Downtown Colorado Springs is bucking some regional and national trends — in a good way, according to the Downtown Partnership advocacy group.

Unlike some cities that have struggled to bring back employees to their downtowns after the onset of the COVID-19 pandemic four years ago, 87% of Colorado Springs’ downtown workers physically have returned to their places of employment, the group says.

Downtown Colorado Springs’ office vacancy rate of 7.3% in the fourth quarter of 2023 was up by more than a full percentage point from the start of the year, yet remained well below other cities, such as downtown Denver where vacancies have risen to upward of 30%.

And even as the retail vacancy rate increased to 4% at the end of last year from 3.1% in 2022, it remained below the pre-pandemic level of 4.4%.

Those were some of the takeaways the Downtown Partnership pointed to in the release Thursday of its ninth annual State of Downtown report, which captures trends and market conditions in the area during 2023.

The report serves as a resource for developers, investors, employers and others who might be interested in doing business downtown.

The Downtown Partnership cited more than a dozen public and private sources for its data, including Colorado Springs city government, the federal Bureau of Labor Statistics, state and El Paso County agencies and Washington, D.C.-based real estate research firm CoStar.

Susan Edmondson, the partnership’s president and CEO, says she’s not trying to paint an overly rosy picture of downtown’s fortunes. But in a “post-pandemic, urban downtown world,” the area continues to fare well, she said.

“When you look at our incredibly low vacancy rates for storefront businesses, lower than they were before the pandemic, when you look at our still very low office vacancy rate, again compared to other downtown centers and that we’re just leading so many cities in getting people back into our downtown, those are the kind of things that folks look for when they want to launch a business or invest in downtown,” Edmondson said.

Among other highlights in the State of Downtown report:

• Downtown saw 29 businesses open in 2023, a slight bump from 25 in 2022.

• The area’s retail vacancy rate of 4% demonstrates storefronts are in demand, which was underscored by the rents that businesses are willing to pay. At the end of last year, retail rents averaged $29.40 per square foot, up a little more than 50% over 12 months.

• Downtown continues to see an influx of apartment construction and completed projects. That trend marks a significant turnaround from 20 to 30 years ago, when downtown advocates and improvement plans cited the area’s desperate need for more housing. In 2023, 431 additional apartments opened in downtown, while another 1,923 were under construction and expected to be available to rent in the next 18 months, the Downtown Partnership said in its report.

• More apartments, however, could be too much of a good thing. The area’s multifamily vacancy rate over 12 months was a hefty 20.2%, nearly twice as high as the citywide rate, the State of Downtown report showed. Downtown rents also averaged $1,918 a month, almost $500 more than the city average of $1,432.

• Since 2013, the dollar value of downtown projects that have been completed, are under construction or are on the drawing board totals $2.347 billion. That’s a bump of $29 million from the 2022 total — a much smaller year-over-year increase from $162.1 million and $436.7 million, respectively, in the previous two State of Downtown reports.

On the one hand, the redevelopment of the YMCA of the Pikes Peak region’s downtown property was removed from the running total of downtown projects because the organization has delayed its project, Edmondson said. The YMCA has cited higher construction costs and interest rates as leading to that delay.

Other developers and investors are in the same situation, and some have hit pause on their downtown projects because they’ve become more expensive to build and finance, Edmonson said.

She remains confident, however, that downtown will continue to attract significant investment; as examples, she pointed to Springs-based Norwood Development Group’s plan to construct a 12-story office building on downtown’s southwest side and a proposal by The O’Neil Group, a local private equity firm, and an out-of-state partner to develop a 36-story, 497-unit apartment tower. Both projects were announced in 2023.

“That capital stack gets more complicated,” Edmondson said of developer and investor financing efforts. “Sources that they may have turned to in the past might be sitting on the sidelines. So, they have to shop around their financing a little bit more.”