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Denver Office Rents Hit Record High

by Joe Monzon, Denver, July 2014

 

Denver's office market is booming. During the first quarter of 2014, rents hit the highest level ever posted. The numbers were driven by strong demand for quality space from both large and small users. As rents continue to rise, higher property tax assessments may follow in the 2015 reappraisal.

 

By the Numbers

 

Denver's direct asking lease rates (measured in full gross terms) reached $22.38 per square foot in the first quarter, according to CBRE Group Inc's most recent MarketView report.

 

Overall Class A rates increased to $26.66 psf, while Class B rates increased to $20.46 psf. Class B rates have appreciated at nearly three times the rate of Class A space during the past two quarters.

 

The Southeast and Downtown submarkets witnessed the strongest rent appreciation as growing demand gave landlords the confidence to raise their rates. Downtown had the highest asking lease rate at $30.17 psf.

 

New Construction

 

The primary area for new construction is Downtown Denver, with nearly 800,000 sf of speculative office space currently underway.

 

In the Downtown submarket's Lower Downtown district, investors and users see infrastructure improvements as a catalyst for future development, making the area one of the most sought after markets in the country, the MarketView report explains.

 

Investment Sales

 

The investment market continues to display strong activity as a number of notable buildings traded hands. Transactions worth $285.6 million were reported, an increase of 13.1% from the start of 2013.