The Aspen Market
The commercial core of downtown Aspen consists of approximately thirty city blocks bounded by Original Street on the east, South Monarch Street on the west, East Durant Street on the south, and Puppy Smith Street on the north. The mix of buildings in the core are typically two to five stories consisting of restored historic buildings dating back to the late-1800’s and newer buildings built in the 1970’s, 1980’s, 1990’s and early 2000’s.
Most of the retailers and restaurants occupy space under 3,000 square feet and consist of a mix of local and regional retailers, and some of the most famous and exclusive national and international retailers such as Ralph Lauren, Gucci, Prada, Dennis Basso, Christian Dior, Fendi, Bvgari, Frette, Burberry, Malo, Loro Piana and Louis Vuitton to name a few.
A high demand for both retail and office in Aspen and a sever lack of new supply of space has created an ideal environment for investors. New development in downtown Aspen is very difficult due to the lack of development sites, high land prices, high costs of construction, strict City zoning codes restricting density, parking requirements and the high cost of affordable housing mitigation. The result has been a market that has seen an average of 7.0% to 7.5% annual increases in commercial rents over the past thirty plus years.
Currently, retail rents range from a low of about $70 per square in the fringe areas to over $200 per square foot in the prime locations net of expenses. Office rents currently range from a low of about $35 per square foot to a high of $70 per square foot net of expenses. The vacancy rate in both retail and office is under 1.0%.
The limited supply and high demand for commercial space, and the resulting market appreciation in rents has created strong interest from investors. Aspen’s commercial buildings are owned by a combination of local investors, wealthy families, national investment partnerships and foreign investors. As a result, capitalization rates are very low with prime properties trading in the 4.5% to 5.0% range. Overall, Aspen commercial real estate has been very good to investors over the years.