South Metro Denver Commercial Real Estate Market View

By September 1, 2011 January 30th, 2015 No Comments



‘Finally’ is the collective word coming out of the commercial real estate world. Finally some movement on leasing activity, finally some sale transactions taking place in commercial real estate, finally some financing becoming available.   The past three plus years have been a tough run for anyone involved in Commercial Real Estate.   2011 has brought renewed optimism and excitement to this sector of the real estate marketplace.   In the South Metro area we have seen many of the same gyrations the rest of the Colorado market has experienced in the past three years.   Following the Lehman Brothers collapse in the Fall of 2008 we saw lease rates dive, vacancy rates increase dramatically (especially in retail) and financing all but dry up for two and a half good years.


With an economic recovery well under way we are now seeing slow recovery in commercial real estate… vacancy rates are decreasing, trailed by the leveling of lease rates (they’re not diving any longer) and trailing well behind the lease rate recovery is the leveling of property values.    Sometimes even given these changes the market doesn’t accept improvements and as such the bid-ask gap remains fairly wide,  that is the expectation that buyers/tenants have (the bid) and the price the Seller/Landlord is seeking for the property (the ask).   This gap was very wide in early 2010 and has slowly improved over the last several months.   The length of this downturn and the compressed lease rates and subsequent deals that could be found has fostered a “steal the property” mentality in the minds of buyers and tenants.  This has in many cases created unrealistic expectations on where a property can be secured either in terms of lease rate or purchase price.   I encourage all buyers/tenants to seek good counsel either in the form of an experience commercial real estate broker or a good attorney.


As an ongoing portion of this column I will feature a local market in the South Metro area and this month I would like to focus on Castle Rock.  With lots going on in the Castle Rock market including a new $250 Million dollar Hospital under construction just West of I-25 at the Meadows Development and a new senior living facility by Bonaventure right across the street, the once small Town that is the Douglas County seat has become more and more attractive to primary employers and permanent residents.  The two projects just mentioned alone comprise over 400,000 SF of construction that is underway.   The town of Castle Rock has dramatically improved their development review process and interaction with the business community generally and is in most circles regarded as one of the more development friendly municipalities on the Front Range.