Amazon HQ2 Followup

So, we now know where the Amazon HQ2/3 is going to go – Washington D.C. and Queens, NY. However, most of the stories I am seeing surround the conversation of available housing / rent. In response to this I thought I would do some looking into this and hope you get something out of it. My favorite article in response to this comes from CoStar:

Housing situation article – LINK

In short, this article explains the topic of housing in New York and some of the theory used throughout this process.

Rental Rates

The above article peaked my interest so I wanted to see what the year over year residential rates looked like and I came across this from Real Property Management:

Better yet, produces another detailed report that shows some areas (Bloomfield in particular) above a 5% rent growth. Here is the details of their study:

Denver Rent Report – Link

I can geek out on this type of information only because I know how much work goes into this type of data, and the information has great implications into the commercial real estate sector. For example, if the cost of living (rent in particular) is driving up higher than the employment wages in a given area it’s easy to see how office buildings and retail settings will be impacted. I know this is one of those “chicken or egg” topics, but I think it’s fun to explore.

Denver is better off without HQ2!
Even though some will see the fact that HQ2 will not be in Denver as a loss for the city, I truly believe this is for the better. In fact, the conversations I have had around this topic highlight the cities need to improve the infrastructure and roads in order to take on such a growth. Therefore, I think a slower pace of growth for the city is more prudent and allows for some of the other needs of growth to keep in alignment in a more stabilized scenario.
In fact, the Denver Business Journal points out that some of the locations that were selected for HQ2 in Colorado would have been will see a higher value in growth:

Higher Home Value – Link

Marijuana impact to CO commercial real estate


In terms of background, marijuana passed / became legal in Colorado at the end of 2012, and the state reports a total of $839,689,434 in total revenue for the state (taxes, license, and fees) with the following breakout:

The greatest takeaway from this chart is the total market place for marijuana, and the growth it has had in terms of sales over the last few years.

Industrial & Retail Impact

Believe it or not, this new industry has been the topic of commercial real estate as there has been an influx in lease rates – primarily for the industrial sector, but there is also some retail involvement as well:

* data from CoStar analytics


One of the other conversation pieces in this topic is the population. That is, I hear many people say that Colorado’s population growth is highly attributed to the new business of marijuana.
Therefore, I just wanted to see what the numbers showed from this time period:

My theory is that marijuana has had an impact, and I know the argument can be made for correlation without causality on all of this but I think more important is that other states (and even counties) are getting more involved in this industry which I think will lower some of the upward movement we have seen over the last five years.

Another way to see this is from the same information on the above displayed sales is in an annual basis as it better depicts the leveling off between 2017 and 2018:

With the adoption of legalization in multiple other states over the years I am predicting we have seen the plateau.

Colorado Companies

I came across two companies that have announced their move to our state, and I thought it would be a good idea to share some of their information:

North Face – The VF Corporation, Which is known for outdoor clothing/apparel, has announced a total of 800 jobs that they will be moving to Colorado. Currently, they have boasted an average salary of $185k a year for it’s employees, and this will be a big economic growth for the state.

North Face – Article
North Face – Video

Smucker’s Uncrustables – If you have kids, you  probably already know about the frozen sandwiches, but you may have not known that they are opening a new $340M facility in Colorado that could employ as many as 500 people!

Uncrustables –  Article

Also, I simply like the idea of buying local! So, I thought it would be a good idea to promote three of my favorite local restaurants chains that are either from Colorado, or call Colorado their headquarters:

Red Robin has history in making burgers that dates back to 1940. It has used the phrase “America’s Gourmet Burgers & Spirits,” and has gained a reputation in serving it’s Steak Fires along with “Freckled Lemonade” – great place to take the family for a good burger.

Like the name says – noodles are their expertise! Their menu ranges from various styles of mac and cheese, to a bowl that has Thai Green Curry and shrimp. They built their concept on the idea of freshness – and I would call them one of the champions in the fast casual restaurant space.

Founded on the concept of healthy Japanese food, this is another restaurant that emphasizes freshness in their concept. They have a focus on cooking techniques around food that is either grilled or steamed, and I would also market them as another leader in the fast casual restaurant space.

Where Are They Moving?

In commercial real estate population shifts are vital as it impacts everything from housing, to office space through employment, retail, development, etc. So, when I saw this article from the Denver Business Journal I had to share – especially seeing that they rank Colorado as 9th in the nation for growth:

I think it’s interesting to see a net migration for Colorado of the following (292k in 7 years):

2010 = 46k
2011 = 42k
2012 = 44k
2013 = 40k
2014 = 45k
2015 = 45k
2016 = 30k

If you would like the see the full article, here it is:

DBJ Migration Article


If you have ANY specific commercial real estate topics that you would like me to research / share, I am happy to do so – just let me know your thoughts or questions and I will add it to the existing topics that I have.

Doug Jennings

Disclaimer: All information provided is not intended for investment advice. Please contact me directly if there are any further inquiries on the data presented above.

Our mailing address is:

RE/MAX Commercial Alliance
5440 Ward Road, Arvada CO 80002

O. 303-756-4747

When Will It Open?

One of the most common questions I get about local commercial real estate is regarding the old Westminster Mall. In short, the first portion of this “block by block” project is targeting to open this year!

With this $5.5M plaza, it’s easy to see why there is a current plan to have / host over 200 events annually. In the next two years, this site is planned to do over 1M SF for the entire development.

The largest structure that can be seen right now is along the frontage on 88th. It’s hard to believe this once was one large indoor mall with only one story and two movie theaters. It’s also hard to imagine that the sign for JC Penny will not be visible from 88th in the future as Ascent is planned to be built in from of the building and the parking garage is already to the east of it.

This is a great resource that explains the current plan / timeline for the site which can be found here:


This entire development is planned to change the dynamics for the city of Westminster, and I think it will bring another retail culture to the N/W metro area. The greatest comparison that this development is being aligned with is what Lakewood did with the old Villa Italia Mall- now known as Belmar:


Disclaimer: All information provided is not intended for investment advice. Please contact me directly if there are any further inquiries on the data presented above.

Our mailing address is:

RE/MAX Commercial Alliance
5440 Ward Road, Arvada CO 80002

O. 303-756-4747

Is BIG BOX dead?

Yes, I’m going to use some science to explain our current real estate market. “Matter is neither created nor destroyed” as  the Law of Conservation of Mass describes, and this works for our real estate space as well.

Let me explain, in one sector (retail) we see attrition from the larger size facilities. However, in another sector (industrial) we see a massive growth. Call me a dork, but I think this is a perfect application of science to our industry.

This is a great article / example that I think points out the retail perspective:


If we look at the new site for Amazon in Aurora Colorado, it’s easy to recognize the 1 million square foot facility (yes, 1M SQFT) of industrial space has a significant impact from the entire real estate ecosystem. The fact that they are touting the attempt to hire over 1,000 employees, one can only imagine the impact this has economically to areas like housing and retail.

This is an interesting video of how this type of site continues to operate and advance its distribution model:

Link – robots change real estate

So, my thought is that some retailers have augmented / adapted their offerings which are easily seen in the brick and mortar. I think this highlights, those that adapt quickly, win, and we in the real estate industry can learn from this when we talk industry segmentation.

Mountains in Denver?

Multi Family – Denver

I couldn’t help it – once I played with the numbers to get this graph I had to use it. Maybe I need to take a trip to the mountains as most people will not see the irony of this chart  looking like a mountain range at first look.In short, this is a ten (10) year history  by month of the number of Multi Unit Housing (MUH) transaction in the county of Denver. From this data, I take away the flowing statistics:

  • Denver averages just under 12 MUH transactions a month over the last 10 yrs
  • Denver is averaging 11 MUH transaction through Q2 of 2018
  • Seasonal trend appears that Q2 tracks lower than the beginning / end of year

With only two (2) transactions closing in April, it’s easy to jump to the assumption that 2018 is running slower than 2018 in terms of MUH. However, If were look at the transaction volume 2017 came in at $330m from Jan through April and 2018 has tracked at $365m for the same period. Therefor, it tough to definitively say if 2018 will continue to be either higher or lower than last year.

Okay, after the last chart I had add some insight as I felt like the last 12 months doesn’t help fully explain the complexity in the MUH space as I know this is the largest segment in commercial space right now in Denver.

In my opinion, I think the data shows the results of the construction defect impact through the build up of the market place in 2011/2012. My guess is that if we could also add the data of condo/town-homes to this chart we would see an equal offset which gives me confidence that we will continue to see a strong market for MUH.

I have tracked the industrial, retail, office, and land separately in the same way as I have the MUH product. If you are interested in these details, please do not hesitate to reach out to me – I’m happy to share.

In fact, if you have ANY commercial real estate questions / concerns I am happy to help – just let me know.


Denver is changing!

The easiest sign of this is the new plans for I-70 that will start this year. In short, it’s a $1.17B project that is reported to take 5 years to complete. I find this interesting as they are going to underground the highway and place a field, playground / park, and event plaza OVER the highway. Check out the rendering below:

While a pictures may be worth a thousand words, then maybe a video is worth a million words:

Animation (it’s only 1 min 20 sec)

To take an interstate highway that is built up in the air with a viaduct system and not only remove, but to underground it is a huge difference! Now, I don’t think this would happen if the Stock Show plans were not in place, but that is a conversation for another day.

Or, if the road project isn’t enough to explain some significant changes, maybe this transaction will (1660 Lincoln – 31 story office building):
In 2013 this building was purchased for $38M, and it just sold for $67.2M. This is ~77% appreciation in roughly 5 years (or ~15% per year). It’s this type of activity that is attracting SO much attention for the city. The state reported a net growth of just over 77,000 new residence in 2017 so I guess this type of activity is just a byproduct of this.

Disclaimer: All information provided is not intended for investment advice. Please contact me directly if there are any further inquiries on the data presented above.

Our mailing address is:

RE/MAX Commercial Alliance
5440 Ward Road, Arvada CO 80002

O. 303-756-4747

Denver – Boom or Bust?


2017 Closed out as a busy year, but the question I constantly get is are we in a boom or bust? I think with standard economic statistics it’s a little easier to define this as we have measurements like GDP. However, in real estate, I think this gets much more tricky due to the local relationship with the combination of timing adjoined to either the capital markets or other economic challenges like municipal laws, or population segmentation as a whole.All of that to say, I will take a bold move and state that I anticipate 2018 to be a SLIGHT bear market when it comes to commercial real estate. I emphasize the term “slight” because so many of the indicators continue to grow while 2017 numerically is trailing the results for 2016 in each of the real estate sectors. Some of this could be due to the lag between the general economics that real estate has, and some of it may be simply due to the timing shift within the industry. Now, I can only say this with the following data as my guidepost:

Construction defects! While there has been attempts to fix the laws around builders and construction defects, the numbers defiantly support the theory that it’s better to build apartments in Denver than condo’s or townhouses in the last 5 to 6 years. In fact, it looks like  2017 averaged $251k per unit, which is still higher than the reported  $average of $196k per unit in 2016. Or, another interesting stat for this segment is that the average per square foot sales in 2016 was $223, while 2017 shows $270 psf.

Collaborative & remote work space? These are the two terms I keep hearing about as I talk with users as we continue to see a somewhat of a plateau in this sector. Granted, this would completely change if we see Amazon HQ2 select Denver, but I consider that a bit of a pipe dream as we don’t have too many national / international head quarters in our portfolio. The one thing to keep in mind that may also change in this sector is the fact that GAP accounting is changing rules in how leases show up on the balance sheet. This could push some long term leases to now convert to buy, but I think there will be a lag impact to this rule that we will not see until 2019 or later.

Amendment 64 is still impacting as it passed at the end of 2012. However, with several other states now having marijuana on the ballot, or in place, for either medicinal or recreational purposes Denver is no longer the pilot market for the industry. Not to mention, there were several sites brought to market between the last couple of years that I think are pushing into other sub markets (outside of Denver County).
Big box stores should be fearing Amazon! The channels of distribution have drastically changed for retail, and if retailers can’t catch up with the market place they will have much bigger challenges to contend with. This isn’t to say we will not have a need for retail in terms of brick and mortar, it’s just that there is a change in place that needs to be identified before evaluating any retail decision.

There not making any more of it. It’s crazy to think we had an average price per square foot of $73.86, but when we identify the fact that this is based on only 54 transactions for the year it helps to explain things a little more. I say this because my personal land deals only work if the numbers are in the single digit so I’m identifying the fact that some transactions in this segment are not the norm for the industry – even if the numbers add up to this type of an aggregate amount.

* All data provided by CoStar Market Analytics filtered for Denver County only.

Disclaimer: All information provided is not intended for investment advice. Please contact me directly if there are any further inquiries on the data presented above.

Our mailing address is:

RE/MAX Commercial Alliance
5440 Ward Road, Arvada CO 80002



Did you know?


Doug’s Commercial Report (Denver)

Denver Green Roof

Any building that has more than 25,000 square feet is now subject to this new intuitive in the city of Denver. That is, once any building that is equal to or greater than this size is either built or pulls a permit it will be required that they install a green roof system. It is a scaled coverage that starts at 20% roof coverage and goes up to 60% coverage for larger sites.The Denver Post put together this informative clip that does a great job explaining this topic in less than 3 minutes:


Did you know there is a change coming for leases!
While I know everyone loves to read accounting stories, this one will make some changes to the entire real estate industry. In short, many analyst are saying that the change that is coming to the way we must treat leases is going to influence the lease versus purchase dissension differently than our current environment.As a real estate practitioner we can expect more disclosures to bifurcate things like TI or CAM costs. If you are interested in more details on this topic, this is a good resource:

I purposefully didn’t put the details of the Financial Accounting Standards Board (“FASB”) or GAAP in this article, but I am happy to discuss with you what I am seeing if you are interested.

Multi-family continues to outrun all the other property types (the blue bar). I find this interesting because this wasn’t always the case as we can see from the chart above. In fact, this appears to have changed between 2011 and 2012. Maybe I am drawing a false correlation, but this is around the same time as the construction defect laws first started. I imagine if we could put a residential chart next to this one that showed the construction of condos / town-homes we would see a trade off between multifamily units and condos / town-homes.

Also, I am always skeptical of generic rules when it comes to market cycles. However, that seven year story (the story that markets cycle around every seven years) seems to fit with this data.

* Chart provided by Denver Office Market Overview Report – 27 Nov 2017 – By CoStar Market Analytics

Disclaimer: All information provided is not intended for investment advice. Please contact me directly if there are any further inquiries on the data presented above.

Our mailing address is:

RE/MAX Commercial Alliance
5440 Ward Road, Arvada CO 80002