Submarket Snapshot_4Q2023_Office_Interactive

SUBMARKET SNAPSHOT CHERRY CREEK NORTH

OFFICE 4Q23

KEY TAKEAWAYS

Q4 2023 LEASING & ABSORPTION

Direct vacancy dropped on a QOQ basis to 3.0%, as the Cherry Creek North submarket maintained an impressively low vacancy rate, making it one of the tightest submarkets in the Denver metropolitan area. However, activity within the submarket has started to cool down as a result of the low vacancy and increasingly limited supply. Of the 358,500 sf of Class A space under construction in Cherry Creek North, only 15,000 sf remained available for pre-leasing, which demonstrates the demand for more supply in the submarket. The rising cost of capital has critically impacted the amount of office investment sales in the Denver Metro, resulting in no significant transaction during the quarter. Cherry Creek remained relatively active, with a two-building portfolio sale in Q1 2023 and a single building investment sale in Q2 2023. Rent growth in Cherry Creek continued to strengthen, with the average NNN asking rate increasing by nearly 6.6% since Q1 2022. Given the strong demand in the market, rental rates may continue to grow due to low vacancy rates and lack of supply.

5,700 4Q23 LARGEST LEASE 4,800 4Q23 LARGEST MOVE-OUT

8,500 4Q23 ABSORPTION 5,700 4Q23 LEASING ACTIVITY

(KSF) LARGEST 4Q22 LESE

2023 INVESTMENT ACTIVITY

ASKING RENTS

AVERAGE CAP RATE

TOTAL SALES VOLUME

LARGEST SALES TRANSACTION

AVG. DIRECT RENTS—NNN $41.85 (ALL CLASSES) AVG. DIRECT RENTS—NNN $48.54 ( CLASS A ) AVG. DIRECT RENTS—NNN $33.15 (CLASS B)

CONSTRUCTION ACTIVITY

Q4 2023

QOQ CHANGE

DIRECT VACANCY (ALL CLASSES)

3.0%

110 bps

UNDER CONSTRUCTION 358,500 SF

3.5%

40 bps

CLASS A VACANCY

2.2%

270 bps

CLASS B VACANCY

PROPOSED OFFICE 1,159,500 SF

SUBLEASE AVAILABILITY

17.9 KSF

INCREASE