Denver, affectionately known as the ”Mile High City,” is renowned for its commitment to business, its access to a broad and highly educated workforce and its fine quality of life. In the beginning, Denver’s economy was primarily based on agriculture and mining; however, in the past three to four decades the local economy has been transformed into a vibrant and diversified place for national and international companies to conduct business. Its central location in the United States provides business leaders easy access to their operations from coast to coast and around the world.
Denver prides itself as a leader in the energy, aerospace, technology, financial, healthcare and telecommunications industries while it is continuing to diversify its business base each and every year. The Denver region is also experiencing increased interest from national and international companies because of its strong commitment to enhancing its public transit, which is evidenced by the ongoing build-out of FasTracks, one of the country’s top transit-oriented development systems.
The Denver metro area office market contains approximately 185 million square feet (msf) of office space across all building classes. The available office inventory varies by metro location, ranging from large multi-tenant office buildings in the central business district to small-to-mid-sized office structures in many of the suburban areas. Denver’s largest users of office space include industries such as energy and mining, aerospace, technology, finance, healthcare and telecommunications. Numerous Fortune 500 companies, such as Newmont Mining, Lockheed Martin, Arrow Electronics, Western Union, DaVita and Dish Network, maintain a headquarters office or large presence in the Denver metro area.
With nearly 189 msf of retail space available in the metro area, Denver can hold its own when it comes to shopping- regardless of what shoppers are trying to find. Denver metro area retail rental rates hit an all-time high in mid-2008 but they took a significant tumble during the last recession. Retail rental rates bottomed out in the second quarter of 2011, but are rebounding and continuing to trend in a positive direction. Denver is home to numerous national retail and discount stores, including Nordstrom and Walmart; however, much of the retail make-up comprises small national retail stores and local boutiques.
After emerging through the recent economic downturn, Denver’s industrial market is well and truly back on its feet. As options for large class A industrial users diminish, build-to-suit projects are popping up at levels last seen in 2006 and 2007. Several new projects are in progress throughout the region. Spanning more than 282 msf of developed space, the industrial market finally looks like it is back to its pre-recession form. Metropolitan Denver’s unemployment rate has begun shifting downward. Most of the industrial growth is being generated by food and beverage companies and growing oil and gas companies. Given current growth conditions, the only mitigant to rapidly increasing rental rates has been the rising cost of construction. The expectation is that rental rates will begin to increase in 2013 and 2014. At that time, it can be expected that developers will begin to build speculative projects again. The oil and gas industry is expected to drive much of the activity, along with the food and beverage sector.
As with other verticals within the commercial real estate realm in Denver, mass transit developments continue to enhance real estate values and foster growth throughout the metropolitan area. Across the region, office demand should remain strong as small business job growth in Colorado continues to flourish and the region continues to attract corporate headquarters. A plethora of available office inventory, including a significant number of distressed properties, will keep appreciation in check for several more quarters. Heightened competition has many owners in a holding pattern, waiting for operations and valuations to improve, reining in transaction activity. Owners in select pockets of the region, such as LoDo, the high-tech Highway 36 corridor toward Boulder, or those located near transit stations, will be the first to benefit from improved operations.
Avison Young’s Denver office opened in December 2012 and is rapidly expanding through the addition of esteemed and positioned professionals and its continued efforts to forge strong bonds with Avison Young’s offices throughout the U.S. and Canada.
The Denver office is well suited for a wide variety of commercial real estate opportunities, including energy-related partnerships with the company’s Alberta operations (Calgary and Edmonton), telecommunications, financial services, technology, biomedicine, and U.S.-based companies with international offices. Denver-based brokers also provide a large, best-in-class platform that assist the various sectors. Services include project management; corporate services, capital markets, research and property management.