market report office · 7/28/2020 · robust workforce, quality of living, and relatively lower...

DENVER

MARKET REPORTOFFICE

Q2 2020

303.321.5888 UNIQUEPROP.COM

FULL-SERVICE COMMERCIAL REAL ESTATE SOLUTIONSPrivately-Owned and Operated for Over 40 Years

OFFICE MARKET REPORT

Market Key Statistics 2

Leasing 4

Rent 9

Construction 12

Under Construction Properties 14

Sales 16

Sales Past 12 Months 18

Economy 20

Market Submarkets 23

Supply & Demand Trends 27

Rent & Vacancy 29

Sale Trends 31

Denver Office

7/28/2020Copyrighted report licensed to Unique Properties, Inc. - 1130503

OverviewDenver Office

988 K (1.3 M) 11.3% 3.0%12 Mo Deliveries in SF 12 Mo Net Absorption in SF Vacancy Rate 12 Mo Rent Growth

In a surprise turn of events, the Denver metro areaadded 30,000 jobs during the month of May, according tothe latest monthly data from the Bureau of LaborStatistics. The nonfarm unemployment rate drew closerto 10%, well below the national average, bolsteringDenver's status as a consistent outperformer irrespectiveof the macro environment. Denver was also among thefirst metros to recover jobs lost from the GreatRecession.

Oil price volatility has already forced a number of drillersto shut their wells. When prices last plummeted below$30 per barrel in 2016, Denver felt the impact, butDowntown Denver received the brunt of the effects. Thesecond quarter will likely be Denver's worst quarterlyperformance for absorption in more than a decade.

Denver's above-average concentration of office-usingjobs appears to have softened the blow to the localeconomy, as many office employees have the capabilityto work from home. At the same time, many of Denver'soil and gas companies occupy large blocks of officespace in the CBD, which could lead to more volatility inthe office market.

Denver, and greater Colorado as a whole, was one ofthe biggest winners of the last expansion due to itsrobust workforce, quality of living, and relatively lowercost of doing business. Tech growth has made thedifference for Denver's office market over the pastdecade, and this sector will be the harbinger of thefuture.

Several substantial move-outs in early 2020 have putupward pressure on vacancies, and the one-two punchof record-low oil prices and the novel coronaviruspandemic casts a cloud of uncertainty in the near term.On a positive note, the amount of office space underconstruction has tapered off since its 2017 peak, which

would make an outsized supply-side shock to Denver'soffice market less likely than in past years. That beingsaid, about 60% of space under construction wasavailable for lease near the end of 20Q1.

Despite the chaos induced by the coronavirus, in mid-March, the Colorado Economic DevelopmentCommission offered economic incentives to twocompanies considering an expansion in Denver. One ofthe companies is a San Francisco-based tech startup.Combined, both firms could potentially add roughly 600high-paying positions to the local economy.

Denver County has one of the nation's highestconcentrations of jobs in the oil and gas industry, andafter oil plummeted to below $20/barrel in March,widespread layoffs could be around the corner. Severalenergy companies already announced significant layoffsprior to the recent plunge in oil prices, including WhitingPetroleum, Occidental Petroleum, and Extraction Oil andGas. Many of Denver's energy firms lease office space inthe CBD, and during the last oil shock in 2016, thesubmarket suffered rent losses as vacancies shot up by300 basis points.

With companies competing for talent, high-end officespace in burgeoning Downtown Denver has givenemployers an edge in the past. Strong demand for 4 & 5Star space has driven the metro's healthy rent gains.Downtown submarkets are consistently on theleaderboard for rent growth: CBD, LoDo, and Platte Riverhave been outperformers and have been favorites oftech companies and other corporate tenants.

Speculative projects are still prevalent, although overalldeliveries are down considerably from cyclical highs(2017–18). It is not uncommon for at least half of officespace under construction to be in core downtownsubmarkets, which was the case in early 2020.

OverviewDenver Office

KEY INDICATORS

Market RentVacancy RateRBACurrent Quarter Availability RateNet Absorption

SFDeliveries SF

UnderConstruction

$34.0412.7%74,765,7874 & 5 Star 19.6% 41,788 320,000 2,889,478

$25.7711.4%70,920,7833 Star 13.7% (243,280) 5,400 127,264

$21.237.9%32,253,9511 & 2 Star 11.6% (82,492) 0 0

$28.5111.3%177,940,521Market 15.8% (283,984) 325,400 3,016,742

ForecastAverage

HistoricalAverage

12 MonthAnnual Trends Peak When Trough When

11.7%12.2%1.2%Vacancy Change (YOY) 16.1% 2003 Q3 7.0% 2000 Q2

1,044,5651,522,107(1.3 M)Net Absorption SF 5,237,210 2000 Q4 (1,835,041) 2003 Q2

1,866,9152,261,434988 KDeliveries SF 7,537,121 2001 Q3 500,954 2012 Q1

1.2%1.6%3.0%Rent Growth 12.2% 2007 Q1 -10.2% 2009 Q4

N/A$1.8B$1.9 BSales Volume $4.2B 2007 Q3 $341.5M 2009 Q4

LeasingDenver Office

The lights are beginning to turn on in Denver's officemarket. With large workplaces allowed to open at 50percent of capacity as of May 4, many office workers willreturn to an environment conducive to social distancingpractices. However, many will also continue to work fromhome in the coming months, giving tenants and landlordsmore time to ponder the long term viability of a remoteworkforce.

Denver's office market entered 2020 on a high note.Even with speculative construction continuing to putupward pressure on vacancies, demand was strongenough to compress the vacancy rate to cyclical lows bythe end of 2019. About 1.2 million SF delivered, whileroughly 1.8 million SF of office space was absorbedduring the year.

Last year's office deliveries were just a fraction of talliesin recent years. More than 3.5 million SF delivered in2018, and nearly 2.5 million SF was added in 2017. Ifdemand tapers off in the coming quarters, supply-sidepressure is not likely to be an outsized factor weighingon fundamentals.

The office market is also recovering from severalsignificant move-outs in 20Q1. Most notably, TICvacated nearly 100,000 SF at Meridian Corporate Centerin Englewood in what was likely a consolidation move.TIC was acquired by Kiewit in 2008, and the latter isbuilding a 260,000-SF regional headquarters in LoneTree that is slated to deliver by 2021. In the interim,Kiewit has a 170,000-SF space in Englewood that itoccupied in 19Q1.

LoDo remains one of Denver's premier officesubmarkets, and national tenants have shown awillingness to pay top dollar for space here in the past.This was made clear when a rare, ultra-large block ofspace was pounced on by VF Corp, which inked a dealfor all 285,000 SF at 1551 Wewatta on a lease that runsthrough 2030. The Fortune 260 company, which ownsoutdoor brands The North Face, JanSport, and Altra,relocated its headquarters to Denver from Greensboro,North Carolina.

The two locally headquartered tenants that vacated 1551Wewatta, Gates Corporation, and DaVita, moved intonew construction projects, both on the border of theLoDo Submarket (Gates at 1144 Fifteenth in the CBDand DaVita at 16 Chestnut in Platte River). For DaVita,which occupied just over half of 1551 Wewatta, the moveis part of a major expansion in the area as it leased

roughly 350,000 SF at 16 Chestnut.

A host of startups have set up operations in the metro inrecent years, but a major tech player is also expanding inthe metro. In 19Q4, Amazon moved into 100,000 SF(25,000 SF was subleased) at 1515 Wynkoop in LoDo asit plans to house 400 employees. Two fast-growing techcompanies from the Bay Area are also expanding in theDenver market: Gusto (formerly Zen Payroll) announcedit will add 1,000 jobs over the next few years whileupping its office footprint by more than 60,000 SF atseveral locations, and Slack plans to hire over 500employees at its new 80,000-SF office at 16 Chestnut.

WeWork is all in on Downtown Denver. Dating back to2018, the embattled co-working provider inked deals formore than 500,000 SF at eight new locations. But after afailed IPO and the removal of its CEO, many are leftquestioning whether WeWork can honor its leasecommitments. The company backed out of a 56,000-SFlease at 1660 Linc at the end of 2019, and it's notimpossible that more cancellations are coming.

At the same time, it's important to remember thatWeWork accounts for less than 0.5% of all occupiedoffice space in the Denver area. Co-working tenants ingeneral only account for about 1% of office space. Andeven if the co-working concept proves unsustainable,the impact may not be as large as most believe,especially if tech tenants decide to jump on vacatedcreative office spaces.

Denver's energy sector exposure has impactedfundamentals in the past—particularly downtown, whereindustry tenants are clustered. The submarket postednegative net absorption of 900,000 SF from 15Q2through 17Q3 (a period when crude oil prices dippedbelow $40/barrel), while rents declined for the first timethis cycle. Sublet availabilities also rose sharply duringthis time, driven by oil and gas tenants.

The oversupply of oil coupled with a dramatic demandslowdown has put Denver's energy firms in a precariousposition. Several companies announced significantlayoffs in recent quarters due to what were alreadyperceived as weaker oil prices. Whiting Petroleum, whichsigned a lease for 135,000 SF at the Wells Fargo Centerin the CBD in 2018 and took occupancy in 2019, laid off254 employees this past summer. In February 2020,Extraction Oil and Gas announced it would eliminate20% of employee positions in the state, including jobs atits downtown headquarters. A slew layoff

announcements have followed in March and April.

Suburban submarkets will continue to play a role inDenver's robust absorption trends. As downtownsubmarkets have grown increasingly unaffordable andcongested for employees, or no longer fit the lifestyle ofolder millennials with families, companies have foundplenty of talent in peripheral areas of the metro.

Cigna moved into 136,000 SF in the Colorado Blvd/I-25Submarket in 19Q1; Lockheed Martin occupied 106,000SF in the Highlands Ranch Submarket in 19Q1; and techfirm Conga settled into 88,000 SF in the BroomfieldCounty Submarket in 19Q2. Major upcoming move-insin suburban submarkets over the next 12 months includeNewmont Mining taking 145,000 SF in 20Q4 in theDenver Tech Center and Crocs occupying 88,000 SF inBroomfield County in 20Q1.

NET ABSORPTION, NET DELIVERIES & VACANCY

VACANCY RATE

AVAILABILITY RATE

12 MONTH NET ABSORPTION SF IN SELECTED BUILDINGS

3rd QtrBuilding Name/Address Submarket Bldg SF Vacant SF

1st Qtr 2nd Qtr 4th Qtr 12 Month

Net Absorption SF

Meridian 192,779 0 0 192,779 0 0 192,779Western Union Campus

Lone Tree 161,218 35,216 (35,216) 0 0 0 126,002ParkRidge Corporate Ctr

CBD 672,000 110,900 25,312 48,882 25,193 0 117,3851144 Fifteenth

Northwest Denver 205,013 106,596 0 98,417 0 0 98,417Westmoor Technology Park

Denver Tech Center 190,236 0 6,834 0 60,018 0 96,759Denver Tech Center (1)

Platte River 156,915 62,848 0 91,974 (534) 0 94,067Platte 15

Cherry Creek 89,000 0 0 0 89,000 0 89,000UC Health Offices

Broomfield County 88,427 0 0 88,293 0 0 88,293ATRIA

Denver Tech Center 190,202 10,160 28,339 0 0 0 78,366Denver Tech Center (2)

Meridian 107,638 0 0 0 0 0 77,697Meridian Office Park

Aurora 117,000 41,245 77,384 (1,629) 0 0 75,755Fitzsimons Innovation Community

Platte River 171,000 96,000 0 0 75,000 0 75,000Revolution 360

Aurora 113,568 0 0 0 0 0 74,291Children’s Hospital Medical Pavil…

Platte River 70,000 0 0 70,000 0 0 70,0003060 Brighton Blvd

Denver Tech Center 192,351 108,704 8,799 0 0 0 64,69750 FIFTY DTC

Platte River 60,000 0 0 0 60,000 0 60,000Buell Public Media Center

Platte River 98,481 7,249 0 0 0 0 57,787The Circa

2,875,828 578,918 111,452 588,716 308,677 0 1,536,295Subtotal Primary Competitors

175,064,693 19,496,890 (455,425) (1,504,664) (592,661) 0 (2,808,362)Remaining Denver Market

177,940,521 20,075,808 (343,973) (915,948) (283,984) 0 (1,272,067)Total Denver Market

TOP OFFICE LEASES PAST 12 MONTHS

Building Name/Address Submarket Leased SF Tenant Name Tenant Rep Compa… Leasing Rep CompanyQtr

National Park Service Building * West Denver 166,744 National Park Service - -Q4 19

ParkRidge Corporate Center Lone Tree 166,708 Lockheed Martin - CBREQ2 20

Panorama Corporate Center * Panorama/Highland Park 144,096 United Launch Alliance Savills CBREQ3 19

Mountain View Corp Center * Broomfield County 137,040 Danone - Newmark Knight FrankQ4 19

EOS at Interlocken * Broomfield County 125,036 Gogo, Inc. - Newmark Knight FrankQ1 20

Oracle Campus * Broomfield County 113,389 SCL Health Cresa -Q3 19

Panorama Corporate Center * Panorama/Highland Park 106,213 United Launch Alliance Savills CBREQ3 19

Inverness Business Park * Inverness 99,797 ViaSat, Inc. - -Q2 20

18th Street Atrium LoDo 92,447 Checkr Savills CBREQ3 19

Century Park * Southeast C-470 72,269 United Launch Alliance Savills -Q2 20

Denver Tech Center Denver Tech Center 70,170 AECOM Cushman & Wakefield Newmark Knight FrankQ1 20

3060 Brighton Blvd Platte River 70,000 VF Services LLC Cushman & Wakefield NAI Shames MakovskyQ4 19

Majestic Commercenter SW DIA/Pena Blvd 66,722 Landmark Packaging - JLLQ4 19

North Valley North Denver 59,838 - - Newmark Knight FrankQ1 20

Market Station LoDo 56,449 JPMorgan Chase CBRE Cushman & WakefieldQ4 19

Peakview Tower Greenwood Village 55,348 Delta Dental of Colorado - JLLQ4 19

Platte 15 Platte River 54,232 EF Education First - Newmark Knight FrankQ3 19

Aurora City Center * Aurora 53,369 Empower High School Cresa -Q4 19

Westmoor Technology Park Northwest Denver 51,854 - - JLLQ4 19

Cornerstar Southeast 50,017 Urban Air Adventure Park Legend Partners David, Hicks & Lampert…Q4 19

Park Meadows Corp Center Lone Tree 48,564 Verizon Communications CBRE Colliers InternationalQ3 19

9th & Colorado Glendale 48,415 - - Cushman & WakefieldQ2 20

Westmoor Technology Park Northwest Denver 46,563 - - JLLQ4 19

1899 Wynkoop * LoDo 46,386 Comcast Savills Lincoln Property Comp…Q4 19

1700 Broadway Office * CBD 45,778 Colorado Secretary of State - CBREQ2 20

1401 Lawrence CBD 44,078 Freshworks - CBREQ1 20

Peakview V at Southbridge * Southwest Denver 42,000 Alcohol Monitoring Systems - Burger InvestmentsQ3 19

169 Inverness Dr W Inverness 41,868 UnitedHealth Group Incor… JLL JLLQ4 19

Sage Bldg CBD 40,470 Sage Hospitality - NAI Shames MakovskyQ4 19

1755 Blake St LoDo 36,931 EF Education - Cushman & WakefieldQ4 19

Platte 15 Platte River 35,360 - - Newmark Knight FrankQ1 20

ParkRidge Corporate Ctr Lone Tree 35,216 - - CBREQ3 20

INOVA Dry Creek Inverness 33,514 Concentric AG Corporation Cresa -Q3 19

Tabor Center * CBD 32,295 Zavanna LLC Cresa -Q3 19

Meridian Int'l Bus Center Meridian 32,093 EN Engineering Savills Cushman & WakefieldQ1 20

Market Station LoDo 31,400 Deloitte Digital Cushman & Wakefield Cushman & WakefieldQ4 19

Plaza Tower One Greenwood Village 31,107 Felsburg Holt & Ullevig - Colliers InternationalQ1 20

Orchard Falls * Greenwood Village 30,795 98.5 Kygo - Cushman & WakefieldQ2 20

Meridian Int'l Bus Center Meridian 30,254 AECOM Cushman & Wakefield Cushman & WakefieldQ1 20

Ridgeline Technology Center Highlands Ranch 29,891 Movement Mortgage - Avison YoungQ4 19

Renewal

RentDenver Office

At about $29.00 per SF, Denver's office space comes ata relative discount to other tech markets. In the BayArea, office rents are more than twice as much, and inSeattle and Austin, they are about 35% higher.

Strong demand for office space in Denver kept rentgrowth well above the national average last year. Annualgains were consistently at or above 4% in 2019, largelydriven by downtown's tech-oriented submarkets. On theother hand, suburban submarkets that have largely beenoverlooked by expanding tech tenants have had some ofthe weakest rent growth, including Denver Tech Center,Greenwood Village, and Southwest Denver.

Denver's run of robust rent growth will likely come to anend due to the impact of the novel coronavirus andvolatile oil sector. In a market that has relied heavily onoffice demand from out-of-state companies looking toexpand, rents could suffer as the movement of people isrestricted throughout the U.S. On the bright side, theconstruction pipeline has moderated from highs in2016–17, which should help minimize supply pressure on

the office market and rents.

The last time oil prices dropped this low was in 2016, butthe decline was not nearly as sharp as what occurred inMarch. During the last oil collapse, annual rent growth inDenver decelerated from nearly 5% in 2015 to just over1% in 2016. The CBD Submarket, where energy tenantsare clustered, suffered rent losses for the only timeduring the cycle.

Volatile oil prices in 2019 led to a number of layoffs inthe energy sector, namely Whiting Petroleum'selimination of 254 positions at the end of July. Whitingmoved into 135,000 SF at Wells Fargo Center in theCBD at the end of 2019. In February, before the mostrecent oil plunge, Extraction Oil and Gas announced itwould lay off 20% of its workforce in the state, includingpositions at its headquarters in the CBD. Denver's rentgrowth outperformed in 2019 despite headwinds from theoil sector, but market conditions have changed drasticallyin 2020.

MARKET RENT GROWTH (YOY)

RentDenver Office

MARKET RENT PER SQUARE FEET

4 & 5 STAR EXPENSES PER SF (ANNUAL)

Utilities Cleaning InsuranceMarket / Cluster Taxes Other Total

Denver $1.17 $0.21$0.60 $5.42 $5.69 $13.09

Aurora $1.18 $0.26$0.91 $3.04 $4.59 $9.98

Broomfield $1.08 $0.22$0.62 $5.00 $4.97 $11.89

Clear Creek County $0.46 $0.14$0.34 $1.33 $2.27 $4.54

Colorado Blvd/Glendale $1.42 $0.26$0.65 $4.47 $5.69 $12.49

Downtown $1.22 $0.22$0.62 $7.47 $6.88 $16.41

Midtown $1.09 $0.17$0.51 $4.60 $6.24 $12.61

North Denver $0.96 $0.15$0.45 $4.51 $4.45 $10.52

Northeast Denver $1.03 $0.18$0.57 $4.84 $4.66 $11.28

Northwest Denver $0.99 $0.21$0.57 $4.50 $4.60 $10.87

Outlying Douglas County $0.97 $0.30$0.72 $4.87 $3.83 $10.69

Parker/Castle Rock $1.19 $0.37$0.89 $3.24 $3.90 $9.59

Southeast Denver $1.19 $0.18$0.56 $5.36 $5.73 $13.02

Southwest Denver $1.02 $0.20$0.58 $2.19 $5.19 $9.18

West Denver $0.85 $0.25$0.60 $4.07 $3.65 $9.42

Expenses are estimated using NCREIF, Trepp, IREM, and CoStar data using the narrowest possible geographical definition from Zip Code to region.

RentDenver Office

3 STAR EXPENSES PER SF (ANNUAL)

Denver $0.95 $0.13$0.49 $4.08 $3.78 $9.43

Aurora $1.08 $0.11$0.82 $3.32 $3.27 $8.60

Broomfield $0.98 $0.13$0.50 $4.99 $3.57 $10.17

Downtown $1.09 $0.19$0.53 $4.85 $5.57 $12.23

Elbert County $0.69 $0.09$0.35 $2.98 $2.71 $6.82

Midtown $0.96 $0.17$0.46 $3.36 $4.52 $9.47

North Denver $0.86 $0.11$0.43 $3.88 $3.29 $8.57

Outlying Arapahoe County $0.84 $0.10$0.50 $5.25 $3.03 $9.72

Park County $0.88 $0.12$0.44 $1.56 $3.43 $6.43

West Denver $0.89 $0.12$0.45 $3.43 $3.28 $8.17

1 & 2 STAR EXPENSES PER SF (ANNUAL)

Denver $0.63 $0.13$0.44 $3.91 $2.53 $7.64

Aurora $0.50 $0.10$0.46 $2.68 $2.55 $6.29

Broomfield $0.52 $0.10$0.40 $4.71 $1.82 $7.55

Downtown $0.94 $0.17$0.50 $5.24 $3.61 $10.46

Elbert County $0.50 $0.09$0.36 $2.45 $2.03 $5.43

Gilpin County $0.58 $0.11$0.42 $1.87 $2.35 $5.33

Midtown $0.80 $0.18$0.47 $4.19 $2.30 $7.94

North Denver $0.55 $0.11$0.42 $3.59 $1.57 $6.24

Outlying Adams County $0.58 $0.11$0.42 $2.46 $2.35 $5.92

Outlying Arapahoe County $0.54 $0.09$0.40 $3.97 $2.82 $7.82

Park County $0.58 $0.11$0.42 $1.78 $2.37 $5.26

West Denver $0.57 $0.11$0.41 $3.53 $2.42 $7.04

ConstructionDenver Office

The Colorado Governor's stay-at-home orderconsidered jobs in the construction industry as “essentialor critical”, which allowed developers to move forwardwith projects if they chose to do so. Deterioratingeconomic conditions could keep upcominggroundbreakings on hold, and speculative projects slatedto deliver in 2020 must grapple with the uncertainty ofdemand.

The unknown near and long term impact of socialdistancing on office demand could make landlords ofrecent deliveries more likely to pull the trigger on below-market lease deals in the coming months. Although thetotal SF currently under construction is below cyclicalpeaks, the percentage of speculative development isnear 10-year highs.

The expansion of Denver's light rail network has hadmajor implications for office development. Outside ofCherry Creek and Broomfield, every 100,000-plus-SFoffice building constructed this cycle has been within onemile of a light rail station, and most are within half a mile.Since 2013, around 40 light rail stations have opened,and more are under construction. While major suburbantransit-oriented developments have largely been focusedin well-established TOD submarkets in Denver'ssoutheastern corridor (where the light rail line opened in2006), developers are faced with an array of newpotential TOD opportunities.

Development in the past decade has been focuseddowntown submarkets: CBD, LoDo, and Platte River,home to the burgeoning RiNo neighborhood. Typically, atleast half of Denver's construction pipeline isconcentrated in core downtown submarkets.

One of the more notable projects in RiNo is Revolution360, a 170,000-SF spec office project near the 38th andBlake Light Rail station. Pre-pandemic, construction wasslated to complete in 2020, and WeWork committed to65,000 SF. The troubled co-working provider wasalready on the ropes before the coronavirus, backing outof a 56,000 SF lease at 1660 Linc at the end of 2019.More lease cancellations could be in the offing as officesshutter due to social distancing measures.

Not far away from Revolution 360, a 280,000-SF mixed-use project in the RiNo district called The HUB was oneof the biggest deliveries of 2019. The HUB is steps awayfrom the rail station and is fully leased to tenantsincluding HomeAdvisor, WeWork, and EverCommerce,serving as a microcosm of Denver's fast-growing techscene.

Co-working has acted as a significant source of demandfor new-construction in 4 & 5 Star buildings. In coredowntown offices constructed since 2015 or currentlyunderway, co-working tenants have leased over 600,000SF, roughly 20% of all leasing activity at these buildings.

In early 2017, Patrinely Group and USAA Real EstateCompany signaled that their Block 162 project was readyto move ahead. Site work began around the start of2018, and the foundation was poured towards the end of18Q2, with a late-2020 or 2021 completion timeframe.Located on the corners of California and 15th streets, itis being designed as a 30-story, 595,000-SF officetower. The development is the first large speculativeproject in the core part of the CBD Submarket (asopposed to 1144 15th St. on the border of LoDo) sincethe early 1980s. Block 162 will likely serve as abarometer for developers eying new projects as theeconomic environment begins to heal.

Numerous speculative developments recently deliveredor are underway in the suburbs, with large projectsalmost universally located near light rail stations. Fullyleased single-tenant properties such as those typicalearlier in the cycle included the Charles Schwab campusin Lone Tree, the CoBank Center in Greenwood Village,the Denver Health Administration building in SouthMidtown, and the FirstBank building in West Denver.

One of the biggest projects in the pipeline, Kiewit'sRegional HQ in Lone Tree, is slated to deliver 260,000SF near the Sky Ridge Light Rail station by 2021. Kiewitwas part of the redevelopment of Denver's heraldedUnion Station and is also the primary contractor for the$1.2 billion I-70 infrastructure project.

ConstructionDenver Office

DELIVERIES & DEMOLITIONS

SUBMARKET CONSTRUCTION

Average Building Size

RankUnder Constr

Under Construction Inventory

All ExistingSF (000) Pre-Leased SF (000)SubmarketNo. RankBldgs Pre-Leased %

1 CBD 2 639 319,74410.0% 8 213,73064 2

2 Platte River 3 397 132,4402.8% 10 45,35411 5

3 Lone Tree 2 392 195,927100% 1 48,208392 3

4 Denver Tech Center 1 385 384,71248.6% 5 110,407187 1

5 LoDo 2 330 165,10331.8% 6 48,084105 4

6 Northwest Denver 7 272 38,84684.8% 3 14,947231 10

7 Glendale 2 163 81,53369.3% 4 44,708113 7

8 Capitol Hill 2 146 72,98614.0% 7 14,26920 9

9 East Hampden 1 104 104,0009.6% 9 25,53410 6

10 Cherry Creek 1 75 75,000100% 1 27,43075 8

All Other 6 113 18,86747.8% 26,58254

Totals 29 3,017 104,02641.8% 32,3561,262

Under Construction PropertiesDenver Office

29 3,016,742 1.7% 41.8%Properties Square Feet Percent of Inventory Preleased

UNDER CONSTRUCTION PROPERTIES

UNDER CONSTRUCTION

Property Name/Address Rating Bldg SF Stories Start Complete Developer/Owner

Jun 2018675 15th St

Block 162607,987 30 Dec 2020

Patrinely Group, LLC

NAI Shames Makovsky1

Sep 20186900 Layton Ave

384,712 15 Sep 2020Prime West

Prime West Companies2

Jun 2019Trainstation Cir

Kiewit Regional HQ - Ph…260,121 5 Jan 2021

Kiewit

Kiewit3

Jan 20201701 Platte St

One Platte250,402 5 Feb 2022

The Nichols Partnership, Inc.

The Nichols Partnership, Inc.4

Oct 20181901 Wazee St

McGregor Square Office203,406 11 Jan 2021

Hensel Phelps

McGregor Square5

Aug 2019Quebec St & Lowry Blvd

Boulevard 1 One139,065 3 Nov 2020

Confluent Development

Confluent Development6

Jun 2020Trainstation Cir

Kiewit Regional HQ - Ph…131,733 4 Jun 2021

Kiewit

Kiewit7

Under Construction PropertiesDenver Office

UNDER CONSTRUCTION

Property Name/Address Rating Bldg SF Stories Start Complete Developer/Owner

Jun 20181601 Market St

Market Station126,800 7 Aug 2020

Continuum Partners LLC

Continuum Partners LLC8

Jun 20191818 Ogden St

Saint Joseph Medical Off…106,572 5 Sep 2020

Fidelis Realty Partners

SCL Health System9

Mar 20193650 Blake St

HUB North105,340 8 Aug 2020

Beacon Capital Partners

Beacon Capital Partners10

Jun 2019500 E Hampden Ave

Synergy Medical Center104,000 5 Oct 2020

Hill Companies, LLC

Hill Companies, LLC11

Jun 2020240 Saint Paul St

75,000 6 Jun 2021BMC Investments Co, LLC

BMC Investments Co, LLC12

Mar 20192128 W 32nd Ave

LoHi Offices57,433 3 Aug 2020

City Street Investors

City Street Investors13

Oct 2019W 108th Cir

Ball Corporation - Buildi…46,500 4 Oct 2020

Ball Corporation

Ball Corporation14

Oct 2019W 108th Cir

Ball Corporation

Ball Corporation15

Oct 2019W 108th Cir

Ball Corporation

Ball Corporation16

Oct 2019W 108th Cir

Ball Corporation

Ball Corporation17

Sep 20193501 Blake St

41,579 3 Oct 2020Leuthold Commercial Properties

Leuthold Commercial Properties18

Mar 201926122 E 68th Ave

JAG Logistics Center at…40,000 - Aug 2020

J.A. Green Development

J.A. Green Development19

Dec 20192600 Welton St

The Hooper Office/Retail39,400 - Jun 2021

Palisade Partners

Palisade Partners20

Apr 2019Glenham Pl

31,500 4 Dec 2020Stonebridge Companies

Stonebridge Companies21

Oct 2019Wilcox St & First St

Festival Park Commons…30,000 1 Mar 2021

Castle Brae Development LLC

Aug 2019Quebec St & Lowry Blvd

Boulevard 1 One24,000 2 Nov 2020

Confluent Development

Kelmore Development23

Feb 202011140 Broomfield Ln

Northwest 3616,007 2 Feb 2021

Morgan Stanley Services Group I…24

Jan 202012650 W 54th Dr

14,400 2 Aug 2020-

Dec 20191900 W 32nd Ave

Firehouse14,091 3 Mar 2021

Jan 20192856-2868 Fairfax St

11,799 2 Aug 2020-

HM Capital27

Dec 201918585 E Mainstreet

10,445 2 Aug 2020-

Stephen A Grove Descendants T…28

SalesDenver Office

Investment activity has slowed dramatically as thefinancial impact of the coronavirus is assessed.

The first quarter of the new decade kicked off with thebiggest non-bulk portfolio trade ever recorded inDenver's office market. Toronto-based Brookfield AssetManagement acquired two assets at Denver City Centerfrom San Francisco-based Shorenstein Properties for$400 million ($311/SF) in February. The CBD buildingstotaled nearly 1.3 million SF of office space and wereapproximately 95% occupied at the time of sale. Notabletenants include Johns Manville, Service Source, Marketo,and SunRun. Denver City Center delivered in 1981 andunderwent minor renovations from the seller during itsholding period.

Coastal investment firms made the biggest splashes inDenver's office market in 2019. Favorable marketconditions buttressed by massive job growth in theprofessional, scientific, and technical service sector madeColorado's capital a sound bet for major players. Withmore than $2.7 billion worth of assets trading in 2019,annual trade volume was one of the highest of the cycleyet decelerated from a record year in 2018. Based onCoStar's Pricing Trends, price growth was stagnant inDenver, a first for the market during this expansion, ascap rates ticked up slightly.

With robust demand and a track record of rent growthoutperformance versus the metro and the nationalaverage, the headline trades have unsurprisinglyinvolved institutional assets in the CBD. The submarkethas been responsible for about one-third of the metro'ssales volume dating back to 2018. The CBD Submarketgenerated more than $600 million in sales volume in2019, and in 2018, the submarket garnered $1 billionworth of trades.

One of the biggest trades of 2019 was Los Angeles-based Rising Realty Partners' June acquisition of the600,000-SF Civic Center Plaza in the CBD Submarket

for $143 million ($239/SF). The 4 Star asset wasoriginally built in 1994 but received more than $7.3million in renovations beginning in 2017, which includedan upgraded lobby, elevators, restrooms, HVAC, and anexpanded conference center. Civic Center Plazareceived LEED Gold certification after receivingupgrades. The building was more than 95% occupiedwith tenants including WeWork, State of Colorado, andthe Regional Transportation District.

Another major asset in the CBD bought by a coastalinvestment firm commanded an even higher price perSF. Miami-based Rialto Holdings acquired 410 17th St.,a 436,000-SF building, for $127.3 million ($292/SF) inJune. Rialto plans to make capital improvements to thecommon areas of the 1977-built property, whichreportedly had no deferred maintenance. The cap rate,based on actual income and expenses, was in theneighborhood of 5.3%. Existing tenants include BonanzaCreek Energy, Weatherford US, and Brownstein HyattFarber Schreck.

Although the final results are still being tallied, the fourthquarter appears to have been uncharacteristicallylackluster. Sales volume has historically been elevated inthe fourth quarter and topped $1 billion in both 17Q4 and18Q4. However, sales volume in 19Q4 clocked in atunder $600 million, the weakest quarter of the year, andthe worst fourth quarter since 2012.

The biggest trade in 19Q4 was Florida-based America'sCapital Partners' acquisition of Tuscany Village Centerfrom Texas-based Crescent Real Estate Equities forapproximately $64.9 million ($251/SF). The six-story,258,000-SF building in Greenwood Village delivered in1985. The property was roughly 90% occupied bytenants including Red Robin's Corporate Headquarters,Xanterra Parks and Resorts, FCC Services, andNewland Communities. The reported cap rate wasaround 6.6%.

SalesDenver Office

SALES VOLUME & MARKET SALE PRICE PER SF

Sales Past 12 MonthsDenver Office

400 6.7% $193 12.8%Sale Comparables Avg. Cap Rate Avg. Price/SF Avg. Vacancy At Sale

SALE COMPARABLE LOCATIONS

SALE COMPARABLES SUMMARY STATISTICS

Sales Attributes Low Average Median High

Sale Price $191,000 $7,838,203 $1,836,000 $205,000,000

Price/SF $8.32 $193 $185 $3,748

Cap Rate 2.8% 6.7% 7.0% 10.7%

Time Since Sale in Months 0.2 6.7 6.9 12.0

Property Attributes Low Average Median High

Building SF 977 38,363 10,038 705,729

Stories 1 3 2 42

Typical Floor SF 668 10,417 5,937 66,800

Vacancy Rate At Sale 0% 12.8% 0% 100%

Year Built 1860 1971 1979 2019

Star Rating 2.5

Sales Past 12 MonthsDenver Office

Property Name - Address Rating Yr Built Bldg SF Vacancy Price Price/SF

Property

Sale Date

Cap Rate

RECENT SIGNIFICANT SALES

-1 Johns Manville Plaza1978 705,729 5.6% $205,000,000 $290

717 17th St2/3/2020 -

-2 City Center1978 644,122 4.5% $195,000,000 $303

707 17th St2/3/2020 -

-3 Regency Plaza1985 335,899 7.2% $71,250,000 $212

4643 S Ulster St9/13/2019 -

-4 Tuscany Village Center1984 257,875 1.3% $64,850,000 $251

6312 S Fiddlers Green Cir12/2/2019 6.6%

-5 Stanford Place II1982 366,184 17.9% $62,250,000 $170

7979 E Tufts Ave11/12/2019 -

-6 Financial House2019 74,085 0% $55,000,000 $742

205 Detroit St8/15/2019 5.2%

-7 7601 DTC1997 190,202 35.4% $48,750,000 $256

7601 Technology Way9/6/2019 -

-8 4601 DTC Blvd1982 278,823 12.4% $46,000,000 $165

4601 DTC Blvd3/10/2020 -

-9 Denver Centerpoint II1980 206,714 28.9% $42,452,100 $205

1777 S Harrison St11/1/2019 -

-10 Belleview Tower1982 201,670 7.8% $40,100,000 $199

7887 E Belleview Ave12/12/2019 -

-11 Denver Corporate Center II1982 192,838 9.0% $36,256,900 $188

7800 E Union Ave9/3/2019 -

-12 Denver Corporate Center…1982 188,628 18.3% $35,453,100 $188

7900 E Union Ave9/3/2019 -

-13 Denver Centerpoint I1982 167,010 16.9% $35,065,400 $210

3900 E Mexico Ave11/1/2019 -

-14 The Citadel1987 130,652 8.8% $33,000,000 $253

3200 Cherry Creek South Dr5/6/2020 -

-15 101 University Blvd1970 59,997 0% $26,000,000 $43310/18/2019 -

-16 1900 Grant St1982 158,000 45.8% $25,750,000 $16312/20/2019 -

-17 Raytheon, Inc.2001 105,221 0% $24,158,724 $230

16470 E Hughes Dr12/30/2019 -

-18 Meridian Campus 22002 198,461 0% $20,762,110 $105

12510 E Belford Ave1/14/2020 -

-19 Meridian Campus 11999 192,779 100% $19,237,890 $100

12500 E Belford Ave1/14/2020 -

-20 Triad Orchard Station W…1972 144,189 15.3% $18,769,586 $130

5670 Greenwood Plaza Blvd2/12/2020 -

EconomyDenver Office

Denver has reclaimed about half of the jobs lost duringApril shutdowns, according to June data from the Bureauof Labor Statistics. The nonfarm unemployment ratecompressed below 10%, outperforming the nationalaverage. At the start of 2020, Denver's unemploymentrate was below 3%, making it one of the tightest jobmarkets in the country.

Leisure and hospitality still weighed on the labor marketas employment in the sector was down more than 20%from last year. Other services, which includes many jobstied to retail, were down about 14%. Work-from-homeindustries continue to weather the storm relatively well.Jobs in information and professional and businessservices were virtually unchanged from the previousyear.

With a job location quotient near the national average forretail and leisure and hospitality, Denver is not overlyexposed to the hardest-hit sectors. Nevertheless,Denver International Airport is a key economic driver forthe region, generating more than $33 billion for the statein a 5-year span.

Flights have been reduced by up to 90% by severalairlines. Although Denver will not be more affected thanmost major metros in this regard, it does rely heavily onin-migration to fuel its labor force growth and overalleconomy, metrics which are expected to decline sharplyin the coming months.

The economic impact of the pandemic and shelter-in-place orders in April dwarfed that of the Great FinancialCrisis, which spanned several years. From 2008-09,Denver lost about 67,000 jobs, or about 100,000 fewerthan reported during April.

Initial unemployment claims in Colorado have climbedpast 550,000 since mid-March. But weekly joblessclaims, including gig workers and the self-employed,continue to fall into July.

The last time oil prices fell this low in 2016, the localeconomy felt the impact. An oil price war between SaudiArabia and Russia caused prices to plummet to $20 perbarrel in March. The fallout of the demand shock causedby the coronavirus led to oil prices hitting all-time lows inApril, even after the U.S. and Mexico agreed to cut oilproduction along with OPEC+. Oil markets rebounded inMay, hovering around $30 per barrel.

Denver's emergence as a bona fide technology market

this cycle has helped insulate it from the impact of thecoronavirus-induced downturn. Tech employers typicallyallow the flexibility of telecommuting, and many office-using employers have the capacity to facilitate a work-from-home transition. Office-using jobs in Denver havegrown above the national average the past five years atabout 3% annually.

Government employment has also been consistent, if notpedestrian, in terms of employment growth in the statecapital. The public sector has often been a stabilizingforce during past economic downturns. The governmentand professional and business services sectors were theonly nonfarm job sectors in Denver to grow at or abovetheir five-year average in 2019.

Although education and health services job gains werebelow their five-year average in 2019, it ranked as thethird-strongest employment growth sector behindprofessional and business services and government.Healthcare is seeing a major investment in the $1.3billion VA hospital in Aurora, the Denver HealthAdministration's new headquarters in South Midtown,and Catalyst's 300,000-SF digital health facility in theRiNo neighborhood.

On the downside, oil and gas companies clustered inDenver's CBD are now faced with volatile oil prices thatplunged to 18-year lows in March. The last time oilprices were this weak in 2016, layoffs were widespreadthroughout the industry. This time, energy companies arefaced with dual threats: oversupply due to Saudi Arabiaand Russia posturing, and a precipitous fall in demandas the movement of people and goods becomesincreasingly restricted due to the coronavirus.

Even though Denver's overall employment growthshowed signs of a slowdown last year along with thenational index, it added tech jobs at an acceleratingpace. Employment in Professional, Scientific & TechnicalServices grew by more than 7% annually in 2019, one ofthe best growth rates in the country. Corporateexpansions and relocations by tech companies such asAmazon, Slack, and Conga drove employment gains andepitomize the trend of West Coast firms choosing toexpand in Denver for its robust workforce, quality of life,and cost of doing business.

Denver has been frequently lauded as a hot destinationfor young, educated job seekers throughout this cycle.Headwinds to this trend could come from housing costs,which are dramatically higher today for both renters and

prospective owners. While home prices continue to climbinto the stratosphere (albeit at a slower rate than thepeak years of this cycle), apartment rent growth hasmoderated alongside elevated levels of construction,which may provide a relief valve for those consideringthe metro for its otherwise robust employment prospects.

Along with a young, highly educated, and growing laborforce, the FasTracks transit expansion is another sellingpoint. Transit-oriented development is taking holdthrough the metro as additional lines connect downtownto North Denver, Aurora, Southeast Denver, and theDenver International Airport.

DENVER EMPLOYMENT BY INDUSTRY IN THOUSANDS

NAICS Industry Jobs LQ MarketUS USMarketUSMarket

Current Level 12 Month Change 10 Year Change 5 Year Forecast

1.36%0.73%0.15%1.24%-8.83%-1.89%0.669Manufacturing

2.15%2.28%0.09%1.13%-10.53%-8.30%1.0254Trade, Transportation and Utilities

2.59%2.74%-0.55%0.13%-12.52%-12.15%0.8122 Retail Trade

0.78%1.20%1.13%1.80%-1.47%-3.65%1.2110Financial Activities

0.87%0.74%-0.47%1.28%-4.27%-1.26%0.9201Government

2.04%2.22%1.97%4.03%-8.10%-7.43%1.3104Natural Resources, Mining and Construction

2.79%3.18%1.18%2.34%-7.10%-6.34%0.8180Education and Health Services

2.55%2.02%1.55%3.13%-8.27%-1.55%1.4278Professional and Business Services

2.09%0.21%-0.12%1.63%-6.37%1.39%1.852Information

10.20%9.52%-2.43%-1.22%-38.38%-35.33%1.0112Leisure and Hospitality

3.57%3.66%-0.85%0.20%-16.97%-17.06%1.049Other Services

Total Employment 1,408 1.0 -8.25% -11.15% 1.68% 0.27% 2.61% 2.72%

Source: Oxford Economics

LQ = Location Quotient

YEAR OVER YEAR JOB GROWTH

DEMOGRAPHIC TRENDS

12 Month ChangeCurrent Level

Metro U.S.Metro U.S.Demographic Category

10 Year Change

Metro U.S. Metro U.S.

5 Year Forecast

Population 329,740,0312,995,545 1.1% 0.5% 1.6% 0.6% 1.1% 0.5%

Households 122,429,8441,154,157 1.0% 0.4% 1.5% 0.7% 1.0% 0.4%

Median Household Income $64,482$83,123 1.7% 1.9% 3.5% 2.6% 2.7% 2.7%

Labor Force 158,090,9381,588,465 -5.3% -3.1% 1.1% 0.3% 1.9% 1.1%

Unemployment 13.4%10.2% 7.5% 9.8% 0.1% 0.4% - -

POPULATION GROWTH

LABOR FORCE GROWTH INCOME GROWTH

SubmarketsDenver Office

DENVER SUBMARKETS

SUBMARKET INVENTORY

12 Month Deliveries Under Construction as % of Inventory

Bldgs SF (000) Percent Rank

Inventory

Bldgs SF (000) Percent RankBldgs SF (000) % Market RankSubmarketNo.

1 Arapahoe Rd 1,714 1.0% 27 0 - - -74 0 0 0% -

2 Aurora 9,294 5.2% 6 0 - - -314 1 117 1.3% 2

3 Broomfield County 7,034 4.0% 9 1 16 0.2% 13141 0 0 0% -

4 Capitol Hill 6,293 3.5% 10 2 146 2.3% 8441 0 0 0% -

5 CBD 28,212 15.9% 1 2 639 2.3% 1132 0 0 0% -

6 Centennial 3,654 2.1% 17 0 - - -89 0 0 0% -

7 Cherry Creek 3,511 2.0% 19 1 75 2.1% 10128 1 89 2.5% 3

8 Clear Creek County 103 0.1% 30 0 - - -11 0 0 0% -

9 Colorado Blvd/I-25 5,705 3.2% 12 0 - - -244 0 0 0% -

10 Denver Tech Center 11,924 6.7% 3 1 385 3.2% 4108 0 0 0% -

11 East Hampden 3,549 2.0% 18 1 104 2.9% 9139 0 0 0% -

12 East I-70/Montbello 3,091 1.7% 23 1 12 0.4% 1490 0 0 0% -

13 Elbert County 57 0% 31 0 - - -22 0 0 0% -

14 Gilpin County 26 0% 33 0 - - -6 0 0 0% -

15 Glendale 5,276 3.0% 13 2 163 3.1% 7118 1 65 1.2% 4

16 Greenwood Village 9,711 5.5% 5 0 - - -141 1 13 0.1% 10

17 Highlands Ranch 2,236 1.3% 25 0 - - -43 0 0 0% -

18 Inverness 6,105 3.4% 11 0 - - -112 0 0 0% -

19 LoDo 7,693 4.3% 7 2 330 4.3% 5160 0 0 0% -

20 Lone Tree 3,278 1.8% 22 2 392 12.0% 368 1 24 0.7% 7

21 Meridian 3,465 1.9% 20 0 - - -37 1 21 0.6% 9

22 North Denver 5,109 2.9% 14 0 - - -187 4 58 1.1% 5

23 Northeast Denver 2,112 1.2% 26 1 40 1.9% 12182 0 0 0% -

24 Northwest Denver 7,309 4.1% 8 7 272 3.7% 6489 1 5 0.1% 12

25 Outlying Adams County 15 0% 34 0 - - -5 0 0 0% -

26 Outlying Arapahoe County 159 0.1% 28 0 - - -11 0 0 0% -

27 Outlying Douglas County 125 0.1% 29 0 - - -21 0 0 0% -

28 Panorama/Highland Park 3,772 2.1% 16 0 - - -65 0 0 0% -

29 Park County 56 0% 32 0 - - -17 0 0 0% -

30 Parker/Castle Rock 2,566 1.4% 24 3 45 1.8% 11191 1 21 0.8% 8

31 Platte River 5,034 2.8% 15 3 397 7.9% 2111 5 520 10.3% 1

32 South Midtown 3,369 1.9% 21 0 - - -254 1 46 1.4% 6

33 Southwest Denver 10,407 5.9% 4 0 - - -575 1 5 0.1% 11

34 West Denver 15,864 8.9% 2 0 - - -770 1 4 0% 13

SUBMARKET RENT

Growth

Market Rent

Per SFSubmarketNo.

12 Month Market Rent QTD Annualized Market Rent

RankRank GrowthRank

1 Arapahoe Rd 1.0%27 1.8% 29$22.65 6

2 Aurora -0.5%29 2.4% 21$22.22 22

3 Broomfield County 0.3%9 3.1% 10$28.42 11

4 Capitol Hill -0.1%12 2.3% 22$27.42 17

5 CBD -2.0%4 3.2% 9$35.22 32

6 Centennial 0.3%23 2.0% 28$24.10 10

7 Cherry Creek -0.4%3 3.6% 4$37.60 20

8 Clear Creek County -0.2%22 2.4% 20$24.60 18

9 Colorado Blvd/I-25 -0.6%17 2.9% 11$26.46 23

10 Denver Tech Center -1.8%7 4.6% 1$29.45 30

11 East Hampden 0.8%33 1.5% 31$20.93 8

12 East I-70/Montbello -0.7%20 3.3% 7$25.58 24

13 Elbert County 2.4%32 1.2% 32$21.43 3

14 Gilpin County 3.2%30 1.1% 33$22.09 1

15 Glendale -1.8%16 4.0% 2$26.60 31

16 Greenwood Village 0.1%11 2.8% 14$27.79 13

17 Highlands Ranch 0.3%10 3.5% 6$28.32 9

18 Inverness 0.3%21 2.0% 27$25.55 12

19 LoDo -3.2%2 3.2% 8$39.94 33

20 Lone Tree -0.9%6 2.8% 15$29.63 25

21 Meridian -0.9%8 3.8% 3$28.54 26

22 North Denver -1.0%19 2.5% 19$25.92 28

23 Northeast Denver 1.3%26 2.2% 24$23.37 5

24 Northwest Denver 0.9%24 2.8% 13$23.43 7

25 Outlying Adams County 3.1%31 1.0% 34$21.57 2

26 Outlying Arapahoe County -1.3%15 2.2% 23$26.66 29

27 Outlying Douglas County -0.1%18 2.7% 18$26.04 16

28 Panorama/Highland Park -0.2%13 2.7% 17$27.27 19

29 Park County 1.5%28 1.6% 30$22.34 4

30 Parker/Castle Rock -0.1%5 2.7% 16$29.68 15

31 Platte River -5.0%1 2.8% 12$43.08 34

32 South Midtown -0.4%14 2.1% 25$26.86 21

33 Southwest Denver 0%34 2.0% 26$20.45 14

34 West Denver -0.9%25 3.5% 5$23.41 27

SUBMARKET VACANCY & NET ABSORPTION

12 Month Absorption

Rank Construc. Ratio

Vacancy

SF % of InvSF PercentSubmarketNo. Rank

1 Arapahoe Rd 123,986 7.2% -(35,192) -2.1% 217

2 Aurora 778,619 8.4% 1.672,950 0.8% 511

3 Broomfield County 672,507 9.6% -(170,269) -2.4% 3017

4 Capitol Hill 548,593 8.7% -(121,298) -1.9% 2714

5 CBD 4,574,928 16.2% -(668,067) -2.4% 3429

6 Centennial 526,309 14.4% -(257,833) -7.1% 3226

7 Cherry Creek 362,153 10.3% 1.738,784 1.1% 619

8 Clear Creek County - - -0 0% --

9 Colorado Blvd/I-25 643,938 11.3% -(139,163) -2.4% 2820

10 Denver Tech Center 1,552,772 13.0% -268,352 2.3% 325

11 East Hampden 440,956 12.4% -(78,765) -2.2% 2524

12 East I-70/Montbello 201,080 6.5% -(14,977) -0.5% 205

13 Elbert County - - -6,232 10.8% 8-

14 Gilpin County 7,429 28.7% -0 0% -31

15 Glendale 620,234 11.8% -(76,181) -1.4% 2421

16 Greenwood Village 1,536,967 15.8% -(311,870) -3.2% 3328

17 Highlands Ranch 180,675 8.1% -(14,542) -0.7% 199

18 Inverness 1,059,773 17.4% -(56,608) -0.9% 2330

19 LoDo 717,881 9.3% -(154,536) -2.0% 2916

20 Lone Tree 398,117 12.1% 0.927,977 0.9% 723

21 Meridian 241,669 7.0% -310,567 9.0% 26

22 North Denver 495,037 9.7% -(92,588) -1.8% 2618

23 Northeast Denver 96,492 4.6% -(14,183) -0.7% 182

24 Northwest Denver 624,854 8.5% 0157,959 2.2% 413

25 Outlying Adams County - - -0 0% --

26 Outlying Arapahoe County 19,056 11.9% -(2,885) -1.8% 1322

27 Outlying Douglas County 9,806 7.8% -(7,198) -5.8% 158

28 Panorama/Highland Park 349,123 9.3% -(8,577) -0.2% 1715

29 Park County 2,400 4.3% -696 1.2% 91

30 Parker/Castle Rock 162,435 6.3% -(8,220) -0.3% 164

31 Platte River 727,147 14.4% 1.4326,417 6.5% 127

32 South Midtown 186,315 5.5% -(3,511) -0.1% 143

33 Southwest Denver 861,772 8.3% -(48,796) -0.5% 2210

34 West Denver 1,330,882 8.4% -(234,227) -1.5% 3112

Supply & Demand TrendsDenver Office

OVERALL SUPPLY & DEMAND

Net AbsorptionInventory

% of Inv Construction RatioSF SF Growth % Growth SFYear

2024 1,755,849 1.0% 0.9%1,602,404 1.1185,225,804

2023 1,641,163 0.9% 1.0%1,767,063 0.9183,469,955

2022 1,316,956 0.7% 0.9%1,672,395 0.8181,828,792

2021 1,284,807 0.7% 0%57,427 22.4180,511,836

2020 1,944,806 1.1% -0.3%(530,913) -179,227,029

YTD 658,298 0.4% -0.9%(1,543,905) -177,940,521

2019 1,131,265 0.6% 1.0%1,685,415 0.7177,282,223

2018 3,503,216 2.0% 1.7%3,082,235 1.1176,150,958

2017 2,387,824 1.4% 1.1%1,862,916 1.3172,647,742

2016 1,008,347 0.6% 0.7%1,112,181 0.9170,259,918

2015 1,832,681 1.1% 1.7%2,830,336 0.6169,251,571

2014 775,971 0.5% 1.1%1,916,443 0.4167,418,890

2013 749,961 0.5% 1.1%1,862,133 0.4166,642,919

2012 607,452 0.4% 0.6%927,057 0.7165,892,958

2011 383,770 0.2% 0.8%1,400,319 0.3165,285,506

2010 907,781 0.6% 1.3%2,172,077 0.4164,901,736

2009 1,557,172 1.0% -0.3%(454,403) -163,993,955

2008 2,510,732 1.6% 0.1%201,176 12.5162,436,783

4 & 5 STAR SUPPLY & DEMAND

2024 2,020,205 2.5% 2.1%1,779,781 1.183,133,361

2023 1,920,217 2.4% 2.2%1,759,469 1.181,113,156

2022 1,610,591 2.1% 2.4%1,931,068 0.879,192,939

2021 1,542,639 2.0% 1.2%956,942 1.677,582,348

2020 1,864,535 2.5% 0.7%545,349 3.476,039,709

YTD 590,613 0.8% -0.4%(291,954) -74,765,787

2019 1,116,990 1.5% 2.5%1,886,278 0.674,175,174

2018 3,676,917 5.3% 4.7%3,421,746 1.173,058,184

2017 2,031,914 3.0% 1.1%776,281 2.669,381,267

2016 785,085 1.2% 0.3%180,081 4.467,349,353

2015 1,525,058 2.3% 2.2%1,477,028 1.066,564,268

2014 904,336 1.4% 1.6%1,031,785 0.965,039,210

2013 929,619 1.5% 2.4%1,552,123 0.664,134,874

2012 563,907 0.9% 0.5%307,372 1.863,205,255

2011 400,462 0.6% 2.1%1,328,172 0.362,641,348

2010 1,153,049 1.9% 3.3%2,056,967 0.662,240,886

2009 1,255,448 2.1% 0.6%339,649 3.761,087,837

2008 1,727,545 3.0% -0.7%(419,126) -59,832,389

Supply & Demand TrendsDenver Office

3 STAR SUPPLY & DEMAND

2024 0 0% 0.1%45,201 071,048,047

2023 0 0% 0.3%178,746 071,048,047

2022 0 0% 0%22,619 071,048,047

2021 44,091 0.1% -0.6%(417,012) -71,048,047

2020 186,253 0.3% -0.8%(578,229) -71,003,956

YTD 103,080 0.1% -1.2%(864,455) -70,920,783

2019 48,376 0.1% 0.2%110,908 0.470,817,703

2018 (58,653) -0.1% -0.4%(305,040) -70,769,327

2017 403,948 0.6% 1.2%869,005 0.570,827,980

2016 328,811 0.5% 1.2%824,831 0.470,424,032

2015 622,124 0.9% 1.2%807,302 0.870,095,221

2014 (12,900) 0% 0.9%630,080 -69,473,097

2013 (24,854) 0% 0.7%467,823 -69,485,997

2012 182,852 0.3% 0.6%426,555 0.469,510,851

2011 65,239 0.1% -0.1%(64,061) -69,327,999

2010 (75,140) -0.1% 0.3%183,621 -69,262,760

2009 72,416 0.1% -1.0%(681,760) -69,337,900

2008 795,053 1.2% 0.9%641,328 1.269,265,484

1 & 2 STAR SUPPLY & DEMAND

2024 (264,356) -0.8% -0.7%(222,578) -31,044,396

2023 (279,054) -0.9% -0.5%(171,152) -31,308,752

2022 (293,635) -0.9% -0.9%(281,292) -31,587,806

2021 (301,923) -0.9% -1.5%(482,503) -31,881,441

2020 (105,982) -0.3% -1.5%(498,033) -32,183,364

YTD (35,395) -0.1% -1.2%(387,496) -32,253,951

2019 (34,101) -0.1% -1.0%(311,771) -32,289,346

2018 (115,048) -0.4% -0.1%(34,471) -32,323,447

2017 (48,038) -0.1% 0.7%217,630 -32,438,495

2016 (105,549) -0.3% 0.3%107,269 -32,486,533

2015 (314,501) -1.0% 1.7%546,006 -32,592,082

2014 (115,465) -0.3% 0.8%254,578 -32,906,583

2013 (154,804) -0.5% -0.5%(157,813) -33,022,048

2012 (139,307) -0.4% 0.6%193,130 -33,176,852

2011 (81,931) -0.2% 0.4%136,208 -33,316,159

2010 (170,128) -0.5% -0.2%(68,511) -33,398,090

2009 229,308 0.7% -0.3%(112,292) -33,568,218

2008 (11,866) 0% -0.1%(21,026) -33,338,910

Rent & VacancyDenver Office

OVERALL RENT & VACANCY

Market Rent

Per SF Index % Growth Vs Hist PeakYear

Vacancy

SF Percent Ppts Chg

2024 133 1.1% 6.1%$29.86 21,306,728 11.5% 0%

2023 132 2.3% 5.0%$29.53 21,148,996 11.5% -0.2%

2022 129 4.0% 2.6%$28.87 21,270,645 11.7% -0.3%

2021 124 -0.1% -1.3%$27.76 21,621,765 12.0% 0.6%

2020 124 -1.2% -1.2%$27.80 20,389,269 11.4% 1.3%

YTD 127 1.3% 1.3%$28.51 20,075,808 11.3% 1.2%

2019 125 4.2% 0%$28.14 17,873,605 10.1% -0.4%

2018 120 4.5% -4.0%$27.01 18,418,755 10.5% 0%

2017 115 3.9% -8.1%$25.85 18,081,947 10.5% 0.2%

2016 111 1.4% -11.6%$24.88 17,444,388 10.2% -0.2%

2015 109 4.7% -12.8%$24.54 17,667,956 10.4% -0.7%

2014 104 5.8% -16.7%$23.44 18,664,964 11.1% -0.7%

2013 99 5.0% -21.3%$22.15 19,807,618 11.9% -0.7%

2012 94 4.6% -25.1%$21.09 20,919,790 12.6% -0.2%

2011 90 1.9% -28.3%$20.17 21,239,395 12.9% -0.6%

2010 88 -1.8% -29.7%$19.79 22,256,485 13.5% -0.8%

2009 90 -10.2% -28.4%$20.16 23,521,881 14.3% 1.1%

2008 100 1.8% -20.3%$22.44 21,502,724 13.2% 1.2%

4 & 5 STAR RENT & VACANCY

Market Rent

Vacancy

SF Percent Ppts Chg

2024 130 1.0% 5.9%$35.51 10,567,694 12.7% 0%

2023 128 2.2% 4.8%$35.15 10,328,064 12.7% -0.1%

2022 126 3.9% 2.5%$34.38 10,168,136 12.8% -0.7%

2021 121 -0.2% -1.3%$33.09 10,489,377 13.5% 0.5%

2020 121 -1.1% -1.1%$33.16 9,904,043 13.0% 1.4%

YTD 124 1.5% 1.5%$34.04 9,487,813 12.7% 1.1%

2019 122 5.5% 0%$33.54 8,605,246 11.6% -1.2%

2018 116 5.2% -5.2%$31.78 9,365,534 12.8% -0.4%

2017 110 3.4% -9.9%$30.21 9,176,343 13.2% 1.6%

2016 107 -1.4% -12.8%$29.23 7,808,059 11.6% 0.6%

2015 108 4.0% -11.5%$29.66 7,302,337 11.0% -0.2%

2014 104 6.1% -15.0%$28.51 7,254,307 11.2% -0.4%

2013 98 4.0% -19.8%$26.89 7,383,938 11.5% -1.2%

2012 94 5.8% -22.9%$25.84 8,006,442 12.7% 0.3%

2011 89 3.0% -27.1%$24.44 7,749,907 12.4% -1.6%

2010 87 -2.1% -29.3%$23.72 8,675,386 13.9% -1.7%

2009 88 -11.6% -27.8%$24.21 9,580,404 15.7% 1.2%

2008 100 2.9% -18.3%$27.39 8,664,605 14.5% 3.2%

Rent & VacancyDenver Office

3 STAR RENT & VACANCY

Market Rent

Vacancy

SF Percent Ppts Chg

2024 137 1.1% 6.4%$27.02 8,121,936 11.4% -0.1%

2023 136 2.3% 5.2%$26.72 8,167,137 11.5% -0.3%

2022 133 4.0% 2.9%$26.12 8,345,883 11.7% 0%

2021 128 -0.1% -1.1%$25.11 8,368,502 11.8% 0.6%

2020 128 -1.0% -1.0%$25.13 7,907,399 11.1% 1.1%

YTD 131 1.5% 1.5%$25.77 8,050,755 11.4% 1.3%

2019 129 3.0% 0%$25.39 7,083,220 10.0% -0.1%

2018 125 3.8% -2.9%$24.64 7,145,752 10.1% 0.3%

2017 121 4.4% -6.5%$23.75 6,917,558 9.8% -0.7%

2016 116 4.2% -10.4%$22.75 7,382,615 10.5% -0.8%

2015 111 5.6% -14.0%$21.83 7,899,087 11.3% -0.4%

2014 105 5.4% -18.6%$20.67 8,084,265 11.6% -0.9%

2013 100 6.0% -22.8%$19.60 8,727,245 12.6% -0.7%

2012 94 3.7% -27.2%$18.49 9,219,922 13.3% -0.4%

2011 91 1.1% -29.8%$17.84 9,463,625 13.7% 0.2%

2010 90 -1.3% -30.5%$17.64 9,334,325 13.5% -0.4%

2009 91 -9.1% -29.6%$17.87 9,593,086 13.8% 1.1%

2008 100 0.3% -22.6%$19.66 8,831,328 12.7% 0.1%

1 & 2 STAR RENT & VACANCY

Market Rent

Vacancy

SF Percent Ppts Chg

2024 135 1.3% 6.1%$22.49 2,617,098 8.4% 0%

2023 133 2.5% 4.8%$22.20 2,653,795 8.5% -0.3%

2022 130 4.2% 2.3%$21.67 2,756,626 8.7% 0.1%

2021 125 0.1% -1.9%$20.79 2,763,886 8.7% 0.7%

2020 125 -2.0% -2.0%$20.77 2,577,827 8.0% 1.2%

YTD 128 0.2% 0.2%$21.23 2,537,240 7.9% 1.1%

2019 127 2.1% 0%$21.19 2,185,139 6.8% 0.9%

2018 125 3.8% -2.0%$20.76 1,907,469 5.9% -0.2%

2017 120 4.7% -5.6%$20.00 1,988,046 6.1% -0.8%

2016 115 4.9% -9.8%$19.10 2,253,714 6.9% -0.6%

2015 109 5.3% -14.1%$18.21 2,466,532 7.6% -2.5%

2014 104 5.9% -18.4%$17.30 3,326,392 10.1% -1.1%

2013 98 6.2% -23.0%$16.33 3,696,435 11.2% 0.1%

2012 92 2.3% -27.5%$15.37 3,693,426 11.1% -1.0%

2011 90 -0.3% -29.1%$15.03 4,025,863 12.1% -0.6%

2010 91 -2.3% -28.9%$15.07 4,246,774 12.7% -0.2%

2009 93 -7.3% -27.2%$15.42 4,348,391 13.0% 0.9%

2008 100 1.3% -21.5%$16.64 4,006,791 12.0% 0%

Sale TrendsDenver Office

OVERALL SALES

Completed Transactions (1)

Turnover Avg Price/SFDeals VolumeYear

Market Pricing Trends (2)

Avg Price Price IndexAvg Cap Rate Price/SF Cap Rate

2024 -- - -- 177- $250.69 6.9%

2023 -- - -- 174- $247.05 6.9%

2022 -- - -- 168- $239.02 6.9%

2021 -- - -- 157- $223.49 7.1%

2020 -- - -- 159- $226.12 7.2%

YTD $840.9M192 2.9% $198.69$7,127,353 1676.7% $236.88 7.0%

2019 $2.8B441 8.0% $201.29$9,734,028 1676.9% $236.50 6.9%

2018 $3.2B427 8.0% $254.02$11,767,793 1676.7% $237.28 6.8%

2017 $2.3B461 7.2% $199.50$7,507,321 1577.1% $222.77 6.8%

2016 $2.1B465 8.2% $164.63$6,307,436 1527.1% $215.42 6.9%

2015 $2.8B469 9.7% $179.65$7,840,027 1497.2% $211.56 6.8%

2014 $2.7B519 10.1% $165.15$7,708,722 1417.7% $199.59 6.9%

2013 $2.5B458 9.3% $172.26$8,037,643 1297.7% $183.29 7.2%

2012 $1.7B371 7.8% $139.34$7,152,199 1197.3% $169.51 7.5%

2011 $1.4B320 5.8% $156.54$7,823,409 1137.0% $160.72 7.8%

2010 $829.7M257 4.1% $140.45$5,464,073 1009.1% $141.49 8.5%

2009 $341.5M188 2.0% $115.35$3,278,223 859.0% $121.29 9.5%

(1) Completed transaction data is based on actual arms-length sales transactions and levels are dependent on the mix of what happened to sell in the period.

(2) Market price trends data is based on the estimated price movement of all properties in the market, informed by actual transactions that have occurred.

4 & 5 STAR SALES

2024 -- - -- 170- $307.25 6.6%

2023 -- - -- 168- $302.98 6.6%

2022 -- - -- 162- $293.33 6.6%

2021 -- - -- 152- $274.30 6.8%

2020 -- - -- 154- $277.63 6.9%

YTD $517.4M13 3.2% $248.22$85,710,352 1615.5% $291.43 6.7%

2019 $1.8B46 10.3% $233.50$38,634,146 1616.1% $291.39 6.7%

2018 $2B39 8.3% $334.21$68,541,611 1665.9% $299.65 6.5%

2017 $1.4B36 7.2% $290.77$44,360,328 1556.5% $280.03 6.5%

2016 $1.2B42 10.2% $186.15$36,322,011 1506.8% $270.19 6.5%

2015 $1.5B40 10.0% $236.58$40,540,089 1496.9% $268.68 6.4%

2014 $1.8B55 11.5% $239.62$43,072,876 1416.6% $254.29 6.5%

2013 $1.7B47 12.7% $225.67$49,221,135 1306.8% $234.17 6.8%

2012 $1.2B35 10.2% $190.98$52,517,530 1207.4% $217.29 7.1%

2011 $1B54 8.7% $206.17$43,659,916 1146.5% $205.63 7.3%

2010 $487M22 4.4% $204.86$37,417,092 1008.0% $180.91 8.0%

2009 $181.7M4 2.2% $133.67$45,415,100 86- $154.65 8.9%

Sale TrendsDenver Office

3 STAR SALES

2024 -- - -- 180- $214.75 7.0%

2023 -- - -- 177- $211.59 7.0%

2022 -- - -- 171- $204.65 7.1%

2021 -- - -- 160- $191.37 7.2%

2020 -- - -- 162- $193.64 7.4%

YTD $230.5M83 2.9% $149.99$4,776,543 1706.5% $202.64 7.1%

2019 $736.9M164 6.5% $164.10$6,737,131 1697.0% $202.14 7.1%

2018 $948.7M180 8.2% $191.90$9,034,267 1666.8% $198.03 7.0%

2017 $626.8M179 6.8% $137.10$5,653,304 1567.2% $186.75 7.0%

2016 $688.9M185 7.0% $157.21$5,963,215 1527.3% $181.44 7.0%

2015 $912.9M197 9.8% $140.24$7,268,225 1477.5% $175.64 7.0%

2014 $746.1M234 10.4% $107.91$5,193,459 1397.6% $166.30 7.1%

2013 $555M181 7.0% $121.20$5,573,827 1287.9% $152.98 7.4%

2012 $374.4M152 6.9% $81.38$4,896,918 1187.5% $141.36 7.7%

2011 $256.5M139 4.2% $96.60$3,472,823 1137.0% $134.80 8.0%

2010 $258.6M129 3.8% $115.07$4,557,729 998.3% $118.53 8.7%

2009 $123.3M85 1.7% $123.83$3,278,232 869.0% $102.20 9.7%

1 & 2 STAR SALES

2024 -- - -- 197- $192.12 7.3%

2023 -- - -- 194- $188.98 7.3%

2022 -- - -- 187- $182.53 7.4%

2021 -- - -- 175- $170.48 7.5%

2020 -- - -- 177- $172.25 7.7%

YTD $93M96 2.2% $152.20$1,359,722 1846.9% $179.53 7.4%

2019 $278M231 6.1% $157.09$2,033,743 1837.1% $178.51 7.4%

2018 $273.5M208 7.2% $156.42$1,928,793 1777.0% $171.89 7.4%

2017 $282.7M246 7.9% $127.03$1,633,569 1677.3% $162.66 7.4%

2016 $233M238 7.1% $113.04$1,216,910 1617.0% $156.93 7.4%

2015 $391.6M232 8.9% $141.81$1,996,075 1566.9% $151.61 7.4%

2014 $212.7M230 7.0% $95.87$1,212,902 1448.8% $139.73 7.6%

2013 $241M230 7.6% $102.57$1,271,873 1308.3% $126.16 8.0%

2012 $131.4M184 4.9% $103.21$949,614 1187.1% $115.18 8.3%

2011 $70.2M127 4.0% $67.05$846,390 1117.9% $108.48 8.7%

2010 $84.1M106 4.3% $65.55$1,006,265 9910.8% $96.06 9.4%

2009 $36.5M99 2.4% $60.31$559,711 848.9% $82.12 10.5%

market report office · 7/28/2020 · robust workforce, quality of living, and relatively lower...

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