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    Denver Commercial Retail Sector – Strong as Ever [with other sectors following suite]

    Despite continual news on the breakdown of the retail sector in the commercial real estate space, Denver proves to be an outlier of strong growth. According to CBRE’s research team, asking rates of almost $20 dollars per square foot hit a record high last year. In terms of big box stores, currently leading the reputation of ‘death of the retail industry’, Denver has about 25% percent fewer of them then was seen in the early 2000’s, despite massive population growths (+80,000 people per year), creating a healthy competition in regard to the market of supply and demand. Unlike in many areas of the country with growing vacancies in the retail space, Denver spaces are warranting a much higher degree of interest and leasing rates. With more than 700,000 square feet of new and existing space being leased last year and over 1.3 million square feet of new space put on the market – Denver held its ground with only a 7% vacancy rate (national average being around 10%).

    In terms of real estate being a large indicator of the reflection of an economy as a whole, Denver’s strong position in this sector proves a result of our miniscule unemployment rate, strong job growths, and increasing population growth of young and educated millennials. Denver is an overall gold mine for talent acquisition and business growth alike.

    Denver’s metro area office area and industrial also hit records in 2018, with square footage prices hitting an all-time high of $28 per square foot in 2018 and 3 million square feet of spaced being leased last year. These robust numbers speak for themselves when it comes to proving a strong sentiment in investor’s confidence in the Denver market as a whole, with office and industrial being a huge percent of our overall economy, and on a diversified level.

    On a localized level, of the $3 billion dollars put forth for office building purchases in 2018 in the Denver metro area, more than half of those were int the downtown area. With that said, as prices continue to increase in Denver’s core neighborhoods of Lodo and Rino, investors are expected to start looking into investing in the proximal Uptown neighborhood in 2019. Their goal here will be to buy low, invest + upgrade, and sell high several years down the road.

    Other thoughts on 2019 include more speculative construction (although we are seeing a slowdown) and a potential lower leasing rates as the markets begin to cool a bit. As far as the 4.2 million square feet of total commercial space under construction today, 3.5 million has yet to have tenant claims.

    Other thoughts on 2019 include more speculative construction (although we are seeing a slowdown) and a potential lower leasing rates as the markets begin to cool a bit. As far as the 4.2 million square feet of total commercial space under construction today, 3.5 million has yet to have tenant claims.

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