January, 2015

Is the Gunbarrel Market the hottest sleeper in Boulder?
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There is no question that the office and industrial market in Boulder is the healthiest it has been in a decade. Deals and rates in the core area of Boulder have outstripped every prognosticator’s expectations. New construction in both the office and multifamily markets are popping up downtown and stretching out beyond 30th St. Downtown lease rates are very aggressive in the mid to high $30’s per SF (NNN with the OpEx hitting $14-$15/SF) and 2nd generation space is going for the high $20’s/SF. Companies are excited about the new and existing availabilities and signing offer letters at a brisk pace. But what about that little area called Gunbarrel, 8 miles to the north east of Boulder? While there has been a fair amount of activity in Boulder, Gunbarrel just might be the surprise performer. Many of the area’s largest employers find the area attractive and are willing to locate to this nice sub market.

The area was created in the mid 1960’s when IBM built its manufacturing plant on what was once the outskirts of Boulder. They brought in thousands of jobs. Residential development started and housed a local labor force. Commercial development followed and grew from incubator spaces to sizable office and manufacturing facilities. Now, daytime employment brings in approximately 28,000 employees that work at over 1,100 businesses. With the Boulder economy expected to grow in the next few years, these numbers will increase. The area is home to companies like Coviden, Celestial Seasonings, Lexmark, IBM , Lockheed Martin and others. Companies locate in Gunbarrel because it offers a close employment base, and is home to restaurants, banks, medical facilities, postal annex, bus, and other local services that make up a small community. In addition, there are few remaining large blocks of space available in Boulder, and most of those that are remaining are in the Gunbarrel area. Companies are taking advantage of lease rates that are slightly lower than office or industrial rates found in Boulder.

Currently, the Gunbarrel area has 192 commercial buildings with a total of approximately 5.5mm SF of office, industrial, retail and R&D/flex space. Existing vacancy in this submarket is hovering between 3% and 4%. That’s up slightly from a mid-year and historic low of 2.8%.

Significant lease transactions in 2014 took place at 4801 63rd where BI expanded into 54,498 SF, Pank leased 28,564 SF at 7084 Winchester, 17,000 SF was absorbed at 5400 Spine (a short term deal before the property undergoes a major re-purpose into a retail center), 13,939 SF leased at 4909 Nautilus and 13,376 SF being leased at 4635 nautilus.

Major sale transactions included 6303 Spine, 170,000 SF investment sale for $13,400,000; 4699 Nautilus, 71,500 SF investment sale for $7,075,000; 6150 Lookout Rd 50,355 SF sold to an owner/user for $5,035,500.

But the big news for Gunbarrel is the new construction that is taking place. New construction has been pretty dormant for the last 25 years, but the new starts have exploded. We are all awaiting the opening of the new 96,000 SF Avery Brewery facility. But if you want a local beer try one of the other 5 microbrews in the neighborhood. In addition, there are three major multi-family housing complexes about ready to be delivered to market: The Gunbarrel Center will have 251 units, Boulder Views will deliver 68 units and the Alexan boasts 231 units.
The local merchants love it and retail is thriving in the area.

Not all the space has been taken though. Gunbarrel still has a few larger blocks of space and several smaller flex and R& D spaces still available. Employers will be prudent to investigate the desirability of this suburban hub with a solid retail, service, and employee base. The market is strong and we expect the absorption to continue well into 2015.
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