Real estate brokers give local market thumbs up
The downtown Boulder market is extremely tight, and concessions to tenants are disappearing, said Stephen Tebo, chief executive of Tebo Development Co. based in Boulder.
A tighter downtown Boulder market historically improves the market throughout Boulder County, said Becky Callan Gamble, CEO of Dean Callan & Co. based in Boulder.
"Things take time. We're seeing downtown is great and strong, and as we go east, things start to get better," Gamble said.
But that might not last. The biggest threat to the Boulder market could be down U.S. 36 in Broomfield, said Lynda Gibbons, CEO of Gibbons-White Inc. based in Boulder. Recent construction in Interlocken has added Class A office space with large floor plates, a much-desired combination.
"There are a lot of companies that seem to really appreciate new product," Gibbons said. "My crystal ball tells me there will be a lot of leakage to those new properties in Interlocken."
The new construction will cause the owners of older properties in Interlocken to drop rents to retain or attract tenants, which could have negative effects for landlords in other cities.
"Those rates are so low, it could create a sucking sound in east Boulder," Gibbons said.
Investors such as real estate investment trusts, or REITs, are looking to acquire properties, a trend that should continue into 2013.
"There's a lot of money out there, and it will start looking for a home," Gibbons said.
Investors are looking for quality retail shopping centers, and demand is high, said Allen Ginsborg, managing director of NewMark Merrill Mountain States. His company earlier this year acquired Twin Peaks Mall in Longmont.
"Right now the demand from capital to own quality retail product is as intense as it's ever been," Ginsborg said.
While Ginsborg's company got a deal on the mall, other investors are paying premium prices for Longmont retail he said, giving the example of a Michigan-based trust's decision to buy the Harvest Junction shopping centers for nearly $70 million.
Shopping centers like Harvest Junction are good investments because they've attracted a nucleus of successful national retailers like Lowe's and Best Buy. Those companies prefer to commit to long-term leases and rarely leave.
"Once you get that tenant mix, it's pretty hard to bust up, because all the nationals that want to be together want to stay together," he said.
Another place the money is flowing is to multifamily housing developments. Several new projects are planned for Broomfield, Lafayette, Louisville and Boulder. Rents and occupancy rates have been climbing steadily, and developers — including national companies like AMLI Residential and Trammell Crow Residential — are noticing and planning projects.
"We have some new apartments that are going to come online, and I think we definitely can absorb them," said Thomas Hast, president of Hast & Co., a property management company that specializes in managing apartment complexes.
The units Hast leases all have been leased out for the fall, which Hast said shows rents should be climbing even higher.
Home values are starting to climb as well, said D.B. Wilson, Re/Max of Boulder's managing broker.
"We did not experience the bubble. As residential Realtors, we were complaining about that in the 2000s as everybody else took advantage, but now I'm thankful," he said.
The rebound is creating its own difficulties, Wilson said.
"We're having multiple offers, and there's a total lack of availability," he said. "Inventory is very, very short right now, in all areas and all price ranges."
Homeowners who shied away from putting their properties on the market are beginning to realize conditions are much more favorable for sellers than they were a year or so ago, Wilson said.
But banks are still being tough with clients looking for new loans, even those with solid credit scores.
"They put you through so many hoops. I think you can get the loans, you just have to be prepared for misery," Wilson said.
Banks do have a renewed appetite for commercial real estate, Tebo said.
"Instead of hiding when you call them, they're now coming by your office and bringing you flowers. It's a total turnaround," Tebo said.
But banks' enthusiasm is limited, and few are interested in lending for spec buildings, he said.
The CEO Roundtable series is co-sponsored by the accounting firm EKS&H and the law firm Berg Hill Greenleaf & Ruscitti.
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