This is a good sign for downtown Denver and the return to the office as the law firm of Sherman & Howard expands their new downtown office by 20% after only being in the space a little over a year.

Sherman & Howard Expands Office Lease at Block 162

By milehighcre

Only 15 months after their initial occupancy at Block 162, the office tower’s first major tenant Denver-based law firm Sherman & Howard L.L.C. has expanded their current lease of nearly 60,000 square feet by more than 20 percent to include an additional 12,049 square feet.

Located at 675 15th Street, between Welton and California Streets in downtown’s Central Business District, Block 162 is a 30–story, 596,295–square–foot, Class A speculative office building developed by Patrinely Group that is certified LEED Gold Core and Shell.

“As many firms navigate a return–to–office strategy, Sherman & Howard’s decision to expand their lease at Block 162 so quickly after their initial occupancy in December 2021 reaffirms our strategy to build the region’s premier office building, and validates our conviction that a flight to quality will successfully attract employees back to the office and reinforce positive company culture,” said Patrinely Group’s Rocky Mountain Region Senior Vice President David Haltom. “At Block 162, we have delivered cutting–edge office space in a sustainable, energy–efficient, and well–ventilated building that offers best–in–class HVAC, flexible, column–free floor plates for optimal customization, and first–class indoor/outdoor amenities and access to light and air to take advantage of Denver’s great climate.”

According to a Gensler study, the number one answer when asked why employees come to the office was “to focus on my work.” I think most would have guessed to socialize and partake in the office amenities. Working from home must be distracting!

What employees want in a post-Covid office space

By Marq Burnett, Associate Editor, The Playbook

How to approach real estate in the post-Covid world will be a key question for employers to consider in 2023 — especially if economic conditions lead to cost-cutting measures.

But what do employees actually want in a post-Covid office space?

That question was a focal point of the Gensler Research Institute’s U.S. Workplace Survey 2022. Gensler is a global architecture, design and planning firm with more than 50 locations across the world.

One big takeaway? Employees want space where they can get work done, signaling a potential disconnect with managers who often focus on the office as a destination for collaboration.

When asked why they come to the office, “to focus on my work” was the most popular answer (48%), outdistancing many of the reasons often cited by managers or companies touting the need to return to the office.

No question the world is changing and office space now comes in all shapes and sizes! But I think Chris Erickson, a partner with Denver-based venture capital firm Range Ventures, is right on with his quote, “Even with all of the remote productivity tools available these days, I haven’t seen anything I think replaces the meeting in a conference room with a whiteboard. For companies in that growth stage, the benefit of colocating and solving hard problems together way outweighs the cost.”

Tech Companies Still Need Offices. But Here’s How Their Look and Location Are Changing.

By Katie Burke –  CoStar News

September 12, 2022

As the 2010s came to a close, tech workers would swarm around the Salesforce Tower in downtown San Francisco on weekday mornings, filling the nearby cafes, light rail stations and soaring office buildings stacked with companies eager to lease distinctive space.

More than three and a half years later, the weekday scene is far quieter, with many workers at home on any given workday. The pandemic spurred early-stage startups and international tech heavyweights to shift to remote, hybrid and flexible work models that led them to reduce, relocate or completely vacate office properties across the country.

Companies are still investing in physical space, but on a smaller, more dispersed scale. Customer service software maker Salesforce has taken a long-term lease at a ranch in a remote Silicon Valley mountain suburb, while search engine giant Google has adopted outdoor work campuses and “Team Pods.” Tech companies are entering a workplace transition that could have a lasting effect on some of the most prominent and expensive U.S. office markets.

“Companies are being smarter with their dollars,” said Samantha Martz, a JLL executive vice president and leader of its High-Growth Technology group in San Francisco. “They were leasing a ton of space in the days before the pandemic, but now the approach is to lease a smaller amount that can be used extremely purposefully in order to let teams be more productive and to have those in-person moments be valuable. Yes, maybe it isn’t five days a week, but when workers do come in, that time is very important and impactful.”

It is clear that the hybrid work from home results and future are unclear! Just read the recent Denver Business Journal article on the topic and your head will be spinning. But common sense tells me that if you cannot do your job better by going to the office, why should you. And I think certain jobs and situations require more collaboration/office time than others.

Likewise, I believe certain people may need more time in the office than others to be effective and happy with their job. Each company will have to evaluate what works best for their situation. In the end, the office does have to be a place that employees want to go and that enhances their productivity.

The return to office is losing steam. Here’s how to make your office a magnet.

By Andy Medici  –  Senior Reporter, The Playbook,

Aug 17, 2022

The much-vaunted return-to-the-office has plateaued — and many workers remain uninterested in coming back full time.

According to the latest data from Work from Home Research, released in late July in collaboration with Stanford University and the University of Chicago, the percentage of paid full days worked from home has stabilized at just over 30% of an average week. Among workers who had previously worked at least some amount of time from home during the pandemic, that share of days worked from home has stabilized at just under 50%.

Roughly 15% of workers are fully remote, compared to about 52% who are full-time onsite and about 33% who are hybrid, although the hybrid percentage continues to increase as the disconnect over remote work appears to be narrowing.

If your company needs new office space or wants to lock in your current space longer term, now is a good time to consider exploring your options.

It’s no big surprise, office vacancies in SES Denver have increased significantly in the last 2 years from 11.5% at the beginning of 2020 to the current 16.4% as Covid forced the close of some offices and remote work reduced use. In addition, the amount of Sublease space on the market increased 70% to 1.5M sf the equivalent of about 10 suburban office buildings, making up much of the total negative absorption of 2M sf.

However, what is surprising is that the average asking rate actually increased 5% or $1.32 psf to $27.47 psf over this period contradictory to rising vacancies and negative absorption. Possible explanations include: effective rates are less due free rent concessions increasing; Landlords holding tough on rate due to other rising costs of operating expenses and tenant improvements; and Lenders not allowing Landlord’s to lower rates.

Tenant Improvements that use to cost in the $30 to $40 psf range can easily cost in the $60 to $80 psf range. And since the Landlord often pays all or most of this cost, the Landlord’s net effective rates have dramatically decreased. A $30 psf increase in tenant improvement cost amortized over a typical 5 year lease equates to a loss of $6.00 psf in the effective rate of the Landlord, which means the average asking rate increase of $1.32 psf only partially offsets this loss.

Another surprising trend is that Class A space has suffered more than Class B or C space with the biggest increase in vacancy of 6.9% to 18.8%. A commonly reported theme is that there has been a flight to quality, but the statistics don’t bear this out. Speculating on the reason, perhaps the bigger Fortune 500 type of companies occupy more of the Class A space than the more regional or local smaller companies. And the Fortune 500 types of companies have been more likely to send employees home to work than these smaller companies. But going forward, as companies fight to retain and attract good employees, I do think there will be more of tendency toward higher quality buildings.

Source: CoStar

What does this mean for Tenants/Companies? Tenant’s are in a stronger position due to having more choices both from increased direct space and subleases. Sublease options often come with discounted rates and free furniture. Landlord’s will have to be aggressive on their ultimate economics or otherwise increase the value of their offerings to compete.

Denver is a city with an innovative driving force to be full of opportunity!

Denver is known for:

• The wealth of talent
• 45% of people who have a degree
• High quality of life that attracts workers
• Central life sciences hub that continues to grow

There are ten predictions for economic recovery in ten different developments ranked from importance.

Forbes #2 top prediction for commercial real estate is “The office will remain the hub of business activity.”

The #1 prediction is “The economy and CRE markets will continue to recover in 2022, and setbacks from flareups of Covid-19 will be short-lived.”

The future in commercial real estate will continue to improve and get better in 2022.

Subleasing office space a better option? As your Denver office Tenant Reps, we want to find the best option for you and your business. Here are six reasons that can help you determine what works the best.

1. Beneficial for startups and businesses that are growing, requiring less capital to get started.
2. Below market rates
3. Usually, shorter terms are available, providing flexibility for growth.
4. Often furniture is included
5. Prewired usually saves you up to $3.00 PSF
6. Quicker occupancy than waiting for tenant improvement construction.

Whether your company is working on a flexible schedule, the space is too big or, you are outgrowing your space, there are Benefits to occupying sublease space.

Market Reports are essential when searching for office space. Searching on publicly available databases sometimes doesn’t offer detailed information for your particular needs. An effective search involves narrowing specific data and locations in each market.

We are confident, knowledgeable, and experienced to effectively search and narrow down specifics to meet your requirements and needs for your office space search.  Save yourself some time and allow our experts to find the suitable space for your needs quickly!