When Will It Open?

Doug Jennings Denver Commercial Real Estate, Westminster Commercial Real Estate

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:

Link

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:

Link
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
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Is BIG BOX dead?

Doug Jennings Colorado Commercial Real Estate, Denver Commercial Real Estate, Doug's Commercial Report

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:

Link

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?

Doug Jennings Colorado Commercial Real Estate

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.

Change!

Doug Jennings Colorado Commercial Real Estate, Denver Commercial Real Estate, Doug's Commercial Report

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
www.CommercialDoug.com

Denver – Boom or Bust?

Doug Jennings Denver Commercial Real Estate, Doug's Commercial Report

 

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
O. 303-756-4747www.CommercialDoug.com

 

Did you know?

Doug Jennings Colorado Commercial Real Estate, Denver Commercial Real Estate, Doug's Commercial Report

 

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:

Video
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
O. 303-756-4747www.CommercialDoug.com

Office Space

Doug Jennings Doug's Commercial Report

New Tower in Downtown Denver?

Davis Partnership, a well known local architectural firm, has put together the following video to help explain the 1,000 foot tall tower intended for 1650 17th Street:

Video

Mike Ursini is the developer behind this concept. John Rebchook, with the Colorado Real Estate Journal, has put together some great information with more details in this article:

Colorado Real Estate Journal

 

Shared Space – A movement in the office sector!
Collaborative office space is making an impact in the world of real estate.  Many Denver companies are choosing to abandon the traditional model of housing employees under one roof and instead are exploring the value of utilizing remote and shared office space.  Some suggest this is a fad and that it may not last.  Others argue that it meets the workforce needs while delivering cost savings to organizations.
Denver Office Rates
While downtown Denver asks for the highest office lease rates, the metropolitan area remains steady with overall lease rate of $26.64.

It stands to reason, that a low unemployment rate has a correlation to higher lease rates.  As of July 2017, the Bureau of Labor Statistics reports the Colorado unemployment rate at 2.4%.  This is well below the national average of 4.6%.

Feel free to contact me directly with questions regarding office lease rates in Colorado.

* Information provided from 3Q 2017 Market Trends©  by Xceligent, Inc All Rights Reserved.
* Direct Weighted Average Asking Rates (FSG)

Amazon HQ2 / Denver area growth

Doug Jennings Colorado Commercial Real Estate, Jefferson Parkway

Amazon?

Will Amazon pick Denver as it’s HQ2? I think John Rebchook has the best article with the Colorado Real Estate Journal (click on the picture above to read it) regarding this question. In short, no one truly seems to know if Colorado will be the company’s pick, but one could imagine the synergies between the HQ2 and the new Aurora distribution center.

It is estimated that Amazon’s HQ2 would bring 50,000 jobs. The impact of this is huge! Think about the accommodations of spouses and dependents, the increased demand for housing, retail, transportation, service industries, hospitality, etc.

Denver is catching up!

Most major cities have a connecting loop around the central business area. In fact, there are two primary development concepts that support this type of growth, central and axial. The reason for this looped concept is to allow for easier access throughout the area without the major traffic build up found exclusively in a grid design.

Will this be a toll road? When E-470 (the opposite side of this loop) opened in 1991 it was built as a toll road. However, this section of the highway has not clearly stated if any of the segments will be based on a toll structure.

Whats the big deal ?

Since the inception of this road, residential and commercial developers have flocked to this area with the anticipation of continued growth. For example, the King Soopers at the intersection of 90th & Indiana has already broken ground and is expected to be complete by the end of the year. (Located at the bend in the middle of the map). This is the first retail development in this area and others are sure to follow.

The completion of the Jeffco Loop runs right thru the nationally ranked zip code of 80007. This is mutually enticing to the developers and residence, who have an average household income of $158,469.

Down Town Westminster

Doug Jennings Colorado Commercial Real Estate, Doug's Commercial Report, Westminster Commercial Real Estate

Doug’s Commercial Report (Denver)

The old Westminster Mall is going to be the new Downtown Westminster!

Now that the old mall has been torn down, it will be fun to watch the new development take place. In short, here are some of the anticipated highlights:

  • 4,500 new residences
  • 700,000 SFT of retail space
  • 2,300 new residential units
  • 8,000 new workers

If you were curious, the original mall opened in 1977, and at it’s peak it had a total of 1,200,000 SFT. It was demoed in 2012 through eminent domain, but suffered many big box sore closures before that between 1997 through 2009.
Down Town Westminster

It’s hard to believe this site was primarily one building when you look at the new site plan. However, many people are excited to see the activity in the area. This should bring the city of Westminster a lot of activity in a multitude of ways. I say a multitude of ways because it’s not just a sales tax basis that this site will bring as much of the plans has ties to mass transit through RTD. The parking garage, and current RTD bus stop across from the site already get a lot of attention as it seems to be the gateway between Denver / Boulder. This will now add to that activity, and attract even more attention.
Parking / RTD

One of the comparisons I keep hearing for this site is that it should end up looking something like Belmar in Lakewood (Belmar replaced the old Vila Italia mall by converting it to a mixed use site). However, the parking at this location is distinctly different due to the proximity of the RTD stops and it’s position just off of highway 36 / Boulder turnpike.

The city has recognized this aspect, and I am betting that is why the first building that has been complete is the new parking garage. They put together this quick video to further explain:

New Parking Garage Video

Disclaimer: All information provided is based on data from the county of Denver records and is not intended for investment advice. The quantity count in this report is based on  the count of parcel s reported within each transactions. Call for details , and or, inquiries on the data provided.Our mailing address is:
1019 8th St
Golden, CO 8001
303-277-1322www.CommercialDoug.com