Metro Denver’s office space market is surging past activity it saw in pre-pandemic times, one of the first three cities in the nation to do so, according to a January report from the real estate giant CBRE commercial.
“Office leasing activity in the Denver metro area jumped 39 points in January, now standing 17% above Denver’s pre-pandemic baseline,” according to the “Pulse of US Office Demand”.
Denver and Seattle were the only two markets to show gains in rental activity in January.
The volume of sublease activity is the seventh lowest among the 12 major metropolitan markets surveyed.
When the pandemic started, businesses with large amounts of office space had to rethink everything – real estate is the biggest expense for a business behind payroll. Thousands of square feet of office space were vacant as workers transitioned to remote working.
“Denver’s success is driven by its continued immigration, both of businesses and of talent,” said Anthony Albanese, senior vice president of CBRE. “There is also the diverse nature of the industries here. We are seeing growth in the thriving life sciences industry along the (US Highway) 36 corridor. It is also the second highest concentration of aerospace workers. Denver has become an overall regional hub.
Using a metric for “renter space needs in the market,” CBRE showed tenant needs in Denver are 5% higher than pre-pandemic levels in the city, one of only three markets to doing so with Boston and Houston getting higher scores.
Albanese said the omicron variant of COVID-19, which hit hard in November, prompted companies to pause just when they were ready with “back to office” plans.
“This is where the sublease market can provide an advantage,” he said. “It’s ready to go and you can skip the supply chain logistics and the lumpy environment of building new right now. Costs have gone up for things like furniture. Thus, a plug-and-play sublease can help a business delay decisions. This makes subletting very attractive at the moment.
But when a new product is available, called Class A space, it rents quickly.
“There’s been a real flight to quality,” Albanese said. “Companies have focused on recruitment tools and they want employees to come back to an exciting place. They want to create a pleasant workplace. Some of the new construction projects are renting really well.
As for the central business district, Albanese said he was coming back.
“People may or may not have been downtown for a long time,” he said. “We have had a few different developments over the past two years. But it’s a much friendlier place over the past six months. LoDo and Union Station submarkets returned to pre-pandemic prices. »
“I want to reiterate that Denver not only sees business coming from the shores, but also international business. They all love our educated workforce,” he said. returning local business employees We continue to grow and there is great recognition globally that Denver is a great place to live and work.