Vuelo Brief 5.14.24

We are thrilled to be distributing our first Vuelo Brief. Vuelo is an investment company — investing in remarkable businesses and real estate throughout Colorado and Wyoming. We founded Vuelo with the intention of creating meaningful impact, which includes a desire to provide thought leadership for the business community. We’ll send out this brief regularly and will provide insights that are driving our investment decisions at Vuelo, discuss key issues that we feel the business community needs to take note of, and offer other potentially valuable resources for business leaders and investors. We hope you find this brief useful, and as always, let us know if we can ever be a resource for you.

Vuelo Ventures: Noteworthy Updates

Waypoint Real Estate, a Vuelo Venture, has elevated two key team members to partner roles. Brokers Jake Arnold and Nick Norton will assume leadership roles within Waypoint's day-to-day operations. Read more

Strategy Spotlight

By Drew Yancey, Operating Partner
Great Leaders Don't Just Plan - They Execute.

As vital as business planning is, the real game-changer lies in execution. In this article, you'll learn about these five key steps that business leaders can adopt to avoid the "execution gap":

- Focusing on Stakeholders

- Radically Prioritizing

- Avoiding Biases

- Frequent Communication

- Risk Mitigation

View full article

Key Business Issue Spotlight

What Vuelo Is Tracking (...and Thinks You Should Be Too)

Colorado Property Tax Legislation Changes Deal expected to reduce property taxes by$1.3 billion in first year. (Read the Colorado Politics article here)

Vuelo's Takeaway: Operating expenses for commercial properties are a poster child for inflation over the past three years. Most properties have incurred operating cost increases of 25%to 30% during that time frame, and for the first time in our careers, we are seeing property expenses (NNNs) that exceed base rents for a growing number of properties. The largest driver of those cost increases: property taxes. For most commercial properties, those operating costs are passed through and paid for by tenants, which explains why your cup of coffee now costs$8.We applaud any sweeping effort by the State to reduce property taxes. Such a reduction is imperative for the health of our small businesses — who also happen to be our tenants.

Stats We're Watching

What's Driving Our Investment Decisions?

According to CoStar data, in the past 12 months, only three office leases over 10,000 SF were signed in the Fort Collins / Loveland market. Vacancy rates are still low at 5.4%,and we are seeing marginal rent growth for quality product.

Vuelo's Takeaway: Quality office space in Northern Colorado is very investable (contrary to what you read), but all buildings are not created equal.

What's Winning: High-quality, well located, small-square footage suites occupied by local/regional service companies whose employees are back working in the office.

Page Turners

Good to Great, by Jim Collins

"Every good-to-great company embraced what we came to call the 'Stockdale Paradox': You must maintain unwavering faith that you can and will prevail in the end regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they might be."

Vuelo's Takeaway: Confront the brutal facts… Our reality is that high interest rates and high inflation may be here to stay (...or at least longer than we’d like). 'Plan for the worst and hope for the best' approach will ultimately win out.