CEO Roundtable: Real estate leaders don’t see market slowing down

Northern Colorado’s real estate market remains hot, even with market concerns about interest rates and supply-chain issues.

That was the consensus at BizWest’s CEO Roundtable on real estate and construction, Tuesday. Industry leaders voiced optimism about residential and commercial real estate on the Front Range.

Brandon Wells, president of The Group Inc., expressed faith that residential real estate would hold strong even in the face of rising interest rates.

“I don’t see anything on the horizon that suggests real estate is in trouble on the residential front,” Wells said.

Brandon Myers of WestMark Homes said interest rates have yet to impact the market in Northern Colorado

“People are thinking that it’s going to start tempering it, but we haven’t even started yet,” Myers said.

While the residential real estate market is still going strong, commercial real estate can be a different story. Many local leaders were concerned about rising triple-net expenses, including utilities, insurance and property taxes.

Josh Guernsey, managing partner at Waypoint Real Estate, expressed his concerns about the impacts of these rising costs on small business owners.

“The triple-net costs are really starting to affect some small-business owners,” Guernsey said.

LC Real Estate Group’s Jerico Devlin noticed fluctuation in the market caused by decreased demand for certain types of commercial real estate.

“I don’t know, with the rising triple-nets and construction rates, if we’re gonna see that level out,” Devlin said.

The pandemic has affected commercial real estate in undeniable ways. In addition to an increase in at-home work, retailers faced challenges of their own. Erik Broman, a broker with Realtec Commercial Real Estate Services Inc., saw a narrowing of some retailers.

“I think you saw some of the weaker retailers fall out, maybe some of the stronger ones weather through,” Broman said.

Julia Crawmer, asset manager at Mountain-N-Plains, Inc, agreed.

“With the little guy, I think they’re struggling more. The small-business person is struggling more,” Crawmer said.

Large businesses in the region may not be facing as many of the same challenges, according to some of the participants. With the influx of companies such as Amazon in Loveland and the Bill Gates-backed Turion development in Berthoud, SVN/Denver Commercial LLC’s Steve Kawulok sees bright things in the region’s future.

“We’ve got two of the wealthiest people in the world interested in Northern Colorado,” Kawulok said.

An influx of capital won’t necessarily make water more accessible to developers or those who move into their spaces. Tom Livingston, CEO of Livingston Real Estate & Development, cautioned other industry leaders about the need for water in order to develop.

“I think the biggest miss in people’s thinking is underestimating the effect of water on development,” Livingston said.

Brandon Wells noted that Colorado rivers, with the exception of the Cimmaron and Green rivers, all flow out of the state.

“We’re one of two states that has no in-flow of water. It’s us and Hawaii,” Wells said.

Increased water costs can be one factor behind decreased access to affordable housing. NAI Affinity president Jake Hallauer felt the need for affordable housing is constant.

“From my perspective, there’s just about endless demand,” Hallauer said.

Guernsey pointed to a philosophy of “not in my backyard” as another cause.

“Everybody loves the idea of affordable until it lands on a parcel next to them,”

Like every industry, builders are facing increases in supply-chain issues. Sara Coutts, senior preconstruction manager with The Neenan Co. LLLP, said increased lead times can cascade into construction delays.

“To me, the biggest concerns are in the supply-chain lead times, versus the price escalation,” Coutts said.

Hallauer also expressed concern about supply-chain delays.

“That just-in-time model of supply chain doesn’t really work,” Hallauer said.

Josh Billiard and Sean Nohavec represented CEO Roundtable sponsor Plante Moran, and Paul Watkins represented sponsor Elevations Credit Union, which also hosted the event. Ashley Cawthorne from sponsor Berg Hill Greenleaf Ruscitti was unable to attend.