The State of the Office, Industrial, and Retail Sectors in Q1
Office Sector – A Stabilized and Fair Market Creates a Win-Win Scenario for Both Landlords and Tenants
The Denver office market continues to show a moderate rebound after slowdown we saw from the collapse in oil prices in 2015. Rent growth continues to move upwards as the vacancy rate dropped to 10% for office space. This 10% vacancy rate impacts the under-construction square footage negatively as it only shows 3.3 million square feet to be delivered to the market.
Industrial Sector – Overall Strong Market with Tight Vacancy and Rising Rental Rates
The Denver industrial market continues to trend upward on vacancy rates nearing 8% – increasing from 2015’s all-time low of 5%. Rental rates continued to grow year over year, reaching 6% in Q1 2019. This represents a 60% increase over the peak reached during the last economic cycle.
Retail Sector – Retail Keeps on Winning in This Market Cycle
The Denver retail market is feeling the market boosts in demographics in Denver. Since 2012, the retail inventory has grown by 3.5% annually. The retail space supply is still limited in the Denver market with Vacancy hovering around 4.4% already down from the end of 2018. Rental rates are trending up at a 5% increase year over year for the past 5 years.
The Quarter One 2019 Market – The Overall Commercial Real Estate Economy
Denver’s overall economy continues to show strong signs of growth as employment growth has gone up across the board and now we’re seeing the labor force expand upward by 3% annually. Marijuana legalization in 2012 helped boost the industrial market and the only blip in the market was the oil/gas adjustment in 2014. Denver keeps attracting a highly educated labor force and FasTracks light rail system development is boosting this construction cycle further.
As the market data suggests, if you’re the current owner of a commercial investment property and you’re ready to cash out or retire, the market is favorable for a sale, given the limited vacancy. For more information on selling your commercial property on the current Denver market, contact Transworld Commercial Real Estate to speak to a commercial broker by visiting transworldcre.com.