Phil Castle, The Business Times
Office spaces, retail outlets and warehouses likely will become smaller as businesses respond to changes in productivity, commerce and distribution.
Meanwhile, prospects for commercial real estate in the United States remain encouraging, according to Fred Schmidt, president and chief operating officer of Coldwell Banker Commercial. “The outlook for commercial real estate is positive.”
In Mesa County, commercial real estate prices and rents remain lower than national levels despite what’s expected to be increased demand in the retail sector and lower vacancies for multi-family housing, said Todd Conklin, president and chief executive officer of Coldwell Commercial Prime Properties and Coldwell Banker Distinctive Properties based in Grand Junction.
Schmidt and Conklin shared their national and local perspectives during a luncheon presentation at the Western Colorado Economic Summit in Grand Junction. More than 400 people attended the inaugural summit, an event that expanded on what was an annual meeting for the Grand Junction Economic Partnership. The summit included keynote and breakout sessions on not only real estate, but also broadband communication, energy, health care and work force development.
Schmidt leads one of the largest real estate companies in the world with more than 200 offices and 2,300 real estate professionals operating in 20 countries. Schmidt has worked in the real estate industry for more than 30 years.
The commercial real estate industry in the United States enjoys tailwinds in low interest rates, increasing consumer spending and job growth, Schmidt said. But the industry also faces headwinds in continued unemployment, government debt and political uncertainty.
Demographics also affect commercial real estate, he said, including the emergence of the 76 million millenials born between 1980 and 2000.
As a group, millenials have married and started families later in life, Schmidt said. Millenials also play an increasingly important role in the work force, and Mesa County could take advantage of the priority millenials tend to place on quality of life in attracting members of the generation, he said.
Schmidt also forecast what he sees as trends in commercial real estate, including smaller offices spaces that reflect increased productivity as well as smaller retail outlets and smaller warehouses located closer to customers to expedite distribution. While Internet sales continue to increase, retailers look to offer customers both e-commerce and traditional brick and mortar locations, he said. As a regional transportation hub, Grand Junction could take advantage of changes in distribution, Schmidt said.
Construction of multi-family housing is expected to surge, he said, temporarily increasing vacancy rates.
In Mesa County, Conklin said office vacancy and rental rates remain below national and regional levels.
The price of retail properties remains about half of regional and national levels, he said. But vacancies are expected to go down and prices up as demand increases.
With the downturn in the energy sector related to low prices, vacancies have increased and rents moved lower for industrial properties and warehouses, Conklin said.
Vacancies for multi-family housing have gone down, but rents have not gone up, he said.