Sublease Space Disappearing From Corridor

DENVER-At the end of the first quarter, CB Richard Ellis’ South Denver Office Team predicted 250,000 sf of the total 1.3 million sf subleased space along the southeast corridor would be gone from the market by the end of the year. Well guess what? That number already has been surpassed.

Through August, 255,000 rentable sf of subleased space along the southeast market has been taken off the market either through leasing efforts or lease expirations, according to the team’s latest market update report. The team of Mitch Bradley, Sergio Castaneda, John Marold, Brett Nathan and Brian Kunkel now expects the sublease market along the corridor to decline by another 350,000 sf by the end of the year. In other words, 610,00 sf of subleased space will have disappeared by year-end, almost cutting in half the amount on the space clogging the market, if no new sublease space is added.

Next year, four subleases for a total of 205,297 sf will expire, even if the space isn’t leased. And in 2006, there are 14 sublease spaces for a total of 249,233 sf returning as direct space.

So who is taking the leased space off the hands off companies? Oil and gas/mining and software companies are the two biggest industries, equally splitting 36% of the activity. The only other industry taking more than 10% of the space is telecommunications, accounting for 15% of the activity. Business services, financial services and health care each account for 9% of the activity. Engineering is taking 6% of the space, as does the “all other” category of companies. Computers and hardware companies account for 3% of the sublease action.

Separately, in August the CBRE team handled 100 transactions for a total of 825,036 sf. The sales ranged from the sale of a 40,738-sf building in the mountain community of Black Hawk for Nationwide Insurance to a 624-sf lease for Feature Homes.