Denver office market vacancy drops to 9.8% in Q3 2015 with net positive absorption of 1,091,048 square feet. This represents the highest net absorption over the last four quarters. This compares to the second quarter 2015 with net positive absorption of 927,619 square feet, while first quarter 2015 saw positive 336,034 square feet, and positive 721,388 square feet in fourth quarter 2014. A total of eight buildings were delivered to the market in the third quarter, totaling 903,233 square feet, with another 2,673,960 square feet still under construction at the end of the quarter.

Class-A office market recorded slightly higher absorption compared to Class-B office market with positive net absorption of 520,881 square feet in the third quarter, compared to 173,122 square feet in the second quarter 2015, positive 324,134 square feet in the first quarter 2015, while fourth quarter recorded positive 277,870 square feet.
Class-B office market recorded net absorption of 453,327 square feet in the third quarter 2015 which was a 65% decrease compared to second quarter 2015 of positive 748,939 square feet, while first quarter 2015 net absorption was 22,109 square feet. Fourth quarter 2014 recorded a net absorption of 367,036 square feet.
Class- C office market recorded net absorption of positive 116,840 square feet in the third quarter 2015 which was significantly higher than second quarter 2015 with 5,558 square feet.

Net absorption for Denver’s central business district in third quarter came in at 91,113 square feet which was considerably higher than second quarter 2015 with positive 44,737 square feet. Suburban markets recorded a net positive absorption of 999,935 square feet in the third quarter 2015, slightly higher compared to second quarter 2015 of positive 882,882 square feet.

Vacancy rate for the third quarter dropped two tenths of a point to 9.8%, compared to the 10.0% vacancy rate for the second quarter 2015, and 10.3% at the end of the first quarter 2015, while fourth quarter stood at 10.5%. Class-A buildings reported a vacancy rate of 11.0% at the end of third quarter 2015 while Class-B buildings reported a vacancy rate of 10.2% at the end of third quarter 2015. Denver’s central business district vacancy rate stood of 11.1% at the end of third quarter 2015 which was slightly higher than the second quarter 2015 of 10.8%. The suburban market vacancy rate decreased to 9.6% in the third quarter 2015, compared to 9.8% at the end of second quarter 2015.

Average asking rental rate for the third quarter increased slightly for all classes to $24.14 per square foot which was a 1.4% increase, compared to the second quarter 2015 at $23.81 per square foot. Denver’s central business district average asking rental rate was $31.97 per square foot at the end of the third quarter 2015 which was slightly lower than the quoted rental rate of $32.23 per square foot at the end of second quarter 2015. Suburban markets reported an average asking rental rate in the third quarter 2015 of $22.23 per square foot compared to $21.72 at the end of the second quarter 2015.

Vacant sublease space for the Denver market also increased marginally to 1,102,978 square feet in the third quarter 2015, compared to 1,062,027 square feet at the end of second quarter 2015.

Total office inventory in the Denver market area stood at 191,709,540 square feet in 7,446 buildings at the end of the third quarter.