Denver Office Space Vacancy Forecast
September 22, 2009
Current Office Vacancy Rate
According to today's statistics compiled by Costar Group the Denver Metro area office market has a direct vacancy rate of 15%. In real terms that means there is over 22 million square feet of office space sitting vacant in the Denver Aurora Broomfield market.
Denver Office Space absorption is negative
Current Net absorption is shown to be negative 1%, so the forecast is for office vacancy to increase to 19% of the space within the next two years. Accordingly it is a great time to negotiate your existing lease renewal as landlords are increasingly reluctant to lose tenants.
Office Lease Rates show declines
A recent article in The Denver Post showed that many major tenants are exploring the option of relocation to the Southeast part of the Denver metro area. This is perceived to be a testing of the rates many central business district buildings are advertising. Landlords are increasingly willing to accept more of the risk of operating expenses in order to entice tenants to lease or renew existing leases and thus are offering more gross or modified gross terms.
My opinion of the Denver Office Space Market
As one drives the highyways and byways of the Denver Metro area you see for lease signs on virtually every office building and commercial project. As time lengthens and this space remains vacant it is more likely that these buildings will become foreclosed or REO Properties. This is a challenging market for landlords and property owners and an opportunity for buyers and tenants.
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