Bitzer Real Estate Partners
1st Quarter 2010
The first quarter of 2010 showed signs of improvement in the Denver Industrial Market with an increase of both sales and leasing activity in most submarkets. This activity is slowly translating into signs of continued decreasing vacancy rates and increasing absorption.
Lease rates declined only slightly as rent abatement is common, but we feel the bottom is near as larger landlords breathe a sigh of relief as vacant space is absorbed. In many cases however, the active tenants in the market are out shopping for ammo to strike renewals with their existing landlords. These Tenants are well aware of the opportunities that exist to strike a great deal or move to higher quality space.
The main driver for the sales market is that banks and lending institutions are starting to open the coffers and deploy some of their dry powder. Lending parameters are still stringent but those that do get through the gauntlet are enjoying low interest rates and reasonable loan-to-value requirements. Surprisingly, the deluges of distressed industrial assets have yet to come to the market. This is largely based on the aforementioned improvement in the capital markets and the fact that banks really cannot afford to take these properties back and are pursuing workouts with their borrowers.
Also worth mentioning is the improvement that REIT stocks have made in 2010. Their underlying strong fundamentals and balance sheets, and the confidence that Wall Street is displaying in the sector, is yet another indicator that 2010 is heading in a positive direction.
For the full Market Report including commentary on the Denver office market, please visit: http://www.bitzerrep.com/pdf/BitzerNewsletter2010Q1.pdf
