Office Market Recovery Dealt Setback

DENVER-The area office market recovery remains elusive, according to a first-quarter report by Grubb & Ellis. While it appeared the market had hit bottom late last year and was poised to begin slowly recover, Grubb & Ellis reports a new round of negative net absorption has caused the overall vacancy rate to rise to 22.4%.

The report shows 322,800 sf of negative absorption in the first quarter. Of that, 295,084 sf is in the suburbs.

“The bottom line is that for Denver’s office market to improve, companies that lease office space need to create more jobs and hence will eventually need more space to accommodate these new employees,” the report notes. “Unfortunately, new job growth for Denver is forecasted at just 1.2% for 2004. This growth rate will not translate into a need for more office space, but at least there is some job growth projected.”