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Commercial real estate points to a booming market...and Here's Why!

Updated: Mar 23, 2023

When you combine commercial real estate and the pandemic, you might think of a downfall of an entire industry.

Employees are working from home, leaving office buildings vacant. Restaurants closed and people holed up in their houses. Customers are leery of stores, thus they prefer online transactions and deliveries.

Over the last two years, this has become our new normal. However, as the pandemic looks to be waning, specialists in the commercial real estate industry, both nationally and locally, depict a significantly more upbeat picture for the commercial real estate industry. But before we go into detail about the commercial real estate market in Colorado, it's important to understand that the state's economy is still recovering.

As of today, gatherings are now allowed, thus, offices, restaurants, inns, resorts, and all other commercial offices are opening their doors to everyone. According to UNWTO, tourism enjoys a strong start to 2022, international tourist arrivals could increase by 30% to 78 percent in 2022 compared to 2021, according to projections. However, this would be 50 to 63 percent lower than pre-pandemic levels. Nonetheless, everyone is coping and the commercial industry is back and kicking the stats high.

March 2022 average asking prices rose as the market received a slew of new listings.

In March, the average asking price per square foot increased by 2.72 percent over the previous month, with cap rates contracting by a small 0.14 percent. During the same time period, occupancy rates increased by 1% as tenants moved in and landlords listed their more crowded properties.

Prices and tenant occupancy in office and retail properties are both increasing.

Office and retail properties, which were among the most severely damaged by the pandemic, showed indications of recovery. Office assets increased by nearly 6% month over month, while occupancy increased by 2%, indicating a continued "return to the workplace" and firms implementing their physical footprint plans as property values grow.

Tourism in Colorado resort towns will continue to strive.

Colorado ski resorts are in a different place now than they were ten years ago, with strong brand recognition and less demand for destination marketing. In general, Aspen and Vail are well-known ski towns in Colorado; over 95 percent of Americans are familiar with them. In essence, a decrease in marketing will have little or no effect on the number of visitors to the various mountain communities.

Meanwhile, according to local analysts, demand for industrial and warehouse space has risen dramatically in recent years, owing in part to the boom in e-commerce, which was fueled in part by the pandemic. Rents have risen as a result of a scarcity of available industrial building sites.

Overall, Colorado's real estate market recovered faster than most other states because it continues to be such an attractive area to live and invest in. If you’re looking forward to learning more about Colorado, reach out today!



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