Submarket Snapshot_4Q2023_Office_Interactive

OFFICE 4Q23 SUBMARKET SNAPSHOT SOUTHEAST SUBURBAN

KEY TAKEAWAYS Southeast Suburban (SES) submarket recorded the second highest amounts of negative absorption in the Denver Metro at negative 118,800 sf, with only Central Business District (CBD) recording higher negative absorption. Despite that, SES net absorption improved by 47.9% QOQ. Leasing activity within SES declined by 18.4% QOQ, with Class A product making up more than 56.4% of the new leasing activity in 4Q 2023 emphasizing a flight-to quality trend. One of the most robust development pipelines in the Denver Metro came from SES as it boasted nearly 5.8 msf in proposed projects. Despite that, economic challenges are still prevalent, which has led to a continued delay in the development projects. SES direct vacancy increased by 10 bps in 4Q 2023. Direct vacancy is expected to fluctuate as the market continues to seek balance in the face of upcoming sublease expirations and the continued impact of hybrid-work models.

4Q23 LEASING & ABSORPTION 27,200 4Q23 LARGEST LEASE 34,800 4Q23 LARGEST MOVE-OUT

-118,800 4Q23 ABSORPTION 269,000 4Q23 LEASING ACTIVITY

2023 INVESTMENT ACTIVITY

ASKING RENTS

AVERAGE CAP RATE

TOTAL SALES VOLUME

LARGEST SALES TRANSACTION

AVG. DIRECT RENTS—FSG $30.68 ( CLASS A ) AVG. DIRECT RENTS—FSG $24.16 (CLASS B) AVG. DIRECT RENTS—FSG $28.26 ( ALL CLASSES )

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

DIRECT VACANCY (ALL CLASSES)

UNDER CONSTRUCTION 0 SF

18.9%

10 bps

19.9%

10 bps

CLASS A VACANCY

17.8%

10 bps

CLASS B VACANCY

PROPOSED OFFICE 5,780,000 SF

SUBLEASE AVAILABILITY

4.6%

20 bps