Commercial real estate slowing, but robust overall

Darah Galvin

The commercial real estate market in Western Colorado has begun to show signs of slowing. But thanks to a strong start at the beginning of the year, activity during 2022 remains robust overall.

The year began with several high dollar sales, including the $6.9 million sale of the D Road Mini Storage, $5 million sale of Mesa Inn and $6.3 million sale of the Horizon Park Plaza office building. These first quarter and second quarter sales were just a few of the multimillion dollar transactions.

A strong first half of 2022 meant the slower pace of sales in the third quarter didn’t significantly affect yearly sales. Compared to the same span in 2021, third quarter transactions decreased 47 percent and total dollar volume of $39 million dropped 47 percent. For the year, however, transactions are down 13 percent and dollar volume down 4 percent.

Retail transactions were the strongest category for the third quarter. They included the sale of Tractor Supply for nearly $5.9 million, a newly constructed Arby’s restaurant in Clifton for almost $1.9 million, the Main Street Station shopping center in Grand Junction for $1.7 million and Cornerstone Storage in Fruita for $1.5 million.

The City of Grand Junction and Mesa County continue to report increasing sales tax collections. The City of Grand Junction showed an increase of 13.3 percent in September 2022 compared to September 2021 and
a 10.5 percent increase in year-to-date numbers. Mesa County reported an 18.7 percent increase from September 2021 to September 2022 and 11.1 percent increase year to date. Sales tax collections have increased over the last few years and barely took a hit due to the COVID-19 pandemic and related restrictions and closures.

Although the office sector continues to see lower numbers, there have been a few notable sales. In July, a 6,608-square-foot office building at 2779 Crossroads Blvd. in Grand Junction sold for $1 million.

As with much of the nation, hybrid and fully remote work operations have changed the way office spaces are used. There’s more demand for smaller offices as fewer people use them full time.

Mesa County continues to see sales of medical and medical-related offices, however. According to the Grand Junction Economic Partnership, eight of the top 15 employers in Mesa County are in the health care sector and employ a total of more than 6,600. Buildings with single offices for lease continue to see demand for space for counselors, therapists, specialists and others in the health care industry.

The multifamily sector has experienced the biggest purchasing slowdown heading toward the end of the year. Investors took advantage of the increasing market and lower prices than other markets last year, purchasing almost $55 million in multifamily assets in 2021. Sales of multifamily properties year-to-date have lagged behind last year by 13.1 percent.

The sale of the Comfort Care nursing home in August for $2.65 million showed the multifamily market is still moving, although slowing.

Construction of new multifamily units remains strong, with the Railyard at Rimrock nearing completion. The Eddy Apartments hit the rental market. The construction of the Copper Village Apartments will add more rental units.

The industrial and warehouse market saw incredible movement in 2021 as well. Although 2022 has yet to emulate 2021, activity still fares comparably to past years. Large transactions included the sale of 2309 Grand Park Drive — a 13,172-square-foot building on 1.29 acres — for more than $2 million; a 7,280-square-foot building on 4.4 acres at
721 23 Road for $2 million; and a 5,720-square-foot building at 2756 Winters Ave. for $1.1 million.

The slowdown in the housing market has shown up in the commercial market. But thanks to a strong start, 2022 remains a comparatively good year.