Study: US 36 West (Interlochen) office district faces valuation, vacancy pressures; city will fold findings into budget work

At a Broomfield City Council study session, AECOM consultants presented the US 36 West (Interlochen) market study, telling council that long-term shifts in office demand and a large inventory of older office buildings are putting pressure on property values and the city’s tax base.

The study found that more than half of jobs in Broomfield are located in the study area (the Flatiron Crossing/Interlochen/Arista corridor) and that employment growth there has lagged countywide recovery since the pandemic. AECOM highlighted two structural forces: the adoption of hybrid and remote work and a concentration of 1980s–1990s office buildings with floor plates and parking configurations that make reuse or renovation more costly.

“The trends we’re dealing with today were the groundwork for these issues laid more than 35, 40 years ago,” AECOM associate Sarah Murphy told council, adding that hybrid work patterns and a “flight to quality” amenity set have left older single-use office buildings struggling to attract tenants.

Consultants said vacancy is elevated and property owners have been able to maintain rents at the cost of occupancy, a combination that creates greater volatility in valuations. AECOM vice president Chris Brewer described two common reuse paths: conversion of appropriately sized floor plates to residential or, in some markets, demolition and replacement to capture new-construction premiums.

“Part of this is a public infrastructure strategy,” Brewer said. He and staff noted that building reuse often depends on parking configuration, floor-to-floor heights and existing below-grade infrastructure — factors that influence whether a privately financed conversion is feasible or will require incentives or public investment.

City staff framed the study as the real-estate and business side of a broader set of analyses that will feed the city’s financial forecasts. City Manager Hoffman told council a preliminary financial outlook tied to recent state budget developments will come in April and that staff will continue to incorporate study findings into the 2026 budget process.

Council members asked about ownership patterns, zoning options, adaptive reuse viability and the role of public incentives. Staff said ownership is mixed — local, out-of-state, REITs and longtime owners who may be less pressured to sell — and that some parcels and underused parking could be candidates for infill or mixed use if zoning and infrastructure permit.

The presentation noted ongoing private and public initiatives nearby, including the 2021 Flatiron Crossing redevelopment agreement and recent announcements of new users to the Flatiron area. Staff emphasized the study is not a policy prescription; rather, it is intended to inform comprehensive plan updates, infrastructure discussions and future incentive or financing conversations.

Consultants and staff will remain available for follow-up and the city plans to update council annually on how changing assessed values and property tax dynamics affect the city’s long-range financial plan. No formal council action was taken on the study itself during the session.

The study and the council discussion set the groundwork for neighborhood- and parcel-level analyses staff said will be necessary to translate broad findings into implementable projects and budget choices.