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DENVER-The metro area office market is 9.3 years away from reaching an equilibrium rate of 90%, if all space is included, according to Laura A. Mathews, a director and office broker at Cushman & Wakefield’s Denver office. Mathews bases her analysis on historic absorption.

The market needs to absorb 13.4 million sf, and from 1994 to 2003, it absorbed an average of 1.445 million sf annually, the company’s research found. However, Mathews tweaked the numbers to get a more realistic take on the time necessary to reach equilibrium. She tells GlobeSt.com the 13.4 million sf includes class-C space, while the majority of tenants are only interested in class-A and class-B space.

Much of the class-C space already is obsolete and needs to find a use other than office space, she notes. If only class-A and class-B space is included, it will take 6.4 years to reach equilibrium–still a long time, but not quite as dire as the overall numbers indicate.

She also looked at how long to return to equilibrium based on job growth, and found the results remarkably similar. If the average job requires 60 sf of space, it will take 223,424 new jobs to reach equilibrium, when all space is included. The average annual job growth from 1993 to 2002 was 24,880, so based on that metric it would take nine years to reach equilibrium.

But, once again, she looked at only what it would take to reach equilibrium in class-A and class-B space. That would require 154,270 jobs, equating to 6.7 years. Obviously, what would accelerate an improvement in the office market is landing a big company that would bring more jobs to the market in one fell swoop, she tells GlobeSt.com. However, Denver and Colorado are not in the same league as competing cities when it comes to offering incentives to companies looking to relocate or expand. Atlanta, Austin, Chicago, Dallas, Reno, Seattle and even Albuquerque offer far more enticements than Denver, she notes.

“With few financial incentives, Denver is not a ‘player’ now,” she tells GlobeSt.com. What Denver promotes is its museums and culture, the new convention center, its proximity to the mountains and nature, it’s young, highly educated workforce and most recently FasTracks, the $4.7-billion transit initiative passed by voters in November.

In other aspects of the market, Mathews says the overall net office vacancy rate is 20.5%. There is 1.357 million sf of proposed office space construction on the drawing board in the metro area, she notes. But she says much of it may not be built in the near term, because it will require substantial pre-leasing.

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