CREJ

Page 2 — Office Properties Quarterly — June 2018 www.crej.com Contents Letter from the Editor I n mid-May, the Downtown Denver Partnership shared its annual State of Downtown Denver report. While this report focuses on the core downtown market, with some references to the entire metro market, the trends, numbers and insights can be help- ful to understand- ing our office mar- ket as a whole. • Workforce. Downtown Den- ver’s employment is at an all-time high – 133,478 employees – which is a 2.5 percent year-over-year increase. Metrowide, Denver saw an employment year-over-year increase of 1.9 percent to just under 1.82 million employees, while the nation only saw a 1.2 percent increase. Denver metro’s unemploy- ment rate clocked in at 2.7 percent at the time the report was pub- lished. • Company activity. While it’s yet to be seen how a few recent clo- sures will affect our employment numbers, an article from Cushman & Wakefield on Page 8 points out that during 2017, eight company headquarters relocated to the metro area. Further, another seven com- panies announced relocations or expansions to downtown Denver, according to the DDP report. The largest employment sectors in the downtown office market are profes- sional/business services, 31 percent of total employment; government, 19 percent; leisure and hospitality, 16 percent; financial activities, 12 percent; and natural resources and construction with 7 percent. One more highlight from the report is about the technology sec- tor. Employment is up 74 percent since 2010, with more than 10,000 employees working for tech compa- nies. The core is now home to 626 tech business, 265 of them startups that formed in the past three years. • Real estate needs. Downtown Denver has a total of 38 million square feet of office space, with 3.8 million sf of that from projects completed, under construction or planned in 2017-2018. The new square footage has the capacity to support 13,400 new downtown employees, the report estimates. Hines’ 1144 Fifteenth Street, a 40-story, 670,000-sf office tower was the largest office project completed this past year. Overall, vacancy has increased slightly to 11.4 percent, yet average lease rates remain steady at $33 per square foot, the report states. Within this issue, you’ll find more information on all of these market indicators. You’ll also notice sev- eral articles aimed at tenant rep. brokers. As physical spaces become an increasingly important part of the recruitment strategy, helping clients determine the right location, price point and build-out to cater to employee needs becomes a key dif- ferentiator for successful brokers. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext.104 All-time employment high 4 6 8 10 12 14 16 17 18 19 20 21 22 23 Office demand in Denver metro remains strong Brian C. Smith Cost of debt: Defining difference from past cycles Jeff Halsey and Brady O’Donnell Investors shift focus to renovated infill assets Aaron D. Johnson, Jon D. Hendrickson and Michael Coppola More linkage fees are not the solution for Boulder Becky Callan Gamble River North roundup: 2M sf of new office space Matt Weist Controlling operating costs in an inflationary market Chad Kollar All-women deal shows representation growth Monica Wiley Tips to help clients build out successful offices Adam Felson Workplace structural shifts experienced firsthand Steve Rogers Co-working spaces translate to new parameters Megan Walsh Companies use workplaces as business strategy Lauren Pogue Focus, privacy must be considered for open offices Christopher K. M. Leach Design-construction process should include IT Howard Feingold Unique amenities aid Dairy Block office leasing Mark Witkiewicz