Colorado-Real-Estate-Journal_528446

May 2026 — Retail Properties Quarterly — Page 11 www.crej.com F ederal Reserve data now estimates 51.1% of all U.S. household wealth to be con- trolled by the baby boomer generation (ages 62-80). The aggregate of their real estate holdings, equities, bonds and pri- vate businesses totals $85.41 tril- lion. That figure will grow further through a $20.18 trillion inheritance from the silent generation over the next decade. Much of that wealth sits in com- mercial real estate. While only a small minority of the boomer cohort directly own income-pro- ducing properties beyond their primary residences, those owners command a disproportionate share of privately held commercial assets. Retail centers, warehouses, office buildings, net lease and legacy mul- tifamily properties comprise port- folios built over decades, acquired or inherited at a much lower basis than current market prices. The U.S. Census pegs the current median age of baby boomers at 71. Actuarial data suggests most of their generation will live another 14-16 years, with many likely liv- ing into their late 80s or beyond. Age bestows wisdom, wisdom gives clar- ity. Why spend precious time in retirement mulling over the headaches of tenant roll- over, capital expenditures, refinanc- ing risk and vendor management? Selling assets outright rarely solves those challenges. Capital gains taxes, net investment income tax and depreciation recapture drastically erode sale proceeds. More importantly, replacing income from legacy properties often requires assuming higher leverage, increasing operational burdens and taking on greater risk – all unac- ceptable trade-offs at this stage of life. Although 1031 exchanges afford owners the ability to defer taxes by trading out of higher-risk assets, the ideal replacement properties featur- ing longer-term leases with limited landlord responsibilities and sell at lower cap rates, offering lower income. In prior cycles, such trades forced material concessions in cash flow – enter 100% bonus deprecia- tion. The tax law changes codified by the Big Beautiful Bill represent a sea change in portfolio construc- tion and estate planning for baby boomers. The permanent reinstate- ment of 100% bonus depreciation allows owners of newly acquired qualifying property to immediately expense certain components identi- fied through cost-segregation stud- ies. While depreciation has always enhanced real estate investing, the ability to fully expense qualifying components materially shifts after- tax income in the early years of ownership. This does not increase NOI but instead transforms after-tax out- comes. Investors who exchange into safer, lower-yielding assets can now preserve or improve after-tax cash flow once bonus depreciation shelters the income that would oth- erwise face full marginal-rate taxa- tion. Consider a hypothetical sce- nario: Aging boomer siblings own and manage a retail center they acquired in the early 2000s, now worth $20 million. They recognize the folly in paying steep taxes in capital gains and depreciation recapture but grow weary from jug- gling 20-plus tenants on short-term leases. How are others in their posi- tion leveraging the new tax code to move toward a more conserva- tive asset allocation? How can they maintain the after-tax income that supports their lifestyles? Combining a 1031 exchange with bonus depreciation on the replace- ment property will allow them to buy their time back without sac- rificing after-tax cash flow. They trade the headaches of common area maintenance requests, man- agement calls, leasing updates, etc., for the peace of mind from a long-term lease backed by corporate credit. These boomers now enjoy the luxury of choosing how long to stretch their bonus depreciation against their property-level income to maximize their after-tax cash flow. Count yourself a healthy and sprightly boomer? Stretch the bonus Boomers: Have your cake & eat (most of it) too MTNL FOR SALE MTNL FOR SALE STNL FOR SALE STNL FOR SALE Waneka Marketplace Sprouts Farmers Market Anchor LAFAYETTE, CO | $10,750,000 Central Colfax Shops 100% Occupied NNN Retail DENVER, CO | $3,360,000 Take 5 | Two Locations Brand-New 15-Year Ground Leases LAKEWOOD & LONGMONT, CO $2.3M & $1.9M Valvoline 15-Year Corporate Ground Lease HUBER HEIGHTS, OH | $1,401,869 7 2 0 . 9 8 9 . 1 0 3 1 | B L U E W E S T C A P I T A L . C O M 2ND GEN RESTAURANT FOR LEASE RETAIL FOR LEASE RETAIL FOR LEASE RETAIL FOR LEASE Shops at Briargate Crossing Super Target Shadow-Anchored COLORADO SPRINGS, CO | 1,400 SF The Village Shops at Castle Pines Grocery Anchored CASTLE PINES, CO | 1,441 SF & 2,916 SF Lone Tree Commons Prime Retail Near Park Meadows LONE TREE, CO | 2,166 SF & 2,683 SF The Shops at St Vrain Centre High-Visibility Sprouts-Shadowed LONGMONT, CO |2,250 SF & 2,300 SF F E AT U R E D I N V E ST M E N T & L E A S I N G O P P O R T U N I T I E S R E T A I L L I S T I N G S A C R O S S H I G H - G R O W T H M A R K E T S S C A N T O V I E W A L L AVA I L A B L E L I S T I N G S ILLUSTRATIVE RENDERING Sam Crowe Associate director, Blue West Capital Please see Crowe, Page 17