Denver’s changing skyline will play a significant role in the 2013 Rocky Mountain Commercial Real Estate Expo on Thursday. With one of the busiest building seasons in years, and millions of square feet under construction, 2013 has proven to be the year of the crane.
And, according to new data released today by the University of Denver’s Franklin L. Burns School of Real Estate Management, Denver’s 2014 construction forecast looks just as promising.
“The 2013 Rocky Mountain Real Estate Expo will be an opportunity for leaders in the real estate, construction and finance industries to come together to discuss the state of the Denver and national commercial real estate market,” said Burns School Director Barbara Jackson, PhD. “The newest trends and research show that Denver is thriving, and 2014 is going to be an even stronger year.”
“Undoubtedly this construction activity – the second largest construction boom I’ve seen throughout my 34-year career – will have people talking at the annual expo and fall forecast,” said Phil Ruschmeyer, senior vice-president with Avison Young, and co-chair of the 2013 Expo.
Highlights of the research show:
- Denver is booming: With an estimated 10 million square feet (msf) currently under construction across all property types (including hotels, office towers, luxury residential developments, hospitals and retail development), 2014 looks just as promising.
- Multi-family developments are hot: As verified by ARA Denver, multi-family development leads construction activity. As of August there are 55 properties totaling 13,940 units under construction, which increases the total inventory by 4.7 percent.
- Projects to watch include: Broomfield’s 424-unit apartment complex at 120 Edgeview Drive, Denver’s 280-unit Alta City House at Union Station downtown and 1050 South Broadway’s 260-unit complex are all large construction sites to watch in the year ahead.
- Multi-family units are in high demand: The occupancy rate for multi-family housing in the second quarter of 2013 increased to approximately 96 percent, while rental rates jumped 3.4 percent since the first quarter of 2013.
- Retail is king: Retail construction represents 28 current projects, with 88 percent of the space already preleased.
- Preleasing reigns: Denver has a high average of preleased space compared to other areas of the country, with the lowest average in the past five years at 81 percent in 2011. This figure also includes newly finished office buildings and buildings expected to be completed by the end of 2013.
Many of the new cranes are also attributed to office construction, including a $16 million mixed-use Class A project in Denver’s LoDo neighborhood. “We’ve had tremendous interest for leasing the building,” said Jamie Gard, executive managing director at Newmark Grubb Knight Frank. “We have about 50,000 square feet of the building pre-leased and all the tenants are newcomers to LoDo.”
Other significant new projects include the 650,000sq ft, three-building Charles Schwab campus, which recently broke ground in the Southeast Suburban submarket. Nine new office buildings are also slated for completion by the end of the year, including the 275,000-square-foot Kaiser Permanente building and the Union Station mixed-use projects at One Union Station and 1601 Wewatta.
“Historically, Denver has a high average of preleased space compared to the rest of the country, with the lowest average in the past five years at 81 percent in 2011,” said Alec Wynne, principal and managing director of Avision Young. “This trend will continue as long as the financial markets slowly recover.”
The November 2013 Expo will also highlight many of the other strong economic indicators in Denver-the state of Denver’s economy, Denver high job growth rate and Denver’s relatively lower unemployment rate.
“Denver’s core submarkets have not only recovered from the Great Recession but are firmly in expansion mode,” said Kevin McCabe, executive vice president and regional managing director of Newmark Grubb Knight Frank. “Limited supply, increasing demand and near record high rental rates have opened a window for new development.”
The 2013 Rocky Mountain Real Estate Expo will feature several keynote speakers including, Howard Lutnick, chairman and chief executive officer of Cantor Fitzgerald and BGC Partners, Mark Rose, chairman and chief executive officer of Avision Young, Economist Rick Pederson, senior vice president of Newmark Grubb Knight Frank Global Corporate Services and Tom Clark, Metro Denver Economic Development Corporation’s chief executive officer and executive vice president of the Denver Metro Chamber of Commerce. The event is hosted by the Denver Metro Commercial Association of REALTORS® and the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver’s Daniels College of Business.