Like most other states in the American West, Colorado has experienced tremendous growth in recent years, as people have relocated from California and other coastal regions where housing prices became drastically inflated. Denver, Colorado's capital and most populous city, is growing especially quickly as it gains a reputation as a cosmopolitan city with a strong and diverse economy. For a real estate investor in Colorado, Denver is where the action is.

Rapid population growth means that all real estate markets in the Denver area are tightening. As in most places, new construction of any type in Denver has slowed down and leases and purchases of existing properties have increased. Vacancies across the board have dropped and rents have increased, even when accounting for the new construction boom of the past few years. Owing to Denver's strong economy, more smaller retail and commercial tenants are filling vacancies as opposed to one or two larger anchor tenants, which lends a great deal of stability to Denver's commercial real estate properties. Additionally, Denver's downtown area - the 10th largest in the country - seems to be experiencing a renaissance so retail, restaurant, night club and, particularly, residential properties in that area are picking up interest and value.

The industrial market is still growing after the shake up of 9/11, and industrial/office flex spaces are doing particularly well as industrial property owners and businesses in general are looking to maintain some flexibility given the overall softening of U.S. manufacturing. The Denver industrial market is heavily dependent on national and international industrial trends, so this could present some issues for the industrial development. While the market is currently strong, there is some thought that it may have reached its capacity and that better investing opportunities lie elsewhere.

Denver is a hot market, but that means its prices are hot, too. An investor of more modest means isn't shut out of the real estate market just because Denver is too pricey. Colorado, like many other Western states, has a lot of open and sparsely populated land. This land is fairly rugged, but rugged land doesn't mean that land development is impossible. Indeed, the high plateaus of the southwestern corner of the state are experiencing rapid growth as people from around the west flock to a relatively inexpensive, "outdoor" lifestyle. Colorado's smaller towns in this area, like Durango and Cortez, are ripe for residential development. However, development in these areas can be highly regulated for aesthetic and environmental purposes. As well, though Colorado receives high levels of precipitation and has several major rivers running through it, it, like other western states, has grave concerns about finding enough water to support population growth.