Submarket Snapshot_4Q2023_Office_Interactive

OFFICE 4Q23 SUBMARKET SNAPSHOT NORTHWEST CORRIDOR

KEY TAKEAWAYS

4Q23 LEASING & ABSORPTION

While the trend of move-outs and downsizing remains notable, there was an improvement in net absorption within the Northwest Corridor, which increased to positive 6,400 sf in 4Q 2023, representing an improvement from negative 9,500 sf the previous quarter. Leasing activity increased by 56.5% QOQ, with just under 98,600 sf in new leases signed, a YOY decrease of 121.3%. Sublease availability decreased by 30 bps QOQ. Despite this, sublease availabilities still remained relatively high. A portion of the subleases are expected to convert into direct vacancy in the upcoming quarters, as tenants continue to explore their options. Direct vacancy fell to 19.7%, a 10-bps decrease in 4Q 2023. Class A vacancies contracted by 40 bps, while Class B vacancies increased by 60 bps QOQ. The development pipeline of Northwest Corridor remained dormant, as the focus of new office construction shifted to the urban core submarkets such as RiNo, the CBD, and Cherry Creek.

20,300 4Q23 LARGEST LEASE 11,400 4Q23 LARGEST MOVE-OUT

6,400 4Q23 ABSORPTION 98,600 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY

ASKING RENTS

LARGEST SALES TRANSACTION

TOTAL SALES TRANSACTION

AVERAGE CAP RATE

LEASING & ABSORPTION ACTIVITY

AVG. DIRECT RENTS—FSG $30.75 (ALL CLASSES) AVG. DIRECT RENTS—FSG $32.38 ( CLASS A )

150,000

Q4 2023 QOQ CHANGE

100,000

50,000

DIRECT VACANCY (ALL CLASSES)

19.7%

10 bps

-

CLASS A VACANCY CLASS B VACANCY

20.9%

40 bps

(50,000)

(100,000)

18.0%

60 bps

AVG. DIRECT RENTS—FSG

(150,000)

$26.92 (CLASS B)

SUBLEASE AVAILABILITY

6.2%

30 bps

Leasing Activity Net Absorption