Denver market benefiting from assets

More young professionals are flocking to Denver.

New York, San Francisco, Los Angeles and Chicago may be the country's most popular cities and common choices for professional relocation, but Denver recently has been emerging as a powerhouse. The city's real estate industry – commercial and residential alike – has been booming, in part because it's less expensive than many other cities.

According to the Denver Community Planning & Development Department, the city's new commercial construction in 2014 is expected to increase 26 percent from 2012, reaching about $2.55 billion – the most in at least 20 years, Bloomberg reported.

"What's working for Denver is that it's less expensive than San Francisco and New York, but that at the same time it has a growing and diverse industry – mutual funds, natural gas, technology," Christopher Frampton, a partner at an Avalon, Colo., developer, told Bloomberg. "Denver now has a vibrant downtown. It never used to. So now you have a true mix of city and sky."

Frampton's company is in the midst of developing 575,000 square feet of office, residential and retail buildings in the Union Station and Riverfront Park neighborhoods, and it has as much as 1.5 million square feet of developments planned.

Office space bouncing back
Companies are demanding more office space in Denver, as its third quarter 2013 vacancy rate was 14.6, according to brokerage CBRE, which is less than the market average since 1990. The pre-recession low was 14.2 percent, meaning commercial real estate companies are busy filling spaces. 

The brokerage also showed that rent for office space in Denver is about $20.08 per square foot, which is about the same as the pre-recession peak, Bloomberg reported. The national average is still hovering at 11 percent less than pre-recession peaks.

"The market is able to support such rent growth because office-using employment is expanding beyond its peak level, helping to generate healthy demand for space," said Arthur Jones, senior managing economist at CBRE.

Young, educated residents
As more young people – whether fresh out of college or new families looking for an elevated lifestyle at a lower price – flock to the Mile High City, so do large companies that want to employ such workers. From 2008 to 2012, Denver had the third-biggest increase in residents ages 25 to 34, tied with Seattle, according to data from the U.S. Census Bureau and Moody's Analytics. Only Washington, D.C., and Baltimore saw bigger increases.

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