The market along US 36 between Boulder and Westminster had only a 1.64% vacancy rate at the end of 2000, according to the report by Chris Phenicie, a broker with Commercial Colorado who specializes in the market with partner David Hart.
Two office projects under construction, which are almost completed, will add 317,000 sf to the market, driving the vacancy rate to 59%, Phenicie says. He's projecting that as tenants take advantage of the type of incentives not offered in the Denver area since the real estate depression of the mid-1980s -- up to a year's free rent, for example – the vacancy rate could fall to about 40%.
It could easily take four or five years for the market to recover, he says.
Kevin Richey, a broker with the Frederick Ross Co., says he places the vacancy rate at about 35%.
''But most brokers will say that it's really more like 40%,'' Richey tells GlobeSt.com. ''There's a lot of 'shadow' space on the market.''
If you counted all the space that could be available if a tenant wanted it, one could make an argument that the vacancy rate is much higher, he says.For example, Richey recently was looking at some space where a few people from a pharmaceutical company are still working.
''The space is kind of available, but isn't officially on the market,'' Richey tells GlobeSt.com. He says it will be tough space to sublease because of its location off the beaten track.
Phenicie's report shows that the highest vacancies are found in class B sublease space. There is 707,289 sf in that category, which has a whopping vacancy rate of 77.25%.
The 879,981 sf of direct class A space has a vacancy rate of 47.69% and the 3.5 million sf of direct class B space has a vacancy rate of 29.92%. The 694,561 sf of direct flex space, which combines industrial and office components, carries a vacancy rate of 44.51%, according to the report.
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