Wheelhouse Commercial has compiled and analyzed the most recent office market data from the last quarter. The table below reports some of the key market indicators from submarkets across the greater Denver office market, during Q2 2021.
Overview
The data and graphs below should surprise no one. With stay-at-home orders in place for a year, COVID was bound to have a significant impact on the office market. Absorption, which had been positive for nearly a decade, went well into the negative.
Vacancy
Denver Metro office vacancy, which had been hovering around a “healthy” 10%, increased by nearly 50%, to 15%. However, it should be noted that over 2 million square feet of new office space was delivered between the middle of 2020 and the middle of 2021. So, with that taken into consideration, the increased vacancy over that past year does not look that bad.
Market Rents
The surprise to us, is that Denver Metro office market rents have remained relatively level. There has only been a roughly 1.5% decrease in asking market rents from the high of $29.20 at the beginning of 2020 to the current $28.71. Of course, many landlords are offering increased “concessions” to the full lease value in the form of increased TI allowance, more free rent, and increased leasing commissions; this is data that is nearly impossible to fully capture. However, it does bode well for the market that wholesale face rent decline has been minimal.
The forecast is for the above trends to continue for the next year, into the third quarter of 2022, at which point a recovery cycle will begin with vacancy decreasing and market rents rising.
Brian Lantzy is the Vice President of Operations at Wheelhouse Commercial in Denver, Colorado. For more information about how Wheelhouse Commercial can help manage your properties, please call 303.518.7406 or email info@wheelhousecommercial.com.