KAJX

High commercial rent in Aspen could prompt shift to outlying offices

Dec 22, 2015

Credit Elise Thatcher

The price of renting commercial space in Aspen is some of the highest rates the resort has seen in years, and there have been questions about whether it’s affecting business owners renting office space.

"As the economy has continued to get stronger, retail and office space downtown have gotten more expensive,” says realtor Bill Small. He handles commercial real estate deals in Aspen, with Zenith Realty Advisors. As reported by Aspen Public Radio, some commercial space in the resort is renting for as much as $250 a square foot.

"We’ve seen some major jumps in pricing, probably about 25% increase in rent in retail section just in the past year,” continues Small. “And I think that’s reflective in the office section.”

Small says those prices are reminiscent of an era before the recession. Office space is going for between $20 and about $60 dollars a square foot. The vacancy rate can be harder to pinpoint, compared to retail space, but Small and others estimate it’s at 5% percent

"We saw this same pattern back in 2006 and 2007 as office space got expensive downtown,” continues Small, “and those tenants migrated down to Basalt and Carbondale and never really came back to Aspen.”

More recently, some businesses have moved to the base of Highlands, the Aspen Business Center, or Basalt and Carbondale. Small says the high prices haven’t spurred his clients to make the move down valley in the last six months, but two or three years ago he did work with “a couple of large office tenants that made that decision… to move from downtown Aspen to Highlands," or cut back their Aspen offices to a much smaller staff.

Size is a powerful factor for employers deciding where to put their employees. Pitkin County and the City of Aspen are both building tens of thousands of square feet in office space to accommodate workers, but that’s a much more difficult option for private businesses. “We don’t have anyplace else to put people,” says Jeff Hanle with the Aspen Skiing Company. “So we’re sharing cubbies and tucking people into corners of different buildings that we have here and there.” The Ski Co recently bought a 28,000 square foot building in Basalt. As one of the biggest employers in the Roaring Fork Valley, the Ski Co is keeping its headquarters in the Aspen Business Center.

About two hundred employees could eventually move to the new Basalt building, although the Ski Co is still working that out. “It also offers us the opportunity to give our employees who might live down valley,” says Hanle, “and do not have ski area operations essential jobs where they have to be on the slopes every day. It gives them an opportunity to save on their commute.”

The Ski Co is joining other larger employers moving workers to Basalt or considering that option. Rocky Mountain Institute is building a new headquarters there, relocating about 26 employees from it’s previous location in Old Snowmass. Pitkin County is looking at renting office space in Basalt for about 50 workers, as a temporary arrangement while the County builds new offices in Aspen. Rental rates in Aspen’s commercial core are about two to three times more expensive than the parcels the County is looking at in Basalt.

One business owner who’s already made the leap to Basalt is Dr. David Borchers. He practices internal medicine and moved his medical practice from Aspen about a decade ago. His family lives in Basalt and his daughter was very young at that time, so it made sense to be closer to home. Plus he wanted to buy office space in Aspen and couldn’t afford it, but Basalt prices were doable. It’s been a good fit, and Borchers especially appreciates not having to commute. His patients have largely been supportive of the move.

Even with the high office rent in Aspen, there are still businesses that have to make it work. That’s true for Erin Lentz, co-founder of Tag Media. She’s been in Aspen for eighteen years, previously edited Aspen Peak magazine, and has been in her current location for a little over a year. “We’re so grateful to be in the Crystal Palace Building,” she says, “... an Aspen landmark in the heart of the downtown core." Lentz and a colleague publish a custom travel magazine called “Curated.” She says holding meetings and lunches in Aspen pays dividends for her business.

And thus far, being Aspen has been affordable because Lentz and her business partner have a discounted rate for their office. They rent from prominent landlord Mark Hunt, who likely will redevelop the building and Tag Media will have to move out. Lentz is planning for that eventuality, and is considering eventually moving to the base of Highlands.