Denver’s position slipped in the latest Emerging Trends in Real Estate report, but the city remains in the top 20 markets to watch nationally in 2020.
In terms of overall real estate prospects, Denver ranked 17th in the nation, down from No. 8 last year.
The lower ranking shouldn’t be concerning because there is less differentiation than ever between the top markets, said Andrew Warren director of real estate research for PwC, which publishes the report with Urban Land Institute. “The score (for Denver) is virtually the same as it was last year; everybody else has kind of shifted around,” he said.
Austin, Texas, led the pack for overall real estate markets, followed by Raleigh/Durham, North Carolina; Nashville; Charlotte, North Carolina; and Boston.
With regard to its ranking among various commercial property types, “Denver exceeds all market averages and matches the average for the top 20 markets, Warren said at a ULI Colorado meeting this morning where the report was highlighted.
He also noted Denver is projected to outpace the U.S. in annual gross domestic product growth over the coming five years at 2.5% vs. 2% nationally.
“The Mile High City displays an enviable combination of size (metro population of 2.9 million and a strong growth trajectory,” the report says. At the same time, “Costs are much on the mind of Denver’s real estate community, from land costs, to construction inputs, to housing affordability, to the tenant improvement allowances needed to nail down leasing agreements.”
In addition to Warren, ULI Colorado hosted a panel of commercial real estate experts who discussed trends within various areas of expertise and Chris Akers, economist with the Colorado Department of Local Affairs. According to Akers, Colorado’s population grew 1.2% from 2018 to 2019, the lowest level since 2005 but well ahead of national population growth of 0.5% during the same period. In terms of job growth, the Denver area should average 1.4% job growth over the next decade, with some areas of the state – notably Weld County – exceeding that average, he said.
Affordable housing, a top issue for ULI Colorado, was a recurring theme in the meeting, with Kim Duty of the National Multifamily Housing Council noting challenges have spread across the country. In 2000, 16% of U.S. middle-income households were “rent-burdened,” and that number grew to 32% in 2016, she said. Denver is even worse, with the number jumping from 18% to 45% during the same time frame.
Rent control, she and others asserted, is not the answer.
In Colorado, “I think it’s baffling that we’re even considering rent control given that it’s been tried all over the country,” said Jim Johnson, shareholder with Otten Johnson Robinson Neff + Ragonetti. “It’s resulted in increased housing costs.”
