The Denver Metro’s 12-month payroll employment losses scaled back to 32,700 through April 2010, a 2.4% rate of contraction, compared to a 1.1 % decline nationally.  The Government and Education/Health sectors continue to outperform the rest of the local economy, adding jobs over the past 12 months.

The region’s unemployment rate declined to 7.6% in April 2010, from 8.2% in January and 7.9% in April 2009. The national unemployment rate was 9.9% in April 2010 and 9.7% in May 2010.  The Denver Metro unemployment rate remains the second-lowest among large metro areas and was the only major metro where unemployment declined over the past 12 months.

The Metro Denver office market experienced significant improvement in the 2nd quarter of 2010, as renewed job growth and a stronger outlook fueled substantial leasing activity.  As a result, vacancy dropped 50 basis points and asking rents remained stable for the 2nd consecutive quarter.

• Net absorption of office space totaled 1.3 million SF in Metro Denver in the 2nd quarter of 2010, compared to 129,000 SF during the 1st quarter.
• Available sublease space in Metro Denver decreased by 79,000 SF in the 2nd quarter of 2010, after increasing by 18,000 SF in the 1st quarter.  There is approximately 1.3 million SF of sublease space on the market, representing 1.0% of the standing inventory.
• The overall office vacancy rate dropped to 14.1% in Metro Denver at mid-year 2010, from 14.6% in the 1st quarter and from 14.6% a year ago.  The direct vacancy rate declined to 13.1% in June 2010, from 13.6% in March and 13.3% a year ago.
• There is 837,153 SF of office space under construction or renovation at mid-year 2010, down from 1.4 million SF in the 1st quarter and 1.9 million SF a year ago.  Space under construction or renovation at June 2010 is 46% pre-leased, up from 39% a year ago.
• Metro Denver office deliveries, including renovations, totaled 1.3 million SF in the 1st half of 2010, compared to 1.2 million SF in the 1st half of 2009.  Space delivered in the 1st half was 58% leased upon delivery, compared to 61% during the same period last year.
• Metro Denver Class A office rents continued to hold steady in the 2nd quarter of 2010.  Asking rents were virtually flat for the 1st half of 2010.
• We recorded investment sales volume of $219 million in Metro Denver in the 1st half of 2010, compared to $166 million in the same period last year and $190 million in all of 2009.

Office/Flex Market Holds Steady

• The Metro Denver office/flex market net absorption totaled 14,000 SF in the 2nd quarter of 2010, compared to 49,000 SF in the 1st quarter.
• There is 73,000 SF of available office/flex sublease space on the market in Metro Denver, representing 0.5% of the standing inventory.  Available sublease space decreased by 45,000 SF in the 2nd quarter of 2010.
• Metro Denver’s overall office/flex vacancy rate declined to 15.0% at mid-year 2010, from 15.6% in the 1st quarter and 15.5% a year ago. The direct vacancy rate is 14.5% at June 2010, compared to 14.9% in March, and 14.8% one year ago.
• There are no office/flex buildings under construction or renovation at mid-year 2010.
• Office/flex asking rents declined 1.2% in Metro Denver during the 1st half of 2010.  The average asking rent is $8.53/SF, industrial gross.
• We recorded $106.6 million of office/flex investment sales in Metro Denver in the 1st half of 2010, compared to $67 million in the same period last year. Sales prices averaged $70/SF in the 1st half of 2010.

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