The third-quarter report notes that asking rates in the local office market dropped for eight consecutive quarters to $17.05 per sf. That's a 2.9% drop from the the first quarter. Average asking rents for all building classes hit their peak in the second quarter of 2001, when rents were $20.82 per sf.
Studley notes with class A rents at historically low rates, at least in the recent cycle, tenants are consistently migrating from class B buildings to class A space. Because of this trend, 1.4 million sf of class B and C space became available in the second quarter, which was balanced by the absorption of 1.2 million sf of class A space.
"As a result, the class A availability rate dropped to 25.8% in the second quarter, from 27% the [first] quarter, even though no change occurred in the overallavailability rate," the report notes.
Metro area companies leased 2.4 million sf in the second quarter, compared with 2.4 million sf in the first quarter. The Denver Region office market is comprised of nearly 105 million sf feet of space.
Studley notes that the ultimate measure of an economic recovery is job creation, which is still lagging. "Even though the direction of the Denver metro area's economy remains unsettled, we may finally be laying the foundation for recovery," Studley notes. "Until that time, the real estate market will continue to hover at the bottom of the cycle.
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