Sperry Van Ness International Corporation’s (SVNIC) 2015 Market Update Reports assess the current state of the national commercial real estate market, and identify micro-trends within specific geographic regions and industries for 2015. Today we are delving into the 2015 Top Office Markets to Watch. Not the largest or the most actively contested markets, the 2015 Office Markets to Watch are each at an important juncture that presents unique opportunities for investment. Together, they reflect the diversity of trends that is driving the economy and commercial real estate performance in markets across the country.
Top Office Market to Watch: Denver, CO
For both employers and high-skilled workers, few markets exert the same pull as Denver. The convergence of low costs of living, appealing amenities, and a business-friendly environment has allowed Denver to expand over time beyond its historical base in the energy sector. While business migration to the urban core has dominated activity and pushed the submarket vacancy rate below 10%, not every firm is headed to the CBD. In particular, some technology companies are eschewing the central business district for more flexible, open floor-plan spaces in the Lower Downtown (LoDo) and South Denver neighborhoods. LoDo is home to a disproportionate share of current office construction, though new inventory has yet to weigh on rent trends. Across the metro area, development activity is roughly 2% of in-place inventory – limited, when compared to the surge in projects underway in markets like Houston and Dallas.
While better diversified than smaller energy markets, Denver is still exposed to the vagaries of oil industry booms and busts. With about 20% of Denver’s CBD occupied by oil and gas companies, there was some worry in early 2015 that slumping oil prices could lead to instability in the office market. Most market observers agree that this will only become a major issue for Denver’s long-term outlook if a prolonged period of depressed oil prices leads to significant restructuring in the industry.
To read more on Denver and other top office markets, download the full version of the 2015 Office Market Update report here.
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