December 2006
Metro Denver commercial and aviation markets capturing attention
Metro Denver’s commercial real estate market and aviation industry are capturing attention nationally, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for December 2006.
While “global gateway” areas such as New York, Washington, D.C., and Los Angeles were the favored investment locations in the 2007 edition of the Emerging Trends in Real Estate report by the Urban Land Institute and PriceWaterhouseCoopers, Denver was ranked as the 16th best market for commercial/multifamily investment and development out of 45 markets in the United States. Analysts noted that Metro Denver’s “budding light rail system and evolving 24-hour LoDo district will be a boon.”
“Metro Denver’s stance in the investment market is continuing to improve, and growth in the commercial market serves as proof,” stated economist Patty Silverstein, president of Development Research Partners. “Downtown Denver is on track to reach a record one million square feet of leasing activity this year.”
The previous leasing activity record in Downtown Denver was set 21 years ago when the Central Business District (CBD) absorbed 968,000 square feet. Third quarter absorption in Downtown Denver alone was 369,269 square feet or 36% more positive absorption than in all of 2005.
Denver-based Westfield Development Co. unveiled plans for a 22-story office tower at 1800 Larimer Street that will be the most energy efficient high-rise in the downtown area. The $150 million, 500,000-square-foot office tower will seek the silver LEED (Leadership in Energy and Environmental Design) certification issued by the U.S. Green Building Council. Demand for LEED-certified space is growing across the country partly because it lowers a tenant’s utility bills and can increase worker productivity. Denver’s RNL Design has been selected as the architect.
Recent major growth was not limited to the commercial real estate market, but extended into the aviation sector as well. Germany’s Lufthansa Airlines is adding a daily nonstop flight from Denver to Munich starting in March 2007. The Munich flight will be the third daily nonstop flight to Europe from Denver International Airport (DIA), including flights to Frankfurt and London.
“This flight allows Lufthansa to double its capacity at DIA, and yearly economic benefits to the Metro Denver region are estimated at $108 million,” said Tom Clark, executive vice president of the Metro Denver EDC. “We couldn’t be happier to land this flight with our sister airport in Munich.”
Passenger traffic at DIA for September 2006 was up 16.1% over the same month last year. Through third quarter, almost 36.4 million travelers have passed through the airport, bringing 2006 passenger traffic up 10.4% over the same period last year. At this rate, DIA will likely set a record in 2006 of almost 48 million travelers, nearing its capacity of 50 million travelers. September 2006 also marks the 17th consecutive month the airport has set a monthly passenger traffic record.
The most recent monthly economic data for Metro Denver reveals that 9 of the 18 indicators moved in a positive direction for the month, down from 13 last month. Annualized activity remained relatively constant with 15 economic variables posting positive changes for the year, the same number as last month. As has been the case since June 2006, virtually all statistics related to the residential housing market are moving in negative directions with declining home sales, rising foreclosures, and decreased construction activity.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.