Vacancies for downtown office space in Denver hit a low of 10.5% mid-year of 2015 and have since been on the rise reaching 14.3% by mid-year 2017. The increase in vacancies has been fueled by new construction of over 1.7 million sf combined with cut backs in the oil and gas industry. Net absorption was a strong 747,000 sf in 2015, but has turned around to negative (475,000 sf) in 2016 and negative (71,000 sf) year to date 2017.
Certainly the RiNo/Platte area has been hot with vacancies under 10% and average quoted rates at close to $40 psf even with significant new construction. But this area’s impact is still relatively small with a market size of only 2.6 million sf compared to the entire downtown market of over 37 million sf.
Report generated from CoStar. For additional information call Vector Property Services @ 303.662.9300
Copyrighted report licensed to Vector Property Services LLC - 88388.
So my conclusion is that Downtown has peaked for now. The economy needs to keep growing with rising oil prices to fuel the office demand fire. Otherwise, vacancies can expect to increase in the near term, putting more pressure on rental rates to decline.