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Leverage in older trophy assets in tenants’ hands

  • ​Denver’s five 1980s-era, trophy assets have certainly seen better times than the past five years. Occupancy rates have fallen, as have rental rates. The exception? 1801 California, Colorado’s second-tallest skyscraper, which reinvested more than $50 million in capital improvements some four years ago. Not only have the new finishes attracted tenants, but the landlord has offered incredibly competitive rates and concessions.
  • On average, the remaining four trophy assets have reinvested $7.4 million. Even spending this amount hasn’t shielded these buildings from rising vacancy and flat-to-falling rental rates. Availability has risen 15.6 percentage points since 2012 to 23.8 percent as nearly 900,000 square feet remains available throughout the four buildings.
  • The older trophy assets now compete not only with 1801 California but newly constructed buildings in the CBD. Since 2009, five additional trophy assets have been built, including three of which were built in just the past 24 months. These boast just 5.9% availability, and each remains a must-see for any occupier considering Class A product.​​

Source: JLL Research

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