Mason corridor could be boon for prime Harmony R.E

coloradoan.com

May 31, 2009

Mason corridor could be boon for prime Harmony real estate

by pat ferrier
patferrier@coloradoan.com

It’s one of the busiest intersections in the city with prime retail space and more than 70,000 cars passing by every day.

Yet, two corners at Harmony Road and South College Avenue have quieted with four “big box” stores sitting vacant.

Linens ‘N Things and Circuit City – off the northeast corner – fell victim to the economic slowdown when their parent companies went bankrupt and liquidated their assets.

On the southwest corner, Ultimate Electronics and Walmart moved to bigger locations, leaving more than 300,000 square feet of major retail space on both sides of the intersection up for grabs, or even a new vision.

With the city’s planned development of the Mason corridor rapid bus transit system one block west, the vacant storefronts are poised to become strategic players in the area’s redevelopment.

The 5-mile Mason Express Bus Rapid Transit, or Max, will provide high-speed transportation along Mason Street from Cherry Street in North Fort Collins to Harmony Road on the south.

The city believes the rapid transit system will make the Mason corridor ripe for transit oriented development – a combination of residential, office and retail built around the mass transit system.

“It’s prime real estate and the Mason corridor will make it even more so,” said Realtor Eric Nichols of SullivanHayes, which is marketing the Ultimate Electronics building.
The city is actively pushing the intersection – and areas all along the Mason corridor – as shopping center redevelopment and repositioning sites.

Repositioning sites such as Harmony Marketplace, the former home of Circuit City and Linens ‘N Things, may be best suited to new tenants while redevelopment sites, such as the old Walmart “may need a full blown redevelopment by completely redoing buildings or taking them down,” said Mike Freeman, the city’s chief financial officer.

Freeman was in Las Vegas last week for the International Council of Shopping Centers convention, the biggest retail networking event of the year, talking up the benefits of doing business in Fort Collins.

On June 9, the City Council will host a work session with Freeman and others to discuss whether the city should take a more active role in redevelopment at Foothills Mall and along College Avenue.

The Harmony and College intersection “is a high priority,” Freeman said. “I think the council will be supportive of us really taking a more proactive role but we won’t know that until June 9.”

The city has zoning in place for transit oriented development, including vertical or multistory designs, along Mason and College but still needs an advantageous fee structure and some type of development authority to make it work, Nichols said.
Freeman said the city has plenty of tools at its disposal to help developers, including things like urban renewal authorities, tax increment financing, special improvement districts, retail sharebacks and public improvement fees.

But first he sees a likely shift in land use patterns as Mason Street comes online in late 2011.

“A lot of people are thinking about strategic pieces of College (Avenue) that have direct or indirect access to Mason Street. Does a larger big-box format still make sense there, or should it be something different?” he said when Circuit City closed.
The city has short-term concerns about the image of having a lot of retail space vacant, but Freeman said its top priority is to “update the vision for what should we be doing on South College.”

The proximity to the major transportation hub will likely play a major role in the corner’s future.

No matter what the city envisions, ultimately, redevelopment will rest with the private landowners but the city wants to potentially “partner” with them on any redevelopment.

“We are not trying to usurp their responsibility,” Freeman said. “I see us coming in and facilitating or accelerating the process and making sure property owners know the city is interested and a willing partner. Those are all real important things.”

But first the city has to understand what the market is doing, who and what the mix of tenants is to make the area successful and how it can help facilitate redevelopment and retention, Freeman said.

“It could be a repositioning where the city is not much involved up to wholesale redevelopment,” he said.

Wal-Mart, for example, is not interested in selling or leasing the building, said Nichols, whose company visited with store officials at ICSC.

The company is testing different store models throughout the country and could be holding on to the property to bring in a different concept, or it could be waiting for market prices to improve, he said.

“They are sitting on their property and no one outside Wal-Mart knows why,” he said. “They know it’s a valuable corner, a valuable asset and they have the ability to sit on it.”

In an e-mail statement to the Coloradoan, Colorado spokesman Josh Phair said the company is continuing to examine potential scenarios for the Mason Street store.
“Depending on design requirements and construction costs, this could include reuse by Wal-Mart as an additional retail location, a leased site or a property for sale. The timing for this determination is fluid based on a number of variables, including performance of surrounding locations and the real estate market.”

Marketing efforts are under way on the other three vacant buildings, but so far no leases have been signed.

Jim Hoffman, a Realtor with Staubach real estate in Denver, said he’s “had a few people poking around,” the Linens ‘N Things building, but no lease is imminent.
Big box tenants, he said, “are slower to commit to new stores in this market. Many national retailers have hunkered down a little bit.”

Existing businesses in the area have seen little impact from the demise of their big box neighbors.

Many of the businesses are destination stops, such as those on the southeast side of the intersection.

Owners Loveland Commercial LLC and Tom Livingston recently upgraded the aging property.

“We’re actually ginning along pretty good. What would be of even more value would be when the Country Store property is brought up to speed and remodeled,” Livingston said.

Representatives from the Country Store, owned by Schrader’s Oil, were not available for comment.

Livingston sees redevelopment issues as better addressed “in parallel with the evolution of Mason Street.”

Ed Andrews of Allstate Insurance said there are plenty of big box stores still in the area, including Target, King Soopers, Bed, Bath and Beyond and Best Buy.

“If I were to conceptualize it in the future it would be basically the type of shopping that has been here though obviously it may be years before it comes back,” he said.
Mike Pedersen of Pedersen Toyota said his business traffic hasn’t changed, but he would like to see more traffic “across the street” at the old Circuit City and Linens ‘N Things. “That brings value to the whole corner.”

He likes the retail outlets there, he said. “I would think that would be important to the city as far as tax revenue.”