Denver’s outlying communities are helping suburban offices nationwide to be almost as full as they were before the Great Recession, according to a report released this month by CBRE Research.
“Still, the suburbs are having a hard time shaking the perception that they’re struggling to keep up with the allure of vibrant downtowns,” said Andrea Cross, who heads up research of office real estate in the Americas for CBRE.
“Although suburban office growth is expected to moderate in the next few years, we believe the market still has further room to run. Many suburban markets are positioned for further occupancy and rent gains due to continued demand and lack of available supply, especially newer, high-quality product,” Cross said in a statement.
CBRE’s analysis shows the U.S. suburban market are strengthening in comparison to downtowns. In Denver, suburban office vacancy decreased from 12.2 percent at the end of 2015 to 11.7 percent at the end of last year. During the same time, vacancy rates in downtown Denver rose from 12.8 percent to 13.2 percent.
Part of the reason suburban vacancy rates are so low nationwide is because developers are building fewer new offices in those communities that need to be filled. Construction has been highly concentrated in a small number of leading markets including the Denver metro.
In 2016, the Denver metro alone accounted for 6 percent of the total U.S. suburban office construction, tying for the third-most active market with Seattle and Northern Virginia.
“Suburban office construction is another metric where Denver stands out as a national anomaly,” said Pete Schippits, senior managing director and market leader for CBRE in Colorado, in a statement. “In addition to our strong suburban rent growth, millennial in-migration and the expansion of our light rail system are giving developers the confidence to invest in new suburban office projects.”