Cushman & Wakefield recently released its Q3 Tenant Report which compares the Mile High City’s population growth, employment, education and cost of living to 12 other large U.S. cities. According to the report, Denver remains a desirable place to live and work.
Report Highlights:
- Denver’s unemployment remains well below the national average of 3.7%, coming in at 2.7%
- Denver remains a top, highly educated metro with 41.4% of the population having a bachelor’s degree
- Denver remains cheaper than coastal metros
Absorption: Flight to Quality Space Remains
The competition for Class A space continued as direct vacancy decreased 60 basis-points quarter-over-quarter to 13.5 percent. Class A net absorption was roughly 377,000 square feet while both Class B and C exhibited negative absorption. Year-to-date, Class A product has accounted for 98.4 percent of the 1.3 million square feet (msf) absorbed throughout the first three quarters of 2019.
Economy: Denver’s Unemployment Continues to Fall
Unemployment decreased 50 basis-points quarter-over quarter, down to 2.8%, well below the national unemployment average of 3.7 percent.
Leasing Activity Dips
The third quarter 2019 saw approximately 2.1 msf leased marking a 12.5 percent decrease from the 2.4 msf leased last quarter. Class A product accounted for roughly 50 percent of the leasing activity with more than 1.0 msf leased.
Average Gross Rental Rate by Location
Boulder: $33.17
Cherry Creek: 33.50
Southeast Suburban: $25.68
NW Corridor: $28.46
LoDo/Central Platte: $46.19
Midtown: $38.27
Uptown: $34.22
RiNo: $45.55
Construction Costs
Denver has historically been indexed as the median market in the Western U.S. While costs for commercial office construction still hover at a regional mid-point, market velocity has seen National Indexes increase by 4 percent in the first half of 2019 across all project types. Strong growth in technology clients in this market continue to increase demand.
