Denver's outpatient medical building market continues to see a pick-up in demand. This comes from a report from CBRE, revealing that net absorption for 2024 was 147,000 square feet. Of which, 107,000 was absorbed during the last six months of the year.
Net absorption was also positive in the year prior when it hit 96,000 square feet.
"The driver of positive absorption in H2 2024 was the newly constructed Intermountain Health Clear Creek Crossing building, where Intermountain Health, Cornerstone Orthopedics, and SCA Health occupied 119,000 sq. ft. across five floors," CBRE wrote.
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"The only large single-building vacancy that accounted for negative absorption in H2 2024 occurred at 2777 Mile High Stadium Cir, where The Urology Center of Colorado vacated 43,000 sq. ft. across three floors."
Direct vacancy slipped by 30 basis points in 2024 to 5.5 percent. The West submarket had the highest inoccupancy rate at 12.9 percent, while Boulder held the lowest at 1.5 percent.
There was 180,000 square feet of product under construction in the outpatient MOB sector in 2024 — with no new properties breaking the ground in the second half.
Investment sales in the last six months enjoyed a nearly doubling in volume at $59.9 million, from $30.4 million in the same period in the year prior. In total, there were eight transactions in the second half of 2024, going for an average of $1,115 per square foot. The biggest sale involved the property UC Health – Highlands Ranch, which changed hands for $13.3 million.
As for rents, they grew by an average of 2.1 percent in 2024 to $32.87 per square foot. The Northwest region in Denver showed the largest improvement (14.8 percent year-over-year). While rents have struggled to get back to their 2021 peak levels due to constrained supply for new projects, they are projected to keep growing in the short term.
"Due to persistently low vacancy rates, average asking rents are anticipated to remain elevated, indicating sustained market demand," CBRE said.
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