Supply Cannot Meet Demand

The commercial real estate market traditionally follows residential market trends, albeit at a slower trajectory. As 2022 gets well underway, the buyer demand for commercial real estate far outweighs supply, just as it did in 2020 and 2021 for residential.

Realtors® are reporting a surge in calls from investors and potential business owners seeking commercial investment opportunities for downtown Steamboat Springs and the outlying area. Work/live apartments and warehouses are currently a golden commodity, but supply is almost non-existent.

At the time of writing, there are only 27 commercial properties for sale and 18 leases available.

Average Price-Per-Square Foot on Annual Commercial Leases for 2022

Office rents are frequently based on a gross lease and retail rents are NNN (triple net) leases, whereby the tenant will pay for taxes, common area expenses, and any interior improvements to the space. Warehouses vary, but the majority are NNN leases.

In a recent study by JP Morgan, they identified a range of trends and commercial opportunities for 2022, many of which can already be seen in Steamboat:

Hybrid Work Model

The future of offices is still largely unknown, but Realtors® in Steamboat have seen a demand for workspace outside the home. Many industries are using a hybrid work option as a recruitment and retention tool.

Upgraded Rental Units

There is a need for larger living quarters as the hybrid work model gains popularity. Renters are home more and want more space. Some buyers and renters have moved from a one-bedroom to a two-bedroom apartment and upwards.

Effects of E-commerce

Brick-and-mortar retail took a hit in recent years, but JP Morgan suggests the impact may have been overblown. They found that people still want to eat at restaurants, get haircuts and purchase other in-person goods and services.

Addressing the “Missing Middle” 

Workforce housing for middle-class households continues to be in short supply. Key workers from sectors such as emergency services and education are struggling to find affordable living solutions. Real estate will need to draw on public-private partnerships to build more workforce housing, such as the partnership between Yampa Valley Housing Authority, Gorman & Company and Deneuve Construction to build Sunlight Crossing on the west side of Steamboat, and the proposed collaboration between the City of Steamboat and UC Health Yampa Valley Hospital to build 22 units earmarked for staff.