The Office RE Market is Awful

The CBRE released their 2nd quarter office vacancy report for Denver.
· The vacancy rate is currently 18.8% the highest since 2009.
· There is another 5 million square feet of space available for sub-leasing, thus the vacancy rate is really 23%. OUCH!
· But, more than 1 million square feet was newly leased in the second quarter, a 44% increase from the first quarter. Still new leased space is down about 22% from the first 6 months of last year.
· There is only 1.3 million square feet under construction, an 8-year low.

I don’t understand why any company is building new space and I wonder if they will keep their loan approvals after their banker reads this report. A good office market has a vacancy rate of 8-9% normally.

Why am I telling you, residential real estate agents, this? I fully expect the residential real estate market near downtown Denver will suffer as so many of these buildings are empty. We might see some spillover effect in the core of the DTC area where condos and townhomes exist next door to office buildings.