Report: Denver commercial market thriving

Denver's commercial real estate market is thriving.

The vacancy rate for Denver's office market has declined for the 15th straight quarter in the second quarter of 2013, according to real estate services from Newmark Grubb Knight Frank, meaning companies are gravitating to the city to either expand existing businesses or open new ventures.

"Denver's office market has exceeded our high expectations for a breakout year, with compelling activity throughout the third quarter," said Kevin McCabe, executive vice president and regional managing director of Newmark Grubb Knight Frank. "The local investment market is also on track to beat 2012's totals, both in activity and volume, and more development projects are in the works."

Overall vacancy in the third quarter fell to 16.3 percent, which is down on a year-over-year basis from 17.7 percent, the Denver iJournal reported. A number of things are contributing to office market growth around the country, like the explosion of new technology and domestic energy production.

Along with the vacancy decrease, the average rate for the Mile High City's class-A office space reached a new high of $24.55 per square foot in the second quarter of 2013, according to the report. The city's all-time high, $32 per square foot, was experienced in the central business district in 2008.

The Denver Post reported that much of the city's growth is in the LoDo – or lower downtown – neighborhood. The area is welcoming new big-name companies, such as McGraw-Hill, the newspaper reported.

Such large corporations are attracted by younger workers who look to live downtown to have easy access to bike lanes and public transportation while still being able to walk to numerous amenities, such as entertainment venues, retail stores and even work. That's a trend seen in many major cities' commercial markets, such as Boston, San Francisco, Dallas and Houston.

"Denver has matured into a top 10 market in the country, with national and international investors committing to the region," Riki Hashimoto, executive managing director of Newmark Grubb Knight Frank Capital Markets, told the Denver iJournal. "Everyone wants to participate – from core and core-plus institutional groups, value-add and entrepreneurial equity to local operating partners with both institutional and private equity sources. We are seen as a stable inland market with good macro-economics, and a nice alternative to the highly competitive gateway cities."

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