We are living through a time of extraordinary change. Demographer and author refers to this time as ‘The Fourth Turning’. It is the last season of a roughly 80-year cycle which is market by intense crises and institutional collapse. Previous fourth turnings have included the Great Depression/World War II, the American Civil War and the American Revolution.
Fourth turnings, while highly disruptive, also provide extraordinary opportunity. Along with the changing geopolitical landscape, energy disruptions and tariff cost shocks, we have AI with its extraordinary potential productivity benefits.
A task previously performed by a human, which is now performed by AI, does not require traditional office space. Already we have seen the office vacancy rate rise to 29% in Downtown Boulder and just slightly lower at 28% for the Denver Central Business District. The industrial space vacancy rates have remained much lower at approximately 8% for both Boulder County and Denver Metro.
Nonetheless, it is our conviction that the need for office and industrial space is not going away. The benefits of face to face collaboration with teammates and customer remain, and for some organizations cannot be replace by digital forms of communication. And products and tools made of atoms, simple require physical facility space.
We are of the conviction that the next three years are going to provide some extraordinary opportunities in commercial real estate for the knowledgeable and prepared. While landlords and sellers have held the upper hand in negotiations over the past decade, we see the balance of power shifting to the benefit of the tenant and purchaser.