The Denver office market flipped back to positive absorption during the fourth quarter, after a three-quarter run of negative numbers. The driver? Tech, JLL Rocky Mountain Region director of research T.J. Jaroszewski said.
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Examining last year's larger leases (20k SF and greater), technology firms easily bested all other industry types as the most active sector, Jaroszewski said. "Tech occupiers signed nearly twice as many transactions as the next closest user type, while accounting for nearly three of every 10 SF leased."
Also notable, on the other end of the spectrum, was the fallout from still-depressed oil pricing. "Energy companies significantly dialed back activity in 2016 — to their lowest levels in years — and finished only sixth among the market's most active sector types," he said.
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The metro Denver office market saw total net absorption in Q4 of a bit more than 266,500 SF, ending the year with a direct vacancy of just above 12.5%, according to JLL data. Total vacancy is 13.8%, close to the lowest level since 2000. Rent growth for the quarter was 1.6% and for the year, 4%.
Looking at the year ahead, tech might not be quite the driver it was last year, but instead more traditional sorts of tenants will be. Jaroszewski said FIRE industries (finance, insurance, real estate) are "businesses we expect to be among Denver's most active pursuers of office space."
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