Denver's Great Market... With Caveats
Denvers CRE market is so hot, its hard to imagine anyone would have concerns. But some of our panelists at our first annual Denver State of the Market event last week had a few. Denver sort of heads in one direction very quickly with respect to a product type in a cycle, says Hines Interests Jay Despard.(We learned he's a big JohnnyCash fan, which may explain why he likes rings instead of lines in one direction.) Thanks to the surge in population, Jay is not concerned real estate will be dropping off a cliff.
Brookfield Office Properties David Sternberg (middle)and Opus Development Cos Marshall Burton(left) worry that the office market could be cannibalizing tenants versus seeing a real influx of new companies. Citing Charles Schwab and TriZettos build-to-suits that are leaving older office space empty, Marshall says it needs to be refilled at rates that are supportive of the market. Another concern Marshall aired was the need to see CRE values rise due to NOI growth and not just a function of low interest rates.
Trammell Crows Bill Mosher says this recovery is all about jobs. And thats a problem. While Denver should recover the jobs lost during the Great Recession, Bill says as a country, theres a chance that this may be the first time weve gone into a recession before we replaced the jobs from the previous recession. And that means Denver needs to remain moderate politically and a job-friendly environment, he says, criticizing a proposed bill in the state legislature that would make companies only hire Colorado residents.