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Denver Office Space Market Update

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Denver, The Mile-High City, is home to more than 600,000 people, making it the 23rd most populous city in the United States.  Founded as a mining town during the Gold Rush, Denver has developed into one of the top 10 markets to watch, according to PricewaterhouseCooper.

Due to its location and desirable climate, Denver is an attractive city to both industry and citizens seeking “green” initiatives and “clean” living conditions.   From its proximity to transportation, its walkability, its bikeability, cultural life, sports teams, and burgeoning restaurant community, the city, as a whole, offers a little something for everyone.

Overall, Denver’s office market continued to grow in the first quarter of 2013. Vacancy rates fell to 16.9%, down from 17.2% in the fourth quarter of 2012. Quarterly absorption of 149,494 square feet was posted for the Class A sector. There are currently five development projects in process, consisting of 635,643 square feet of new space.

The Denver office market is made up of several submarkets.  Quarterly absorption was moderate in all submarkets, with the exception of Southeast Suburban (SES). SES posted first quarter absorption of 293,473 square feet, with vacancy rates of 15.7%.  See the chart below.

Submarket

Class

Vacancy

Absorption

Rental Rate

Aurora

A

B

19.39%

28.78%

0

-32,661

$16.85

$15.00

CBD

A

B

13.97%

15.15%

23,575

-8,580

$30.25

$23.00

Midtown

A

B

13.65%

12.40%

6,791

27,167

$24.60

$18.25

Northeast

A

B

18.80%

13.33%

23,964

14,596

$25.00

$16.30

Northwest

A

B

17.64%

23.44%

34,833

-39,547

$23.50

$17.00

Southeast

A

B

19.89%

25.51%

-7,211

3,607

$19.00

$15.30

Southeast Suburban

A

B

13.5%

17.84%

103,413

188,319

$24.25

$17.90

Southwest

A

B

11.24%

19.08%

4,653

6,436

$20.50

$17.00

West

A

B

13.32%

23.11%

-40,524

-16,188

$19.50

$17.00

 

The outlook for 2013 is positive for the Denver market and is expected to be a year of expansion.  Positive absorption is projected for all submarkets, as well as continued rental rate increases projected for the Central Business District.

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By: James Osgood

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