Denver retail vacancy rate drops to levels not seen since 2006, lowing the vacancy rate 5.9% in second quarter of 2015. The average asking lease rates for Denver retail space soared 12.5% to $17.37 per square foot as more than 241,000 square feet of retail space was absorbed. Nearly 369,000 square feet of retail is currently under construction in second quarter which is an 11,000 square foot increase compared to last year but significantly lower than the 5 million square feet that was being developed prior to the recession. One soft spot for retail, is the closure of nine Safeway stores which is expected to occur on or about June 13th totaling more than 473,000 square feet.

The average lease rates for the industrial segment posted a 7.5% increase year-over-year to $6.83 per square foot with a positive absorption of 628,434 square feet, dropping the vacancy rate to 4.3% in second quarter. This was the 21st consecutive quarter of positive absorption for the industrial segment.  A total of 5 buildings were delivered in second quarter with another 2.8 million square feet under development. Large speculative developments have also done well with more than 37% of the space currently under construction already leased. Distributor space continues to be attractive to national tenants because of the lease rates being in the middle of the pack among other major other major cities. However, data does show some comeback for the manufacturing use for industrial properties with manufacturing jobs. More than 6000 jobs were created in the first four months of 2015 in the Denver metro area with nearly 3,000 of those in manufacturing.

The average lease rates for the office segment posted a 7.2% increase year-over-year to $24.15 per square foot full-service with a positive absorption of 701,622 square feet, dropping the vacancy rate to 12.5%. Several new developments in the central business district and in the Denver Tech Center are currently underway and in the second quarter, more than 1.3 million square feet of new construction broke ground in the metro area, pushing the total amount under construction to 3.1 million square feet. However, because of falling oil prices, the office segment is seeing some softening with regards to the sublease space which totaled more than 1 million square feet in June. The amount of sublease space both downtown and the broader Denver market currently exceeds the 10-year average, but is still lower than the previous peak, which occurred in the second quarter of 2010.  Institutional sales saw nearly $178 million investment sales in the second quarter, bringing the year-to-date to $801 million which was 29% lower than the sales volume totals in the first half of 2014. Furthermore, downtown Denver has seen more than $5 billion invested in developments in the last five years totaling more than 71 projects, including 5,565 residential units and more than 3 million square feet of office space and 2,630 hotel rooms.