CREJ

18 / 32

Page 18 — Office Properties Quarterly — March 2017
Building Denver today and tomorrow.
Workplace Resource has been a
leading provider of workspace
environment solutions, strategies
and products in Denver for over
30 years.
Thank you for choosing rand* to
work with you.
I f you’ve driven past downtown
Denver in the last year, you’ve
probably noticed a crane or
two in the sky – or 30. It isn’t
news either that Denver is
seeing one of the biggest population
spikes in the country. According to
the Colorado Office of Economic
Development, Denver’s current pop-
ulation of 2.7 million is expected
to increase nearly 50 percent to a
staggering 3.9 million by the year
2030.
With Denver’s active-friendly
cityscape and beautiful surround-
ing landscapes, Denver’s workforce
enjoys a happier and healthier
quality of life and, for that reason
alone, it’s obvious why so many
businesses have been flocking
to the area as well – not to men-
tion our international airport and
business-friendly government.
Even with all the new people and
businesses coming to town, there
is one question investors and office
building owners are asking them-
selves: Is the office pipeline out-
pacing the demand? The answer:
Not necessarily.
Denver’s highly skilled workforce
has enticed several larger tech
firms to move or consider moving
to Denver and, compared with the
Bay Area or the East Coast, the cost
of living and rental rates for office
space in Denver are significantly
lower and are attractive qualities
to now-cost-conscious tech execu-
tives.
Let’s think about why the Den-
ver workforce is so talented. One
reason could be that many of the
graduates who
are coming here
for education are
staying after and
getting jobs. It also
is likely that many
of these gradu-
ates are becom-
ing entrepreneurs
and starting busi-
nesses. In 2015,
Denver topped
the list of venture
capital funding at
$800 million. That
was more than California, Texas,
New York and Massachusetts. With
regard to migration studies, it is
known that in a given period the
lion’s share of a migrant popula-
tion from state to state are in their
20s and 30s. Denver’s recent and
continuing population boom is rich
with young, educated individuals
looking for jobs or eager to start
businesses.
In the 1980s, Denver’s industry
buzz was all oil and gas. That sec-
tor’s biggest firms commanded
nearly 50 percent of central busi-
ness district’s leased office space,
leaving Denver exposed to the
boom-and-bust nature of the
industry. With the decline of this
industry in the recent past, we’ve
seen a lot of sublease space come
to market, though it should be
noted that Encana did recently
renew its 335,000-square-foot lease
in Republic Plaza at 370 17th St.
As mergers and consolidations in
the oil and gas industry took place,
however, many of the giants vacat-
ed the Denver marketplace, leav-
ing behind a staggering amount
of sublease space. Marketwide,
Denver has roughly 1.3 million sf of
sublease space available and, out of
that, the energy sector accounts for
nearly 900,000 sf of it.
Job growth continues to be a
big driver for the development of
new product. According to the U.S.
Bureau of Labor and Statistics,
Denver came in seventh out of the
51 largest metro areas in terms of
job growth. With the addition of
45,000 jobs, Denver’s job growth
rate came in at 3.2 percent. With
over 52,000 units of multifam-
ily in the pipeline and new home
construction, Denver’s residential
markets are postured to receive the
massive population influx.
As for office inventory, the pipe-
line is the largest Denver has seen
since 2000.
“Twenty-two projects totaling 4.5
million square feet are currently
under construction or renova-
tion,” according to Newmark Grubb
Knight Frank’s fourth-quarter 2016
market research. “1401 Lawrence
(301,130 square feet in the CBD),
Industry Phase III (a 72,000-square-
foot addition to the co-working
facility in Midtown submarket) and
8181 Arista Place (65,971 square feet
in the Northwest submarket) deliv-
ered (fourth) quarter.”
While this information may
seem daunting, the strength in our
workforce’s education, the unprec-
edented in-migration of 20- and
30-somethings, and the job growth
rate should offer investors a sense
of comfort.
Denver continues to consistently
outperform the nation in nearly
every aspect of growth. Forbes
lists Denver as the best place for
businesses and careers. While the
pipeline currently may be outpac-
ing demand, the population and job
growth we are experiencing here
in Denver should make up for any
disparity in the long run. It is a wild
card and time will tell. One thing is
for sure, it has been an interesting
and exciting few years here in Den-
ver with many more on the horizon.
I think it’s safe to say that we are
no longer that little cowtown in the
West. s
Broker Perspective
Zach Smith
Broker associate,
Unique Properties,
Denver
Marketwide, Denver
has roughly 1.3 million
sf of sublease space
available and, out
of that, the energy
sector accounts for
nearly 900,000 sf of it.