DENVER—The Denver region's overall availability rate, 16.2%, inched up by 0.3 pp for the fourth quarter but fell by 1.4 pp for the year, according to a recent report from Savills Studley. Following a significant decline in the third quarter, the class A rate dropped again in Q4, albeit modestly (-0.1 pp to 16.4%). It decreased by 2.4 pp year-on-year. And while the Central Business District and the LoDo district have a limited supply of available class A, that availability did not decline as quickly as it did in some suburban markets, Savills notes.

LoDo only has about 300,000 sf of Class A space available for lease, not including approximately 750,000 sf under construction that will be delivered in 2016 or later. As the availability of space in the CBD and LoDo dwindled in 2014, leasing activity spread to suburban submarkets that offer a larger pool of big blocks, causing availability in suburban Denver to dip markedly.

Class A available space in Suburban Denver has fallen by 15.3% to 4.4 msf in the last four quarters. In contrast, available space in LoDo (down by 4.9%) and the Central Business District (down by 9.9%) has declined more moderately.

Overall asking rent increased quarterly by 1.6% to $23.73 and registered a 2.0% yearly gain. Class A asking rent, $28.30, jumped by 3.2% for the quarter and by 2.6% for the year.

Overall leasing totaled 1.6 msf, a decrease of 22.3% from last quarter and of 30.3% from the fourth quarter of 2013.

As of November, office-using employment in Denver was 4.4% above its pre-recession peak, supporting regional labor markets and reflecting three years of sustained economic growth.

In Boulder, Google's plans to construction of a four-acre campus that would accommodate 340 employees. This solidifies Boulder's status as a tech innovation center, the report states.

Steady expansion among smaller and mid-sized tech companies, coupled with very tightly controlled construction, depleted availability in Boulder.

In the overall regional market, demand for space continues and will be answered with new projects delivering in 2016 and 2017, and Savills adds.

As these buildings approach delivery and companies start to lease space, it will push many landlords in class A-/B+ buildings to either upgrade their properties or increase their concession packages.

Instant Insights /

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