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— Office Properties Quarterly — July 2015
CONTENTS
Letter from the Editor
Meet the new, youthful breed of office investors John Becker Mile High City investment sales trending high Monica Wiley A recap of Denver’s busy office development Matt Ritter South Broadway is officially on the map Kittie Hook and Tom Lee Colorado Springs market stabilizes, looks to grow Peter Scoville Office properties move fast in Fort Collins Annah Moore Western Slope office market enjoys uptick Brian Bray Denver enjoys the benefits of diverse market Michelle Z. Askeland The rise of the healthy building movement Josh Radoff and Alan Scott Colorado’s tech industry strengthens office market Michelle Z. Askeland What the PACE program means to office owners Keirstin Beck and J. Drever Sustainable offices make money and a difference Erin Geegan Sharp The radical shift coming to office space Ben Gilliam Break areas, kitchens continue to evolve Tia Jenkins Unlocking value for improved investments Jim Diaz Transparency is key for turnkey projects Phillip A. Infelise 3 4 6 7 8 9 10 12 14 15 16 18 19 20 22 23B
efore you read the articles
highlighting Colorado statis-
tics in this issue, I’d like to
share a few national statistics
to offer perspective.
To begin, the U.S. economy and
employment numbers in the first
quarter, while both decent, were low
when compared with previous quar-
ters. In DTZ’s U.S. office trends report,
it attributes the shaky first quarter to
temporary factors and expects this
year to follow in
2014’s footstep – a
slower first quarter
followed by an over-
all healthy year and
office sector.
In fact, Cush-
man &Wakefield is
predicting that the
period from 2015
through 2017 will be
the strongest three years of economic
growth in the U.S. since 2004 through
2006, according to the company’s U.S.
Office Market Review and Forecast.
Cushman &Wakefield also predicts
that employment will increase by
almost 8 million jobs in the same
time period.
Primary office-using sectors added
50,000 jobs (lower than the six-month
average of 71,000 jobs) and tenant
absorption was 4.3 million square feet
in the first quarter nationally, which
is the lowest level of absorption since
first-quarter 2011, stated Newmark
Grubb Knight Frank’s National 1Q15
Office Market Report.
Twenty markets registered negative
net absorption for office properties,
with NewYork City leading the pack,
according to the DTZ report. However,
Denver was recognized as a market
with solid first-quarter demand and
positive absorption, joining Dallas,
Orange County, California, Columbus,
Ohio, and Detroit, according to the
NGKF report.
Cushman &Wakefield is optimistic
that the other major markets will
follow, predicting that over the next
three years, office absorption will
total 175 million sf, which is more
than the past eight years combined,
said the company’s report.
Denver ranks seventh for cumula-
tive rent increases from 2014 to 2017,
according to the Cushman &Wake-
field report. Average asking rents
across the U.S. ended the first quarter
at $27.76 per sf full service, up 1.5
percent from the prior quarter and
up 4 percent from first-quarter 2014,
according to NGKF.
And finally in the first quarter, 98.5
million sf of office space was under
construction, DTZ reports. Markets
in the south and west regions (where
there is the greatest pressure on rent-
al rates) accounted for three-quarters
of the activity and nearly 90 percent
of deliveries in the quarter.
I want to thank the authors who
took the time and energy to research
and write articles. Please reach out
to me if you have thoughts on the
issue, are interested in contributing
something to a future issue or would
like to make sure we cover something
important in an upcoming issue.
I look forward to hearing from you,
and thanks for reading.
Michelle Z. Askeland
maskeland@crej.com303-623-1148, Ext. 104
How our market stacks up