It may not have gotten the memo about inflation, rising rates
Although the capital markets – what with inflation and rising rates – are not in real estate investors’ favor of late, Denver’s growing appeal has made the Mile High City something of a municipal outlier.
In its latest “Weekly Take” presentation, CBRE – a global leader in commercial real estate services and investments – showcased the city’s heightened attraction for investment. “Thankfully, we are very diversified here in Denver, so we have a good upside to the story,” Katie Kruger, who heads CBRE’s five offices in Colorado, said. A former CEO of the Denver Metro Commercial Association of Realtors, she now leads CBRE’s Advisory Business across all lines of business in the state, according to her corporate bio.
“We’re still the fifth most-preferred market for real estate investment,” she noted, pointing to layered statistics in her presentation arsenal to buttress the point. “In 2021, 33% of our new sector projects were residential, mixed-use was 33% and office was 17%.”
What a difference a year makes, she suggested: “Our pipeline going forward includes 13 private sector projects with 46% residential, 38% mixed-use and 8% office. And so, the investment is still here. They’re shifting. We’re seeing at CBRE-Colorado, and we’re working with our clients on shifting their investments.”
Virtually every sector on fire
Rodney Milton, executive director of the Urban Land Institute, agreed. ULI-Colorado counts some 1,400 professionals from across the real estate industry, architects, developers, planners and more.
Read more: Denver tops list of hottest US housing markets
“Multifamily is on fire and industrial spaces are really key,” Milton said in assessing the Denver market. Helping to fuel its economic activity are the very dynamics that make the city appealing to residents and visitors alike, he suggested: “The dynamics have changed,” he began. “So the core of the workweek – Tuesday, Wednesday, Thursday – is pretty vibrant. And I think you can note that I think there is vibrancy in activity. But I think what you’re seeing is there’s still tourism, right. Folks are visiting downtown and visiting Denver. And that level of vibrancy in terms of our bookings for restaurants, in terms of events space and activities, is still vibrant.”
Back to real estate: “But my members are saying multifamily is really huge, residential is really huge and that push towards mixed-use - that pipeline of projects is still up,” Milton said. “It’s the gateway to the West,” he stated. “It is a regional city in a sense that it has the economic engine that powers the region. It’s a fantastic city in the sense of the quality of life.”
He’s a true believer
Milton is no mere civic booster but a committed devotee, as he explained: “As a matter of fact, I just recently relocated,” he said. “I grew up here, but I moved away, and I brought my wife here, I don’t know - 10, 11 years ago. The lifestyle, the outdoors, the beauty, drew her so much that she said every year from that moment, we have to figure out a way to get to Denver. So we relocated in 2020. And I think that draw to quality of life – particularly if there was something about the pandemic that was positive – it was the recognition for folks to be able to move and be where they wanted to be so that they could be in places that were outdoors, places that were thoughtful and intentional about quality of life.”
Moderator Spencer Levy noted the growing number of environmentally conscious construction that has only added to the city’s appeal at a time of greater focus on the environment. “If I haven’t given enough love to Denver, let me give you one more little piece of love here,” he said. “Because about three years ago, I wrote a piece, or I was involved in writing a piece, called CBRE’s Green Building Adoption Index, and the number one city for office for greenest buildings in terms of LEED and Energy Star and stuff was Chicago and Washington, DC. But the number one city for multifamily was Denver, but it was still a relatively small percentage of about 7%, which is shockingly small when you see offices like 70% -- including the building that we’re sitting in right now.”
How big is green a part of the Denver growth story?
Krueger sees the green focus as part and parcel of its growing appeal. “I like to think of Denver as having this overarching atmosphere that’s this unique, pro-business, environmentally focused place that sort of makes you feel like you’re combining Texas and California,” she said. “And I think that this is a great way to articulate how we kind of come together.”
Read next: Denver, CO, and Austin, TX, best US cities
But it wasn’t easy becoming green, Krueger added. Rather, the status has come along after thoughtful effort among various stakeholders: “In 2017, the business community and the environmentalists worked together for 18 months to develop Denver’s Green Building ordinance,” she said. “And what it put in place is all buildings over 25,000 square feet have a number of choices to advance their green initiatives.”
The upshot: “Colorado ranks in the top 20 for the percentage of electricity generated from renewable resources,” Krueger said. “In 2019, Colorado generated 25% of its electricity from renewables. And we like to think of it also in terms of jobs. It has spurred on jobs here in manufacturing turbines, installing wind and solar facilities. And so, the trickle-down is great.”
This all makes Greeley seem prescient
“Go West, young man,” New York Tribune editor Horace Greeley – a prominent booster of western settlement in the mid-nineteenth century – is reported to have once said. In tribute to the advice, the town of Greeley, CO – one of the first planned communities in the US located a mere 63 miles north of Denver – was named after him.
Somewhere, Greeley might very well be smiling.
