Market Snapshot: Denver Office—Millennial Haven
- May 15, 2015
By Ioana Neamt, Associate Editor
Denver’s economy has been on an upward path for several years now, leading the city to be named one of The Best Places for Business and Careers in 2014 by Forbes Magazine.
The metro is experiencing record growth that is expected to continue in 2015 as Denver becomes one of the most desirable destinations for young professionals in the technology, finance and energy industries.
According to recent data collected by CBRE, Denver’s booming economy and job growth are attracting investors, especially in the Downtown and Southeast submarkets. A growing demand and a lack of available quality office space are the main factors fueling construction activity in the metro. More than 2 million square feet of office space are currently under construction in the Denver metro, mostly concentrated in the Downtown, Southeast, Cherry Creek and Boulder markets. In these submarkets, lease rates have increased significantly, as investors are competing for a limited supply of quality office space.
According to CBRE, overall direct vacancy in the area has increased 44 basis points to 12.9 percent quarter-over-quarter. Transaction volume totaled $552.4 million in the first quarter, up 82 percent year over year. Invesco’s purchase of 1515 Wynkoop from ARA for $171.9 million was the area’s largest transaction concluded in the first quarter.
Availability also increased to 19.4 percent in the first quarter, thanks to demand for high-quality space that is fueling development. The only office delivery in the first quarter was The Boathouse, a 10,651-square-foot Class B office building in Capital Hill. However, more deliveries are expected in the next several quarters, including Prime West’s One Belleview Station and McWhinney’s Z-Block in LoDo. Google is also expected to expand its office presence in Boulder to house 1,500 employees.
Charts courtesy of CBRE