O ffice sale transaction vol- ume through the end of May has been slow. With that said, the market is beginning to concede that we have reached the trough for office sales volume. Excluding loan sales, there have been six notable office sale transactions in Denver through the end of May. Specifically, there were three buildings that sold to end users, one was a stabilized office sale, and two sold as value- add, low basis acquisitions. The lack of transactions has been driven by a continued (but narrowing) bid-ask gap, an increased cost of capital and challenged leasing fundamentals materialized mainly by the hybrid working trend. However, our data suggests a wave of transactions is on the horizon and the early movers will have a signifi- cant advantage in creating value. There are cur- rently 37 office deals on the mar- ket with 12 of those buildings currently under contract. Based on our market intelligence, the number of deals coming to the market for sale and the increase in buyer activ- ity would suggest more transactions will materialize. Pricing discovery is happening. Of the six deals our team in Denver has under contract, two are being pur- chased by users, two are stabilized with attractive in place yields with long contractual lease terms, one is a redevelopment and the last one is a transitional, value-add strategy. We are finding that office sales market participants are finding common ground, hence that the bid-ask gap is narrowing in a consequential way. This means that over the next 90 to 180 days, Denver’s office market will recog- nize a “reset” as large vacancies are occupied by purchasers or are taken out of the available stock via rede- velopment, and transitional assets crystallize at lower bases. This is not just a trend in the Denver market. JLL is seeing more engage- ments, more investor inquiries and more bidding activity nationwide from well capitalized investors. Additionally, we’ve seen office buyers increasingly “lean in” to properties they have strong inter- est in and increase their price to achieve an award. The average INSIDE Office investing PAGE 6 Office buyer pool expands as private capital, smaller fund operators reengage June 2024 PAGE 22 PAGE 30 Power play Developers scour locations in secondary markets (Denver) to meet demand Industrial construction Industrial market's shift toward smaller projects and BTS portends balance Please see Thiel, Page 16 Larry Thiel Managing director, JLL Capital Markets Reaching the trough: An uptick in office transaction volume is imminent Sean Whitney Senior director, JLL Capital Markets The corner of Belleview Avenue and Crescent Parkway includes a number of office assets that are on the market or have just closed: Crescent VII and VIII (8350-8390 E. Crescent Parkway): just sold (in early June by JLL); Prentice Point (5299 DTC Blvd.): under contract; Prentice Plaza (8101 E. Prentice Place): marketing; and Axis Tower (5613 DTC Blvd.): under contract.