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Denver’s Lower Downtown submarket, or LoDo, is the most popular submarket for companies looking to expand as the city’s overall office vacancy rate reached 21.7% in the second quarter, according to the latest data from JLL.
LoDo has the largest share of leases that represent a tenant expansion since 2020, JLL data shows.
Overall, LoDo had an 11.2% direct vacancy rate in Q2, a 1.1% decline year-over-year. Meanwhile, the submarket had an average direct asking rent of $46.89 per SF, a nearly $2-per-SF decline compared to Q2 2022, according to JLL. Other office hot spots like the southeast suburban market, home to the Denver Tech Center, have a direct vacancy rate of 16.5% despite charging an average direct rent that is more than $20 per SF cheaper than LoDo.
LoDo is bordered by Commons Park, Cherry Creek, Lawrence Street and 20th Street in Downtown Denver. The area is home to more than 100 bars and restaurants, according to the LoDo Neighborhood District, and JLL Vice President of Tenant Representation Janessa Biller told Bisnow that these entertainment spots are helping draw companies from all over the country to the submarket.
“People are not ready to give up on downtown,” Biller said, referring to a conversation she had with a client who extended its lease for that reason. “There are still people who are invested in making Denver work and people who want to be downtown.”
Downtown Denver, especially LoDo, has been a source of concern over the last several years because of crime and a rising unsheltered population. Homelessness in Denver increased by 31% year-over-year between 2022 and 2023, according to the latest federal one-night count, and retail hot spots like the 16th Street Mall have seen tenants leave because of increasing theft.
However, those tides appear to be turning. Pivot Energy signed a lease for 22.6K SF at 1601 Wewatta St. in April, software technology company Dynatrace opened a 52K SF office for more than 400 employees in May, and law firm Clark Hill doubled its LoDo office space from 6K SF to 12K SF in June.
Other companies like Xcel Energy are starting to require their employees to work from the office at least three days per week, which could help improve foot traffic and bring more businesses downtown, Biller said.
Biller added that new Denver Mayor Mike Johnston seems to understand the problems that Downtown Denver still faces, and he seems to be working to improve conditions in the city. She pointed to Johnston’s emergency declaration on homelessness, which he signed on the first day he was in office, because it showed he was serious about following through on his campaign promise to address homelessness.
“He said he was going to work on it, and he’s now working on it,” Biller said. “Hopefully that will help downtown.”
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