2012 Commercial Real Estate Overview

Transcription

Metro Denver and Northern Colorado
An Annual Report on
Commercial Real Estate in
Metro Denver and the
Northern Front Range.
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Cassidy Turley Colorado
Table of Contents
Table of Contents
Letter to Clients
4
Corporate Overview
5
Office Overview
6
Industrial/Flex Overview
8
Retail Overview
10
Multifamily Overview
12
Investment Overview
14
Land Overview
16
Northern Colorado Overview
18
Denver County Overview
22
Arapahoe County Overview
24
Jefferson County Overview
26
Boulder/Broomfield County Overview
28
Adams County Overview
30
Douglas County Overview
32
Professionals, Sources & Methodology
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Corporate Overview
To Our Valued Clients
Things Feel a lot Better as We Enter 2013!
Thankfully, the drama of the Presidential election, as well as the
fiscal cliff, are behind us and we can now focus all of our attention
on the improving economy and a surprisingly resilient commercial
real estate market. I have the occasion to be on multiple national
phone calls each month with my peers within Cassidy Turley and there is no question in
my mind that Denver is one of the healthier markets and rebounded faster than most.
I think we will look back at 2012 as being a real turning point for the commercial real
estate market along the Front Range. In addition to declining vacancies and increasing
rents, we saw a number of build-to-suits, which is a healthy sign. From energy to
aerospace, to bioscience, information technology/software and financial services,
Colorado has developed a diversified economy of viable industries that support a more
predictable economy.
Our transition from Fuller Real Estate to now Cassidy Turley has been incredibly
beneficial for our employees and clients. The services and resources we now have
access to are second to none and we are well positioned as we enter the New Year. I
personally wanted to reach out and thank all of the people that have been so important
to us over the years. It is gratifying to not only be able to provide a high level of service,
but also to enjoy the very close relationships we have with so many. From all of us
at Cassidy Turley, I want to wish you a happy New Year, and we look forward to the
continued momentum we’re enjoying in Colorado.
Happy New Year,
Gregory W. Morris
President & CEO, Colorado
303.312.4285
[email protected]
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A Leader In Commercial Real Estate Services
Cassidy Turley is a national team of commercial real estate professionals with a proven track record of delivering superior results
for our clients. We are dedicated to consistently providing solutions that are creative, cost-effective and responsive to our clients’
specific real estate needs, while supporting overall business performance. We are a trusted partner and advocate, supporting our
clients’ long-term success by leveraging industry insight, world-class expertise and local market knowledge to provide commercial
real estate investors and occupiers with comprehensive services around the globe.
Local Market Leaders, Nationwide
• Our in-depth, local market knowledge provides a comprehensive understanding of market dynamics and enables us to effectively
forecast market trends – providing insight to all real estate decisions.
• Our leadership position is recognized in the communities we serve. We are often rated in local business journals as a “Best Place
to Work” and are honored for our many local philanthropic efforts.
Industry Leadership
National publications and objective third-parties have already recognized Cassidy Turley for its position in the industry:
• Real Estate Alert ranked Cassidy Turley #3 in office sales of at least $25 Million during the first half of 2011.
• Real Capital Analytics ranked Cassidy Turley in the Top Five in Office and Industrial Sales in Q1 2011.
• Cassidy Turley was named to the Leaders List of the International Association of Outsourcing Professionals® 2011 Global
Outsourcing 100®.
• The Lipsey Company’s Commercial Real Estate Top Brands Survey ranks Cassidy Turley in the Top 10.
World-Class Expertise
• Many of our associates have honed their skills in their respective markets for years – even decades – gaining an understanding
of industry best practices.
• Cassidy Turley has served clients’ needs outside of the United States since 1985.
• In order to better serve our clients in Europe and Asia-Pacific, Cassidy Turley is proud to partner with GVA, the founder and
majority shareholder of GVA Worldwide, which serves key markets in over 25 countries.
Key Statistics
Corporate Overview
• Our professionals have deep ties to our communities and our industry, and a thorough understanding of local business leaders
and practices, giving Cassidy Turley and our clients an edge.
• More than 60 U.S. offices
• 65 international offices
• More than 3,700 professionals
• More than 900 brokers
• 2011 transactions
- Gross transaction volume
$22 Billion
- Gross capital markets volume
$10.3 Billion
• 455 Million SF management
portfolio on behalf of institutional,
corporate and private clients
• More than 28,000 Corporate
Services locations served
Get to know us better!
Please visit our website:
cassidyturley.com/colorado
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Office Overview
Market Summary
Central Business District
Overview
Overview
Following a strong year in 2011, Denver’s office market continued to perform well in 2012, with users,
investors and developers all active in the market. Despite CenturyLink vacating nearly 800,000 SF
at 1801 California in Downtown, the Denver Metro market still managed to record 1.4 Million SF of
positive absorption, just below what was recorded in 2011. Vacancy is at its lowest since 2002, at
12.5%, marking the third consecutive year-over-year decrease.
The Downtown office market continued to strengthen in 2012 and looks poised for further growth
in the foreseeable future. The lone statistical blemish was 1801 California, which recorded over
900,000 SF of negative absorption due to CenturyLink and other tenants vacating the property in
the third quarter. However, Downtown still managed to record 100,000 SF of positive absorption,
maintaining stable market vacancy, which finished the fourth quarter at 12.2%. Average asking rents
pushed higher for the first time since the recession, averaging $27.05/SF full service in the fourth
quarter, a 6.7% increase year-over-year.
Leasing activity was led by a number of deals over 100,000 SF, focused mostly in the Downtown and
Southeast submarkets. The two largest transactions were extensions of existing leases, signed by
DIRECTV and MarkWest Energy Partners. DIRECTV currently occupies 256,000 SF at 161
Inverness while MarkWest doubled in size to 215,000 SF at Bridgepoint Plaza. As demand
heats up for office space, quality blocks of space have become scarce, allowing landlords
“As demand heats up for office space,
to begin increasing asking rents. Average asking rents jumped 5.0% from 2011, finishing
the year at an average of $20.83/SF full service.
quality blocks of space have become
scarce, allowing landlords to begin
With the lack of large blocks of space, many companies planning on relocating to Denver
increasing asking rents.”
or needing to expand have found that the only viable options available to them now are
build-to-suit developments or proposed speculative buildings. This was the case with
DaVita HealthCare Partners, The TriZetto Group and Trimble, all of whom decided to
build new facilities for their corporate headquarters. In total, seven properties delivered
during the year, totaling 820,000 SF, with only one speculative development. There are another nine
office properties under construction totaling 900,000 SF, all of which are build-to-suit or pre-leased
projects. 2012 was a big year for office investments as well, with a large number of core properties
trading hands in the Downtown and Southeast submarkets. The year recorded $1.9 Billion in sales,
the highest total since 2007. The largest sale was Beacon Capital’s purchase of the Wells Fargo
Center. The 1.2 Million SF property sold for $387.5 Million or $321.82/SF.
Forecast
Rental rates will continue to increase with consistent tenant demand and fewer space options, likely
by up to 5.0% during 2013. Expect to see more speculative developments break ground in 2013
and 2014. Investment activity increased for the third year in a row, a trend that should continue as
the market shifts further towards the landlord’s advantage. Denver remains one of the top investment
markets in the country.
The expected trend of a further rise in rental rates has definitely
led to increased investment activity, which reached over $700
Million in volume for the second year in a row. Twenty-four
properties were sold during 2012, totaling $775 Million, just
shy of the levels recorded in 2006 and 2007. Beacon Capital
Partners is certainly an example of investor’s positive outlook
of the Denver CBD market, accounting for the two largest
sales of the year, purchasing 1700 Lincoln and the portfolio of
410 17th, 600 17th and 1560 Broadway.
Several significant developments are underway, namely the
Union Station North and South Wing office properties. The two properties total over 220,000 SF and
will be anchored by IMA Financial Group and Antero Resources. There are currently multiple parcels
of land in the Union Station Neighborhood and surrounding LoDo area which are ready to break
ground once a proportion of the properties are pre-leased. DaVita Healthcare Partners also moved
into to its recently developed build-to-suit headquarters adjacent to Union Station in July.
Forecast
Rents will continue to be pushed up by confident landlord and limited relocation option for large
tenants. Expect over 500,000 SF of positive absorption in 2013.
Both investors and developers will remain highly active over the next two to three years with rising
rental rates in a market with limited new supply coming online.
Metro Office Vacancy & Rates
CBD Office Vacancy & Rates
Metro Office Absorption & New Construction Rates
CBD Office Absorption & New Construction Rates
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Southeast
Northwest
Overview
Overview
The 44 Million SF of office space in the Southeast submarket makes it the largest segment of the
Denver Metro office market. The market continued to experience high activity in 2012, reaching its
lowest vacancy rate in the past decade, and seeing a high amount of investment sales of core office
properties.
The Northwest submarket was another high activity segment of the metro region during 2012.
Vacancy in the Northwest dropped to 10.1% in the fourth quarter after 500,000 SF of positive
absorption throughout the year. Like the
Southeast submarket, this is the lowest
vacancy the Northwest has recorded in
“The market continued to experience
the past decade. Average asking rental
high activity in 2012, reaching its lowest
rates rose accordingly, up to $21.98/SF
full service in the fourth quarter, a 5.6%
vacancy rate in the past decade, and
increase year-over-year.
seeing a high amount of investment sales
The Southeast submarket finished the year with nearly 900,000 SF of positive absorption, marking
the fourth consecutive year of positive absorption. This helped drop vacancy in the market by 200
basis points from the end of 2011, to 13.2% in the fourth quarter. Average asking rents increased
significantly from 2011, up to $19.62/SF full service from $18.68/SF the prior year, a 5.0% increase.
With vacancy at record low levels, rates should continue to hold firm or increase over the next two
years until several projected larger vacancies become available in 2015 and beyond.
Currently, office development has been limited mostly to build-to-suit development for companies
unable to find viable existing space on the market. TriZetto is under construction on its new 180,000
SF headquarters facility in Englewood, expected to deliver in April 2013, and after extensively
evaluating the market, Charles Schwab has announced it will relocate its 2,000 employee Colorado
workforce into one consolidated campus in Lone Tree. The company will invest $230 Million to build
the campus in the RidgeGate development, with construction likely beginning in early 2013 and
completing by Fall 2014.
Office property sales in 2012 came close to doubling sales during 2011, recording over $520 Million
in volume. The largest transaction was that of Plaza Tower One. The 468,885 SF Class A property
was purchased for $82.5 Million or $175.95/SF by Granite Properties at a recorded cap rate of 6.3%.
Other notable sales included Village Center Station ($265/SF), Peakview Tower ($204/SF), Terrace
Tower ($156/SF) and Waterview 4 ($177/SF).
Forecast
Investment activity increased relative to
2011, with 88 properties trading hands
totaling $320 Million, a $70 Million
increase from the prior year. The largest
transaction was the portfolio sale of four properties in Mountain View Corporate Center. The Class A
properties totaled 461,000 SF and were purchased by Westfield Company for $92 Million or $199.38/
SF at a recorded cap rate of 6.4%.
The first speculative development in the metro region was completed in Broomfield in September,
totaling 186,000 SF. The property was developed by Hines and is LEED Platinum certified and
will provide a good barometer of how strong demand for spec space is along the US 36 corridor,
determining how soon other developers may follow suit.
Forecast
One or two build-to-suits are likely to break ground here by the end of 2013 with few readily available
large blocks of space. The emergence of further speculative development over the next two years
will hinge on the success and ultimate rents achieved in Hines recently constructed property “EOS”.
Investment activity will remain steady, if not grow slightly, as investors look to take advantage of the
growing demographics in these markets.
If Class A lease rates rise by 10-20%, expect to see some developers strongly consider breaking
ground on partially speculative developments.
Southeast Office Vacancy & Rates
Northwest Office Vacancy & Rates
Southeast Office Absorption & New Construction Rates
Northwest Office Absorption & New Construction Rates
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Office Overview
Based on the volume of sales recorded in 2012, investors are clearly focused on the Southeast market,
particularly for Class A product, which is still trading at a 25% discount or more to replacement cost.
Expect volume to remain steady as investors look to take advantage of higher lease rates.
of core office properties.”
Market Summary
Northeast
Overview
Overview
The Denver industrial market experienced strong leasing activity during 2012, particularly in terms
of new construction, with numerous build-to-suits coming to market. Vacancy in the 260 Million SF
market dropped significantly during the year, down 100 basis points to 6.4% at the end of 2012. This
decrease came as a result of 3.3 Million SF of positive absorption.
As in years past, the Northeast submarket continued to be the most active segment of the Denver
industrial market in 2012. The submarket finished the year with an average vacancy rate of 6.6%,
nearly two full percentage points lower than at the end of 2011. This drop in vacancy was caused by
over 2 Million SF of positive absorption, accounting for over 60% of the total absorption across the
metro market.
Average asking rents throughout the metro area improved slightly for both warehouse and flex space,
finishing the year at $4.67/SF NNN and $8.70/SF NNN respectively. The two largest transactions of
the year were United Natural Foods’ lease of distribution space totaling 550,000 SF currently under
construction on I-70, and Rocky Mountain Bottle Company’s renewal of 230,000 SF in the Coors
Technology Center.
Development activity has been the story of 2012 for the industrial market, with over 850,000 SF of
new space deliveries and an additional 1.1 Million SF currently under construction. Each of these
developments is a build-to-suit or pre-leased project. The two largest projects are food and beverage
facilities, one being the United Natural Foods property, the other being Niagara Water’s 320,000 SF
facility in Prologis Park, expected to deliver in the second quarter of 2013.
Volume for total industrial sales during 2012 was slightly higher than 2011, yet still well short of the
average annual totals recorded between 2004-2008, when volume reached as high as $1.1 Billion
dollars. Over 300 properties traded hands during 2012 totaling $425 Million in volume, with average
prices decreasing down to $48.60/SF from $58.60/SF in 2011. Industrial investment activity remained
flat for the year as a result of few quality investment offerings hitting the market. Several investment
sales were completed in the 6.5% to 7% cap range for core assets, as pent up demand and low
interest rates increased investor motivation and drove cap rates to the lowest point in the last 15 years.
Average asking rents increased significantly in 2012, up to $3.94/SF NNN for warehouse space and
$8.94/SF NNN for flex space, a 6.5% and 7.0% increase year-over-year, respectively. The majority of
activity was focused along the I-70 corridor, with nearly all of the major leases signed during the year
located along the interstate. These include United Natural Foods 550,000 SF distribution facility that
is currently under construction as well as Goodwill Industries move into 220,000 SF at 4355 Kearney
Street and FedEx Smartpost’s move into 200,000 SF at the Majestic Commercenter.
With the increase in activity, the number of large available blocks of space in the Northeast has
diminished, leading to numerous new build-to-suit developments over the past year. Four properties
delivered in 2012, totaling 350,000 SF, with another four properties currently under construction
totaling 930,000 SF, including the two large food and beverage facilities for United Natural Foods
and Niagara Water.
Forecast
Sales activity was modest in the Northeast with 61 properties trading hands totaling $89 Million in
volume, slightly less than during 2011. The largest transaction was the sale of two Class B properties
in Aurora totaling 236,700 SF. The properties were sold to St. Paul Fire and Marine Insurance
Company for $17 Million and included over 17 acres of land. Another notable sale was that of 2780
Tower Road. The 386,000 SF property formerly served as Albertson’s distribution center and was
purchased by Steven Roberts Original Desserts for $11 Million, who will occupy 205,000 SF and
lease the remainder.
With vacancy falling below 7.0% for the first time in 10 years, asking rents are expected to continue
increasing in a tight market. This increase is expected to total $0.25 - $0.75/SF by the end of 2013.
Forecast
The first signs of speculative development are on the horizon, with a large project totaling over
600,000 SF planned to break ground in 2013 near I-70 and Havana. Other developers may follow
suit. If confidence in the economy continues to improve, look for more user-buyers entering the
market, which should increase user sale pricing as well as activity.
Decreasing vacancy will continue to fuel developer’s confidence for new construction along I-70.
The first significant speculative project is slated for construction in Q3, totally over 600,000 SF near
Havana and I-70. Look for lease rates in this submarket to increase $0.25 to $0.75/SF over the next
12 months for Class A and B product.
Metro Industrial Vacancy & Rates
Northeast Industrial Vacancy & Rates
Metro Industrial Absorption & New Construction Rates
Northeast Industrial Absorption & New Construction Rates
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Central
Southeast
Overview
Overview
The Central industrial submarket had a strong year in 2012 with decreasing vacancy and increasing
asking rents for both warehouse and flex space. Vacancy finished the year at 5.8%, the lowest it has
been since 2003. Average asking rents finished the year at $5.03/SF NNN for warehouse space and
$8.70/SF NNN for flex space, a 6.0% and 13.0% increase year-over-year, respectively.
The Southeast market consists of 19 Million SF of industrial space, and roughly half of that is made
up of flex properties. Vacancy in the Southeast market improved during 2012, falling 80 basis points
to 8.4% on a year-over-year basis, with 300,000 SF of positive absorption.
Approximately 20% of all Denver Metro industrial sales during 2012 took place in the Central market,
with $86 Million in volume trading during the year. Sales volume has increased every year since
2009, a trend that is likely to continue as rental rates continue to increase.
Forecast
This helped to stabilize asking rents, particularly for flex space, which was experiencing a consistent
downward trend in rates over the past four years. Asking rents finished the year at an average of
$7.40/SF NNN for warehouse space and $8.36/SF NNN for flex space. The Southeast market also
saw its first significant construction activity in two years, the most notable being Polystrand’s build-tosuit manufacturing facility which finished construction in July. Polystrand relocated its headquarters
from Montrose, CA, adding 240 new jobs to the market in the process.
Average rates should continue to increase slightly in 2013 which may influence developers to begin
looking at potential opportunities, though it is unlikely any projects will begin prior to 2014. However,
with very few land parcels to build on, some users may choose to redevelop existing properties. The
lack of quality inventory remains a common theme in the central market. Thus, sale values should
continue to rise for user (“owner occupied”) facilities in the coming year.
Forecast
Central Industrial Vacancy & Rates
Southeast Industrial Vacancy & Rates
Northwest
Southwest-West
Overview
Overview
The Northwest submarket consists of 57 Million SF of industrial and flex space dominated by high
tech manufacturing, outdoor recreation products and natural food companies.
The Southwest and West submarkets consist of 32 Million SF of warehouse and flex space stretching
from Golden down south to Ken Caryl and north along the South Santa Fe Drive corridor. These
submarkets recorded exceptionally high positive absorption during 2012, totaling 560,000 SF,
bringing vacancy down 160 basis points year-over-year to 4.2%.
Activity for both sales and leases should pick up in the submarket. Look for lease rates and sale
prices for quality product to increase.
Average asking rents finished the year at $6.11/SF NNN for warehouse space and $8.62/SF NNN
for flex space, slightly higher than at the end of 2011. The Southwest market is one of the few
submarkets to have had stable rental rates over the past four years, actually seeing a slight increase
from 2007.
Forecast
Forecast
There was one build-to-suit property delivered during 2012 after three years of minimal construction
activity. Expect to see further build-to-suit developments as the US 36 corridor has become a highly
desired location for technology companies.
Average rents are likely to continue to increase in 2013 at a modest pace as the availability of quality
space remains tight. Buyers and tenants looking to locate in this submarket will continue to be
frustrated with the lack of quality offerings, putting upward pressure on sale prices and lease rates.
Northwest Industrial Vacancy & Rates
Southwest-West Industrial Vacancy & Rates
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Vacancy for the Northwest submarket finished the year at 7.4%, 40 basis points lower than at the
end of 2011. This is the lowest rate that the Northwest submarket has recorded in 10 years and it
continues to trend downward. Despite the continued downward trend in vacancy rates, asking rents
did not see a significant increase over the year. Asking rents actually fell slightly for warehouse space,
down 6.0% year-over-year to $4.95/SF NNN, while rates for flex space remained stable, finishing
2012 at $9.52/SF NNN.
Retail Overview
Market Summary
Downtown
Overview
Overview
Denver appears to be the exception rather than the rule in terms of retail performance
when compared to the rest of the nation. Over the past year, the national retail market has
struggled. The U.S. Consumer Confidence Index remains low, finishing December at 65.1,
and the population continues to save their money rather than spend it. Holiday sales in 2012
fell short of the National Retail Federation’s forecast of a 4.1% increase from 2011, recording
only a 3.0% gain. However, when observing the Denver market, the major retail communities
are as active as ever, with new restaurants and shops opening monthly and development
activity re-emerging.
The retail market in Downtown Denver consists of over 5 Million SF of space and boasts the
lowest vacancy in all of Denver, a meager 2.2% at year end. Average asking rents remained
stable at $21.43/SF NNN in the fourth quarter. Downtown is seeing several infill office and
multifamily developments coming to market, particularly in the Ballpark District and the
Highlands, which will help bolster nearby retail locations once completed.
Union Station remains the main topic of discussion in the Downtown submarket. The
redevelopment of the station and surrounding areas made notable
progress over the course of the year. Union Station Alliance won the bid
for the right to redevelop the Historic Union Station building, which will
Denver notched its seventh consecutive year of positive absorption
“After minimal retail property
be converted into an upscale 130 room hotel on the upper floors and
totaling 550,000 SF during 2012, lowering the vacancy rate to
sales from 2009 to 2011, sales
a retail center on the main floor, which will open to a large landscaped
6.9%, a 120 basis point decrease year-over-year. After decreasing
activity increased dramatically in
public plaza. Redevelopment of the interior of the station is expected to
each of the past five years, average asking rents stabilized finishing
2012, with $1 Billion in recorded
be completed by 2014, while development of the transit portion is already
2012 at $14.76/SF NNN, slightly higher than at the end of 2011.
volume.”
underway, approximately 65% complete. Construction of the two mixedThis was due in large part to significant rental rate increases in
use properties adjacent to the station’s main plaza, developed by private
Denver’s tightest markets, including LoDo, Cherry Creek and
companies East West Partners and Continuum Partners, are also underway
Colorado Boulevard. In addition to increased leasing activity, there
and are expected to deliver by early 2014.
was a boost in retail development, with 585,000 SF of deliveries in
2012, and 760,000 SF currently under construction, consisting of numerous big box spaces.
After minimal retail property sales from 2009 to 2011, sales activity increased dramatically
in 2012, with $1 Billion in recorded volume. The largest transaction was The Macerich
Company’s purchase of the Flatiron Crossing Shopping Center in Broomfield. The company
purchased the 1.5 Million SF center for $323 Million, or $286.69/SF, at a recorded cap rate of
5.95%. Other notable sales included the Southlands, Harvest Junction and The Shoppes at
Castle Rock, which all traded at sub 7.5% cap rates. The number of large centers purchased
and the price investors were willing to pay is a prelude to the expected success of Denver’s
retail market in the coming years.
Colorado Boulevard / Cherry Creek
Similar to the Downtown submarket, the Cherry Creek and Colorado Boulevard retail
submarket boasts a sub 3.0% vacancy rate, finishing 2012 at 2.8%. Asking rents averaged
$22.45/SF NNN in 2012, a $0.70/SF increase from 2011. This is the highest average rental
rate across all Denver Metro submarkets, with rates in this submarket reaching as high as
$40/SF NNN in high quality, well placed properties.
This submarket has several significant development projects on the horizon. The most
notable of these are two redevelopment projects, that of the former University of Colorado
Hospital on 9th Avenue and Colorado Boulevard and the former Century 21 Theater on
Colorado Boulevard just north of I-25. Fuqua Development will be converting the 28.5 acre
University of Colorado site into a large mixed-use community with shops, offices, restaurants,
and over 300 apartment units. Reliable Investment Company is the developer of the Century
21 project, which will be redeveloped into a 32,000 SF plaza featuring an array of restaurants
and retailers.
Denver Metro Retail Market
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West / Southwest
Overview
Overview
The South and Southeast submarkets consist of 31 Million SF of retail space with major
shopping centers including Streets at Southglenn, Park Meadows Mall and Arapahoe
Crossings. Vacancy in this submarket is in line with the metro average and remained stable
compared to 2011, finishing 2012 at 6.3%. Asking rents increased 3.5% year-over-year, to
an average of $18.49/SF NNN in the fourth quarter.
Retail development has been active in this submarket, with the delivery of
the 400,000 SF IKEA in 2011 and an additional 376,000 SF currently under
construction, consisting of two auto dealerships, Kuni Lexus in Englewood
and Nissan in Highlands Ranch, as well as a Cabela’s located on I-25. The
Kent Place redevelopment is nearing completion. King Soopers opened its
upscale 30,000 SF Fresh Fare market in December, emphasizing fresh and
organic products catering to the location’s consumer base. Three stores
opened along with King Soopers, with two scheduled to open in early 2013,
and construction is underway on a 300 unit apartment community that
will border the retail center. The project’s developer, Continuum Partners,
originally had to delay development due to the economic downturn. However,
after partnering with Regency Centers and Forum Real Estate group, was
able to revive the project, highlighting a major success story in this submarket.
The West and Southwest retail submarkets recorded high leasing activity in 2012, with
176,000 SF of positive absorption, bringing vacancy down to 7.4% in the fourth quarter, a
30 basis points drop year-over-year. Average asking rents improved moderately, averaging
$13.26/SF NNN in 2012 compared to $13.18/SF in 2011. Sales activity increased from
2011 as well, with $106 Million in volume, up from $78 Million.
The largest transaction was Tabani Group’s purchase of Conifer
Town Center. The 115,000 SF Safeway anchored shopping center
“Union Station Alliance won the bid
was bank-owned at the time of sale, and traded for $13.1 Million,
for the right to redevelop the Historic
or $114.30/SF.
Union Station building, which will be
converted into an upscale 130 room
hotel on the upper floors and a retail
center on the main floor, which will
open to a large landscaped public
plaza.”
Aurora
Overview
Aurora’s retail submarket performed well in 2012, with 170,000 SF of positive absorption,
helping to decrease vacancy to 7.7% in the fourth quarter, a 140 basis point drop yearover-year. However, retail vacancy in Aurora still remains above the metro average, with an
oversupply of big box and shop space throughout the submarket. Dated centers will most
likely need to be demolished because of their functional obsolescence and lack of curb
appeal. Average asking rents decreased for the fourth consecutive year, albeit at a slower
rate in 2012, down to $11.44/SF NNN, $0.20/SF lower than at the end of 2011.
Further highlighting the difficulty the Aurora market is facing is the delay of the original
Gaylord Entertainment project. The project was proposed as an $824 Million, 1,500 room
conference hotel located near DIA, which would receive $300 Million in funding from the
city, plus an additional $82 Million incentive package from the state in an attempt to increase
tourism. However, Gaylord Entertainment was purchased by Marriot International in May,
and was converted into the REIT Ryman Hospitality Properties. Ryman has since stated that
is has been unable to locate a developer willing to take on the project at its current proposed
scale. It is unlikely that the project will be completed unless it is restructured, if it gets done
at all, marking a significant blow to the economic development council in Aurora.
Denver Metro Retail Vacancy & Rates
In Lakewood, further progress was made on the redevelopment
of the Federal Center located along the 6th Avenue corridor. The
redevelopment is focused on a mix of transit oriented development
centered around a “Federal Quad” and is slated to complete in
steps along a 20 year cycle. Once the west RTD FasTracks line is
constructed, currently slated to open in April 2013, development
of the project’s surrounding area should begin in full.
Northwest
Overview
The Northwest submarket finished 2012 with a vacancy rate of 9.2%. This represented
a significant decrease from 2011, despite minimal absorption during the year, due to
Westminster Mall getting demolished, removing 1.3 Million SF of vacant space from the
market. Asking rents increased slightly during the year, up to an average $13.71/SF NNN in
the fourth quarter. This is primarily because of high rates in Boulder, which increased $0.40/
SF on average during 2012.
Westminster Mall was demolished in order to redevelop the 108 acre site into a downtown
shopping location. The city purchased the mall and surrounding sites for $22 Million and
plans develop up to 5 Million SF of shops, restaurants, offices, and residences. The city
hopes the redevelopment will revitalize the community and plans have the first phases of
the project completed by 2015. Westminster and the rest of the Northwest submarket will
also benefit from the addition of RTD’s Northwest rail line. The line is currently planned
as a 41-mile high capacity project from Union Station to Boulder and then to Longmont.
However, only the segment from Union Station to Westminster is funded and scheduled for
construction, which is expected to be complete by 2016.
Denver Metro Retail Historical Sales
/
11
Retail Overview
South / Southeast
Market Summary
Sold Apartments Metro Denver: 4-49 Units
Overview
Metro Denver
Multifamily real estate remains the hot topic in Denver, with exceptional
activity over the course of 2012. With home sales down significantly
from peak levels and a continued net migration into the Denver-AuroraBroomfield Metropolitan area (over 60,000 people in since 2010,)
Multifamily continues to be in high demand. Vacancy fell 40 basis points in
2012 to 4.9% in the fourth quarter without a single submarket registering
higher than a 7.0% vacancy rate. Boulder, supported by a large college
community, registered the lowest vacancy rate, at a mere 2.7%.
With demand at an all-time high, landlords continued to increase asking
rents during 2012, which coupled with the delivery of numerous highly
priced upscale communities, pushed rental rates to an average of $1.14/
SF in the metro market. This represents a 5.6% increase from 2011 and
the third consecutive year of rent growth. Rents are expected to continue
increasing over the next two to three years until the influx of new deliveries
expected to come to market helps to stabilize vacancy and increase
competition among landlords.
Sales Volume
2008
2009
2010
$95,676,859
$133,373,284
$215,245,328
$231,502,991
232
172
186
224
233
2,957
1,829
2,233
3,017
3,510
2,176,576
1,341,033
1,692,143
2,405,765
2,697,232
$62,078
$59,091
$64,525
$76,382
$72,074
Price per SF
$84.34
$80.48
$83.40
$96.85
$95.92
Cap Rate
6.94%
7.35%
7.36%
6.91%
6.89%
# of Transactions
Total Units
Total SF
Price per Unit
and nearly 13,000 units currently
under construction.”
Multifamily Historical Sales
/
2012
$183,564,696
Development activity has skyrocketed, with approximately 3,000 new units delivered in 2012
and nearly 13,000 units currently under construction. A high percentage of this activity is
focused in Denver’s CBD and Interlocken submarkets, with 3,150 and 2,300 units under
construction respectively. Given the lack of multifamily construction in the past few years
and high tenant demand, developers are unlikely to have any issue filling the units that
are currently under construction. However, with
an additional 18,000 units planned to break
ground by 2015, the market will eventually
“Development activity has
reach a state of oversupply which will hinder
skyrocketed, with approximately
further rent growth and push vacancy back
3,000 new units delivered in 2012
towards its historical average, around 7.0%.
12
2011
Sold Apartments Metro Denver: 50+ Units
Metro Denver
Sales Volume
2008
2009
2010
2011
2012
$622,627,572
$282,938,900
$572,704,250
$1,489,596,175
$1,993,259,548
47
20
33
65
80
8,458
3,867
7,930
15,672
20,262
7,438,528
3,195,938
6,990,780
14,731,434
17,895,322
$77,538
$73,168
$72,220
$97,480
$103,832
Price per SF
$92.68
$90.16
$82.07
$107.93
$117.25
Cap Rate
6.05%
7.12%
5.91%
5.75%
5.91%
# of Transactions
Total Units
Total SF
Price per Unit
Forecast
Investor demand for multifamily properties remained strong in 2012 with record sales volume
recorded over the year. Over 300 properties were sold, totaling $2.2 Billion, more than $300
Million greater than the previous annual high recorded in 2007. The largest transaction
was the sale of The Metro apartment community at 2121 Delgany Street. The property sold
for $90.8 Million at a recorded cap rate of 5.4%, an exorbitant price given that the same
property sold for only $55 Million in 2009. This sale perfectly reflects the resiliency of the
multifamily market and the measured upside in the post-recession era. Average cap rates
have fallen over 250 basis points from 2009, and have averaged below 6.0% over the past
two years. Prices are expected to remain high in 2013, with multifamily properties remaining
the most sought after property class by Denver real estate investors.
2012 Notable Multifamily Sales
Champions Park
The Metro
Windrock & Stone Canyon
Champions Park
The Metro
Windrock & Stone Canyon
2525 E 104th Avenue / Thornton, Colorado
2121 Delgany Street / Denver, Colorado
19255 East Cottonwood Drive / Parker, Colorado
Size:
480 Units
Size:
415 Units
Size:
660 Units
Leased:
94.6%
Built:
2002
Built:
2002
Built:
2000
Leased:
95.0%
Leased:
95.0%
Sale Price: $68,256,400
Sale Price: $90,750,000
Sale Price: $82,750,000
Price/Unit: $142,201
Buyer:
Eaton Vance Investment Managers
Buyer:
MEPT
Buyer:
Thompson Michie Associates, Inc.
Seller:
Archstone
Seller:
CBRE Global Investors
Seller:
JPMorgan Asset Management
Cap Rate:
5.79%
Cap Rate:
5.00%
Cap Rate:
5.60%
/
13
Investment Overview
Market Summary
Overview
Continued improvement of fundamentals kept Denver as a market of major interest for
institutional and private equity investors in 2012. Institutions have accounted for the majority
of activity, with a number of well-located, core assets trading since the recession. Denver
commercial real estate, specifically office and multifamily, has been trading at historical
pricing levels ever since the nation began its recovery from the recent recession. Identified
as a growth market, Denver has been making news with its burgeoning public transit system,
educated work force and diversified economy.
The office sector continued to be the darling asset class for investors in 2012. Sales volume
increased by nearly $330 Million over 2011 levels, ending at approximately $1.7 Billion.
A number of high profile assets traded in 2012 with the majority of
activity focused in the Central Business District and LoDo submarkets.
One transaction, the sale of the 52-story, 1.2 Million SF Wells Fargo
Center, represented the majority of the first quarter dollar volume at
$387.5 Million or $321.82/SF. Beacon Capital Partners purchased the
property in an off-market transaction from Los Angeles-based Maguire
Properties. Metro-wide vacancy rates have dropped nearly 3% since
2009 and asking rents have grown by $1/SF in the last year.
Replacement cost is becoming more relevant as development is underway in high barrierto-entry, urban locations and speculative construction looms on the horizon in suburban
markets.
Activity in the retail market picked up in 2012 ending at approximately $800 Million in total
consideration which represents a 267% increase from 2011. The largest transaction of the
year was the sale of Flatirons Crossing, a super-regional mall outside of Boulder, Colorado,
for approximately $323 Million. This transaction involved Macerich – a REIT – buying out its
operating partner at a market cap rate of approximately 5.95% as reported by CoStar.
Another major retail transaction in the Denver market was Southlands, an 860,651 SF
regional, outdoor lifestyle center. The property traded for $102.5 Million
at a reported 6.5% cap rate in an off-market transaction.
“Denver commercial real estate,
specifically office and multifamily,
has been trading at historical
pricing levels ever since the nation
began its recovery from the recent
recession.”
As vacancies shrink in the Class A office market, we can expect to
see increased net absorption in Class B properties with increased
investor demand in smaller, suburban buildings. The most significant
suburban office building sale of 2012 was Plaza Tower One, a 22-story, 468,885 SF trophy
office tower located in Greenwood Village. The property sold for $82.5 Million or $175.95/SF
on a reported 6.27% cap rate.
Industrial and flex investment sales remained slow in 2012 with few
significant sales. The largest deal of the year was the sale of the National
Archived Record Administration building in Broomfield for $19.5
Million. This was a long-term leased asset for the Government Services
Administration and was purchased for a 7% cap rate by a local buyer.
Industrial transactions have been few and far between as the product
type lends itself to a long term hold strategy. Fundamentals did not erode
in this sector as much as office and retail and as a result, few properties
went through foreclosure and few offerings have hit the market in light of
the high demand for industrial product.
Metro Denver Investment Overview
2011
Dollar Volume
Properties
Units (M.F.)
Total SF (Excl. M.F.)
Cap Rate
Investment Sales Volume
14
/
Investment Sales Cap Rates
$1,982,347,716
497
9,791
10,846,870
7.19%
Change
2012
$2,696,655,910
493
12,898
13,180,328
6.53%
Forecast
2013 will see continued momentum in the Denver investment market as commercial real
estate continues to be a favored investment vehicle. More transactions are anticipated
as investor risk tolerance for Class B properties eases as vacancy rates shrink in Class A
buildings, creating drastic rent growth for premium space.
The amount of foreclosures has slowed through 2012, but there is still a dramatic amount of
toxic CMBS debt that will come due through 2015 that will be a challenge to refinance. Office
will continue to be a be a favored asset class with investors seeking immediate value-add
opportunities with the quickly improving market.
Retail will start to make a comeback as consumer spending improves and retailers continue
to expand and post positive earnings. Banks, life insurance companies and conduits
continue to provide cheap debt which will make the next 12-24 months a favorable time to
purchase real estate. 1031 exchange activity should increase with the reversion of capital
gains taxes to the pre-Bush era tax laws.
Investment Purchaser Profile
2012 Investment Sales Volume by Product Type
Sales Volume
Multifamily
$1,130,733,258
Office
$1,017,788,335
Industrial
$268,064,250
Retail
$280,070,067
Investment Overview
Product Type
Investment Sales By Product Type
/
15
Land Overview
Market Summary
Overview
Denver has proven to be a resilient city, emerging from the recent economic downturn
units estimated to come online by 2013. If all projects in the pipeline prove out, over 25,000
with strong employment and economic momentum. 2012 was the first year that all 18
multifamily units are likely to deliver in the metro area before 2016.
indicators the Denver EDC uses to track economic progress in Denver were positive since
Other notable land sales included a number of infill sites in the Central Business District.
the EDC began the initiative in 2001. Denver added 34,000 new jobs in 2012, bringing the
Parking lots are being sold at record pace to make room for vertical office and multifamily
unemployment rate down to 7.4%, 30 basis points below the national
developments. Within the past two years, 44 lots accounting for
average. The high growth that Denver is currently experiencing, coupled
approximately 4,700 downtown parking spaces have either been
with low interest rates and falling vacancy for commercial and residential
developed or purchased for future development. Prices for many
properties, has fueled demand from developers seeking well-positioned
“2012 was the first year that all 18
of these sites have become exorbitant. Examples include The
land sites throughout the metro area.
indicators the Denver EDC uses to
Avis Lot at 1900 Broadway, which sold for $11.7 Million or $4.3
track economic progress in Denver
Land sales remained stable in 2012, recording over $390 Million in
Million per acre and Block 54 on Park Avenue and 24th Street,
were positive since the EDC began the
volume, slightly less than 2011. Volume was led by sales of commercial
which sold for $8.3 Million or $3.6 Million per acre. As this fixed
initiative in 2001.”
and residential sites, which accounted for $120 Million and $240
supply of surface parking lots remaining downtown continue to
Million respectively. Industrial sites recorded only $26 Million in volume.
be developed, it is likely that pricing for these sites will increase,
Construction for detached single family housing has been surprisingly
especially for well located parcels.
active, with 1,647 housing starts in the third quarter, a 40% increase from
the third quarter in 2011 and the highest quarterly total since 2007. Entry level and move
Forecast
up homes continued to account for a greater percentage of starts, with houses priced over
The demand for land parcels is expected to remain stable in 2013. With the boom and bust
$250,000 accounting for over 82% of all starts in 2012, compared to 64% in 2011 and 47%
cycle Denver experienced, many developers who had purchased sites for future development
in 2010. Multifamily development enjoyed a significant boost as rental rates continued to
were forced to place projects on hold during the economic recession. Now that the market
climb and metro wide vacancies decreased, down to 4.9% at the end of 2012. Notable sales
has recovered, developers are again looking to restart these projects. Once this cycle of
of multifamily or apartment ground include BMC Investments purchase of a redevelopment
development is complete, land sales are expected to gain ground on 2007-2008 levels as
site in Cherry Creek for $15.8 Million for 250 units and ReyLenn Properties’ purchase of
developers again start to identify new purchase opportunities. Given the influx in population
801 South Cherry Street in the same submarket for just under $11 Million for their proposed
and improving employment numbers, Denver is positioned for sustainable growth over the
341 unit project. In the metro market over 3,100 units were delivered in 2012 with 5,100
next decade, which bodes well for the land market.
2012 Major Land Sales
Address
Buyer
Size (Acres)
Type
Price
Price/AC
6363 E. Hampden Ave.
D.H. Friedman Properties
10.5
Commercial
$10,525,000
$1,002,381
3100 Pearl St.
ReyLenn Properties
5.3
Residential
$6,650,000
$1,254,717
Ridge Rd.
Embrey Partners
16.4
Residential
$5,700,000
$347,561
25 International Ct.
AMLI Residential
11.9
Residential
$5,330,000
$447,523
14949 Lowell Blvd.
Taylor Morrison, Inc.
30.1
Residential
$5,000,000
$165,893
4545 S. Monaco St.
Richmond American Homes
7.6
Residential
$5,000,000
$657,895
Land Sales Volume
2012 Annual Housing Starts
Source: Metrostudy
16
/
Land Overview
Cassidy
Cassidy Turley
Turley Colorado
Colorado
//
17
17
Northern Colorado
Northern Colorado
The two major counties located to the north of the Denver Metro area are Larimer and Weld
Counties, which constitute what is known as Northern Colorado. Northern Colorado includes
the major cities of Greeley, Loveland and Fort Collins. This area has outpaced the national
average for population growth for the last ten years and is viewed as a very desirable place to
live. With its growing population and an incentive laden business environment, national and
international companies have flocked to Northern Colorado. The most prevalent industries
are Agriculture, Energy, Bioscience, Information Technology and Manufacturing and Water
Innovation.
The largest employers in Weld County include the
following:
Larimer County has become a stimulating economy for business development with over $1
Billion in new capital construction projects being completed over the past 5 years. Currently,
the county contains 12 major business parks with over 2,700 acres that have been developed
or are currently in the process. In 2011, Forbes magazine ranked the county as number five
on its list of the “Best Places for Business and Careers.” The county is also home to one of
the state’s top universities, Colorado State University, which has become a leading research
institution in the nation, securing over $340 Million in research funding in 2012.
•
JBS Swift & Company
•
Banner Health
•
Vestas
•
State Farm Insurance Companies
•
Carestream Health, Inc.
Northern Colorado Demographics
Population
554,907
Employment
205,313
Labor Force
300,919
Average Wage
$41,532
Median Age
35
Northern Colorado consists of over 15 Million SF of
office space. The office market experienced healthy leasing activity in 2012, with vacancy
falling 127 basis points year-over-year to 7.5% as of the fourth quarter. This marks the
2012 Northern Colorado Major Sales
The largest employers in Larimer County include the following:
Address
Size (SF)
Type
Price
•
Poudre Valley Health System
4432-4503 S. College Ave.
350,593
Retail
$58,000,000
•
Hewlett Packard Technology
215-225 E. Foothills Pky.
1,002,001
Retail
$39,688,400
•
Center Partners
900-901 Constitution Ave.
356 Units
Multifamily
$31,100,000
•
Woodward Governor Company
1720 Kirkwood Dr.
259 Units
Multifamily
$29,925,000
•
McKee Medical Center
5295 Hahns Peak Dr.
168 Units
Multifamily
$23,550,000
4711-4759 W. 29th St.
138,818
Retail
$23,400,000
2208-2236 E. Harmony Rd.
85,354
Retail
$18,000,000
2201 S. College Ave.
68,334
Retail
$17,875,000
5890 W. 13th St.
58,000
Office
$13,200,000
1538 E. Harmony Rd.
70,692
Retail
$10,800,000
Weld County, located to the east of Larimer, was ranked the second fastest growing area
in the nation by the United States Census Bureau, with indications that the population will
likely double by 2030. Since 2006, new and expanding companies have created more than
7,000 new jobs in the county and over $2.3 Billion in new capital investment. The county’s
top industries include energy production, manufacturing, healthcare and business services.
18
/
Northern Colorado’s industrial market displayed strong fundamentals in 2012, marking first
year-over-year decline in vacancy since 2008. Overall net absorption ended the year with
a positive 287,000 SF compared to 2011 when it stood at negative 89,000. Sales activity
was also up for the year with 76 properties trading hands, an increase from 69 in 2011; the
largest transaction consisting of the $6 Million sale of 1201 Cornerstone Drive in Windsor.
Development activity is currently limited to four properties, the largest of which is the 500,000
SF Leprino Foods facility, opening in phases and scheduled for final completion at the end
of 2014. Berken Energy announced that it plans to relocate its headquarters from Roswell,
New Mexico to Fort Collins in 2013. The company, which manufactures thermovoltaic
technology, will hire an additional 50 employees to work at the facility. DCP Midstream also
made progress on construction of its build-to-suit plant, which will deliver in mid-2013. The
planned $270 Million facility will allow the company to process 110 Million cubic feet of
natural gas per day. In comparison, the seven processing plants it currently operates in the
Denver Metro area have a combined processing capacity of 400 Million cubic feet per day.
Northern Colorado
lowest vacancy rate since the end of 2007 when vacancy stood at 7.3%. There was roughly
$65 Million in office sales during the year, $30 Million more than last year and 210,000 SF
in deliveries, nearly double that of 2011. Two major call centers were opened in Northern
Colorado, both in Greeley. TeleTech hired over 500 employees to relocate to a new 50,000
SF customer support center that was formerly occupied by Kmart while Xerox opened a new
call center space which will create 700 jobs by the end of 2013.
The retail market showed strong performance in 2012 as well, with nearly 290,000 SF of
positive absorption. Vacancy ended the year at a mere 6.4%, marking the lowest rate since
the second quarter of 2008 when it stood at 5.8%. Retail property sales skyrocketed in 2012,
recording the highest annual volume total in the past decade at $295 Million. The largest
transaction was the investment sale of Harmony Marketplace in Fort Collins. Chandelle
Development sold the 350,500 SF shopping center to AmCap for $58 Million or $165.43/SF
at a recorded cap rate of 6.21%. Other notable shopping centers that sold in 2012 include
Foothills Mall, Greeley Commons and Harmony School Shops. Despite the rise in leasing
and sale activity, new retail construction deliveries remained minimal during 2012, with eight
projects totaling 57,000 SF delivering and no new projects currently under construction.
Multifamily activity was vigorous throughout 2012, with vacancy falling 130 basis points
year-over-year to 3.8% in the fourth quarter, the lowest vacancy has reach in the past seven
years. The market recorded 140 units of positive absorption during the fourth quarter,
bring the annual total to 499 units, considerably higher than 2011, when only 40 units
2012 Northern Colorado Leasing Summary
Building
Base
Direct
Vacant
Sublease
Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Average Asking Rents
Office
15,183,633
1,088,736
41,188
1,129,924
7.44%
8.73%
$17.66
Industrial
42,809,321
4,424,282
45,302
4,469,584
10.44%
11.20%
$6.54
Retail
29,112,631
1,881,638
2,414
1,884,052
6.47%
7.22%
$12.76
Total
87,105,585
7,394,656
88,904
7,483,560
8.59%
Property Type
All rates NNN except for office (full service)
larimer
weld
I N T E R STAT E
25
Fort Collins
loveland
greeley


257


85


34



34
287


6


40


36
/
19
Northern Colorado
were absorbed. The high level of activity led to an annual increase in average rents, which
finished the year at $1.09/SF, an increase of 7.6% from last year. Sales activity increased
slightly, with 36 properties trading hands, totaling $104 Million in volume, nearly double
that of 2011. Multifamily property sales have consistently recorded the lowest cap rates
across all property types over the past five years, typically trading at sub 7.0% rates. Given
the continued decrease in vacancy, cap rates could decrease further over the next two to
three years. The decreased vacancy has also spurred a boost in development activity. 284
units were added to the Northern Colorado market in 2012, while another 687 are currently
under construction and an additional 1,400 are planned to break ground within the next
two years. The largest of these is the 221 unit student housing community being developed
by Capstone Development Partners in Fort Collins, which is expected to open in Fall 2013.
Office Vacancy vs. Average Asking Rent
Industrial Vacancy vs. Average Asking Rent
Retail Vacancy vs. Average Asking Rent
20
/
Nearly $92 Million in land sales were recorded in 2012, compared to $60 million in 2011.
2012 recorded its highest number of land transactions since 2008, the last year prior to the
economic recession. Residential land sites experienced the strongest activity with over $46
Million in sales throughout the year, up significantly from 2011, when sales totaled only $12
million. While land sales increased in 2012, the annual volume remained well below the
levels recorded between 2004 and 2007, which peaked at $342 Million in 2007. Because
of the recession many housing and commercial developers were forced to place projects
on hold. This also meant they were no longer pursuing new land purchase opportunities
for future developments. Developers are now beginning to restart these projects and should
begin identifying new land sites for future development in the next two to three years,
assuming the market remains stabilized.
Northern Colorado Multifamily Historical Data
Larimer & Weld County Historical Cap Rates
Northern Colorado Residential Building Permits
Northern Colorado
Larimer & Weld County Historical Sales Volume
/
21
Denver County
Denver County
stable despite CenturyLink vacating 1801 California, leading to over 800,000 SF of negative
absorption in that building alone. Large blocks of existing space have become increasingly
difficult to find for companies wishing to move or expand in Downtown, which has spurred
continued development activity, particularly for build-to-suit and pre-leased projects.
Trammel Crow’s development of DaVita’s new headquarter facility near Union Station
delivered in August, along with another eight properties during the year, totaling
520,000 total SF in deliveries. The two North and South Wing office properties
“Denver’s economic development
alongside Union Station are also currently under construction, with IMA Financial
council and government leaders
Group and Antero Resources slated to be the primary tenants for each property.
Denver, or “The Mile High City” as it is commonly known, is the epicenter of trade, commerce
and business in the State of Colorado. The county of Denver includes Downtown, Stapleton,
the I-70 East Corridor, Denver International Airport, and extends southeast to the Denver
Tech Center. Denver County’s population is approximately 620,000 and attributes a steady
increase in population over the last decade to its diverse business climate, outstanding
weather and overall quality of life.
Denver continues to grow its image, both nationally and
internationally, voted as one of the top destinations to travel
to in the world by numerous sources, including Huffington
Post (#6 in the world), Fodor’s (Top 10 in US), Hotwire (#7
in US) and Business Traveler (#1 Airport in North America),
among others. Denver’s economic development council and
government leaders have done an excellent job of promoting
the city’s friendly business environment and at ease lifestyle,
helping attract multiple Fortune 500 companies to the city.
Companies to recently expand their presence in Denver include
DaVita Healthcare Partners, Arrow Electronics, Xcel Energy and
Kaiser Permanente.
have done an excellent job of
promoting the city’s friendly
business environment and at
ease lifestyle, helping attract
multiple Fortune 500 companies
to the city.”
Denver County includes approximately 66 Million SF of office space, focused primarily in
the Central Business District and Lower Downtown. In 2012, the office market continued to
ride the positive momentum it has experienced over the past two years. Vacancy remained
A number of core office properties Downtown sold in 2012, helping Denver
County record its highest sales volume since 2007. In total, 88 office properties
were sold totaling $870 Million. Beacon Capital Partners, looking to add to its
portfolio in Denver, accounted for the two largest sales, that of the Wells Fargo
Center and the portfolio sale of 410 17th, 600 17th, and 1560 Broadway. Wells
Fargo traded for $387.5 Million or $321.82/SF while the portfolio properties were
purchased for $268 Million or $171.55/SF.
In addition to high-rise office, Denver’s skyline continues to add more residential and
apartment comminutes as the multifamily market heats up. Ten apartment communities
delivered in Denver Country during 2012, totaling 1.4 Million SF and another 18 properties
are currently under construction totaling 2.8 Million SF. That adds up to an astounding 3.2
Million SF, also broken down to 4,650 units, of new apartment space over the span of 3-4
2012 Denver County Leasing Summary
Property
Type
Building
Base
Direct
Vacant
Sublease Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Office
66,340,866
7,683,006
153,743
7,836,749
11.81%
11.64%
$23.22
Industrial
94,986,023
5,406,601
83,671
5,490,272
5.78%
7.32%
$4.31
Retail
33,717,455
1,347,621
139,938
1,487,559
4.41%
4.82%
$17.25
Total
195,044,344
14,437,228
377,352
14,814,580
7.60%
22
/
2012 Denver County Major Sales
Denver County Demographics
Population
605,722
Employment
420,592
Labor Force
322,078
Average Wage
$59,409
Median Age
34
years, with many more projects still in the planning
stages. While expected that this would provide for
excessive supply, the market should have no problem
filling the new units, with demand at an all time high,
as evidenced by an average vacancy of less than
5.0% in Denver County neighborhoods, the lowest
vacancy rate recorded over the past decade.
The retail market in Denver County also performed well over the past year, finishing 2012
with a vacancy rate of 4.4%, down 110 basis points from the previous year. Asking rental
rates averaged $17.72/SF NNN at year end, a slight increase from the end of 2011. The
restaurant sector has performed exceptionally well, particularly in Denver’s Downtown and
Highlands neighborhoods, where a number of popular new restaurants have opened within
the past two years, including Linger, Tag Raw Bar, Trillium and Pinche Taqeuria to name a
few. The continued development of many infill sites for office and multifamily properties,
along with the redevelopment of Union Station will only further boost the success of Denver
County’s retail market in the future.
Size (SF)
Type
Price
1700 Lincoln St.
1,204,089
Office
$387,500,000
410 17th, 600 17th and
1560 Broadway
1,594,135
Office
$268,000,000
1420 Stout St.
209,420
Hotel
$134,000,000
2121 Delgany St.
415 Units
Multifamily
$90,750,000
1401 17th St.
191,151
Office
$53,600,000
2570 Dayton and
10050 E. Harvard
644 Units
Multifamily
$48,500,000
3310 S. Kenton St.
212 Units
Multifamily
$28,750,000
6165 E. Iliff Ave.
426 Units
Multifamily
$28,000,000
1660 Wynkoop St.
65,716
Office
$26,600,000
3481 S. Fenton St.
240 Units
Multifamily
$21,000,000
6301 W. Hampden Ave.
230 Units
Multifamily
$17,650,000
1090 S. Parker Rd.
345 Units
Multifamily
$16,307,500
Denver County
Behind the office and multifamily markets, Denver
County’s industrial market quietly had its strongest
year since the economic recession in terms of leasing activity. The county recorded nearly
1.3 Million SF of positive absorption, helping drop average market vacancy to 5.7%, a 130
basis point decrease from the end of 2011. This was led by multiple companies moving into
significant sized spaces, the largest being Goodwill Industries move into 220,000 SF at 4355
Kearney Street off of I-70.
Address
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23
Arapahoe County
Arapahoe County is one of the most populous counties in Colorado and features a range of
characteristics, from the densely populated business and lifestyle-centric south I-25 corridor,
to the rolling plains extending into the east. Arapahoe County also features some of the most
affluent suburbs of Denver, including Cherry Hills, Greenwood Village and Littleton.
• HealthSouth Corp: Started construction on a
49,000 SF rehabilitation hospital in Littleton.
The hospital is expected to be operational by
September 2013.
Arapahoe County is a major location of business and commerce in the State of Colorado.
The Interstate 25 corridor in the southeast suburbs of Denver includes approximately 7,000
acres spread out over twenty business parks. The Southeast submarket has the largest
concentration of office buildings in metro Denver with 44 Million SF, 28 Million of which is
located in Arapahoe County. The County is also home to many prominent retail and shopping
outlets, including Park Meadows Mall, the Streets at Southglenn and the new 400,000 SF
Ikea situated on I-25.
Arapahoe County contains 42 Million SF of office
space, the majority of which is focused along the
I-25 corridor in Greenwood Village. The county
recorded its highest absorption totals for office
space within the past five years, at 643,000 SF
of positive absorption, helping bring vacancy
down 200 basis points from the beginning of the year to 14.8%. Demand for office space
in this market has increased dramatically over the past two years, with many companies
relocating or expanding in the Southeast market. Because of this, large blocks of space
have become harder to attain, especially for high quality space, which has allowed landlords
the flexibility to increase asking rental rates. Rates increased to $18.51/SF full service in
the fourth quarter, a 5.7% increase year-over-year. The increased demand has also led to
a surge in investment activity, with close to $600 Million in total sales volume during 2012,
double the volume recorded in 2011 and the highest total recorded since 2006. Significant
property sales included those of the Southeast Corporate Center, Plaza Tower One, Village
Center Station and Peakview Tower, among others.
There were a number of significant headlines in Arapahoe County during 2012, including
the following:
• Kaiser Permanente: Announced that it will hire up to 500 IT professionals at a new
campus in Greenwood Village by 2015.
• Connextions: In August, the health care technology company opened a 550 employee
solutions center in Centennial.
• Great-West Financial: Having already added over 100 new jobs to its headquarter location
in Greenwood Village, the company announced that it plans to add an additional 100 jobs
to the location in 2013.
• DaVita Healthcare Providers: Added 100 jobs in its recently opened guest services
contact center in Centennial.
“Arapahoe County is a major
location of business and commerce in
the State of Colorado. The Interstate
25 corridor in the Southeast Suburbs
of Denver includes approximately
7,000 acres spread out over twenty
business parks.”
The retail market was also a strong performer in Arapahoe County, with over 260,000 SF of
positive absorption, bringing vacancy down 80 basis points year-over-year to 7.4% in the
fourth quarter. Average asking rents increased 3.1% from the end of 2011, finishing 2012
at $14.98/SF NNN. The most significant retail project currently underway in the county is
2012 Arapahoe County Leasing Summary
Property
Type
Building
Base
Direct
Vacant
Sublease
Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Office
41,847,629
6,102,352
40,505
6,142,857
14.68%
16.38%
$18.48
Industrial
33,515,066
2,553,266
33,186
2,586,452
7.72%
7.88%
$7.10
Retail
36,186,691
2,608,426
44,450
2,652,876
7.33%
8.14%
$15.06
Total
111,549,386
11,264,044
118,141
11,382,185
10.20%
24
/
Arapahoe County Demographics
Population
575,022
Employment
270,342
Labor Force
319,084
Average Wage
$56,498
Median Age
36
the redevelopment of Kent Place. The 11.5 acre site
is currently owned by a partnership of Forum Real
Estate Group, Continuum Partners and Regency
Centers, and is being constructed as a mixed-use
center with a grocery-anchor shopping center along
with a 300 unit Multifamily community.
Arapahoe County has approximately 32 Million SF
of industrial/flex product. The Santa Fe corridor
is the most robust industrial submarket in the
county serving the southwest Denver suburbs. This
submarket includes over 12 Million SF of industrial/flex space and was 5.3% vacant as of the
fourth quarter of 2012. Asking rents remained stable, finishing the year at an average rate of
$7.09/SF NNN for both warehouse and flex space.
2012 Arapahoe County Major Sales
Size (SF)
Type
Price
23901 E. Orchard Rd.
860,651
Retail
$102,500,000
11900 E. Cornell Ave.
286,000
Office
$90,846,892
6400 S. Fiddlers Green Cir.
468,885
Office
$82,500,000
6380 S. Fiddlers Green Cir.
233,958
Office
$62,000,000
5151 S. Rio Grande St.
350 Units
Multifamily
$60,000,000
6565 S. Greenwood Plaza Blvd.
264,149
Office
$54,000,000
688 Units
Multifamily
$49,500,000
2234 S. Trenton Wy.
384 Units
Multifamily
$47,000,000
22959 E. Smokey Hill Rd.
320 Units
Multifamily
$45,250,000
24750 E. Applewood Cir.
340 Units
Multifamily
$42,750,000
342 Units
Multifamily
$39,250,000
2134 S. Richfield Wy.


7


36
15849 E. Jamison Dr.
I N T E R STAT E
r
Arapahoe County
LL
Address
I N T E R STAT E
25
225
INTERSTATE


85
70
AURORA
arapahoe
englewood
Littleton


85
Centennial
greenwood
village
/
25
Jefferson County
Jefferson County
Jefferson County Demographics
over 340 of the company’s employees. The company
Jefferson County has long been known as the “Gateway to the Rocky Mountains” and
built the expansion because it has experienced rapid
includes much of the western side of Metro Denver as well as portions within the foothills of
growth and the expansion will provide it with additional
the nearby mountains. Interstate 70 transverses westward through Jefferson County, passing
storage and manufacturing space.
some of Colorado’s most famous ski resorts before continuing on into the neighboring state
of Utah. Major employers within Jefferson County include
Jefferson County’s retail market also
Lockheed Martin (Aerospace/Defense), MillerCoors Brewing
performed well in 2012. Vacancy
Company (Food & Beverage), Exempla Lutheran Medical Center
“The expansion line, expected to
dropped over 400 basis points during
(Healthcare) and Terumo BCT Inc. (Medical Technology).
complete in April 2013, along with the
the year to 8.1%, due to 220,000
Federal Center initiative in Lakewood,
should spur a number of transit-oriented
developments along the U.S. 6 corridor
in coming years.”
Jefferson County is served by major highways I-70, I-76 and
C-470, and will also benefit from one of the major expansion lines
of Denver’s RTD Light Rail. The West 12 mile light rail expansion
line which will provide an important connection between Golden,
Lakewood and Downtown Denver made significant progress in
2012. The expansion line, expected to complete in April 2013,
along with the Federal Center initiative in Lakewood, should spur
a number of transit-oriented developments along the U.S. 6 corridor in coming years. The
$435 Million St. Anthony Medical Campus was completed on 6th and Union in 2011 and the
Federal Center is currently in the planning stages of redeveloping the center and surrounding
area.
The office market in Jefferson County contains approximately 21.8 Million SF. Vacancy in the
county increased slightly due to 40,000 SF of negative absorption, up to 15.3% in the fourth
quarter. Despite increased vacancy, asking rental rates increased over the course of the year,
up to an average of $18.18/SF full service, a 2.0% increase year-over-year. The largest lease
signing was New West Physicians, who moved into 32,000 SF of space at the Cole Center at
Denver West in Golden.
After a tough year in 2011, Jefferson County’s industrial market had a positive 2012, with
nearly 600,000 SF of positive absorption, dropping vacancy by 200 basis points to 4.3%
in the fourth quarter. Rental rates increased slightly, up 2.0% year-over-year to $7.25/SF
NNN at year end. There was one significant development completed in the county. Sundyne
Corporation, manufacturer of engineered pumps and compressors, finished construction on
an expansion at its 180,000 SF headquarter facility in Arvada, which currently accounts for
26
/
Population
535,533
Employment
202,559
Labor Force
304,791
Average Wage
$48,952
Median Age
41
SF of absorption and construction
beginning on the previously vacant site of the Lakeside Redevelopment.
Walmart will anchor the site, just finishing construction in November on a
150,000 SF super center store. Asking rental rates for retail space in the
county increased slightly, up 1.9% year-over-year to an average of $12.68/
SF NNN.
The multifamily market in Jefferson County saw a significant increase in investment activity
during 2012, with sales more than doubling the county’s previous annual high with $480
2012 Jefferson County Major Sales
Address
Size (SF)
Type
Price
8507 W. Hampden Ave.
600 Units
Multifamily
$66,700,000
8153 W. Eastman Pl.
352 Units
Multifamily
$65,475,000
1724 Robb St.
360 Units
Multifamily
$40,100,000
7846 W. Mansfield Pky.
300 Units
Multifamily
$39,000,000
9100 Vance St.
276 Units
Multifamily
$37,750,000
770 S. Vance St.
208 Units
Multifamily
$34,800,000
71,000
Health Care
$33,100,000
301 Jackson Dr.
196 Units
Multifamily
$31,250,000
6792 W. 19th Pl.
192 Units
Multifamily
$17,000,000
7865 Allison Way
168 Units
Multifamily
$16,831,900
5344 S. Kipling Pky.
Million in total volume. Eight transactions in excess of $20 Million were recorded, with the
sale of The Hamptons and The Huntington Apartments in Lakewood being the largest,
totaling $66.7 Million or $111,167 per unit. Multifamily development remained steady
as well, with one significant project currently under construction, the 450,000 SF Arvada
Station community in Wheat Ridge, which will feature 160 luxury apartment units with a
resort style pool and spa. Development is expected to pick up over the next two years in the
county, with over 2,600 units currently in the early to late planning stages of development.
Jefferson County
2012 Jefferson County Leasing Summary
Property
Type
Building
Base
Direct
Vacant
Sublease
Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Average Asking
Rents
Office
21,916,246
3,262,147
98,866
3,361,013
15.34%
14.40%
$18.14
Industrial
29,166,850
1,268,336
6,406
1,274,742
4.37%
6.43%
$7.28
Retail
33,153,133
2,618,010
165,708
2,783,718
8.40%
8.49%
$12.51
Total
84,236,229
7,148,493
270,980
7,419,473
8.81%
/
27
Boulder/Broomfield County
Boulder County
Boulder County Demographics
Boulder County, located along the foothills of the Rocky Mountains in Northwest Denver, is a
unique location with a diverse business climate. The sixth most populous county in the state,
Boulder has a high concentration of employment in the information technology, bioscience
and aerospace industries. The quality of life and appeal of Boulder, along with one of the top
research institutions in the country in the University of Colorado, have helped draw many
companies to the area, particularly start-up technology companies. Below is a list of some of
the many accolades that Boulder received during 2012:
• Cities Where Startups are Thriving (#1) CNN Money
• Top Cities for Technology Start-ups (#9) USA Today
• 10 Incredible and Underrated Cities to Live In (#6) BuzzFeed
• Top 10 College Towns (#1) Livability.com
• Most Well-Read Cities for Affordable Vacations (#7) Amazon.com
2012 Boulder County Major Sales
Address
Size (SF)
Type
Price
205-225 Ken Pratt Blvd.
329,905
Retail
$72,000,000
2310 9th Ave.
100,000
Health Care
$28,000,000
919-951 Pearl St.
42,000
Office
$16,100,000
3333 Walnut St.
65,545
Office
$13,780,200
2870 28th St.
14,820
Retail
$7,389,392
38.38 Acres
Land
$7,381,760
1900 9th St.
18,335
Office
$7,012,700
1625 & 1751 S. Fordham St.
124,179
R&D
$6,875,000
371 Centennial Pky.
73,485
Office
$5,865,000
108 Units
Multifamily
$5,400,000
Clover Basin Dr.
600 Martin St.
28
/
During 2012, there were a few significant companies
Population
295,487
to relocate or expand their presence in Boulder
County. NeoMedia Technologies, a leader in mobile
Employment
152,116
barcode scanning solutions, announced in January
that it planned to relocate its corporate headquarters
Labor Force
175,874
from Atlanta to Boulder, citing Boulder’s growth as
a hub for the high tech and mobile community as
Average Wage
$55,358
the reasoning behind its decision. SEFE Inc., a
Median Age
36
company focused on power generated from static
electricity, also announced it would be relocating
its headquarters to Boulder in April, moving from Arizona to consolidate its business as
it had recently opened a Science and Technology Research Center in the county. Other
notable stories include Covidien PLC, a manufacturer of medical devices, which opened
a new 65,000 SF R&D center in March creating 160 new jobs, and Albeo Technologies,
manufacturer of LED fixtures, which announced in July that it planned to expand its Boulder
manufacturing space by 15,000 SF and increase staff at the facility by 30%.
Because of this increased activity, Boulder’s office market recorded a remarkably strong
year, with nearly 400,000 SF of positive absorption in 2012. Vacancy dropped 270 basis
points from the end of 2011, down to 7.3%, the lowest vacancy has reached in the past
decade. Along with the decreased vacancy came an increase in rental rates, which bumped
up 3.2% year-over-year to an average of $20.57/SF full service in the fourth quarter.
Boulder County’s industrial and flex market consists of nearly 28 Million SF of space. Vacancy
for the county fell 70 basis points during 2012 to 7.3% in the fourth quarter with positive
absorption close to 200,000 on the year. Average asking rents increased slightly to $8.40/SF
NNN in the fourth quarter, up from $8.15/SF in 2011.
The retail market in Boulder County had a positive year with decreasing vacancy and high
absorption. As of the fourth quarter, the retail market posted a vacancy rate of 7.0%, down
90 basis points from the end of 2011. There was also a spike in the sale of retail properties,
with over $120 Million in volume sold during the year, nearly triple 2011. This was due
mostly to the sale of Harvest Junction Shopping Center in Longmont. Panattoni Development
Company sold the 330,000 SF center sold for $72 Million or $218.25/SF, at a recorded cap
rate of 6.75%.
Broomfield County
Broomfield County falls between Denver and Boulder Counties, and is the smallest in
the metro area with a population of 56,000 people. Broomfield is strategically located in
a major growth area and has served as a hub for hightech employment for the past 50 years. Like Boulder,
Broomfield County Demographics
Broomfield County offers a friendly business environment
Population
56,135
which has allowed it to grow substantially. Broomfield
also has a significant amount of developable land which
Employment
29,919
provides the opportunity for continued growth in the future.
Business parks including Broomfield Business Center,
Labor Force
30,912
Great Western Business Park, Interlocken, Interpark, and
North Park are all in the early stages of development, and
Average Wage
$65,673
offer a combined 2,340 acres for new construction.
Median Age
37
The office market in Broomfield is approximately 6 Million
SF. Average asking rents reached their highest point in
over a decade during 2012, at $27.31/SF full service as of the fourth quarter, over $2.00/
SF higher than during 2011. The 185,000 Class A office property named “EOS” finished
construction in Broomfield in October and is currently seeking tenants to lease space within
the property. The property was the first speculative development in the metro market in over
four years and any further development in 2013 will likely hinge on EOS’s ability to secure
tenants quickly.
Address
Size (SF)
Type
Price
1 W. Flatiron Cir.
1,502,215
Retail
$323,000,000
12002-12303 Airport Wy.
461,438
Office
$92,000,000
10901-11101 W. 120th Ave.
326,628
Office
$42,400,000
17101 Huron St.
162,000
Industrial
$19,500,000
1100-1170 Hwy. 287
114,870
Retail
$15,750,000
1302-1318 W. 4th Ave.
90 Units
Multifamily
$6,400,000
910 Acres
Land
$5,546,000
7005-7035 W. 120th Ave.
82 Units
Multifamily
$5,400,000
340 E. 1st Ave.
28,066
Office
$4,430,200
12555 Sheridan Blvd.
50 Units
Multifamily
$3,000,000
16583 Las Brisas Dr.
Boulder/Broomfield County
2012 Broomfield County Major Sales
Broomfield’s retail market consists of 5 Million SF of space, with Flatiron Crossing Shopping
Center being the only major retail center in the county. While the office market performed
exceptionally well in 2012, the retail market did not fare as well with over 240,000 SF of
negative absorption. This helped push vacancy up to 12.2%, a 200 basis points increase
during the course of the year. Broomfield’s industrial market, with just over 4.5 Million SF,
recorded 270,000 SF of positive absorption, decreasing vacancy by 240 basis points in
2012 to 8.8% in the fourth quarter. The most significant news in Broomfield County during
2012 was SCL Health System’s announcement that it would be relocating its corporate
headquarters to the Denver Metro area, creating approximately 750 new jobs in total, 550 of
which would be located in its Broomfield office. It is likely that
many more companies will consider relocating to Broomfield
during 2013 given the county’s relaxed business policies and
potential for future growth.
/
29
Adams County
Adams County
Adams County Demographics
Adams County is located in the northeastern portion of the Denver Metro region. Most of the
county is situated to the north of Interstate 70 and to the east of Interstate 25 and features a
diverse mix of industrial and residential neighborhoods. Agricultural activities account for the
largest use of land in the county, using approximately three quarters of the land area. The
rest of the county is primarily attributed to industrial uses, with 34 business parks ranging
in size from 100 to 5,400 acres providing for a large contingent of distribution, warehouse,
and manufacturing properties. Major industries in Adams County include Healthcare,
Bioscience, Construction, Logistics, Aviation, Energy and Technology.
Adams County is likely to be one of the fastest-growing
counties in the state over the next two decades in population
and employment. Forbes ranked Adams County as the thirdbest place in the nation to weather the economic recession
in 2008. The county is the direct benefactor of four major
local projects, each with an excess of $1 Billion in capital
investment:
“Adams County is home to
the largest concentration of
industrial properties in the
seven-county region.”
• Anschutz Medical Campus
Adams County is home to the largest concentration
Population
443,715
of industrial properties in the seven-county region.
With over 64 Million SF of existing space distributed
Employment
147,987
across major business parks such as Adams
Crossing, Majestic Commercenter, ProLogis Park 70
Labor Force
231,640
and Eastgate Business Center, the industrial market
Average Wage
$43,467
benefits from immediate access to the I-70 corridor
and other major interstates as well as proximity to
Median Age
33
Denver International Airport. The Industrial
market recorded a year of high activity in 2012,
with over 670,000 SF of positive absorption, dropping vacancy down to 7.5% from
8.6% to start the year. Average asking rents increased slightly from 2011 to $4.63/
SF NNN for both warehouse and flex space. Development activity re-emerged in full
strength during 2012, with over 350,000 SF in deliveries, and nearly one Million SF
currently under construction. The following developments are either finished or are
currently under construction.
• 17901 E. 40th Avenue: 550,000 SF build-to-suit property currently under construction.
Will serve as distribution / food storage space for United Natural Foods. Construction
planned to complete by April 2013.
• E-470
• FasTracks
• ProLogis Park 70: Construction underway on 320,000 SF build-to-suit space for Niagara
Bottling Co. Construction planned to complete by April 2013.
• Denver International Airport
2012 Adams County Leasing Summary
Building
Base
Direct
Vacant
Sublease
Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Office
7,509,949
909,493
29,605
939,098
12.50%
13.14%
$16.90
Industrial
64,434,417
4,857,939
205,260
5,063,199
7.86%
8.08%
$4.63
Retail
19,894,494
1,673,114
5,654
1,678,768
8.44%
8.45%
$12.08
Total
91,838,860
7,440,546
240,519
7,681,065
8.36%
Property Type
30
/
2012 Adams County Major Sales
Size (SF)
Type
Price
2525 E. 104th Ave.
480 Units
Multifamily
$68,256,400
2700 W. 103rd Ave.
384 Units
Multifamily
$42,500,000
2710 Bruchez Pky.
232 Units
Multifamily
$28,600,000
1900 W. 85th Ave.
492 Units
Multifamily
$28,250,000
8451 Pearl St.
131,210
Health Care
$18,733,000
3471 & 3511 Salida Ct.
98,306
Retail
$17,025,000
9081 Federal Blvd.
228 Units
Multifamily
$16,614,000
4703 W. 52nd Ave.
127 Units
Multifamily
$16,250,000
95,791
Retail
$11,550,000
200 Units
Multifamily
$8,000,000
12900-12910 Zuni St.
10370 Brendon Wy.
• ProLogis Park 70: A 220,000 SF build-to-suit property delivered in November 2012.
Interline Brands will occupy entirety of the space.
• 9461 Willow Ct.: Construction completed in November on 90,000 SF manufacturing
facility for UE Compression.
Adams County’s office market is minimal compared to the industrial market, totaling
approximately 7.5 Million SF. Vacancy rates decreased slightly during 2012, down to 12.5%
in the fourth quarter, 70 basis points below the average rate at the end of 2011. Over 1.1
Million SF of the market is medical office space, which has benefited from the addition of
Anschutz Medical Campus & Fitzsimons Life Science District. Rental rates for the Adams
county office market have remained stable with average asking rents between $16-17/SF full
service over the past five years. Rates finished 2012 at an average of $16.88/SF.
Like the office market, Adams County’s retail market is small, totaling 19 Million SF, with only
two significant shopping centers, Westminster Plaza Shopping Center and Thornton Town
Center. Vacancy for the retail market remained stable in 2012, finishing the year at 8.4%.
Average rental rates have decreased significantly since 2008 and continued to fall over the
past year, albeit at a slower rate. Rates dropped 4.1% year-over-year to $12.09/SF NNN in
the fourth quarter.
/
31
Adams County
Address
Douglas County
Douglas County
Douglas County Demographics
Douglas County, to the south of the City of Denver, is home to 290,000 residents. The county
is located midway between Colorado’s two largest cities, Denver and Colorado Springs, and
is home to numerous residential neighborhoods and business parks including Highlands
Ranch, Meridian, Parker, Castle Rock and Castle Pines. The county also contains a large
contingent of open space and national parks, with over 71 square miles of permanently
protected land. Since 2000, the county has grown in population by 65%, making it one of
the fastest growing counties in the United States.
Douglas County’s office market contains over 11 Million SF of space and is concentrated
primarily along the southern portion of C-470 and I-25 in Highlands Ranch and Meridian.
Vacancy dropped significantly in 2012, decreasing by 240 basis points year-over-year to
8.4% in the fourth quarter, due to 260,000 SF of positive absorption. The most notable
story in the office market was the announcement that The TriZetto Group would be building
a new 186,000 SF property to serve as its world headquarters in Meridian. The property
began construction in April and is planned to complete in early 2013. TriZetto is expected to
create over 750 new jobs at the facility within the next five years. Hitachi Data Systems also
announced that will be expanding into
Colorado, with plans to construct a
50,000 SF office building in Meridian
“The most notable story in the office market
Corporate Center, potentially creating
was the announcement that The TriZetto
up to 400 jobs at the facility.
Group would be building a new 186,000 SF
property to serve as its world headquarters
in Meridian. The property began
construction in April and is planned to
complete in early 2013. TriZetto is expected
to create over 750 new jobs at the facility
within the next five years.”
32
/
The industrial market in Douglas
County is approximately 9 Million SF
and experienced a moderate growth in
activity during 2012. Vacancy finished
the year at 5.8%, a 50 basis point
drop from 2011, with 160,000 SF of
positive absorption.
The industrial vacancy rate in the county has
Population
287,152
remained slightly below that of the metro average,
which has helped to push average asking rents
Employment
89,824
higher over the past two years. Average rents for
Labor Force
160,069
both warehouse and flex space increased 4.0% from
2011, to an average of $8.37/SF NNN in the fourth
Average Wage
$52,971
quarter. One industrial property delivered in 2012,
with Gordon Holdings, a laminate manufacturer,
Median Age
37
completing construction on its new 120,000 SF
Polystrand manufacturing facility in HighField
Business Park. The property also contains a large
contingent of office space, allowing it to function as Polystrand’s corporate headquarters.
Douglas County is home to some of the larger retail developments in the metro Denver region,
including the Park Meadows Mall and the Castle Rock Outlets. Retail vacancy remained
stable, finishing 2012 at an average of 5.5%, with minimal market absorption. However, due
to high absorption figures over the previous three years, landlords were confident in their
ability to increase asking rents, which averaged $18.28/SF NNN in the fourth quarter, a
$0.30/SF increase over average rates in 2011. Construction of retail space remains minimal,
with only one major project currently under construction, the 110,000 SF Cabela’s, which is
expected to deliver in July 2013 off Ridgegate Parkway and I-25.
Douglas County also continues to increase its healthcare and medical office infrastructure.
In November, Bonaventure completed construction of a 100,000 SF assisted living facility
in Castle Rock, while The Children’s Hospital broke ground on a 175,000 SF facility in
Highlands Ranch, which is expected to hold 80,000 patient visits within the first year. In
addition, Kaiser Permanente is currently constructing a new hospital in Meridian, which
will host a mixture of specialized medical services. The hospital will total 275,000 SF on six
floors, and is planned to deliver in late 2013.
2012 Douglas County Leasing Summary
Property
Type
Direct
Vacant
Sublease
Vacant
Total
Vacant
2012
Vacancy
2011
Vacancy
Office
11,218,158
903,498
36,643
940,141
8.38%
10.77%
$22.07
Industrial
8,991,489
515,271
0
515,271
5.73%
6.32%
$8.43
Retail
16,161,360
725,570
162,500
888,070
5.50%
5.22%
$18.29
Total
36,371,007
2,144,339
199,143
2,343,482
6.44%
Douglas County
Building
Base
2012 Douglas County Major Sales
Address
Size (SF)
Type
Price
19255 E. Cottonwood Dr.
660 Units
Multifamily
$82,750,000
520 Dale Ct.
356 Units
Multifamily
$50,850,000
18931 E. Briargate Ln.
326 Units
Multifamily
$44,500,000
10375 Park Meadows Dr.
192,359
Office
$34,000,000
5642, 5646 & 5650 Allen St.
105,528
Retail
$20,600,000
333 Inverness Dr. S.
140,162
Office
$18,900,000
304 Inverness Wy. S.
134,691
Office
$11,550,000
8757 Ridgeline Blvd.
56,400
Flex
$6,768,000
16.9 Acres
Land
$6,677,951
21,000
Retail
$5,600,000
1811 Plaza Dr.
11211 S. Dransfeldt Rd.
/
33
Professionals, Sources & Methodology
Cassidy Turley Colorado Professionals
Methodology
Management
Office
Gregory W. Morris
Brian J. Baker
Donald L. Kortz
President & CEO
Vice President Corporate Counsel
Chairman of the Board
Kristine Reinhardt
Andrea Jones
Executive Vice President & COO
Vice President Marketing & Research
Includes Class A, Class B, Class C, suburban garden
office buildings and medical office buildings. Class
A product is steel and concrete construction, built
after 1980, quality tenants, excellent amenities, and
premium rents. Class B product is built after 1960, fair
to good finishes, and wide range of tenants.
Industrial (IND)
Buildings used for warehouse, light manufacturing
and R&D purposes that meet those building’s
specifications.
Office Specialists
Investment Specialists
Northern Colorado Office
Manufacturing (MFG)
John Ash
Ron Allum
Travis Ackerman
Stockton Baker
Jim Brady
John Baker
Whitney Hake
Trevor Brown
Brian Hutt
Jeff Halsey
Russell Baker
Manufacturing buildings generally have a parking ratio
less than 3/1000, clear height less than 18', dock or
grade-level doors, 6-15% office buildout, and one side
of glass.
Robert Knisely
Patrick Henry
Jason Ells
Warehouse (WHSE)
Bill Lucas
Kittie Hook
Jared Goodman
Dan Miller
Terry Matthews
David Stinnette
R.C. Myles
Cole Herk
Warehouse buildings generally have a parking ratio
less than 2/1000, clear height greater than 18',
multiple dock and/or grade-level doors, limited office
buildout, and a limited amount of glass.
Dick Tinkham
Brian Mannlein
Flex
Doug Wulf
Aki Palmer
Flex buildings generally have a warehouse component
with approximately 50% or more of the space built out
as office.
Office | Tenant
Representation Specialists
Preston Dunn
Ted Harris
Dan Ryan
Rick Schepis
Joe Sigdestad
Land Specialists
Industrial Specialists
Nate Heckel
Jim Palmer
Chris Ball
Dan Bess
Tim Gilchrist
Esther Kettering
F & C Holdings
Jeff Roemer
Joe Krahn
Craig Myles
Brandon Ray
Teri Merbach, Manager, Graphic Design
Total Availables
All space being marketed for lease, direct or sublease,
available within 90 days. This may include availabilities
with pending leases.
Alec Rhodes
Research Analysis
Aaron Valdez
Sean Wiseman
Ken Egan
Brian Wilkes
Stan Shapiro
Golf Property Specialists
John Emmerling
Total floor space available for retail sales, usually in SF.
Vacancy
Sources
Available square footage divided by total square
footage of inventory.
Retail Specialists
Special Thanks To
Net Absorption
Tyler Bray
Metro Denver Economic Development Corporation
Change in occupied square footage from period to
period.
T.J. Johnson
Art Seiden
Gross Leaseable Area (GLA)
Design, Art Direction & Production
Tyler Smith
Stew Mosko
A planned group of connected retail stores, usually
with an attached parking area, specially developed on
a parcel of private property and managed by a single
organization.
Steve Poole
Jim Capecelatro
Mike Kboudi
Retail Shopping Center
David Fried
Robert Hudgins
Data Provided By
Ray Rosado
CoStar Group
Real Capital Analytics
Metrostudy
Apartment Insights
Bureau of Labor Statistics
Gross Absorption
Total lease or user purchase activity in a period.
Rent Range
Range in asking rates at the end of 2010. Unless
otherwise noted, office rents are quoted as monthly
full service rates, and R&D, mfg, and whse are quoted
as NNN monthly rates.
Average Rent Rate
The weighted average (by square footage) of quoted
rents at the end of 2010.
N/A
Indicates information was not applicable or not
available at press time.
© 2013 Cassidy Turley Colorado
34
/
Professionals, Sources &
Methodology
Cassidy Turley Colorado / 35
Denver
1515 Arapahoe Street, Suite 1200
Denver, Colorado 80202
303.292.3700 phone
303.534.8270 fax
Northern Colorado
772 Whalers Way, Suite 200
Fort Collins, Colorado 80525
970.776.3900 phone
970.267.7419 fax
www.cassidyturley.com/colorado

2012 Commercial Real Estate Overview

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