Commercial property foreclosures haven’t yet occurred to the extent some economic experts predicted in the wake of the Great Recession. The housing market — both nationally and in the Grand Valley — remains the greater concern with increased foreclosure activity.
While commercial foreclosures could occur locally over the next year, some in the industry don’t foresee a larger number.
“Most have debt, but it’s under control,” says Dale Beede, broker at Coldwell Banker Commercial Prime Properties in Grand Junction. “We’ll see a number that could come into foreclosure. I don’t see too many people in trouble.”
Still, large chunks of commercial space sit vacant in the Grand Valley. Beede estimates that 10 percent to 12 percent of office space remains vacant, while 6 percent to 7 percent of industrial space is vacant and an undetermined amount of retail space is open.
Commercial space is available for various reasons — companies going out of business, moving into new quarters or consolidating services.
Borders is the latest national chain to run into financial problems, filing for Chapter 11 bankruptcy protection. The company announced the closure of its Grand Junction location as part of a plan to shutter
30 percent of its nearly 650 outlets nationwide.
A Blockbuster location on Broadway in the Redlands area of Grand Junction also is closing. Blockbuster filed for Chapter 11 bankruptcy protection and recently announced plans to sell the company.
A building that once housed Office Depot on
U.S. Highway 6 & 50 near Mesa Mall, remains vacant after the outlet moved to a nearby building that formerly housed Circuit City, yet another national retailer that closed its Grand Junction outlet. The move left a building with about 32,000 square feet of space.
Hobby Lobby announced it will vacate its space in the Teller Arms Shopping Center on North Avenue to move into a building under construction in the Rimrock Trade Center. Sonic built a drive-in restaurant at the center and Dick’s Sporting Goods has long-term plans to build in the area.
City Market closed its grocery store in the Eastgate Shopping Center on North Avenue, but opened a larger store on 24 Road north of Mesa Mall. Some employees from the former store went to work at the new location. Commercial space also is opening on First Street, where Ashley Furniture is closing. RBCS Electronics, located just south of the furniture outlet, also closed its doors.
Meanwhile, a new and larger furniture store is on the horizon. American Furniture Warehouse plans to open in a new building on U.S. Highway 6 & 50 between Wal-Mart and Gold’s Gym.
A Candlewood Suites hotel is scheduled to open north of the 24 Road City Market this year. A hotel on Main Street in downtown Grand Junction is scheduled to open this spring.
The Springhill Suites by Marriott will be the third downtown hotel operated by Steve and Kevin Reimer. Even during a soft economy, demand for hotel rooms in Grand Junction can be brisk during peak tourism months. The Reimers reported solid bookings even as some local hotels have struggled.
Many spaces remain open in mini malls across the Grand Valley, but a mall on 25 Road just east of Borders is now full with tenants. A new restaurant, Chuck & Kluck, recently opened in a building on 12th Street just south of Orchard Avenue.
At the national level, spending for private nonresidential construction dropped 6.9 percent from December’s figure and fell 13.2 percent from the total in January 2010, according to Associated Builders and Contractors (ABC), a national trade association.
Total nonresidential construction spending, which includes both private and publicly financed construction, fell 5.3 percent from January of last year. Office construction dropped 22.6 percent.
The declines aren’t necessarily based solely on economic conditions. “One could simply disregard January’s construction performance as a reflection of meteorological rather than economic phenomena,” says Anirban Basu, chief economist for ABC. “It was cold and snowy, and it is likely that weather played a role in suppressing overall activity. … Remarkably, total construction spending in America would have expanded in January relative to December had it not been for a sharp decline in energy related construction.”
Public nonresidential construction spending was up 2.5 percent compared to January 2010.
In Grand Junction, projects at Mesa State College have boosted the nonresidential construction industry in Mesa County. Construction on a new dormitory continues, as does expansion and renovation of the Houston Hall classroom building along North Avenue.
“We seem to be staying busy,” says Sid Squirrell, an agent with Bray Commercial in Grand Junction.
Despite complaints by companies that have encountered difficulty securing bank loans, Beede says many people can qualify for commercial mortgages. “If someone has a good business plan and good experience and 20 (percent) to 30 percent down, they shouldn’t have trouble.”
Adds Squirrell: “If you can get the financing and do it yourself, it could be good.”
Construction companies like to point out that costs have dropped over the past three years. A structure that cost $1.5 million in 2008 might cost $1.2 million now, requiring a $300,000 down payment, Beede says.
As for the overall market, the number of sales and median home prices could rise this year compared to 2010.
“I think we’ve probably hit bottom,” Squirrell says. “We’re busy, with a ton of closings in February.”