(COSTAR) Rising demand for commercial real estate and a scarce supply of available land is driving surface parking lots in downtown Denver to sell at record prices as developers seek projects that won’t be restricted by existing buildings.
In some cases, investors eager to develop ground-up apartments to capture growing interest from renters are paying higher prices for empty parking lots than they are for existing multifamily buildings outside the downtown core.
“There’s a trend line of price increases based on demand, and that demand is focused on the urban core,” said Chris Cowan, a Denver-based vice chairman at ARA, A Newmark Company, who specializes in land sales for multifamily development.
Denver is just one example of a parking lot demand across the country. With available development plots becoming increasingly scarce in nearly every major U.S. city, parking lots are seen as prime locations for development that capitalize on the levels of activity and walkability, real estate professionals said.
Companies that deploy capital want to go where the demand is and that means following millennials and active adult populations who are drawn to busy urban areas across the country, including Denver, Cowan said.
Most recently, the sale of a 1.15-acre parking lot at the corner of 18th and Market streets in Denver’s Lower Downtown area sold for $20.7 million, or $413 per square foot, according to CoStar.
At that price, the lot sold for about $35 more on a per-square-foot basis than Westend, a 390-unit apartment complex at 3500 Rockmont Drive, roughly a mile away.