Downtown Longmont Market Analysis Preliminary Findings Prepared for - - PowerPoint PPT Presentation

February 26, 2020

Prepared for the Longmont Downtown Development Authority Presented by

Preliminary Findings

Downtown Longmont Market Analysis

PURPOSE

2

To garner a more accurate picture of the business climate in Downtown Longmont to better inform LDDA staff, LDDA board members, downtown business and property

• wners, developers and investors to

strengthen Downtown Longmont To provide a quantitative and qualitative assessment of the market demand for office, retail and small scale (artisan) manufacturing in Downtown Longmont To further inform the Implementation Priorities Ideas and Projects identified in the LDDA Master Plan of Development

WORK COMPLETED TO DATE

3

Project Kick Off 20+ Stakeholder Interviews Downtown Business Inventory Update Downtown Business Survey Office Market Analysis Retail Market Analysis Small Scale Manufacturing Analysis Key Findings & Recommendations Economic and Demographic Framework

Downtown Longmont population (1,273) and households (739) less than 2% of the City Downtown grew 50% greater compared to the City during 2010-2019 Increase in population primarily result of new residential housing (Roosevelt Park Apartments) Downtown’s forecasted to grow by more than 700 people and 450 households over the next 10 years (>50% increase) South Main Station (314 units) and Boulder County affordable housing project (73 units) primary factors for increase Downtown’s population forecasted to increase more than 3X annual rate compared to City and County

2019 Forecast 2029 Forecast Number Change Annual % Change Downtown Longmont 1,273 1,992 719 5.65% City of 98,347 111,440 13,093 1.33% Boulder County 333,887 376,110 42,223 1.26% Denver CSMA 3,612,270 4,265,654 653,384 1.81%

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2019 Forecast 2029 Forecast Number Change Annual % Change Downtown Longmont 739 1,196 457 6.19% City of Longmont 37,363 42,247 4,884 1.31% Boulder County 132,940 149,886 16,946 1.27% Denver CSMA 1,406,141 1,653,863 247,722 1.76%

Population Households

ECONOMIC AND DEMOGRAPHIC FRAMEWORK

Average household size in Downtown is smaller compared to City of Longmont, Boulder County and Denver metropolitan area

47.1% 29% 26.8% 29% 27.5% 31% 32.8% 34.8% 25.4% 40% 40.4% 36.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Downtown Longmont Primary Market Area City of Longmont Boulder County Prcemt of Households 1 person 2 persons 3 or more

Household Composition, 2019

1.67 2.61 2.43 2.53 Downtown Longmont City of Longmont Boulder County Denver CSMA

HOUSEHOLD CHARACTERISTICS

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Household Size, 2019 Households with one person (47%) account for the largest share of households in Downtown Longmont 75% of households in Downtown Longmont are 1 or 2-person households compared to 60% for City and 64% for County

23% 34.6% 35.5% 29% 21.6% 29% 30.9% 28.7% 55.4% 36.4% 33.6% 42.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Downtown Longmont Primary Market Area City of Longmont Boulder County Percent of Households Household with children under 18 years Household with no children under 18 years Nonfamily Household

Household Composition, Family and Nonfamily Households

HOUSEHOLD CHARACTERISTICS

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Downtown Longmont has lower % of households with children under 18 years of age compared to City and County 23% of households in Downtown Longmont have children under 18 years compared to 35% for City and 29% for County More than 55% of households in Downtown Longmont are non family households compared to 34% in the City and 42% in the County

INCOME CHARACTERISTICS

Household Income Distribution, 2019 Downtown Longmont (33%) has lower percentage of households with incomes

• ver $100,000 compared to

City of Longmont (36%) and Boulder County (43.5%)

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Downtown Longmont City of Longmont Boulder County Denver CSMA

$84,419

$78,161

$60,522

$74,730

Median Household Income, 2019 Median household income in Downtown Longmont is less than the City, County and Denver CSMA Median household income of Downtown households 23% less than City of Longmont and 40% less than the Boulder County

14.2% 15.8% 14.9% 11.6% 18.1% 25.4% 13.6% 19.0% 17.5% 13.1% 18.4% 18.4% 17.7% 24.0% 19.2% 12.3% 14.9% 11.9% 20.9% 20.4% 17.1% 8.0% 17.5% 16.2%

0% 5% 10% 15% 20% 25% 30% Less than $25,000 $25,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 or more Downtown Longmont Primary Market Area Longmont Boulder County

41% 13% 12% 36% 23% 17% 20% 32% 13% 19% 19% 14% 6% 10% 9% 4% 9% 20% 22% 11% 8% 21% 18% 0%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 65 Years and over 45 to 64 Years 25 to 44 Years Under 25 years Less than $25,000 $25,000 - $49,999 $50,000 - $74,999 $75,000 - $99,999 $100,000 - $149,999 $150,000 or more

Household Income by Age of Householder, Downtown Longmont, 2019

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INCOME CHARACTERISTICS

Household incomes increase as people age, particularly during the prime working years and start to decrease once retirement age is reached. More than 40% of Downtown households ages 24-64 years (during the prime working years) have average household incomes $100,000 or greater between 36% of downtown households with age of householder under 25 years have incomes less than $25,000 and 41% when the age

• f householder is 65 years and
• ver

Population Distribution by Age

AGE CHARACTERISTICS

41.2 38 36.9 36.9

Downtown Longmont City of Longmont Boulder County Denver CSMA

Median Age, 2019 Downtown Longmont’s resident population is older,

• n average, compared to the

City, Boulder County and the Denver metropolitan area Downtown Longmont has fewer school age children and residents under 35 years of age compared to City and Boulder County Downtown has a higher percentage of residents between the ages of 35 to 74 compared to City and Boulder County

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22.0% 20.0% 27.6% 24.6% 5.8% 26.4% 20.6% 25.6% 21.4% 6.0% 26.4% 19.6% 26.2% 21.8% 5.9% 24.1% 23.6% 25.0% 21.9% 5.3%

0% 5% 10% 15% 20% 25% 30% Under 20 20 to 34 35 to 54 55 to 74 75 and Over Downtown Primary Market Area Longmont Boulder County

Educational Attainment, Population Aged 25+, 2019 Downtown Longmont residents, and Colorado residents overall, are highly educated Nearly 43% of Downtown residents have a Bachelor’s degree or higher compared to 44% of City of Longmont residents and 45% of Denver metropolitan area residents More than 13% of Downtown residents have a Graduate or Professional degree compared to 29% for Boulder County

EDUCATIONAL ATTAINMENT

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86.8% 42.9% 13.3% 90.6% 44.2% 16.9% 95.2% 63.1% 28.8% 91.5% 45.3% 16.7%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% High School Diploma or Higher (a) Bachelor's Degree or Higher Graduate or Professional Degree Downtown Longmont City of Longmont Boulder County Denver Metropolitan Area

LONGMONT AREA EMPLOYMENT

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Mid Wage ($48,500-$70,700) High Wage ($84,000-$136,100) Mid Wage ($23,400-$44,000)

0.0% 0.0% 0.4% 1.0% 1.3% 1.4% 1.4% 1.6% 2.0% 2.1% 2.4% 2.5% 4.9% 6.6% 7.7% 9.2% 9.3% 9.7% 10.2% 12.2% 14.2%

0% 2% 4% 6% 8% 10% 12% 14% 16% Unclassified Industry Utilities Mining, Quarrying, and Oil and Gas Extraction Management of Companies and Enterprises Arts, Entertainment, & Recreation Transportation and Warehousing Agriculture, Forestry, Fishing and Hunting Real Estate and Rental and Leasing Educational Services Finance and Insurance Information Wholesale Trade Other Services (except Public Administration) Administrative & Support & Waste Management Construction Professional, Scientific & Technical Services Accommodation & Food Services Manufacturing Health Care & Social Assistance Retail Trade Government % Employment

Total Area Employment 55,992

Employment Breakdown by Wage Low Wage ($23,400- $44,000) Mid Wage ($48,500- $70,700) High Wage ($84,000- $136,100) 38% 45% 18%

Unemployment rate: 2.0%

LONGMONT AREA EMPLOYMENT FORECAST 2019-2028

12

• 68
• 1

2 36 54 71 98 95 124 135 135 141 280 328 416 421 778 830 923 1119 1257

• 200

200 400 600 800 1000 1200 1400 Administrative & Support & Waste Management Utilities Unclassified Industry Arts, Entertainment, & Recreation Finance & Insurance Mining, Quarrying, and Oil and Gas Extraction Real Estate and Rental and Leasing Agriculture, Forestry, Fishing and Hunting Transportation and Warehousing Management of Companies and Enterprises Wholesale Trade Information Educational Services Manufacturing Other Services (except Public Administration) Construction Accommodation and Food Services Retail Trade Professional, Scientific, & Technical Services Health Care & Social Assistance Government

Mid Wage ($48,500-$70,700) High Wage ($84,000-$136,100) Mid Wage ($23,400-$44,000)

Net Change +7,174 Jobs (13.7%)

Employment Change Forecast 2019-2028 by Wage Low Wage ($23,400- $44,000) Mid Wage ($48,500- $70,700) High Wage ($84,000- $136,100) 11.2% 13.4% 84.7%

ECONOMIC AND DEMOGRAPHIC TAKEAWAYS

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Downtown Longmont’s fast growing population provides

• pportunities to capture retail, office and small scale

manufacturing demand in Downtown Downtown residents are older and highly educated; more likely to stop in-store vs. on-line which can benefit Downtown retail shops Downtown households are smaller and have fewer school age children and is driven by a large proportion of non-family households Downtown household incomes are less compared to region, but 40% of households with head of household during prime working years (24-64) have household incomes > $100,000 High wage jobs in the Longmont area forecasted to grow faster compared to other wage jobs, including office using jobs in professional and technical services, finance and insurance that are highly concentrated in Downtown Longmont

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DOWNTOWN LAND USE, BUSINESS & EMPLOYMENT

Government and community uses is the predominate use by land area in Downtown comprising 22% of the total land area and 500,000 sq. ft. of building space Residential property occupy the second highest use in terms of land area with 18% of the total downtown land area Office uses comprise more approximately 10% of the land area with more than 330,000 sq. ft. of building space Retail space occupies 8% of the land area with nearly 300,000 sq. ft. of building space Services uses comprise more than 16% of the land area with more than 423,000 sq. ft. of building space 25 acres, or 15% of the land area, is vacant land (half is the vacant property is the former Butterball property)

Government & Community 22% Industrial 12% Office 10% Retail 7% Services 16% Vacant 15% Residential 18%

Total Area 169.8 acres

Government & Community 28% Industrial 10% Office 20% Retail 17% Services 25%

Total Building

• Sq. Ft.

1,665,764

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DOWNTOWN BUSINESS & EMPLOYMENT

Downtown Longmont has a diverse mix of businesses and government agencies with an estimated 474 businesses and ~3,571 employees 51% of Downtown Longmont businesses are services-

• riented providing 33% of Downtown jobs

Health and Wellness businesses comprise 19% of the businesses present, but 9% of jobs Retail Trade comprises 13% of businesses and 8% of jobs Eating and Drinking Places comprise 9% of the businesses and 13% of jobs Government totals 4% of businesses, but provide 28%

• f jobs in downtown

Services 51% Industrial 5% Retail Trade 13% Eating and Drinking Places 8% Health & Wellness 19% Government & Community 4%

474 Total Businesses

Services 33% Industrial 9% Retail Trade 8% Eating and Drinking Places 13% Health & Wellness 9% Government & Community 28%

3,571 Total Employees

Downtown Longmont Business Inventory by % of Businesses, 2020

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DOWNTOWN BUSINESS INVENTORY

0.6% 0.8% 0.8% 0.8% 1.5% 1.7% 2.3% 2.3% 3.8% 8.2% 8.2% 13.1% 16.7% 18.8% 20.3%

0% 5% 10% 15% 20% 25%

Administrative & Support & Waste Management Education Transportation and Warehousing Arts, Entertainment and Recreation Information Manufacturing Government Construction Real Estate and Rental and Leasing Finance and Insurance Accommodation and Food Services Retail Trade Other Services Health Care and Social Assistance Professional, Scientific and Technical Services

474 Downtown Businesses

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DOWNTOWN EMPLOYMENT

Downtown Longmont Business Inventory by Number of Employees, 2020

Mid Wage ($48,500-$70,700) High Wage ($84,000-$136,100) Mid Wage ($23,400-$44,000)

0.0% 0.8% 1.7% 1.7% 2.4% 2.8% 3.2% 3.6% 5.5% 6.0% 7.1% 7.9% 9.6% 9.8% 12.7% 25.2%

0% 5% 10% 15% 20% 25% 30% Other Arts, Entertainment & Recreation Administrative & Waste Educational Services Transportation & Warehousing Real Estate, Rental & Leasing Construction Manufacturing Finance & Insurance Information Other Services Retail Trade Health Care & Social Assistance Professional & Tech Services Accommodation & Food Services Government

3,571 Downtown Employees

Employment Breakdown by Wage Low Wage ($23,400- $44,000) Mid Wage ($48,500- $70,700) High Wage ($84,000- $136,100)

32% 44% 24%

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DOWNTOWN SERVICE BUSINESSES

Downtown Longmont - Services Businesses by Number of Businesses, 2020

2.9% 5.8% 6.6% 7.5% 10.4% 10.8% 16.2% 39.8%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Information Personal Care Services Religious, Social and Civic Organizations Real Estate and Rental and Leasing Automotive Sales, Parts & Services Other Services Finance and Insurance Professional, Scientific and Technical Services % of Service Businesses

241 Downtown Services Businesses

Downtown Longmont - Retail Businesses by Number of Businesses, 2020

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DOWNTOWN RETAIL TRADE BUSINESSES

4.8% 6.3% 6.3% 7.9% 11.1% 11.1% 14.3% 14.3% 23.8%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Book Stores & News Dealers Electronics & Appliance Stores General Merchandise Stores Food & Beverage Stores Home & Garden Miscellaneous Retail Art Galleries & Dealers Sporting Goods, Hobby & Music Stores Clothing & Clothing Accessories % of Retail Businesses

63 Downtown Retail Trade Businesses

Location Quotient, Downtown Employment compared to Longmont Area Employment, 2019

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DOWNTOWN EMPLOYMENT - LOCATION QUOTIENT

0.25 0.37 0.42 0.63 0.65 0.86 0.94 1.06 1.38 1.44 1.70 1.76 1.78 2.46 2.64

0.00 0.50 1.00 1.50 2.00 2.50 3.00 Administrative & Support & Waste Management Manufacturing Construction Arts, Entertainment, & Recreation Retail Trade Educational Services Health Care & Social Assistance Professional, Scientific & Technical Services Accommodation & Food Services Other Services (except Public Administration) Transportation and Warehousing Real Estate and Rental and Leasing Government Information Finance and Insurance

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DOWNTOWN BUSINESS SURVEY

Survey sent to Downtown business and property owners, tenants; received 55+ responses 40% of respondents have been a business owner in Downtown for over 10 years 2/3 respondents reported using gross structure (30% of gross leases > $20 per sq. ft.) Nearly half of NNN leases between $15-$20 per sq. ft. (11% > $20 per sq. ft.) 40% reported NNN expenses $4-$6 per sq. ft. More than 50% of lease terms between 1-4 years 30% of TI costs between $25-$50 per sq. ft. while 1/3 reported no TI costs (nearly half of respondents reported the cost being split between tenant and landlord)

OFFICE MARKET OVERVIEW

• No. of

Buildings Inventory (Sq. Ft.) Average Building Size Downtown Longmont 62 392,127 6,325 Boulder Metro Market 1,058 18,866,532 17,832 Longmont Submarket 199 2,110,900 10,608 City of Boulder Submarket 605 12,106,850 20,011 Boulder County Submarket 254 4,648,782 18,303

Downtown Longmont 392,127 Sq. Ft. 2% Longmont 1,718,873 Sq. Ft. 9% City of Boulder 12,106,850 Sq. Ft. 64% Boulder County 4,648,782 Sq. Ft. 25%

TOTAL INVENTORY 18,866,632

• SQ. FT.

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Downtown Longmont has nearly 400,000 square feet of office space in 62 buildings Downtown’s office space includes stand alone

• ffice buildings and mixed use buildings with

retail, residential and office Most of Downtown’s space is Class B and C space A few office buildings, such as Roosevelt Place, can be classified as Class A office space Downtown Longmont office inventory is 2% of the Boulder Metro Market and 19% of the City

• ffice inventory

Downtown Longmont’s office buildings are smaller compared to the City of Longmont and Boulder Metro Market average building sizes Office Market Inventory by Submarket, 4Q 2019

17.4% 3.7% 15.6% 5.8% 10.9% 7.8% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Vacancy Rate Downtown Longmont Longmont Submarket Boulder Metro Market

Average Office Vacancy Rates, 2010 - 4Q 2019

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OFFICE VACANCY

Downtown office vacancy 3.7% (year end 2019) Downtown’s office vacancy lower than Longmont (5.8%), Boulder Metro (7.8%) and Denver regional market (10.1%) Downtown vacancy decreased 83% since 2010 Strong leasing activity and limited supply contributed to decreasing vacancy Longmont submarket (59%) and Boulder Metro market (28%) also recorded strong vacancy decreases since 2010

• 83%

Downtown Longmont Vacancy Rate Change (2010-2019)

$15.96 $22.01 $15.23 $23.34 $20.46 $30.16 $0 $5 $10 $15 $20 $25 $30 $35 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Direct Rent / Sq. Ft / Year Downtown Longmont Longmont Submarket Boulder Regional Market

Average Office Rents (Gross) per Square Feet, 2010 - 4Q 2019

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OFFICE AVERAGE MARKET RENTS

Current Downtown office market rents averaged $22.01 per sq. ft. (gross) Downtown office rents increased +37% since 2010 Downtown office rents wide range - $12-30 per sq. ft. NNN with sweet spot $14-22 per sq. ft. NNN Downtown NNN expenses average $6-10 per sq. ft. Strong leasing activity and limited supply contributed to increasing rents Downtown rents on average 36% less compared to Boulder Metro Market ($30.16) and 8% less compared to Longmont submarket ($23.34) +37% Downtown Longmont Average Rent Change

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OFFICE NET ABSORPTION

12 Month Net Absorption

• Sq. Ft.

% of Inventory Downtown Longmont (7,340)

• 0.01%

Boulder Metro Market 141,706 0.8% Longmont Submarket 34,319 1.6% City of Boulder Submarket 90,850 0.8% Boulder County Submarket 16,537 0.4%

Office Net Absorption, 4Q 2019

• 7,340

17,186 7,410 8,327 5,621 8,487 923 6,118 45

• 31
• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5%

• 10,000
• 5,000

5,000 10,000 15,000 20,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % of Inventory Net Absorption (Sq. Ft.)

Downtown Longmont Office Net Absorption, 2010 - 4Q 2019 Office absorption positive since 2010 in Downtown Longmont averaging +4,675

• sq. ft. annually

In 2019, Downtown Longmont’s net absorption rate was -7,340

• sq. ft. (compared to +34,319 sq.
• ft. for Longmont)

Overall Boulder Metro market recorded +141,706 sq. ft. net absorption led by City of Boulder with +90,850 sq. ft.

Average 4,675 sq. ft.

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OFFICE NEW DELIVERIES

12-Month Deliveries Buildings

• Sq. Ft.

Downtown Longmont Boulder Metro Market 3 112,000 Longmont Submarket City of Boulder Submarket 2 72,000 Boulder County Submarket 1 40,000

Office New Deliveries, 2019 Since 2010, there has been no deliveries of new office product in Downtown Longmont Office deliveries in the Longmont Submarket minimal with only 66,878 square feet delivered since 2011, representing 3% of the total office inventory. Boulder Metro Market has seen a total of 1.4 million sq. ft. of new office delivered since 2011 Most activity in City of Boulder = 750,000 sq.

• ft. of office since 2016 (including Google’s

new 200,000 square foot campus) Denver metropolitan market - 35 office buildings under construction (3 million square feet of office space, representing 1.7% of inventory)

72,000 40,000

10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Longmont Submarket City of Boulder Submarket Boulder County Submarket

• sq. Ft. Officxe Delivered past 12 Months

New Office Deliveries (Sq. Ft.), 2019

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OFFICE UNDER CONSTRUCTION

Under Construction Buildings

• Sq. Ft.

% of Inventory Average Building Size Downtown Longmont 0% Boulder Metro 7 509,000 2.7% 72,796 Longmont 0% City of Boulder 4 360,000 3.0% 90,000 Boulder County 3 149,000 3.2% 49,745

Office Under Construction, 4Q 2019 No office buildings currently under construction in Downtown Longmont 509,000 sq. ft. of office space under construction in the Boulder Metro (2.7% of inventory) Most construction in the City of Boulder (360,000

• sq. ft.), most is spec office space (35% pre-

leased) 149,000 sq. ft. of office space under construction in Louisville and Lafayette; primarily catering towards medical office tenants (40% pre-leased) Average building size of the City of Boulder office space under construction is 90,000 sq. ft. (55% larger than the average building space of the remaining space under construction) Buildings are getting larger - Average size of new

• ffice buildings nearly 73,000 sq. ft. compared to

average size of 17,832 sq. ft. for existing inventory in County

360,000 149,000

50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 Longmont Submarket City of Boulder Submarket Boulder County Submarket

• Sq. Ft. Under Construction

Office Under Construction (Sq. Ft.), 2019

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COMMERCIAL SALES ACTIVITY

Address Sales Date Sale price Building

• Sq. Ft.

Price /

• Sq. Ft.

225 Main Street 5/6/2019 $670,000 1,500 $447 625 Main Street 8/15/18 $370,000 1,500 $247 519 Main Street 6/24/19 $750,000 3,125 $240 616 Coffman Street 4/22/19 $400,000 1,756 $228 455 Main Street 1/12/18 $510,000 2,300 $222 624 Coffman Street 8/30/19 $755,000 3,690 $205 543 Terry Street 8/13/18 $790,000 4,108 $192 338 Main Street 12/28/18 $825,000 4,800 $172 309 Atwood Street 7/27/18 $450,000 2,769 $163 230 Main Street 1/2/2019 $850,000 5,555 $153 721 5th Avenue 9/20/19 $940,000 7,686 $122 611 2nd Avenue 2/5/18 $912,500 9,050 $101 Total / Average $8,222,500 47,839 $172 Median $198

Downtown Longmont Commercial Sales, 2018-2019

$172 $225 $219 $0 $50 $100 $150 $200 $250 Downtown Longmont Boulder Metro Market Denver Regional Market Average Sales per Sq. Ft.

12 sales in Downtown Longmont totaling 47,740 sq. ft. (2018-2019) Total Downtown sales volume = $8.2 million Average Downtown sales - $172 per sq. ft. Downtown average sales 30% less than Boulder Metro average sales and 27% less than Denver regional market

175 Sales (2019) 1,052 Sales (2019) 12 Sales (2018-2019) *Includes both office and retail sales

Average Sales Price per Sq. Ft., 2018-2019

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OFFICE MARKET TRENDS IMPACTING DOWNTOWNS

Accelerated Movement Towards Sustainability

Sustainability continues to gain traction driven by investors and tenants - this includes sustainable design in buildings and tenant finishes, social sustainability programs, Wellness programs and other initiatives.

Hipsturbia

Growth of the 18-hour “live-work-play” walkable, mixed use downtown district in suburban communities

More People-Focused, Flexible Office Space

“Modern workplaces shifting from an efficient, tech-driven place where people had to be to an effective people-focused place where employees want to be.”

Smart Offices and Impact of Technology and Efficiency

Technology is leading to to smaller employees footprints and increased workplace efficiency that is optimizing work environments and office space design

Power of Amenities in Optimizing People’s Performance

Amenities aren’t about escaping work—they’re about optimizing it. “The best amenity strategies prioritize anywhereworking, creating hybrid settings that deliver both an amenity and a workspace: work cafés, quiet/focus zones, and innovation hubs.”

Evolution of Coworking

Coworking is a supplement, not a replacement, for a great workplace experience.

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DOWNTOWN LONGMONT OFFICE MARKET DEMAND POTENTIAL

2019 Jobs 2028 Jobs 2019 - 2028 Change Average Job per

• Sq. Ft.

Potential Office Demand Sq. Ft. (2019-2028) Downtown Longmont Capture Rate Potential Downtown Demand (Sq. Ft.) Low High Low High Office Employment Growth (Longmont Area) 14,735 16,496 1,761 175 308,175 15% 25% 46,226 77,044 Office Employment Growth (Boulder) 35,100 40,350 5,250 175 918,750 2% 3% 18,375 27,563 Total Potential Office Demand in Downtown Longmont 64,601 104,606

Employment growth in office-based industries – through both recruitment of new firms and expansion of existing firms – generally drives

• pportunities for new office space

Examined projected growth in office-based industries in Longmont and Boulder market (2019-2028) Longmont office-based employment forecasted to grow 12% (2019-2028), or 1,761 jobs (ESMI) Downtown office demand potential - 64,600

• sq. ft. - 104,600 sq. ft.

Industry 2019 - 2028 Jobs Change Change % Information 143 10.5% Finance & Insurance 55 4.7% Real Estate and Rental and Leasing 100 11.3% Professional, Scientific, & Technical Services 925 17.9% Management of Companies and Enterprises 135 25.1% Administrative & Support & Waste Management

• 70
• 1.9%

Health Care & Social Assistance 446 26.3% Other Services (except Public Administration) 27 11.8% Total / Average 1,761 12.0%

Projected Office-Based Employment Change, Longmont Area, 2019-2028

Downtown has a high concentration of high paying jobs in Finance and Insurance, Information, Real Estate and Professional and Technical Services relative to the City Positive office indicators suggest strong downtown office market (low vacancy, positive net absorption, increasing rents) Downtown’s walkable, amenity rich environment with restaurants, services and retail goods very positive for downtown employees Downtown’s strong office market fundamentals in terms of low vacancy rate, increasing rents and limited supply suggest continued positive strength to accommodate future demand Downtown is the hub of Longmont, home to a robust mix of innovative and creative businesses, diverse housing and civic activities and can be attractive to businesses and employees looking to work in an authentic and potentially more affordable environment Coworking spaces in Downtown provide opportunities for start up businesses and entrepreneurs to grow their business in flexible environment (and hopefully stay in Downtown!)

DOWNTOWN OFFICE MARKET STRENGTHS

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Current average base rents in downtown do not support new office construction without potential public / private partnership (e.g. rents need to be ~$30 per sq. ft. to attract equity and debt to a project and achieve needed project returns and debt coverage ratios required by banks for lending) Lack of large blocks of office space for tenants (e.g. at least 2,500 sq. ft. In Longmont) Lack of highway access (I-25 and US 36) where a lot of

• ffice development is occurring in region

Lower employment density and population to support new

• ffice demand

Limited amount of modern office space in Downtown (and Longmont) constraint to capturing future growth and demand for office as this type of space is no longer appealing to today’s businesses Increasing rents may make some small businesses struggle to remain in Downtown

DOWNTOWN OFFICE MARKET CHALLENGES

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DOWNTOWN OFFICE MARKET THREATS

Rising construction materials and labor costs and availability (50% increase in last 5 years) putting pressure on new construction feasibility Increases in entitlement and permitting costs negatively impacting project pro formas Rising tenant fit out costs (close to $100 / sq. ft. for new construction) Longer entitlement and construction timelines Tighter lending restrictions Potential slowing US economy and disruptions negatively impacting office market fundamentals (e.g. vacancy, absorption, lease rates)

33

Transform underutilized properties, including 2nd floor space, to accommodate office demand (new, adaptive reuse, rehabilitation of existing space) Capitalize on new residential development (e.g. South Main Station) as a catalyst for new office Potential opportunities to assemble land to create larger blocks for (re)development Modernize existing space or adaptive reuse of building to be competitive for target industry needs in City (and capture potential spillover growth from Boulder) Lower office rents relative to Boulder and other Longmont areas provide opportunities to attract new businesses Provide flexible, creative workspace reflective of emerging workplace trends for today’s workers and target industries Transform coworking spaces and traditional office with private suites, meeting rooms, collaborative space and amenities in a flexible office environment

DOWNTOWN OFFICE MARKET OPPORTUNITIES

34

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DOWNTOWN OFFICE MARKET KEY TAKEAWAYS

Downtown has strong placemaking to attract office demand Strong office fundamentals and projected demand present

• pportunities absorb existing space, adaptive reuse of existing space

and rehabilitate older out of date existing space Increasing lease rates present challenges to smaller, start up businesses - reinforces importance of coworking hubs Seek out building out larger floor plates to attract new users Types of tenants to target for downtown Longmont: creative users, tech firms, professional and business services, start up businesses Evolution of coworking is forcing the transformation of the traditional workplace to meet the needs to today’s worker - connectivity and collaboration with private space Potential Downtown office demand: 64,600 - 104,600 sq. ft. over next 10 years Downtown opportunity sites to accommodate office demand: Coffman Street corridor, STEAM area, former Butterball properties, 100 and 200 blocks of Main Street

RETAIL MARKET

• No. of

Buildings Inventory (Sq. Ft.) Average Building Size Downtown 97 534,064 5,506 Boulder Metro 1,354 17,421,000 12,866 Longmont 528 5,964,000 11,295 Boulder Submarket 826 11,457,000 13,870

Downtown Longmont 534,064 Sq. Ft. 3% Longmont Submarket 5,429,936 Sq. Ft. 31% Boulder Submarket 11,457,000 Sq. Ft. 66%

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Downtown Longmont has approximately 534,000 sq. ft. of retail space in 97 buildings (CoStar) This space is located in stand alone retail buildings and as part of mixed use buildings that includes both retail, residential and office Most of Downtown Longmont’s retail space is clustered along Main Street 17.4 million sq. ft. of retail space in the Boulder Metro Market Downtown Longmont office inventory is 3% of the Boulder Metro Market and 9% of the Longmont market Downtown Longmont’s retail buildings are smaller compared to the City of Longmont and Boulder Metro Market average building sizes Retail Market Inventory by Submarket, 4Q 2019

TOTAL INVENTORY 17,421,000

• SQ. FT.

Average Retail Vacancy Rates, 2010 - 4Q 2019

37 4.6% 3.3% 7.5% 4.3% 7.3% 6.1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Vacancy Rate Downtown Longmont Longmont Submarket Boulder Metro Market

• 27%

Downtown Longmont Vacancy Rate Change (2010-2019)

RETAIL VACANCY

Downtown retail vacancy 3.3% (year end 2019) Downtown’s retail vacancy lower than Longmont (4.3%), Boulder Metro (6.1%) and Denver regional market (4.6%) Downtown vacancy decreased 27% since 2010 Strong leasing activity and limited supply contributed to decreasing vacancy Longmont submarket (-57%) and Boulder Metro market (-16%) also recorded strong vacancy decreases since 2010 Longmont Submarket has nearly half the vacancy of other County jurisdictions (7%)

$9.60 $14.50 $14.23 $16.67 $18.41 $22.74 $0 $5 $10 $15 $20 $25 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Direct Rent / Sq. Ft / Year Downtown Longmont Longmont Submarket Boulder Metro Market

Average Retail Rental Rates (NNN), 2010 - 4Q 2019

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+51% Downtown Longmont Vacancy Rate Change (2010-2019)

RETAIL AVERAGE MARKET RENTS

Current Downtown retail market rents averaged $14.50 per sq. ft. (NNN) Downtown office rents increased +51% since 2010 Downtown retail rents wide range - $12-24 per sq. ft. NNN Downtown NNN expenses average $4-8 per sq. ft. Downtown rents on average 56% less compared to Boulder Metro Market ($22.74) and 21% less compared to Longmont submarket ($16.67) and 75% less than Boulder submarket ($25.44)

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RETAIL NET ABSORPTION

12 Month Net Absorption

• Sq. Ft.

% of Inventory Downtown Longmont (7,200)

• 1.35%

Boulder Metro Market (21,231)

• 0.1%

Longmont Submarket (78,484)

• 1.3%

Boulder Submarket 57,253 0.5%

Retail Net Absorption, 4Q 2019

14,726 (6,428) 14,327 (990) 10,758 (7,265) 3,834 5,007 4,841 (7,200)

• 2%
• 2%
• 1%
• 1%

0% 1% 1% 2% 2% 3% 3% (10,000) (5,000) 5,000 10,000 15,000 20,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 % of Inventory Net Absorption (sq. Ft.)

Downtown Longmont Retail Net Absorption, 2010 - 4Q 2019 Office absorption positive since 2010 in Downtown Longmont averaging +3,161 sq. ft. annually In 2019, Downtown Longmont’s net absorption rate was -7,200 sq. ft. (compared to -78,484 sq. ft. for Longmont) Overall Boulder Metro market recorded -21,231 sq. ft. net absorption led by City of Boulder with +57,253 sq. ft.

Average 3,161 sq. ft.

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RETAIL NEW DELIVERIES

Retail New Deliveries, 2019 Limited new retail construction in Boulder Metro market and Denver metro area In 2019, there was 1 delivery of new retail product in Downtown Longmont (South Main Station) Since 2010, more than 715,000 sq. ft.

• f retail has been delivered in

Longmont, primarily from Village at the Peaks project (representing 12% of the total retail inventory) City of Boulder has seen minimal activity, just 75,000 sq. ft. delivered since 2013 (1.5% of inventory) Denver metropolitan market - 207,000 sq.

• ft. delivered in 2019, representing 0.1% of

inventory

12-Month Deliveries Buildings

• Sq. Ft.

Downtown Longmont 1 10,000 Boulder Metro Market 8 147,000 Longmont Submarket 2 17,000 Boulder Submarket 6 130,000

10,000 17,000 130,000

20,000 40,000 60,000 80,000 100,000 120,000 140,000 Downtown Longmont Longmont Submarket Boulder Submarket Square Feet of of Space

New Retail Deliveries (Sq. Ft.), 2019

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RETAIL UNDER CONSTRUCTION

Retail Under Construction, 4Q 2019

Buildings Sq. Ft. % of Inventory Average Building Size Downtown Longmont Boulder Metro Market 5 84,000 0.5% 16,800 Longmont Submarket 4 59,000 1.0% 14,750 Boulder Submarket 1 25,000 0.2% 25,000

No new retail space currently under construction in Downtown Longmont Smokin’ Dave’s BBQ currently converting former office into 5,500 sq. ft. restaurant along Main Street Minimal construction activity in area - 84,000 sq. ft. of retail space under construction in the Boulder Metro (0.5%

• f inventory)

Buildings are getting larger - Average size of new retail space nearly 17,000 sq.

• ft. compared to average size of 13,000
• sq. ft. for existing Metro area inventory

59,000 25,000

10,000 20,000 30,000 40,000 50,000 60,000 70,000 Downtown Longmont Longmont Submarket Boulder Submarket Square Feet of Space

Retail Under Construction (Sq. Ft.), 2019

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DOWNTOWN LONGMONT SALES

Downtown Longmont Net Sales by Classification, 2019

Apparel, $3,678,171 5% Auto, $6,214,858 8% Food, $41,790,776 55% Home Furnishing, $2,339,919 3% General, $5,200,493 7% Lodging, $75,202 0% Lumber, $8,016,578 10% Professional, $1,922,690, 3% Public Utility, $18,706 0% Unclassified, $4,693,607, 6% Home Occupation, $0 0% Manufacturing, $2,520,823 3%

Total Downtown Sales $76,471,824

Total of $76,471,824 in net sales generated from Downtown Longmont businesses in 2019 Majority (55%) of Downtown sales generated from food Other prominent sales generators include lumber / building supplies (10%) and auto (8%) General sales (e.g. hardware, jewelry, leather goods, second hand stores, sporting goods, and specialty shops) generated 7% of Downtown sales Unclassified sales (e.g. book stores, computer equipment, florists, lawn and garden, machine shops) generated 6%

• f sales

Apparel (e.g. clothing stores, shoe and shoe repair) generated 5% of sales

Total City sales tax revenue generated 2019 $2,731,950

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DOWNTOWN LONGMONT SALES TRENDS

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Downtown Sales $33,085,379 $34,525,412 $39,215,911 $42,193,804 $46,511,994 $50,766,557 $57,510,073 $59,998,136 $65,527,011 $76,315,360 $76,943,935

$0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 $80,000,000 $90,000,000 Net Sales

+133% since 2009

Downtown Longmont Sales, 2009-2019 Downtown sales represent 4.2% of total Longmont sales in 2019, in 2009 Downtown had 2.9% of the City’s total sales Downtown sales up +133% since 2009 In 2009, Downtown sales totaled $33 million, in 2019 Downtown sales totaled nearly $77 million

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DOWNTOWN LONGMONT SALES TRENDS

4.4% 13.6% 7.6% 10.2% 9.1% 13.3% 4.3% 9.2% 16.5% 0.8% 3.7% 4.7% 3.0% 7.4% 5.7% 0.9% 7.3% 8.1% 3.8% 4.6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

% Change in Net Sales

Downtown Longmont City of Longmont

Downtown and City of Longmont % Change in Net Sales, 2010-2019

Downtown Average +8.9% City Average +4.9%

Downtown sales averaging +8.9% annual growth since 2010 Longmont averaging +4.9% annual growth since 2010 In 2019, Downtown sales increased +0.8% compared to +4.6% for the City

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DOWNTOWN LONGMONT SALES TRENDS

$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 Apparel Auto Food Home Furnishing General Lodging Lumber Professional Public Utility Unclassified Home Occupation Manufacturing Net Sales

2017 2018 2019

+14.7% +1.3% +6.1% +20%

• 32.6%

+37.8% +71.2% +131% +27%

• 100%

+16.9% +13.6%

Downtown Longmont Net Sales, 2017-2019 All Downtown retail categories have experienced sales growth (with the exception of lodging and home

• ccupation) since 2017

Since 2017: Food sales +13.6% Apparel sales +14.7% Auto sales +1.3% Home furnishing +6.1% General +20% Lumber +37.8% Unclassified +27% Manufacturing +16.9% Professional +71.2%

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RETAIL MARKET TRENDS IMPACTING DOWNTOWNS

Omnichannel is Becoming the Norm

Online brands expanding into bricks-and-mortar spaces

Focus on Placemaking

Adapting the tenant mix to include entertainment, attractions (live concerts) and weekly events

Fitness, Health and Wellness Explosion

Membership in niche boutique concepts soared 70% last 4 years compared to 5% in traditional concepts

Experiential and Active Entertainment

New concepts including arcades, escape rooms, trampoline parks gaining higher market share

Food and Beverage

Ever growing trends toward curated food goods, healthier food options

Growth of the Service and Specialty Tenants

Service uses such as Mathnasium, Code Ninjas, Kumon and specialty tenants (CBD, organics)

Pop-Up-A-Palooza

Experiential, Media / Entertainment, Hospitality, Event, Permanent Pop-Ups

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RETAIL DEMAND DRIVERS: Primary Market Area (5 minute drive time) Household Growth Retail Expenditures Secondary Market Area (20 minute drive time) Household Growth Retail Expenditures Downtown Employees Growth - Retail Spending Downtown Visitor Spending Downtown Primary Market Area

DOWNTOWN LONGMONT RETAIL MARKET DEMAND POTENTIAL

RETAIL GOODS AND SERVICES: Convenience Goods Shoppers Goods Eating and Drinking Places

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Demand Potential (Sq. Ft.) Low High Primary Market Households 10,339 20,678 Secondary Market Area 6,854 13,709 Downtown Employees Growth 1,381 2,169 Downtown Visitors Growth 1,143 1,601 GRAND TOTAL 19,717 38,156

DOWNTOWN LONGMONT RETAIL MARKET DEMAND POTENTIAL

Potential Downtown Longmont Retail Demand by Source (Sq. Ft.), 2019-2028 Source of Market Demand for Downtown Retail Estimated household growth forecasts and household income (2019 - 2028) for the Primary and Secondary Market Areas Household retail expenditures adjusted for the impact of E-commerce (on-line purchases) Lack of retail leakage within Primary Market Area given Downtown’s strong retail presence Secondary Market Area shows retail leakage of $460 million across most retail categories Capture rate of 10-20% for Primary market area and 1-2% for Secondary Market area Estimated retail demand of 19,700 - 38,000

• sq. ft. over next 10 years

Primary Market Households Growth 54% Secondary Market Area Households Growth 36% Downtown Employees Growth 6% Downtown Visitors Growth 4%

High Capture 38,156 Sq. Ft.

Type Low Capture High Capture Convenience Goods 6,736 13,227 Shoppers Goods 8,950 17,492 Eating & Drinking Places 4,031 7,437 TOTAL 19,717 38,156

Market indicators suggest a healthy Downtown retail market (low vacancy rate, increasing rents, historical positive net absorption) Walkable Downtown environment Downtown Retail “Mash Up” - eclectic mix of more than 60+ retail businesses, entertainment and services Growing restaurant scene with diverse selection Growing Downtown residential market with new housing development provides additional support for Downtown retail and restaurants Positive growth in retail sales past 10 years (average 8.9% annually) Downtown retail sales growing faster than City as a whole

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DOWNTOWN RETAIL MARKET STRENGTHS

Higher cost environment for retail construction, permitting, tenant fit outs Current market rents do not support construction of new space Cost to retrofit of non-retail space into retail space Lack of parking Lack of foot traffic Increasing occupancy costs for tenants (labor, NNN property taxes) squeezing local merchants (e.g. NNN expenses have increased from $2-4/SF to $8-10/SF past decade on average) Limited daytime / employment population to support retail Conversion of vacant buildings turn into non-retail uses which limits future retail opportunities Demographic / economic / lifestyle characteristics limiting factor for Downtown potential for national chain retailers

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DOWNTOWN RETAIL MARKET CHALLENGES

Rising construction costs, permitting fees and tenant fit out costs limiting new retail supply Uncertainty in the supply chain for retailers (e.g. trade war, tariffs) impacting

• perating costs

On-line shopping and E-commerce impacting brick-and-mortar shopping and store closings for certain segments Overabundance of retail space per capita in the U.S. (23.5 sq. ft.) compared to other countries (average 2-4 sq. ft.) limits new supply “Void in the Middle” - luxury goods / experiences and value / off-price retail are growing, but other retail stores categories are declining

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DOWNTOWN RETAIL MARKET THREATS

1,336 1,548 1,845 2,382 2,982 3,535 4,206 4,927 5,695 6,542

1,000 2,000 3,000 4,000 5,000 6,000 7,000

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Sales in Billions (U.S. Dolars)

Retail E-Commerce Sales Worldwide, 2014 - 2023 (in billion U.S. Dollars)

+389% increase

Continue to focus on authenticity and building a sense of place Expand niche retail opportunities and creating great experiences for the consumer - experiential and interactive retail, health and wellness, curated goods Opportunities for pop-up shops, restaurants, entertainment, speciality goods and services; that also target Millennials and Gen Z preferences Potential to create retail and services synergies and critical mass to be attractive to shoppers (e.g. clothing stores agglomeration) E-commerce resistant tenants such as restaurants, fitness and entertainment can lead the way to back-filling vacancy and new construction in appropriate locations Opportunities to capture retail leakage - smaller, independent shops (e.g. clothing boutiques, specialty food and beverage stores, fitness / sporting goods as well as restaurants)

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DOWNTOWN RETAIL MARKET OPPORTUNITIES

Source: Cushman and Wakefield

Longmont Grainery Redevelopment

53

DOWNTOWN RETAIL MARKET KEY TAKEAWAYS

Downtown’s strong forecasted population growth provide opportunities to capture spin off retail demand Shifting retail market and consumer preferences provides opportunities for experiential retail, pop-ups, active entertainment and restaurants Potential to capture retail leakage focusing on independent clothing boutiques, specialty food and beverage stores, fitness / sporting goods Rising construction costs and permitting fees limit new retail construction; focus on smaller format, independent retailers and retrofit of existing spaces High occupancy costs for tenants drag on

• pportunities for retail, particularly independent

merchants which typically operate with tighter profit margins Potential demand of 19,700 - 38,000 sq. ft. over next 10 years through absorption of vacant space, retrofit existing space, potential new construction

SMALL-SCALE (ARTISANAL) MANUFACTURING MARKET

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Artisanal manufacturing

The making or fabrication of products either by hand or with minimal automation, which may include direct sales to consumers. This definition includes uses such as small-scale fabrication, manufacturing, and other industrial uses and processes typically not permitted in residential or mixed- use zoning districts —City of Longmont Land Development Code

Small scale manufacturing (SSM) can play an important role in revitalization of Downtown Longmont’s economy US Manufacturing is undergoing tremendous transformation with technological advances that is improving productivity, agility and competitiveness

• Data Analytics
• Internet of Things
• Advanced Robotics
• Computer-Driven Manufacturing (3-D Printing)
• Artificial Intelligence

Growing opportunity for Downtown Longmont to capitalize on this transformation in manufacturing Focus on smaller “maker” businesses, < 20 employees

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MANUFACTURING IMPACT ON US ECONOMY

Manufacturing integral part of US economy US manufacturing second largest in the world - producing 18.2% of the world’s goods US manufacturing sector 9th largest economy in the world Every dollar spent in manufacturing adds $1.89 in business growth in other supporting sectors, including retail, transportation and business services Manufacturing pays well - 12% more than comparable workers earn in rest of the private sector While manufacturing has contracted overall in the past two decades, certain segments are growing (electronics, pharmaceuticals, medical devices, aerospace) Employment GDP Patents Exports R&D

9% 12% 55% 60% 70%

INDUSTRIAL MARKET SNAPSHOT

56

Logistics 9,133,541 33% Specialized Industrial 5,367,691 20% Flex, 12,903,060 47%

27,404,292

• Sq. Ft.

Total

Boulder Metro Industrial Market Inventory Boulder Metro Industrial market comprises 27.4 million square feet of space Most of the inventory is comprised of flex (47%) and logistics (33%) space Flex space demand driven by high tech tenants who need both R&D and office space Boulder Metro market has 2nd highest proportion of flex space in the country (behind San Jose) 20% of the market is specialized industrial Manufacturing typically found in specialized industrial and flex (R&D) space

INDUSTRIAL MARKET SNAPSHOT

57 11,448,000 9,757,000 6,199,000 0% 2% 4% 6% 8% 10% 12% 14% 16% 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 Boulder Boulder County Longmont % Vacant

• Sq. Ft. of Space

Boulder Metro Industrial Market Submarkets

15.1% 6.2% 4.1%

Longmont submarket comprises 6.2 million sq. ft. of industrial space (23%

• f the Boulder Metro market)

Longmont has higher reported vacancy rate (15.1%) compared to City of Boulder (4.1%) and Boulder County (6.2%) Downtown Longmont has 165,000 sq.

• ft. of industrial space (2.7% of City)

Downtown Longmont has low industrial vacancy rate of 2% (~3,415 sq. ft. vacant) Vacancy by Product Type

Logistics 5.9% Flex 9.2% Specialized 5.4%

7.3% vacancy

INDUSTRIAL MARKET SNAPSHOT

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Boulder Metro Industrial Lease Rates

$12.78 $11.01 $9.59

$0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 Boulder Boulder County Longmont

Industrial market rents in Boulder Metro Market average $11.42 per sq. ft. Longmont ($9.59) industrial rents 33% less compared to City of Boulder ($12.78) and 15% less compared to Boulder County ($11.01) Longmont reported 12 month market rent growth is 3.3%, higher than City of Boulder (2.9%), but less than Boulder County (3.5%) 6 buildings under construction totaling 541,000 sq. ft. of space in Boulder Metro; located in Louisville and Lafayette Rents by Product Type

Logistics $10.43 Flex $12.70 Specialized $10.10

$11.42 Market Rent

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DOWNTOWN LONGMONT SMALL SCALE MANUFACTURING DEMAND POTENTIAL

Employment growth in SSM-based industries generally drives opportunities for new SSM space Examined projected growth in SSM-based industries in Longmont market (2019-2028) Longmont SSM-based employment forecasted to grow 10.1% (2019-2028), or 1,034 jobs Assumes 75.3% of businesses are small businesses, <20 employees (U.S. SBA) Downtown SSM demand potential - 15,500 sq. ft. - 31,200 sq. ft. Projected Office-Based Employment Change, Longmont Area, 2019-2028

NAICS Industry 2019 Jobs 2028 Jobs 2019-2028 Jobs Change Change % 31 Manufacturing 5,395 5,718 323 6.0% 44-45 Retail Trade 217 264 47 21.7% 51 Information 1,203 1,361 158 13.1% 54 Professional, Scientific, & Technical Services 3,296 3,791 495 15.0% 71 Arts, Entertainment & Recreation 141 152 11 7.8% Total 10,252 11,286 1,034 10.1% Longmont Area Employment 2019 Jobs 2028 Jobs 2019 - 2028 Change Average Job per

• Sq. Ft.

Potential Demand Sq.

• Ft. (2019-2028)

% small businesses Downtown Longmont Capture Rate Potential Downtown Demand (Sq. Ft.) Low High Low High SSM Employment Growth 10,252 11,286 1,034 400 413,600 75.3% 5% 10% 15,572 31,144

DOWNTOWN SSM MARKET STRENGTHS

60

Continued growth in Boulder / Longmont industrial market Positive employment growth (14.3%) forecast in small scale manufacturing over next 10 years in Longmont area Existing Downtown (MU-D) zoning permits small scale manufacturing as a permitted use Longmont’s high concentration of target industries for small scale manufacturing with strong growth projections (Advance Longmont 2.0)

• Smart Manufacturing (e.g. electronics, medical

devices)

• R&D (biotech, aerospace, life sciences)
• Food and Beverage (craft breweries and distilleries,

specialty food) Downtown well positioned to capture a portion of this growth with its authentic and progressive atmosphere, supportive entrepreneurship and business climate and incentives for smaller-scale manufacturers

Production in the

City is key to having a strong economy

— Ilana Preuss, Recast City

DOWNTOWN SSM MARKET CHALLENGES

61

Current building vacancy in City doesn’t meet the needs of many new and expanding SSM businesses Lack of modern space with high ceilings desired by industrial and manufacturing users Limited availability of affordable space for manufacturing appropriate spaces, particularly for smaller, growth-oriented companies and start ups Small manufacturing businesses understanding how to access public agencies and resources to solve problems impacting their business

DOWNTOWN SSM MARKET THREATS

62

Skills gaps / inability to fill manufacturing job openings (shifting skill sets due to advanced technologies, misperceptions of manufacturing jobs, retirement of baby boomers) Market volatility and rising materials costs negatively impacting production costs Access to capital, particularly for innovative, emerging manufacturers that often have longer timelines for revenue and profitability, making them less attractive to investors of risk capital Negative perception about manufacturing and the producer economy (e.g. decline of industry)

DOWNTOWN SSM MARKET OPPORTUNITIES

63

Downtown opportunity sites to capture small scale manufacturing demand: 110 Emery redevelopment, 3rd Avenue Corridor Work with property owners to reposition and retrofit vacant and underutilized buildings to accommodate small scale producers Strengthen linkages with FRCC / Advanced Manufacturing Center Highlight current small scale manufacturing success stories in Downtown Leverage Longmont’s strong and diverse industry base, particularly advanced technology companies, to locate in Downtown Continue to support growth in small manufacturers with information and assistance programs, incentives, and connecting available space with prospective tenants

Moving from the “Creative Economy” to the “Creator Economy” requires more “Maker Space”

110 Emery Redevelopment Concept

SMALL SCALE MANUFACTURING KEY TAKEAWAYS

64

Positive industrial fundamentals in Boulder Metro market; low industrial vacancy in Downtown Existing vacant space in City does not meet the needs for today’s industrial / small scale manufacturer users Estimated 15,600 - 31,200 sq. ft. demand for small scale manufacturing space in Downtown over next 10 years

• Absorb existing vacant and underutilized space
• Adaptive reuse of existing space
• New construction (if financially viable)

Downtown opportunity sites to capture small scale manufacturing demand: 110 Emery redevelopment, 3rd Avenue Corridor Certified Creative District and branding key opportunity areas to attract small scale manufacturers, including store-front retail with production

Manufacturing in the future will look very different from 20 years ago

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THANK YOU! QUESTIONS?