There has been a lot of buzz about the boom of mid-tier markets, particularly those located along the sun belt and in the west and south. Of Amazon’s list of 20 finalist cities to host its second headquarters, 12 are non-coastal cities. In the fourth quarter of last year, Redfin reported that users in more expensive, high-tax coastal markets like San Francisco, New York, and Los Angeles, searched for homes in metro areas like Sacramento, Phoenix, Las Vegas, and Nashville where taxes are lower, the weather is friendly, and housing is more affordable. Many mid-tier markets in the middle of the country are experiencing similar above-average growth rates.
In metro Denver, a great quality of life (i.e. outdoor activities, nice weather, and beautiful vistas) combine with relative affordability to result in a consistent inflow of businesses, young people, and educated workers. According to Redfin, 7 of 10 (non-local) users searching for homes in Denver originate from bigger and more established markets like Chicago and Los Angeles. Transplants are trading the convenience of larger cities and coastal locations for affordability and quality of life.
And the growth is tightening vacancy all across the real estate market. In the last 12 months, office vacancies have increased by only 1%, where the historical average is 10.3%. In the last quarter, 1- and 2-star office spaces have been only 6.1% vacant. And market absorption for 3-, 4-, and 5-star properties was 164,607 square feet, meaning 164,607 more square feet became occupied than vacated. All in all, office seekers may not have as many choices as they would like as they hunt for a new space.
Futurists do not predict the trend to slow down anytime soon. According to the State Demography Office, the Denver and Boulder metro areas are expected to add 1.39 million people between now and 2050, a 45.4% increase.
All things considered, this is good news for Denver and Boulder real estate. The flood of people and businesses will need places to live and work and real estate investors stand to gain. Now is the time to make that investment you’ve been on the fence about. Our Boulder Brokers are always available to guide you through that process and answer any questions you may have about investing in real estate.