The mostly vacant Rustic Hills North shopping center in Colorado Springs will be transformed into an industrial commerce center — a change that’s expected to help inject new life into the Academy Boulevard corridor.
Brennan Investment Group of suburban Chicago, a privately owned firm that acquires, develops and operates industrial facilities nationwide, paid $7 million last week to purchase the 22-acre Rustic Hills North, northeast of Academy and Palmer Park boulevards.
Built in the early 1970s, Rustic Hills North was once a thriving retail center and home to popular stores and businesses such as Albertsons and Longs Drugs that served east-side residents and neighborhoods.
Shifting demographics and changing retail patterns, however, left Rustic Hills North a shell of its former self as stores closed or moved to trendy Powers Boulevard to chase growing numbers of rooftops on the far east and northeast sides. Albertsons shuttered in 2006 and Longs followed the next year.
Now, Brennan plans a series of upgrades and enhancements for the majority of Rustic Hills North that will create spaces for light industrial users, while giving the property a fresh and renovated look, said Brian Roach, a company principal based in suburban Denver.
“There will be some good changes as we go into the new year,” Roach said. “The focus now is to just kind of find businesses to fill that space up. But it will look better, I’ll tell you that.”
Brennan was attracted to Colorado Springs, in part because of its strong population growth, which draws suppliers and other industrial businesses that want to be near booming markets, Roach said. Thriving cities also give businesses a growing labor pool from which to hire, he said.
“If you’re in a market that is a static population base, you already probably have all of your suppliers, your providers,” Roach said. “Those people aren’t going to move tremendously and grow tremendously. But if you have continual population growth, there’s always a need for one more supplier.”
Rustic Hills North’s central location at Academy and Palmer Park, meanwhile, will provide good access to other parts of town for future industrial tenants, while a large parking lot will offer hundreds of spaces for their employees and customers, Roach said.
As part of Rustic Hills North’s makeover, Brennan plans to convert three buildings totaling nearly 207,000 square feet into industrial spaces.
Such uses, Roach said, might include warehouses for e-commerce retailers; storage and offices for heating, ventilating and cooling companies; space for construction industry suppliers; or carpeting, flooring and tile showrooms.
Colorado Springs has a shortage of smaller industrial spaces, but Rustic Hills North will accommodate multiple users, some of whom might need as little as 7,500 square feet, said Aaron Horn and Heather Mauro of Cushman & Wakefield/Colorado Springs Commercial. They represented Brennan in its purchase of Rustic Hills North and are marketing the property.
“Industrial groups that are looking for that, they just don’t have any choices,” Horn said. “They’re stuck with renewing (a lease) where they’re at. Sometimes they don’t come to Colorado Springs at all.”
Building smaller industrial spaces, meanwhile, is cost prohibitive, Horn added. Rustic Hills North will charge $9 to $10 per square foot for its space, but newly constructed, speculative projects — those without tenants signed in advance — would have to charge several dollars more to recover building and investment costs, he said.
Brennan’s other plans for the property include demolition of a roughly 21,000-square-foot building on the shopping center’s north end, which the city had condemned. Plans will be developed for the site’s future use.
The company will keep a 9,742-square-foot building on Rustic Hills North’s south end and continue to lease it to retail tenants. A restaurant, tax service and laundry currently occupy the retail spaces.
Also remaining: the Colorado Springs Event Center, which has hosted boat and RV exhibits, home expos, gun and knife shows, and other trade, consumer and specialty events at Rustic Hills North since 2011. It has an existing lease and will continue to operate at the property, Roach said.
Brennan is receptive to keeping the Event Center at Rustic Hills North, he added.
The Event Center could be a complementary use to industrial tenants, Roach said. Home show attendees, for example, might be interested in a carpet installer or kitchen and bath company leasing space at Rustic Hills North.
Kevin Hummer, CEO of RJ Promotions in St. Joseph, Mo., who heads one company that leases and operates the venue and another that puts on shows at the facility, said he’s ecstatic over Brennan’s acquisition of Rustic Hills North.
He’s looking to build “synergy” with the new owner and its efforts to upgrade the property and hopes to keep the Event Center at Rustic Hills North. His lease allows for mutually renewable options at the property, he said.
Brennan will undertake extensive improvements at Rustic Hills North, including façade updates, interior renovations, upgrades to a truck court and dock doors on the building’s east side, screening the property from nearby residents, parking lot repairs and landscaping enhancements, Roach said.
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Rustic Hills North’s transformation from a retail center to another use was inevitable because of Colorado Springs’ growth to the north and northeast, said John Egan, a broker with NAI Highland in Colorado Springs. He and colleagues Randy Dowis and Craig Anderson represented the property’s former owner, a Denver businessman, in the property’s sale.
The new use for Rustic Hills North, meanwhile, should help attract more businesses to the central portion of Academy, which city officials identified years ago as a troubled area because of stores and restaurants abandoning the corridor for Powers Boulevard and elsewhere.
“That really is truly the heart of Colorado Springs,” Mauro said. “Since I’ve lived in Colorado Springs, which would be 2007, it’s been an area of town that needs some activity, it needs some redevelopment and needs a heartbeat. I think this is really going to offer that to that part of town.”