CREJ

Page 14 — Office & Industrial Quarterly — December 2020 www.crej.com OFFICE — TRENDS NEXT STEP Energy Solutions 59,000,000+ sqft. 12,898 equivalent $74,980,119 56% 19,345,772 lbs. $8,092,632 Converted to LED lighting Utility rebates secured for our customers Autos removed from roads annually CO 2 emissions avoided Average first year return on investment Annual savings realized by our customers For the past ten years, we have offered our customers a turnkey LED lighting retrofit exprience. We would welcome the opportunity to discuss the advantages of an LED lighting conversion at your facility. www.nextstepenergysolutions.com D espite the pandemic, you probably have seen head- lines this year reporting consistent major real estate acquisitions by companies in big tech. Yet big tech does not necessarily represent the big pic- ture, right? Statistically speaking, the pandemic already has had a negative impact on office markets nationally and Denver is no excep- tion: In the last 12 months, we have seen negative 3.6 million square feet of net absorption. Cap rates are up and year-over-year sales are down 35%, according to CoStar data. A month into lockdown, executives were reporting how well remote working was going; by sum- mer, many had rescinded those comments, per the Wall Street Journal. Perhaps accordingly, just six months after Twitter CEO Jack Dorsey announced that employees would be allowed to work remotely forever after the pandemic, we learned in late November that Twit- ter signed on for 65,000 sf of addi- tional Boulder office space. Mean- while, on a much smaller scale, my clients have continued the pursuit of office space in 2020 as well. Fol- lowing are a few anecdotes. • A Denver-based engineering firm had leased an entire office building for the better part of four decades and concluded last year that its landlord was unwilling to renew its lease at the beginning of 2021. I was hired to find a new building for the company to purchase. They needed parking for about 80 vehicles and scientific lab space as well as a large office com- ponent. The first week of April, “the one” came on the market. I imme- diately inquired and we toured the property as soon as lockdown ended. Knowing there were other prospective buyers lined up, we pre- sented a full-price offer and closed in July. Pandemic or not, this com- pany’s operations could not be run from home. • A Denver-based architecture firm had been operating out of a coworking space for many years. After we first met in January, it decided to stay at the coworking space where there were inherent benefits to collaborating with the other firms on site. When lock- down ended in May, however, the firm could not properly distance its team at the coworking space. With in-person collaboration deemed too important to continue work- ing remotely, we negotiated a sub- lease for a space nearby. So it was because of the pandemic that this architecture firm signed its first multiyear lease. • A Denver-based dental practice had a lease expiring in early 2021. We spent months exploring the pros and cons of purchasing, leas- ing at a new property or renewing the existing lease. Although we could have negotiated far better terms on a new lease, my client chose to extend his current term for an additional five years, per- sonal guarantee and all. Here, the pandemic dissuaded my client from going through the process of mov- ing, but it did not deter him from recommitting, long term. • A Denver-based construc- tion company engaged me about a year ago to identify land in a very focused geographical area to acquire and build a new corporate headquarters. In October, an ideal parcel came on the market; we toured it and presented an aggres- sive offer. We were outbid, and that property is now under contract with another buyer. As a result, we pre- sented an offer in late November for an off-market property at a price more than 40% above what the clos- est and most recent comp sold for a month earlier. Despite the pan- demic, this company sees a bright future for itself and the Denver real estate market. At this point are you asking yourself, “What recession?” No dis- counts of any kind to report here. Quite the opposite. Ironically, it Stories of Denver businesses bullish on space Alexander F. Becker Principal, Real Estate Consultants of Colorado LLC, abecker@rec- colorado.com Element Properties Twitter’s new office at Railyards at S’Park Please see A. Becker, Page 16