Downtown Aspen

By local real estate appraiser Randy Gold’s own tally, some 60 billionaires own residential or commercial property in the Aspen area. He estimates there may be more, estimating the total number at around 75. That would make Aspen one of the most billionaire-saturated markets on the planet.

The Aspen commercial real estate market remains strong and stable, notching another solid year in 2019. Like much of the rest of the overall real estate market, numbers were hovering close to 2018.

Two recent sales of office properties caught the eye of local appraiser Randy Gold, however. Both purchases, for office space at around $2,700 per square foot, were made by billionaires who own homes within walking distance.

That led Gold, speaking to over 300 people in the St. Regis ballroom at Thursday’s Annual Market Update Luncheon presented by the Aspen Board of Realtors, to identify what he sees as a new phenomena in the local real estate scene. Coining the phrase “hobby officers” to laughter from the crowd, he described them as emblematic of the influence a growing number of billionaire buyers are having on local real estate.

By Gold’s own tally, some 60 billionaires own residential or commercial property in the Aspen area. He estimates there are more he doesn’t know about, estimating the total number at around 75. That would make Aspen one of the most billionaire-saturated markets on the planet.

He reminded the audience just how much a billion dollars is. If someone worth $1 billion spent one dollar every second, they wouldn’t run out of money for 32 years. The mere millionaire would run out of cash at a burn rate of $3,600 per hour in 11 days.

With that much disposable income, a billionaire can afford to overspend by on properties by millions of dollars, with the same relative impact of a millionaire overspending by $50,000, noted Gold, who is with the Aspen Appraisal Group and has been appraising properties in Aspen and elsewhere for 42 years.

This is having a profound impact on the commercial market that will trickle down to business owners who are tenants of these billionaire landlords.

Gold specifically referenced Mark Hunt, whom Gold said is bankrolled by two billionaire investors. Since 2010, Hunt has bought 17 commercial properties, spending around $160 million. Gold said the developer has another two under contract, one of which will “turn some heads” if the sale closes. Most recently, Hunt bought commercial space in the Isis building, paying $13 million at $3,400 per square foot.

This spending spree has emboldened sellers and has made appraising the true value of commercial properties more difficult, Gold noted. It is also driving up property tax bills, since the county assessor must consider comparable sales. Gold said he has seen recent tax bills where the rate comes to $20 per square foot for commercial property. Those charges tend to be passed directly to the tenant.

In order to justify the kind of selling prices driving this activity, commercial rents have to be steep, in the range of $175 to $200 per square foot, he said. The most likely customers for such a lease are national and international brands with deep pockets.

Gold predicted that at some point, there will be a clash between landlords and the city, which in 2017 restricted chain stores and formula retail in development projects proposed after the ordinance took effect.

Other notable developments in the Aspen and Snowmass real estate markets based on Gold’s analysis of 2019 data include land sales in Aspen reaching new heights in terms of average price. 2019 saw fewer land sales in Aspen that in the prior year, with 20, sold for a total dollar volume of $151 million. That was still good enough for the second-highest dollar volume, behind 2018’s $181 million. The average price per Aspen land sale was a staggering $7.5 million — roughly on par with the average price for a finished Aspen home, although that market had much greater overall activity, with 81 sales. 

Aspen condos saw a decrease in dollar volume of 28 percent compared to 2018, but Gold said that was mostly due to a tightening of supply. Since 2017, Aspen condos have been a sellers’ market, he said.

Snowmass in 2019 saw its record highest-price condo sale at over $6 million for a unit in the new Luminary’s building in Base Village.

But the strongest performer in the local real estate market was Snowmass homes, Gold said, where the number of transactions was up 26 percent and dollar volume was up 55 percent. In contrast, Snowmass land sales were down in 2019 as buyers contemplated the cost of construction and gravitated toward remodel projects.

Overall, 2019’s total dollar volume was just a shade below 2018. Gold predicted that a “slow transition into a down market” would continue in 2020, though he said that are some potential threats that could throw the wider economy farther off course. These include the coronavirus, which has led to travel restrictions for 750 million people in China, depressing that nation’s economy and by extension the global economy.  

And of course, there is the U.S. presidential election in November. Gold said there is not strong evidence over the years of a correlation between an election and real estate market effects. However, the upcoming contest is sure to be bitter, and an ugly election is not likely to fuel buyer interest in purchasing Aspen real estate, he said.

Curtis Wackerle is the editor of Aspen Daily News. He can be reached at curtis@aspendailynews.com or on Twitter @CurtisWackerle.