By Scott Crabtree & Liz Amaro

Many recent conversations with landlords, tenants, investors, and CRE enthusiasts have started with “what are the comps?” or “what are the cap rates?” questions that used to be easy to answer and show the data for.

Now I answer these questions by setting the stage with a quick anecdote..

In a recent discussion with a colleague, he suggested it is like we went into the locker room at half time and the referees came in and handed us a new rule book that was for different game and said, “good luck.”

In other words, comps from the past can be thrown in the trash and the ones that matter are the ones that have transacted in the last 3-6 months (or weeks), which are few and far between. That said, our team has proactively been tracking and requesting comps at every opportunity.

The question is, how many of these inquiries and pending transactions will transact in 2024? Before the most recent interest rate kafuffle, I would have suggested the CrabtreeTeam transaction rate (defined as: from agreed upon terms in an LOI or similar, to a closing or signed lease) was in the 85% range. With today’s uncertainty in capital markets and the economic uncertainty in general, I would suggest this is closer to 55-60% today. This is completely understood, and hence, we are focusing on business more than ever on supporting clients in these times with a focus on building long-term relationships, which we pride our business on.

The answer is.. it depends.

To get into it, if you can invest in Boulder at a basis that starts in the $200s/SF (asset dependent, of course) or lease an office space in Downtown Boulder with base rates that are in the sub $20s/RSF for the first year, then I would say hell yes. There are opportunities to be had, and the investors and tenants that are putting the time in to underwrite and sniff these deals out will be rewarded. If the amount of calls we are receiving from interested parties is a solid sample, I believe this will be a short window of opportunity. A wise man once told me many years ago that “you make your money on an investment when you buy, not sell.” It takes luck to buy at the bottom of the trough, and sell at the peak apex of a market cycle, and there will be a limited number of deals to be had, but they are out there. If you believe in Boulder as a great community and its longevity for future demand, then now would be a good time to dig in, and we are here to do the bird-dogging for you.

We are continuing to see a flight towards quality space. Landlords that are being proactive and making improvements to their spaces with a willingness to be deal makers are being rewarded with smooth transactions. As for those that aren’t, well it might be a while until they are getting income.

While Pearl Street vacancies are at an all-time low, it has still been a struggle to structure deals for first-generation spaces outside of Downtown because construction costs are causing tenants to pause. The retail deals we are seeing get done for new construction are deals where the Landlords are offering Tenants $150+/SF in TI and are willing to structure a ramp-up period for the first couple of years while the business establishes its presence in the Boulder market. Pearl Street is a huge draw for large companies with deep pockets who can afford the $45-$60/SF lease rates and write this off as a marketing expense. Smaller, local retail businesses are focused on areas outside of downtown where the rent is more affordable. Because the majority of the vacant retail square footage is new construction, there aren’t a ton of options available unless they are up for the huge undertaking of going through a buildout process, which takes 9- 12 months, and are willing to get a loan to cover the costs of the TI above what the Landlord is wiling to contribute. Boulder’s retail market is still very hot, and when second-generation retail spaces are available, they typically lease quickly.