BY FREDA MIKLIN
The last report we saw from the City of Greenwood Village showed an office vacancy rate that had only gone in one direction, up, since it began to climb with the advent of the COVID-19 pandemic three and one-half years ago. The most recent data we reviewed from GV showed that the vacancy rate for office space nearly doubled from 11% in 2018 to nearly 20% as of August 2023.
An article published on October 30 by Business Den included information and charts showing that the office vacancy rate in downtown Denver went from 16.5% at the end of 2019, just before the pandemic, to over 30% as of one month ago. As with GV, that data showed that office vacancy rates downtown have been rising steadily with no sign of declining or even leveling off.
The new term of art in the office leasing industry, “flight to quality,” means lessees are seeking highest quality office space when they enter into new leases, typically Class A space that is new and in buildings that includes amenities like a gym, coffee shop, retail, and personal service businesses. That term is heard frequently to explain why new office construction is planned in a market with such high vacancy rates, including when one new building, High Pointe Tower, was recently approved in GV at 6430 S. Fiddlers Green Circle.
Business Den points out that “Class B and C office buildings are the drivers behind downtown’s rising vacancy…those buildings have a collective vacancy rate of 35.5%,” compared to 23% for Class A buildings.
In the area of GV with the highest relative office vacancy rate, the area near the Orchard Light Rail station south of the Landmark Towers all the way up to Orchard Road, virtually all the vacant office space is Class B or Class C. Current city policy, going back to 2018, is that no multi-family residential development will be considered by the city council, even though it is permitted by GV’s zoning code.
Given current economic trends in the office rental market, the data published by Business Den could be an additional cause for concern over the future of that area, something that has become a much-discussed issue in the current GV District Two city council contest between 14-year incumbents Dave Kerber and Anne Ingebretsen, who are being challenged by newcomers-to-politics Mike Lopez and Michail Sidorov.