Downtown Colorado Springs’ retail and commercial scene, battered like other parts of town by the COVID-19 pandemic, has regained its momentum heading into the new year, area supporters say.
By the close of 2021, 37 restaurants, stores, hotels, service providers and other businesses opened street-level retail and commercial spaces in downtown, according to a recent report by the Downtown Partnership advocacy group.
That’s the highest number of new street-level businesses that have launched in any year since 2014, when the Downtown Partnership began to track the information, said Katie Frank, the group’s economic development manager.
At the same time, downtown’s retail vacancy rate fell to 3% in the fourth quarter of last year, down from 5.2% at the end of 2020, according to the Downtown Partnership, based on data from Washington, D.C.,-based real estate research firm CoStar Group. Vacancies rose in 2020 when a statewide stay-at-home order and capacity restrictions designed to slow the spread of the coronavirus hurt many businesses.
The fourth-quarter retail vacancy rate for downtown in 2021 also declined from 4.4% at the end of 2019, before the pandemic hit, CoStar data show. It also was the lowest for any quarter since 2.9% at the start of 2019.
The renewed interest in downtown retail space underscores what supporters have been saying for the past few years, the pandemic notwithstanding: The area is enjoying a surge of business interests that it hasn’t seen for decades.
“I moved here in ’86; I’ve seen our downtown struggle to some extent,” said broker Manny San Fernando of Kratt Commercial Properties, who’s marketing ground-floor space at the Hilton Garden Inn that opened in 2019 at Bijou Street and Cascade Avenue. “But that is no longer the case. Things are great, things are happening, things are moving.”
Housing is one of the biggest reasons.
Downtown supporters clamored for more residences for decades and every civic improvement plan that came along listed it as a major priority. Now, it’s no longer just a goal.
The Downtown Partnership estimated last year that nearly 600 apartments, lofts and condos have opened in the area since 2015, while more than 2,400 residences were under construction in 2021 or expected to break ground this year. Another 2,100 are planned or have been announced.
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Apartment developers have said they’re responding to a demand by residents who want an urban lifestyle — the ability to walk or bike to restaurants, bars, coffee shops and entertainment venues from their downtown apartments.
Those developers also have been intrigued by Colorado Springs’ demographics, some commercial real estate industry experts say.
The area’s population is on the upswing; El Paso County grew by 17.4% over the last decade to 730,000 residents to make it the state’s largest county, U.S. Census Bureau data released last year show.
“When a city experiences an influx of new residents and businesses like we have, expansion into new areas isn’t the only type of development that will take place,” said Derek Cohn, who with partner Brent Baldwin operates The Baldwin Cohn Group in Colorado Springs. Cohn and Baldwin have completed redevelopment of one Tejon Street building downtown and have two more in the works along the corridor.
“Inevitably, certain areas that have become blighted or underutilized will be redeveloped and revitalized,” Cohn said via email of downtown spaces. “The south end of downtown Colorado Springs is one of the areas that has seen this outcome of explosive growth.”
More millennials also are a big part of Colorado Springs’ demographic profile, which makes downtown attractive for some retailers and businesses.
A 2018 Brookings Institution study showed millennials were moving to Colorado Springs at a higher rate than anywhere else in the U.S.
The Springs once had a reputation as a place where kids grew up, went to college and then moved away to find a job, said Alex Winsor, a commercial broker with the Olive Real Estate Group who markets downtown properties.
Now, U.S. News & World Report in recent years has rated Colorado Springs as the nation’s most desirable place to live, and it’s increasingly attractive for young people who want to stay, work and perhaps live downtown, Winsor said.
Young people who desire that quality of life also have greater educational opportunities because of the growth of the University of Colorado at Colorado Springs, he said.
New attractions provide another reason for more people to live downtown and visit the area, he said.
The 8,000-seat Weidner Field multiuse stadium opened last year on downtown’s south side; it’s home to the Colorado Springs Switchbacks soccer team, concerts and other events. The 3,500-seat Robson Arena on the Colorado College campus also opened last year on downtown’s north edge; it hosts the school’s hockey team and can hold other events.
Those venues followed the 2020 opening of the U.S. Olympic & Paralympic Museum in southwest downtown.
“They’re (new attractions) creating more of an incentive for the downtown retailers and restaurants to come here and see that we are this booming market all of a sudden, when before we were kind of the red-headed stepchild from Denver,” Winsor said. “We’d be overlooked because, ‘Oh yeah, they’re just kind of a small town.'”
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But it’s not just the new that attracts people to downtown, Cohn said. “Additionally, historic buildings, mostly in the core of downtown, characterize the rich history of Colorado Springs. Older buildings have features that create a unique atmosphere that is impossible to re-create. … When you add the scenic views that are visible from these buildings, the area becomes an appealing destination or home to people of all ages.”
In April 2021, Aaron and Becky Nuttall opened CLAY Venues in a portion of a remodeled, late 1940s building northwest of Pikes Peak and Wahsatch avenues that originally was home to an auto dealership and in recent years housed a thrift shop and antique store.
CLAY Venues, named for Aaron’s grandfather, has a little more than 4,000 square feet of climate-controlled space where it primarily hosts weddings, though it also attracts corporate meetings, business parties and other gatherings, Becky Nuttall said. Additional space for clients, vendors and other uses pushes the venue’s total to 6,000 square feet.
The Nuttalls could have opened CLAY Venues along busy Powers Boulevard on the east side, in fast-growing InterQuest to the north or another of Colorado Springs’ hot commercial hubs in outlying suburban areas.
But they wanted to offer couples the option of getting married and holding receptions in a downtown setting, which is a trend in the wedding industry, Becky Nuttall said.
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“It’s definitely, like, in vogue, to have more of an urban, downtown wedding reception,” she said. “We just really wanted to provide that downtown, urban, industrial, more modern reception space.”
After a slow start in 2021, business picked up; bookings are strong in 2022 and CLAY Venues already is scheduling events in 2023, Becky said.
The Nuttalls, however, don’t just operate their business downtown; they live there, too.
“We are the kind of people who like to ride our bike and walk everywhere if we can,” Becky said. “We truly believe it’s an extension of our home and our hospitality. When we opened CLAY, we didn’t want it to be 30 minutes across town. We wanted it to be where we lived.”
Curtis and Cody Bell opened their Bell Brothers Brewery on New Year’s Eve in one of the Tejon Street buildings being remodeled by The Baldwin Cohn Group and where Zeezo’s costume and magic shop operated for years.
The Bells looked at areas outside downtown, Curtis Bell said, but were turned off by high rents and landlords who rejected financial help the brewery might need as a start-up business.
The Baldwin Cohn Group, however, offered to work with the Bells — helping them with the cost of constructing their space and making building improvements, while offering them discounted rent that will ramp up as the brewery gets going, Curtis said.
“A lot of my equipment and costs were built into the build-out of the space, on top of trying to improve the building,” Curtis said. “The landlords really took a competitive stance to that and said, ‘We want this kind of vibe for our building'”
The central location on Tejon Street also gave the Bells a chance to be part of a growing and thriving community of breweries in the urban core, such as Mash Mechanix, Battle Mountain, Goat Patch and Phantom Canyon, Curtis said.
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He talked with other breweries and sought to have them share their products via guest taps in the Bell Brothers space, which helps promote each other’s business, he said. Even as Bell Brothers Brewery competes with other brewers, Curtis said, he sees them as teammates who are part of the same industry.
“Everything that’s in our building is Colorado-brewed or distilled,” he said. “Based on the size of our system and our downtown location, we don’t expect logistically that we could brew enough beer to furnish 12 different taps, full time, at all times throughout the entire year.”
Despite the influx of new businesses, downtown’s retail and commercial landscape still has its share of ongoing problems that retailers and merchants deal with, area advocates acknowledge.
Downtown’s homeless population, for example, can be a turnoff, though Bell said he’s found that most transients are harmless.
Bell Brothers Brewery has worked with the Colorado Springs Police Department to train its employees on how to deal with transients, which most times just requires keeping an eye on them if they enter the business and allowing them to use the bathroom if needed, Bell said. If a problem arises that might require police help, employees have been trained on what to do, he said.
Parking, meanwhile, is a major headache for businesses like his, Bell said.
He worries there’s not enough convenient parking downtown, especially at times when Weidner Field hosts events or other activities take place in the area. Frank, of the Downtown Partnership, says the area has about 8,000 available parking spaces.
Bell also believes parking rates are too high and that the city is too concerned about making money from parking. Bell said he’d like to see some meters removed and parking costs reduced, which he believes would encourage more people to come downtown and boost business.
“There’s been a number of times where I’ve had clients, customers come in, and they’d drink another round, except that, ‘Oh, my parking meter just ran out,”’ Bell said. “Well that’s $10 or $15 (in sales) that just walked out the door because $1 worth of parking is what the city was looking for. But they were going to make that back in sales tax immediately. It’s not just me; every business downtown has the same problem.”
Some vacancies persist
Even as downtown saw more than three dozen new businesses open in 2021, some prominent retail and commercial spaces continue to sit idle and showcase ugly gaps in downtown’s otherwise healthy smile.
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Except for a short time five years ago when it was occupied by a local tech company, the former Michelle’s Chocolatiers & Ice Cream storefront at 122 N. Tejon St. has been vacant since the longtime candy and ice cream favorite closed in 2007.
Winsor, of Olive Real Estate Group and who markets the property, said some downtown spaces have characteristics that make them hard to lease.
In Michelle’s case, the space is a skinny, nearly 3,760-square-foot storefront that’s too large for many quick-serve and fast-casual restaurants, some of whom were downsizing to spaces of around 2,000 square feet even before the pandemic hit, Winsor said.
Remodeling spaces like the old Michelle’s can be costly, especially as costs for construction materials and labor have soared, Winsor said. Michelle’s even has kitchen equipment that’s no longer useable still sitting in the space, he said.
A coworking space, however, is now are looking at leasing a portion of the former Michelle’s property, Winsor said. It might be joined by other professional services, he said.
In other cases, some owners of empty commercial spaces in downtown can blame bad timing for not being able to find users.
The 27-unit Casa Mundi Apartments opened on South Tejon Street about one month before the pandemic hit, with ground-floor retail and commercial space that was expected to entice restaurants, coffee shops and other small businesses. That space, however, has remained vacant for nearly two years even as Casa Mundi’s upper-floor apartments found renters.
“We had leases in the past, but with the pandemic, people didn’t want to move forward,” said Helen Cameron, a broker and partner with Thrive Commercial Partners, who’s marketing the ground-floor Casa Mundi space. “It was a lot of unknown.”
Lumber and other building material costs that skyrocketed in 2021 also prompted some businesses to rethink their plans, she said.
“The cost of materials, the cost of tenant improvements — they’re not turn-key spaces anymore,” Cameron said.
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The Casa Mundi retail space now is close to leases with two restaurants — a breakfast concept and sit-down dining, she said.
“I think it’s going to bring a lot of flavor to that area of town,” Cameron said.
At the Hilton Garden Inn in downtown, the hotel’s owner has been selective about the property’s ground-floor space and recently decided against leasing to food users in favor or retail, office and service providers, said San Fernando, of Kratt Commercial Properties.
The goal is to have users who complement the hotel and the surrounding area, San Fernando said. He hopes to announce leases soon, he added.
Even as downtown’s vacancy rate drops and some remaining storefronts fill up, don’t expect retail and commercial spaces to be completely full, he said. Retail comings and goings are part of the business world, and some stores and restaurants simply don’t pan out.
“All of a sudden you have four or five locations that maybe they didn’t make it,” San Fernando said. “It’s a typical ebb and flow that you see. We’re never going to see 100% (occupancy), whether it’s prominent locations or not-so-prominent locations. But I’m certainly not concerned about it. I think Colorado Springs is vibrant and spaces will get filled.”