Tenants of Peak Innovation Park include Amazon, which occupies three buildings. (Courtesy Colorado Springs Airport)
Out near the Colorado Springs Airport, plans for one of the biggest business parks in Colorado are finally gathering speed, with millions of square feet already built and meaningful negotiations underway for hundreds of thousands more.
Peak Innovation Park encompasses 1,600 acres south of the airport. It’s master-planned for a dynamic and robust development of industrial, office and retail buildings that will ultimately house an estimated 30,000 employees, many in high-paying aerospace jobs, and some new to the community.
“Peak Innovation is bigger than the Denver Tech Center,” says Troy Stover, director of business park development for the Colorado Springs Airport. “The Tech Center is 1,100 acres. This project is an order of magnitude bigger than anything else in this city that a lot of people don’t really understand.”
The vision for the project was born in 2014 when Stover and airport administration aimed to revive plans for a business park development that petered out after a false start in 2006. The airport contracted Urban Frontier, based in Denver, as the developer. Shortly after Urban Frontier created the master plan, Stover said the developer’s connections brought Amazon to the table.
Before Amazon’s investments were announced, Stover says Peak Innovation hosted an event for local commercial brokers, where the vision for the project was met with a lot of skepticism. A second broker event this spring was greeted with much more enthusiasm, he says. Amazon was the biggest driver in the change of sentiment about the park.
“I was talking with Amazon for three years,” Stover says. “The first two, no one knew. The third year, it was the worst-kept secret in town.”
In 2017, Amazon used a 19,000-square-foot tent as its temporary distribution center.
Now, Amazon occupies three facilities at Peak Innovation Park, including a 65,000-square-foot distribution facility, a 278,000-square-foot sorting facility, and a 4 million-square-foot fulfillment center.
Following Amazon’s investment in the area, Aerospace Corporation has nearly doubled its footprint at the Park with an additional 90,000 square feet of office space.
This June, another Fortune 500 company purchased 12 acres for a distribution facility. The company hasn’t formally announced the project yet, but plans are underway for a 100,000-square-foot facility, Stover says.
Since the Amazon announcement, there has been a lot of momentum and interest from big national businesses, says Alec Rhodes, broker and executive director with Cushman & Wakefield. His team has been marketing the property for three years.
“Amazon really put Peak Innovation Park on the map,” Rhodes says. “That made other users look and realize that Colorado Springs is easy to get around with good access to I-25 and there’s flexibility in the size available.”
He says activity has been steady with interest from myriad different industries, including distribution, manufacturing and Department of Defense.
Stover says he is in active negotiations with nine different potential users that could be announced as soon as a few months to now up to three years from now.
Perhaps the biggest indicator that the Park has serious momentum may be a single-story 50,000-square-foot office building completed this year by Flywheel Capital, a private investment company. The group built the speculative property as the first of a planned complex of four that will total more than 200,000 square feet. The group also has secured property at the Park where it plans an additional 130,000-square-foot multi-story office building.
“This project is an order of magnitude bigger than anything else in this city.” — Troy Stover
Building 50,000 square feet of office space without a tenant in hand is an unusual move in Colorado Springs — or anywhere at a time when national office occupancy is still 50 percent of what it was in 2019. Stover and others said they believe it’s the first speculative office construction in town in more than 15 years.
“They built it purely on spec,” says Brian Wagner, a commercial broker with Newmark, who is marketing the building and pre-leasing Flywheel’s planned buildings. “When you look at the Southeast part of town, it’s a pretty tight market with no large blocks of space available.”
At the same time, the development and growth of Peterson Space Force Base has made the area a magnet for big DoD contractors.
“We were seeing tenants come in and spend huge sums to renovate existing space,” Wagner says.
Even when tenants will spend money to renovate, the space isn’t available in that part of town. The biggest blocks of space are about 30,000 square feet, Wagner says. To get bigger, tenants would have to go the north part of town, the only area where there has been meaningful new office construction in the last two decades. But these users are looking to be close to Peterson.
There is a vision of Southeast Colorado Springs being a nexus for aerospace and defense businesses, Wagner says. There just haven’t been options for those tenants.
“There’s an element of ‘if you build it, they will come,’” he says. “But it’s more that you have to build it to prove you’re going to.”
He says developers have put signs and plans out dozens of times over the years, but the buildings never come out of the ground. Building 50,000 square feet proves that Flywheel will deliver. And the bet, so far, seems like it will pay off.
Wagner says he’s negotiating with prospective tenants for all four buildings and is close to being able to announce a tenant for the first building. And there’s interest for proposed multi-story building.
“I just got a call today to schedule a meeting for a user looking at 100,000 to 140,000 square feet,” Wagner says. “This would be a new tenant to the market. They’re not here now.”
Wagner says most of the interest in the space has come from the aerospace industry and defense contractors.
Colorado Springs is the temporary headquarters for U.S. Space Command. However, in the dying days of his presidency, Donald Trump decided Space Command would move to Huntsville, Alabama. Congress and the DoD are still investigating that decision and are expected to settle the location of the permanent headquarters this year.
Wagner says he is not hearing from prospective tenants that the final location of Space Command is a factor in their decision.
Stover agrees that the interest in the Park doesn’t seem dependent on the Space Command headquarters; there’s already so much space work happening at Peterson that contractors expect will continue regardless of where the headquarters is ultimately located.
In addition to distribution and defense, Stover says he’s hoping to attract more retail to Peak Innovation Park. There are two Marriott hotels that have been slow to come out of the ground, but Stover says they’re beginning construction and expected to open in 2024.
He is also focused on getting more retail, starting with a gas station and some quick-service food, in the business park.
“Our vision is much greater than building some buildings and jobs,” Stover says. “We’re focused on creating an environment and a place that is something special.”
The project is funded via two metro districts. The first funds infrastructure. The airport sold bonds for the next phase of the project in late 2022 and is currently using that money to build out roads and utilities. The second metro district is for maintenance, which will soon be funded by existing build-out to support planning for public amenities like a disc golf course and walking paths.
The land in the park was purchased with Federal Aviation Administration dollars for the long-term support of the airport. Because of that, the FAA has to release any property the airport sells. To work around that, Stover says the airport is prioritizing long-term land leases over sales.
The land for the 4 million-square-foot Amazon distribution center was leased instead of sold to the private developer and investor who built it. While a different structure, the leases have not been a deterrent to most would-be investors, such as Flywheel Capital. The city still owns the land under the planned four-building campus, according to public record.
Rhodes says that the private investment group that built the Amazon center successfully sold the property to another investor without the land lease being a concern.
The goal of the land leases is to create long-term financial support for the airport that will keep its operating costs down and generate diverse sources of revenue that can help fund capital projects. That allows the airport to be a more competitively-priced place for airlines to operate.
“We’re all told to diversify our retirement plans,” Stover says. “Peak Innovation Park is a diversified economic engine for the airport. It’s a diversification of industry revenue to make sure the airport is fiscally stable way into the future.”