Affordable Colorado Springs booms in diverse ways
A variety of investments are paying off in El Paso County
Seems like most of Colorado’s Front Range is in the news for rapid population growth and development — with the exception of Colorado Springs. But the state’s second-largest city is no sleeping giant, judging from the volume of development activity.
The city’s new mayor — former Colorado Attorney General John Suthers — is promoting a collaborative methodology that is necessary for growth and development in Colorado Springs to occur.
“I sense there’s a change going on here,” says Tatiana Bailey, director of the Southern Colorado Economic Forum and a research associate at the University of Colorado at Colorado Springs. “First, there’s the change in leadership. There’s been a lot of collaboration between the mayor’s office and the council.”
The UCCS School of Medicine has established a branch in Colorado Springs, enrolling 184 students annually.
UCCS broke ground on the ENT Center for the Arts, which will house a 750-seat theater, 245-seat recital hall, Gallery of Contemporary Art, rehearsal and instructional studio space.
Penrose-St. Francis Health Services is building a $100 million, 134,000-square foot addition to the St. Francis Medical Center.
The O’Neill Group Co. is redeveloping an old railroad depot into Catalyst Campus, a mixed-use work and education environment similar to Galvanize in downtown Colorado Springs.
“There’s a significant amount of capital investment in the community, both in the public sector and in the private sector,” says Dirk Draper, president and chief executive of the Colorado Springs Regional Business Alliance.
And those are just a handful of the projects that have been announced or that are under way in Colorado Springs.
“We are seeing a lot of development, particularly in the more mature parts of the city,” says Peter Wysocki, planning director for the city of Colorado Springs. “There’s lots of infill and redevelopment in older parts of town and we continue to grow to the north.”
But the city has to be strategic about its economic development. Because about half Colorado Springs’ economy relies on the military, diversification is critical. In 2013, the federal government cut $85.4 billion from the U.S. budget in an effort to lower the nation’s deficit. The cuts, known as sequestration, were split evenly between defense and domestic spending.
“Sequestration really impacted the military contractors, which rippled through the economy,” says Bob Cope, the city’s economic vitality specialist. “We’d be the first to admit that we’re lagging behind a lot of the Front Range cities, but we’re trending and catching up.”
The city and Colorado Springs Regional Business Alliance have adopted a strategy of attracting and retaining businesses in six sectors: aerospace/defense; health care; information technology/data storage; manufacturing; medical innovation and technology; and sports.
“Rather than a catch-all strategy of chasing RFPs (Requests for Proposals), we’re being more selective,” Draper says.
Earlier this year, Sierra Nevada Corp. announced that it will build an $88 million campus at the Colorado Aerospace Park at the Colorado Springs Airport for its new subsidiary Sierra Completion, which modifies the interiors of large private jets. The state awarded the company up to $18.8 million in job-growth incentive tax credits in exchange for locating 1,323 jobs paying an average annual wage of $83,720 in Colorado Springs.
That has prompted a number of other suppliers and vendors in the aerospace industry to locate in Colorado Springs, as well as businesses like Global SuperTanker, a newly formed company that will bring in the largest firefighting aircraft in the U.S. to the city.
The Sierra Nevada announcement also spurred Pikes Peak Community College to build a training and workforce development center next to the Sierra Completion facility.
“Nothing brings success like success,” Draper says.
Rising home prices in Denver have many people relocating to Colorado Springs, where housing is more affordable. The city’s growing population has stimulated construction of new homes, as well as sales of existing homes.
El Paso County, where Colorado Springs is located, has an estimated population of 663,519 and is likely to grow by about 10,000 people annually through 2021, according to the Colorado Department of Local Affairs.
In August, the Pikes Peak Regional Building Department issued 265 building permits for single-family homes in El Paso County, a 44 percent increase over the same month last year and the seventh consecutive month building permits have increased on a year-over-year basis. Single-family permits were up 12.5 percent to 1,902 for the first eight months of this year.
“They just keep raising prices in Denver,” says Mike Tinlin, regional vice president of Oakwood Homes, which is building an average of 200 homes a year at Banning Lewis Ranch on the north side of Colorado Springs. “If you live on the south side of Denver in Parker and commute to downtown, it’s the same drive as it is from here. We’re a 50-minute drive from the [Denver] Tech Center.”
In 2012, Oakwood Homes acquired 2,600 acres at Banning Lewis Ranch, the fastest-growing master-planned community in El Paso County. At the time, there were 350 occupied houses in the development. Today, there are 825. At full build-out, there will be 9,000 homes.
City planners see Banning Lewis Ranch and other developments in the northern part of Colorado Springs as the push for residential growth.
“We want to make sure that we do have room to grow,” says planning director Wysocki. “Banning Lewis Ranch provides us ample land for future growth. That is probably the next wave.”
Like other Front Range communities, home sales in the Colorado Springs region are also on the rise. The number of homes sold in El Paso County increased 17.5 percent in August to 1,243, compared to 1,058 during the same month a year ago, according to an analysis of Multiple Listing Service data by Coldwell Banker Residential Brokerage. Sales have steadily risen since 2010, when the number of homes sold was just 647.
“In the northern part of El Paso County, we’re seeing clients come from Denver because they can’t afford to get what they want there, but it’s not as much of a flood as you would think,” says Chris Lutyen, managing broker of Coldwell Banker’s Colorado Springs office.
Brisk sales also are pushing prices up. The median price of a home in El Paso County was $232,500 in August, up 2.4 percent from $ 227,150 a year ago.
Still, Colorado Springs remains more affordable than many other Front Range communities.
In Denver, for example, the median price of a single-family home in August was up 12.3 percent to $320,000, compared with $285,000 during the same month last year. In Boulder the median price spiked 13.4 percent from $352,399 during the same period, and in Northern Colorado, prices jumped 15.9 percent from $246,000 to $285,000.
Though there’s only one project in the works now, significant multifamily construction is expected to begin in downtown Colorado Springs, Cope says.
“That’s an area we have been lagging behind in,” he says. “Young professionals want to live in a 24/7 urban environment, but we haven’t been able to provide that.”
Hospitality and tourism
Tourism represents a significant portion of Colorado Springs’ economy. The area boasts more than 55 attractions and activities, including the Garden of the Gods, the Manitou Cliff Dwellings, the U.S. Air Force Academy, Cheyenne Mountain Zoo, Old Colorado City and the U.S. Olympic Training Center. A number of national U.S. federations such as USA bobsled, fencing, skating, cycling and boxing also have their headquarters in Colorado Springs. And perhaps the region’s most famous attraction is Pikes Peak, which inspired the song “America the Beautiful” by Katharine Lee Bates.
Colorado Springs also is home to The Broadmoor Hotel, the longest-running five-star resort in the U.S. and member of the Historic Hotels of America program. Since Denver businessman Philip Anschutz bought the company that owned The Broadmoor and the Pikes Peak Cog Railway in 2011, he’s invested more than $130 million to renovate the hotel and three other properties: Cloud Camp, the Rank at Emerald Valley and the Broadmoor Fishing Camp. He’s also acquired The Gazette newspaper and the Seven Falls tourist attraction, where he opened the swanky Restaurant 1858.
It’s not just Anschutz investing in Colorado Springs hospitality industry. Great Wolf Lodge is spending $90 million to transform the unfinished Renaissance Hotel at Interstate 25 and InterQuest Parkway into a resort that will include 311 rooms, a 65,000-square-foot indoor waterpark, an arcade, miniature golf, mini-bowling, four to five restaurants, and more than 20,000 square feet of meeting space. It’s slated to open next fall.
Northgate Properties LLC, developer of the 200-acre Polaris Pointe shopping center on the north side of town, broke ground in May on The Colorado Grand Resort and Hotel. The first phase will include 165 rooms and a fitness center. Phase 2 will add more rooms and a 60,000-square-foot indoor waterpark.
Overall, Colorado Springs’ economy is faring well. With an unemployment rate of 4.9 percent — the lowest since January 2008 — salaries are rising. However, the rate of participation in the work force is declining, says Bailey, who attributes that to baby boomers retiring and young people who left the labor force during the recession not returning. As of July, there were 16,437 open jobs with a median salary of $54,275, compared with a median salary of $52,925 in the rest of the state.
“We are still too reliant on the military and sectors that are not high-paying jobs, like tourism and call centers,” Bailey says. cb
Olympics museum and more
One of the biggest projects slated for Colorado Springs is the City for Champions, which includes a sports-medicine facility on the University of Colorado at Colorado Springs campus, a new Air Force Academy visitor center, a U.S. Olympic Museum and an indoor-outdoor sports facility downtown for Olympic and other events.
The city was awarded $120.5 million over the next 30 years under the state’s Regional Tourism Act to help fund the $250 million project. The state funding hinges on building the Olympic Museum, which city leaders say will be completed in 2018.
“The Olympic Museum is going to be another one of those once-in-a-lifetime opportunities,” says Bob Cope, the city’s economic vitality specialist.
The site for the museum was donated by Colorado Springs-based Nor’wood Development Group, which owns other property nearby. The museum will include 20,000 square feet of exhibit space, an atrium, Olympic Hall of Fame, theater, gift shop and broadcast studio.
Though not slated to break ground until next June, the City for Champions project already is stimulating other development nearby.
“There are already plans in place for the area surrounding the museum downtown,” Cope says. “That will take care of the balance of the urban renewal area.”