THE STATE OF COMMERCIAL REAL ESTATE
When considering the strength of the local commercial real estate market, one must first consider the prevailing strength in local job growth. While we aren’t creating new jobs on a daily basis, we seem to be losing far fewer jobs than in the past four years. Energy jobs have declined, partially because of low commodity prices, and partially because of more strenuous government oversight. Natural gas development will benefit from a shift in the country from coal fired power generation to natural gas run plants. Local machining and manufacturing companies remain busy and we could see more government-sponsored construction projects soon. The local job market, while a mixed bag, appears to be poised for steady, albeit small, growth. The efforts of the GJ Chamber of Commerce and others in the community to “buy local” may be starting to pay off.
The strong sectors in the local commercial market still seem to be in retail and professional office properties. The addition of TJ Maxx to Grand Mesa Center is helping to create more future retail jobs and current construction work while the former Borders Books space is expanded. The Sunflower Farmer’s Market space is nearing completion in the Rimrock Center and Hobby Lobby is doing a strong business just down the sidewalk. A yet-to-be-named retailer is making plans to move into the former Office Depot building at the intersection of 24 ½ Road and Hwy 6&50 across from Mesa Mall. True Value Hardware is looking at expansion into the Fruita area and we see retail growth also occurring in the Clifton area. In addition, national retail media reports that most major retail companies are financially stronger now than before the recession. All in all, it appears that we will have another banner year in retail growth in the area.
Rents also appear to be firming in the professional office sector. While we haven’t seen much in the way of new office construction over the past four years, the medical buildings planned for the new Community Hospital site off approximately 2350 G Road will mark quality expansion in that market. Some highly desirable Class A office space recently became available in the Shaw building at 760 Horizon Drive. It is anticipated that this space will not be available for long considering recent demand.
Industrial construction and leasing of industrial properties have slowed somewhat since the first quarter of 2012. Much of the blame for the softness seems to come from the slowdown in area natural gas drilling. Many of the drill rigs apparently will be laid down as winter approaches and while natural gas prices remain low. Many international drilling-related companies are expanding into markets that are rich in oil production while the natural gas industry slows its rate of growth. While GE Energy is expanding into a larger building on 21 ½ Road, space that is being vacated that company and others could be available for a time. For the first time in seven years, it is likely we will have a softer industrial building market for at least the next year.
Few vacant land transactions have occurred over the past four years. That may be changing now as retail demand and the aforementioned professional office demand strengthen. Our office is currently seeing demand for 2 to 5-acre retail sites primarily around the Mesa Mall area. While industrial demand appears flat, raw land zoned industrial is now available that is priced at about 1/4th the cost of industrial land four years ago. Some industrial-zoned land is currently available in the Whitewater area for as little as $10,000 per acre. As more people become aware of the affordability of industrial land, additional industrial land sales and the construction of spec buildings should occur. Are we at the bottom of the industrial market? It is hard to say. Still, this may be a good time to pick up bargains in the market.
We can forecast a market that is improving slowly, or a market that is ready to worsen. The one idea that supports the former is the fact that we live in the United States of America…still the land of the free and the home of the brave, and also the home of people who are not afraid to invest in their future. That tells me we are in for market improvements as the year progresses.Dale Beede, Broker, CCIM Coldwell Banker Commercial, Prime Properties, LLC 2646 Patterson Road, Suite B Grand Junction, CO 81506 Phone: 970-243-7375 Email: firstname.lastname@example.org