303-632-8784
Northern CO 970-207-0700

Market Trends & Commentary | Q 3 & 4, 2016

  • January 18, 2017
  • Quarter Report
  • 0 Comments

Market Trends & Commentary

 

By Steve Kawulok, Managing Broker for SVN/Denver Commercial

 

Q3 & Q4, 2016 Sales
Northern Colorado Commercial Real Estate Report
for Boulder, Larimer, and Weld Counties.

Just when things slowed up in mid-year, the last two quarters sales activities pulled 2016 to its best sales year since the recession ended. At approximately $1.8 billion, the tri-county sales transactions featured many notable large properties as investors from around the country added northern CO to their portfolios. These investors largely purchased higher rated buildings, and bought at cap rates of 6% or below. Demand for quality cash flowing commercial real estate is high in the region. The market demands for space was such that vacancy remained below 6% even though 4 million square feet of new construction was added to the supply.

 

Listings at 5 year low.

Listings at 5 year low.

 

We almost reached $2 Billion.

We almost reached $2 Billion.

 

Absorbing all we are building.

Absorbing all we are building.

 

Spread between building class widens a bit.

Spread between building class widens a bit.


A Few Significant Regional Sales Transactions

Out of state investors drove the NoCO market in terms of these larger deals in the second half of 2016. Portfolio deals often included NoCO assets. One buyer even came from Kuwait. A general demand for yield drove these investment deals. Multi-family sold at the lowest cap rates compared to other property types.

3100 Pearl Street Boulder, CO – SOLD $136 million 319 Units / $462,332 per unit / 3.75% cap

3100 Pearl Street
Boulder, CO – SOLD $136 million
319 Units / $462,332 per unit / 3.75% cap

Gunbarrel Business Park Boulder, CO – SOLD $18.45 million $107.90 PSF / 170,988 SF

Gunbarrel Business Park
Boulder, CO – SOLD $18.45 million
$107.90 PSF / 170,988 SF

Aspen Heights Fort Collins, CO – SOLD $65.5 million $297,727 per unit/Buyer from Columbus, OH

Aspen Heights
Fort Collins, CO – SOLD $65.5 million
$297,727 per unit/Buyer from Columbus, OH

Boulder Marriott Boulder, CO – SOLD $61.4 million 157 rooms / $391,082 per key / 7.6% cap

Boulder Marriott
Boulder, CO – SOLD $61.4 million
157 rooms / $391,082 per key / 7.6% cap

Gateway Apartments at 2534 Johnstown, CO – SOLD $58.25 million 254 units / $229,330 per unit / 4.57% cap

Gateway Apartments at 2534
Johnstown, CO – SOLD $58.25 million
254 units / $229,330 per unit / 4.57% cap

Life Storage (part of a 5 property portfolio) Boulder, CO – SOLD $55.6 million 3000 storage units / $156.03 PSF

Life Storage (part of a 5 property portfolio)
Boulder, CO – SOLD $55.6 million
3000 storage units / $156.03 PSF

Exeter Building (part of a portfolio sale) Boulder, CO – SOLD $46.4 million $422.85 PSF / 17 property portfolio

Exeter Building (part of a portfolio sale)
Boulder, CO – SOLD $46.4 million
$422.85 PSF / 17 property portfolio

University Center (3 Retail Properties) Fort Collins, CO – SOLD $40.2 million $222.34 PSF / Buyer from Columbia, MO

University Center (3 Retail Properties)
Fort Collins, CO – SOLD $40.2 million
$222.34 PSF / Buyer from Columbia, MO

 


 

Q3 & Q4, 2016 Lease Activity – Northern Colorado Commercial Real Estate Report; Boulder, Larimer, and Weld Counties

After a very strong first half of the year, the tri-county region drug down to a year with over two million less square feet of leasing activity. Despite this slow close, vacancy rates held in the 5% overall range, and new construction was absorbed. 4.6 million square feet of activity resulted in a net absorption across the region of two million. Much of the new construction is user oriented, versus speculative. Thus, the new buildings have ready made occupants.

Vacancies holding steady for 2 years.

Vacancies holding steady for 2 years.

 

Slow finish to the year.

Slow finish to the year.

 

Better than 2015, but no record year.

Better than 2015, but no record year.

 

Loveland with late year rise in Office and Industrial vacancies.

Loveland with late year rise in Office and Industrial vacancies.


A Few Significant Regional Lease Transactions

General Electric Company Longmont, CO – Leased 50,297 SF Industrial/Flex

General Electric Company
Longmont, CO – Leased 50,297 SF
Industrial/Flex

Boulder Market Square Boulder, CO – Leased 23,500 SF Retail

Boulder Market Square
Boulder, CO – Leased 23,500 SF
Retail

Centerra Industrial Loveland, CO – Leased 42,000 SF Industrial/New

Centerra Industrial
Loveland, CO – Leased 42,000 SF
Industrial/New

4093 Specialty Place Weld County, CO – Leased 30,320 SF Industrial

4093 Specialty Place
Weld County, CO – Leased 30,320 SF
Industrial

 


From the Author: Summary / Market Trends:

  • The second half of 2016 was marked much more by large sales than it was by leasing activity. Multifamily sales continued to draw out of area investors seeking the university city surroundings of northern CO. Several of these sales met all time high pricing points (and lowest cap rates in memory). The investment community is bullish about our tri-county region!
  • Leasing activity slowed considerably in the second half of 2016, totaling 6.7 million square feet for the entire year. Even so, absorption was a positive 2 million square feet, despite the delivery of 4 million square feet of new buildings. With 10 year low vacancy rates, many users are building their own space rather than lease less suitable or non-available spaces. Landlords have been able to raise rates in past years, but are holding steady in 2016, albeit at these higher rates.
  • 305 Land parcels sold in our region last year, Sales volume for those sales was $317 million, or about $1 million per sale on average. One of the larger sales was a mobile home park in Fort Collins, which sold for over $16 million. Technically, that is a land sale as the mobile homes rent land slots. About 15 were specifically for new multi-family projects, and that use is likely part of the PUD and Residential developments being planned as well. The residential population trends are drawing developers and builders to our region.

Download the PDF version of this report.

View previous Market Trends & Commentary Quarterly Reports.

 

0 Comments