economic outlook denver metro · 2017. 8. 31. · denver metro third quarter 2016 third quarter...

DENVER METROTHIRD QUARTER 2016

THIRD QUARTER HIGHLIGHTS

ECONOMIC OUTLOOK

Sources: Metro Denver Economic Development Corporation, Bureau of Labor Statistics, Delta Associates, Forbes,Business Insider, Denver Business Journal, CNBC, WalletHub, Denver Post, Associated General Contractors

Colorado Breaks Tourism Record

Denver Job Growth Continues to Increase*

* In the past 12 months ending in August 2016

Professional/Business Services+8,200 JOBS

Rankings for Metro Denver

Tourism/Hospitality+9,600 JOBS

Mining/Logging/Construction+11,400 JOBS

COLORADO RECORDED A 7% INCREASE IN TOURISM FROM 2014 AND A 31% INCREASE SINCE 2009

77.7 MILLIONvisitors recorded in 2015

$1.13 BILLIONgenerated in state and

local taxes

$19.1 BILLIONan all time-high spent

during their stay

3xRESIDENTS LIVE IN

DENVER SINCE 2000

AS MANY 68%OF RESIDENTSOVER 2X THE NATIONAL

AVERAGE

HAVE A BACHELOR’S DEGREE OR HIGHER

for technology jobsBEST CITY3RD

CONSUMER CONFIDENCE2005 – Q3 2016

0.0

20.0

40.0

60.0

80.0

100.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1 2016 Q2 2016 Q3 2016

Cons

umer

Sen

timen

t Ind

ex

Source: Surveys of Consumers - University of Michigan

DENVER METROTHIRD QUARTER 2016

ECONOMIC OUTLOOK

ECONOMYAugust unemployment figures lowest levels since Q1 2016

• Denver metro unemployment 3.2%, down from 3.4% August 2015

• Boulder unemployment 2.9%, down from 3% August 2015

• Combined Denver/Boulder metro unemployment 3.14% down from 3.32% August 2015

• Year over year job growth of 3.5% for metro Denver

PAYROLL JOB GROWTH :: Large Metro Areas12 Months Ending August 2016

55.6

0

20

40

60

80

100

120

140

160

180

200

LA Basin NY DFW SF Bay Hou Atl S Fl Chi Phx Den/Bldr Bos Was

Payroll Job

s in 000

’s

Source: Bureau of Labor Statistics, September 2016

PAYROLL JOB CHANGE IN PERCENTAGE TERMS :: Large Metro Areas12 Months Ending August 2016

3.4%

2.8% 2.7%

0.5%

3.4%3.5%

2.3%

2.0% 2.0%2.1%

2.4%

1.3%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

DFW SF Bay Atl Hou S. Fl Denver Phx LA Basin NY Bos Was Chi

Percen

t Cha

nge in Payroll Jobs

Source: Bureau of Labor Statistics, September 2016, not seasonally adjusted

U.S. KEY INDICATORS

52 WEEK HIGH 52 WEEK LOW

DJIA 18,636.05 15,660.158

S&P 500 2,190.15 1,810.1

NASDAQ 5,342.88 4,266.84

1-YR TRSY 0.76 0.21

10-YR TRSY 2.34 1.36

PRIME RATE 3.5 3.25

30-YR FIXED 3.97 3.37

15-YR FIXED 3.11 2.61

UNEMPLOYMENT RATES :: Large Metro AreasAugust 2016 vs. August 2015

0%

1%

2%

3%

4%

5%

6%

7%

Den /Boulder

DFW Hou SF Bay Bos S Fla Phx Atl NY Chi LA Basin Was

2015 Aug2016 Aug

4.9%5.2%

National Average


Note: Figures are not seasonally adjusted.

JOB GROWTH :: Denver-Boulder Metro Area1995 – May 2016

‐70

‐50

‐30

‐10

10

30

50

70

'96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 'YTDAug16*

Payroll Job

s in Th

ousand

s

20‐Year Average = 23,200


Note: Figures reported in this graph are annual average job growth

JOB FORECAST :: Denver-Boulder CSA2005 – 2016

‐75,000

‐55,000

‐35,000

‐15,000

5,000

25,000

45,000

65,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Annu

al Payroll Job Grow

th

2005‐07 average annual job growth = 27,400

2012‐14 average annual job growth = 46,700

2016 projected 45,500

Source: Bureau of Labor Statistics, September 2016 / Revised projected 2016 figure from www.colorado.gov Q2 2016 Economic Forecast

Note: Annual totals reflect non-seasonally adjusted average annual job growth.

UNEMPLOYMENT

The Denver metro area’s unemployment rate

is 3.14%, down from 3.32% a year earlier. The

national unemployment rate is 4.9%, down from

5.2% the previous year.

Core Industries Driving Growth

CORE INDUSTRIES $ (BIL) % GRP*

Financial/Professional/ Business Services $72 36%

Trade/Transportation/Utilities $30 15%

Information $19 9%

State & Federal Government $19 9%

Manufacturing $15 7%

Mining/Construction $21 10%

Education/ Health Services $13 6%

Hospitality/Tourism $8 4%

Total Core Industries $197 98%

Other $5 2%

Total GRP* $202 100%

*GRP = Gross Regional Product; totals are estimated and may not add due to rounding

Note: Percent GRP reflects the most recent data available from the BEA

Source: BEA, U.S. Conference of Mavors, GMU Center for Regional Analysis, June 2016

2 REAL ESTATE OUTLOOK DENVER METRO Q3 2016

DENVER METRO MARKETTHIRD QUARTER 2016

EDUCATION AND HEALTH SERVICES :: Denver-Boulder CSA2005 – Q2 2016

119.4 123.1128.0

133.7138.0

142.8148.0

153.4160.0

168.0175.9

181.8

18.0 18.319.0

19.619.8

19.820.5

21.222.0

22.623.6

24.1

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

220.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016

Educ

atio

n/H

ealth

Ser

vice

Em

ploy

men

t, in

000

’s

Metro Denver Boulder


EDUCATION/HEALTH SERVICES

Employment increased by 4,100 jobs over the 12 months ending in August, a gain of 2.3%

• University of Colorado Hospital ranks in the Top 20 hospitals in America according to US News & World Report

• UC Health opens new 18 room, 3 operating room ICU and emergency facility in Broomfield

BUSINESS EXPECTATIONS & ECONOMIC DEVELOPMENT

Q4 outlook dips slightly

The Leeds Business Confidence Index (LBCI) measures the confidence of Colorado’s business leaders through a survey

covering several categories. The LBCI dropped to 53.0 heading into Q4 of 2016.

• State economic expectations remain steady at 57.9

• State sales expectations drop for the second consecutive quarter, down 3.3 points to 55.3

• State profit expectations follow suit, decreasing 4.7 points to 52.2

• Hiring expectations decrease by 0.2 points, down to 53.2, with less than 30% of respondents anticipating an increase in hiring within their industry for Q4

BUILDING ACTIVITY AND CONSTRUCTION EMPLOYMENT2005 – August 2016

0

10

20

30

40

50

60

70

80

90

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Proj.2016

Constructio

n‐Re

lated Em

ploymen

t In 000’s

Housing Units Autho

rized

By Bu

ilding Pe

rmits

Single Family Housing Units

Multi Family Housing Units

Construction‐Related Employment

Actual Through August 2016Single Family: 7,407Multi-Family: 6,365

Single Family is defined as detached single family and attached two family units. Multifamily units are defined as buildings containing three or more attached units. Construction-Related Employment refers to average annual employee totals in the Denver-Aurora-Bromfield MSA for the Specialty Trade Contractors and Construction of Buildings industry sub-sectors.

Source: Bureau of Labor Statistics, U.S Census Bureau, September 2016

MINING/LOGGING/CONSTRUCTION

Employment grew by 11,400 jobs over the 12 months ending in August, a gain of 11.4%

• Residential construction at highest levels since 2006

• Office product currently under construction in Denver/Boulder totals over 4.6M SF


DENVER AIRPORT SYSTEM :: Passenger Count & Air Freight

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Thru Q2 2016

Air Freight (In Po

unds)

Passen

gers

Passengers Total Air Freight

Source: Flydenver.com, September 2016

TRADE/TRANSPORTATION


• $1.1 Billion Rush Creek Wind Farm gains approval, construction expected to begin in late 2017

• Walmart purchases 169 acres near DIA, assumed to be for a new fulfillment center

• DIA on pace for another record setting year for total number of passengers served

VENTURE CAPITAL INVESTED IN COLORADO FIRMS

$791.89

$123.05

0

20

40

60

80

100

120

140

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD Q22016

# of

Dea

ls

Vent

ure

Cap

ital I

nves

ted

in M

illio

ns

Dollars Invested# of Deals

Source: pwcmoneytree.com, September 2016

PROFESSIONAL/BUSINESS SERVICES


• Brooklyn Boulders moving headquarters to Denver from New York

• Partners Group Holding AG, a Swiss asset management company is relocating its’ North American hub to Denver from San Fransisco bringing several hundred employees over the next two years

• Janus Capital agrees to merger with British based Henderson Group to create Janus Henderson Global Investors

TOURISM/HOSPITALIT Y


• $1.5 Billion spent on hotels/lodging in metro Denver in 2015

• Record setting hotel occupancy rate of 75.9% in 2015

• Average daily room rates in Downtown is $185/night

DENVER CONVENTION CENTER STATS2000 - 2015

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

-

100

200

300

400

500

600

700

800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rev

enue

(Milli

ons)

Atte

ndan

ce /

#0f G

roup

s

Attendance (in thousands) # of Groups Economic Impact (in millions)

Source: Denver.org



ECONOMIC OUTLOOK

Guarded optimism seems to be the general

sentiment heading into the 4th quarter,

with concerns over the election and

political climate. Overall unemployment

rates will remain below the national level,

with continued job growth expected in the

Education/Health Services and Tourism/

Hospitality sectors. Construction related

employment will remain strong due to

the number of projects underway and the

continued demand for new housing into

2017. Housing affordability will continue to

be of concern, but should start to ease as

new inventory comes available.

MEDIAN SINGLE FAMILY HOME PRICE :: Denver-Boulder Metro AreaQ2 2016

$362,900

$394,400

$463,700

$549,600

$229,400$240,700

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

$550,000

$600,000

2007 2008 2009 2010 2011 2012 2013 2014 Q2 2015 Q2 2016

Med

ian

Sing

le-F

amily

Hom

e Pr

ice

Denver Boulder US

Year Over Year ChangeDenver + 8.68%Boulder + 18.52%US + 4.88%

Source: National Association of Realtors, September 2016

Note: Denver and Boulder are considered seperate metro areas by NAR

RATIO OF MEDIAN HOME PRICE TO MEDIAN HOUSEHOLD INCOMELarge Metro Areas :: 2014/2015/Q2 2016

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

SF Bay NY LA S FL Bos Den Was Phx Hou DFW Chi Atl US

Ratio

2014 2015 Q2 2016

National Ratio Q2 2016 = 3.65

National Ratio 2014 = 3.36

National Ratio 2015 = 3.43

Sources: NAHB/Wells Fargo Opportunity Index; September 2016

INVENTORY (UNITS) / AVG OCCUPANCY / AVG EFFECTIVE RENT PSF

$0.50/PSF

$0.70/PSF

$0.90/PSF

$1.10/PSF

$1.30/PSF

$1.50/PSF

$1.70/PSF

93.00%

93.50%

94.00%

94.50%

95.00%

95.50%

96.00%

96.50%

97.00%

97.50%

218,650 218,679 219,009 220,221 220,622 221,330 222,416 223,479 224,418 226,998 228,758 230,463 233,691 235,850 239,598 241,502 242,979 246,025 246,879 248,432 249,307

2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3

Inventory (Units)/Avg Occupancy/Avg Effective Rent PSF

Occupancy % Avg. Effective Rate Per SF

Source: CoStar, September 2016

HOUSING

Home resale price gains #3 in the nation• Average home price in Denver increased to

$394,400, up 8.68% year over year

• Average home price in Boulder increased to $549,600, up 18.5% year over year

• Case-Schiller Denver home price index is 187.42 through July

• National Association of Realtors report indicates Denver needs over 67,000 new homes built to return to historically normal building pace

• Months supply of inventory down to 1.9 in the metro Denver area

• Average days on the market for single family homes is 25

OFFICE MARKET STATISTICS BY SUBMARKET - THIRD QUARTER 2016

SUBMARKET INVENTORY

NO. OF

BLDGS

DIRECT VACANCY

RATE

OVERALL VACANCY

RATE

DIRECT VACANT & AVAILABLE

SF

SUBLEASE TOTAL

AVAILABLE SF

YTD DIRECT ABSORPTION

YTD NET ABSORPTION

YTD COMPLETIONS

UNDER CONSTRUCTION

ASKING DIRECT

RATE PER COSTAR

$/PSF TREND FROM

PREVIOUSQUARTER

Downtown

Class A 21,595,436 51 10.68% 12.57% 2,301,381 1,077,799 (18,529) (112,427) 0 2,477,200 $35.26/fs

Class B 10,439,783 116 8.68% 9.64% 912,913 256,069 (85,512) (109,535) 66,000 53,478 $29.64/fs

Totals 32,035,219 167 10.03% 11.61% 3,214,294 1,333,868 (104,041) (221,962) 66,000 2,530,678 $33.76/fs

Southeast Suburban

Class A 22,317,193 141 7.42% 8.33% 1,653,893 827,099 13,419 (15,685) 0 1,125,381 $26.63/fs

Class B 18,652,137 268 13.74% 14.53% 2,591,904 273,256 (355,044) (393,536) 50,000 0 $21.93/fs

Totals 40,969,330 409 10.36% 11.22% 4,245,797 1,100,355 (341,625) (409,221) 50,000 1,125,381 $24.18/fs

Suburban (Non S. East)

Class A 17,930,658 131 8.44% 9.42% 1,512,372 541,083 80,973 66,680 469,110 544,446 $28.42/fs

Class B 41,629,003 632 10.56% 10.74% 0 341,253 475,438 418,302 212,000 491,834 $21.06/fs

Totals 59,559,661 763 10.04% 10.47% 1,512,372 882,336 556,411 484,982 681,110 1,036,280 $23.18/fs

Denver Metro

Class A 61,843,287 323 8.86% 10.13% 5,467,646 2,445,981 75,863 (61,432) 469,110 4,147,027 $30.61/fs

Class B 70,720,923 1,016 11.12% 11.57% 7,974,986 870,578 34,882 (84,769) 328,000 545,312 $22.45/fs

Totals 132,564,210 1,339 10.14% 10.98% 13,442,632 3,316,559 110,744 (146,201) 797,110 4,692,339 $26.25/fs

Totals With Class C 140,380,928 1,489 9.73% 10.52% 13,751,659 3,322,588 155,094 (101,851) 797,110 4,692,339 $26.11/fs

OFFICE LEASE STATISTICS :: VACANCY & GROSS RENTAL RATE

SOURCE: Transwestern, CoStar. Class A and B buildings over 25,000sf. Excludes government-owned buildings.

VACANCY (%)GROSS RENT PSF ($)

10.1%

$26.25

$12.00

$16.00

$20.00

$24.00

$28.00

0.0%

5.0%

10.0%

15.0%

20.0%RATES $26.25/FS

DIRECT VACANCY 10.14%

Y.T.D DIRECT ABSORPTION 110,744 SF

* Arrow indicators represent change from previous quarter

SOURCE: Transwestern, CoStar. Class A and B buildings over 25,000 sf. Excludes government-owned buildings.



OFFICE LEASE STATISTICS BY SUBMARKET

SUBMARKET INVENTORY

NO. OF

BLDGS

DIRECT VACANCY

RATE

OVERALL VACANCY

RATE


SF

SUBLEASE TOTAL

AVAILABLE SF


YTD NET ABSORPTION

YTD COMPLE-

TIONSUNDER

CONSTRUCTION

ASKING DIRECT

RATE PER COSTAR

$/PSF TREND FROM

PREVIOUSQUARTER

CBD

Class A 17,592,085 31 11.27% 13.42% 1,976,681 920,358 (83,848) (149,619) 0 1,071,015 $34.37/fs

Class B 6,593,686 53 9.77% 11.21% 644,480 202,566 (92,626) (160,933) 0 0 $26.60/fs

Totals 24,185,771 84 10.84% 12.79% 2,621,161 1,122,924 (176,474) (310,552) 0 1,071,015 $32.66/fs

LoDo (LoDo and Platte River)

Class A 4,003,351 20 8.11% 8.81% 324,700 157,441 65,319 37,192 0 1,406,185 $42.33/fs

Class B 3,846,097 63 6.84% 7.00% 268,433 53,503 7,114 51,398 66,000 53,478 $34.03/fs

Totals 7,849,448 83 7.56% 7.99% 593,133 210,944 72,433 88,590 66,000 1,459,663 $37.59/fs

Midtown (Capital Hill and South Midtown)

Class A 933,825 5 0.65% 0.65% 6,064 0 (6,064) (6,064) 0 0 $27.81/fs

Class B 2,815,949 39 4.02% 4.09% 115,305 6,090 (3,471) (7,054) 0 328,600 $23.20/fs

Totals 3,749,774 44 3.24% 3.29% 121,369 6,090 (9,535) (13,118) 0 328,600 $23.70/fs

Cherry Creek

Class A 1,046,784 9 12.06% 12.06% 126,248 5,812 (27,311) (27,311) 0 112,000 $34.88/fs

Class B 1,186,707 19 9.32% 9.52% 108,290 9,850 7,783 12,782 0 0 $31.05/fs

Totals 2,233,491 28 10.50% 10.60% 234,538 15,662 (19,528) (14,529) 0 112,000 $33.64/fs

Co Blvd/Glendale

Class A 2,811,037 15 10.68% 11.27% 300,143 64,783 (49,961) (63,621) 0 232,446 $28.09/fs

Class B 5,548,380 68 10.34% 10.34% 573,805 34,267 40,868 43,409 0 0 $21.43/fs

Totals 8,359,417 83 10.45% 10.65% 873,948 99,050 (9,093) (20,212) 0 232,446 $24.58/fs

Northwest (Northwest and Broomfield County)

Class A 5,208,259 40 9.95% 10.58% 515,795 180,098 41,847 54,927 98,980 0 $27.18/fs

Class B 6,024,499 89 10.84% 11.17% 665,583 35,611 (39,737) (23,193) 0 0 $21.56/fs

Totals 11,232,758 129 10.52% 10.99% 1,181,378 215,709 2,110 31,734 98,980 0 $24.29/fs

North

Class A 706,944 5 2.35% 3.07% 16,590 5,090 42,533 37,443 41,400 0 $21.43/fs

Class B 2,191,371 33 9.79% 9.79% 238,407 27,874 60,826 38,334 53,000 30,000 $21.44/fs

Totals 2,898,315 38 8.80% 8.97% 254,997 32,964 103,359 75,777 94,400 30,000 $21.44/fs

Aurora/Northeast (Aurora, Northeast, and East I-70/Montbello)

Class A 2,477,734 19 5.09% 5.09% 126,197 66,846 11,689 11,679 0 0 $23.38/fs

Class B 6,782,534 93 8.14% 8.28% 558,050 73,792 127,155 116,756 0 0 $18.48/fs

Totals 9,260,268 112 7.39% 7.49% 684,247 140,638 138,844 128,435 0 0 $19.20/fs

Southwest

Class A 1,333,735 6 12.35% 13.72% 167,965 18,524 (114,968) (118,167) 0 0 $26.05/fs

Class B 4,432,186 76 15.45% 15.82% 684,559 26,984 125,335 111,004 0 25,000 $17.33/fs

Totals 5,765,921 82 14.79% 15.39% 852,524 45,508 10,367 (7,163) 0 25,000 $18.13/fs

West

Class A 1,824,166 17 7.97% 7.97% 145,445 74,950 (27,814) (27,814) 28,258 0 $25.66/fs

Class B 7,014,591 112 15.08% 15.25% 1,060,298 43,725 260,711 254,260 159,000 0 $21.10/fs

Totals 8,838,757 129 13.64% 13.78% 1,205,743 118,675 232,897 226,446 187,258 0 $21.67/fs


0

2

4

6

8

10

12

14

# of B

locks

Contiguous Block Availabilities by Submarket Cluster50K ‐ 75K SF Blocks 75K ‐ 100K SF Blocks Over 100K SF Blocks

SUBMARKET INVENTORY

NO. OF

BLDGS

DIRECT VACANCY

RATE

OVERALL VACANCY

RATE


SF

SUBLEASE TOTAL

AVAILABLE SF


YTD NET ABSORPTION

YTD COMPLETIONS

UNDER CONSTRUCTION

ASKING DIRECT

RATE PER COSTAR

$/PSF TREND FROM

PREVIOUSQUARTER

Boulder (Boulder and Boulder County)

Class A 1,588,174 15 6.81% 13.38% 107,925 124,980 211,955 205,608 300,472 200,000 $36.04/fs

Class B 5,632,786 103 7.95% 8.18% 465,872 83,060 (116,836) (127,996) 0 108,234 $24.51/fs

Totals 7,220,960 118 7.95% 9.58% 573,797 208,040 95,118 77,612 300,472 308,234 $27.00/fs

Denver Tech Center

Class A 7,317,136 37 8.82% 9.54% 643,766 281,736 105,587 122,700 0 617,702 $27.38/fs

Class B 3,261,993 37 22.14% 23.16% 723,171 42,138 (107,852) (103,817) 0 0 $23.47/fs

Totals 10,579,129 74 12.92% 13.73% 1,366,937 323,874 (2,264) 18,883 0 617,702 $26.12/fs

Greenwood Village

Class A 3,667,855 17 5.44% 6.08% 199,932 57,056 4,244 26,155 0 0 $27.33/fs

Class B 4,540,769 55 17.25% 18.70% 783,290 112,457 (196,956) (206,190) 0 0 $23.20/fs

Totals 8,208,624 72 11.98% 13.07% 983,222 169,513 (192,712) (180,035) 0 0 $24.28/fs

Inverness

Class A 2,051,357 16 12.83% 15.92% 263,148 160,882 (46,145) (109,661) 0 447,679 $25.60/fs

Class B 2,783,837 42 16.23% 17.39% 470,571 41,508 (155,885) (171,031) 0 0 $19.85/fs

Totals 4,835,194 58 15.17% 17.18% 733,719 202,390 (202,030) (280,692) 0 447,679 $21.67/fs

Meridian

Class A 2,419,613 19 7.17% 7.66% 172,617 152,269 (100,410) (109,852) 0 0 $27.54/fs

Class B 791,760 7 5.13% 5.65% 40,626 18,792 13,694 9,577 0 0 $23.24/fs

Totals 3,211,373 26 6.64% 7.13% 213,243 171,061 (86,716) (100,275) 0 0 $26.84/fs

Lone Tree

Class A 2,238,274 17 6.22% 6.50% 139,266 6,111 837 10,864 0 0 $30.23/fs

Class B 493,560 11 16.88% 16.88% 83,304 0 (16,351) (16,351) 0 0 $30.13/fs

Totals 2,731,834 28 8.15% 8.37% 222,570 6,111 (15,514) (5,487) 0 0 $30.18/fs

Balance Of Southeast (Arapahoe Rd, Centennial, Panorama/Highland Park East Hampden, Highlands Ranch and Parker/Castle Rock)

Class A 4,622,958 35 5.10% 6.08% 235,164 169,045 49,321 44,109 0 60,000 $22.11/fs

Class B 6,780,218 116 7.15% 7.31% 490,942 58,361 105,816 94,276 50,000 0 $18.65/fs

Totals 11,403,176 151 6.37% 6.86% 726,106 227,406 155,137 138,385 50,000 60,000 $19.92/fs

0

2

4

6

8

10

12

14

# of Blocks

Contiguous Block Availabilities by Submarket Cluster50K ‐ 75K SF Blocks 75K ‐ 100K SF Blocks Over 100K SF Blocks

Aurora Boulder Broomfield Colorado Blvd./

Glendale

Downtown North Denver

Northwest Denver

Southeast Denver

West Denver

NortheastDenver

Southwest Denver



RATES SLOWING FOR CLASS A OFFICE PRODUCT

• Class A Direct Average Asking Rate $30.61/SF down from $30.76/SF ending Q2 2016

• Class B Direct Average Asking Rate $22.45/SF up from $22.36/SF ending Q2 2016

• Overall Direct Average Asking Rate $26.25/SF down from $26.40/SF ending Q2 2016

DIRECT VACANCY TICKS UP FROM Q2

• Class A Direct Available Vacancy 8.8%

• Class B Direct Available Vacancy 11.2%

• Overall Direct Available Vacancy 10.1%

NOTABLE LEASES SIGNED IN Q3 2016

• EKS&H signed a 29,000 SF direct deal and 120,000 SF sublease at 8181 E. Tufts

• BOA Technology will lease 100,000 SF in the new Flight Building, currently under construction, scheduled for Q3 2017 delivery

• Lewis Bess Williams & Weese signed 22,000 SF at 1801 California

• CDM Smith, Inc. leased 29,000 SF at 555 17th Street

SUBLEASE SPACE

Sublease space continues to grow

• Sublease space available in the metro area increases to 3.3M SF

• 1.3M SF available in the Downtown Cluster

• 1.1M SF available in the Southeast Cluster

DOWNTOWN CLUSTER :: SUBLEASE LEVELS

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0.20 M

0.40 M

0.60 M

0.80 M

1.00 M

1.20 M

1.40 M

1.60 M

2016 Q32016 Q22016 Q12015 Q42015 Q32015 Q22015 Q12014 Q42014 Q32014 Q22014 Q1

Square Feet

Sublease Levels ‐ Downtown Cluster

Total Available Sublease SF % of Total RBASOURCE: Transwestern, CoStar.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0.20 M

0.40 M

0.60 M

0.80 M

1.00 M

1.20 M

1.40 M

1.60 M

2016 Q32016 Q22016 Q12015 Q42015 Q32015 Q22015 Q12014 Q42014 Q32014 Q22014 Q1

Square Feet


Total Available Sublease SF % of Total RBA

SOUTHEAST CLUSTER :: SUBLEASE LEVELS

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

0.00 M

0.20 M

0.40 M

0.60 M

0.80 M

1.00 M

1.20 M

2016 Q32016 Q22016 Q12015 Q42015 Q32015 Q22015 Q12014 Q42014 Q32014 Q22014 Q1

Square Feet

Sublease Levels ‐ Southeast Cluster

Total Available Sublease SF % of Total RBASOURCE: Transwestern, CoStar.

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

0.20 M

0.40 M

0.60 M

0.80 M

1.00 M

1.20 M

1.40 M

1.60 M

2016 Q32016 Q22016 Q12015 Q42015 Q32015 Q22015 Q12014 Q42014 Q32014 Q22014 Q1

Square Feet


Total Available Sublease SF % of Total RBA


DELIVERIES AND CONSTURCTION

• 8181 Arista Place – 98K SF Class A in the Broomfield submarket delivered Q3

• 1048 Pearl Street “Pearl West” – 175K SF Class A in Boulder delivered Q3

• 202 6th Street “The Move at Castle Rock” – 50K SF Class B in Parker/Castle Rock delivered Q3

• 4.6M SF under construction

• 1144 15th St – 670K SF Class A in the CBD

• 7001 Belleview “One Belleview Station” – 318K SF Class A in the DTC

• 1401 Lawrence St – 311K SF Class A in the CBD

• 2000 S. Colorado Blvd “Colorado Center Tower III”- 232K SF Class A in Co. Blvd/I25

• 1800 Wazee “The Dairy Block” – 235K SF Class A in LoDo

• 7250 S. Havana “INOVA Dry Creek I” – 211K SF Class A in Inverness

• 6165 S. Willow “Granite Place at Village Center” – 300K SF Class A in the DTC

• 1801 Wewatta St “Union Tower West” – 112K SF Class A in Platte River

• 2001 16th St “16 Chestnut” – 428K SF Class A in Platte River

SALES ACTIVIT Y PICKS UP IN Q3

69 transactions totaling $342,645,000 totaling over 3.3 Million SF sold

• 9189 & 9191 S. Jamaica St “CH2M Hill Campus” – 370,486 SF Class A in Meridian sold for $122,000,000 (329.30/SF) – 5.9% cap rate

• 2301 Blake St – 53,376 SF Class B in LoDo sold for $21,200,000 ($397.18/SF)

• 6312 S. Fiddlers Green Circle “Tuscany Plaza” – 259,118 SF Class A in Greenwood Village sold for $46,000,000 ($179.84/SF) – 7.14% cap rate

• 4582 S. Ulster St “Standford Place III” – 367,416 SF Class A in the Denver Tech Center sold for $39,250,000 ($106.83/SF) – 9.40% cap rate

• 1777 S. Harrison St & 3900 E. Mexico Ave “Denver Centerpoint I & II” – 374,020 SF Class B in the Co. Blvd/I-25 submarket sold for $61,700,000 ($164.96/SF) – 7.71% cap rate



Copyright © 2016 Transwestern. All rights reserved. No part of this work may be reproduced or distributed to third parties without written permission of the copyright owner. Transwestern’s research affiliate, Delta Associates, prepared the economic portion of this report, and Transwestern prepared the balance of the market analysis. The information contained in this report was gathered by Transwestern from various primary and secondary sources believed to be reliable. Transwestern, however, makes no representation concerning the accuracy or completeness of such information and expressly disclaims any responsibility for any inaccuracy contained herein.

DENVER OFFICE MARKET WATCHTHIRD QUARTER 2016

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Transwestern Locations

CONTACT: Kevin Roberts :: President, Southwest713.270.3347 :: [email protected]

Bill Lawrence :: Senior Vice President303.407.1460 :: [email protected]

Jeffrey Buckingham :: Research Analyst303.952.5606 :: [email protected]

About Transwestern Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service — The Transwestern Experience. Specializing in Agency Leasing, Management, Tenant Advisory, Capital Markets, Research and Sustainability services, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Transwestern has 34 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate.

Experience Extraordinary at Transwestern.com/denver and @TranswesternCO.

*Source Transwestern, CoStar. The information in this report is the result of a compilation of information on the office properties located in the Denver metropolitan area. This report includes single tenant, multi-tenant, and owner-user office properties over 25,000 SF and larger excluding properties owned and occupied by a government agency.

Net absorption occurs when a lease is signed, not when physically occupied, pre-leased space counts as net absorption when a building delivers. Vacant space that is not available for direct lease is excluded, sublease space is excluded.

economic outlook denver metro · 2017. 8. 31. · denver metro third quarter 2016 third quarter...

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