The report showed that in 2002, the Denver-area office market had a negative net absorption of just over 2 million sf, compared to 3.5 million sf of positive absorption in 2001 - a 5.5 million-sf swing. The long-term annual average absorption is 2.6 million sf.
Direct office vacancy rose to 14.4% from 12.6% in mid-year 2006 and from 10.7% at the end of 2001.
When subleased space is included, it reported that the overall vacancy rate rose to 17.4%. The spread above direct vacancy declined by 10 basis points in the second half of last year, after increasing 30 basis points in the first half of 2002. The spread above direct vacancy was 220 basis points in 2001.
Transwestern noted that the Denver-area economy suffered its weakest period since 1987. But since the economy is more diversified than it was during the energy bust of the mid-80s, it should start to build momentum in late 2003.
There was 1.8 million sf under construction at the end of the year and it was 37% pre-leased, down slightly from mid-year 2002.
Investment sales volume was almost half of what it was in 2001, with $224 million in 2002, compared with $422 million in 2001 and $747 million in 200. Average sales price was $102 per sf, down from $134 per sf in 2001.
"As the national economy strengthens in 2002, the core industries of Denver will gain momentum and begin to spur growth again," according to the report. "Distribution services, transportation, tourism, technology and financial services will all likely experience improved performance in 2002. More normal levels of growth are expected to resume in Denver's economy in 2004.
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