That market also should fare relatively well in 2008, the analysis predicts.
This year was marked by high-profile acquisitions and large lease renewals, according to Mark Lucas, Denver market director for Chicago-based Jones Lang LaSalle (NYSE: JLL).
Metro Denver saw its biggest real estate transaction ever in March of this year, when Callahan Capital Partners LLC acquired five downtown-Denver office buildings from The Blackstone Group LP for $770 million. The deal coincided with Blackstone's purchase of Equity Office Properties of Chicago for $41 billion.
CB Richard Ellis Inc.'s Denver office represented Blackstone in the transaction.
Other significant sales included LBA Realty Inc.'s purchase of Denver Place North & South Towers from Amerimar Enterprises Inc. for $200 million, and Walton Street Capital LLC's purchase of the Park Central building from Beacon Capital Partners Inc. for $135 million. All those buildings are in downtown Denver.
"As national investors set their 2008 target markets for capital replacement, Denver remains on most investors' hot list," Lucas said in a statement. "Revenue growth, supply discipline and a diverse economy are the drivers."
Other office market highlights for 2007, and the report's predictions for '08, include:
* Building owners enjoyed lower vacancy rates and increasing rents this year. Metro Denver's 90 million square feet of investment-grade office stock had more than 1.6 million square feet of absorption this year, including sublease space. The overall vacancy rate dropped to 13 percent from 15 percent at the end of 2006.
Average asking rental rates for all types of office buildings increased 13 percent to $21.99. Top-tier, Class A buildings in the central business district are asking $40 per square foot for premium space.
* Energy companies drove large lease renewals in metro Denver this year; the renewals were in downtown Denver buildings. EnCana Oil & Gas Inc. renewed its lease and expanded its space in Republic Plaza to 453,000 square feet. Anadarko Petroleum Corp. expanded its presence in Granite Tower to 221,000 square feet.
"Tenants within the energy industry continue to expand and have a strong presence within Denver, showcasing a trend that is not likely to slow through 2008," Lucas said.
Other major downtown Denver office transactions included Wells Fargo & Co.'s expansion to 400,000 square feet at Wells Fargo Center, and the Internal Revenue Service's 157,000-square-foot lease at 1999 Broadway.
In the southeastern suburbs, Dex Media will consolidate multiple locations at a 160,000-square-foot build-to-suit at Panorama Corporate Center.
* Transit-oriented development (TOD) continued to have a major effect on the local office market this year, particularly along light-rail corridors in lower downtown Denver and the southeastern suburbs.
New downtown TOD projects include Opus Northwest LLC's 1400 Wewatta and 1401 Wynkoop buildings, with a total of 317,862 square feet. Hines Interests LP continued construction on its 285,217-square-foot building at 1515 Wynkoop St. The 656,334-square-foot 1001 17th Street building continued its renovation.
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source: bizjournals.com
