Denver Office Report – Spring 2019

The sector continues to pick up steam following a banner 2018, boosted by population growth, job gains and the rise of coworking.
Office-using employment in Denver, click to enlarge
Office-using employment in Denver, click to enlarge

Denver’s office market continued to pick up steam, as both people and companies flocked to the metro. In April, the unemployment rate fell to 2.7 percent, its lowest point since December 2017 and 90 basis points below the national rate. Although a few companies in the financial activities sector announced job cuts, office employment made strong gains overall, driven by an increase of more than 15,000 jobs in the professional and business services sector.

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After a banner 2018, when office deliveries totaled 3.2 million square feet, vacancy remained tight at 13.2 percent as of April, boosting asking rates to $27.18 per square foot. Space in the Central Business District was quickly absorbed as several firms—including Amazon and a number of other tech companies—announced significant expansion or relocation plans. Coworking providers continued to build their presence throughout downtown Denver, with WeWork, now the metro’s largest office tenant, signing two deals encompassing nearly 150,000 square feet.

Employment growth by sector in Denver, click to enlarge
Employment growth by sector in Denver, click to enlarge

Transaction volume totaled nearly $700 million in 2019 through April, with investors heavily focused on the CBD. More than half of the properties sold were Class A, though Class B assets became increasingly attractive to buyers, as evidenced by falling acquisition yields amid rising asking rates and declining vacancy.

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