CREJ

A s a year into the pandemic is quickly approaching, the commercial real estate industry in Denver and the rest of the economy are hopeful the pandemic signed a short-term lease and will not be renewing. With most employees working from home, many office users are taking this opportunity to reduce overhead. They saw their real estate footprint as the most obvious choice to downsize and coincidently listed a portion or, in some cases, the entirety of the space for sublease. Since Gov. Jared Polis announced the statewide stay- at-home order in late March of last year, 2 million square feet of sub- lease space was added to the mar- ket, nearly dou- bling the Denver market’s sublease availability rate. Following the oil price shock, massive layoffs and bankruptcies from companies across the metro area, sublease availabilities catapulted to the highest level in the past 20 years. The downtown market added over 800,000 sf of available sublease space since March, and the south- east market mirrored those levels, adding over 700,000 sf of available space to the bucket. While sub- lease availabilities have increased substantially over the past year, the reality of the situation is that a small number of major tenants (50,000-plus sf) account for the larg- est percentage of available sublease space. Of the 1.9 million sf of total sublease space listed downtown, major tenants of more than 50,000 sf account for 45% of the available sublease space. In the southeast, the situation is even more polar- ized, where major tenants of more than 50,000 sf account for 61% of the submarket’s 1.7 million sf of available sublease space. While we’d like to believe that the sublease availability rate will begin to taper off, this likely won’t be the case for a while. Still, it is more likely that we will continue to see INSIDE Owner insights PAGE 10 How one ownership group is adjusting its leasing to meet the demand for flexibility Jared M. Balcavage Research analyst, Transwestern Measuring the shadow cast by sublease space The amount of shadow space, a portion of leased space that the tenant is not using, is challenging to measure because it is not officially marketed or tracked in industry data- bases. However, over the next year, it will impact vacancy rates as it comes to market. March 2021 PAGE 14 PAGES 19-36 Office trends Understand several key workplace trends as businesses navigate new reentry challenges Industrial section Industrial market updates and highlights as well as outlooks and trends are featured Please see Page 17