CREJ

Page 2 — Office Properties Quarterly — March 2018 www.crej.com Contents Letter from the Editor O ur Colorado Real Estate Jour- nal property management conference, held in February, included office panelists who shared interesting insights – from general market observations to analysis on staying relevant in the competitive market to predictions for what’s to come in 2018. • Competition. Competition is alive and well in the office market. Co-working space represents about 1 percent of the downtown office market, but it’s beginning to show signs of consolida- tion, mirroring what we’re seeing in the industrial marijuana space. How- ever, experts said it still is compet- ing heavily with smaller spaces that landlords are having trouble leasing to young businesses. As Colorado’s population continues to grow, so do complaints of traf- fic and affordability, both of which impact the way people work. Panel- ists agreed that these factors will emphasize a shrinking of trade areas, as markets on the periphery improve in desirability because people can still find housing and office space at a reasonable rate. Thornton and Aurora were two places mentioned to watch. One last component of competi- tion is the ever-increasing amenities war as employers look to locate in office properties that will attract (and hopefully retain) employees. Two dif- ferent panels said they believe many millennials would pick a job in a cool location, even if the salary was less than what they were offered by a company in an older, outdated build- ing. While I’m not completely con- vinced of this, it certainly is reflective of many employers’ decisions to pay top-dollar for space. Within this market, many previous- ly touted amenities now are consid- ered “basic benchmarks” that a prop- erty needs to have to stay relevant. For older buildings vying to compete, a variety of must-haves include out- door space, gym, fiber, cafés and res- taurants. • Southeast suburban market. In 2017, this submarket enjoyed rent growth and positive absorption. But panelists warned that a lot of the absorption was largely due to com- pany relocations – not expansions or new companies. This “musical chairs” concern means there’s an anticipated surplus of large-block space com- ing to the market this year, which is causing hesitation for investors and developers. • Downtown Denver. Meanwhile, investors in the downtown area were cautious throughout 2017, and many of these investors are growing tired of looking for problems, panelists said. It’s anticipated that these inves- tors, who are finding themselves with a lot of capital, are going to have a busy 2018. The days of long holds appear to be ending, and asset trad- ing is expected to increase. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext.104 Management conference notes 4 6 8 9 10 11 12 13 14 15 16 17 18 19 Healthy fundamentals continue throughout Denver Joshua Manning Northern CO: Market cycles are here to stay Ron Kuehl Capital favors premier locations and amenities Patrick Devereaux and Jason Schmidt Determining suburban transaction volume in 2018 Jeff Wood Canadian capital comes to CO with firm acquisition Rick Stone Rising lease rates: How are tenants reacting? Andy Cullen Why we decided to recommit to 1670 Broadway Craig Dunn Strategy and vision help foster Denver’s demand Tami Door 1144 Fifteenth comes to fruition after 2 decades Anthony J. Markese Biophilic design is more than a workplace trend Kim Hoff Readiness should be change management goal Megan Walsh Don't let a parking garage hurt your asset's value Keith Bawolek How to move beyond benchmarking your building John Lisman Fiddler’s Green Center: An energy retrofit story Phillip Saieg We’re givingDenver a standing INOVAtion UPROPERTIES.COM MINNEAPOLIS DENVER UP congratulates the Denver development team for its creative vision at INOVA Dry Creek. By providing a high value product at attractive pricing, along with “go big or go home” innovation, you inspired nearly 100 percent pre-leasing with anchor tenants Comcast and Travelers Insurance.. Contact United Properties Denver team for an innovative, big-thinking approach to your commercial space needs at 720.898.8866. INOVA I at Dry Creek 7250 Havana Street Centennial INOVA II at Dry Creek 10825 E. Geddes Avenue Centennial