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Denver office vacancy falls to 9.5% in Q1 2016

Office

Denver office vacancy falls to 9.5% in first quarter 2016

The Denver office market ended the first quarter 2016 with a vacancy rate of 9.5%. This was a 0.3% decrease from previous quarter, where the vacancy rate stood at 9.8%. Net absorption for the quarter was 649,144 square feet which was a -40.54% drop compared to positive absorption of 1,144,087 square feet in the fourth quarter 2015. A total of three buildings were delivered to the market in the first quarter totaling 146,717 square feet, with another 4,386,212 square feet still under construction at the end of the quarter.

Net absorption for the third quarter 2015 was 721,916 square feet and 952,913 square feet in second quarter 2015. Class-A office market reported net absorption of positive 337,413 square feet in the first quarter 2016 which was a 64% drop compared to positive absorption of 937,569 square feet in the fourth quarter 2015. Class-B and Class-C office market reported net absorption of positive 242,831 and 61,435 square feet in the first quarter 2016 respectively.

The vacancy rate stood was 10.1% at the end of third quarter 2015, and 10.0% at the end of the second quarter 2015. The office vacancy rate for Class-A stood at 10.2% at the end of the first quarter 2016, 10.6% at the end of the fourth quarter 2015, 11.2% at the end of third quarter 2015, and 10.6 at the end of second quarter 2015. Class-B vacancy rate stood at 10.3% at the end of the first quarter 2016, 10.5% at the end of the fourth quarter 2015, 10.4% at the end of third quarter 2015, and 10.7% at the end of the second quarter 2015. The overall vacancy rate in Denver’s central business district increased slightly to 10.6% at the end of the first quarter 2016, compared to 10.3% at the end of the fourth quarter 2015. The vacancy for the suburban markets came in at 9.3% in the first quarter 2016 which was a 0.4% drop compared to 9.7% vacancy rate at the end of fourth quarter 2015.

Average rental rate for all classes was $24.84 per square foot per year at the end of first quarter 2016, up 1.6% from previous quarter when rents were reported at $24.45 per square foot. The average rental rate for Class-A sector was $29.81 per square foot at the end of first quarter 2016, while Class-B sector rates stood $21.81, and Class-C rates at $16.84. Average rental rate for CBD was $32.46 per square foot at the end of the first quarter 2016, up 0.53% from previous quarter when rents were reported at $32.29. For the suburban markets the average rent was $23.01 and $22.52 at the end of the fourth quarter 2015.

The total office inventory at the end of first quarter 2016 was 195,580,656 square feet, comprising of 7,571 buildings. This was a 0.95% increase compared to first quarter 2015, where the total office inventory was 193,743,370 square feet.