Page 4 —
COLORADO REAL ESTATE JOURNAL
— April 6-April 19, 2016
Metro Denver
by Jill Jamieson-Nichols
The party may be winding
down for Denver’s industrial
market.
The vacancy rate for industrial
space increased for the first time
in six years in the last quarter
of 2015, and around 3.5 million
square feet of speculative indus-
trial space is being built – a mil-
lion sf more than was delivered
last year. “One-off” players are
developing much of that space,
while large, long-term industrial
developers are being more cau-
tious.
“We are flirting with being a
little bit overbuilt,” commented
CBRE First Vice President Paul
Kluck, who said it’s hard to
imagine rental rates and building
prices – which exceed the previ-
ous peak – continuing to escalate
as they have over the last several
years.
“We feel like we’re at the top
of – a little bit past the top in –
the industrial cycle,” said Kluck,
who along with CBRE First Vice
President Murray Platt, has col-
lected 40 years worth of data
on the Denver industrial market.
That information, coupled with
their experience through four
Denver real estate cycles, leads
them to believe the market could
go down through 2020 or 2021.
“How steep that is or how shal-
low that is we don’t know. It may
be very shallow,” said Platt, add-
ingDenver industrial has become
a tale of two markets. There is the
bulk distribution market, which
revolves around users 50,000 sf
and larger, and the more typi-
cal industrial
user, which
a v e r a g e s
31,000 sf.
The latter
already is suf-
fering from a
lack of supply,
and it’s only
going to get
worse, they
believe.
“The mar-
ket will expe-
rience a crisis
of supply,”
said Kluck.
Platt said
deve l ope r s
are able to
c o m m a n d
rental rates
needed
to
justify bulk
distribution product, but costs
generally do not justify buildings
for smaller tenants that make up
most of the industrial market.
“It’s the smaller tenant in this
market that is really struggling.
There aren’t a lot of options.
Nobody is building anything in
the 10,000- to 20,000-square-foot
range,” he said.
The lack of supply comes at a
time when tenants that weath-
ered the recession are looking to
expand, prices and rental rates
are higher than ever, and sup-
ply is dwindling. Some 200,000
to 300,000 sf of inventory has
disappeared because of redevel-
opment in the River North area
and throughout the city, accord-
Chart courtesy of CBRE Inc.
Paul Kluck
Murray Platt
by Jill Jamieson-Nichols
A local company that bought
a downtown parking lot not
quite three years ago recently
sold the property at nice return.
Greenwood Village-based
NexGen Properties sold the
6,250-square-foot property at
1440 Stout St. for $3.1 million,
or $496 per sf. The buyer is
affiliated with Dikeou Realty.
Denver-based Dikeou owns
neighboring property. Phone
calls to Dikeou were not
returned; a CoStar listing says
the site is proposed for an office
building.
Matthew Vandal of NexGen
Properties said NexGen pur-
chased the property for $1.78
million, or $284 per sf, in June
2013. “Obviously we liked the
stability of the parking lot cash
flow and thought it was an
opportune time to purchase an
infill lot like that.”
With regard to its reasons for
selling, “It was just a matter of
the offer being strong enough
to warrant that consideration,”
he said.
Other News
n
Independent Electrical
Contractors Rocky Moun-
tain
recently purchased a
26,000-square-foot building at
11429 Pearl St. in Northglenn.
The trade association paid $1.3
million for the property and
will spend an additional $2.6
million on construction and
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