Denver Market's Looking Good for 2001

DENVER-The commercial real estate market here should remain as strong or stronger in the coming year, according to executives in the Denver office of Cushman & Wakefield Inc. “The bottom line is that our market is strong,” Sherman Miller, Cushman & Wakefield’s senior managing director of the Denver office, tells GlobeSt.com. “Overall, I expect it to stay strong. Continued growth in our metro economy should be benefiting the future of the commercial real estate markets.”

Tim Richey, an investment specialist, who has sold more than 16 million sf of buildings for more than $1.3 billion, says he often is asked if Denver’s office market is at its peak.He breaks office markets into four cycles: expansion, oversupply, recovery and bottoming.

Denver, along with Frankfurt, Germany, Paris, New York City, Boston and Washington, DC are in various stages of market expansion, says Richey. Amsterdam is about to peak and San Francisco has peaked, he contends. North Virginia, Madrid, London, Atlanta and Phoenix are suffering from an oversupply, he believes. Meanwhile, he says Warsaw, Shanghai, Bangkok and Los Angeles, all have bottomed while Tokyo, Seoul, Singapore and Hong Kong are recovering from downturns.

Overall, office markets across the country are in good shape, Richey says. “We have the lowest vacancy rates in history,” he says. “CBD performance is off the charts, and will continue to tighten. Suburban vacancy rates are healthy, but essentially flat at 10.3%.”He said the correction in the NASDAQ has caused owners to increase credit requirements from owners. “I have never seen so much scrutiny on who the tenants are as I have in the last six months,” Richey tells GlobeSt.com.

Denver is much like the national market, he says. Apartments are in strong demand because investors don’t have to spend a lot of money on tenant improvements or pay brokerage fees as they do with multi-tenant office buildings, says Richey.

He expects several Denver CBD office buildings to trade hands in 2001 at steadily increasing record prices. Also commanding high selling prices will be large industrial properties, which are in short supply. “The hottest properties will be grocery-anchored retail centers, which will command the highest profit for developers,” Richey says.