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Denver named a real-estate market to watch
Denver Business Journal
Metro Denver has been named one of the country's top markets to watch next year in the new "Emerging Trends in Real Estate 2011" report.
In its 32nd year, the commercial real estate study is compiled by the PricewaterhouseCoopers LLP financial services firm and the Urban Land Institute.
The report ranks Denver 11th among U.S. cities on a list of real estate markets to watch for commercial and multifamily investment.
In the survey, metro Denver earned points for its redevelopment of downtown's Union Station as a multimodal transportation hub, having "one of the nation's most modern airports" in Denver International Airport and relatively low business taxes. The market also was singled out for its broad-based economy anchored by oil and gas, alternative energy and defense companies, and its relatively strong office and apartment markets.
One survey respondent said of Denver: "We can weather the storm better than most, and quality-of-life attributes will continue to attract people."
Other major markets to watch, according to the survey, include: Washington, New York, San Francisco, Boston, Seattle, San Jose, Houston, Los Angeles, San Diego and Dallas.
The "Emerging Trends" study is based on surveys of more than 1,000 commercial real estate experts, including investors, developers, lenders and brokers.
Looking at the United States as a whole, the study found "hopeful signs of tempered commercial real estate market improvements" for next year.
Survey respondents expect high single-digit returns for high-quality, core assets, according to the study. They think lenders with strengthening balance sheets finally will step up foreclosure activity and property sales in 2011 and 2012. Stronger real estate lenders also are expected to increase lending next year.
Property owners whose buildings have high vacancies and lower rents may have trouble with the credit markets, and even face foreclosure.
Well-located properties with strong tenants that generate good cash flow will be most attractive to investors over the next several years, the study says. Prime apartment and office properties already are getting the most attention.
The best advice to investors for 2011, from survey respondents, includes:
-- Temper expectations, and buy well-leased core assets.
-- Lock in leverage; mortgage rates can't get much lower.
-- Focus on global "gateway" cities -- 24-hour markets -- including coastal cities with international airport hubs.
-- Buy land; it won't get any cheaper.
-- Be cautious with distressed loan pools. They could be a recipe for disaster if assets aren't underwritten properly.
Compiled by the DBJ's Paula Moore
