OfficeReports

CBRE Denver Office MarketView Q2 : Leasing Activity Improves as Tenant Demand Picks Up

Facebooktwitterredditlinkedinmail

According to CBRE’s research report, Denver Office MarketView Q2 2021, the Denver office market exhibited encouraging fundamentals in Q2 2021, posting negative direct net absorption of 430,422 sq. ft. This marks the fifth straight quarter of negative absorption, although this figure has vastly improved upon last quarter’s negative 1.1 million sq. ft. absorbed. Class B office properties were the catalyst for this quarter’s change, recording approximately 336,000 sq. ft. of negative net absorption.

Total vacancy grew 140 basis points (bps) quarter-over-quarter to 18.8%, prompted by multiple large office properties in downtown delivering mostly vacant. Sublease available space increased, albeit marginally compared to previous quarters, as occupiers weigh their office requirement needs.

Leasing activity continued to improve, posting approximately 1.0 million sq. ft. as Denver office interest persists and competition for space picks up. The average direct asking lease rate continued upward, reaching $30.96 per sq. ft. full service gross (FSG).

Construction starts slowed as 1.3 million sq. ft. of office space was under construction during Q2 2021 and only one property broke ground. New office completions were plentiful as eight buildings delivered 1.3 million sq. ft. of new space, including Block 162, McGregor Square and Market Station in the Downtown submarket.

Highlights:

  • Metro Denver posted 430,000 sq. ft. of negative net absorption in Q2 2021—the fifth straight quarter of negative
    activity.
  • Total vacancy reached its highest level as tracked by CBRE, increasing 140 bps quarter-over-quarter to 18.8%.
  • 1.3 million sq. ft. was under construction at the end of Q2 2021 with only one office property breaking ground.
  • 1.3 million sq. ft. delivered in Q2 2021— notably three deliveries in downtown totaling 885,000 sq. ft.
  • Investment sales activity continued its upward trajectory, posting $591 million in transaction value in Q2 2021.
  • The average direct asking lease rate increased $1.55 quarter-over-quarter to $30.96 per sq. ft. FSG.
  • Leasing activity totaled over 1.0 million sq. ft. for Q2 2021, up 44.4% from the previous quarter.

Read the full report here

Previous post

CBRE Denver Industrial Marketview: More Than 1.2M sq. ft. of Positive Net Absorption Recorded in Q2

Next post

Tributary Real Estate Purchase Recently Renovated Denver Office Building

No Comment

Leave a reply

Your email address will not be published. Required fields are marked *