Thursday, March 8, 2007

BankRate's 2007 Real Estate Guide

Bankrate, the nation's leading aggregator of financial data, released its 2007 Real Estate Guide, which includes 10 steps to selling, and a prediction that " a smaller volume of homes on the market, increasing income levels and rising interest rates could be contributing factors to cause the buyer's market to disappear by the end of 2007 and be replaced by a neutral market that favors neither buyer nor seller."

The press release: " stable interest rates, rising consumer confidence and bargain prices make for an overall optimistic outlook for 2007.However, new housing starts and foreclosures due to ARM resets keep experts on guard."

Its forecast for Denver: partly cloudy. "It's a low time for the Mile-High City's housing market [emphasis not added]. Denver experienced price declines last year, along with a drop in single-family home construction. Population growth is also low. Job growth was impacted by the last recession, losing jobs particularly in the telecom industry, but it's returning with moderate gains of 2 percent, which Ingo Winzer predicts may spur in migration in the next few years." The blurb reports Denver's 4Q06 median home price at $245,600 and calls for a decline to $244,980 at the end of 2007. According to the profile, there was 1 foreclosure for every 331 households in Jan. 2006 versus 1:283 in Jan. 2007.

The experts:

" Chris Porter, senior consultant with Irvine, Calif.-based John Burns Real Estate Consulting, predicts the market will hit bottom in mid- to late-2007. Spots such as San Diego and Sacramento, Calif., which got hit early, may be among the first to emerge, he says."

"Richard Moody, chief economist and director of research for Texas-based Mission Residential, says the increase in sales and prices during December and even November...was more of a blip because of warmer-than-usual weather in some parts of the country and seasonal adjustment. He believes the first half of 2007 will look much like the second half of 2006, with housing starts continuing to decline and sales further softening."

"Ingo Winzer, president of Massachusetts-based Local Market Monitor, a real estate analysis firm, disagrees.

'Interest rates are still low by historical standards, although not as low as a couple of years ago,' he says. 'I do believe that interest rates will drift upward and that will be bad for the housing market.'"

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Here's DenverInfill.com's blog entry on the Auraria Campus Master Plan, which has long been something of an island in downtown Denver.

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The Colorado Bankers Associated released a random survey of Colorado foreclosures, as reported by the Denver Post. Here's the full report. 374 randomly selected foreclosure filings were examined, revealing the following average profile: a 2.8-year-old mortgage valued at $202,000 and issued by a nonbank lender (banks originated only 22% of foreclosures studied) between 2003 and 2005.

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Here's an interesting analysis of Seattle's condo market, written by a consultant at Seattle-based Realogics, Dean Jones. Seattle's three urban condo markets are affordable ($350-$550 PSF), market rate ($450-$800 PSF) and luxury (700-$1,500+ PSF). Jones says that market fundamentals support a positive outlook for Seattle's urban condo market thanks to a healthy job market and the growing numbers of lifestyle buyers (re: downsizing baby boomers, retirees and second-home buyers).

Friday, March 2, 2007

Greenspan's Shadow

U.S. stocks just suffered from their worst week in four years. I listened to three economists on BBC talk about whether the global economy will correct or crash. Ben Bernanke, who one of the economists said is way too much of a proponent of printing money, sought to allay investors' fears earlier this week, yet he's still in the shadow of his predecessor, Mr. Greenspan, who said that "there is the possibility, but not the probability of the U.S. moving into recession". This followed his comments made to an audience on 2/26 to the effect that there was a risk of recession due to the slowing growth of profit margins, which is said to have contributed to the big selloff the equity markets witnessed this week. Bernanke assured that the central bank still expects the economy to pick up this year. Journalists perhaps prefer the sometimes inscrutable sometimes elucidating statements of Greenspan to Bernanke's relatively straightforward statements. Markets still hang on Greenspan's every word and go to great lengths to interpret his comments, even now that he's no longer in power but rather on the global speaking circuit. He encapsulated broad financial trends by coining catchy phrases such as "frothiness" (re: the real estate market) and "irrational exuberance" (re: the stock market boom that ended in 2000).

Greenspan's forthcoming book, which he's been writing since retiring in Jan. o6, is entitled "The Age of Turbulence".

There was a big announcement in the real estate marketing world this week: Realogy, the bohemoth that owns the Coldwell Banker, Century 21 and ERA brands, is partnering with Google and Trulia, to provide searchable, mappable listings.

The blogosphere is a sometimes trifling, puerile realm, but this can be worth a few cheap laughs: Fortune interviewed David Lereah, the NAR's chief economist (and some say its cheerleader/spinmeister), who shared that a blogger almost made his mother cry, simply for taking Lereah to task for his rosiness towards the housing market. The blog, DavidLeareahWatch, has the following subtitle: David Lereah is the Chief Economist and Senior VP of the National Association of Realtors (NAR). Mr. Lereah regularly makes statements regarding the housing bubble. The media regulary turns to him for real estate quotes. He is very influential. Mr. Lereah tells half truths and manipulates facts and figures. He cannot be trusted as he is a paid shill. Lereah said that the 26-year-old blogger has it out for him because he couldn't afford to buy a townhome. Salon's Andrew Leonard in his How The World Works column, puts it all into perspective: "the basic thrust is that Jackson believes David Lereah spins the numbers to make them look as good as possible for his employer, the National Association of Realtors. Not exactly a shocker, but still, I guess, a little hurtful."

Maybe NAHB members are drinking the Kool Aid too, as their confidence, according to the Wells Fargo/NAHB index continues to climb out of a September trough, when the index bottomed out at 30. Existing home sales jumped to their highest level in seven months and were up 3% from a year earlier for Janaury, but Business Week cautions that real estate's not out of the woods yet, citing the latest and most threatening culprit -- subprime mortgages.

Thursday, March 1, 2007

Ain't Life Grand (Avenue)?


Photo Credit: Los Angeles Times

The largest single development in downtown LA gained final approval after a unanimous vote by City Council. This mega-project -- 3.6 million SF of development and at least five highrises -- will be built almost entirely on public land that will be transferred through a 99-year lease to the developer, Related Cos. Through this blog, continue exploring the issue of subsides and public-private partnerships. There appears to be plenty of risk to go around:

Early estimates put the tax rebates for Grand Avenue at $40 million over 20 years. But a recent report from the city's legislative analyst estimated that the rebates could cost $66 million. The largest tax break would be in the 14% city hotel tax, a maximum of $60.5 million over 20 years, the report said.


From the beginning, the Grand Avenue project has been marked by a nontraditional public-private marriage. Besides the proposed tax breaks, government agencies are providing the land, investing in street improvements and subsidizing affordable housing in the project.

Related and its fiscal partners, meanwhile, are taking much of the financial risk — particularly tenuous in a downtown real estate market that has shown signs of softening. They also are subject to a number of requirements, including the condition that all construction and permanent jobs in the development meet the city's "prevailing" or "living" wage requirements.

The first phase is expected to begin construction in October of this year with completion slated for 2011. A lot can happen in five years, but even if there's some exposure to taxpayers and developers alike, this investment in big ideas that could pay off immensely both financially and otherwise.

In today's Los Angeles Times, an op-ed essay by columnist Patt Morrison wonders aloud: "Does L.A. need another downtown?", asserting that the city that elicits images of ten-lane freeways and endless suburbs has already "turned the corner", somewhat organically and perhaps marginally, if only because more and more people are already moving to the Bunker Hill area, where Grand Ave. and its star-chitecture (re: Frank Gehry) will soon dominate. So does LA need a mega project that will create a downtown? Or is downtown revitalizing on its own, thank you very much?

Morrison comments broadly on American culture that is applicable from Omaha to Oceanside, one of convenience and instant gratification -- anywhere:
Big-screen TVs and iPods create audiences of one. And nearly every suburban city and neighborhood replicates the chain-store commerce of the next one, which proves that, like certain actresses and the Botox needle, the risk lies in too much as well as in too little. No one is going to travel from the San Fernando Valley to 1st Street for the same Pottery Barn experience that's available 10 blocks from home. If you've seen one Gap…
Morrison points out that NYC, of all places, doesn't really have a defined center, arguing that no city really needs a desginated center, then likens the "ranchos" from early CA days to today's self-sufficent suburan pods, a constellation of centers if you will. Still, doesn't Grand Avenue have the potential to be, if not the center of gravity in Southern California, an iconic place of which Angelenos would be proud? His main point is that any new place must offer something that people can't get in their own "burgs", and it seems that if Grand Avenue goes off well, people will leave the 'burbs for downtown LA, even if they're still plugged into their iPods. Morrison wraps up his column with a hilarious and telling encounter:
The day I knew to a dead-bang certainty that downtown was already back was when I was crossing a street on the way to a restaurant. Walking toward me, in the crosswalk, was a couple with skis over their shoulders and ski boots in hand. I looked around for the cameras that had to be shooting a chewing gum or beer commercial — that's a lot of what downtown has been for ages, Hollywood's ready-made back lot.

No cameras. I had to ask them: "Were you … are you … do you?"

Yep, they said. We've been skiing. And we're coming back home. To downtown.
Now, let's turn to Denver, where Union Station has been one of Denver's central icons. Falling into disrepair for decades in the 20th century, downtown Denver is already well on its way to recovery, and then some. So maybe downtown Denver is already standing on its own two feet, and there's no need for the grand vision and public-private commitment to Union Station. Absent this redevelopment, however, I think that a cobbled-together Union Station could be turn into something much less than grand that would leave a gaping hole in the heart of downtown. Aesthetics, finance and politics aside, it's very encouraging that cities are dreaming big and seeking to make sense of their center(s).

Sunday, February 25, 2007

"Master Planning Is Over In San Diego"

Lack of Land, Traffic Congestion Forcing More Mixed-Use, Infill Projects

Era Over for Large-Scale, Mixed-Use, Master-Planned Suburban Communities

San Diego Business Journal Staff

Several of the retail shops in the Marketplace at Liberty Station celebrated grand openings this month.
Several of the retail shops in the Marketplace at Liberty Station celebrated grand openings this month.
The age of large-scale, mixed-use, master-planned communities in suburban areas of the county may be over.

Tony Pauker, regional president of the Olson Co. and chairman of the Urban Land Institute of San Diego/Tijuana, said future development will shift from master-planned communities to smaller infill mixed-use projects.

“With the exception of a couple large parcels, master-planning is over in San Diego,” said Pauker.

While we are at the end of that era, Pauker said future projects may be as small as a few acres on the waterfront downtown to a few hundred acres in and around Otay Mesa and in North County.

Craig Clark, president of La Jolla-based commercial real estate developer C.W. Clark Inc., said a number of factors played into the growing use of mixed-use, redevelopment projects in San Diego and elsewhere in the past few years.

Clark said the lack of land, congestion and demand for shorter commutes are the leading causes for these adaptive uses.

Shortening The Commute

He stressed the importance of having work and home closer together.

“When you can find a community where a lot of these things are intermingled in a general geographic area, it is much better,” said Clark, citing areas in the city such as Mission Valley.

With the benefits of having a self-contained, self-sufficient community come drawbacks.

“The negative is cost, cost, cost. It is expensive to operate. It is expensive to build,” said Clark.

Nonetheless, Clark said he and other developers would continue pursuing mixed-use development.

“We don’t have a choice,” said Clark.

[Source: http://www.sdbj.com/industry_article.asp?aID=22141724.4341242.1438632.410194.7617086.305&aID2=110655]

Saturday, February 24, 2007

TIF-ed about Condo-rado



In a Rocky op-ed, Jennifer Lang, a researcher at the Independence Institute's loftily named Center for the American Dream, takes issue with urban renewal authorities and mechanisms such as tax increment financing (TIF). The II's chief, Jon Caldara, is a radio personality on Denver's biggest AM station, 850 KOA, and II's beliefs are decidedly libertarian and staunchly anti-tax and anti-most-things-related-to-(our) government. Caldara fancied himself as a modern-day Robin Hood as he spearheaded opposition to Referendum C in 2005 state elections.

In the op-ed piece, Lang contends that "urban renewal aims to stimulate growth and tax revenue to remain competitive with other cities, but ultimately, it could slow regional growth as private development will be drowned out by the influx of subsidized development." The general idea behind TIFs is to finance development or improvements that might not otherwise occur, creating future taxable value. To be sure, some TIF's flop. But it seems misguided to oppose the likes of Stapleton, Lowry and Belmar, which have created thousands of jobs and and millions in tax revenue at sites that would otherwise languish. Today, Stapleton, Lowry and Belmar are thriving centers that provide tax revenue for their respective jurisdictions and more lively public spaces for citizens. The private sector is a key player in this process, and takes on its own risks in undertaking the complexity of mixed-use development, but the public-private partnerships here in Colorado have been vastly successful. Categorcial libertarian opposition to urban renewal authorities is somewhat paradoxical, because it seeks to "free up" private enterprise by shackling government practices that often unleash the positive forces of capitalism.

Lang's piece likens New Urbanism to the "latest planning fad" that greatly undermines the American bedrock, single family homes, replacing them with " high-density, walkable communities with multifamily housing on tiny lots combining retail, office and living space." Oh no! On its website, the Center posts a PowerPoint presentation entitled "Urban Renewal In Colorado's Front Range". Slide 27: "Land as far as the eye can see for eight hours, no land shortage".

Thursday, February 22, 2007

Low Fat Pringles and New Urbanism

Suburbs import urban features to create sense of community

BETSY TAYLOR
Associated Press

Right now, City Hall is in a doublewide trailer where the power just went out.

But if Mayor Pam Fogarty has her way, a new municipal building, still on the drawing boards, - or, really, still in her imagination - will become part of a new chapter in this growing town's story.

The mayor and other supporters, with design help from a firm known for pioneering the New Urbanism movement in architecture, are planning a place to bring people together, where they can walk the streets and pass time, and where a sense of community can flourish.

Dardenne Prairie is getting a downtown.

Once an agricultural community with fields of corn, wheat and soybeans and the occasional cattle farm dotting the landscape, Dardenne Prairie is located about 35 miles west of St. Louis. It is a stone's throw from the two Missouri cities that are growing most rapidly, Wentzville and O'Fallon.

Today, bedroom communities have sprouted in Dardenne Prairie's pastures, and franchise stores line the roads into and out of town. Its population has expanded by about three-fourths, from about 4,000 people at the start of this decade to nearly 7,000 in 2005, according to U.S. Census figures.

But, Fogarty says, her little city is missing something.

"Everybody wants a third place. You have your work. You have your home, but everybody wants a gathering place," says Fogarty, a mother of five.

Her reference is a nod to sociologist Ray Oldenburg who defines the third place as "a setting beyond home and work (the `first' and `second' places respectively) in which people relax in good company and do so on a regular basis."

Fogarty's vision for her town: This third place will include a proper City Hall building, perhaps with a front porch where residents can gather. The new district will give the community a place where people can have "cookies with Santa and the Fourth of July parade," she says, envisioning a walking district filled with shops, offices and living space.

"When you have a downtown, people say, `There's Dardenne Prairie,'" the mayor says.

And she knows exactly where they'll be when they say that.

The would-be downtown is 80 acres, part of it occupied by a baseball diamond that will remain, the rest open fields and a few privately owned houses. Several are rental properties whose owners are interested in selling, Fogarty said.

The site's transformation into a downtown begins with town meetings in April.

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Dardenne Prairie isn't the only community seeking to establish a sense of place by designing it.

In Storrs, Conn., the University of Connecticut has drawn notice for a plan to essentially build itself a college town, with shops, restaurants, apartments, and even a traditional New England town green. UConn officials have said they don't know of another university that has attempted the same thing.

The belief that aspects of traditional neighborhoods can enhance communities has been growing with certain architects in recent years.

After World War II, suburbs flourished. As many commuters moved farther from cities into housing subdivisions, their lives became more separate from one another. Homes were no longer down the block from the corner store. Offices sprung up in business parks. It became yet another drive to get to church or school.

In their book, "Suburban Nation, The Rise of Sprawl and the Decline of the American Dream," Andres Duany, Elizabeth Plater-Zyberk and Jeff Speck criticize suburban sprawl and related development that appear to have only one goal: "making cars happy."

Duany and Plater-Zyberk are among about a dozen people credited with the New Urbanism movement. They drew much attention after developer Robert Davis asked them in 1979 to design Seaside, Fla., which was inspired by aspects of small-town life.

Now Dardenne Prairie has hired their firm, Miami-based Duany Plater-Zyberk & Co., to help shape its downtown and its future.

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Not far from Dardenne Prairie, a made-from-scratch community with the fitting name New Town is rising from fields that were mainly used for growing sod.

The 750-acre development, whose full name is The New Town at St. Charles, drew from classic city architecture, with detached garages in back of homes and including a church, a bookstore, a market and other shops with more on the way. Residents can swim, kayak and fish in manmade lakes with fountains and canals that are actually a stormwater system. Wide front porches and parks are intended to encourage neighbors to get to know one another.

New Town is pitched by its creators as "a return to the towns of yesterday."

Developer Greg Whittaker said he wanted to build a community where, "once you park your car, you don't have to get back into it."

In all, 5,700 homes could be built in the instant community, with townhouses selling from $120,000 and a couple of single-family homes topping out at over $1 million.

New Town, which is more than 10 percent complete now, was designed right down to its intricate manhole covers.

A sign at the center of the development displays "The Shades of New Town," the 28 paint colors largely in use at the development. A yellowish cream is called "New Town Latte," and a light green is "New Town Celery." Whittaker says residents can pick their own colors to paint their homes, as long as they clear them first with the town architect.

There are other restrictions. Outdoor furniture can't be plastic, for aesthetic reasons. Gas lawn movers can't be used, an effort to reduce environmental and noise pollution. Venetian blinds facing the outside need to be neutral colors, and individual homes don't have individual mailboxes. Residents pick up their mail at a mail center, a decision made in part to get people socializing and out of their homes, Whittaker said.

Several residents said they've found just what they were looking for in New Town.

Peggy Riley, 56, recently had lunch at the Prancing Pony bookstore with her grandson, Will Statler, 3, before heading to a meeting with a couple of women from St. Charles Christian Church, also located in town.

She said her family is related to eight other families that have opted to move to New Town. She loves how the community looks, but more importantly she's very fond of the other residents. To many of them family is important, she said, and they like to stay active, taking part in church and social gatherings.

"We really try not to leave New Town," she said. "It's like being on vacation. Why would you want to go out into the other world?"

An architectural photographer, Toby Weiss, whose day job is with a residential design-build firm, visited New Town and wrote about it on a blog. Weiss found it ironic that she had to drive "over 30 miles to deep suburbia to see a modern replica of my city neighborhood."

Weiss said she found it a pleasant place to visit, but called aspects of New Town like a movie set or Disney World.

"New Town is the visual equivalent of the taste of low-fat Pringles," she wrote.

"So we should have buildings falling down and graffiti?" Whittaker asked, when told some think the development looks a little too perfect or inauthentic.

"It needs a little time to grow," he said. "It needs a little patina."

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New Town was planned by DPZ, the same firm that Dardenne Prairie is going to use for its downtown.

A DPZ team, hired for $325,000, plans to come to Dardenne Prairie on April 18-24. They'll hold meetings to talk to residents, business owners and other decision-makers and sketch ideas about their hopes for the new downtown.

To help fund the more traditional downtown it is seeking, the town used an unusual approach to development, first drawing some big-box retailers to generate tax revenue. A Target, J.C. Penney and Shop 'N Save grocery store have gone in, as well as a multi-screen movie theater.

In 2003, the community sought to bring in commercial development, simply to raise basic operating funds. There was no city park, no way even to pay for a trash can, Fogarty said. She noted that she still cleans the bathroom at City Hall, where power went out temporarily during a reporter's visit as utility workers relocated lines.

Over time, as Dardenne Prairie sought development, community members began to think more about the type of place they wanted to be living. A small group started kicking around the notion of a downtown. From there, aldermen passed a resolution, and two community hearings were held last year for public comment.

With more money coming in, the community thinks it has a chance to determine what it wants its future to be, even as it draws on its past.

"You're seeking to enhance a sense of place that hopefully is already there," DPZ project manager Senen Antonio says.

Fogarty, the mayor, said a century-old Catholic church, with caramel-colored stone and simple stained glass windows, may serve as a design inspiration for much of the new downtown.

Either way, she believes the community will get its needed town center.

"You go get what you want," she said, "or you wait for what comes."


For Whom The Bell Tolls

The Denver Post reports that Denver/Boulder/Greeely inflation (3.6%) outpaced the nation (3.2%) in 2006, pushed by rising shelter and apparel costs. Metro's core inflation raced ahead at a 5.5% clip vs. 2.7% for the nation. The WSJ cautions that the core rate went up 0.3% last month after three straight months of 0.1% increases. briefs that the Fed is "expected to hold its key rate target steady at 5.25% a sixth time next month, but further increases are still possible this year. Data out this week showed consumer prices rose faster than expected in January, signaling inflation pressure hasn't abated enough for the Fed to relax -- or cut rates."

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On Wall Street, Toll Bros. reported a 67% decline in 1Q07 net profit. On the bright side, Toll's cancellation dropped to 29.8% from 36.9% the previous fiscal quarter. Still, only 6,000 to 7,000 homes are expected to be delivered, off from a November estimate of 6,300 to 7,300.

Robert Toll: "There are too many soft markets at this stage of the selling season to call a general upturn in the new-home market," said Chairman and Chief Executive Robert Toll. "Demand varies greatly from week to week in individual markets."

Is it Time yet to talk about housing? The weekly newsmagazine by that very name runs a story under the banner "America's House Party". Nothing earth-shattering here but the article suggests that the latest boom will have lasting effects on how Americans view their homes:
The deeper changes of the real estate boom are likely to stick, particularly the notion that the house is no longer just a home. By tapping their built-up home profits through refinancings and home-equity loans, owners have ensured that the home-as-piggy-bank will be with us for some time, and that may have wide implications for tomorrow's economy.
We can at least take solace in the inherently different nature of housing as an investment vehicle, for houses are after all much more tangible and less prone to crashes than tulips or stocks. Okay, so Wikipedia says there is such a thing as a housing bubble; it's just that "a real-estate 'crash' is usually a slower process, because sellers just decide not to sell. Historically due to inflation, prices do not fall in nominal terms, rather they stay "flat" for a period of 3-5 years."

If you're not so worried about bubbles bursting, think about Colorado's water:

The Colorado River serves seven states - Colorado, Wyoming, New Mexico and Utah in the upper basin and Arizona, California and Nevada in the lower basin. When the 1922 Colorado River Compact divided the water among the states, the annual flow was estimated at 15 million acre-feet. Hoerling said that the recent annual flows are about 13 million acre-feet, but by 2050, climate change may drop that to about 10 million acre-feet - less than what is currently used by all of the states. That could mean there would be no extra water to store in Colorado.
A water bubble? Maybe someday. But back to real estate...

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Here's John Rebchook's article about Lincoln Station in its entirety:

Work starts on Lincoln Station
Westfield Development and Bradbury Woods have broken ground on the first-phase of Lincoln Station, a transit-oriented development on 35 acres next to the Lincoln Avenue Light Rail station, along Interstate 25 between Lincoln Avenue and C-470.

The mixed-use development will be anchored by a 151,000-square-foot, six-story, energy efficient office building called One Lincoln Station.

Phase one also will include the Clock Tower and Station Street South buildings, which will include 34,500 square feet of boutique office space on two floors above 18,800 square feet of retail.

The commercial space will cost $45 million — $30 million in equity and $15 million in a commercial loan.

The first phase also will include Station Street Lofts, a 73-unit "loft" building with 8,000 square feet of retail.

Eventually, the entire development will have more than two million square feet of additional office space, 2,000 residential units, and 50,000 square feet of retail space.

The first phase will be completed in the spring of 2008.

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Rebchook also scoops a new eight-townhome project, MetroView, in Jefferson Park.

Here are some renderings from website, denvercore.com, announcing the project:

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Another Front Range story to ponder: is Foothills Mall ripe for redevelopment? The article doesn't suggest anything of the sort, but consider recent Front Range success stories such as Boulder's Twenty Ninth Street (wikipedia). Just as Centerra is beginning to siphon off retail revenue from Ft. Collins, Flatiron Crossing had been doing the same number on Boulder until they responded. I wonder, by the way, if the new Wild Oats HQ at 29th Street will change now that the Boulder natural grocer has been, um, consumed by its now parent company, Whole Foods.

Twenty Ninth Street Site Plan: