Strong demand for commercial, residential properties in NoCo

LOVELAND — There is a strong demand for commercial real estate in Northern Colorado from investors seeking core assets, said Aki Palmer, director of Cushman & Wakefield’s office in Fort Collins.

Palmer, who along with Jay Hardy, president and partner at Fort Collins-based real estate developer Brinkman, and Lauren Hansen, chief executive of Loveland-based Information Real Estate Services Inc., a multiple-listing service, provided insights into where the commercial and residential markets in the region are headed.

During a presentation at BizWest’s Northern Colorado Real Estate Summit, Palmer said that investments in multifamily-housing developments will continue in 2018. Nearly $220 million was invested in multifamily projects in Northern Colorado during 2017, down from $264 million in 2016. The amount outpaced $64 million in industrial space development, $39 million in retail and $28 million in office space developments during 2017. Palmer said there are pockets to develop more industrial space throughout the region.

He said office vacancies are low at about 5.5 percent, compared with the rest of Colorado and the nation with vacancy rates north of 10 percent.

“Office leasing rates have not kept up, making building new office space a challenge, mainly because construction costs continue to increase,” Palmer said. “Class A office space is going for $20 per square foot, but construction costs are between $23 and $25 per square foot.” He said many companies are leasing older stock and then renovating it to meet their needs.

Palmer said that retail is repositioning itself following a long list of closures in the past 12 months.

Hardy explained that there is a shift in deal structures, with many developers going the route of public-private partnerships, citing examples of The Foundry in Loveland, The TPC golf course in Berthoud and the DoubleTree Inn in Greeley.

He also said the economic growth trend in the region has outperformed the state and the nation and expects it will continue. Hardy pointed out that the current economic expansion that started nationwide in 2009 is closing in on being the second-longest expansion in U.S. history.

Hardy said there is a pent-up demand for investors, but they are still waiting for more clarity on the recently passed tax reform. He said a plus is that 1031 exchanges remain intact.

Residential

Hansen said there are negative and positive trends taking place in the Northern Colorado residential market, but overall characterized it as “a very healthy market.”  On the downside, she said inventory is low and the number of days on the market — the time from listing a home to selling it — is very short. She said the time on market is 55 days in Larimer County and 57 days in Weld County.

Hansen said across the region median home prices are trending upward, as is dollar volume and price per square foot.

“Weld is generally the most affordable, with Greeley in particular,” she said. “The most expensive community in Larimer County is Estes Park, with a median price of a  single-family home at $445,000.

Hansen showed a graph that spelled out the per square foot price for homes in the broader four-county region: Weld, $135; Larimer, $175;  Broomfield, $179; and Boulder, $270.

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