Denver Office Leasing Strong In 2017
Metro Denver’s office market leasing activity remained strong, with deal volume totaling 9.1M SF in 2017, exceeding the 8.6M SF completed during the previous year, according to a Savills Studley report on the region’s office sector.
Asking rent was nearly unchanged, increasing by 0.3% from $26.63 to $26.70.
Some of the region's submarkets are in more demand than others, according to the report. As companies focus on hiring younger employees, the push has been to locate in the urban core, creating very competitive and challenging conditions in Boulder, Cherry Creek, Lower Downtown and the Central Platte Valley.
For example, rent in LoDo and the Central Platte Valley is approaching $39/SF, and new buildings are commanding up to $45/SF. Rent is about 20% lower in Midtown and Uptown because they lack the nightlife and streetscape found in downtown Boulder and LoDo. They also have more big blocks of space available. There are only six existing buildings in LoDo and the Central Platte Valley with a contiguous block of space more than 50K SF. The rest of Denver’s central business district has 11 buildings.
“Large space options remain very limited in LoDo/Platte, as well as downtown Boulder,” Savills Studley Vice Chairman Rick Schuham said. “Tenants willing to step out into surrounding submarkets such as Uptown or suburban Boulder can capture significant discounts in rent and greater concessions.”
Investors are eager to expand their Denver holdings, particularly in LoDo, which continues to command the highest prices in the region. Pricing also is increasing for newer office buildings in suburban locations that have easy access to either light rail or major transportation routes.
Office property sales through November totaled $1.5B — a 21% decline from $1.9B in the same period in 2016.