Upturn Predicted in Commercial Real Estate
- Jul 21, 2011
A panel of experts analyzed the state of all the major sectors of Denver’s commercial real estate market and their conclusions were positive. It certainly looks like metro Denver is slated for a recovery with some sectors leading the way much more than others. In fact, Douglas Wulf, a senior vice president of Cassidy Turley Fuller Real Estate, was quoted by The Denver Business Journal as saying that this is the first time the area has been this close to a rebound.
After pulling apart and dissecting each sector, the conclusions were that the land submarket has seen some considerable increase in activity. With 12 active homebuilders in the Denver area, and only 4,500 new houses built this year, activity will most certainly up its game as more and more developers cater to Denver’s shrinking vacancy numbers. There are only 1,670 new apartment units coming online year which on top of increased rent rates and vacancy issues again foreshadow an upturn in the market.
The office submarket has felt its fair share of impact from the recession and the venues Denver is offering are aging spaces; in fact 65 percent of office buildings were built before 1986, a Colliers International manager said for DBJ. That same source pointed out the fact that there are few venues in the area that can provide more than 100,000 square feet of space. The pressure exerted on these buildings will create drastic increases in rent since the relief provided by new buildings will only come in two years’ time. There is a reasonable amount of absorption with a predicted 1.2 million square feet by the end of the year and the vacancy rate should stand at around 14.5 percent.
The retail submarket has also been lagging—but even though it has taken its hits, there are signs that Denver can still attract investors from both the high-end and national realms. However, those organizations are now looking closely to find the best amenities, rent rates and overall fit of their projects, as cities like Denver enter the same competition with places like Los Angeles and New York, Peter Pavlakis is quoted as saying.