Page 2
— Office Properties Quarterly — October 2015
CONTENTS
Letter from the Editor
A
s we wrap up the fourth
quarter of Office Proper-
ties Quarterly, one theme
sticks out about the rest –
it’s a good time to be in the
office properties market in Colorado.
Developers in Colorado’s office mar-
ket will complete 2 million square
feet of additional stock this year,
according to a report from Marcus &
Millichap. Roughly
1.1 million sf was
delivered in 2014.
Even though this
is a large volume of
new stock, indus-
try reports don’t
appear fearful of
overbuilding. Brian
Smith takes a look
at some of these
reasons in the article on Page 17.
Some indicators of demand are
the declining vacancy rates, which
will see the lowest year-end rate in
nearly eight years, and soaring net
absorption, which is expected to sur-
pass 2.5 million sf, according to the
report.
Of the available vacant space,
most is second-generation space
under 100,000 sf. This is because
these spaces are not large enough to
entice companies to relocate, said a
DTZ report. Larger vacant spaces are
leasing more quickly. As of the end
of the second quarter, there were
only 10 buildings offering 100,000
sf of contiguous vacant space, of
which only three were located in the
central business district, the report
states.
This increase in development is a
welcomed update for much of the
metro area. “Across the entire Denver
market, the average age of properties
is 35 years,” said JLL’s office insight
second-quarter report. “Downtown,
seven of every 10 square feet was
built at least three decades ago.”
One of the major projects that
broke ground this year is a 40-story
tower by Houston-based Hines
Group, located at 1144 15th St. Once
completed, the 662,000-sf office
tower will be the fifth tallest in Den-
ver and the tallest built since 1985.
Another project, 1601 Wewetta, will
deliver 283,000 sf of office and 17,000
sf of retail space, making it the larg-
est project scheduled for delivery in
2015.
Of the millions of sf under con-
struction, about 50 percent is pre-
leased. Some recent groundbreak-
ings did so without any leases, the
Marcus & Millichap report said. The
importance of preleasing for a proj-
ect’s success is explained in Kyle
Ramstetter’s article on Page 15.
While many of these statistics are
Denver-specific, the positive office
trends are not limited to the capital
city. Office product in Glendale and
Aurora reported the strongest annual
rent gains, while the highest rents
remain downtown. Beginning on
Page 10, we highlight several other
Colorado markets.
Next year looks to be as busy a
year as 2015, and I look forward to
covering it. Please send me your
feedback on what you’d like to see
covered.
Michelle Z. Askeland
303-623-1148, Ext. 104
