Business Monday: Aspen commercial sales flat, commercial construction up

A crane that is part of the redevelopment project of the Boogie’s Building on Friday sits in the background of the “Lego building” on 535 E. Hyman Avenue, which sold for $28 million in 2018. Expect to see an uptick in commercial construction activity this year, according to Aspen real estate appraiser Randy Gold.
Rick Carroll/The Aspen Times

Sales of commercial properties in Aspen leveled off in 2017 and 2018 and will probably remain that way in 2019, a year that will see plenty of construction projects underway in the downtown core.

That’s according to the Aspen Appraisal Group’s Randy Gold, who spoke at the Aspen Board of Realtors Market Update Luncheon on Thursday at the St. Regis Aspen Resort.

Commercial sales in 2017 and 2018 accounted for $76 million and $72 million, respectively, while sales totaled $39 million in 2016, $89 million in 2015, $55 million in 2014 and $49 million in 2013, according to Gold.

“The way I describe the market is stable with muted enthusiasm,” said Gold, who has been a regularly featured speaker at the annual event. Last week’s drew a record crowd, organizers said.

Citing the City Council’s overhaul of Aspen’s land-use code in 2017, Gold said commercial-property buyers have grown more hesitant to invest in older downtown property because of tighter development regulations, which include 100 percent employee-housing mitigation, maximum building heights of 28 in the commercial core and the creation of second-tier commercial spaces (such as basements and above-ground floor spaces, for example), among other restrictions.

“Aspen is essentially a no-growth town for a commercial developer,” Gold said.

Last year’s commercial sales were highlighted by the $28 million sale of the so-called “Lego building,” completed in 2015, in February to a Dallas group of investors led by Stephen Summers. At the time of the sale, the 20,000-square-foot mixed-use building, located at 535 E. Hyman Ave., had been nearly devoid of retail tenants.

“Since that time,” Gold said, “(Summers) has managed to rent out the street-level space, some long-term and some pop-ups. … He’s taken a building that was vacant for a long time and rented it out.”

The $23 million sale of the Meyer Business Building was the most expensive commercial transaction of 2017.

Aspen’s biggest commercial-property sale this year came Jan. 4 when a group Florida investors, as well as Aspen resident Jimmy Marcus, closed on the $14.8 million purchase of Katie Reed Plaza at the corner of Hopkins Avenue and Monarch Street. The complex is home to Rustique Bistro, Meat and Cheese and other businesses. The businesses of Rustique, as well as the Cooking School of Aspen and The Cottage Aspen — all owned by Rob Ittner — are part of the plaza and are under contract for purchase. They all will close in mid-April.

That’s also around the time when construction activity will start heating up downtown, something not lost on Gold.

“There’s a huge amount of construction happening,” he said, noting such current projects as the demolition of the Boogie’s Building and the W Hotel at the base of Aspen Mountain, as well as pending projects including the redevelopment at 201 E. Main St., the city’s new 37,500-square-foot office building on Rio Grande Plaza, and potential projects at the Conoco service station on Main Street, the redevelopment of the old Crystal Palace space into a boutique hotel, and other projects.

“All of that stuff will start in 2019,” he said, “probably.”