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).
(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)