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Denver-Area Office Market More Cautious

DENVER-The direct vacancy rate remains strong at 9.32%, but when subleased space is included in the equation, it rises to 11.93%, according to a first quarter report by the Denver office of Jones Lang LaSalle.

By John Rebchook | Updated on May 22, 2001

DENVER-The area office market has become much more cautious than it was a year ago, according to a first quarter report by the Denver office of Jones Lang LaSalle. The direct vacancy rate remains strong at 9.32%, but when subleased space is included in the equation, it rises to 11.93%, says Steve M. Basset, senior vice president/regional leasing director of Jones Lang LaSalle. At the end of the year, the vacancy rate stood at 8.2%.

Excluding the small Northeast submarket, the direct vacancy rate ranged from 2.62% in the Northeast to 10.985% in the West. By adding subleased space to the vacancy, the range rises to 8.105% in Midtown to 14.97% along the Southeast suburban corridor.”Subleases will have an impact in 2001,” Basset says. “The full impact is yet to be seen. However, some owners have slightly dropped rates. New construction will also be impacted. Tenants will now have the option of direct or sublease space to compete with new construction.”

The market, however, did boast slightly more than 500,000 sf of positive net absorption in the first quarter. The Southeast suburban corridor led with 332,806 sf of net absorption. The Southwest suburban market experienced negative absorption of 48,734 sf.

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