross. Now businesses are finding it hard to renew their leases at ever higher rates. If they consider moving, they are faced with a low-vacancy market and landlords that are not willing to renegotiate much on rent or concessions.

Landlords want to get the “Highest and Best Use”- which is thrown around in the market, but effectively means landlords are holding out for the tenant that is willing to pay the most for the real estate. Tech companies, breweries, distilleries, coworking spaces and other creative spaces are taking over the industrial spaces market which was historically reserved for the service industry, automotive, manufacturing and a myriad of other small companies. It’s now “trendy” to update industrial spaces into the newest, chic hangout. Rino District anyone? While it is certainly “cool”, it also drives up the cost and limits supply.

We have all seen and sometimes smelled the effect of Colorado’s marijuana businesses. Industrial spaces, like no other asset type in commercial real estate, have been transformed by this boom. What we are noticing is largely due to regulation – and not demand – for more space, as the majority of the industrial spaces appropriate for growers have already been secured. While the amount of industrial spaces in Boulder occupied by marijuana grow facilities is considerable, we do not foresee additional absorption, and therefore competition, with this user group in the years to come.

Finally, some call this the Amazon affect while others call it the New-Age Industrial Revolution. Online retailers of all shapes and sizes are trying to get as close to consumers as possible to decrease the transportation time and costs associated with delivery. This affects all small and big businesses working to stay competitive online. They either stay in the city and pay top dollar or they expand to the closest and cheapest suburb. Boulder businesses are moving to East Boulder and Denver businesses are moving to Commerce City, both of which offer many industrial spaces. For Boulder, the march east to secure affordable rates without losing proximity has been the bane of many Boulder businesses real estate search.

So what are your options? If you are currently in a space that is working well for your business, we suggest you immediately begin discussions with your existing landlord to renew or restructure your lease. Consider renewal options and fair market rate escalators built into your lease to lock in future rents. If you are growing out of your space or your space no longer works, start opening up your horizons and consider the many options just outside of Boulder that remain affordable with landlords more willing to negotiate. And if you have to move and remain in Boulder, there are a few options that will come to market from time to time. Be prepared to move fast and be ready to be flexible, as the space you are looking for will not always be a perfect fit and you will likely need to invest in tenant finishes to make it work.

In this fast-changing environment, you need a real estate professional who understands your business and financial goals, as well as the market for industrial spaces. That’s what BOOM Properties offers. We’d like to start a conversation.

BOOM Properties was established in 2016 by Jessica Dieter, Mollie McQueen and Todd Walsh as a commercial real estate and property management firm. Boom Properties leverages technology and values transparency to offer 360 degrees of commercial real estate services to clients looking to buy, lease, sell and manage commercial real estate. With our office located in the heart of downtown Boulder on the corner of 9th and Pearl, Boom Properties understands and appreciates the finer points of Colorado commercial real estate especially in Boulder County.

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