Office Market Improves Slightly

DENVER-At long last, the Denver-area office market is moving in the right condition, according to a second quarter report by CB Richard Ellis.

The office market absorbed almost 300,000 sf in the second quarter, according to the CB report. That has decreased the overall direct occupancy rate a fraction to 18% from 18.2% in the first quarter, it notes. More importantly, it brings “to a halt the rate escalation experienced over the last two years,” the report notes.

More good news: The amount of available sublease space continues to shrink, dropping by 4%. The office market has, when all of the available space is factored in, also declined modestly to 24.2% from 24.5% in the first-quarter. However, the increased absorption has not translated into higher lease rates yet. Lease rates continue to trend downward, according to CB.

“Over the last five quarters, average asking lease rates have decreased approximately two to three percent each successive quarter,” the report notes. “First quarter 2003 was no exception, tapering another 3% to $15.46 from $15.91 last quarter. Since the apex of $17.80 experienced in the fourth quarter of 2001, average asking lease rates have come off that mark by approximately 13%.”