"Many companies put real estate decisions on hold while monitoring the direction of the economy," the report says. "Other companies returned space to the market, bringing the total sublease space to over four million sf in the metro area."
Overall vacancy rate rose to 18% from 14.6% at the end of the second quarter. The hardest hit, the northwest corridor, is shouldering a 34.7% vacancy rate. The average rent, however, only dropped slightly to $20.92 per sf from $21.92 per sf.
Developers increasingly are offering concessions such as free rent, free furniture and phone systems and flexible lease terms, but few companies are taking advantage of the breaks, Studley reports. "Tenants that are ready to relocate or renew can now find enticing opportunities," the report says.
The northwest market between Boulder and Denver suffered the most. The vacancy rate rose from 4% to 34.7%. Rob Link, senior vice president and branch manager for the Denver Studley office, says he has never seen a market change directions as quickly as the Boulder corridor.
The southeast market fared better, with a 21.35% vacancy rate. The downtown market, with its presence of more financially stable tenants and lack of new construction, remains the strongest of the three major submarkets.
However, with the major increase in disposition of space and below-average absorption levels, a full rebound is unlikely in 2002. Availabilities in this market jumped from 13.4% from 9.4% and rents slipped to $24.29 per sf from $24.82 per sf.
And throughout the three major markets, class A space has the highest vacancies. In the CBD, the class A vacancy rate is 17%, it's 24.3% along the southeast corridor and a whopping 45.8% in northwest submarket.
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