D enver retains its status as a high-growth market. A net in-migration total of 18,200 residents will register as the metro’s largest inflow since 2016 and add to Denver’s growing population this year. A notable portion of these relocations are among 20- to 34-year-olds, allowing the demographic to expand by a five-year high 1.1%. This substantial increase is partially tied to a tight local labor market. As of July, Denver’s unemployment rate held below 3%, well under its 4.7% historical average. Despite a net reduc- tion over the initial seven months of 2023, employment among traditionally office-using sectors held 5.2% above its pre-pandemic headcount. These strong demographics aid Denver’s long-term office outlook as more companies start to push for hybrid and in-person attendance policies, while developers complete another minimal delivery slate in 2023. For the second consecutive year, completions will total fewer than 850,000 square feet. This measure had not been achieved in more than a decade prior to 2022, a period in which deliveries averaged 1.76 million sf per annum. Although this year’s conser- vative completion total fails to notably tame the pace of vacancy expansion, increasing 130 basis points to 21.4%, the rate is stabilizing amid improved net absorption in the second half of the year. Between July and December, ten- ants will relinquish less than half the amount of space as in the initial two quarters, underscoring that improving demand momentum may be on the horizon. When looking into the underly- ing breakdown of available space, the outlook is more nuanced. During the second quarter, Denver’s total vacancy rate, when including space available for sublease, ranked as the fifth high- est among major U.S. metros. However, when comparing markets based on the amount of space that does not have a lease attached, Denver has a better standing, ranking ninth. This indicates that, relative to other metros, more of Denver’s marketed office space has a commitment rather than being entirely empty. Although vacancy likely continues to rise in the near-term as subleases expire, the market’s notable population growth trends, a strong job INSIDE Seeing the bottom? PAGE 4 Data is increasingly showing signs that pricing is near its trough September 2023 PAGE 13 PAGE 17 Office conversions C-PACE financing could make office conversions feasible Industrial evolution Denver's industrial market has shown mixed signals in 2023 Please see Update, Page 14 Bright spots in select areas bring renewed optimism Brandon Kramer First vice president, Investments, National Office and Industrial Properties Group, Marcus & Millichap Chadd Nelson Senior associate, Investments, National Office and Industrial Properties Group, Marcus & Millichap Composition of Space by Submarket Percent of Local Inventory