Denver office market vacancy continues to drop, ending first quarter 2015 with a vacancy rate of 10.2%. Net absorption for the overall Denver office market for the first quarter came in at 282,253 square feet compared to positive 626,513 sf in Q4 2014, positive 1,037,692 sf in Q3 2014, and positive 779,103 sf Q2 2014.  This was the tenth consecutive quarter of positive absorption which resulted in average lease rate inching up to $23.50 per square foot, an increase over the previous quarter. In fact Denver office market vacancy has dropped in 17 of the past 18 quarters.

Class-A Denver office market saw the highest positive absorption with 216,487 square feet in the first quarter 2015, compared to positive 196,487 square feet in the fourth quarter of 2014. Meanwhile, Class-B Denver office market saw a positive absorption with 75,312 square feet, compared to positive 356,402 square feet in fourth quarter of 2014. Net absorption for Denver’s central business district was positive 52,933 square feet for the first quarter 2015, compared to positive 222,389 square feet in fourth quarter of 2014.

Rental rates for Class-A sector stood at $29.06 for first quarter 2015, while Class-B rates stood at $20.48, and Class-C rates at $16.44. At the end of fourth quarter, Class-A rates were at $28.83 per square foot, Class-B rates $20.27, and Class-C rates $16.24. Average asking rental rate for Denver’s CBD was $32.11 per square foot at the end of first quarter 2015, and $21.43 for the suburban markets.

A total of two building were delivered in first quarter 2015, totaling 15,227 square feet however, this was no match to the seven buildings totaling 263,278 square feet that was delivered in the fourth quarter of 2014. Furthermore, six buildings totaling 653,539 square feet was delivered in third quarter of 2014, and ten buildings totaling 456,539 square feet in the second quarter of 2014. At the end of first quarter 2015, there are approximately 2,673,204 square feet of office space under construction.

Total inventory for the Denver office market amounted to 190,305,689 square feet in 7,396 buildings at the end of first quarter 2015 while total vacancy stood at 18,457,388.