Denver Real Estate Blog

Denver Commercial Real Estate Market – Hot

Denver’s commercial real estate market is ranked No. 8 of the top 15 cities tracked in the Emerging Trends report released this past week. Denver was the only noncoastal city in the top teir, according to the report by the Urban Land Institute and Price Waterhouse-Coopers.

Denver has retooled its downtown area to create an “urban burb” , a hip and exciting urban core in the midst of a sprawling surburban area, connected to downtown via light rail transit”, as noted in the report. The report said that while the lack of barrier to entry and abundant land have encouraged over the building and hurt the housing market, the commercial real estate market has been hot for several years.

Mid-Year Commercial Market 2007 Summary

Metro Denver’s office market strengthened in the second quarter of 2007, according to the latest data from CoStar Realty Information, Inc. The second quarter direct vacancy rate decreased to 11.9% from 12.5% in the first quarter of 2007. Compared to a year ago, the direct vacancy is a full percentage point lower.

The total vacancy rate, which includes sublet space, also improved from first to second quarter and stands below second quarter 2006. The average lease rate continued its climb in the second quarter of 2007, rising from $19.19 per square foot in the first quarter of 2007 to $19.60 per square foot in the second quarter. The second quarter average lease rate is the highest quarterly rate since third quarter 2002.

Solid market fundamentals support significant construction activity. For the second consecutive quarter, more than two million square feet of new office space has been under construction. Although the square footage of space currently under construction slipped slightly from first to second quarter, the number of buildings soon to be added to the marketplace increased from 76 in the January-March period to 88 in the April-June period. About one-third of the 2.2 million square feet of office space under construction will be added in the City and County of Denver. Arapahoe County (28%) and Douglas County (26.6%) followed closely behind Denver.

Metro Denver’s central location on the 105th meridian, at the exact midpoint between Tokyo and Frankfurt, makes it a great location for conducting international business. This unique location provides access by air and satellite communications to Europe, the Far East, and Latin and South America.

Metro Denver is also strategically located between Canada and Mexico to capitalize on the North American Free Trade Agreement (NAFTA) opportunities. Colorado exports of manufactured goods, minerals and agriculture products reached nearly $8 billion in 2006, an increase of 17.3 percent over 2005.

Semiconductors, the state’s top export category, grew 69.9 percent from $763 million in 2005, to $1.3 billion. Other top export commodities included telecommunications equipment, fresh or chilled beef, and medical and scientific equipment.

International Trade Summary:

Colorado Exports – 2006: $7.96 billion in goods
Largest Trading Partners – 2006: Canada ($1.85 billion), Mexico ($1.02 billion), China ($800 million), Taiwan ($707 million), Japan ($400 million)
Top Exported Products – 2006: Semiconductors ($1.3 billion), Computers and Peripherals ($937 million), Office Machine Components ($657 million)
Foreign trade offices are maintained by both the Colorado Office of Economic Development and International Trade (Tokyo and Guadalajara) and the Denver Office of Economic Development (London).

A World Trade Center was established in Denver in 1989. In addition to its educational services, the World Trade Center Denver offers a state-of-the-art computer system that links Colorado-based companies with businesses worldwide, helping to connect buyers and sellers.

Metro Denver Foreign Trade Zones allow manufacturers using imported parts and materials in their products to expedite customs and reduce or eliminate some fees and tariffs. Denver’s General Purpose zone has two locations: near the Stapleton redevelopment area and at WorldPort by Denver International Airport.

Denver’s City Council has begun the process to expand its current 13-acre Foreign Trade Zone through the addition of a 500-acre industrial park near Windsor in Northern Colorado. In addition, manufacturers can establish Foreign Trade Subzones at their place of business.

Metro Denver is home to 32 foreign consulates. Six of these consular missions are staffed by career diplomats from the countries of Guatemala, Japan, Mexico, Peru, Canada and the United Kingdom. The consulates provide information and service regarding international trade promotion, tourism, and cultural exchange.