{"id":1004703569,"date":"2024-03-08T02:54:45","date_gmt":"2024-03-08T10:54:45","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004703569"},"modified":"2024-07-25T03:51:45","modified_gmt":"2024-07-25T11:51:45","slug":"denvers-office-market-slow-but-with-brightspots","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/denvers-office-market-slow-but-with-brightspots\/","title":{"rendered":"Denver’s Office Market Slow but With Bright Spots"},"content":{"rendered":"\n

<\/p>\n\n\n

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\"Rendering\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Xcel preleased 220,000 square feet at T3 RiNo in Denver.
Image courtesy of Hines<\/em><\/figcaption><\/figure><\/div>\n\n\n

Denver’s office market has continued to slowdown throughout 2023, as both construction starts and completions have significantly decreased from the previous year, CommercialEdge data shows. Furthermore, no new development activity has been registered in the metro as of January. Transactions also declined with per-square-foot prices contracting year-over-year, but still holding well above the national average. <\/p>\n\n\n\n

The metro’s vacancy rate ranked among the highest in the U.S., considerably above the national average. However, there were a number of sizeable leasing deals recorded last year, through both new tenants as well as renewals and expansions. <\/p>\n\n\n\n

Development activity drops<\/h2>\n\n\n\n

As of January, there were more than 2.4 million of square feet of office space under construction in Denver across 13 properties. The pipeline accounted for 1.3 percent of total stock, slightly below the national rate of 1.6 percent. The metro considerably outpaced many of its peers including Salt Lake City (0.1 percent), Portland (0.5 percent) and Phoenix (0.6 percent) and was on par with Atlanta (1.4 percent).<\/p>\n\n\n

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\"Paradigm\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Paradigm River North expects completion in early 2024.
Image courtesy of Rockefeller Group and Jordon Perlmutter & Co.<\/em><\/figcaption><\/figure><\/div>\n\n\n

One of the largest developments underway is Paradigm River North<\/a>, a 200,000-square-foot building developed by a joint venture of Jordon Perlmutter & Co. <\/strong>and Rockefeller Group. Also known as 3400 Walnut St., the project broke ground in 2022 and is taking shape in the city\u2019s River North Arts District.<\/p>\n\n\n\n

Throughout all of 2023, developers broke ground on eight properties totaling 932,255 square feet. The pipeline considerably decreased from the previous year, when despite construction starting on only six projects, they amounted to 1.6 million square feet.<\/p>\n\n\n\n

A significant development<\/a> that started construction in 2023 was Schnitzer West <\/strong>and Brue Baukol Capital Partners\u2019 201 Filmore, a 140,000-square-foot office and retail building in the Cherry Creek submarket. The project expects completion in 2025\u2019s third quarter and aims for LEED Gold certification.<\/p>\n\n\n

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\"Law\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Law firm Moye White is The Current’s first tenant.
Image courtesy of Schnitzer West<\/em><\/figcaption><\/figure><\/div>\n\n\n

Last year, nine properties came online in the Denver office market totaling more than 1.1 million square feet, which accounts for 0.6 percent of total stock, slightly below the national delivery rate of 0.8 percent. Completions mark a significant drop from the previous year when almost double the space was delivered at 2 million square feet. <\/p>\n\n\n\n

In terms of delivered volume, Denver surpassed some of its peers such as Salt Lake City (383,430 square feet) and Portland (315,714 square feet), but considerably lagged other comparably sized markets including Atlanta (2 million square feet) and Austin (2.8 million square feet).<\/p>\n\n\n\n

One of the largest properties to come online in 2023 was The Current<\/a>, a 240,000-square-foot building developed by Schnitzer West. The project was supported by a $77 million construction loan from Otera Capital, maturing this year.<\/p>\n\n\n\n

Denver investments almost halve<\/h2>\n\n\n\n

As the year kicked off, two office properties traded in January totaling 251,368 square feet for a combined $32 million. Throughout 2023, some 4.8 million square feet changed hands in the Denver office market for a total of slightly above $1 billion. These figures represent a considerable drop from 2022 numbers, when nearly 9.4 million square feet traded for a total investment volume of more than $2.8 billion.<\/p>\n\n\n

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\"10051\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
The building at 10051 Trainstation Circle traded for $520.8 per square foot.
Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n

Consequently, prices also decreased with the average price per square foot being registered at $243 in 2023, an 18.7 percent drop from the previous year\u2019s figure. The Denver office market was however more expensive than the national average of $192 and surpassed many of its peers including Atlanta ($145), Salt Lake City ($165), Phoenix ($180) and Portland ($192).<\/p>\n\n\n\n

One of the largest transactions recorded in 2023 in Denver was Benderson Development and CGA Capital\u2019s $205.2 million acquisition<\/a> of a nearly 400,000-square-foot campus in a sale-leaseback deal. Kiewit Corp. sold the asset at $520.8 per square foot and will continue to occupy space at the property under a 20-year lease.<\/p>\n\n\n\n

Vacancy rates soar in Denver’s office market<\/h2>\n\n\n\n

As of January, the vacancy rate in Denver stood at 22.2 percent, marking a 3.9 percent year-over-year increase. The metro registered one of the highest vacancy rates in the U.S. and was considerably above the national rate of 17.8 percent. It was nearly on par with Austin (22.0 percent), but fared worse than many of its peers including Dallas (19.7 percent), Phoenix (18.6 percent) and Atlanta (17.8 percent).<\/p>\n\n\n

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\"Greenwood\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
Tenants at Greenwood Plaza include AT&T and Bright Horizons.
Image courtesy of Cushman & Wakefield<\/em><\/figcaption><\/figure><\/div>\n\n\n

One of the most significant leasing deals registered in Denver throughout 2023 was Xcel Energy-Colorado taking more than 220,000 square feet at T3 RiNo<\/a>, a brand-new mass timber building in the River North Arts District, the firm becoming the largest office tenant in the submarket. The property was developed by a joint venture of Ivanho\u00e9 Cambridge, Hines and McCaffery.<\/p>\n\n\n\n

Kaiser Permanente also renewed its nearly 121,000-square-foot lease<\/a> at the Greenwood Plaza where it has been occupying space since 2013. The landlord, Franklin Street Properties, was represented by Cushman & Wakefield, while JLL brokered the deal on behalf of the tenant.<\/p>\n\n\n\n

Denver has a high share of flexible office space <\/h2>\n\n\n
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\"1660\n\t\t\t\n\t\t\t\t\n\t\t\t<\/svg>\n\t\t<\/button>
1660 Lincoln St. rises 31 stories in downtown Denver.
Image courtesy of CommercialEdge<\/em><\/figcaption><\/figure><\/div>\n\n\n

As of January, there were 3.3 million square feet of flexible office space in Denver, accounting for 2.0 percent of total stock. The proportion of shared space in the metro was above the national average of 1.7 percent, but slightly below the ones recorded in some of its peers like Atlanta (2.1 percent) and Salt Lake City (2.2 percent).<\/p>\n\n\n\n

The largest coworking space operator in Denver was Regus, with more than 550,000 square feet across 29 properties. WeWork also commanded a sizeable footprint of 343,800 square feet in six locations. Recently, Coalition Space also entered the metro<\/a>, taking 16,000 square feet at a Westport Capital Partners-owned building located downtown.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here’s how the metro is performing relative to its peers, according to the latest CommercialEdge data.<\/p>\n","protected":false},"author":3120,"featured_media":1004692431,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[1587,21782,22251,21783,52420,21742,21747,15],"tags":[51047,50674],"class_list":["post-1004703569","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-denver","category-development","category-in-focus","category-investment","category-market-updates","category-latest","category-office","category-west","tag-marketupdate","tag-commercialedge"],"acf":[],"yoast_head":"\nDenver's Office Market Slow but With Bright Spots - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"Read how Denver's office market performed relative to its peers according to the latest CommercialEdge data.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/denvers-office-market-slow-but-with-brightspots\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Denver's Office Market Slow but With Bright Spots\" \/>\n<meta property=\"og:description\" content=\"Read how Denver's office market performed relative to its peers according to the latest CommercialEdge data.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/denvers-office-market-slow-but-with-brightspots\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-08T10:54:45+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-07-25T11:51:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/11\/t3-rino-in-denver-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Radu Corfus\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/denvers-office-market-slow-but-with-brightspots\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/denvers-office-market-slow-but-with-brightspots\/\",\"name\":\"Denver's Office Market Slow but With Bright Spots - 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