Commercial Activity is Back in Full Force
Commercial real estate activity in the Yampa Valley had been in a bit of a COVID-induced lull, however activity is now back in full force. In the last six months, there has been a surge in sales on buildings and businesses, especially in downtown Steamboat. Competition for leased space is fierce with rates going at a premium.
Standalone Premises and Single Person Office Space Demand is on the Rise
Smaller standalone premises are in huge demand throughout downtown for a range of retail concepts. Qualified tenants are paying rates that would have been hard to imagine in previous years. The Victorian, Howelsen Place, and Alpen Glow are all currently at 100% occupancy. The average asking rent on premium retail spaces in the downtown corridor is approximately $30-$35 per SF for a triple net base lease plus property tax, insurance, and any common area maintenance.
On the flip side, the need for larger office spaces has dwindled with buyers and renters securing deals at below market rate on spaces that have been on the market for some time. The transition to home offices has made a notable impact. Many people are now looking to lease small single person office spaces as more people wish to work out of the house but in an isolated environment.
Downtown continues to be the preferred location for retail and restaurants driven in part by substantial infrastructure and streetscape investments over the last few years. Yampa Street has gone through a major overhaul and its popularity is evident by the increased number of restaurants and the bustling farmers market. A new food truck location, to be named The Boat Yard, is currently under review with the city.
Restaurant Spaces are Far and Few Between
Restaurants throughout Steamboat adapted their business model to accommodate either take out or outdoor dining during the pandemic. There are currently no turn-key restaurant spaces available in the downtown area and several restaurants are for sale as a business only. Downtown restaurant sales are averaging $414 per SF, ranging from $249 per SF for a remodel project to $675 per SF for finished restaurant space, and one sale at $750 per SF for shell space.
Mountain Investments are Driving Interest in the Base Area
On the mountain, Steamboat Resort is well underway with their $135M redevelopment project. The demolition phase was completed at the end of July and construction crews are working tirelessly ahead of the winter. Many long-term vacant or underutilized commercial units have sold at Torian Plum including Terry Sports, the Base Club, and Rocky Mountain Peddler. The investment by Alterra is also driving interest in the few remaining parcels of development land in the base area.
Commercial real estate seems to be on the same trajectory as the residential market where demand significantly outweighs supply.