This chapter presents information regarding current and future market conditions in the Grand Junction/Mesa County area that would affect future development in the 24 Road Corridor. These include economic and demographic indicators, market indicators, and a summary of market opportunities relative to future development.
Leland Consulting Group conducted a thorough market analysis to identify opportunities for new development along the 24 Road Corridor. Since the corridor represents a sub-market within the City of Grand Junction (the City), and as such will likely compete with projects from a broader trade area, overall economic and demographic indicators, supply factors, and demand estimates were analyzed for both areas. The trade area consists of the Grand Junction Metropolitan Statistical Area (Mesa County), Delta County, Montrose County, and a portion of Garfield County. This trade area was determined considering the following factors:
(a) 
Current and future development patterns in the Grand Junction area and surrounding communities.
(b) 
Employment, residential and commercial development concentrations.
(c) 
Influence of competitive projects/communities.
(Res. 109-00 § 3, 11-1-00)
Economic and demographic characteristics in the market are indicators of overall trends and economic health which may affect private and public sector development. The following summarizes economic and demographic trends which will affect development demand within the 24 Road Corridor over the next decade.
(Res. 109-00 § 3, 11-1-00)
The Grand Junction trade area population increased at a compound average annual rate of 2.7 percent between 1990 and 1999. In comparison, the City population grew at a slightly higher 3.0 percent rate. This trend is expected to reverse over the next decade, as the trade area population is expected to grow at a compound average annual rate of 2.0 percent, compared to a 1.4 percent growth rate for the City.
Household growth in the trade area and the City closely mirrors population trends, both in terms of historical and projected growth. Average household sizes in the trade area are significantly higher than those for the City, indicating a higher concentration of one- and two-person households and a lower concentration of families within the City.
These population and household growth patterns, projected to continue over the next 10 years, are indicative of regional trends that indicate an increasing number of single professionals and retired couples moving into Colorado.
Table 1: Population and Household Growth
City of Grand Junction
City
Trade Area*
1990 Population
32,893
153,535
1999 Population
43,100
195,600
2005 Population
47,100
221,600
2010 Population
50,300
243,800
1990 Households
14,300
59,660
1999 Households
18,700
77,900
2005 Households
20,700
89,300
2010 Households
22,200
98,700
1990 Average Household Size
2.15
2.51
1999 Average Household Size
2.08
2.45
2005 Average Household Size
2.04
2.42
2010 Average Household Size
2.02
2.41
* Trade area includes all of Mesa County, Delta County, Montrose County and one-half of Garfield County.
Source: U.S. Census Bureau; Colorado Department of Local Affairs; Claritas, Inc.; and Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)
The current median household income for the trade area is $31,300 – significantly higher than that for the City ($24,600). Over the past nine years, the trade area median household income increased at a compound average annual growth rate of 3.3 percent, while the City’s grew at a slower annual rate of 2.8 percent. This trend is expected to continue over the next 10 years, as trade area household incomes are expected to grow at a rate faster than that for the City.
Table 2: Median Household Income Growth
City of Grand Junction
City
Trade Area
1990 Median Household Income
$19,161
$23,352
1999 Median Household Income
$24,600
$31,300
2005 Median Household Income
$26,800
$38,100
2010 Median Household Income
$29,000
$44,900
Source: U.S. Census Bureau; Claritas, Inc.; and Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)
Trade area employment is currently estimated at approximately 95,200. The Grand Junction MSA (Mesa County) comprises over 60 percent of trade area total employment. Recent high job growth rates (five percent to six percent) in the trade area are expected to decline to steadier rates in the 2.5 percent to three percent range over the next decade.
Growth in trade area employment will likely continue to be dominated by the trade and services sectors, which comprise approximately 55 percent of the total economy. Another fast-growing industry is manufacturing, projected to grow at an average annual rate of 2.98 percent over the next five years. This is indicative of the national growth trend in small, independent service companies.
Table 3: Employment Growth
City of Grand Junction
City
Trade Area
1995 Employment
NA
83,500
1999 Employment
NA
95,200
2005 Employment
NA
113,700
2010 Employment
NA
128,600
Source: Colorado Department of Labor and Employment and Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)
Critical to interpreting the 24 Road Corridor’s competitive position within the Grand Junction trade area market is an understanding of the supply characteristics of competitive developments and surrounding sub-markets. In order to identify potential market opportunities, given the corridor’s potential competitive position and prevailing market conditions, demand estimates were also prepared. The following discussion presents an overview of existing supply conditions and estimates of future demand by land use type.
(a) 
Retail.
The Grand Junction MSA recently reached a population concentration level sufficient to attract the attention of national retailers, particularly “big-box” users. These large-scale discount retailers have accounted for the majority of new retail development in the Grand Junction area over the past two years. As with other mid-sized metropolitan areas, this “big-box” development activity has occurred in close proximity to a regional mall – in this case, the Mesa Mall. At the intersection of 24 Road and U.S. Highway 6/50, the Mesa Mall provides a regional shopping destination for Grand Junction, Mesa County and the entire Western Slope. The area developing around Mesa Mall currently consists of a mix of national and regional chains.
(1) 
Local retailers are generally concentrated within other commercial areas/corridors in the Grand Junction market area, such as the following:
(i) 
Downtown Grand Junction – primarily specialty retail.
(ii) 
North Avenue – older strip commercial.
(iii) 
Orchard Avenue – older strip commercial.
(iv) 
Horizon Drive – new strip commercial.
(v) 
U.S. Highway 6/50 – mix of strip commercial and highway-related retail.
(2) 
Supply characteristics for the Grand Junction retail market are summarized as follows:
(i) 
There is an estimated 3,500,000 to 4,000,000 square feet of retail space in the Grand Junction market area, comprised primarily of regional retail and neighborhood commercial space.
(ii) 
Current retail vacancy rates in Grand Junction appear to range between 10 percent and 20 percent, with older commercial areas (e.g., North and Orchard Avenues) experiencing the highest vacancy rates.
(iii) 
Retail lease rates in the Grand Junction market generally range between $6.00 and $12.00 per square foot. Older commercial areas (e.g., Downtown, North and Orchard Avenues) are at the lower end of the rent range, while areas such as Horizon Drive and Mesa Mall are at the high end of the rent range.
(iv) 
Overall, the Grand Junction retail market is experiencing market stability, with declining vacancy rates, steady absorption, and rent inflation.
Demand for retail space is determined by the potential level of retail expenditures in a given trade area. Existing and projected total household retail expenditures in the Grand Junction trade area were determined by multiplying growth in households with that portion of household income typically spent on general retail purchases. The results of this analysis (shown in Table 4) indicate demand for 100,000 to 150,000 square feet of additional retail space annually in the Grand Junction trade area over the next 10 years.
Table 4: Trade Area Retail Demand
1999 to 2010
Household Expenditure Method
Trade Area
Total 1999 Households
77,900
Total 2010 Households
98,700
New Household Growth
20,800
Annual Per Household Expenditures for Select Retail Categories*
$14,700
Aggregate Retail Sales Potential from Household Growth
$305,760,000
Trade Area Supportable Retail Square Feet (@ $200/SF)
1,528,800
Average Annual Demand for Retail Space (SF)
100,000 to 150,000
* Categories include those featured in a community and/or neighborhood center.
Source: U.S. Census Bureau; Colorado Department of Local Affairs; Claritas, Inc.; and Leland Consulting Group.
(b) 
Office.
The Grand Junction office market is concentrated in two primary areas: Downtown and Horizon Drive. Serving local professionals, Grand Junction’s office inventory primarily consists of lower-cost Class B and C space. New office activity has been concentrated along Horizon Drive, which is developing as the primary commercial route connecting Walker Field (the regional airport) and Downtown Grand Junction.
Supply characteristics for the Grand Junction office market are summarized as follows:
(1) 
There are an estimated 9,500,000 square feet of office space in the Grand Junction trade area, comprised primarily of local service space.
(2) 
Current office vacancy rates in Grand Junction appear to range between 10 percent and 15 percent, with older office concentrations (e.g., Downtown, North Avenue) experiencing the highest vacancy rates. Newer office space along Horizon Drive appears to exhibit lower vacancy rates.
(3) 
Office lease rates in the Grand Junction market generally range between $6.00 and $15.00 per square foot. Older commercial areas (e.g., Downtown, North and Orchard Avenues) are at the lower end of the rent range, while newer areas such as Horizon Drive are at the high end of the rent range.
(4) 
Overall, the Grand Junction office market is experiencing market stability, with declining vacancy rates, steady absorption, and rent inflation.
Demand for new office space is derived from two primary sources: expansion of existing industry and the relocation of new companies into the market. Employment projections by industry classification for the Grand Junction trade area were used to estimate an average annual demand of approximately 300,000 square feet of office space between 1999 and 2005 and an average annual demand of approximately 370,000 square feet of office space between 2006 and 2010 (shown in Table 5).
Table 5: Trade Area Office Demand, 1999 to 2010
Average Annual Increase
Penetration Rate
Office Space Employees
Office Square Feet Per Employee
Total Demand
1999 – 2005
Manufacturing
271
15.00%
41
200
8,140
Mining/Construction
237
15.00%
36
200
7,123
TCPU
173
45.00%
78
200
15,540
Trade
848
35.00%
297
200
59,354
FIRE
130
85.00%
110
200
22,015
Service
866
60.00%
520
200
103,970
Government
496
90.00%
447
200
89,355
Self-Employed
62
15.00%
9
200
1,850
Projected Annual Demand
3,083
1,537
307,347
2006 – 2010
Manufacturing
326
15.00%
49
200
9,768
Mining/Construction
285
15.00%
43
200
8,547
TCPU
207
45.00%
93
200
18,648
Trade
1,018
35.00%
356
200
71,225
FIRE
155
85.00%
132
200
26,418
Service
1,040
60.00%
624
200
124,764
Government
596
90.00%
536
200
107,226
Self-Employed
74
15.00%
11
200
2,220
Projected Annual Demand
3,700
1,844
368,816
Source: Colorado Department of Labor and Employment and Leland Consulting Group.
(c) 
Industrial.
The Grand Junction industrial market is concentrated in two primary areas: near Walker Field and along U.S. Highway 6/50. Similar to office space, Grand Junction’s industrial inventory primarily consists of lower-cost space serving small local users. New industrial activity has occurred in the two areas outlined above, locating in those areas primarily for their easy transportation access (air/highway).
Supply characteristics for the Grand Junction industrial market are summarized as follows:
(1) 
There are an estimated 8,000,000 square feet of industrial space in the Grand Junction trade area, comprised primarily of local service space.
(2) 
Current industrial vacancy rates in Grand Junction appear to range between five percent and 10 percent, with most industrial concentrations experiencing relatively low vacancy rates.
(3) 
Industrial lease rates in the Grand Junction market generally range between $2.00 and $6.00 per square foot. Older industrial areas (e.g., U.S. Highway 6/50) are at the lower end of the rent range, while newer areas near Walker Field are at the high end of the rent range.
(4) 
Overall, the Grand Junction industrial market is experiencing market stability, with declining vacancy rates, steady absorption, and rent inflation.
Demand for new industrial space is derived from two primary sources: expansion of existing industry and the relocation of new companies into the market. Employment projections by industry classification for the Grand Junction trade area were used to estimate an average annual demand of approximately 270,000 square feet of industrial space between 1999 and 2005 and an average annual demand of approximately 320,000 square feet of industrial space between 2006 and 2010 (shown in Table 6).
Table 6: Trade Area Industrial Demand
Average Annual Increase
Penetration Rate
Industrial Space Employees
Industrial Square Feet Per Employee
Total Demand
1999 – 2005
Manufacturing
271
65.00%
176
550
97,002
Mining/Construction
237
55.00%
131
350
45,703
TCPU
173
55.00%
95
350
33,238
Trade
848
20.00%
170
350
59,354
FIRE
130
5.00%
6
350
2,266
Service
866
5.00%
43
350
15,162
Government
496
5.00%
25
350
8,687
Self-Employed
62
25.00%
15
350
5,396
Projected Annual Demand
3,083
662
266,809
2006 – 2010
Manufacturing
326
65.00%
212
550
116,402
Mining/Construction
285
55.00%
157
350
54,843
TCPU
207
55.00%
114
350
39,886
Trade
1,018
20.00%
204
350
71,225
FIRE
155
5.00%
8
350
2,720
Service
1,040
5.00%
52
350
18,195
Government
596
5.00%
30
350
10,425
Self-Employed
74
12.00%
19
350
6,475
Projected Annual Demand
3,700
1,844
320,170
Source: Colorado Department of Labor and Employment and Leland Consulting Group.
(d) 
Multifamily Housing.
Supply characteristics for the Grand Junction housing market are summarized as follows:
(1) 
The average single-family home price in the Grand Junction market area was approximately $128,000 in 1998 and the average condominium/townhouse price was $88,000.
(2) 
Residential construction has recently averaged approximately 1,600 units annually. Multifamily construction represents a minimal share of new home construction.
(3) 
One-bedroom apartment rents in the Grand Junction market area currently range between $350.00 and $800.00, with the majority of units under $400.00. Two-bedroom apartment rents currently range between $425.00 and $1,000, with the majority of units under $500.00. Apartment vacancy rates in the Grand Junction market area generally range between five percent and 10 percent, with older projects experiencing vacancy rates between 10 percent and 20 percent.
Demand for new residential units is primarily a factor of the growth in households within a trade area. Projected Grand Junction trade area household growth was analyzed along with historical patterns of single-family and multifamily development trends to arrive at an estimated average annual demand for 650 to 700 multifamily units in the Grand Junction trade area over the next decade.
Table 7: Trade Area Multifamily Housing Demand
Demand Estimate
Trade Area
Total 1999 Households
77,900
Total 2010 Households
98,700
New Household Growth
20,800
Estimated Percent New Multifamily Units (Rental and For-Sale)
35%
Total Demand for New Multifamily Units (Rental and For-Sale)
7,280
Average Annual Demand for Multifamily Units (Rental and For-Sale)
650 to 700
Source: U.S. Census Bureau; Colorado Department of Local Affairs; Claritas, Inc.; and Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)
Taking into consideration these market analysis conclusions, specific development opportunities were identified for the 24 Road Corridor. Table 8 presents a summary of these opportunities and their potential timing.
Table 8: 24 Road Corridor Market Opportunities
Land Uses
Short-Term
1 to 3 Years
Mid-Term
3 to 5 Years
Long-Term
5 to 10 Years
Retail
Specialty Retail
X
Entertainment Retail
X
Neighborhood-Serving
X
Big-Box Retail
X
Office
Class A High-Rise
X
Corporate Campus
X
Class B Suburban
X
Incubator Space
X
Industrial
“Flex” Office/Warehouse
X
Light Industrial
X
Office/R&D
X
Housing
Rental Apartments
X
Affordable Housing
X
High-Density Ownership
X
Source: Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)
Based on the specific development opportunities identified for the 24 Road Corridor, potential market capture rates were applied to arrive at supportable land utilization in the corridor over the next 10 years. The market capture rates were based on the following factors:
(a) 
Market Factors.
(1) 
Ability to create theme/identity for corridor.
(2) 
Build on current development concentrations/activity in corridor (Mesa Mall).
(b) 
Physical Factors.
(1) 
Proximity to major transportation corridors (I-70, U.S. Highway 6/50).
(2) 
Capacity of base infrastructure (roads, utilities).
(3) 
Proximity to corridor amenities (Canyon View Park).
(c) 
Regulatory Factors.
(1) 
Subarea planning for land use, infrastructure, development regulations, and financing.
(2) 
Consistency with community vision.
(d) 
Economic Factors.
(1) 
Cost of base infrastructure (24 Road improvements, utilities).
(2) 
Cost of land assemblage.
(3) 
Development risk versus return.
(4) 
Levels of public/private participation.
Table 9 presents a summary of the market capture and land utilization analysis.
Table 9: 24 Road Corridor Development Summary
Land Use
Trade Area Average Annual Demand
Corridor Capture Rate
Annual Corridor Development
Total Corridor Development
Projected Bldg./Land Ratio
Total Acres Absorbed
Retail
125,000
20%
25,000
250,000
25%
23
Office
335,000
15%
50,250
502,500
30%
38
Industrial
300,000
15%
45,000
450,000
20%
52
Multifamily
675
20%
135
1,350
20%
68
Total Development
181
Source: Leland Consulting Group.
(Res. 109-00 § 3, 11-1-00)