Commercial Real Estate Update January-February, 2011 The Number One Question Clients Ask As a third party expert for our clients, the information we contribute assists in our clients success. As the market continues to change and evolve, commercial brokers are an excellent source of information. In the past three months, the most asked question has been; “Have we hit bottom in the commercial real estate market?”. Tenants and landlords alike are very interested in finding the answer because the shifts in the metrics (i.e.
vacancy rates , absorption rates, sublease inventory, master lease inventory, etc), all lead to the golden key of “timing the market”. The market data that was published in late 2010 had us believe that the commercial market was nearing bottom or had reached bottom. Unfortunately, the incredibly steep and deep valley that we have entered can not be measured in depth until we start the climb on the other side. Only then can we define the actual bottom of our market.
Have we hit bottom in the commercial real estate market?
Tenants are holding on anticipating that the market may give them more time and potentially more savings in their quest for rock bottom lease rates and incentives. Landlords have been scraping along trying to survive the market and in a few submarkets are claiming that there is a beginning to a recovery on the horizon. The information we have obtained spells it out very clearly; The market is starting a very slow and measured recovery. A few submarkets are feeling it more than others but the answer is the same; We have hit bottom. Chris C. Jensen
Office Market Experiences Moderate Absorption in 4th Quarter There were improvements in the fourth quarter to the Metro Denver area office market.
Chris C. Jensen Data was obtained from multiple sources including Xceligent, Cushman Wakefield Research, Costar, Loopnet, and Newmark Knight Frank Research.
We provide: • Lease and Market Reviews • Tenant Representation • Consulting Services
Enough positive absorption had taken place to say with confidence that a recovery of some type has begun. The net positive absorption of approximately 850,000 plus square feet reached its highest level since 2007. Demand has somewhat resurfaced and continues its progress slowly but surely. The year finished with a 17.5%
vacancy rate, the lowest level in since 2008. Most of this demand was brought on by small to medium size users and there were several large deals that helped push overall vacancy down but in general this recovery will most likely be the result of small to medium sized companies on the move. It could be said that the biggest achievement of fourth quarter 2010 was the return of demand. There were many leases signed and secured with the majority of the deals being less than 20,000 square feet. Chip McReynolds
COVERING THE US-36 CORRIDOR, FOOTHILLS, I-25 CORRIDOR, I-70 CORRIDOR, NORTHERN COLORADO, DENVER METRO, AND YOUR LOCATION.
The Metro Denver Apartment Market Settles The Metro Denver multi-housing market continued its upswing throughout fourth quarter 2010. Vacancy rates on stabilized properties ticked down from the previous quarter and ended up at 5.40%. Absorption continued upward in 2010 and more so in the fourth quarter of the year. There were 972 net positively absorbed units for the fourth quarter; for 2010 the total absorbed units was 6,379, this figure is stronger than any other
year in the past 10 years. As this trend continues, the activity for the first quarter in 2011 should surpass the prior quarter. Renewed confidence seemed to lead a rise in multi unit housing sales throughout 2010. By the end of the year, there were a total of 36 sold properties that exceeded 50 units each, totaling 8,008 units. The collective price of all properties sold exceeded $610 million, in comparison 2009 showed a total of $292 million. According to a recent report by the Apartment Association of Metro Denver and the Colorado Division of Housing, apartment vacancy
rates fell 28 percent year over year from fourth quarter 2009’s of 7.7 percent. One overlying factor causing this drop in vacancy is that the number of new apartment units added to the market is at a 10 year low. Vacancy rates for the various surveyed counties are as follows; Adams 5.7%, Arapahoe 6.6%, Boulder / Broomfield 3.6% Denver 5.2%, Douglas 5.2% and Jefferson 4.5%. Fourth quarter medium rents were up from 2009’s fourth quarter varying from market to market. Chip McReynolds
Oppedahl Patent Law Firm We provide: • Landlord Representation • Leasing Services • Property Management
JP Morgan Chase Renews Vista Commercial Advisors recently completed a 10,537sqft lease renewal. As the market fluctuated at the end of 2010, retaining tenants became a priority for landlords. Vista Commercial Advisors assisted
in the lease renewal negotiations between RQL Investments and JP Morgan Chase for their renewal at 4704 Harlan in Denver. The highway exposure of the Chase Building at Harlan and I-70 and the ease of access for Chase customers were a few major contributing factors to the tenants desire to stay in the building. Chris C. Jensen
Law Firm chooses new central location close to Denver. The relocation and expansion in to 2,900sqft at 12000 Pecos Street was facilitated by Vista Commercial Advisors during 1st Quarter 2011. Due to the
overwhelming demand for patent attorneys, the new location allows for additional clients. The central location provides ease of access for the entire Denver Metro and Northern Colorado business communities. Chip McReynolds
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