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No Red Flag Rising Over Available Sublease Space

DENVER-The northwest corridor's unexpected vacant sublease space isn't cause for concern, say area brokers. Rather, it's a sign of a return to a more normal market. And, it could be the ticket to lure California-based companies to the region.

By John Rebchook | Updated on March 23, 2001

DENVER-One of the Denver area’s hottest submarkets, the US 36 corridor between Boulder and Denver, is being hit for the first time with a large amount of vacant sublease space. The five-million sf northwest corridor, filled largely with high-tech tenants and those who serve them, currently has 379,102 sf of subleased space, according to an analysis by David Hart and Chris Phenicie, principals of Commercial Colorado. But a separate study by Scott Garel, Tom Lee and David Lee of the Frederick Ross Co. places the amount of subleased space at 292,630 sf.

In any case, brokers agree the sudden appearance of sublease space, red hot just a year ago, is returning to a more normal kind of market. “This is not the end-of-the-world type of thing,” Phenicie says. He and Hart have leased 20,000 sf in two deals within two weeks. “I think it is actually good news,” adds Hart. “It allows companies to get into the market who couldn’t get into it a year ago. They had been shut out.”

The corridor’s vacancy rate is 8%, including the sublease space, whereas the direct rate stands at 1%. “There’s no problem along the corridor at all,” contends Garel. “Basically, the direct vacancy rate is about zero.” In fact, the market is so healthy that there is room for several new buildings to be constructed, he says.

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