November 19-December 2, 2014 —
COLORADO REAL ESTATE JOURNAL
— Page 5
Greater Denver
by Jill Jamieson-Nichols
2015 will be an exciting year for
commercial real estate in Denver
if “bold predictions” by CBRE
professionals pan out:
• There will be five specula-
tive office projects representing
1.2 million square feet under
construction in the southeast
suburban market – office spe-
cialist John Marold.
• A Class A industrial asset in
Denver will trade for more than
$200 per sf – industrial expert
Jim Bolt.
• A carrier hotel for data com-
munications will be built from
the ground up in downtown
Denver, representing a $500 mil-
lion investment – Pat Lynch,
Data Center Solutions.
• An “uber-core” office asset
will shatter records by trading
at a sub-5 percent cap rate –
leading investment broker Mike
Winn.
Those and other “bold predic-
tions” were offered at a CBRE
market forecast event called
Moving Up the Risk Curve in
Denver Nov. 6. More than 350
people attended.
Drilling down from a positive
forecast on the national econo-
my, CBRE Global Chief Econ-
omist Richard Barkham said
Denver probably has another 18
to 24 months of falling unem-
ployment ahead, which is good
news for its already strong local
office market. The multifamily,
retail and industrial markets are
performing better than the coun-
try’s as a whole, and based on
past cycles, it’s likely neither the
U.S. nor Denver markets will
enter what he called a “zone of
danger” until around 2018.
Barkham warned against wor-
rying about geopolitical events,
saying they do not cause reces-
sions. Interest rates are a con-
cern, but he doesn’t see the Fed
beginning to move up short-
term rates for at least 12 to 18
months.
“Everybody is talking about
Denver, and that’s a good thing,”
said keynote speaker Tom Clark,
CEO of the Metro Denver Eco-
nomic Development Corp.
Colorado ranked fourth in the
nation in job growth in 2014 (and
11th on the list of the top 20 mar-
kets for high-tech job growth),
and employment growth should
continue to be strong into 2015.
Clark said 26 percent of Denver
metro employers expect to hire
in the fourth quarter of this year.
“We haven’t seen numbers like
that since the 1990s.”
Potential limiting factors to
Colorado’s robust economy
include Interstate 70 traffic, esca-
lating housing prices and, long
term, water availability, he said.
CBRE panel discussions
regarding commercial real estate
users and investments in Denver
yielded the following insights:
• Energy companies occupy
about 4.3 million sf of office
space in downtown Denver, or
approximately 20 percent of the
market – Anthony Albanese.
• Boulder, Interlocken, River
North and Lower Downtown
comprise the four technology
submarkets in metro Denver. “I
think LoDo’s best tech days are
yet to come” – Chris Phenicie.
• CBRE’s 20-member Global
Corporate Services team, whose
clients increasingly are mov-
ing toward collaborative work
environments, followed suit. “It
creates a tremendous amount
of energy, which is a huge posi-
tive.” – Doug Bakke.
• “2015 stands to be another
great year for commercial lend-
ing.” Volume should increase
another 8 percent beyond 2014
– Brady O’Donnell.
• Expect continued cap rate
compression for core and core-
plus retail properties in 2015 –
Brad Lyons.
• The industrial market has
seen unprecedented levels of
preleasing in new construction.
“This is far and away the best
market I’ve been part of” – Jim
Bolt.
•Rent growth in themultifam-
ily market will moderate in 2015,
but investment sales will remain
strong – Jessica Ostermick.
s
by Jill Jamieson-Nichols
Foreign capital is flowing rap-
idly into U.S. commercial real
estate markets, with Canadian
and Asian groups accounting
for more than half of the invest-
ment.
Foreign investors that tradi-
tionally establish a presence in
gateway cities now are begin-
ning to drill down into sec-
ondary markets, according to
Amy Powell Erixson, principal
and managing director of global
investments for Avison Young
Commercial Real Estate.
With 80 percent of its popula-
tion within 100 miles of the U.S.
border, and as this country’s
largest trading partner, it’s no
wonder Canada is the single
largest foreign purchaser of real
estate in this country. Asia, on
the other hand, is still grappling
with myriad issues related to
investing in U.S. properties,
from tax structures to cultural
differences, but, “They’re going
to be the butterfly in the room,”
Erixson said.
China represents is the fast-
est-growing foreign capital
source, accounting for a third of
all global cross-border invest-
ment, Erixson said. Most of that
capital is going into the U.S. –
particularly Los Angeles – and
London, she said, adding Chi-
nese investment in Vancouver,
British Columbia, Canada, is
driving up home prices in that
market.
Erixson led a panel discussion
on foreign capital at NAIOP’s
Development ’14, the com-
mercial real estate association’s
annual North American confer-
ence held this year in Denver.
Panelists included John Mac-
Neil, president and chief oper-
ating officer of Canada-based
First Gulf, who discussed for-
eign investment from his coun-
try, including in Denver. The
company recently broke ground
on 1401 Lawrence, a 22-story
Denver office tower.
“It’s a good time to own
commercial real estate in Den-
ver,” said MacNeil, who noted
demand for downtown office
space and rental rate growth
are among the strongest in this
country.
Panelists also included Brad-
ley Olsen, president of Atlantic
Partners Ltd., who discussed
European investment in U.S.
