Event Round-Up: JLL Horizon 2016 – Tale of Two Cities
By: Julie Wanzer, LEED AP
Denver, CO – JLL hosted their third annual Horizon report this morning at the Four Seasons Denver with a theme reminiscent of Charles Dickens with a Tale of Two Cities. The program focused on the dichotomy Denver is facing as the fifth fastest growing state in 2015, as presented by keynote speaker, Tom Clark, Chief Executive Officer, Metro Denver Economic Development Corporation. With the decline of the oil and gas market to the rise of technology start-ups, Denver is facing several challenges and opportunities in the commercial real estate market.
Tom Clark highlighted Denver’s growth trajectory with the “Five Things That Brought Us Here” including:
- Infrastructure = DIA, Union Station, FasTracks
- Culture of Collaboration
- Diversification of Economy
- Reuse = major changes in land use such as Stapleton and Fitzsimons
- “Place making” in Urban Center
He projected that homebuilders will carry the economy through 2017 and he expects updates regarding the construction defect law that has kept condominium construction at only 187 units built with 11,500 units sold.
The client panel, moderated by Peter Merrion, Vice President for the JLL Agency Leasing team in Denver, included:
– Mark Bowen, DCT Industrial Trust
– Bob Hottman, EKS&H
– Adam Hazlett, Cortland Parnters
– Chris Terrell, HomeAdvisor
– Ned Carner, Unico
Adam Hazlett at Cortland Partners touched on the Tale of Two Cities theme by commenting on the multi-family market that is experiencing a huge supply in the Downtown Denver area with about 10,000 units per year versus the suburban Denver markets which are under-supplied. He also touched on another duality in Denver where the increases in wages are not adequately keeping pace with the increases in rents.
The industrial market, which is sitting at about 3 – 3.5% vacancy rates, dominated the discussion with several retailers competing for the limited supply including Walmart looking for 1.2 million SF and Amazon with 450,000 SF per Mark Bowen at DCT Industrial Trust. Carmon Hicks, Vice President and member of JLL’s Logistics & Industrial Services team, even went so far to say that, “Industrial is the new retail,” attributing the food and beverage, healthcare and e-commerce industries as drivers for the industrial commercial real estate market.
The JLL broker panel highlighted several trends in the Denver commercial real estate market, including investment banking. Baxter Fain, Managing Director of JLL’s Capital Markets Real Estate Investment Banking group, is “Seeing a tightening in lending within the last 90 days,” with banks becoming more particular about lending on multi-family, hotel and speculative-type properties. Pat Stucker, Managing Director within JLL’s Capital Markets group, echoed this sentiment that the lending industry will help regulate the multi-family market, projecting only half of the 22,000 units that are in planning and permitting over the next two years to receive funding to move forward.
Images courtesy of Business Rewritten. Infographics courtesy of JLL Research