CREJ - Property Management Quarterly - April 2017
It can be helpful to have a quick snapshot of how a specific property market is performing. In-depth articles about each market are included in our other quarterlies, Office Properties Quarterly, Retail Properties Quarterly and Multifamily Properties Quarterly. However, I thought it might be useful to get a brief overview on market performance through these first few months of 2017. •Office. Following a strong 2016, this year is predicted to offer more of the same as companies expand and hiring remains stable. While the end of 2016 and the beginning of 2017 were relatively quiet, the Denver office market has enjoyed a seven-year expansion run, resulting in a total of 8.4 million square feet of absorption and a 594-basis point plunge in vacancy, according to a report from Newmark Grubb Knight Frank. This year will see healthy net absorption that will keep Denver office vacancy near historical lows even as completions reach a cyclical high, according to Marcus & Millichap. Colorado will continue to see its national reputation change from a second-tier to first-tier market in the eyes of national and international investors. In fact, Denver advanced to the No. 8 spot on a list of the best metros for investment on this year’s CBRE Americas Investor Intentions Survey. •Multifamily. As homeownership rates continue to fall, the apartment market remains in demand. This demand is caused by millennials and baby boomers deciding for lifestyle choices to be renters rather than owners as well as a limited supply of affordable for-sale homes for first-time buyers. Strong job growth will encourage inmigration, which will help offset some of the record-number of units completed this year and vacancy is expected to remain below early-2000 levels, according to a report from Marcus & Millichap. However, the high number of deliveries is causing some growing calls for caution among those at last month’s CREJ multifamily conference. •Retail. The adage “retail follows rooftops” is proving an accurate statement, as retail activity is busiest in and surrounding high-density population areas. Repurposing of larger, bigbox vacant spaces will require creativity as consumers demand experiential retail over many traditional outlets. This year, builders will scale back completions for a second consecutive year. In 2016, 745,000 sf of retail space was brought on line. This year’s deliveries will be limited to mostly preleased centers or single-tenant buildings, according to Marcus & Millichap. As a result, tenant demand will outweigh supply additions, pushing vacancy below 5 percent and raising rental rates. Last year, rates went up 3.6 percent, increasing the average rental rate to $17.19 per sf, according to the report. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104