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State of Downtown Aspen Commercial Market

Here are my notes on Aspen commercial real estate from an excellent "State of the Aspen Snowmass Market Year End 2008" presentation by Randy Gold, President, Aspen Appraisal Group at Aspen Board of REALTOR's luncheon on Wed. 12/17/08. I hope to post my notes on his Aspen Snowmass residential part of the presentation over the weekend. The presentation is available in its entirety at the Aspen Appraisal Group's website.

At present, the Aspen commercial real estate market is non-existent. Great economic uncertainty nationally, huge political uncertainties within Aspen City Council as to what, if anything, they'll approve  and no credit available.
2008 Commercial bldg sales
•    Aspen Community Banks Bldg: $1,300 sf
•    Pomeroy Sports Bldg across street from Aspen Mtn Gondola: $1,600- $1,700 sf
•    Crystal Palace Bldg: $900 sf
•    700 Main St Office space, approx $800 sf

Vacancy rates: At present, for commercial downtown space there is 2% vacancy rate. But “2009 could be higher”.
Cap rates:  realistically at 5-6 ½ %, but most owners want property valued at 3-4% cap rates. Cap rates are trending up. Whereas the emphasis on commercial property pricing used to be on price per sq ft and appreciation potential, now a growing emphasis on income seems to be coming back.

With downtown commercial, even though Aspen City Council Moratorium was lifted 12/10/08 lifted (See Aspen Times Moratorium full article), still a great deal of political uncertainty prevails:
?    Codes are likely to get more restrictive. At present, code calls for 60% employee housing mitigation; there’s talk, almost forecast , it will go to 100%.
?    Weinerstube Project Approval was rejected summer '07  in spite of meeting the code. There is a lawsuit presently pending,developers vs Aspen.
?    The environment: any approvals are highly uncertain. In 2007 and 2008, the City Council has consistently acted to stem the tide of development.

On the positive side:
•    Commercial supply is extremely limited.
•    Interest rates going down
•    Construction costs falling dramatically
•    Real estate prices coming down
•    Greater selection in down market
•    More motivated sellers
•    Buyers need to think long term

See two articles on the presentation:  Aspen Times article and  Aspen Daily News article on Randy Gold's Aspen Board of REALTORS 12/17/08 luncheon presentation at Hotel Jerome