Getting your player ready...
Even a modest improvement in Denver’s housing construction market would be a boon to the area’s industrial market that remains stalled in the early stages of a “recovery mode,” according to a top industrial broker.
“In the last three-year period, we pulled fewer building permits than in 1991,” said Jason Addlesperger, an industrial broker at Newmark Knight Frank Frederick Ross, during a wide-ranging “Mile High Market Trends Forum” today at the commercial real estate company’s headquarters at 1800 Larimer.
The drop in housing construction is important to the industrial market, because when there is even a normal amount of residential construction, warehouses are full of building supplies, ranging from lumber to lamps and dishwashers to drywall.
“Any recovery at all in residential permit activity will provide a tremendous benefit to the industrial market,” said Addlesperger, who currently has more than 2 million square feet of industrial listings in the Denver area.
Indeed, he recently has noticed a small uptick in interest for storage space from everyone from granite companies to HVAC (heating, ventilation and air conditioning ) contractors, which could be an early sign that the housing construction market is getting back on its feet.
The housing crisis also hammered the office market, added Tom Lee, a top office broker at Newmark Knight Frank Frederick Ross.
Lee noted that home builders such as Beazer pulled out of the Denver area during the crisis, vacating their office space. Other builders and companies dependent on the home construction market followed suit.
“Between mortgage brokers and builders, they probably vacated 1 million square feet of space,” Lee said.
Not that he is predicting any surge in building activity anytime soon.
“That is not going to be a big part of the recovery this year,” Lee said.
One thing that does appear on the horizon is an increase in apartment construction, Addlesperger said.
According to Apartment Realty Advisors, only 498 apartment units were added to the Denver-area market last year, the lowest level since 1992, when 446 units were added. But from now until 2013, another 7,200 units are expected to come on line – 1,700 this year, 2,500 next year and 3,000 the following year. “And that may not be enough to meet demand,” Addlesperger said.
