Demand is strong for most kinds of property in Denver, and supply still isn't keeping up, which is a recipe for good times. Even so, owners and developers have their share of headaches, according to the expert speakers at our Denver State of the Market event at the Ritz-Carlton Denver.
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Most current development is still multifamily, our speakers said, but not enough supply for the demand, with about 80 people moving to Denver a day and as many as 40,000 jobs a year created in the market, many of them high-income positions.
Office product isn't being overbuilt either. There are strong demand drivers for office space. Companies are moving to Denver, partly because the value equation still makes sense for their employees. The industrial market is very tight, even under-supplied for new product. Demand is robust.
Snapped: Sage Restaurant Group co-founder Peter Karpinski, Zocalo Development president David Zucker, Brownstein Hyatt Farber Schreck shareholder Bruce James, who also moderated, and Zeppelin Development president Mickey Zeppelin.
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Construction costs are a challenge, our speakers said. Some of the trades are so busy now they can name their price. The price of steel is also going up. Developers can only stretch rents so far to make developments pencil.
Fortunately, financing is still plentiful, and it looks like interest rates are going to stay put. Regulations are cumbersome for lenders, and getting worse, but capital flow is relatively strong for Colorado deals. Denver's on the map, not only nationally but also internationally.
Here are McWhinney CEO Chad McWhinney, DPC Development president Chris King, Etkin Johnson partner, EVP Ryan Good, the Opus Group senior director Mark Johnson and Cushman & Wakefield executive managing director Doug Wulf, who moderated.
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Our speakers also stressed the importance of innovation in office and multifamily properties. Innovation involves time and risk and persistence. The change in office space illustrates the process.
It wasn't that long ago that office space meant cubicles and recreation was going to lunch. A new kind of workplace, where people could be together and share ideas, slowly evolved out of more traditional space, as people discovered it better suited their needs. The newer space is called innovative, one panelist noted, but it's simply meeting people's needs.
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The event included a one-on-one interview of Dividend Capital VP Larry Braud by VTS Southeast regional director Rhett Miller. Larry, whose company is a diversified owner, talked about technology in real estate. As recently as five years ago, he said he wondered why he needed a smartphone. Today, the device means he can be as productive anywhere as in his office, largely because of the migration of technology to the hand-held platform.
Core business applications aren't always maintained by the IT department anymore, Larry added. It's part of the evolution of tech, but also organizational evolution. Data is now accessible anywhere.
Information about leasing, for instance, used to be stored in desktop computer files. Now when a question rises about a lease, or really anything important, the answer is available no matter where you are. In short, tech is helping real estate pros do their jobs better.
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