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Coworking space accounted for a significant portion of the nearly 2.1M SF of office space leased in metro Denver during the first quarter, which marked the highest quarterly leasing total of the past four quarters, according to Savills first-quarter office report.
Overall, nearly 900K SF of office was leased in Denver’s central business district, with WeWork committing to more than 90K SF in the CBD and Boulder during the first quarter, according to the report. In total, WeWork controls more than 700K SF in the greater Denver area and is on track to surpass DaVita as the largest occupier of office space in the market.
“It’s not surprising there’s a robust coworking market in Denver because there’s been such a massive influx of people,” Savills Vice Chairman and Director Rick Schuham said. “WeWork is set to be at 1M SF by the end of the year. Denver is certainly saturated. We think they must have something deep in their algorithms we can’t figure out.”
Overall, space availability in Denver continues to decline, with the quarter ending at 16.8% — a year-over-year decrease of 180 basis points. This marks the eighth consecutive quarter that the market’s overall vacancy rate has fallen.
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Unlike its competitors, Savills’ numbers include all sublease space, as well as space that is under construction if it has already broken ground.
“We care about what’s available for our clients,” Schuham said, noting that Savills only represents tenants in transactions.
While there is currently 3.5M SF under construction throughout Denver, options for large blocks of space continue to dwindle, so it is important for companies to start looking for new space at least two years before their leases are up, Schuham said. There aren’t many options in downtown Denver for companies looking for views, and only the less attractive buildings in Boulder have space available, although some of the nicer buildings have space on the lower floors, Schuham said. Cherry Creek has very little of anything.
“The tightness in the market is really around high-quality space,” he said. “There’s not a lot of high-rise space in the CBD, and there’s not a lot of newer buildings that have Front Range views.”
CORRECTION, APRIL 16, 1:15 P.M. MT: The nearly 900K SF reported in Denver's central business district was for overall office leasing. The story has been updated.
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