Development question: Does it make any sense to bring more apartments, offices, retail projects to the Denver area today?
“What would I develop?” is an especially intriguing question in the Denver area today, given the number of construction cranes dotting the landscape, rising labor and land costs, and increasing opposition to development from neighborhood groups and some politicians.
Four top commercial real estate brokers – experts in all of the major commercial real estate food groups – office, multifamily, retail and industrial – will address that question at the upcoming 2018 Development & Construction & P3 Forum sponsored by the Colorado Real Estate Journal. (Register for the conference with this link.)
The conference, expected to draw 400 or more people, will be the largest development conference this year in Colorado. The conference will be held from 7 until 11:45 a.m. June 5 at the Hyatt Regency Aurora-Denver Conference Center.
The Broker Panel, titled appropriately enough, “What Would I Develop?” will be the first of the halfday event.
Panel members include:
- Office: Doug Wulf, executive managing director at Cushman & Wakefield;
- Multifamily: Terrance Hunt, executive managing director, ARA, a Newmark company;
- Retail: Riki Hashimoto, executive managing director, Newmark Knight Frank Capital Markets; and
- Industrial: Tyler Reed, managing director, Stream Realty Partners.
“I’m really excited to hear what these great people would invest their own equity in, if they were on the other side of the table and were acting as developers,” said John Markovich, a senior vice president of FirstBank.
Markovich, the moderator of the “What Would I Develop” panel, threw out some options about where the brokers see opportunities.
“Would they still do speculative projects? Or would they lean toward preleased development? How do they mitigate the risk of construction costs rising?”
FirstBank in recent years has been an aggressive local commercial real estate lender.
The bull market in Denver commercial real estate, like the stock market, has had a long run.
“I feel like the projects that are moving forward do not have much meat on the bone,” Markovich said. “There is not much room for error.”
The Denver area market “is kind of approaching the last inning of the cycle,” he added.
At the same time, there is plenty of money to finance developments.
“That is kind of scary,” Markovich said. “Bank margins are compressed. There is plenty of capital chasing projects. It’s not like 2008-2009 when anyone who could fog a mirror could get financing, but lenders are still very aggressive.”
I asked Markovich if he thinks the Denver market is facing overbuilding.
“Certainly, in some asset classes it looks that way,” Markovich answered. “For multifamily, for example, that’s been a concern for a couple of years now. If there is a slight dip in the market, you would have to think some project would suffer. That’s why I am really interested in what these guys who lease and sell commercial real estate for a living see as development opportunities they would pursue.”
Other panels at the Development & Construction Forecast Event include:
- Contractors: Emerging Trends,
- Mid-year updates,
- Developers: Opportunities and Challenges,
- Construction Cost Update and
- Public (Development) Perspectives.
In addition to the brokers on the “What Would I Develop” panel, other speakers at the conference will include:
- RJ McArthur, partner, EKS&H;
- Allan Bliesmer, Plains District manager and vice president, Hensel Phelps Construction;
- Shannon Rogers, senior vice president, GE Johnson Construction Co.;
- Joel Scottm, CEO, Murray & Stafford Inc.;
- Rich Allison, executive vice president, GH Phipps Construction Cos.;
- Todd Guthrie, president, W.E. O’Neil Construction Co.;
- Mike Robinson, senior preconstruction manager, The Weitz Co.;
- Shane Brown, partner, EKS&H;
- Patricia Silverstein, president and chief economist, Development Research Partners;
- Peter Knowles, executive vice president, Rider Levett Bucknall;
- Marshall Burton, president and CEO, Confluent Development;
- Brian J. Levitt, president, NAVA Real Estate Development;
- Erika K. Shorte, director, Colorado Acquisitions, Evergreen Development;
- Stephen Tebo, founder/owner, Tebo Development;
- Austin Kane, vice president, regional director, Unico Properties LLC;
- Jonathan Bush, principal, LCP Development; and
- V. Michael Komppa, president, Corum Real Estate Group.