High Quality Office Assets Driving Up Rates in Denver
CommercialEdge just released its September national office report, analyzing the U.S. office market’s performance through August 2021.
Average listing rates often reflect the quality of assets being offered in the market rather than underlying fundamentals. A case in point is Denver, where rates have increased 3.3 percent over the last year despite vacancies increasing 600 bps over the period. Rates have been driven upwards by new, high-quality assets. Foremost among these is Block 162, an A+ rated 30-floor tower in the CBD. Currently listing more than 500,000 square feet at a triple-net rate of $36 per foot, which is a full-service equivalent rate of more than $50, this property has pushed up the average rate in the market.
- The national office asking rents inched up to $38.72 per sq. ft. in August.
- The national vacancy rate slipped to 15.4% across top office markets.
- Total vacancy for office space in Denver was 17.2%, following a 600 basis points increase year over year.
- Transactions closed through August totaled nearly $45 billion.
- Office-using employment sectors grew 4.5% Y-o-Y, but there are still 647K fewer office-using jobs compared to pre-pandemic levels.
- Over 38 million sq. ft. of new office space was delivered YTD.
Life Sciences Demand Grows
While the office sector as a whole has struggled for the last 18 months, the life sciences industry has grown more rapidly during the pandemic than it had beforehand. As this subsector continues to grow, firms may look to move into highly educated secondary markets in search of qualified employees and cheaper leases.
Download the full September 2021 report on performance across U.S. office markets, as well as insights on industry and fundamentals of economic recovery.