DENVER-Denver's economy and office market have a sense of momentum and energy heading into 2014. That is according to a recent report from Studley. According to the firm, the regional economy is gathering strength.
“Companies from a broad set of sectors such as energy, tech, banking and healthcare are adding to their payrolls, spurring demand for office space,” says the firm. “The region's expertise in these growing industries, coupled with relatively low business costs and superior quality of life, continues to induce corporations to set up or expand their operations in Denver.”
An aging population and new mandates tied to the Affordable Care Act have contributed to growth in healthcare across the US, says Studley. “Many healthcare providers are expanding in Denver due to its lower costs relative to Los Angeles and New York and its expertise in the field.” During the fourth quarter, Exempla Health Care, for example, completed a 29,170-sf lease at 500 Eldorado Boulevard in Broomfield and Ria Radiology Invision leased 32,791 square feet at 10700 E. Geddes Ave. in Englewood.
Oil and Gas, Healthcare Sectors Active
The oil and gas industry, for example, is enjoying a mix of expansion by locally based firms and an influx of companies eager to tap into the region's resources for the first time, says the Studley report. “Accelerated shale oil and gas exploration and extraction have been one of the key sources of new jobs across the Plains and Front Range.”
Houston-based Noble Energy, for example, recently revealed its intention to spend $2 billion in the Denver region in 2014, with plans to invest $10 billion in the area between 2013 and 2018. The company said that about 70% of the money would be invested in the company's US onshore operations.
But Big Blocks Are Becoming Rare
Some new construction and the addition of a couple of big blocks of sublet space pushed
availability in LoDo higher in the fourth quarter. However, with an availability rate of
11.1%, this submarket remains the tightest and most sought-after in the region, says Studley. “Area businesses have shown a clear preference for buildings in the CBD and—if they can find it—space in LoDo. The highest-quality class-A properties in the CBD and essentially all product in LoDo have seen their occupancy rates rise steadily in the last two to three years.”
According to Studley, “landlords who have a bigger block that is vacant or a building with significant rollovers in the short term possess a rare commodity.”
Demand for office space shows no signs of letting up, says the firm. According to the Colorado
Business Economic Forecast, the state is expected to add 61,300 nonfarm jobs in the next year, including 14,200 in professional/business services (the most of any sector) and 2,500 in financial services. “Availability is likely to continue its steady descent and there appear to be a sufficient number of tenants willing to pay a premium for space in LoDo and in Downtown's quality class-A properties to keep the market trending in the favor of landlords. The reality is that tenants, particularly larger tenants who want space in LoDo and the CBD, are facing increasing costs.”
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
