Market contrasts: While ample space remains available, construction proceeds
To the casual observer, the commercial real estate market in the Grand Valley offers a contrast in extremes. In the midst of signs advertising open retail, office and industrial space are the sights and sounds of construction workers and machinery building structures on 24 Road, in the Rimrock Marketplace and on the Mesa State College campus.
“We probably have more projects going on in Grand Junction than we ever have,” says Steve Meyer, president of Shaw Construction, a high-profile company which continues work on two college buildings, two Grand Junction Housing Authority projects, a building for Grand Valley Rural Power and a new dental office.
Signs of a rebound in the real estate market provide some hope as residents hope for conditions remotely resembling the boom times of 2006 to 2008. The number of real estate transactions in Mesa County and the total dollar volume of those sales increased during the first half of 2010 over the first half of 2009.
But there are also signs that a bona fide recovery is a ways off — perhaps a year or more.
On the residential side of the ledger, the median sales price for a three-bedroom home in Mesa County dropped 10 percent to less than $185,300 during the first half of 2010. The number of secured real estate loans dropped 52 percent. As for commercial construction, Mesa County issued only 13 building permits through the end of June, half the number issued during the first half of last year, which experienced one of the slowest real estate market since the oil shale bust of the 1980s.
While business might not be going gangbusters for most construction companies, they can be thankful they’re not reliant on business in the mountain resort towns. Says Meyer: “The mountain towns are deader than they’ve been in 30 years.”
Rod Johnson, owner and president of EC Electric in Grand Junction, agrees: “It is worse in mountain resort communities.” EC Electric offers electrical contracting work in Colorado and nearby states.
Johnson says when travelers notice construction going on in places like Vail, they should realize the projects were planned during strong economic times and are being completed at a time when not many new projects are planned.
Meanwhile, Grand Junction certainly has plenty to worry about in the commercial sector. There’s an abundance of office and retail space partly because developers built additional capacity in mini malls and other commercial spaces during the boom days that lasted until late 2008. Another key factor is that some businesses have closed their doors during the economic downturn, leaving yet more open commercial space.
ERA Murphy and Associates was one of a handful of real estate firms that consolidated last year to reduce overhead and continue to do business. The company merged with Coldwell Banker Home Owners Realty, but left vacant a
5,000-square foot office building on North Avenue.
Still, many industrial buildings have been leased or purchased. For companies that have the resources, a down market offers a good time to invest.
“We’ve leased so many vacant buildings that our supply is not as great as it was,” says Dale Beede, an agent with Coldwell Banker Prime Properties.
He says American Furniture Warehouse must construct a new building to open an outlet in Grand Junction.
“It’s a good market for people to better position themselves,” Beede adds.
So far, predictions of a wave of commercial property foreclosures haven’t come true in the Grand Valley, and the numbers look good compared to the residential foreclosure rate. Reports of a resurgence in commercial real estate leasing in the Denver area also offer hope for the Grand Valley, which often follows Front Range trends several months later.
But Beede and others see people slowly testing the waters of investment in local commercial property and other kinds of real estate. “We have four to six years to work through this,” Beede says
Adds Johnson: “I don’t see any signs of recovery.”