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— Office Properties Quarterly — April 2015
CONTENTS
Letter from the Editor
Financing for permanent office building loans Stephen P. Bye 2014 year-end Denver office market overview Lauren Douglas The often overlooked value in your office building Kendra L. Goldstein IRS presents a gift to landlords … Really! Zane Dennis Office investment market continues to thrive Patrick Devereaux and Jason Schmidt Boom-and-bust cycle squarely in the past Tom Lee Finding value in vibrant southeast suburban Denver Preston Dunn and Chaise Schmidt Why is Boulder’s office market soaring? Paul Whiteside RiNo’s office market has found its place Darrin Revious Creative office alternatives found in periphery Hadley Cox and Drew Thomas Nonprofits facing space crisis in strong market Katie Edwards Trends in action: Union Station wing buildings Michelle Z. Askeland Employment growth and the downtown market Patricia Silverstein The evolution of office space utilization Sarah Carver Recruitment and retention bodes well for Denver Paul Washington Craft and authenticity transform the workplace Gillian Hallock Johnson Collaborative spaces thrive best with balance Michelle Z. Askeland Speculative suites are low on the sexy scale Tia Jenkins Examining myths, realities of workstations Phillip A. Infelise Office developers win big with design-build Doug Spuler A look at Colorado's robust office construction Lauren Smith The impact of an aging office inventory Katy Sheehy and Abby Vollmer The new definition of a project manager Megan Walsh 3 4 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 22 23 24 27 28 28A
s we wrapped up this issue,
several reports came out
about the office market. One
area in particular stands out,
and that’s the employment
numbers in Colorado.
Employers in Denver are fore-
casted to add 43,000 workers during
2015, and office-
using payrolls will
increase by 14,000
jobs, according to
the Marcus and Mil-
lichap 2015 Nation-
al Office Report.
Denver is ranked
the sixth-healthiest
employment mar-
ket in the country,
according to the report.
The Denver area currently has 3.6
percent unemployment, according
to CBRE’s Denver 2015 Market Out-
look. Make sure to read Patricia Sil-
verstein’s article on Page 16 to learn
more about the employment pool
and its effect on the office market.
With these numbers, one thing is
consistently mentioned – the Denver
office market is not reliant on the oil
and gas industry. While the energy
industry and its peripheral busi-
nesses are a large presence in Den-
ver, there is a well-balanced blend of
industries.
In addition, we have a great genera-
tional blend. Millennials continue to
pick Denver as the top location they’d
like to live, and employers are taking
note.
“Denver continues to attract busi-
nesses due to its highly educated
workforce,” said the CBRE outlook.
“In 2013, 42.1 percent of the Denver
region’s workforce had obtained at
least a bachelor’s degree, compared
to the national average of 29.6 per-
cent. Further, Colorado is the second-
most educated state in the nation.”
These positive trends undoubtedly
are affecting the office market. At the
end of 2014, the average asking lease
rate was $23.15, the office market
vacancy rate was 12.5 percent and
there was 2 million square feet of
office property under construction,
according to the CBRE outlook.
In response to this influx, there are
2.2 million sf of office space that will
be brought on line this year, mainly
downtown and in the Denver Tech
Center, according to the Marcus and
Millichap report. However, develop-
ers are cautious not to overbuild the
market, which Tom Lee discusses on
Page 9.
I want to thank all the authors who
took the time and energy to research
and write for this issue. Please reach
out to me if you have any thoughts
on the issue, are interested in con-
tributing or would like to make sure
we cover something important in an
upcoming issue.
I look forward to hearing from you,
and thanks for reading.
Michelle Z. Askeland
maskeland@crej.com303-623-1148, Ext. 104
Colorado’s strong employment helps market