Colorado ski real estate doubles, will there be a drop on the other side? 5 factors that will shape the future
The amount spent on real estate in six of Colorado’s resort-anchored counties doubled from 2019 to…
I hope everyone had a great summer, this is Luna accompanying me on an inspection in Colorado style 😊 I have recently written about ski real estate setting records for both prices and volumes, but not all ski real estate is following the same pattern. What property type is bucking the skyrocketing price trend? What are the short and long term trends driving the changes?
Commercial mountain real estate:
Although Colorado Ski resort communities are a respite from the craziness, they are not totally immune from greater market forces impacting commercial real estate. Commercial real estate in the various mountain towns, from Aspen, Crested Butte, Steamboat Springs, etc.. is not following the upward trajectory of residential prices.
In mountain towns throughout Colorado vacancies are up and lease rates are down. For example areas like main street in steamboat have historically had few vacancies, now there are more than a handful of dark storefronts. Many restaurants have also shuttered.
What is causing the decline in commercial real estate
Each of the towns has such a small commercial base in the core areas like main street where there might be only a few sales ever year. What I am seeing in my inspections throughout the various mountain towns is that in the short-term prices for commercial real estate in the various mountain towns is flat at best to slightly declining. It is definitely not following the same pattern as residential where if a property is priced correctly it is flying off the shelf. Fortunately, the restrictions on capacity and stay at home orders will get resolved within the next twelve months. Furthermore, the shift to online shopping doesn’t impact mountain retailers as much as their competition isn’t Amazon. If someone needs new gloves or a warmer jacket while on a ski vacation, they are going to buy them in town as they likely need them now or many times they are buying an item for more sentimental reasons like a t-shirt or a painting they bought in Steamboat to remind them of their visit.
Long term commercial real estate in the resort communities looks bright. There have been two recent trends that will drive long term commercial real estate prices up.
Commercial real estate will be directly impacted by more full-time residents and higher demographics in the resort communities. Over the long term this will drive commercial real estate higher as demand for more services and the ability to pay more will enable rents to increase and vacancies will decrease.
The virus is rapidly reshaping Colorado ski real estate with commercial and residential real estate reacting differently. In the short term, Colorado commercial ski real estate will take a hit with lower rents, higher vacancies, and reduced prices. Fortunately, this is a short-term event as the resort communities evolve with more full-time residents with higher demographics. These two changes will ultimately drive commercial real estate higher throughout the mountain towns.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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