Industrial developers, brokers and investors in the Denver area should hire Tony the Tiger as their spokesman.
That’s because the local industrial market, to borrow the catchphrase of the iconic cat that pitched Kellogg’s Frosted Flakes, is “GRREAT!”
That’s not hyperbole.
“In the big picture, I think it is incredible,” said industrial broker Jeremy Ballenger.
Demand is hot for industrial space in the Denver area. Shown is a building in the Hub 25 industrial park.
“We are seeing really good demand, really low vacancies, and rental rates are kind of reaching replacement cost,” added Ballenger, a senior vice president at CBRE.
The market is being driven to new heights primarily by e-commerce giants, most notably Amazon, noted Ballenger, who will be a moderator at the 2017 Industrial Summit & Expo conference next month.
The industrial conference, the largest of its kind in Colorado this year, is sponsored by the Colorado Real Estate Journal.
The conference will be held from 12:25 to 4:45 p.m. Sept. 19 at the Hyatt Regency Aurora-Denver Conference. The industrial conference will follow a half-day CREJ conference on the office market that I told you about on Wednesday.
This icon could be a spokesman for Denver’s industrial market.
Ballenger noted a recent CBRE industrial forecast indicated that, nationwide, more than 50 percent of all of the industrial real estate absorption this year will come from e-commerce.
“E-commerce is a pretty big demand driver, especially when you consider that category really didn’t even exist five years ago,” Ballenger said.
At the same time, more traditional warehouse uses, such as storing materials for homebuilding, also are “very strong right now,” in the Denver area, he added.
This being Colorado, of course, you have to talk about the impact of cannabis on the warehouse space.
Indeed, the final industrial panel at the CREJ conference will be a cannabis update. That panel will be moderated by Steve N. Levine of the law firm Husch Blackwell LLP. Panel members will be Paul Kluck of CBRE and Chuck Smith of Dixie Elixirs and Edibles.
This industrial building will be part of the 1.8-million-sf 76 Commercenter in Brighton, a joint venture between Hyde Development and Mortenson. It is being marketed by Tim D’Angelo, Mike Wafer and Mike Wafer Jr. of Newmark Knight Frank.
“Cannabis had an impact, for sure,” Ballenger said. “I think it is much more muted than a few years ago. For example, Denver is not giving out any more permits, so I think the industry has pretty much plateaued. But pot growers took over 4 million square feet of industrial space a few years ago, a notable percentage of the market.”
Denver’s robust industrial market has not gone unnoticed by investors.
“We are seeing properties selling for record prices and record low cap rates,” Ballenger said.
In fact, investors from all over the world are kicking the tires and looking to buy industrial properties, he said.
“We are seeing capital coming from the Middle East, Asia, Europe and Central America. That is definitely new. For the first time, we are on the global radar screen.”
A snapshot of the Denver area industrial market. Source: Colliers International.
Ballenger’s CREJ panel is called Broker Update: State of the Market and 2018 Outlook.”
It will be the first panel after the opening remarks by attorney James M. Mulligan of Husch Blackwell LLP and Peter Beugg, the 2018 SIOR Colorado chapter president.
Ballenger’s panel members will include:
- James M. Bolt, CBRE;
- T.J. Smith, Colliers International;
- Mike Wafer, Newmark Knight Frank;
- Drew McManus, Cushman & Wakefield; and
- Mitchell H. Zatz, JLL.
Another panel is titled “North is Where It’s At for Industrial Development,” which will look at the north, north central, northwest and northeast industrial submarkets.
That panel will be moderated by Tyler Carner of CBRE.
Panel members will include:
- Wayne E. Barrett, Prologis;
- Ann Sperling, Trammell Crow Co.;
- Randy M. Schwartz, Westfield Co. Inc.;
- Chris King, DPC Cos.; and
- Jeremy J. Kroner, CBRE.
A Construction and Design Trends panel will be moderated by Tom Kooiman, Brinkmann Constructors.
Panel members will include:
- Chris Alcorn, Acorn Construction Inc.;
- Karla Nugent, Weifield Group Electrical Contracting;
- Ned White, Intergroup Architects; and
- Bryant Mazzetti, Powers Brown Architecture.
A lender panel will be moderated by Peter Keepper, Essex Financial Group.
Panel members will include:
- Sara Croot, Chase Commercial Term Lending;
- Adam Sands, FirstBank;
- David O’Brien, Terrix Financial;
- Kevin Doyle, Wells Fargo, SBA; and
- Brian Schwartz, Great-West Financial.
The Owner/Developer/Investor Panel: Industrial Tops the List, will be moderated by Marshall Burton of Confluent Development.
That panel will include:
- Chad Brue, Brue Bakoul Capital Partners LLC;
- Randall C. Hertel, Majestic Realty Co.;
- Ryan Good, Etkin Johnson Real Estate Partners;
- Mace McClatchy, Industrial Property Trust;
- Mark Bowen, DCT Industrial; and
- Pete Anderson, Becknell Industrial.
