Third quarter showed mixed results for the Denver’s commercial real estate market however the overall market continued to show signs of recovery.  The vacancy rate for retail and industrial submarket remained in the single digit but did drop slightly quarter over quarter and year over year. The office market vacancy rate increased as expected partly because of the release of 800,000 square feet of office space at 1801 California St. by CenturyLink and the speculative office building EOS at Interlocken in Broomfield.

Denver Retail submarket overall vacancy rate stood at 7.7% in Q3 and current asking rate is at $15.89 per square foot up from second quarter of $15.86 with 400,000 of positive absorption in Q3 plus another 114,000 square feet of positive absorption in Q2. National retailers continued to show interest in the Denver retail submarket and big-box retailers are more willing to backfill spaces especially along the Wadsworth corridor. Some of the highest lease rates were found in the Colorado Boulevard/Midtown submarket with asking rates at $24.19 and a vacancy rate at 1.7%.

Denver Industrial submarket overall vacancy rate stood at 5.4% in Q3 slightly down from Q2 2011. Current asking rate is at $5.88 down from $6.21in Q2 but is flat year over year. The industrial submarket continued to deliver positive news in Q3 with 10th consecutive quarters of positive absorption. New construction another bright spot with 1,677,153 square foot being constructed including Niagra Water’s new 319,158 square foot distribution facility at the ProLogis Park 70 and the Leprino Foods complex in Greeley.

Denver Office submarket overall vacancy rate stood at 15.3% in Q3 up from 14.8% in Q2. Current asking rate is at $20.23 up 23 cents from Q2 despite the market had a negative absorption of 766,000 square feet. Class B rates saw a spike in Q3 of 79 cents per square foot in just one quarter to $19.13 while Class A rates dropped slightly to $23.65. Landlords are also seeing an increased demand and tightening for Class B space. Several notable build-to-suit projects include DaVita’s new world headquarters in LoDo, TriZotto’s headquarters in the southeast submarket, Trimble’s regional office in the northwest submarket and One Union Station in LoDo.