CREJ

Page 2 — Office Properties Quarterly — June 2019 www.crej.com Contents Letter from the Editor W ith a sizable amount of Denver’s office market activity occurring in the downtown area, it’s appropriate to spend a few minutes sharing statistics about the office and employee market for the area, courtesy of the 2019 State of Downtown Denver Report published by the Downtown Denver Partnership. After all, once the office projects currently under construction are completed, the downtown market will offer over 40 million square feet of office space. Net office absorption for the region stood behind only New York City and San Francisco in 2018. The area’s vacan- cy rate of 10.2% was nearly 12% lower than the previous year, the report states, despite the fact that there was delivery of more than 1.4 million sf of space. With steady rental rates that average nearly $34 per sf, the area continues to see strong office leas- ing activity. The top five office leas- es in 2018 included 296,000 sf for Anadarko, 285,000 sf for VF Corp., 176,000 sf for the U.S. Environmen- tal Protection Agency, 148,000 sf for WeWork and 135,000 sf for Whiting Petroleum. It’s interesting to note that if you look at the top 10 leas- es, WeWork is listed in both the No. 6 and 10 spots, which makes sense since it is now the largest office tenant in the city. Driving all this office demand is Denver’s insatiable job growth, which continues to set new records. There are 138,970 jobs downtown, 5,490 of which were added in the past year. This 4.1% increase is a steep climb from the entire metro region’s 2.6% growth, Colorado’s 2.4% growth and the nation’s 1.6% growth. The top five industries for downtown employ- ment are: • Professional and business ser- vices; • Government; • Leisure and hospitality; • Financial activities; and • Natural resources and construc- tion. The high-tech industry is still a darling for the office community when discussing demand. Since 2010, the rate of employment growth for this sector is 103%, with a reported 14% year-over-year growth for 2018. Overall, 8.5% of downtown’s total employment base works in the high-tech sector, the report states. While this report was hyperfo- cused on the downtown area, the metro area is covered extensively within this issue – and for good reason. Transaction activity is increasing around much of the city. As several of the authors discuss, many of the office buildings in the core of the city have traded more than once during this long cycle, so many opportunities now are presenting themselves in the city’s submarkets in addition to other cities along the Front Range. Michelle Z. Askelan d maskeland@crej.com 303-623-1148, Ext.104 Downtown’s insatiable activity 4 6 8 10 12 14 15 16 17 18 19 Denver office financing transactions ramp up Peter Keepper Opportunities blossom in Denver’s submarkets Andy Cullen The state of Denver’s office investment market Larry Thiel Boulder leasing and development activity continue Becky Callan Gamble Office developers meet amenities gap in RiNo Whitney Hake The balancing act in financing office properties Jeff Halsey and Brady O’Donnell Will Senate Bill 181 impact Denver’s office market? Chris Smith Office tenant expectations continue to evolve Sarajane Goodfellow Companies get creative due to Denver’s talent war Frederic de Loizaga 30-something buildings: Staring at a midlife crisis Mark W. Kennedy Increased occupancy’s unintended consequences Jaime Brunner