Denver commercial real estate is fueled by energy companies

Denver commercial real estate is booming partly because of the stiff competition from energy companies who are looking for prime real estate. Denver, along with Calgary, Dallas, Houston, Philadelphia and Pittsburgh are cities that are expected to benefit up to 75% of the 3.5 million new energy jobs expected to be created by 2035. The other 25% of the jobs are expected to be in other geographic regions, such as the financial centers of New York City and Chicago. In cities with large energy presence, commercial real estate is thriving resulting in landlord favorable market. It not only does it affect office space availability but also retail, hotel, multifamily and distribution facilities. Because of the booming energy sector, available Denver office space is being leased up rapidly and, in some instances, driving up asking rates. In the central business district energy leasing transactions showed that energy tenants on average paid 9.7% above landlord’s initial asking lease rate for office space.  Most of the demand is coming from industries and companies that support the energy sector. Approximately 22% of all office space that have been leased nationwide in the last few years was to energy industry companies.