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Let’s talk sublease space: how’s the office market riding out that last crude pricing downturn?

• The close of 2015 saw crude oil pricing crater worse than at any time since the mid 1980s. We’ve well documented the wave of sublease space that soon hit Denver’s office market in the aftermath. For four consecutive quarters starting in June 2016, available sublease space throughout the Mile-High City measured north of 3.0 million square feet (m.s.f.)—an unprecedented amount and streak that illustrated the degree to which the market was slackening.

• The amount of available sublease space specifically within the CBD has long commanded most headlines; it’s exceeded 1.0 MSF for a record 12 consecutive quarters. Notably though, when measured as a percent of inventory, the figure is trending downward. Presently, only one of every three s.f. of available sublease space is located in Downtown properties. The worst of the last oil price downturn has passed. 

• The chart above examines each submarket’s current sublease situation: availability and pricing. Occupiers looking to minimize costs or lease shorter term should look toward the chart’s northwest quadrant. Seek out the suburbs (we’re looking at you, Southeast Suburban and Northwest submarkets). Here, you’ll find a significant percentage of inventory available as sublease space—space that’s priced considerably below market average, too.

• Broad job and population growth have kept Denver’s office market resilient, but tenants take note: there are most certainly deals to be had out there.

Source: JLL Research

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