Yesterday I attended the NAIOP Mid Year Forecast Breakfast held at the Marriott City Center in Denver. With over 300 commercial real estate professionals in attendance, the overall sentiment was very upbeat and optimistic that the Denver commercial real estate market should see continued improvement across all sectors for the unforeseeable future. Below are a few highlights from the panelists.
Office - Doug Wulf, Cassidy Turley Colorado
1. Use imagination and innovation to create new or revitalize old projects.
2. The health of the Denver office market hinges on job growth. Denver currently ranks 8th in the US for job growth in part because of our diversified economy.
3. "Millennial's" have a voice in where companies locate. The current focus is on location and amenities which have showing to promote productivity. Companies will pay 10-30% more for an edgy and modern building.
4. The aging population in the US is leading to a proliferation of medical office properties.
Industrial - T.J. Smith, Colliers
5. The investor demand for industrial property is unprecedented. CAP rates in the low 6's for institutional grade and mid 8's for properties with deficiencies.
6. Quality inventory is very low, leasing concessions are down it is shifting to a landlords market.
7. Multiple spec developments are already underway however current lease rates do not fully support development costs, especially on projects under 100,000 SF.
Investment - Brad Lyons, CBRE
8. There is a wall of capital pursuing national investment deals which is putting continued downward pressure on CAP rates. As a result of the recent jump in interest rates, there has been a slight pullback in interest in non-core assets.
Land - Eric Roth, CBRE
9. The SFR land market is very strong with more builders entering the market instead of PE firms which were the norm in the recent past. Construction costs are up and access to trade labor is very tight.
10. Denver has a big renter pool which should be able to absorb all of the product coming online. Approaching an oversupply of projects.
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