The commercial real estate market in Mesa County is in a dynamic phase shaped by several factors influencing both demand and supply. While there are challenges to navigate, the market remains active.

The commercial real estate market saw a modest downturn during the second quarter of 2024, with total sales volume and transaction value lagging behind 2023 levels. Despite this, certain segments of the market — including notable property sales —  continue to provide optimism.

One of the key indicators of the market’s overall performance — sales volume — fell significantly in the second quarter of 2024. Year-to-date figures reveal a 21 percent drop in sales volume compared to the same period in 2023, with total sales decreasing from $115.7 million to $91.7 million. This sharp decline can be attributed to a shift toward lower-priced property sales in 2024, a departure from higher dollar transactions in 2023.

The number of sales recorded saw only a minimal change, dropping just 1 percent year over year, with 100 commercial property sales recorded in the first half of 2024 compared to 101 in the first half of 2023. While properties are still changing hands at a healthy rate, the overall value of those transactions has decreased.

Several significant property transactions stood out during the second quarter of 2024. A newly constructed Starbucks building on Horizon Drive was sold for more than $5 million, one of the highest-value transactions for the quarter. The Horizon Drive building that houses the Bank of the San Juans sold for $1.1 million, while the Grand Villa Care Facility changed hands for $5 million.

The commercial real estate market doesn’t operate in isolation. Broader economic trends affect the market, including consumer spending and employment stability. Consumer spending in Mesa County has trended slightly upward in 2024, with a 2.7 percent increase in sales tax revenue compared to 2023.

Even as the market for commercial real estate sales has softened, there’s been a modest decline in new commercial development activity. Commercial building permits have decreased by 19 percent, with four fewer permits issued in 2024 compared to 2023. This suggests a temporary slowdown in new construction potentially linked to rising interest rates and construction costs.

The availability of commercial properties on the market has increased. As of the second quarter of 2024, there were 222 active commercial listings and 165 active leases in Mesa County. Both figures represent an increase over Q2 2023 and Q1 2024, indicating a growing inventory of properties available for sale or lease.

Increasing demand for industrial and warehouse space drives the market. This sector has remained resilient in the face of broader economic uncertainties. Local businesses are expanding, and national companies are showing interest in establishing logistics centers in Mesa County. Vacancy rates for industrial properties are at historic lows, putting upward pressure on lease rates. Investors are capitalizing on this trend with new developments.

The retail real estate sector in Mesa County has experienced mixed conditions. While brick-and-mortar retail has seen a decline in certain areas, such as big-box stores, there’s been a resurgence in smaller, niche businesses and experiential retail. Food and beverage establishments, particularly those with outdoor dining, have seen steady demand as consumers seek social experiences. Retail spaces that blend physical and digital experiences or cater to specific needs perform well.

New construction in the commercial market has seen an uptick, especially in the industrial and multifamily sectors. However, rising construction costs and supply chain disruptions have caused delays in some projects. Developers are navigating these challenges by focusing on cost-effective solutions and sustainable building practices.

Investors are keeping a close eye on Mesa County as a region with  growth potential. Such challenges as rising interest rates and inflation temper enthusiasm in some quarters. Despite these hurdles, local investors continue to be active, particularly in the industrial and multifamily sectors. The appeal of long-term growth coupled with Mesa County’s strategic location and economic diversity continues to draw attention from regional and national investors.

The commercial real estate market remains active with a steady number of transactions and an increase in property listings. As consumer spending continues to rise and employment remains stable, there’s cautious optimism the market could rebound in the second half of 2024. The key will be balancing the increased inventory of properties with potential demand from businesses and investors looking for opportunities in a changing economic environment.