2013 COLORADO OFFICE MARKET CLEARED FOR TAKEOFF

Transcription

1 2013 COLORADO OFFICE MARKET CLEARED FOR TAKEOFF Natasha Felten President November 14 th, 2013 Flight 2013 SEAT NUMBER 01A FIRST Flight 2013 Denver to Recovery DEPARTS 3:40PM

2 FLIGHT PLAN Pre-flight Checklist Demand for office space in Colorado Current supply characteristics of Colorado office space Trends affecting office usage and users Take-off!

3 Colorado Post-Recession Job Growth q Demand % of Growth Year Over Year 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -6% Colorado Job Growth Exceeds US Data Thousands of People Colorado Population Increases & Job Growth Number of Jobs (Thousands) US CO Natural Increase Net Migration Job Growth 1 2 Source: 1 US Census Bureau 2 Colorado State Demography Office 3

4 Market Demand for Office Space is Growing q Demand Organic Expansion of Existing Users In Migration Attracting Out of State Firms New Start Ups/ New Operating Entities Job Growth 4

5 Some Companies Driving Demand in 2013 q Demand Organic Kaiser Permanente 24-7 Intouch Charles Schwab Anthem Blue Cross and Blue Shield Rally Software Digital Globe Intrex Aerospace In Migration Sunetric Selling Simplified Cool Planet Energy Systems Canada Goose Inc. Summit Materials, LLC MDReview EcoSys Sympoz New Datu Health Inc. Ardent Mills Intelivideo SeedPaths 5

6 Office Demand Requires White Collar Jobs q Demand Total White Collar Jobs: 1,300, Key Industry Growth Other Industries, 64% Fastest Growing Industries, 36% Percent of Growth 12% 10% 8% 6% 4% 2% 9.8% 6.4% 4.8% 4.5% 3.1% 3% 0.5% 0% Energy Aviation Financial Services Bioscience Healthcare & Wellness IT/Software Aerospace Source: Metro Denver Economic Development Corporation: Metro Denver Industries Employment Snapshot

7 Positive Absorption Results from Demand Sustained positive absorption in Colorado for 15 consecutive quarters Thousands of Square Feet 2,000 1,500 1, ,000-1, Source: C3 Aggregate Data 7

8 How Does Current Supply Meet Demand? MSF Total Office Space Inventory & Vacancy 17.0% 16.5% 16.0% 15.5% 15.0% 14.5% 14.0% 13.5% 13.0% 12.5% Vacancy % Current Stock (MSF) Current Inventory & Vacancy by Submarket % 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Vacancy % Total Space (MSF) Vacancy (%) CBD SES NW CBD Vacancy SES Vacancy NW Vacancy Source: Jones Lang LaSalle Research 8

9 Colorado Office Pricing Trends 20 Total Office Space Vacancy & Rental Rates $30.00 $35.00 Average Rents PSF by Submarket & Class MSF $25.00 $20.00 $15.00 $10.00 $5.00 Rental Rates/RSF Rental Rates/RSF $30.00 $25.00 $20.00 $ $0.00 $ Vacancy (MSF) Class B Rental Rates Class A Rental Rates CBD A SES A NW A CBD B SES B NW B Source: Jones Lang LaSalle Research 9

10 Colorado s Aging Office Inventory Office Building Age 50+ YRS 5% 1-10 YRS 11% 88% of CBD buildings > 21 years old YRS 60% YRS 24% 54% of SES buildings > 21 years old 73% of NW buildings < 20 years old Source: CoStar Group, 10

11 Colorado s Few Large Blocks Current Class A Blocks of Contiguous Office Space ,000-50,000 SF 50, ,000 SF 100, ,000 SF >200,000 SF CBD SES Source: Jones Lang LaSalle Research *Includes vacant existing blocks and available UC/UP blocks 11

12 Colorado is in Need of New Office Product Thousands of Square Feet 2,500 2,000 1,500 1, ,000-1,500 Colorado Net Absorption & New Construction Average Annual Construction Net Absorption New Construction Source: C3 Aggregate Data 12

13 Colorado s Current Office Development 99 Sites Proposed +/ Million Square Feet 9.3% of Total Inventory 100,000+ RSF <100,000 RSF 10 Sites Under Construction +/- 2.0 Million Square Feet 1.8% of Total Inventory 26, ,990 RSF 13

14 S S S Office Buildings Under Construction 1601 Wewatta LoDo 299,990 RSF Hines Park 12 Hundred North 297,172 RSF IBC Holdings 100 St Paul CC 150,500 RSF The Pauls Corporation 16M LoDo 145,158 RSF Integrated Properties Inc. & Elevations Group LLC Union Station North Wing LoDo 109,034 RSF First Century Development, LLC Union Station South Wing LoDo 105,974 RSF East West Partners 250 Columbine CC 89,000 RSF Western Development Group 215 St Paul CC 26,252 RSF Adolph Coors Foundation Kaiser Permanente SES 275,000 RSF Kaiser Permanente Charles Schwab Complex SES 562,500 RSF Charles Schwab UNDER CONSTRUCTION TOTAL 2,060,580 RSF S S 1.8% of Total Inventory BTS S S S BTO 14

15 Trends Impacting Office Supply & Demand þ Supply Sustainability/ Infrastructure Technology Gen Y Demographic External Forces 15

16 Detecting Opportunities & Avoiding Threats þ Supply Sustainability/ Infrastructure Technology Gen Y Demographic External Forces l Colorado Values l LEED l DIA l Union Station l Fast Tracks l TODs l Cloud l Mobile Devices l Alternative Work Spaces l Unconventional l Social l Tech Savvy l Live/Work/Play l Government l Global Economics l Conflict

17 Colorado s Commercial Office Market - Clear for Takeoff! þ Supply þ Trends Companies and people who want to work here To soar, Colorado needs Facilities that can accommodate efficient operations and user s requirements The ability to respond to opportunities Good government and global stability Information derived from sources believed to be reliable. All content subject to independent verification by end user. 17