Denver Office Industrial and Retail Sectors Look Strong in Q2
Metro Denver’s office, industrial and retail real estate sectors posted healthy performance in the second quarter of the year according to CBRE’s Q2 2019 MarketView reports.
“The office sector performed notably well, with near record-level absorption, rising lease rates, robust construction activity and strong sales volume. The industrial sector saw nearly 1 million square feet of space newly occupied this quarter, and industrial sales volume is just trailing 2018’s record-setting pace. Lease rates held steady at the market’s all-time high in the retail sector, with retail development ramping up to close to 1.5 million sq. ft. underway,” said Pete Schippits, senior managing director for CBRE’s Mountain States.
- The office market posted positive net absorption of 450,438 sq. ft. in Q2, bringing the year-to-date (YTD) total to 949,865 sq. ft. — the highest mid-year total on record since Q2 2007.
- The average direct asking lease rate increased for an eighth-consecutive quarter to a record high of $28.43 per sq. ft. full-service gross.
- Development activity rose to nearly 2.5 million sq. ft., driven by new construction starts in the suburbs. Ninety percent of the development underway is speculative.
- Investment activity was split evenly between the downtown and suburban submarkets and totaled $710.3 million in Q2, a 41.5 percent increase year-over-year.
- With more than 970,000 sq. ft. recorded, the market saw its 37th consecutive quarter of positive net absorption—pushing YTD net absorption to 1.5 million sq. ft., a 77.8 percent increase over the first half of 2018.
- The overall average direct asking lease rate cooled slightly to $8.06 per sq. ft. triple net (NNN)—a result of abundant big box supply.
- Eleven buildings comprising 1.8 million sq. ft. delivered while construction activity remained elevated with 4.0 million sq. ft. underway.
- An overall sales volume of $344.0 million was recorded in Q2, bringing YTD sales volume to nearly $700 million, not far behind last year’s record-setting pace.
- The market recorded negative absorption for the first time since Q1 2018, but a strong Q1 2019 puts YTD net absorption at a positive 357,859 sq. ft.
- The average direct asking lease rate held steady at the all-time high of $19.60 per sq. ft. NNN.
- Under construction retail space increased to nearly 1.5 million sq. ft.
- Investment sales priced $3.0 million and greater totaled $140.8 million, up from last quarter but down 41.7 percent from last year YTD.