Submarket Snapshot_4Q2023_Office_Interactive

SUBMARKET SNAPSHOT CENTRAL BUSINESS DISTRICT

OFFICE 4Q23

KEY TAKEAWAYS

4Q23 LEASING & ABSORPTION 72,200 4Q23 LARGEST LEASE 58,100 4Q23 LARGEST MOVE-OUT

While the asking rates for the CBD remained relatively stable, direct rents contracted by $0.08 psf in fourth quarter 2023. New construction activity remained subdued during Q4 2023, with only one building under construction and no others scheduled to commence construction until 2024. Sublease availabilities experienced a 20-basis point (bps) increase, as CBD experienced a continued trend of tenants looking to downsize and/or sublet their space. The large amount of sublease availability is expected to slowly affect direct vacancies as subleases expire in the coming quarters. Flight-to-quality remained salient within the Central Business District (CBD) as Class A product comprised of 92.5% of the total leasing volume in Q4 2023. City and County of Denver secured the largest lease in the CBD by signing for 72,200 square feet at 370 17th Street Investment activity has slowed significantly, attributable to the elevated cost of capital and the enduring uncertainties prevailing within the office sector.

-359,900 4Q23 ABSORPTION 275,500 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY

ASKING RENTS

AVERAGE CAP RATE

TOTAL SALES TRANSACTION

LARGEST SALES TRANSACTION

AVG. DIRECT RENTS—FSG $39.26 (ALL CLASSES) AVG. DIRECT RENTS—FSG $42.69 ( CLASS A ) AVG. DIRECT RENTS—FSG $34.13 (CLASS B)

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

DIRECT VACANCY (ALL CLASSES)

25.4%

70 bps

UNDER CONSTRUCTION 704,000 SF

22.4%

10 bps

CLASS A VACANCY

37.2%

270 bps

CLASS B VACANCY

PROPOSED OFFICE 1,702,800 SF

SUBLEASE AVAILABILITY

5.9%

20 bps