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. Since the last recession, Denver has diversified while growing in the national spotlight. Denver is rising in popularity as an affordable, vibrant city to live and work, with amenities that appeal to many generations. Population has grown substantially, particularly from the in-migration of millennials, who are drawn to the employment opportunities and quality of life that Denver provides. Population in Metro Denver now totals over 3.0 million.
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 skilled workforce, affordable business operating costs, and favorable tax policies. The Denver Metro Region has taken initiative in planning for future infrastructure needs by building a new international airport, designing a multimodal transportation infrastructure, and smartly planning residential and commercial development to accommodate for growing population areas.
The Denver metro area office market contains approximately 138 million square feet (msf) of office space across all building classes. The Denver office market has experienced years of sustained growth, with the current development cycle representing the most construction to occur dating back to the mid-1980s. Denver’s largest users of office space include industries such as energy, aerospace, technology, finance, healthcare and telecommunications. Ten Fortune 500 companies, such as Lockheed Martin, Arrow Electronics, Western Union, DaVita and Dish Network, maintain a headquarters office or large presence in the Denver metro area.
With nearly 198 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’s population boom is driving demand for retail product. Vacancy in retail space continues to trend downward, particularly in walkable areas that support the live, work, and play lifestyle. In addition, grocery-anchored developments and other need-based retail establishments will continue to see demand to support Denver’s growing population.
Denver’s industrial market, which is comprised of nearly 240 msf of flex and distribution/warehouse inventory, continues to grow at a fast pace thanks to the city’s favorable economic climate and recent population boom. Denver industrial asking rates have increased substantially dating back to 2012 due to demand brought on by the marijuana industry and the surge of interest in the area. High demand for space has led to a building boom for Denver’s industrial market with an increased amount of preleasing in proposed/under construction buildings. Due to its central location and superior logistical routes, the Denver market is driven mainly by warehouse and distribution properties. Online retail growth and Denver’s population boom will further boost warehouse and distribution properties in Denver in the coming years.
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. Denver has moved from a second-tier market to a lower first tier market, which is attracting additional investors to the area. The city has benefitted from outside capital, particularly from coastal investors looking to diversify their portfolios and reduce risks. Cap rates continue to compress, particularly in Denver’s downtown area, which has led to the highest pricing ever. The frantic price escalations witnessed in the past few years will likely abate going forward with cap rate compression flattening out to a sustainable pace. Denver’s healthy economy will likely lead to continued strong investment interest.
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.