Insights from Top CRE Performers: Current Market Conditions and Future Outlook

Submitted by Shane Mahoney - June 2023, Published August 2023

To help keep a pulse on current conditions, NAIOP Colorado decided to ask the top performers from the Chapter’s 2022 Broker Awards what market conditions they are seeing right now and where they see things heading.  Here is what those teams and individuals shared with us.


2022 Industrial Broker of the Year

"While I see challenging months ahead, with slowing demand from large users and an oversupply of new buildings in our market, there is light at the end of the tunnel.  Given dramatic changes in underwriting, coupled with persistent historically high pricing for building components, new supply will be greatly diminished.  Once the standing inventory of buildings gets leased, which is a relatively small amount of space, there will be few choices for expanding companies.  This scarcity of supply will force lease rates dramatically higher to financially rationalize new construction."


2022 Industrial Broker Team of the Year 

Momentum to Build Throughout 2023
Like most markets, Denver’s Q1 was light in industrial net absorption compared to recent years, but we expect momentum to build throughout the year and can even see an outcome that bucks the trend: 2023 absorption levels exceeding 2022. Tenant requirements remain healthy, and the construction pipeline will slim down throughout the year, which will support ongoing rent growth.  A new capital markets cycle is underway after a few quiet months. Higher interest rates stalled investment velocity in late 2022 and Q1 2023, but both the narrowing of the bid/ask spread and redemptions are breaking through the stalemate.  Equity clearly is behind industrial’s fundamentals, evidenced by the number of CA’s and offers coming in, especially for the most preferred deal profiles. The minute debt becomes more accessible and accommodating, industrial investment pricing will change overnight. We anticipate sales volume to increase as the year unfolds and for pricing to recover... but not to Q1 2022 levels.

2022 Industrial Broker of the Year Finalist

  • The west, north and northwest submarkets are currently performing better than any other submarket and should remain resilient for the foreseeable future.
  • The advanced manufacturing and R & D uses which make up the bulk of the demand in these submarkets is bustling and seems to be relatively impervious to general fluctuations in the economy.
  • If anything, and this is more specific to the west and northwest submarkets, specifically southern Boulder County, we’re acutely running out of functional industrial space with extremely limited opportunities to deliver new product going forward.
  • Keeping these dynamics in mind, lease rates will continue to increase in those submarkets.

The exception would be the north submarket, while currently healthy and active, it’s almost in the opposite situation where an enormous amount of new product is in various stages of delivery or planning.  As of now, demand remains robust and lease rates have held, but oversupply will be an ongoing concern on the north I-25 corridor for the foreseeable future.

DREW McMANUS, Cushman & Wakefield
2022 Industrial Broker of the Year Finalist

Currently, we’re seeing continued strength in industrial leasing activity within our smaller bay product and softer demand in bulk distribution (>200,000 SF).  Sale volume is expected to remain low and speculative construction starts will slow due to increased interest rates.  We foresee this year to continue to bring in historically healthy demand and absorption.

2022 Industrial Broker of the Year Finalist

We are seeing steady leasing activity in various industrial product types metro wide, especially very well located buildings with immediate interstate access. I think we will continue to see tenant “flight to quality”, which will benefit Class A buildings with superior features like higher clear heights, more parking, larger truck courts, and more modern office space. Also, niche industrial product like IOS (Industrial Outside Storage) will continue to do very well given the lack of available space. The challenging capital markets environment and construction costs will slow spec development from the last few years’ record pace. 




2022 Investment Broker of the Year 

Deal flow is substantially increasing, driven by the following:
  • Seller acceptance of lower valuations and increasingly saying “just clear it.”
  • Owners with floating rate debt from 2019 – 2022 acquisitions are being pressured to either invest additional equity or purchase expense rate caps to hold them longer.
  • Lenders are not extending expiring loans but are also not keen to take the assets back. There is a surge in short-sale processes driving dispositions. 
There is a theme of increased discussion around strategic recaps and platform transactions; the business models of investing continue to evolve. We are seeing the following affect market direction:
  • While traditional sources of capital are still being more cautious, there is an amplified focus on JVs and recaps, especially as some mezz positions are at risk given the decline in values.
  • We are also seeing a rising prevalence of increased use of secondaries which is a long-term theme we’ve been speaking to
    • A recent report from Ares cites that real estate secondaries transaction volumes reached an all-time high of $12.4 billion in 2022 – the third record-breaking year in secondaries; as investment exits, and distribution activities slowed in the direct market. 


2022 Investment Broker of the Year Finalist

Where we see the investment market going depends on the product type, price point and profile.  The Fed “flexed” on all of us the last 12 months, universally reducing asset values, as we now know who is boss.  However, the entrepreneurial spirit to acquire real estate and see through the current challenges continues to reveal that long term ownership with modest leverage will typically prevail in commercial real estate. 


2022 Investment Broker of the Year Finalist 

We see a very bright future for Denver office investments. However, near-term the office market will be choppy as the world absorb the effects of working from home, occupancy needs, and rising interest rates. We expect to see the suburbs outperform the CBD in terms of fundamentals, however long-term the CBD will prevail. We believe office as an asset class will emerge much stronger on the other side of this cycle. Furthermore, Denver remains a top-tier preferred market for office investment and we expect it to outperform a majority of other major cities.




2022 Land Broker of the Year


At midyear, the land market is still tepid due to higher interest rates and a continuance of tight capital markets. Overall, development groups are still attracted to greater Denver-area fundamentals and bullish on its prospects long term. 

Looking Ahead

Despite a slow start to 2023, we expect activity to pick-up later in the year and heading into 2024.  Softer terms will be critical to allow buyers sufficient time for project approvals and procurement of capital.



2022 Multifamily Broker of the Year

From an apartment fundamentals standpoint, the Denver market remains solid.   We’re seeing occupancies in the 94%-95% range, absorption is strong, and we’re still seeing net effective rent growth equating to 4.5%.  From a transaction standpoint, deal activity is down 75% from this time in 2022.  As a result, deals that are on the market are seeing a healthy amount of interest from investors, although much of that interest is about trying to get real-time data points on pricing, cap rates, yields, etc.  That said, we’re seeing deals trade at cap rates in the 4.5% - 4.75% range – that’s in place rents, stabilized expenses, adjusted for a full real estate tax bill.  Investors are saying that Denver and South Florida are the two markets where they are seeing some of the strongest multifamily pricing. 

I don’t expect to see pricing change drastically through the end of this year.  I think cap rates will stay in that range for metro Denver.  Based on BOV activity, the second half of the year should see more transactions than the first half, but not by leaps and bounds.  The capital markets will remain in flux though the end of 2023.  Even though the multifamily sector has the benefit of the GSEs, the turmoil being experienced by the national and regional banks due to the commercial loan landscape cannot be underestimated and will be felt by other commercial real estate sectors.





2022 Office Broker Team of the Year 

The Denver market has stayed consistent with the national headlines.  With accelerated interest rates and hybrid work schedules, office leasing continues to be stagnant with many companies scrutinizing decisions to lease.  Those companies that can make long-term decisions benefit from enhanced concessions. 

Going forward, the "return to work" story will continue to develop and should bring normalcy to the office market in the mid-term.  Enhanced Concessions will continue to be available to those companies that can actually forecast their needs.



2022 Retail Broker of the Year

We have seen a nice rebound in brick-and-mortar retail sales this past year which is expected to continue through the balance of 2023. Although high inflation, rising interest rates and labor shortages will remain headwinds, high construction costs and tight availability ensure that retail fundamentals will remain stable.  New development has remained at historic low levels both Colorado and nationally, which has constrained the supply in the face of rising demand. Retail rates have improved in many submarkets accordingly.

RAY ROSADO, Cushman & Wakefield
2022 Retail Broker of the Year Finalist 

To say the current state of CRE is a bit wobbly of late would be an understatement.  Many tenant expansions are on pause, there is a lack of for sale inventory, and the chasm between buyers, dealing with the realities of financing difficulties today and sellers, with yesteryear expectations, is wide.   I anticipate 2024 to continue to be an adapting year with changing cultural expectations of flexible workspaces, as well as the introduction of technological advancements with a focus on sustainability, property management, and tenant engagement.   I do not anticipate knowledge workers to get back to pre-pandemic “in office” levels. 

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 U.S. Senator Hickenlooper Meets with Members

Submitted by Matt Lengel, May 2023 - Published August 2023

NAIOP had the pleasure of hosting Senator John Hickenlooper on April 10th, 2023, in an intimate setting at Lowe’s building in the Denver Tech Center. The event is part of NAIOP’s new “Select Speaker” series where the organization highlights prominent members of the community to speak on a range of topics that affect our membership.

This specific conversation with Senator Hickenlooper was a “fireside chat” format with Matt Lengel moderating the discussion. As a refresher, Senator Hickenlooper has held a variety of high-ranking public positions in the state of Colorado. He had an a-typical path to public service. In a past life, he was a real estate investor, geologist, brewer of beer, and Denver businessman before he became Denver’s 43rd mayor. He served eight years as the Mayor of Denver before being elected as the 42nd Governor of Colorado, serving in this role from 2011-2019 before eventually becoming a Federal Senator representing the state of Colorado.

Sen. Hickenlooper with Matt Lengel Sen. Hickenlooper with Lowe representatives.  Sen. Hickenlooper with Chris Alcorn, Ian Nichols, and Brandon Kramer.


Matt asked the Senator a wide range of questions from transportation, economic development in the state of Colorado, immigration, tax policy, and much more. Due to the relaxed environment, Senator Hickenlooper was rather “accessible” in his answers, and it felt like an open and honest discussion. The intimacy of the event gave the audience the ability to ask questions and be heard before having a “meet & greet” with the Senator for about 45 minutes after the Q&A wrapped up.

We’d like to extend a huge thank you to board member Mara Fabian with Lowe for providing the space for the event and Matt Lengel with Denver Private Wealth Management for using his connections to land the Senator and moderating the event.

We hope to see you at the next “Select Speaker” series! If you believe you have someone worthy of being featured in the “Select Speaker” series, please reach out to Brandon Kramer, Matt Lengel, or Nick Kitaeff.

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Expand Your Network. Join NAIOP’s Membership Committee!

Submitted by Brandon Kramer, May 2023 - Published August 2023

The Membership Committee of NAIOP Colorado is looking for member volunteers to join our ranks! This committee is tasked with the recruitment, welcoming and onboarding of the 600+ member organization. It is a phenomenal committee for anyone looking to connect with our membership on a deeper level and help foster the relationships NAIOP is built upon. Serving on membership is especially great for any of our members in business development roles at their companies, who would benefit from communicating with our members, especially the new members! Being on the committee is a great excuse to introduce yourself to members and prospects you don’t already know. The group meets every month over the lunch hour and attends most of our events to help drive membership forward. Please contact Brandon Kramer, Steve Scrivener, or Jayma File for more information.

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Opus Foursome Wins NAIOP Golf Classic 

Published August 2023 

Opus Development Company's foursome of Joe Swensson, Randy Danielson, Nic Carter and Daniel Close won 1st place at the NAIOP Colorado "90s" Golf Classic in late June at Fossil Trace Golf Course in Golden.  

Finishing second was the Land Title foursome of Luke Davidson, James McGill, Chris Schultz and Tyler Ryon, and the third-place team representing Kimley-Horn included Emily Felton, Willie Konishi, Dennis Sobieski and Coy Williams. The "most honest team of the day" award went to Megan Kranichfeld and CJ Manning with Prime West and Peter Beugg and Blake McVean for Stream Realty Partners.  

In other action, James McGill sunk a hole-in-one PCL Construction's par-3 and the longest drive winners included Andy Miles and Emily Felton. TJ Carvis and Megan Kranichfeld took home closest to the pin prizes from Galloway.  

Thanks to the players and sponsors, the tournament raised $3,000 in mulligan sales for the NAIOP Corporate PAC and funded another $3,000 Student Scholarship for the NAIOP and Project Destined Bridge Program by betting the "Hole Hecklers" sponsored by Flash Parking.  

Small Giants captured all the action on the course, while other supporting sponsors provided giveaways, beverages and more throughout the tournament day - Opus Development Company, Murray & Stafford, Polsinelli, PC, The Weitz Company, Ryan Companies, Studio 10, CBRE, CoStar Group, Fidelity National Title National Commercial Services, First American Title-NCS, LBA Realty, Moss Adams, Moye White LLP, Stewart Title, Transwestern, and Vari.  

Congratulations to the 2023 Developing Leaders (DL) Golf volunteers for planning a fun filled day: Ben Gosz, Braden Demmerly, Henry Holmes, John Rayburn, Josh Valdivia-McDonald, Blaire Butler, and Arthur Heldt

opus foursome 2023  Golf Classic 2023 Players  Golf Classic 2023 Committee

To view all the photos from the action-packed golf tournament, Click Here