Colorado Springs

Colorado Springs runs on a tenant base most Front Range markets do not have: five active military installations feeding steady demand into housing, retail, and service commercial property, which changes what a replacement candidate's stability actually depends on.

Defense And Tourism Drive This Market

Fort Carson, Peterson Space Force Base, Schriever Space Force Base, the Air Force Academy, and Cheyenne Mountain Space Force Station together support a large share of the region's employment and housing demand, giving Colorado Springs a tenant base that behaves differently from a market driven by private-sector office leasing. Tourism around Garden of the Gods, Pikes Peak, and the Broadmoor area adds a second demand driver focused on hospitality-adjacent retail and service commercial space.

Sellers here are typically holding apartments serving military and civilian workforce demand, retail centers along Powers Boulevard or Academy Boulevard, medical office tied to the region's growing healthcare and defense-contractor employment base, or small industrial space supporting aerospace and defense suppliers.

Why Defense-Tenant Demand Behaves Differently

Military and defense-contractor demand tends to be less cyclical than typical private-sector leasing, which can make Colorado Springs property attractive as a stability play, but it also means a replacement candidate's underwriting should account for base-adjacent demand specifically rather than generic population growth. A property near Fort Carson or Peterson serves a different renter and tenant profile than one anchored to downtown or Old Colorado City retail.

Growth has also pushed development toward Powers Boulevard and the Briargate area on the city's north and east sides, and a replacement candidate in these newer corridors should be tested against actual leasing activity rather than projected growth alone.

The University of Colorado's Colorado Springs campus and a growing base of aerospace and cybersecurity contractors add a third layer of demand that does not map neatly onto either the military or tourism categories. Office and flex space serving these tenants tends to behave more like a standard suburban office market, with lease terms and financing patterns closer to what a Denver metro lender would expect.

Downtown revitalization efforts have also brought new mixed-use and residential development into the urban core, adding a fourth category that trades more like an infill investment than like the base-adjacent or tourism-adjacent property described above. A seller should treat a downtown candidate on its own diligence track rather than folding it into either of the region's larger demand stories.

Pueblo, roughly forty miles south, offers a useful pricing reference for sellers weighing whether Colorado Springs basis has grown too high relative to rent, since the two markets share some tenant categories but trade at noticeably different price points.

Sequencing An Exchange Around Two Demand Drivers

A seller should decide early whether the replacement plan favors defense-adjacent stability, tourism-adjacent retail, or growth-corridor upside, since each carries different lender expectations and different diligence needs. A lender preflight conversation matters here, particularly for retail near tourism corridors, where seasonal revenue patterns can affect underwriting.

Backup candidates should reflect more than one of these categories, since a defense-adjacent property and a tourism-adjacent property can each stall for entirely different reasons.

Where Colorado Springs Sellers Typically Look Next

Given the market's dual demand drivers and generally lower basis compared with Denver metro, sellers weigh a range of paths before settling on a replacement.

• Staying in defense-adjacent multifamily near Fort Carson or Peterson for renter stability
• Trading into retail or hospitality-adjacent commercial space near the tourism corridor
• Moving north toward Castle Rock or Denver for a different tenant base and pricing
• Comparing a Pueblo acquisition for even lower basis and a different growth profile
• Placing proceeds into a DST or NNN sponsor program to remove active property management

Building A Complete Record Before Closing

Pueblo, Castle Rock, Denver, Centennial, and Aurora commonly appear as comparison markets for a Colorado Springs exchange, chosen for pricing differences or a different demand driver rather than proximity alone. The file should note why each was reviewed and whether it moved beyond a backup reference.

After closing, the record should hold together for the seller's CPA preparing Form 8824: identification letters, qualified intermediary correspondence, lender documentation tied to the replacement's demand category, and notes explaining why the final property, defense-adjacent, tourism-adjacent, or growth-corridor, matched the seller's goals.

Common 1031 Exchange Questions

How does military presence affect a Colorado Springs exchange?

Fort Carson and the region's other installations support a large, relatively stable tenant and renter base. A replacement candidate near these installations should be evaluated on that specific demand driver rather than on general population growth assumptions.

Do Colorado Springs sellers have to replace within the city?

No. Like-kind treatment covers qualifying real property anywhere in the United States. Many sellers compare Pueblo, Castle Rock, or Denver metro property, or a DST structure, against local Colorado Springs options.

Why does tourism matter for retail property in Colorado Springs?

Retail and hospitality-adjacent commercial space near Garden of the Gods and the Broadmoor area can carry seasonal revenue patterns that affect underwriting differently than a standard neighborhood retail center.

What should be ready before a Colorado Springs relinquished property closes?

A qualified intermediary agreement, a lender contact suited to the target demand category, and backup candidates spanning more than one of the market's drivers, since defense-adjacent and tourism-adjacent property carry different risks.

Is tax advice included in this Colorado Springs exchange coordination?

No. This page covers market conditions, timing, and coordination. Tax treatment, boot exposure, and financing decisions should be confirmed with the seller's own CPA, attorney, and lender.

Ready to organize the exchange file?