If initial numbers are to be believed, Denver is one of three cities in the country to be bucking the sluggish commercial real estate market trend. Denver, Minneapolis and Dallas all posted positive numbers this quarter, up almost 50 percent higher than average.
Minneapolis saw the largest gains with 127 percent dollar increase in corporate property sales, Dallas had 108 percent, and our own Denver, 89 percent. That’s compared to a national average of 47 percent dollar volume investment in commercial real estate overall.
It seems investors are slowly beginning to embrace risk once more. The real estate market is tried and true, and certainly capable of yielding more than capital or bond markets. Many money men are remembering this and coming back to good old bricks and mortar.
Some of the notable purchases in Denver corporate housing and commercial real estate have been significant. For example, Invesco Ltd. of Atlanta purchased a 22-story Denver tower for $213 million in February. Q Viva Marc Anthony This was the highest price paid for an office building in our city’s history.
KBS Real Estate Investment Trust II purchased Granite Tower, a 31-story downtown property, in December 2010 for $149 million, the biggest office transaction in the city last year. The building is now almost completely leased.
The improved fortunes of the city make it attractive to investors. The increase in job potential and population makes Denver a worthwhile risk. With the likelihood of more employers coming to the city, and a sunnier outlook overall, the Mile High City looks to be over the worst of the economic woes for now.
While we certainly wouldn’t say the downturn is over, the green shoots of recovery have been growing in the Denver corporate housing market as well as the commercial real estate sector. Purchases are up, demand is growing, and rents have increased slightly over last year.
The population is also increasing, climbing 8.2 percent from 2000 to 2010, according to the U.S. Census Bureau. Word of Denver’s ability to weather the storm has obviously gotten out and employers as well as new residents are gradually appearing.
In the bigger picture, Wall Street has sold more property bonds this year than they did last year. Last year saw a surge of almost 45 percent in the sale of property-related bonds, almost $119 billion worth. With the uptake of corporate property and commercial real estate, this amount is believed to increase again over this year.
The Denver corporate rentals market is also going to improve through 2012 as more employers look to up and coming cities to base their operations. They want stability, infrastructure and growth, all things that Denver offers in spades.
While there is still some way to go, the Denver property market is making its way slowly into the light. We are well placed to attract new investment, new employers, new corporate housing developments and new residents in equal measure over the coming years.