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Denver commercial real estate sets another record in 2015

Denver commercial real estate

Denver commercial real estate sets another record in 2015

As the Denver commercial real estate continues to thrive, investors purchased $10.3 billion worth of commercial properties in metro Denver in 2015, which was a record for the area. Multifamily was the leader in all three submarkets, with $4.6 billion in sales which was a 31% increase over 2014, when $3.5 billion worth of apartments were sold.

The industrial submarket sales activity in 2015 were slightly down from 2014, which was a record year with close to $1 billion in sales volume. In the twelve months of 2015, there were 192 industrial sales transactions, totaling $802,420,043 while the average price per square foot stood at $78.13. In the twelve months of 2014, there were 232 industrial sales transactions with a total volume of $902,688,838 while average price per square foot stood at $66.13. However, cap rates for 2015 were slightly lower than 2014, averaging 7.68%, compared to the twelve months of 2014, when they averaged 8.01%. The average rental rate was at $7.98 per square foot at the end of the fourth quarter 2015, which was a 17% increase over the previous year. Total industrial inventory in the Denver commercial real estate market area amounted to 290,508,852 square feet, with an additional 3,569,111 square feet of industrial space under construction. The industrial submarket ended the fourth quarter 2015 with a vacancy rate of 4.4%, which was identical to 2014’s vacancy rate.

The retail submarket sales activity in 2015 was up compared to 2014. In the first nine months of 2015, the market saw 89 retail sales transactions with a total volume of $791,467,790 while the price per square foot averaged at $160.67. In the same first nine months of 2014, the market posted 85 transactions with a total volume of $441,489,206 while the price per square foot averaged at $115.83. However, cap rates 2015 were lower than 2014, averaging 7.27% compared to the same period in 2014 when they averaged 7.66%. One of the largest transactions that has occurred within the last four quarters in the Denver market is the sale of Denver Pavillions. This 311,612 square foot retail center sold for $109,600,000, or $439.65-per-square-foot. The property sold on 6/30/2015. The average rental rate was at $15.57 per square foot at the end of the fourth quarter 2015, which was a 1.73% increase over the previous year. Total retail inventory in the Denver commercial real estate market area amounted to 193,353,055 square feet, with an additional 1,052,441 square feet of retail space under construction. The retail submarket ended the fourth quarter 2015 with a vacancy rate of 5.0%, which was 0.5% lower than 2014’s vacancy rate of 5.5%.

The office submarket sales activity in 2015 was down 15% compared to 2014. In the first nine months of 2015, the market saw 105 office sales transactions with a total volume of $1,366,672,666 while the average price per square foot stood at $165.01. In the same first nine months of 2014, the market posted 82 transactions with a total volume of $1,603,349,935, while the average price per square stood at $188.76. Cap rates were also lower in 2015, averaging 6.98% compared to the same period in 2014 when they averaged 7.23%. The largest transaction that occurred in 2015, was the sale of 1515 Wynkoop St. The 306,791 square foot building sold for $171,937,500, or $560.44 per square foot. The property sold on 3/5/2015. The average rental rate for all classes, was $24.44 per square foot at the end of the fourth quarter 2015, which was a 5.21% increase over previous year. The average rental rate at the end of fourth quarter 2014 stood at $23.23 per square foot. Total office inventory in the Denver commercial real estate market area amounted to 193,167,537 square feet, with an additional 3,431,549 square feet still under construction. The office submarket ended the fourth quarter 2015 with a vacancy rate of 9.8%, which was 0.7% lower than 2014’s vacancy rate of 10.5%.