BV RECon: Real estate market to remain stable to ‘gentle growth’

BOULDER — Both residential and commercial real estate agents expect stability in the Boulder Valley real estate market as the new year approaches, with the potential for “gentle growth” in all sectors of the commercial market.

Lynda Gibbons, president and managing broker at Gibbons White Inc. commercial brokerage and Todd Gullette, managing broker at ReMax of Boulder, spoke at BizWest’s Boulder Valley Real Estate Conference Thursday at the Embassy Suites in Boulder.

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Commercial seeing new developments

Google, which established a big presence at 30th and Pearl Street in Boulder with two phases totalling 200,000 square feet of office space, continues to gobble up space in the community, Gibbons said. She said it will assume all the space at the Reve Boulder development, which is near the Google Boulder campus. As originally planned, the Reve would have 120,000 square feet of offices and apartments.

Gibbons said that the University of Colorado-Boulder continues expansion with new buildings, from low- to high-rise.

“The way they do it creates an intricate fabric of functional buildings,” she said. “Boulder needs to get over its fear of high-rise development.”

She also said the 250-room hotel to be built on the CU campus on Broadway, to be open in late 2022, will fill a gap in the community.

Future plans for retail space

“There is a lot of strength and stability in the numbers,” she said, with vacancy rates relatively low in all categories including retail. She said there are more than 1 million square feet under construction in the community, including multi-family residential.

Citing national trends in retail, Gibbons predicted 25 percent of shopping malls will close in the next few years. Owners are working hard to repurpose those spaces as fulfillment centers for online sales, as self-storage facilities, sets for TV and movie production and lifestyle centers. 

Gibbons said retail is repurposing itself into an “omni-channel” that fuses virtual and physical sales. Grocery chain Kroger Co. (NYSE: KR), for example, is testing stores in which people can use their phones to scan the items they add to their carts and pay without having to go through a checkout lane.

In the office sector, co-officing remains a growing force because it permits startups to grow. Incorporating wellness spaces, rooftop features and delivery hubs for shopping experiences are all popular with today’s worker, Gibbons said.

A third of all office leases in the U.S. in the past 18 months are co-officing, she said. Still, co-officing accounts for between 1.5 percent to 4 percent of big city office markets, meaning there’s room for a lot of growth in the co-office subsector.

“Co-officing is here to stay,” she said.

Marijuana and CBD businesses have had the most significant impact on industrial space in the Boulder Valley, she said. Meanwhile, in the multi-family sector, experiential living is driving changes. Today’s apartment renter, particularly among younger demographics,  is interested in facilities that have on-site co-working, rooftop amenities, furniture rental options and more.

“Millennials are willing to pay 20 percent more for a smart apartment,” she said.

Smart apartments respond to renter lifestyles and typically will have wireless outlets, lights and locks that respond to usage and smartphone applications, and motion and temperature changes.

Home values remain stable or growing…almost

Todd Gullette, managing broker at ReMax of Boulder, cited a wide range of residential property information that showed home price appreciation in every city in Boulder County except one — Louisville — and a clear leader in number of homes sold — Longmont.

The U.S. Federal Housing Finance Agency lists Colorado as 21st in the nation in housing price appreciation. One-year appreciation in the Boulder market is at 5.36 percent, he said, and 380.24 percent since 1991. Idaho is first in the nation with one-year appreciation of 11.36 percent, Gullette’s data showed. Among metro areas, Boulder is one of the most stable in the nation with a 0 percent chance of property devaluation over a 25-year period.

Average sale prices in the city of Boulder this year remains above $1 million at $1.245 million. All communities were showing growth in housing prices except for Louisville, which dipped from $747,615 to $735,330. Gullette said a deep dive into the houses sold in Louisville in the past year shows that the decline in average price had more to do with the type of housing that became available for sale, and not about the overall health of the housing market in the community. 

The number of houses sold in Longmont so far this year was 920 at an average price of $467,945, followed by 495 in Boulder.

Home affordability in Longmont was responsible for the higher number of sales in that community, Gullette said.