2012 Global Market report - NAI Global

Colorado Springs, Colorado
Denver, Colorado
Contact
NAI Highland
Commercial Group
+1 719 577 0044
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
799,976
874,368
397,332
$65,958
$51,003
The local economy and commercial real estate market has
largely mirrored the national economy. Colorado Springs has
experienced the worst commercial market in 19 years. Our
problems are reflective of the national economy as we have
lost primary employment jobs in the last three years and
capital markets are still stagnant. Our current unemployment
rate is 9.6% above the national average. A more precipitous
decline has been avoided because of our strong military
presence.
Overall, the office market “feels” better than 2009 and
2010. With no new construction, vacancy rates continue to
decline with the CBD as the strongest submarket. Metro
vacancy rates are 14.4% while Class A remains the weakest
at 19.9%. Rental rates remain flat. No new spec construction
is planned.
The industrial market has outpaced all other sectors
with 2.7 million SF of leasing activity since 2009. Vacancy
rate has declined to 10.1% and rates are flat. Activity in
warehouse/distribution space is the strongest with organic
growth driving the market. No spec projects are planned.
Investment real estate transactions remain scarce and few
investment grade options have been available. Of the $252
million in improved property sales thus far in 2011, 63% is
attributed to outside investors, the remaining 37% have
been Colorado investors; 12% office, 8% industrial, 48%
retail and 24% multifamily. Keep in mind that a large portion
of overall sales activity included “user” transactions.
Land values are stable but flat. New single family lot
development should begin in 2012 after a four year hiatus.
The land market will slowly improve.
The projection for Colorado Springs is for the economy to
continue to slowly improve during the balance of 2011 into
the 2012 time period. Retail vacancy rates are up slightly
and rates down slightly, but the activity has picked up
in 2011 versus 2010. Leasing should catch up with the
activity. Quality retail locations are leasing well and the dated
properties are suffering. Creative re-use will be required for
the older locations. Barring national calamity, we expect
2012 to be better.
Contact
NAI Shames Makovsky
+1 303 534 5005
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
2,847,582
3,009,276
1,586,705
$85,192
$67,358
Located on the western edge of the Great Plains, Denver is
the largest city in the Rocky Mountain region. Its diverse
industry base and highly educated workforce place Denver
in an excellent position for business growth and economic
development. Denver’s high-tech, health care and energy
sectors continue to lead the region’s economic recovery,
which experts predict will unroll in a series of gains and
setbacks until business and consumer confidence returns
to a sustainable level.
As 2012 begins, Metro Denver is slowly continuing its
recovery. Vacancy rates dropped by more than 7.5% in both
the office and retail markets to 14.0% and 7.3%, respectively.
Positive absorption rates reflect the drop in vacancy with
1,874,287 SF absorbed in the office market and 1,467,212
SF retail product absorbed.
Denver’s industrial market is slightly behind with a slight rise
in vacancy to 6.1% and a negative absorption of -335,752
SF. Lease Rates have remained low across the board and
are expected to show little to no change until employment
begins to grow and leasing activity increases. During 2011,
overall market office lease rates declined 1.0% to
$19.73/SF, industrial rates declined 2.8% to $4.47 and
retail rates also declined 2.8% to $14.46. Several specific
submarkets including the Lodo area surrounding the
redevelopment of Union Station and the US-36 Boulder
corridor have enjoyed increased lease rates.
Total office and industrial building sales activity in 2011 was
up compared to 2010. In the first six months of 2011, the
market saw 33 office sales transactions with a total volume
of $642,357,600 and 61 industrial sales transactions with
a total volume of $167,325,177. The price per square foot
averaged $175.42 for office and $53.67 for industrial.
However, total retail center sales activity in 2011 was down
compared to 2010. In 2011, the market saw 26 retail sales
transactions with a total volume of $112,517,443. The price
per square foot averaged $97.07. Additionally, several large
new construction projects were delivered to the market in
2011 including the 1,000,000 SF St. Anthony Hospital in
Lakewood and a new 400,000 SF facility for IKEA in
Centennial.
Total Population
Median Age
36
Total Population
Median Age
38
Colorado Springs At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
$
$
$
$
$
$
$
N/A
13.50
8.50
N/A
12.00
8.00
3.25
4.00
6.25
12.25
8.00
18.00
15.00
$
$
$
$
$
$
$
$
$
$
$
N/A
15.50
11.50
N/A
14.50
11.50
4.50
5.50
8.50
25.00
28.00
30.00
29.00
$
$
$
$
$
$
$
$
$
$
$
N/A
14.75
11.25
N/A
13.50
10.45
3.75
4.75
7.25
17.00
15.00
23.00
20.00
N/A
10.00%
10.20%
N/A
19.90%
14.40%
10.00%
14.00%
14.00%
4.10%
11.40%
7.30%
13.40%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
$
653,000.00
175,000.00
130,000.00
87,000.00
130,000.00
15,000.00
$
$
$
$
$
$
1,524,600.00
350,000.00
218,000.00
218,000.00
871,200.00
50,000.00
Denver At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
Premium (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
$
$
31.00
17.50
12.00
21.88
15.50
9.00
$ 35.93
$ 40.50
$ 38.97
$ 25.01
$ 31.39
$ 26.50
$ 33.39
$ 27.98
$ 20.98
$ 22.32
$ 21.98
$ 16.88
28.00%
12.00%
14.00%
10.00%
12.00%
19.00%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
$
1.70
2.50
1.70
$ 14.85
$ 12.00
$ 17.00
$
$
$
4.31
4.87
4.47
7.00%
3.00%
6.00%
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
10.86
5.00
8.00
11.00
$ 39.74
$ 40.00
$ 38.00
$ 28.00
$ 21.98
$ 14.19
$ 17.94
$ 19.18
2.00%
10.00%
7.00%
15.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
$ 353,107.34 $16,332,752.61
Land in Office Parks
Land in Industrial Parks
$
$
116,276.07
43,551.02
$
$
740,520.21
172,061.70
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
1,176.47
23,076.92
10,856.69
$16,332,752.61
$15,840,329.48
$13,995,881.26
2012 Global Market Report n www.naiglobal.com 87