DENVER (KDVR) — Between the COVID-19 pandemic’s economic battering and a violent summer, Downtown Denver’s offices cleared out in 2020.
Nationally, most cities in 2020 either restricted office and retail work or strongly advised individual businesses to use work-from-home options.
As a result, the United States reached record rates of office and retail space vacancies. During 2020’s fourth business quarter, the U.S. had the third-worst quarter on record for office space demand, according to Denver-based CBRE.
Denver had an even worse time of it.
CBRE tracks global, national, state and local commercial real estate trends. Representative Sara Johnston broke Denver problem’s into three areas.
“The Denver office market softened in 2020 following 10 years of robust growth,” wrote Johnston. “The market realized the distresses of the recession brought on by the COVID-19 pandemic as negative net absorption, increasing vacancy and heightened sublease availability all point to a continued slowdown in 2021.”
The simplest of CBRE’s three metrics is simple vacancy rate.
Denver’s percentage of empty office space grew to 15.9% in 2020, which was the highest rate in the Denver metro area since it emerged from the Great Recession in 2011 and a percentage point higher than national average. Citywide, there were more than twice as much office space availability for subleasing than before the pandemic started.
Downtown Denver fared even worse.
Nearly one in five Downtown Denver offices sat empty in the fourth quarter of 2020, or 18.6%.
Cities with robust and diverse economies, such as Denver, would naturally have felt office closures more sharply than other areas. Indeed, Denver felt them harder than most.
Data compiled by real estate company Jones Lang LaSalle placed Denver as the locality with the 20th-highest vacancy rate in the country, ahead even of Los Angeles, San Francisco and Silicon Valley.
Still, Denver’s spot at the top of the nation’s move-to list gives it an excellent chance for a comeback.
CBRE said Denver’s commercial real estate will fill up more quickly than other areas. Commercial real estate investment in the area is still strong, and economic and political leaders here in Colorado continue pressing to attract tech talent from Silicon Valley and other tech hubs increasingly looking to relocate to cheaper areas.
“Tenant in-migration, especially from coastal markets, continues to be a bright spot amid the pandemic with users opting to open offices in metro Denver,” Johnston wrote. “Despite the uncertainty this year, Denver remains a market best poised to recover from the COVID-19 pandemic due to its favorable pricing, diverse industry mix, highly educated labor pool, and quality of life.”