While it is nice when we fill up our gas tanks to see how low fuel prices have fallen in recent months, falling energy prices are a source of uncertainty for both the Colorado and U.S. economies. While Colorado is much more economically diversified than it's been in the past, the oil and gas sector is a critical component to our economy and close attention needs to be paid to the economic impact of prolonged low energy prices.
A strong commercial real estate market is good in so many ways, however it also creates a number of challenges. Quality office and industrial space in the Denver metro area is increasingly hard to locate, lease rates and asking sales prices are increasing, and lease incentives from landlords are dwindling.
As a result, if your lease is expiring in the next 12 months or you are considering relocating your business, it is critical to begin the search for new space as soon as possible to ensure you have options and to maintain leverage with your current landlord if you decide to renew.
On the flip side, now is a terrific time to be a seller of commercial real estate! The market is full of local and national investors clamoring to add Denver properties to their portfolio. Interest rates remain historically low and with rate increases on the horizon, investors are actively seeking both stable and value-add opportunities.
New construction is occurring throughout the city with many of the most significant projects underway surrounding the core of Downtown Denver including sites at the Union Station redevelopment, just north of downtown Denver in the RiNo district, and in the Highlands. There are also many developments underway in Cherry Creek North and the DTC. Many of these projects are mixed use combining office, retail and apartments.
Construction defect laws have significantly limited developers willingness to build condominium projects which is restricting supply and further fueling the residential market for lower priced product. These laws will most likely oversupply the multi-family market with apartments earmarked for condo-conversion in the future. With a repeal in the works, that could still take 12-18 months.
A strong community is the foundation of a strong economy. To further support our community, Sherpa Commercial is initiating a new Referral Program! Sherpa will donate 5% of fees earned from qualified referrals. Refer us a client who closes a transaction by the end of the 2nd Quarter 2015 and we will make a contribution to one of the following charities: The Wounded Warrior Project, The Denver Rescue Mission, or The Special Olympics.
Please contact me if you would like to learn more about our referral program, Sherpa's CRE services, or how I can assist with your individual commercial real estate needs.
Braiden J. Welsh, MSRECM
Sherpa Commercial Real Estate, Inc. | President
303.949.6443 | Brady@creSherpa.com | www.creSherpa.com