denver - co · 12 mo deliveries in sf 12 mo net absorption in sf vacancy rate 12 mo rent growth ......

Denver - CO

PREPARED BY

Dustin Ferguson

Certified General Appraiser and Owner

Office Market Report

OFFICE MARKET REPORT

Market Key Statistics 2

Leasing 4

Rent 9

Construction 13

Under Construction Properties 15

Sales 17

Sales Past 12 Months 19

Economy 21

Market Submarkets 24

Supply & Demand Trends 28

Rent & Vacancy 30

Sale Trends 32

Denver Office

4/19/2020Copyrighted report licensed to Ferguson Appraisals, LLC - 491941.

OverviewDenver Office

846 K 435 K 10.3% 3.9%12 Mo Deliveries in SF 12 Mo Net Absorption in SF Vacancy Rate 12 Mo Rent Growth

The coronavirus pandemic is having an unprecedentedimpact on the national and local economies. Joblessclaims due to shutdowns are skyrocketing as stay-at-home orders force non-essential businesses to shutteracross the state. The health of commercial real estateand the economy virtually hinges on the mitigation effortsto slow the spread of the virus.

The fiscal and monetary stimulus packages movedthrough Congress relatively quickly and should provide abridge for many people and businesses impacted by thecrisis, at least in the short-term. The Governor's stay-at-home orders were extended through April 26, with thepossibility of further extensions.

The last time oil prices fell this low in 2016, Denver'seconomy felt the impact. An oil price war between SaudiArabia and Russia caused prices to plummet to $20 abarrel in March, an 18-year low. Oil prices remain weakand demand has fallen off a cliff due to the coronavirusshock. In early April, the U.S. and Mexico agreed to cutoil production along with OPEC+, which should helpreduce volatility to a degree. We will be updating ouranalysis frequently as more information becomesavailable. The current report largely reflects theenvironment before the pandemic.

Denver's above-average concentration of office-usingjobs could soften the blow to the local economy, as manyoffice employees have the capability to work from home.At the same time, many of Denver's oil and gascompanies occupy large blocks of office space in theCBD, which could lead to more volatility in the officemarket.

Denver, and greater Colorado as a whole, is one of thebiggest winners of this expansion due to its robustworkforce, quality of living, and relatively lower cost ofdoing business. Tech growth has made the difference forDenver's office market over the past decade, and thissector will be the harbinger of the future.

Demand for office space outpaced the rate ofdevelopment in 2019, compressing vacancies by about40 basis points.

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, whichwould 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 $20/barrel in March, widespreadlayoffs could be around the corner. Several energycompanies already announced significant layoffs prior tothe 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 hard-to-find talent, high-end office space in burgeoning Downtown Denver cangive employers an edge. Strong demand for 4 & 5 Starspace 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.


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OverviewDenver Office

KEY INDICATORS

Market RentVacancy RateRBACurrent Quarter Availability RateNet Absorption

SFDeliveries SF

UnderConstruction

$33.8811.2%74,415,2074 & 5 Star 17.7% 196,285 0 3,058,945

$25.6810.8%70,581,4503 Star 12.9% (34,094) 64,680 106,135

$20.977.2%32,459,3381 & 2 Star 10.5% 50,048 0 0

$28.3510.3%177,455,995Market 14.5% 212,239 64,680 3,165,080

ForecastAverage

HistoricalAverage

12 MonthAnnual Trends Peak When Trough When

10.7%12.2%0.1%Vacancy Change (YOY) 16.1% 2003 Q3 7.1% 2000 Q2

1,115,1981,586,519435 KNet Absorption SF 5,235,440 2000 Q4 (1,835,493) 2003 Q2

1,933,0402,289,851846 KDeliveries SF 7,489,742 2001 Q1 505,579 2012 Q1

0.6%1.6%3.9%Rent Growth 12.3% 2007 Q1 -10.1% 2009 Q4

N/A$1.8B$2.6 BSales Volume $4.2B 2007 Q3 $341.5M 2009 Q4


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LeasingDenver Office

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 past years. More than 3.5 million SF delivered in 2018,and nearly 2.5 million SF was added in 2017. Measuredlevels of development similar to 2019 are expected tocontinue moving forward, which could soften the blowfrom supply-side pressure if demand tapers off in thecoming quarters. The worrisome combination of plungingoil prices and the coronavirus pandemic is undoubtedly aheadwind to demand in the near term, especiallyconsidering Denver's concentration of jobs in the oil andgas industry.

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 170,00-SF space in Englewood that itoccupied in 19Q1.

Denver's recipe for consistent office demand in the pastdecade isn't complex, but its ingredients are ideal. Over45% of residents 25 years or older hold a bachelor'sdegree, U.S. News & World Reports ranked Denver asAmerica's second-best place to live, and the cost ofdoing business is low relative to other tech markets.Tech firms entering or expanding in the metro universallycite these factors as driving their decision-makingprocess.

Most of Denver's positive absorption derives from 4 & 5Star properties. Landlords have leveraged employersentiment that modern, highly amenitized space is criticalin the battle for talent. Strong leasing at large-scalespeculative developments, both in downtown and in thesuburbs, enabled 4 & 5 Star vacancies to compress forthe second straight year in 2019.

LoDo remains one of Denver's premier officesubmarkets, and national tenants have shown awillingness to pay top dollar for space here. This wasmade clear when a rare, ultra-large block of space was

pounced on by VF Corp, which inked a deal for all285,000 SF at 1551 Wewatta on a lease that runsthrough 2030. The Fortune 260 company, which ownsoutdoor brands The North Face, JanSport, and Altra, willrelocate its headquarters to Denver from Greensboro,North Carolina. VF Corp plans to move into its newspace in 2020 as it fills 800 tax-subsidized jobs.

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 leasedroughly 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 vacatedspaces.

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 dipped


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below $40/barrel), while rents declined for the first timethis cycle. Sublet availabilities also rose sharply duringthis time, driven by oil and gas tenants.

The growing likelihood of a supply shock from ramped upoil production in Saudi Arabia and a demand slowdowndue to the novel coronavirus pandemic puts Denver'senergy firms in a precarious position. Several companiesannounced significant layoffs in recent quarters due towhat were already perceived as weaker oil prices.Whiting Petroleum, which signed a lease for 135,000 SFat the Wells Fargo Center in the CBD in 2018 and tookoccupancy in 2019, laid off 254 employees this pastsummer. In February 2020, Extraction Oil and Gasannounced it would eliminate 20% of employee positionsin the state, including jobs at its downtown headquarters.

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


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VACANCY RATE

AVAILABILITY RATE


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12 MONTH NET ABSORPTION SF IN SELECTED BUILDINGS

3rd QtrBuilding Name/Address Submarket Building SF Vacant SF

1st Qtr 2nd Qtr 4th Qtr 12 Month

Net Absoption SF

Lone Tree 161,218 0 0 0 0 0 161,218ParkRidge Corporate Ctr

CBD 672,000 161,695 25,312 23,280 0 0 112,4571144 Fifteenth

Aurora 113,568 0 0 0 0 0 106,794Children’s Hospital Medical Pavil…

CBD 1,337,504 186,405 53,220 23,869 0 0 100,815Republic Plaza

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

CBD 644,122 29,141 11,946 0 0 0 94,402City Center

Denver Tech Center 190,202 10,160 28,339 0 0 0 87,650Denver Tech Center (1)

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

Aurora 117,000 39,616 77,384 0 0 0 77,384Fitzsimons Innovation Community

Denver Tech Center 192,351 108,704 8,799 0 0 0 75,90650 FIFTY DTC

CBD 106,231 4,800 0 32,733 0 0 69,535The Vault

Highlands Ranch 203,951 0 0 0 0 0 66,986Campus 470

CBD 598,592 8,975 7,123 1,684 0 0 65,302One Civic Center

Platte River 428,219 0 1,900 73,882 0 0 64,868Union Station Neighborhood

CBD 531,608 8,105 11,876 0 0 0 64,297US Bank Tower

Broomfield County 80,000 0 0 0 0 0 63,2961200 Entrepreneurial Dr

Denver Tech Center 363,417 20,658 44,951 13,817 0 0 60,032Denver Tech Center (2)

6,052,634 684,855 270,850 267,682 0 0 1,447,056Subtotal Primary Competitors

171,403,361 17,604,548 (759,518) (55,443) 0 0 (1,011,716)Remaining Denver Market

177,455,995 18,289,403 (488,668) 212,239 0 0 435,340Total Denver Market


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TOP OFFICE LEASES PAST 12 MONTHS

Building Name/Address Submarket Leased SF Tenant Name Tenant Rep Company Leasing Rep CompanyQtr

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

ParkRidge Corporate Center Lone Tree 166,708 - - 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

Oracle Campus Broomfield County 113,389 - Cresa -Q3 19

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

Rubicon NGP-Aurora, CO * Aurora 101,285 Defense Health Agency - -Q2 19

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

Meridian Office Park Meridian 77,696 Lockheed Martin JLL Cushman & WakefieldQ2 19

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

1290 Broadway * Capitol Hill 61,018 ALPS JLL CBREQ3 19

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

Denver West Office Park * West Denver 57,339 CoorsTek Inc. Savills Cushman & WakefieldQ3 19

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 - 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

The HUB Platte River 50,125 EverCommerce NAI Shames Makov… JLLQ2 19

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

Park Central CBD 49,694 Gusto - CBREQ1 20

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

Westmoor Technology Park Northwest Denver 48,253 Ball Corporation JLL CBREQ2 19

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

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

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 United Healthcare Group 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

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

The Vault CBD 32,733 WeWork CBRE CBREQ3 19

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

Galleria Office Towers Glendale 32,160 Covius JLL Cushman & WakefieldQ2 19

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

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

1801 California CBD 31,385 Ibotta - JLLQ3 19

Renewal


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RentDenver Office

At about $28.00 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)


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RentDenver Office

MARKET RENT PER SQUARE FOOT

4 & 5 STAR EXPENSES PER SF (ANNUAL)

Utilities Cleaning InsuranceMarket / Cluster Taxes Other Total

Denver $1.16 $0.20$0.60 $5.05 $5.66 $12.67

Aurora $1.15 $0.25$0.88 $2.48 $4.46 $9.22

Broomfield $1.07 $0.22$0.62 $4.66 $4.93 $11.50

Clear Creek County $0.45 $0.14$0.34 $0.75 $2.25 $3.93

Colorado Blvd/Glendale $1.36 $0.24$0.62 $4.22 $5.81 $12.25

Downtown $1.24 $0.22$0.63 $6.38 $6.97 $15.44

Midtown $1.12 $0.17$0.50 $4.33 $6.50 $12.62

North Denver $0.90 $0.14$0.44 $5.44 $3.80 $10.72

Northeast Denver $1.02 $0.18$0.58 $5.01 $4.62 $11.41

Northwest Denver $0.98 $0.20$0.57 $4.32 $4.56 $10.63

Outlying Douglas County $0.97 $0.30$0.72 $0.97 $3.80 $6.76

Parker/Castle Rock $1.19 $0.37$0.88 $3.17 $3.86 $9.47

Southeast Denver $1.18 $0.18$0.56 $5.19 $5.71 $12.82

Southwest Denver $0.93 $0.19$0.64 $2.97 $4.39 $9.12

West Denver $0.86 $0.24$0.59 $4.03 $3.78 $9.50

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


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RentDenver Office

3 STAR EXPENSES PER SF (ANNUAL)


Denver $0.95 $0.13$0.48 $3.76 $3.76 $9.08

Aurora $1.07 $0.11$0.81 $2.73 $3.25 $7.97

Broomfield $0.98 $0.13$0.49 $5.00 $3.55 $10.15



Downtown $1.09 $0.19$0.54 $4.18 $5.66 $11.66

Elbert County $0.73 $0.10$0.37 $5.77 $2.87 $9.84

Midtown $0.95 $0.17$0.46 $2.96 $4.49 $9.03

North Denver $0.86 $0.11$0.43 $3.57 $3.28 $8.25



Outlying Arapahoe County $0.83 $0.10$0.50 $5.21 $3.01 $9.65


Park County $0.87 $0.11$0.44 $1.55 $3.41 $6.38




West Denver $0.88 $0.12$0.44 $3.31 $3.27 $8.02


1 & 2 STAR EXPENSES PER SF (ANNUAL)


Denver $0.63 $0.13$0.43 $3.57 $2.52 $7.28

Aurora $0.50 $0.10$0.46 $2.43 $2.54 $6.03

Broomfield $0.52 $0.10$0.39 $3.69 $1.81 $6.51



Downtown $0.94 $0.17$0.50 $4.75 $3.63 $9.99

Elbert County $0.50 $0.09$0.36 $2.43 $2.00 $5.38

Gilpin County $0.58 $0.11$0.42 $1.89 $2.33 $5.33

Midtown $0.80 $0.18$0.46 $3.91 $2.29 $7.64

North Denver $0.55 $0.11$0.42 $3.32 $1.57 $5.97



Outlying Adams County $0.58 $0.11$0.42 $2.12 $2.33 $5.56

Outlying Arapahoe County $0.54 $0.09$0.40 $3.94 $2.80 $7.77


Park County $0.58 $0.11$0.42 $1.77 $2.35 $5.23




West Denver $0.57 $0.11$0.41 $3.41 $2.41 $6.91



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RentDenver Office


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ConstructionDenver Office

The Colorado Governor's stay-at-home order considersjobs in the construction industry as “essential or critical”,which would allow developers to move forward withprojects if they choose. Deteriorating economicconditions could keep upcoming groundbreakings onhold, and speculative projects slated to deliver in 2020must grapple with the uncertainty of demand. Given theremarkable fluidity of the coronavirus outbreak, it is notout of the realm of possibility that construction jobs couldeventually lose their essential business designation.

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 offices

shutter 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.


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ConstructionDenver Office

DELIVERIES & DEMOLITIONS

SUBMARKET CONSTRUCTION

Average Building Size

RankUnder Constr

Under Construction Inventory

All Existing{0} 000 Pre-Leased SF (000)SubmarketNo. RankBldgs Pre-Leased %

1 Platte River 5 657 131,34826.8% 7 45,754176 5

2 CBD 2 639 319,74410.0% 9 213,75364 2

3 Denver Tech Center 1 385 384,71248.6% 5 110,158187 1

4 LoDo 2 304 151,90330.6% 6 47,96593 4

5 Northwest Denver 7 272 38,84684.8% 3 15,003231 10

6 Lone Tree 1 260 260,121100% 1 48,179260 3

7 Glendale 2 163 81,53369.3% 4 44,994113 8

8 Capitol Hill 2 136 67,98610.5% 8 13,82014 9

9 East Hampden 1 104 104,0009.6% 10 25,46410 6

10 Cherry Creek 1 89 89,000100% 1 26,97689 7

All Other 9 156 17,36152.5% 26,56282

Totals 33 3,165 95,91241.6% 32,3091,318


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Under Construction PropertiesDenver Office

33 3,165,080 1.8% 41.6%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 Jun 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 Office208,406 11 Jan 2021

Hensel Phelps

McGregor Square5

May 20193600 Brighton Blvd

Revolution 360171,000 5 Jun 2020

Haselden Construction, LLC

Haselden Construction, LLC6

Aug 2019Quebec St & Lowry Blvd

Boulevard 1 One139,065 3 Nov 2020

Confluent Development

Confluent Development7


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Under Construction PropertiesDenver Office

UNDER CONSTRUCTION

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

Mar 20193650 Blake St

HUB North105,340 8 May 2020

Beacon Capital Partners

Beacon Capital Partners8

Jun 2019500 E Hampden Ave

Synergy Medical Center104,000 5 Oct 2020

Hill Companies, LLC

Hill Companies, LLC9

Jun 20191818 Ogden St

Saint Joseph Medical Off…96,572 5 Sep 2020

Saunders Construction, Inc.

SCL Health System10

Jun 20181601 Market St

Market Station95,400 6 Jul 2020

Continuum Partners LLC

Continuum Partners LLC11

Oct 2017100 Cook St

UC Health Offices89,000 5 May 2020

Brookhaven Capital Partners

Cook Street Center, LLC12

Mar 20183060 Brighton Blvd

70,000 2 Jul 2020Mass Equities, Inc.

OZ Architecture13

Nov 20182101 Arapahoe St

Buell Public Media Center60,000 3 Jul 2020

Mortenson Construction

Rocky Mountain Public Broadcast…14

Mar 20192128 W 32nd Ave

LoHi Offices57,433 3 Jun 2020

City Street Investors

City Street Investors15

Oct 2019W 108th Cir

Ball Corporation - Buildi…46,500 4 Oct 2020

-

Ball Corporation16

Oct 2019W 108th Cir


-

Ball Corporation17

Oct 2019W 108th Cir


-

Ball Corporation18

Oct 2019W 108th Cir


-

Ball Corporation19

Mar 201926122 E 68th Ave

JAG Logistics Center at…40,000 - Jun 2020

-

J.A. Green Development20

Dec 20192600 Welton St

The Hooper Office/Retail39,400 - Jun 2021

Palisade Partners

Palisade Partners21

Apr 2019Glenham Pl

31,500 4 Dec 2020Stonebridge Companies

Stonebridge Companies22

Oct 2019Wilcox St & First St

Festival Park Commons…30,000 1 Mar 2021

Castle Brae Development LLC

-23

Aug 2019Quebec St & Lowry Blvd

Boulevard 1 One24,000 2 Nov 2020

Confluent Development

Kelmore Development Corporation24

Jun 201913559 Huron St

20,000 2 May 2020-

Horizons North Credit Union25

Feb 202011140 Broomfield Ln

Northwest 3616,007 2 Feb 2021

-

Morgan Stanley Services Group I…26

Jan 202012650 W 54th Dr

14,400 2 Aug 2020-

-27

Dec 20191900 W 32nd Ave

Firehouse14,091 3 Sep 2020

-

-28


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SalesDenver Office

We fully expect investment activity to come to a standstillin the near term as the financial impact of thecoronavirus is assessed. Before the outbreak, severalmajor deals for institutional-grade assets took place.

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 the

600,000-SF Civic Center Plaza in the CBD Submarketfor $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%.


Page 17

SalesDenver Office

SALES VOLUME & MARKET SALE PRICE PER SF


Page 18

Sales Past 12 MonthsDenver Office

442 6.9% $196 13.5%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 $9,561,704 $2,600,000 $205,000,000

Price Per SF $8.32 $196 $173 $3,748

Cap Rate 3.0% 6.9% 7.0% 10.7%

Time Since Sale in Months 0.2 6.1 5.9 11.9

Property Attributes Low Average Median High

Building SF 804 45,225 11,700 705,729

Stories 1 3 2 42

Typical Floor SF 622 11,497 6,494 72,567

Vacancy Rate At Sale 0% 13.5% 0% 100%

Year Built 1860 1973 1979 2019

Star Rating 2.6


Page 19

Sales Past 12 MonthsDenver Office

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

Property

Sale Date

Sale

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 Civic Center Plaza1983 598,592 5.7% $143,000,000 $239

1560 Broadway6/27/2019 -

-4 410 17th St1977 436,455 16.9% $127,250,000 $2926/27/2019 5.3%

-5 1700 Broadway Office1956 394,174 2.3% $78,000,000 $198

1700 Broadway6/28/2019 -

-6 Regency Plaza1985 335,899 7.2% $71,250,000 $212

4643 S Ulster St9/13/2019 -

-7 Tuscany Village Center1985 257,875 1.3% $64,850,000 $251

6312 S Fiddlers Green Cir12/2/2019 6.6%

-8 Stanford Place II1982 366,184 17.9% $62,250,000 $170

7979 E Tufts Ave11/12/2019 -

-9 TriZetto/Cognizant Tech…2013 166,912 0% $61,250,000 $367

9655 Maroon Cir7/3/2019 -

-10 Financial House2019 74,085 0% $55,000,000 $742

205 Detroit St8/15/2019 5.2%

-11 7601 DTC1997 190,202 35.4% $48,750,000 $256

7601 Technology Way9/6/2019 -

-12 4601 DTC Blvd1982 249,449 13.8% $46,000,000 $184

4601 DTC Blvd3/10/2020 -

-13 Denver Centerpoint II1980 206,714 28.9% $42,452,100 $205

1777 S Harrison St11/1/2019 -

-14 9201 E Dry Creek Rd2001 128,500 0% $40,100,000 $3125/2/2019 6.1%

-15 Belleview Tower1982 201,670 7.8% $40,100,000 $199

7887 E Belleview Ave12/12/2019 -

-16 Denver Corporate Center II1982 192,838 9.0% $36,256,900 $188

7800 E Union Ave9/3/2019 -

-17 Denver Corporate Center…1982 188,628 18.3% $35,453,100 $188

7900 E Union Ave9/3/2019 -

-18 Denver Centerpoint I1982 167,010 16.9% $35,065,400 $210

3900 E Mexico Ave11/1/2019 -

-19 Crescent VI1998 135,240 17.4% $28,200,000 $209

8400 E Crescent Pky6/5/2019 -

-20 Westmoor Place Buildin…2002 161,325 0% $27,488,571 $170

11000 Westmoor Cir5/1/2019 -


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EconomyDenver Office

The coronavirus pandemic is having an unprecedentedimpact on the national and local economies. Joblessclaims due to shutdowns are skyrocketing as stay-at-home orders force non-essential businesses to shutteracross the state. The health of commercial real estateand the economy virtually hinges on the mitigation effortsto slow the spread of the virus.

The fiscal and monetary stimulus packages were quicklypassed through Congress and are expected to provide abridge for many people and businesses impacted by thecrisis, at least in the short-term. The Governor's stay-at-home orders were extended through April 26, with thepossibility of further extensions.

The last time oil prices fell this low in 2016, Denver'seconomy felt the impact. An oil price war between SaudiArabia and Russia caused prices to plummet to $20 abarrel in March, an 18-year low. Oil prices remain weakand demand has fallen off a cliff due to the coronavirusshock. In early April, the U.S. and Mexico agreed to cutoil production along with OPEC+, which should helpreduce volatility to a degree. We will be updating ouranalysis frequently as more information becomesavailable. The current report largely reflects theenvironment before the pandemic.

Under the Governor's order, residents may only leavetheir homes for matters concerning the health and safetyof the household, or for jobs deemed as “critical”.

Critical businesses to remain open include not onlygrocery stores and restaurants with to-go options, butalso marijuana dispensaries and, in Denver, breweries.

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 arguably the primaryeconomic driver for the region, generating more than $33billion for the state in 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.

Denver's emergence as a bona fide technology marketthis cycle could help insulate it from the impact ofwidespread shutdowns. Tech employers typically allow

the flexibility of telecommuting, and many office-usingemployers have the capacity to facilitate a work-from-home transition. Office-using jobs in Denver have grownabove the national average the past five years at about3% 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 andprospective owners. While home prices continue to climbinto the stratosphere (albeit at a slower rate than the


Page 21


peak 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.

Geographic isolation remains an economic liability insome respects. The geographic separation from largebusiness and financial centers makes locating acorporate headquarters here difficult for companies thatbenefit from proximity to suppliers, competitors,financiers, and customers, although firms that draw onDenver's natural resources and brainpower have thrived.As a result, the metro has had to rely on its own brand ofspecialization in high-value-add industries likeengineering, energy, communications, and high tech todrive growth.

DENVER EMPLOYMENT BY INDUSTRY IN THOUSANDS

NAICS Industry Jobs LQ MarketUS USMarketUSMarket

Current Jobs Current Growth 10 Yr Historical 5 Yr Forecast

-0.41%-0.12%1.04%1.65%-0.83%1.85%0.672Manufacturing

0.02%0.22%1.17%2.09%-0.60%1.24%1.0280Trade, Transportation and Utilities

-0.02%0.25%0.73%1.38%-0.93%-1.47%0.9137 Retail Trade

0.31%0.54%1.29%2.21%0.87%0.91%1.3115Financial Activities

0.50%0.93%0.11%1.65%1.27%2.83%0.9207Government

0.13%0.62%2.90%4.83%0.96%2.34%1.3113Natural Resources, Mining and Construction

0.76%1.03%2.15%3.40%2.61%3.54%0.8197Education and Health Services

0.59%1.05%2.59%3.49%1.25%3.07%1.3286Professional and Business Services

0.29%-0.07%0.56%1.56%1.22%2.03%1.752Information

0.87%1.03%2.26%3.04%-1.86%-1.39%1.0170Leisure and Hospitality

-0.03%0.40%1.03%2.02%0.57%0.45%1.059Other Services

Total Employment 1,551 1.0 1.85% 0.54% 2.68% 1.52% 0.70% 0.38%

Source: Oxford Economics

LQ = Location Quotient


Page 22



YEAR OVER YEAR JOB GROWTH

DEMOGRAPHIC TRENDS

Current ChangeCurrent Level

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

10-Year Change

Metro U.S. Metro U.S.

Forecast Change (5 Yrs)

Population 329,297,1882,984,122 1.1% 0.5% 1.6% 0.7% 1.1% 0.5%

Households 122,102,8671,149,585 1.0% 0.4% 1.5% 0.7% 1.0% 0.4%

Median Household Income $64,696$83,206 3.4% 3.4% 3.5% 2.6% 2.8% 2.9%

Labor Force 164,221,7971,683,381 0.7% 0.8% 1.7% 0.7% 0.6% 0.4%

Unemployment 3.7%2.6% -0.8% -0.1% -0.6% -0.6% - -


POPULATION GROWTH


LABOR FORCE GROWTH INCOME GROWTH


Page 23

SubmarketsDenver Office

DENVER SUBMARKETS


Page 24


SUBMARKET INVENTORY

12 Month Deliveries Under Construction

Bldgs SF (000) Percent Rank

Inventory

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

1 Arapahoe Rd 1,719 1.0% 27 0 - - -74 0 0 0% -

2 Aurora 9,385 5.3% 6 0 - - -313 1 117 1.2% 2

3 Broomfield County 7,089 4.0% 9 1 16 0.2% 14140 3 115 1.6% 3

4 Capitol Hill 6,081 3.4% 10 2 136 2.2% 8440 0 0 0% -

5 CBD 28,215 15.9% 1 2 639 2.3% 2132 0 0 0% -

6 Centennial 3,650 2.1% 17 1 13 0.3% 1589 0 0 0% -

7 Cherry Creek 3,480 2.0% 19 1 89 2.6% 10129 0 0 0% -

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

9 Colorado Blvd/I-25 5,692 3.2% 12 0 - - -245 0 0 0% -

10 Denver Tech Center 11,897 6.7% 3 1 385 3.2% 3108 0 0 0% -

11 East Hampden 3,540 2.0% 18 1 104 2.9% 9139 0 0 0% -

12 East I-70/Montbello 3,097 1.7% 23 1 12 0.4% 1691 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 5,309 3.0% 13 2 163 3.1% 7118 1 65 1.2% 6

16 Greenwood Village 9,703 5.5% 5 0 - - -141 1 13 0.1% 11

17 Highlands Ranch 2,229 1.3% 25 1 10 0.4% 1743 0 0 0% -

18 Inverness 6,081 3.4% 11 0 - - -112 2 49 0.8% 7

19 LoDo 7,674 4.3% 7 2 304 4.0% 4160 0 0 0% -

20 Lone Tree 3,276 1.8% 22 1 260 7.9% 668 1 24 0.7% 10

21 Meridian 3,465 2.0% 20 0 - - -37 1 30 0.9% 9

22 North Denver 5,095 2.9% 14 1 20 0.4% 13186 3 38 0.7% 8

23 Northeast Denver 2,111 1.2% 26 1 40 1.9% 12182 0 0 0% -

24 Northwest Denver 7,306 4.1% 8 7 272 3.7% 5487 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 3,787 2.1% 16 0 - - -65 0 0 0% -

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

30 Parker/Castle Rock 2,565 1.4% 24 2 40 1.6% 11190 4 74 2.9% 4

31 Platte River 4,941 2.8% 15 5 657 13.3% 1108 2 246 5.0% 1

32 South Midtown 3,367 1.9% 21 0 - - -254 1 66 2.0% 5

33 Southwest Denver 10,231 5.8% 4 1 5 0.1% 18574 0 0 0% -

34 West Denver 15,817 8.9% 2 0 - - -771 1 4 0% 13


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SUBMARKET RENT

Growth

Market Rent

Per SFSubmarketNo.

12 Month Market Rent QTD Annualized Market Rent

RankRank GrowthRank

1 Arapahoe Rd -1.5%27 2.2% 31$22.64 22

2 Aurora -2.0%28 3.4% 19$22.18 26

3 Broomfield County -1.5%9 4.2% 7$28.32 21

4 Capitol Hill 0.4%14 3.7% 12$26.84 2

5 CBD -1.0%4 4.6% 3$35.23 14

6 Centennial -3.6%23 2.6% 27$23.62 34

7 Cherry Creek -0.9%3 4.2% 6$37.01 12

8 Clear Creek County -2.1%22 3.3% 22$24.38 29

9 Colorado Blvd/I-25 -0.6%17 3.6% 13$26.23 9

10 Denver Tech Center 1.1%6 4.8% 2$29.21 1

11 East Hampden -0.8%33 2.4% 28$20.98 10

12 East I-70/Montbello -2.1%19 4.3% 4$25.63 28

13 Elbert County -0.8%32 1.8% 32$21.14 11

14 Gilpin County -0.3%29 1.6% 33$21.75 5

15 Glendale 0.3%16 5.0% 1$26.47 3

16 Greenwood Village -1.1%11 3.5% 16$27.71 15

17 Highlands Ranch -0.6%10 3.8% 10$28.15 7

18 Inverness -2.3%20 2.4% 29$25.39 30

19 LoDo -1.0%2 4.1% 9$38.93 13

20 Lone Tree -1.8%5 2.8% 26$30.01 24

21 Meridian -2.1%8 4.2% 8$28.73 27

22 North Denver -3.4%18 3.6% 14$25.81 33

23 Northeast Denver -1.3%26 2.9% 25$22.96 17

24 Northwest Denver -0.6%24 3.6% 15$23.46 8

25 Outlying Adams County -0.4%31 1.6% 34$21.24 6

26 Outlying Arapahoe County -1.9%15 3.4% 20$26.61 25

27 Outlying Douglas County -2.3%21 3.5% 17$25.38 31

28 Panorama/Highland Park -1.6%12 3.3% 21$27.31 23

29 Park County -1.5%30 2.3% 30$21.61 20

30 Parker/Castle Rock -2.4%7 3.4% 18$28.88 32

31 Platte River 0%1 4.2% 5$42.19 4

32 South Midtown -1.5%13 3.0% 23$27.07 19

33 Southwest Denver -1.4%34 2.9% 24$20.18 18

34 West Denver -1.2%25 3.8% 11$23.39 16


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SUBMARKET VACANCY & NET ABSORPTION

12 Month Absorption

Rank Construc. Ratio

Vacancy

SF % of InvSF PercentSubmarketNo. Rank

1 Arapahoe Rd 112,426 6.5% -(13,890) -0.8% 247

2 Aurora 684,195 7.3% 0.5245,718 2.6% 28

3 Broomfield County 643,851 9.1% -(125,180) -1.8% 3116

4 Capitol Hill 514,452 8.5% -(105,141) -1.7% 2913

5 CBD 3,879,608 13.7% -(75,574) -0.3% 2728

6 Centennial 427,548 11.7% -(162,877) -4.5% 3421

7 Cherry Creek 312,984 9.0% -(621) 0% 1815

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

9 Colorado Blvd/I-25 582,227 10.2% -(94,243) -1.7% 2819

10 Denver Tech Center 1,569,985 13.2% -302,388 2.5% 127

11 East Hampden 423,596 12.0% -(58,338) -1.6% 2623

12 East I-70/Montbello 196,906 6.4% -(9,242) -0.3% 226

13 Elbert County - - -4,911 8.5% 13-

14 Gilpin County 7,429 28.7% -(5,878) -22.7% 2031

15 Glendale 650,248 12.2% -(155,949) -2.9% 3325

16 Greenwood Village 1,182,472 12.2% -(30,154) -0.3% 2524

17 Highlands Ranch 165,649 7.4% -30,070 1.3% 119

18 Inverness 1,063,107 17.5% -(10,192) -0.2% 2330

19 LoDo 466,519 6.1% -229,512 3.0% 35

20 Lone Tree 304,930 9.3% 0.2118,934 3.6% 618

21 Meridian 506,440 14.6% 0.741,684 1.2% 1029

22 North Denver 521,621 10.2% -(139,478) -2.7% 3220

23 Northeast Denver 89,483 4.2% -(496) 0% 171

24 Northwest Denver 591,497 8.1% 0153,826 2.1% 511

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

26 Outlying Arapahoe County 19,056 11.9% -(4,059) -2.5% 1922

27 Outlying Douglas County 11,606 9.3% -(8,419) -6.7% 2117

28 Panorama/Highland Park 334,064 8.8% -44,746 1.2% 914

29 Park County 2,400 4.3% -1,000 1.8% 142

30 Parker/Castle Rock 142,318 5.5% 0.378,510 3.1% 74

31 Platte River 616,600 12.5% 1.1207,999 4.2% 426

32 South Midtown 167,744 5.0% 4.215,854 0.5% 123

33 Southwest Denver 851,857 8.3% -63,481 0.6% 812

34 West Denver 1,187,197 7.5% -(105,688) -0.7% 3010


Page 27



































Supply & Demand TrendsDenver Office

OVERALL SUPPLY & DEMAND

Net AbsorptionInventory

% of Inv Construction RatioSF SF Growth % Growth SFYear

2024 1,827,554 1.0% 0.6%1,033,941 1.8185,735,277

2023 1,741,602 1.0% 0.7%1,335,749 1.3183,907,723

2022 1,860,657 1.0% 0.6%1,153,608 1.6182,166,121

2021 1,838,783 1.0% 0.5%868,792 2.1180,305,464

2020 1,279,874 0.7% 0.6%1,063,698 1.2178,466,681

YTD 269,188 0.2% -0.2%(276,429) -177,455,995

2019 1,146,972 0.7% 1.0%1,768,953 0.6177,186,807

2018 3,695,565 2.1% 2.0%3,442,071 1.1176,039,835

2017 2,452,824 1.4% 1.1%1,888,081 1.3172,344,270

2016 1,011,418 0.6% 0.7%1,106,303 0.9169,891,446

2015 1,832,681 1.1% 1.7%2,826,457 0.6168,880,028

2014 775,971 0.5% 1.1%1,916,443 0.4167,047,347

2013 747,999 0.5% 1.1%1,858,361 0.4166,271,376

2012 607,452 0.4% 0.5%867,877 0.7165,523,377

2011 388,395 0.2% 0.9%1,405,887 0.3164,915,925

2010 894,918 0.5% 1.3%2,166,669 0.4164,527,530

2009 1,592,950 1.0% -0.3%(428,566) -163,632,612

2008 2,472,841 1.5% 0.1%165,382 15.0162,039,662

4 & 5 STAR SUPPLY & DEMAND



2024 2,077,622 2.5% 1.9%1,584,076 1.383,869,059

2023 2,023,953 2.5% 2.1%1,676,811 1.281,791,437

2022 2,159,336 2.8% 2.2%1,740,901 1.279,767,484

2021 2,097,456 2.8% 2.0%1,545,953 1.477,608,148

2020 1,296,098 1.7% 2.1%1,570,091 0.875,510,692

YTD 200,613 0.3% 0.4%321,117 0.674,415,207

2019 1,116,990 1.5% 2.6%1,944,427 0.674,214,594

2018 3,869,266 5.6% 5.1%3,733,674 1.073,097,604

2017 2,096,914 3.1% 1.1%785,185 2.769,228,338

2016 785,880 1.2% 0.3%180,376 4.467,131,424

2015 1,525,058 2.4% 2.2%1,471,714 1.066,345,544

2014 904,336 1.4% 1.6%1,024,087 0.964,820,486

2013 927,657 1.5% 2.4%1,519,254 0.663,916,150

2012 563,907 0.9% 0.5%311,224 1.862,988,493

2011 400,462 0.6% 2.1%1,339,806 0.362,424,586

2010 1,153,049 1.9% 3.3%2,057,567 0.662,024,124

2009 1,255,448 2.1% 0.6%336,485 3.760,871,075

2008 1,711,647 3.0% -0.7%(429,606) -59,615,627


Page 28

Supply & Demand TrendsDenver Office

3 STAR SUPPLY & DEMAND



2024 (81) 0% -0.3%(220,134) -70,687,116

2023 (85) 0% -0.1%(68,690) -70,687,197

2022 (86) 0% -0.3%(219,679) -70,687,282

2021 43,970 0.1% -0.3%(241,285) -70,687,368

2020 139,628 0.2% -0.2%(175,270) -70,643,398

YTD 77,680 0.1% -0.7%(472,547) -70,581,450

2019 46,676 0.1% 0.1%101,766 0.570,503,770

2018 (58,653) -0.1% -0.3%(239,067) -70,457,094

2017 403,948 0.6% 1.3%919,987 0.470,515,747

2016 328,811 0.5% 1.2%817,548 0.470,111,799

2015 622,124 0.9% 1.2%808,537 0.869,782,988

2014 (12,900) 0% 0.9%632,644 -69,160,864

2013 (24,854) 0% 0.7%479,936 -69,173,764

2012 182,852 0.3% 0.5%366,415 0.569,198,618

2011 69,864 0.1% -0.1%(61,256) -69,015,766

2010 (75,140) -0.1% 0.3%174,019 -68,945,902

2009 93,694 0.1% -0.9%(653,398) -69,021,042

2008 778,416 1.1% 0.9%629,891 1.268,927,348

1 & 2 STAR SUPPLY & DEMAND



2024 (249,987) -0.8% -1.1%(330,001) -31,179,102

2023 (282,266) -0.9% -0.9%(272,372) -31,429,089

2022 (298,593) -0.9% -1.2%(367,614) -31,711,355

2021 (302,643) -0.9% -1.4%(435,876) -32,009,948

2020 (155,852) -0.5% -1.0%(331,123) -32,312,591

YTD (9,105) 0% -0.4%(124,999) -32,459,338

2019 (16,694) -0.1% -0.9%(277,240) -32,468,443

2018 (115,048) -0.4% -0.2%(52,536) -32,485,137

2017 (48,038) -0.1% 0.6%182,909 -32,600,185

2016 (103,273) -0.3% 0.3%108,379 -32,648,223

2015 (314,501) -1.0% 1.7%546,206 -32,751,496

2014 (115,465) -0.3% 0.8%259,712 -33,065,997

2013 (154,804) -0.5% -0.4%(140,829) -33,181,462

2012 (139,307) -0.4% 0.6%190,238 -33,336,266

2011 (81,931) -0.2% 0.4%127,337 -33,475,573

2010 (182,991) -0.5% -0.2%(64,917) -33,557,504

2009 243,808 0.7% -0.3%(111,653) -33,740,495

2008 (17,222) -0.1% -0.1%(34,903) -33,496,687


Page 29

Rent & VacancyDenver Office

OVERALL RENT & VACANCY

Market Rent

Per SF Index % Growth Vs Hist PeakYear

Vacancy

SF Percent Ppts Chg

2024 128 -0.1% 2.5%$28.69 20,792,887 11.2% 0.3%

2023 128 0% 2.6%$28.71 19,994,263 10.9% 0.1%

2022 128 0% 2.6%$28.70 19,583,397 10.8% 0.3%

2021 128 0.9% 2.5%$28.69 18,871,170 10.5% 0.4%

2020 127 1.6% 1.6%$28.42 17,895,319 10.0% 0%

YTD 127 1.3% 1.3%$28.35 18,289,403 10.3% 0.3%

2019 125 4.0% 0%$27.98 17,743,786 10.0% -0.4%

2018 120 4.3% -3.9%$26.90 18,356,767 10.4% -0.1%

2017 115 3.8% -7.9%$25.78 18,187,446 10.6% 0.2%

2016 111 1.3% -11.3%$24.82 17,510,052 10.3% -0.2%

2015 109 4.7% -12.4%$24.52 17,724,671 10.5% -0.7%

2014 104 5.8% -16.4%$23.40 18,717,800 11.2% -0.7%

2013 99 5.0% -21.0%$22.12 19,860,454 11.9% -0.7%

2012 94 4.5% -24.7%$21.07 20,970,816 12.7% -0.2%

2011 90 2.0% -28.0%$20.15 21,231,241 12.9% -0.6%

2010 88 -1.8% -29.4%$19.77 22,249,274 13.5% -0.9%

2009 90 -10.1% -28.1%$20.13 23,522,125 14.4% 1.1%

2008 100 1.8% -19.9%$22.41 21,493,027 13.3% 1.2%

4 & 5 STAR RENT & VACANCY

Market Rent


Vacancy

SF Percent Ppts Chg

2024 124 -0.1% 2.7%$34.25 9,937,352 11.8% 0.3%

2023 125 0% 2.8%$34.30 9,444,693 11.5% 0.1%

2022 125 0% 2.8%$34.29 9,098,409 11.4% 0.2%

2021 125 0.9% 2.8%$34.29 8,680,862 11.2% 0.4%

2020 123 1.8% 1.8%$33.98 8,129,790 10.8% -0.7%

YTD 123 1.5% 1.5%$33.88 8,355,389 11.2% -0.2%

2019 121 5.2% 0%$33.36 8,475,893 11.4% -1.3%

2018 115 5.0% -4.9%$31.72 9,294,330 12.7% -0.6%

2017 110 3.2% -9.4%$30.22 9,224,718 13.3% 1.7%

2016 106 -1.6% -12.2%$29.28 7,800,338 11.6% 0.6%

2015 108 3.9% -10.8%$29.76 7,294,116 11.0% -0.2%

2014 104 6.0% -14.2%$28.64 7,240,772 11.2% -0.3%

2013 98 4.0% -19.0%$27.01 7,362,705 11.5% -1.1%

2012 94 5.7% -22.1%$25.98 7,954,302 12.6% 0.3%

2011 89 3.0% -26.4%$24.57 7,701,619 12.3% -1.6%

2010 87 -2.0% -28.5%$23.84 8,638,732 13.9% -1.8%

2009 88 -11.6% -27.0%$24.34 9,544,350 15.7% 1.2%

2008 100 2.8% -17.4%$27.54 8,625,387 14.5% 3.2%


Page 30

Rent & VacancyDenver Office

3 STAR RENT & VACANCY

Market Rent


Vacancy

SF Percent Ppts Chg

2024 133 -0.1% 2.5%$25.96 8,147,577 11.5% 0.3%

2023 133 0% 2.6%$25.98 7,927,524 11.2% 0.1%

2022 133 0% 2.6%$25.97 7,858,916 11.1% 0.3%

2021 133 0.9% 2.6%$25.96 7,639,320 10.8% 0.4%

2020 132 1.6% 1.6%$25.73 7,354,064 10.4% 0.4%

YTD 132 1.4% 1.4%$25.68 7,589,425 10.8% 0.8%

2019 130 3.2% 0%$25.32 7,039,198 10.0% -0.1%

2018 126 3.9% -3.1%$24.54 7,094,288 10.1% 0.2%

2017 121 4.5% -6.7%$23.62 6,932,067 9.8% -0.8%

2016 116 4.0% -10.8%$22.60 7,448,106 10.6% -0.8%

2015 111 5.6% -14.2%$21.72 7,957,295 11.4% -0.4%

2014 106 5.5% -18.8%$20.56 8,143,708 11.8% -0.9%

2013 100 6.1% -23.0%$19.49 8,789,252 12.7% -0.7%

2012 94 3.6% -27.5%$18.36 9,294,042 13.4% -0.3%

2011 91 1.2% -30.0%$17.73 9,477,605 13.7% 0.2%

2010 90 -1.3% -30.8%$17.52 9,346,485 13.6% -0.3%

2009 91 -8.9% -29.9%$17.74 9,595,644 13.9% 1.1%

2008 100 0.4% -23.1%$19.48 8,840,970 12.8% 0.1%

1 & 2 STAR RENT & VACANCY

Market Rent


Vacancy

SF Percent Ppts Chg

2024 129 0% 1.9%$21.35 2,707,958 8.7% 0.3%

2023 129 0.2% 1.9%$21.34 2,622,046 8.3% 0.1%

2022 129 0.2% 1.7%$21.30 2,626,072 8.3% 0.3%

2021 129 1.1% 1.5%$21.27 2,550,988 8.0% 0.5%

2020 127 0.4% 0.4%$21.04 2,411,465 7.5% 0.6%

YTD 127 0.1% 0.1%$20.97 2,344,589 7.2% 0.4%

2019 127 2.1% 0%$20.95 2,228,695 6.9% 0.8%

2018 124 3.1% -2.1%$20.52 1,968,149 6.1% -0.2%

2017 121 4.5% -5.0%$19.90 2,030,661 6.2% -0.7%

2016 115 5.2% -9.1%$19.04 2,261,608 6.9% -0.6%

2015 110 5.8% -13.7%$18.09 2,473,260 7.6% -2.5%

2014 104 5.8% -18.4%$17.11 3,333,320 10.1% -1.1%

2013 98 6.1% -22.8%$16.17 3,708,497 11.2% 0%

2012 92 2.2% -27.2%$15.25 3,722,472 11.2% -0.9%

2011 90 -0.1% -28.8%$14.92 4,052,017 12.1% -0.6%

2010 90 -2.4% -28.7%$14.93 4,264,057 12.7% -0.3%

2009 93 -7.3% -27.0%$15.30 4,382,131 13.0% 1.0%

2008 100 1.3% -21.2%$16.51 4,026,670 12.0% 0.1%


Page 31

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- $256.75 7.1%

2023 -- - -- 177- $257.36 7.0%

2022 -- - -- 177- $256.30 6.9%

2021 -- - -- 174- $252.45 6.9%

2020 -- - -- 166- $240.80 7.0%

YTD $722.6M116 2.5% $200.98$10,582,135 1686.7% $243.19 6.9%

2019 $2.8B443 8.0% $201.56$9,733,780 1666.9% $241.22 6.9%

2018 $3.3B429 8.1% $245.09$11,506,200 1666.7% $241.66 6.8%

2017 $2.3B461 7.2% $199.26$7,501,681 1567.1% $227.08 6.8%

2016 $2.1B464 8.3% $164.15$6,307,436 1517.1% $219.61 6.8%

2015 $2.8B469 9.7% $179.77$7,816,078 1497.2% $216.13 6.8%

2014 $2.7B519 10.2% $165.31$7,708,722 1407.7% $203.85 6.9%

2013 $2.5B458 9.4% $171.91$8,039,047 1297.7% $187.52 7.2%

2012 $1.7B372 7.8% $139.78$7,122,922 1207.3% $173.62 7.5%

2011 $1.4B320 5.9% $156.38$7,823,409 1137.0% $164.58 7.7%

2010 $829.9M257 4.1% $140.33$5,465,057 1009.1% $144.93 8.4%

2009 $341.5M188 2.0% $115.35$3,278,223 859.0% $124.13 9.4%

(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 -- - -- 171- $309.03 6.8%

2023 -- - -- 171- $309.85 6.7%

2022 -- - -- 171- $308.72 6.7%

2021 -- - -- 168- $304.20 6.6%

2020 -- - -- 160- $290.28 6.7%

YTD $481.3M6 3.0% $251.41$96,252,422 1625.5% $293.48 6.6%

2019 $1.8B45 10.2% $231.09$38,914,905 1616.1% $291.61 6.6%

2018 $2B39 8.3% $331.57$66,490,769 1665.9% $299.79 6.4%

2017 $1.4B36 7.2% $290.20$44,339,255 1556.5% $279.87 6.5%

2016 $1.2B42 10.2% $186.15$36,322,011 1496.8% $270.10 6.5%

2015 $1.5B40 10.0% $235.82$40,410,428 1496.9% $269.32 6.4%

2014 $1.8B55 11.5% $239.62$43,072,876 1416.6% $254.87 6.5%

2013 $1.7B47 12.8% $225.84$49,243,930 1306.8% $234.73 6.8%

2012 $1.1B34 10.0% $192.71$54,251,698 1207.3% $217.93 7.1%

2011 $1B53 8.6% $207.10$45,222,147 1146.5% $206.08 7.3%

2010 $487.1M22 4.4% $204.71$37,428,436 1008.0% $181.37 8.0%

2009 $181.7M4 2.2% $133.67$45,415,100 86- $154.90 8.9%




Page 32

Sale TrendsDenver Office

3 STAR SALES





2024 -- - -- 179- $226.69 7.2%

2023 -- - -- 180- $227.30 7.1%

2022 -- - -- 179- $226.39 7.0%

2021 -- - -- 177- $223.00 7.0%

2020 -- - -- 168- $212.64 7.1%

YTD $182.6M57 2.4% $143.82$5,806,337 1705.8% $214.54 7.0%

2019 $762.8M166 6.6% $169.30$6,914,838 1687.0% $212.42 7.0%

2018 $1B180 8.2% $180.47$8,850,147 1646.8% $207.78 6.9%

2017 $626.8M179 6.9% $137.09$5,652,974 1557.2% $196.37 7.0%

2016 $688.9M184 7.0% $155.85$5,963,215 1517.3% $190.68 7.0%

2015 $905.9M197 9.8% $140.37$7,211,254 1467.5% $185.05 7.0%

2014 $746.1M234 10.4% $108.15$5,193,459 1397.6% $175.17 7.0%

2013 $554.6M181 7.1% $120.14$5,570,029 1287.9% $161.85 7.3%

2012 $390.5M153 7.1% $83.06$5,046,293 1197.5% $149.91 7.6%

2011 $264.2M140 4.3% $96.97$3,531,931 1137.0% $142.96 7.9%

2010 $258.6M129 3.8% $114.89$4,557,729 1008.3% $125.78 8.6%

2009 $123.3M85 1.7% $123.83$3,278,232 869.0% $108.26 9.6%



1 & 2 STAR SALES





2024 -- - -- 196- $196.57 7.4%

2023 -- - -- 196- $196.68 7.3%

2022 -- - -- 195- $195.48 7.3%

2021 -- - -- 192- $192.23 7.2%

2020 -- - -- 183- $183.27 7.4%

YTD $58.7M53 1.5% $142.74$1,673,462 1847.2% $184.39 7.2%

2019 $278M232 6.2% $157.20$2,033,743 1827.1% $182.45 7.3%

2018 $281.9M210 7.2% $155.38$1,947,248 1757.0% $175.35 7.2%

2017 $281.6M246 7.9% $126.69$1,627,485 1677.3% $166.73 7.2%

2016 $233M238 7.0% $113.09$1,216,910 1617.0% $160.95 7.3%

2015 $394.9M232 8.9% $143.13$2,013,013 1556.9% $155.64 7.3%

2014 $212.7M230 7.0% $95.87$1,212,902 1438.8% $143.31 7.5%

2013 $241M230 7.6% $102.71$1,271,952 1298.3% $129.61 7.9%

2012 $131.8M185 4.9% $103.33$945,461 1187.1% $118.48 8.2%

2011 $70.2M127 4.0% $67.10$846,390 1127.9% $111.64 8.5%

2010 $84.1M106 4.2% $65.55$1,006,265 9910.8% $98.82 9.3%

2009 $36.5M99 2.4% $60.31$559,711 848.9% $84.51 10.4%




Page 33

denver - co · 12 mo deliveries in sf 12 mo net absorption in sf vacancy rate 12 mo rent growth ......

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