CBRE research has published three Q4 reports covering metro Denver retail and southeast and downtown office. Strong market fundamentals persist for the Denver retail market as Q4 boasts low availability. Downtown Denver’s total office vacancy stayed flat while availability increased at the end of 2023. In the southeast Denver market, office rents held firm despite more negative absorption and moderating leasing activity in 2023.
Metro Denver RETAIL Q4 2023 Takeaways
- Q4 2023 posted just over 108,000 sq. ft. of positive net absorption, bringing the annual total to positive 593,000 sq. ft.
- Direct vacancy decreased 10 basis points (bps) quarter-over-quarter to 5.9%, while the total availability rate decreased 60 bps to 5.9%.
- The direct average asking rent in metro Denver saw a healthy 3.8% quarter-over-quarter increase to $20.65 per sq. ft. NNN.
- The construction pipeline exceeded 589,000 sq. ft. in Q4 2023. Two projects totaling just over 16,000 sq. ft. were completed in the fourth quarter, a 77.5% decrease in deliveries quarter-over-quarter and 82.3% year-over-year.
- Sales volume totaled $218.5 million in the fourth quarter of 2023, a strong 4.9% quarter-over-quarter increase and a 37.6% decrease year-over-year.
DOWNTOWN Denver Office Q4 2023 Takeaways
- Total vacancy remained at 31.5% in Q4 2023 and was up 210 bps year-over-year. Class A vacancy also remained unchanged during the quarter at 23.1%.
- Total net absorption of positive 26,100 sq. ft. was recorded in Q4 2023, bringing the year-to-date total to negative 579,000 sq. ft.
- Sublease availability increased in Q4 2023, rising 2.8% to slightly above 2.0 million sq. ft. but fell 8.5% year-over-year.
- Leasing activity totaled 307,000 sq. ft., down from the 526,000 sq. ft. recorded in the third quarter. Q4 2023’s rolling four-quarter total was 1.4 million sq. ft. Class A properties captured 67.3% of fourth-quarter leasing activity.
- The submarket’s average direct asking rent was up slightly in Q4 2023 and largely unchanged year-over-year at $39.90 per sq. ft.
- No new construction starts were seen this past quarter, keeping 1900 Lawrence as the only project under construction Downtown.
SOUTHEAST Denver Office Q4 2023 Takeaways
- Positive 41,000 sq. ft. of total net absorption was posted in Q4 2023, bringing the 2023 total to negative 484,000 sq. ft.
- No new office projects broke ground in 2023, as developers dealt with increased interest rates and tepid demand.
- Leasing activity decreased 41.0% quarter-over-quarter to 255,000 sq. ft., with telecommunications being the top industry this year.
- Sublease availability increased 58,700 sq. ft. over the quarter, reaching 1.8 million sq. ft. or a decrease of 3.2% year-over-year.
- Total vacancy decreased 10 bps quarter-over-quarter to 21.3%, while direct vacancy remained stable at 17.9%.
- The average direct asking rent remained resilient, increasing slightly to $28.50 per sq. ft. FSG to close out 2023.
Click here to read Q4 metro Denver office, industrial reports.
