I thought I would discuss a topic with which most of us Denverites are all too familiar: our boom and bust real estate cycles, and if we’re destined to repeat history again this time—or not.

The surge of real estate development in Downtown Denver is quite evident. Currently, we have 45- and 41-story buildings under construction plus a bunch of mid-rise buildings in the 5 – 32 story range under construction too, and a couple more 40+ story buildings scheduled to break ground in 2008. Add in the dozens of lower-scale townhome and condo buildings in our Center City districts like Highland, Golden Triangle, and Curtis Park, and we’re definitely experiencing a Downtown boom like we haven’t seen since the 1980s. Is all of this development just leading us into another bust, where we’ll experience a decade or more of development inactivity?

The other day I was chatting with my buddy Joe about our current Downtown boom and he brought up a good point I’d like to expand upon. Denver is obviously feeling the impact of the current credit/financing crisis. Today, most of our Downtown infill projects are having a hard time getting financing. Even developers with strong reputations and relatively deep pockets are currently finding it difficult to obtain funding for their projects. Other cities like Las Vegas, Miami, San Diego, and Phoenix boomed when credit was easy to get. They built more units than was justified, and now they’re paying for it through declining values and huge unsold inventories. Just as our boom was, well, starting to really boom, the credit crunch hit and has stalled many projects. Perhaps we should be grateful.

Joe and I speculated that if the credit markets were generous right now, Denver would be going through an even bigger boom than we already are. Downtown Denver would probably be going crazy with high-rise condo and office construction, only to leave us a few years from now in a position of over-supply and severely declining values. That is our history, after all. Instead, the credit crises has weeded out weaker projects and kept in check the number of new projects under construction. Our current Downtown real estate boom has been moderated, which hopefully will result in what Denver has typically failed to do on its own: maintain a healthy but measured, sustainable pace of new development over a long period of time. Maybe it took an external force like the national credit crunch to save us from ourselves and to interrupt what would have been our next Denver boom and bust cycle.