Downtown Denver office market absorption is projected to surpass million square feet for 2018
Downtown Denver office submarket absorption is projected to surpass million square feet for 2018 and continue at record pace through 2021. The demand has been fueled in particular by technology companies and existing firms that continue to expand, the downtown office market is becoming increasingly constrained. From 1980 to 2017, the annual absorption rate for downtown was 322,055 square feet and the last time absorption totaled one million square feet or more was 2006.
Last year 17 projects were completed in downtown and the completed projects added over 4,000 residential units, 772 hotel rooms and 2.7 million square feet of office space. Downtown Denver office submarket has a total of 38 million square feet of office and an 11.4% vacancy which means there are at least 4 million square feet of available space. Class A office space has an average leasing asking rate of $40.22 per square foot, with new construction approaching $60 per square foot. Another downtown Denver office project just broke ground at 15th and Welton St. and the project, called Block 162. The 32-story building will have 10 floors of podium parking and three levels of underground parking, encompass approximately 606,500 square feet. The expected completion date is 2020.
Denver ranks among the top 10 for technology professionals and companies looking to hire technology talent. In addition, WeWork is now the second largest downtown Denver office tenant with 432,150 square feet behind DaVita and they are still expanding and about 95% full. Coworking space is becoming the hottest trend for large companies relocating to Denver as it’s solves the issue with finding turn-key space while looking for permanent space.
VF Corp. just signed a 12-year lease for 285,000 square feet at 1551 Wewatta St. which has an estimated capacity of 1,200 people, giving the company room to expand beyond the 800 people it expects to employ in Denver over the next eight years. Slack Technologies, just signed a lease for 80,000 square feet at 16 Chestnut and will employ about 550 people. Denver is becoming a more corporate town with Gates Corp., DaVita, and BP.