Fourth Quarter Market Update

The office vacancy rate in Denver continued on the steady decline track with vacancy rate in the Denver market area dropping to 11.4% at the end of the fourth quarter 2013. The vacancy rate was 11.6% at the end of the third quarter 2013, 11.8% at the end of the second quarter 2013, and 11.9% at the end of the first quarter 2013.

The average asking lease rate for office space was $22.03 per square foot per year at the end of the fourth quarter. Representing a 1.7% increase in rates compared to Q3 of 2013.quarter 2013, and 11.9% at the end of the first quarter 2013.

Total office inventory in the Denver market area amounted to 186,987,415 square feet in 7,311 buildings as of the end of the fourth quarter 2013. The Class-A office sector consisted of 60,023,810 square feet in 315 projects. There were 3,808 Class-B buildings totaling 102,480,903 square feet, and the Class-C sector consisted of 24,482,702 square feet in 3,188 buildings. Within the Office market there were 532 owner-occupied buildings accounting for 19,556,503 square feet of office space.

Sales of buildings totaling 15,000 square feet or larger rose during the third quarter of 2013. Closing 33 office transactions with a total sales volume of $658,618,750. Those 33 buildings totaled 2,720,945 square feet with an average price of $242.06 per square foot.

Cap rates also increased in 2013, rising from 7.35% in 2012 to 7.88% in 2013.
With vacancy on the decline and rental and cap rates steadily rising, 2014 is an ideal time to invest in commercial office buildings and condos. The market is on an upward climb and this trend is only predicted to hold steady in the upcoming quarter and throughout the year.