Colorado's booming energy economy has had a positive ripple effect throughout Metro Denver's commercial real estate market. The trends are expected to produce higher property appraisals next year that may require proactive appeals. Any impact of recently falling oil prices is yet to be seen.
Colorado assessors will reappraise all properties in 2015. Value notices will be mailed on or before May 1, 2015. The new values will represent the market during 2013 and the first half of 2014.
During the data gathering period, metropolitan Denver office buildings experienced falling vacancy rates, positive absorption, and rising rents. Vacancies fell to pre-recession levels, and absorption has been positive for seven consecutive quarters. As reported earlier this year, Denver office lease rates hit record highs in 2014.
A Hub for the Oil and Gas Industry
Some of the nation's highest-earning oil and gas companies are headquartered in Denver. The energy industry's payrolls have expanded and wages have increased. As a result, all sectors of the real estate market have benefitted. Demand is growing for multifamily, office, hotels, retail, and residential properties, according to the National Real Estate Investor.
Energy-related tenants presently occupy 25% of the top-tier offices in Denver's Central Business District (CBD). As an example of the strength of the market, the tallest and largest office property to be built in Denver in the past 30 years will begin construction next year on a fully speculative basis.
Looking forward, analysts are keeping an eye on the potential for renewed local regulation on fracking and falling oil prices internationally; each of which could negatively impact the energy industry in Denver and the local real estate market.
For now, the Colorado Oil and Gas Association is winning the fight against local laws that outlaw fracking. Three municipal fracking restrictions have been overturned by Colorado courts in the past four months.