Q3 2021 Market Update

Metro Denver’s commercial real estate market is showing signs of a return to normal following a rocky few quarters caused by the COVID-19 pandemic. There’s no question that there are still challenges to overcome as the marketplace tries to right itself after an unprecedented shock, but a few glimmers of hope for the office market popped up in the third quarter of 2021.

Perhaps the most encouraging statistic from the most recent quarter is the positive net absorption of office space, the first time this figure has ventured into positive territory since 2019. In the third quarter of 2021, the office market experience positive net absorption of nearly 240,000 square feet, including both direct and subleasing.

This figure marks a shift back to more normal leasing activity in the office market, coupled with fewer companies leaving their office space. Companies leased more than 2.3 million square feet of office space in metro Denver in the third quarter, an increase of 43% over the third quarter of 2020, when leasing activity was largely stifled by COVID-19.

Economic activity has crept back in metro Denver with the proliferation of COVID-19 vaccines, and offices are slowly reopening. This bodes well for the office market, where confidence was shaken when huge swaths of office workers were sent home to work for more than a year.

But there’s a long road back to where we left off in 2019. Before the pandemic, the metro Denver office market was cooking, with average rents approaching $30 per square foot, new product under construction and vacancy rates holding steady at sub-10%, even with new buildings coming online.

Now, the total vacancy rate is 14.3%, up 4.4% from its pre-pandemic position. The amount of space under construction has halved, although a big reason for that is the delivery of major office buildings like Block 162 earlier this year, which added more than 600,000 square feet of office space to the downtown market. Historically, buildings like that don’t come around in Denver very often, so it’s not out of the ordinary for many years to lapse between the construction of a major new downtown office building.

Direct gross office rents have held steady on average, ticking up by almost $1 to $29.60 per square foot year-over-year. Rents for sublease space, on the other hand, reflect the rush of sublease space that hit the market during the pandemic, dropping more than $2 to $24.08 per square foot on a gross basis.

Many companies placed their space on the sublease market throughout 2020, with the total vacant sublet space more than doubling over the course of the year to 2.4 million square feet. Today, there are more than 3 million square feet of vacant office space available for sublease.

What all this means for office tenants is that now is the time to act. Right now, owners are more open to negotiating various concessions like tenant improvement dollars, shorter term leases or discounted rental rates. Using a trusted brokerage like Tributary can help you secure these concessions and more when making your next real estate decision.

Q3 2021 Market Update2021-11-17T18:28:37+00:00

Creating and Maintaining a Strong Company Culture

The last eighteen months have taught us a lot, but there are two lessons which have really resonated with us at Tributary: health is vital and so are the people you surround yourself with.

Not only does a healthy work environment lead to fewer sick days, but it will likely increase the success of your company overall. In fact, a study published by the Behavioral Science and Policy Association showed that employees were 50 percent more likely to experience health problems in an uneasy or stressful work environment. On the other end, a study conducted by NCBI showed that when employees have a sense of social support, appreciation, and a positive work environment, they perform better.

So, how can you build and maintain a strong and healthy company culture? Here are a few ways Team Tributary has found success in building an environment where people can thrive:

Implement a rhythm of play: Appreciating your teammates as people – and not just office mates – completely changes the workplace dynamic: projects flow seamlessly, collaboration is a natural effect and creativity runs high. Encourage your company to implement regularly scheduled activities, from happy hours and annual workplace parties to offsite team-building activities and retreats. Earlier this year, we went on a company retreat to Steamboat Lake. Disconnecting from our phones for a minute and connecting outside of the office refreshed and strengthened our outlook as a team.

Live out your core values: Core company values are the foundation upon which your business grows and succeeds. They also provide a valuable connection point for everyone on the team. Once your team owns those values and feels empowered by them, a strong company culture naturally follows. At Tributary, we believe in showing up, advocating always, doing the right thing, putting team above self, and giving back. These are what guide not only how we interact with our clients, but also with each other.

Staying connected (even virtually): While we believe nothing can quite replace in-person working relationships, many of our clients are choosing to implement work-from-home and hybrid working models during this most recent wave of the pandemic. In this setting, it’s more important than ever to find ways to feel connected online. Establishing that cameras need to be on during meetings is a simple way to make virtual meetings more personal, encouraging everyone to be present and engaged without distractions. Virtual team bonding activities can feel more physical by assigning breakout rooms where you have opportunity to chat privately with co-workers. Outside of meetings, regularly checking in with your team via text and phone calls will go a long way in helping them feel supported and appreciated.

According to TeamStage, 94% of entrepreneurs and 88% of job seekers say that healthy work culture is vital for success. Building and maintaining a strong and healthy work environment is critical, not only for the health and wellness of your team, but for employee loyalty and retention. When you build a thriving environment on meaningful core values, you also build boundless potential for success.

Creating and Maintaining a Strong Company Culture2021-11-17T18:22:03+00:00
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