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DENVER-The vacancy rate along the Southeast office market finally broke the 15% mark, if only barely. It now stands at 14.94%, according to the latest Market Update report by the CB Richard South Denver office team of Sergio Castaneda, senior vice president; John Marold, senior vice president; Mitch Bradley, vice president; Cameron Brown, senior associate; and Brett Nathan, associate.

The last time the vacancy rate was this low was in the second quarter of 2002, when the vacancy rate stood at 14.53%, according to the team’s report. In other good news, the corridor, which has more total office space than Downtown Denver, absorbed 266,090 sf.

However, while the direct office space is dwindling, the corridor is not out of the woods yet. “While we have seen market improvement, availability is still 19.7%,” the report notes. Availability includes sublease space and space that is not officially on the market, but could be leased, often called “shadow” space, which is excessive space owned or lease by corporations, but not fully utilized.

Also, leasing activity has slowed down since the summer months. This could be foreshadowing a slowdown in the fourth quarter absorption rate, the team cautions. “We expect this roller-coaster market to continue through 2006,” according to the report.

If the team’s activity is a microcosm of the entire market, it shows a dramatic drop since the summer ended. In August and September, the team handled a total of 209,039 sf in deals. However, the activity wasn’t evenly split between the months. In August, the team handled 23 transactions for a total of 144,474 sf. The biggest deal was 26,539 sf for the Colorado Foundation Medical Care at 23 Inverness in the Inverness Business Park. The smallest deal was 484 sf for Science Curriculum at Union Plaza.

In September the team handled about 30% fewer deals, and the square footage dropped by 55.3%. The 16 deals the team handled in September equated to 64,565 sf. The largest deal was 10,900 sf at the Triad office building and the smallest was 1,177 sf for Harris Kocher. In the first three quarters, the team has completed 151 assignments for a total of 1.36 million sf. That equates to an average of 126,252 sf in deals each month so far this year.

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