November 14, 2014 | Author: Cameron Moix | Original Source
Five years have passed since part of a fledgling urban renewal project in north-central Colorado Springs began a journey to become a shopping and dining mecca.
In those five years, University Village Colorado — an 80-acre property once peppered with derelict motels and blight — has become a major source of both employment and tax revenue.
The plan, after all, was “to reduce, eliminate and prevent the spread of blight within the Urban Renewal Area and to stimulate the growth and development in the corridor over the near- and long-term,” according to the Urban Renewal Authority’s North Nevada Avenue Corridor Plan.
Despite the center’s troubled beginnings (a substantial construction project breaking ground at the bottom of the recession), the complex at 4880-5342 N. Nevada Ave. quickly bloomed. From plans for a simple stretch of shops and a couple of anchors rose a sprawling complex with 56 tenants, including both local and national retailers and restaurants.
Its success is no surprise to many involved.
According to real estate data, nearly a half-million people live within a 25-minute drive of UVC — and nearly 200,000 of those are just 10 minutes away during working hours. That includes the more than 11,000 students who attend UCCS, which borders the sprawling plaza directly to the east.
“We have seen more students now than ever before,” said developer Kevin Kratt, who owns real estate company Kratt Commercial Properties.
But Kratt and co-developer Tom Cone, owner of Olive Real Estate Group, said the impact of UCCS on the success of University Village was much more significant than was expected.
“We always felt that the college would be a strong neighbor of ours,” Kratt said. “But Costco [Wholesale], Kohl’s and Lowe’s [Home Improvement] never thought of that as being essential. They wanted to be centrally located, along the I-25 corridor, having great infrastructure with the new interchange. As we moved forward and when it opened, they realized how strong of an economic driver the college had become.”
A brief history
A decade ago, UCCS was in a bad place geographically — surrounded by blight and in need of a revitalized western entryway.
“There were a lot of old, run-down properties that weren’t really generating any tax revenue for the city and were preventing any development,” said Jim Rees, a consultant for the Urban Renewal Authority on projects including UVC.
Cone approached Kratt in 2002 with an idea to develop portions of land across from the university, unaware the site had been targeted by the Colorado Springs Urban Renewal Authority for designation as a revitalization district, which was approved by City Council in December 2004.
“There was a spawning of an idea, then we collaborated, but it took a long time to bring to fruition,” Cone said.
After years of working alongside each other as retail brokers, they joined forces as University Village Developers LLC to purchase and develop the decrepit, creekside property.
“It seemed like a synergistic fit,” Kratt said.
The URA’s approval of the site plan, as well as growing interest from Costco and Lowe’s, led the developers to move forward with purchasing the 30 parcels from more than 13 different property owners. The process took years, ending in 2007.
“It was a jigsaw puzzle,” Kratt said. “We were dealing with all of that while working to move forward with entitlements and coordinating with the Urban Renewal Authority and the City of Colorado Springs and the campus,” Kratt said.
“But we both knew that Costco was looking along the North Nevada Corridor for a location for their first Colorado Springs store, so it was very site-specific.”
Costco purchased 16 acres of the vacant land in early 2008 for $4.85 million and began construction on a large stand-alone building. Lowe’s followed close behind, purchasing 12.3 acres for $5.6 million and breaking its own ground.
The two large retailers attracted others of various sizes, including popular Kohl’s department store, and University Village was opened in October 2009 — in the depths of recession.
It came together
“Would we do things differently?” asked Cone rhetorically. “Yeah: We wouldn’t have had a recession as soon as construction started.”
But he said the center is all the better for it, having accumulated a more varied tenant mix of companies — more lean, mean and ready for business.
Also a testament to the center’s success is its nonexistent turnover rate, the developers said. They haven’t lost a single business in those five years, while the industry standard was 20-25 percent turnover, Kratt said.
“It’s a great testimony to their perseverance,” Rees said.
Kratt said another aspect of University Village’s growth was engineered simply by practicality.
“We quickly found that it was going to be very expensive from a utility standpoint because it was a brownfield site, and we were dealing with some real antiquated situations there,” he said. “It was going to be cost-prohibitive to develop a smaller site there, so we needed more ground to spread that cost around.”
Because so many other developments paused during the recession, Cone and Kratt were targeted by companies that showed little interest in locating in the region pre-economic dip, the developers said.
Now, Cone said, five-year leases are beginning to expire but tenants are “enthusiastically renewing their leases.” Although the rents are higher, Kratt said companies would rather spend extra cash for quality structures (created by Colorado Springs companies including RTA Architects and Peak Professional Contractors) and more traffic.
“We wanted to create long-term value,” Kratt said.
They ensure that each lease is another asset that adds to and doesn’t conflict with the current tenant mix. For some businesses, enough demand is evident to justify covering certain areas of the market more thoroughly (food and beverage, sports and outdoors retailers, cell phone shops).
Kratt and Cone said they’re picky when it comes to the tenants they allow to lease a piece of the shopping center. An estimated 20-25 percent of those who have shown interest in moving into the development have been denied because of legal or ethical issues pertaining to their other tenants.
And their perserverance, patience and pickiness has paid off, Kratt said.
“If we had built it out in 2010, Trader Joe’s wouldn’t have been ready,” he said. “We would have been built-out with no place for them to go and completely missed that opportunity.”
A new front door
The effects that UVC has had on job growth and tax revenue, though hard to track precisely because each tenant’s data is proprietary, are undeniable.
Original estimates for Costco’s revenue generation alone were more than $125 million, and UCCS now estimates that around 500 of its students are employed at University Village.
“Tax revenue has definitely been increasing every year so far,” Rees said. “The main goal was basically to stimulate development at UCCS and help them to develop the area surrounding their campus. That has been a great success.”
Rees consulted on all of the URA’s revitalization efforts, including small projects such as Ivywild School and larger ones like the mixed-use and residential Gold Hill Mesa development in west Colorado Springs.
“This is exactly the type of development we were looking for,” Rees said of the area’s revitalization.
“They are all somewhat unique but follow the same model to encourage development, but University Village has definitely been the most successful in terms of dollars and cents.”
It has also helped UCCS, spurring its westward expansion, connecting the campus with the North Nevada Corridor.
“It cleaned up Nevada Avenue, making it a showcase,” Cone said. “Our success and their [UCCS’] success have really paralleled each other. Their growth in population, enrollment and their construction of new buildings have all mirrored the growth we’ve seen.”
In five years, the school has built new student housing and the Lane Center for Academic Health Sciences, bolstered its infrastructure and will soon start on projects including a Visual and Performing Arts Center and its City for Champions sports medicine complex.
“UCCS is extremely pleased with the development of University Village,” Martin Wood, vice chancellor for University Advancement and Development, wrote in an email.
“We have worked closely with Kevin Kratt and Tom Cone as they have developed the property into one of the most vibrant retail areas in the Pikes Peak region. We are thrilled with the energy and vibrancy this has created on the North Nevada corridor as the University continues its own development on the east side.”
University Village is approaching its 650,000-square-foot buildout, and its developers hope to have the project wrapped up by the end of next year.
It has attracted an array of businesses well-suited to Colorado living, including the widely popular Trader Joe’s based in California.
That, coupled with Starbucks and other stores new to the center in 2014, continue to attract shoppers and those interested in further developing the land around it.
“It was really an infrastructure sweet spot and a geographic sweet spot,” Kratt said. “Then, when it opened, they realized what a strong economic driver the campus had become. … It became super-important for us to create an environment within the development where students could hang out and that was inviting for the kids as well as the faculty and staff.”
As 2014 draws to a close, University Village Colorado sits at nearly 600,000 square feet with only one vacant padsite remaining.
Kratt said the Village is preparing to welcome new tenants like Christy Sports, Venice Olive Oil Company and Cowboy Star Restaurant & Butcher Shop, all expected to open in 2015.
Nearby, the new Phil Winslow BMW dealership is under construction just west of Pulpit Rock, and talks are ongoing about the prospect of future multi-family housing development to the north of the thriving shopping center.
“University Village has replaced a blighted area of our community, which has been very positive for the University in building our own brand,” Wood wrote.
“We are thrilled with the number of student jobs that have been created in the various businesses, and the proximity of the Village is a great resource for our faculty, staff and students. University Village Colorado is a great resource for our community.”