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DENVER-The Denver regional economy is suffering from its weakest period since 1986, according to the latest office market report by Transwestern Commercial Services and Delta Associates, Transwestern’s research and consulting based in Alexandria, VA. The weak economy has led to a negative absorption of 98,000 sf by mid-year, compared to a positive absorption of 3.5 million sf in all of 2001, according to a report that puts the long-term annual average absorption at 2.6 million sf.

The vacancy rate, including sublet space is about 16.1%. The spread above direct vacancy rose 30 basis points in the first half of 2002, after increasing 220 basis points in 2001.

“Denver’s economy will likely remain sluggish through the end of 2002, but with increased signs of improvement thereafter,” says Thomas “Chip” Clarke, president of the southwest region for Transwestern. “As the national economy strengthens in 2003, the core industries of Denver will gain momentum and begin to spur growth again. Distribution services, transportation, tourism, technology and financial services will all likely experience improved performance in 2003.”

But the real turn around won’t start to be seen until 2004, Clarke projects.

“More normal levels of growth are expected to resume in Denver’s economy in 2004,” he notes.

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