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Denver’s commercial real estate market should continue growth

On Behalf of | Sep 7, 2018 | Commercial Real Estate Transactions |

Business continues to be good for those who own commercial real estate in Denver. The city was ranked the eighth hottest commercial real estate market in the country in 2017, after first breaking the top ten the prior year.

According to the Colorado Real Estate Journal, real estate investors spent almost $13 billion on commercial real estate in 2016, which was an over 20 percent increase from the prior year. The spike in growth has some experts questioning its sustainability, particularly amid reports that Denver’s residential real estate market is overvalued.

Denver has a growing population, good jobs and lower rent costs

While it is true growth cannot continue forever, the city’s continued popularity seems to indicate the commercial real estate market may not face a downturn for some time. Not only is Denver’s population growing, but the city is also experiencing a particularly healthy job market. In Denver, jobs that pay well in fields like science, technology, engineering and mathematics are available at one and half times the national average. Even if home prices are inflated, Denver residents still spend 6 percent less of their income on rent than the average American.

Demand is still outpacing supply

Data showing the median sales price of commercial properties and data reflecting the number of commercial property sales also paints a hopeful picture. While sales volumes and sale prices are growing, the construction of commercial property has not kept up. In other words, the demand for commercial property is still outpacing the supply.

For those concerned that the commercial real estate bubble is about to burst, current data seems to suggest otherwise. If people to continue to relocate to Denver, there may be little to stand in the way of continued growth.