Reports Show a Sizzling Office Market and a Corridor Busy with Development

The Interstate 25 corridor north of Denver will see a great deal of commercial development in the coming years, according to Libby Kirschner, a land broker with Cushman & Wakefield Colorado Inc.

Kirschner, an associate director at Cushman & Wakefield, notes that in the Centerra development at I-25 and Highway 34, south of Fort Collins and Colorado State University, a 115-bed advanced care hospital will be built. The Poudre Valley Health System and Regional West Center plan a regional hospital on 91 acres.

In addition, plans call for a 500,00-sf lifestyle shopping center, a 12-room hotel and 1.5 million sf of commercial space.

However, Windsor, Loveland, and Fort Collins, she notes, all are in a race to build a giant lifestyle center or open-air mall between 400,000 and 700,00 sf. But Kirschner notes that while the area is under-retailed, while at the same time will see a lot of rooftops in the coming years, there is only room for one in the foreseeable question. "The big question is, which city will win," Kirschner says.

According to the latest report by the CB Richard Ellis Office team of SVP's Sergio Castaneda and John Marold and Senior Associates Mitch Bradley and Lang Williams, the South Denver office market is sizzling.

Projected 12-month activity along the corridor, has jumped 34% from June of last year to 1.96 million sf to 1.46 million sf. And projected absorption from these tenants is up 60% to 998,000 sf from 625,00 sf.

"Activity has certainly improved," the report notes.However, there still is a 26.6% availability rate, which continues to pressure landlords to cut lease rates. They need to compete fiercely, even for small requirements, the brokers note.

So far this year, average gross asking lease rates for all classes of buildings in southeast Denver have decline 4.7% to 15.73 per rental sf in full-service deals.