Steadily rising unemployment, tumbling stock markets, bank failures, massive government bailouts, foreclosures, huge state budget deficits and Somali pirates there’s no shortage of bad news these days!  But, in the midst of all this gloom, is there a silver lining?

The answer is yes if you’re a tenant in the Colorado commercial real estate market and are looking to open a new office or renew an office lease  Landlords are hungry and there are deals on Denver office space for Lease!  As Denver office vacancy rates increase, Landlord’s are predictably offering incentives, including lower lease rates, free rent, and increases in tenant improvements, or TI Allowance.

The best deals will be found in the Denver commercial properties with the highest vacancy rates – especially now – because besides being a motivator to increase cash flows, high vacancy rates can sometimes trigger a capital call by the Landlord’s lender.  In this kind of market, some Landlords are strongly motivated to negotiate early office lease renewals with existing Tenants and it is not impossible, at some buildings, to secure an immediate rent reduction.

Additionally, we are starting to see significant new sublease space coming to market.  Sublease space can often be secured for a significant discount.  In some cases, furniture, phones and other equipment can be purchased at bargain prices.  And shorter term sublease space can be converted into longer term “direct space” by having the existing tenant “buy out” of its remaining lease obligation, with some part of this penalty subsidizing the new lease rates and terms.

Because the rising vacancy rate in office space for lease will lag the rising unemployment rate, we expect this trend to continue for some time.  However, nobody really knows how long the “positive” (from a Tenant’s perspective) bad news in the Colorado commercial real estate market will continue.

In any case, it’s the right time to start planning.  Please feel free to contact us for a free “bad news” consultation!

Image credit: Petr Kratochvil | CC0

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The Guidance Advantage

Guidance Corporate Realty Advisors provides corporate tenant / buyer representation services to corporate real estate users in the Denver metropolitan area including Boulder, Colorado. Guidance also provides these services in all major U. S. markets, as well as markets in Canada, Asia, South and Central America, and Europe.

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