CREJ

Page 10 — Office & Industrial Quarterly — December 2021 www.crej.com OFFICE — TRENDS Are your tenants uncomfortable? We can help. www.cmimech.com 303.364.3443 We love solving complicated mechanical problems. T he Denver office market shows slow improvement as we gently emerge from the pandemic-induced office market sales slump of 2020. Job growth is up, and there is evi- dence of an improved suburban office market in the strong interest in owner-user-occupied office build- ings. The market for user office build- ings is rarely examined. The indus- trial real estate market is awash with user purchases, but office building sales are more often mult- itenant investments, with relatively few user office purchases. Interestingly, we are seeing single- tenant user office buildings being bought by companies that want to diversify away from their core businesses and become real estate owners as well. This trend is even extending to users buying multitenant buildings to occupy a portion of the building and rent the rest, becom- ing not only real estate owners but also landlords. In the Ken Caryl sales market, a market I specialize in, six out of the seven office buildings sold in 2021 went to users. This submarket isn’t as small as you’d think, with over 775,000 square feet of office product and a similar amount of flex prod- uct, but 75% of the office building sales year to date were to users, with an average price per sf of over $208. While typically sub-10,000-sf buildings, this submarket has seen user buildings sell to a church, a pediatrics group, dentists and home health groups. By extension the metro market is experiencing a similar trend. As of November, just under $180 million in office transactions (greater than $350,000) sold to users in the metro Denver area this year, up slightly in dollar volume from last year to date, but the number of transac- tions is up 35% in the number of deals (125 this year), according to CoStar. I attribute this increase in user interest to a gently improving economy as we emerge from the COVID-19 slump. Job growth is up, and small companies have the new- found confidence to invest in real estate to accommodate their grow- ing businesses, all the while having the diversification tool offered by real estate ownership. Notable user office sales this year in metro Denver include: • 333 S. Allison Parkway in Lake- wood, which sold to Colorado Chris- tian University for $5 million; • 33 Inverness, which sold for nearly $3.07 million; • 2401 Larimer St., which sold for almost $3.38 million; • 2800 W. Midway in Broomfield, which sold to Hunter Douglas for $4 million; • KC Plaza at 4401 S. Quebec St., which sold for $4.6 million to a user-investor; and • The largest user sale, 9359 E. Nichols Ave., which sold to a church for $8.25 million. The most recent Colorado employment study by the Colorado Department of Labor and Employ- ment, published Nov. 19, shows steady job growth in the state. The number of individuals employed has grown by 133,000 this year, while unemployment continues to fall. These healthy job statistics point to an improving economy and good consumer confidence, which helps drive user-office purchases through- out the metro area. User-occupied building acquisitions on the rise John Becker Senior vice president, Fuller Real Estate The most recent Colorado employment study by the Colorado Department of Labor and Employment, published Nov. 19, shows steady job growth. The number of individuals employed has grown by 133,000 this year, while unemployment continues to fall. Please see Becker, Page 14