Phil Castle, The Business Times

While the commercial real estate market in the Grand Valley faces challenges from higher interest rates and inflation, Brian Bray remains optimistic.

Demand persists, especially for investment properties. Businesses are growing and moving into bigger quarters. And more inventory is becoming available, said Bray, managing broker of Bray Commercial based in Grand Junction. “The market is good. The market is really strong.”

While sales and dollar volume decreased in the first quarter compared to more robust activity a year ago, Bray said he expects sales to increase and reflect that underlying strength. “There are just a lot of good things going on in the Grand Valley.”

Commercial sales decreased in Mesa County during the first quarter of 2023 compared to the same span in 2022.

According to numbers Bray Commercial tracks for the commercial real estate market, 45 transactions worth a total of less than $50 million were reported during the first quarter of 2023. More than 70 transactions worth a total of more than $70 million were reported during the first quarter of 2022.

Bray said the comparison isn’t straightforward because of the surge in activity in 2022. Going back to 2008, dollar volume for the first quarter of 2023 was still higher than all but three years.

The Mesa County commercial real estate market faces headwinds in higher interest rates that make it more expensive to borrow money and inflation that makes it more expensive to build, he said.

Bray said he remains upbeat nonetheless about most sectors of the market.

Demand remains strong for vacant properties, and more industrial and distribution inventory should come on line, he said. The retail sector has experienced ups and downs. The office sector continues to lag as it has nationally, but wasn’t overbuilt in Mesa County, he said.

Meanwhile, the multifamily housing sector has surged in Mesa County with the development and construction of thousands of units, he said. That reflects demand for more affordable housing as well as what he termed a  “turn key” lifestyle without the responsibilities of homeownership.

Higher interest rates also have affected residential real estate activity in Mesa County. Transactions and dollar volume through the first five months of 2023 both declined more than 30 percent compared to the same span in 2022.

There’s also been a decline in the construction of single-family homes, Bray said, as builders face higher interest rates and prices on materials.

There’s a correlation between residential and commercial real estate, Bray said, as growing populations and work forces demand more products and services as well as provide labor for companies.  Commercial real estate trends traditionally lag behind residential trends, he said.

Bray said there’s more uncertainty in the market, a situation a presidential election in 2024 will only exacerbate.

But at the same time, the local economy remains strong. And Grand Junction has garnered increasing attention in the aftermath of the COVID-19 pandemic as a place to work and live, he said.

Bray said that makes him optimistic.