Office Market Vacancy Rises

DENVER-The overall Denver-area office market vacancy rate in the first half of 2003 is 18% for direct space and 21.2% when sublease space is included, according to a report by Fuller and Co. In the CBD, the overall vacancy rate is 18.3%, including 1.4 million sf of sublease space.

The Southeast Suburban market is even in worse shape, with a 25.4% vacancy. Approximately 2.1 million sf of sublease space will still available, according to the report.

But the U.S. 36 corridor, between Boulder, is in bad shape, with a 49.8% vacancy, according to Fuller. In that small market, there is 875,000 sf of sublease space available.

Lease rates are following similar trends. In the CBD, Class A space commands rental rates of $21 to $27 per sf, while the best space along the SE corridor ranges from $17 to $20 per sf. Class A space along the NW corridor brings only $17 to $19 per sf.

Despite the high vacancies and low rates, Fuller remains cautiously optimistic. “The overall metro office market will likely not see much more of an increase in vacancy rates for the balance of the year,” according to the report. “While there may be statistical improvement in the marketplace, we do not anticipate any increase in rental rates until 2004 when the office market should begin to recover.”