Tuesday, July 25, 2006

What Silver Lining?

by Osman Parvez


For the last few months, I've noticed an uptick in the number and size of commercial property deals in our region. Interlocken is again hot. Longmont is attracting a number of new companies. Denver is frequently announcing new projects underway and large commercial property deals. A quick glance in downtown Boulder now yields a surprising number of cranes (and more are on the way).

As I've mentioned before, rising interest rates and tougher lending standards (including a move against piggyback mortgages) are all signs of credit tightening, which should push potential buyers into renting. Sure enough, residential rents are on the rise. Gordon Von Stroh, a DU business professor who has been tracking Denver's real estate market for 25 years just released his latest (100th) report. It shows apartment vacancies in Denver at the lowest level since 2001 and median rent of $804.28 (up 2.3% from a year earlier).

If you look at my real estate market updates (right menu on my blog) for local communities, you'll find many are showing higher inventories and lower absorption rates. Colorado also has a record number of foreclosures. Areas with short commutes to Boulder or Denver may be attractive investments (I particularly like Broomfield, Louisville, and Lafayette). The smart money earns a profit by buying property below intrinsic value. Distressed assets are often a great source for doing this, if you're willing to do the due diligence and have patience for the often lengthy process.




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The ideas and strategies described in this blog are the opinion of the writer and subject to business, economic, and competitive uncertainties.   We strongly recommend conducting rigorous due diligence and obtaining professional advice before buying or selling real estate. 

3 comments:

  1. Osman, you have probably one of the best blogs on the matter. Not only you provide us with comprehensive analysis of RE trends in different sub-areas (I clopsely watch Louisville) but also with side observations indirestly related to the RE. From this post I can assume that business is improving and this will eventually affect RE. Great job!

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  2. Thank you for the generous compliment. It's good to know that my work is reaching an audience and is appreciated.

    Yes, there is increasing evidence of economic growth in the Denver/Boulder area. The attractiveness of cities like Louisville, Boulder, and many places on the Front Range is also a driver of long term growth but it won't come without ups and downs.

    Many people have written about the relationship between jobs and local RE and I tend to agree. The stronger the local economy, the better the housing market. It's probably the most important factor for a primary home market.

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  3. "Thank you for the generous compliment"
    Well, you deserved it. Funny enough, before I started to read your blog regularly, I spatted with you elswhere (another RE blog)on the quality of Boulder appartments - I lived in several developements along the Arapahoe and near Table Mesa - it was horrible. The interior layouts were generally good, but the construction quality was below any standards - the biggets complain is soundproofing and windows. The latter stop everything but wind and sounds :-). Just an observation. SFH were better, though just a little; as an owner of RE in this area I know this firsthand... Anyway, thanks for the excellent blog.

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