Investors targeting Denver as a ‘rising star city to park capital

[Tariq Hakeem]

Buoyed by strong employment and population growth over the past decade, Denver is among a handful of non-coastal U.S. cities that rank as the most attractive destinations for investors, according to a recent report published by JLL Capital Markets.

Denver was one of eight “rising star” cities or "growth cities" identified by JLL (NYSE: JLL). The cities are becoming increasingly appealing for investment opportunities and are competing with larger "gateway markets" such as Los Angeles, New York City or San Francisco, for those dollars.

The other cities on the “rising star” list are Austin, Atlanta, Charlotte, Dallas, Miami, Nashville and Raleigh.

The line between gateway cities and growth markets such as Denver is likely to become more blurred in the near future. JLL’s study added gateways such as New York City or San Francisco will remain a magnet for residents and companies, but they will have greater competition from previously non-traditional markets — Denver included.

Denver has seen more than 25% employment growth since 2010, with a 17% increase in population during that same time. Many experts believe that the city's active lifestyle and central location will continue to draw employers and workers considering relocations.

Even during the pandemic, Denver has proven its ability to attract major corporate office users such as Palantir, Healthpeak Properties Inc. and LogistiCare Solutions LLC.

“The city is ranked in the top five U.S. markets for job recovery and continues to benefit from West Coast spillover and gains in aerospace, engineering and contracting,” said Jordan Robbins, a senior managing director with the Denver office of JLL Capital Markets.

Peter Merrion, a senior director with JLL Capital Markets in Denver, said he's been encouraged by a strong start to office investment activity in 2021 compared to the "notable depression in sales volume and activity" in 2020.

"What we're finding — and I think this is a theme that's being echoed across product types — is that Denver is graduating in terms of its market status," Merrion said.

Three months into the year, he said, office occupiers and investors appear to be "far more positive and far more bullish." Collections on office, multifamily and industrial properties have performed better during the pandemic than many initially thought, Merrion said.

"On the office side, and the multifamily side and the industrial side, companies saw far less of an impact to their bottom lines in 2020 than many thought," Merrion said. "That's not to belittle the very real pain that a lot of people did go through, but for the most part, the pandemic was a shorter headwind, economically, than a lot of people were thinking."

Still, some of Denver's office market fundamentals, such as a rise in sublease space that's been acute in the Central Business District, are prompting concern from investors, Merrion said. The result has been increased interest in suburban submarkets such as the Denver Tech Center or Interlocken.

Many investors also want to see increased returns to the office from employers before making big decisions, which could mean it will take longer for Denver's office investment market to recover to pre-Covid levels of activity, Merrion said.

JLL isn't the only one pegging Denver as a city poised to emerge from the pandemic in a position of relative strength.

Results of an investor survey released by CBRE Group Inc. last month found that Denver ranked third out of five Sun Belt cities where investors are likely looking to park their money. Austin and Dallas ranked ahead of Denver, while Atlanta and Phoenix rounded out the top five.

“Sun Belt markets garnered strong interest, particularly those with favorable job and population growth prospects and, in most cases, higher yields,” the CBRE report stated. “For the first time in the survey’s seven-year history, large investors (those with assets under management of more than $50 billion) are more enthusiastic about secondary markets than primary markets.”

[David Avery]

Colorado Springs down to Pueblo is where investors could do really good on their investments.

Great article

[Jeffrey Davis]

As a Miami-based Florida Realtor, I gotta rep the Sunshine State. According to US News (https://realestate.usnews.com/...)

Top 25 Fastest-Growing Places in the U.S. in 2020-21

#1: Fort Myers, FL

#3: Naples, FL

#4: Sarasota, FL

#5: Ocala, FL

#6: Daytona, FL

#7: Lakeland, FL

#8: Port St. Lucie, FL

#11: Melbourne, FL

#12: Orlando, FL

#14: Tampa, FL

#20: Jacksonville, FL

Denver didn't make this list, but Fort Collins did. I am encouraging investors here for the great rental market (vacation and short term). That being said, a family member who is a techie millennial is moving from Miami to Denver, so maybe you are onto something...

[Kayla Givens]

Great article. Where can investors do well in the other cities you've mentioned? North Atlanta? North Austin? South Phoenix? I know you mentioned the Tech Center and Interlocken for suburban submarkets, what would be the comps in these other markets? Thanks 

[Jay Hinrichs]

Originally posted by @Tariq Hakeem:

Buoyed by strong employment and population growth over the past decade, Denver is among a handful of non-coastal U.S. cities that rank as the most attractive destinations for investors, according to a recent report published by JLL Capital Markets.

Denver was one of eight “rising star” cities or "growth cities" identified by JLL (NYSE: JLL). The cities are becoming increasingly appealing for investment opportunities and are competing with larger "gateway markets" such as Los Angeles, New York City or San Francisco, for those dollars.

The other cities on the “rising star” list are Austin, Atlanta, Charlotte, Dallas, Miami, Nashville and Raleigh.

The line between gateway cities and growth markets such as Denver is likely to become more blurred in the near future. JLL’s study added gateways such as New York City or San Francisco will remain a magnet for residents and companies, but they will have greater competition from previously non-traditional markets — Denver included.

Denver has seen more than 25% employment growth since 2010, with a 17% increase in population during that same time. Many experts believe that the city's active lifestyle and central location will continue to draw employers and workers considering relocations.

Even during the pandemic, Denver has proven its ability to attract major corporate office users such as Palantir, Healthpeak Properties Inc. and LogistiCare Solutions LLC.

“The city is ranked in the top five U.S. markets for job recovery and continues to benefit from West Coast spillover and gains in aerospace, engineering and contracting,” said Jordan Robbins, a senior managing director with the Denver office of JLL Capital Markets.

Peter Merrion, a senior director with JLL Capital Markets in Denver, said he's been encouraged by a strong start to office investment activity in 2021 compared to the "notable depression in sales volume and activity" in 2020.

"What we're finding — and I think this is a theme that's being echoed across product types — is that Denver is graduating in terms of its market status," Merrion said.

Three months into the year, he said, office occupiers and investors appear to be "far more positive and far more bullish." Collections on office, multifamily and industrial properties have performed better during the pandemic than many initially thought, Merrion said.

"On the office side, and the multifamily side and the industrial side, companies saw far less of an impact to their bottom lines in 2020 than many thought," Merrion said. "That's not to belittle the very real pain that a lot of people did go through, but for the most part, the pandemic was a shorter headwind, economically, than a lot of people were thinking."

Still, some of Denver's office market fundamentals, such as a rise in sublease space that's been acute in the Central Business District, are prompting concern from investors, Merrion said. The result has been increased interest in suburban submarkets such as the Denver Tech Center or Interlocken.

Many investors also want to see increased returns to the office from employers before making big decisions, which could mean it will take longer for Denver's office investment market to recover to pre-Covid levels of activity, Merrion said.

JLL isn't the only one pegging Denver as a city poised to emerge from the pandemic in a position of relative strength.

Results of an investor survey released by CBRE Group Inc. last month found that Denver ranked third out of five Sun Belt cities where investors are likely looking to park their money. Austin and Dallas ranked ahead of Denver, while Atlanta and Phoenix rounded out the top five.

“Sun Belt markets garnered strong interest, particularly those with favorable job and population growth prospects and, in most cases, higher yields,” the CBRE report stated. “For the first time in the survey’s seven-year history, large investors (those with assets under management of more than $50 billion) are more enthusiastic about secondary markets than primary markets.”

Dont forget its world headquarters for Bigger Pockets corporate that is a market maker / mover !!!

[Matt M.]

This just in.... Water is Wet!!! 

[James Carlson]

@Tariq Hakeem

Interesting post. This just confirms what I'm seeing in our intake calls. More California, New York and Seattle buyers who want to "park some money" Denver. This is subjective, but I can see it when you're out to eat in LoHi or the Highlands or on Tennyson Street. More Teslas and big-ticket cars. More well-dressed people. More money everywhere. 

I'm not saying it's all a great thing. Denver's increasingly a tough place to live without loads of cash. And the inequity is easy to see. But what it does tell me is that people with a lot of money think that buying and holding in Denver is a great financial choice. Not for cash flow. Not because the cap rate works. But because this Denver is on the path of Seattle and San Francisco. 

[Greg Stetz]

Wow. What a list. I live in Port. St. Lucie, FL and homes are flying off the shelves in hours for high prices. The best buyer's agents are in a challenging environment. Very difficult to pull off a simultaneous closing with the same clients. I am also with EXP @Jeffrey Davis

[Dave Peterson]

Hi all, I'm a realtor in Naples, Fl. Reach out to me if you are looking to do deals in the area. 239-296-4463