OIQ_091521

Page 4 — Office & Industrial Quarterly — September 2021 www.crej.com OFFICE — MARKET UPDATE D enver is proving to be one of the most resilient office markets in the country. Last spring, we anticipated that Denver would be a bright light coming out of the pandemic and that capital sources would favor Denver’s fundamentals, which are driven by job growth, popula- tion growth and several corporate relocations of varying degree. Fast- forward to August and the story of Denver continues to get better. We’ve noticed a lack of seasonal- ity traditionally seen in the summer months, as investors try to make up for lost time by deploying some of their dry powder. June was a great month for Denver office investment as we tracked 10 transactions total- ing over $760 million, an improve- ment from the $301 million in 10 transactions in March, April and May. Value-add and opportunistic investors are not waiting for the dis- tress seen in the last cycle and are finding compelling pricing in subur- ban office. The southeast suburban office submar- ket – Denver’s largest submarket – is ripe with opportunity to reposi- tion assets, increase occupancy and mark-to-market existing leases. Some of its most well-known Class B buildings traded at extremely compelling pricing, ranging from the mid-$90s to mid- $110s per square foot, setting up the opportunity for an investor to compete heavily on rate. Any office build- ing between downtown Den- ver and Boulder/ Longmont is in the crosshairs of a significant number of investors who view the northwest corridor as the optimal environment for tech, life science and corporate relocations with its breathtaking views, boundless open space and recreational outlets. Denver’s largest landlords are staking their claim in Boulder, evi- denced by Pearl East, an 11-build- ing, 453,424-sf portfolio in Boulder that recently traded hands at $410 per sf to Beacon Capital. Interlocken assets also are highly in favor, with Central Park Tower and the rebrand- ed Mountain View Innovation Cam- pus recently selling. Pricing is so strong that it has prompted some owners to accept off-market offers, such as Church Ranch Corporate Center and Globe 4Hundred, two deals the JLL team orchestrated. Investors targeting single-story office and flex asset classes also are finding opportunities throughout the Denver metro area. Although not traditional office, investors love the functionality and versatility of the space. The newly built Atria traded hands in March to Kennedy Wilson, a portion of The Campus at Longmont with Front Range Com- munity College sold for $150 per sf in the northwest corridor, and a recently vacated flex asset in Long- mont sold to a developer for just under $100 per sf. The market is rewarding owners who have completed their business plans and are delivering stabilized, core-plus assets. We have tracked $698 million in transactions spread across 10 core-plus office assets in the past six months. Investors craving the highest-quality proper- ties also are finding opportunities throughout the metro area, with trades involving Peakview Tower in Greenwood Village, 200 and 250 Columbine in Cherry Creek, and Signature Centre in Golden at com- pressed yields. Denver will continue to thrive through the end of the year as a top-performing and resilient mar- ket. Moody’s ranked Denver as the No. 2 best large city to recover from the pandemic, and, according to JLL research, Denver gained 72% of jobs back since 2020. Our state’s popula- tion growth continues to soar with 60,000 new residents to Colorado in 2020, and Denver is in the top five cities for population gain in 2020. Investors will continue to see Den- ver as a beacon of light and a major target for capital deployment. s larry.thiel@am.jll.com jason.schmidt@am.jll.com Office investors can’t get enough of Denver area Larry Thiel Managing director, capital markets, JLL Jason Schmidt Managing director, capital markets, JLL The market is rewarding owners who have completed their business plans and are delivering stabilized, core-plus assets.