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Worst of the energy downturn in the rearview mirror, office market breathes sigh of relief

  • ​Three years past the start of the slump largely responsible for the rapid ramp-up of subleases-to-market, oil prices have recovered in recent weeks—largely attributable to domestic restraint in production. Still, we project energy-related tenant occupancy to remain relatively flat during the next 12 months as larger, longer-established industry stalwarts continue to right size and use their office buildouts differently (i.e., more efficiently).
  • Though it’s measured north of 1.0 MSF for an unprecedented 11 consecutive quarters, when measured as a percent of inventory, total available sublease space is trending downward; the worst of the last oil price downturn has passed.
  • Currently, energy, retail, and architecture/engineering account for more than three of every four square feet on the market for sublease. Some 40.0% has been on the market for one to two years. Energy-sector weakness and the subsequent bringing-to-market of subleases has curbed CBD momentum.
  • Oil and gas users—and their ancillary sectors—still comprise a considerable share of Downtown occupiers. Still, our economy has never been more diversified. Today, volatile oil prices pose a far less significant risk to the overall health of Denver’s office market than perhaps any time in the metro’s history. ​​

Source: JLL Research




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