1. By: Julie Wanzer, LEED AP
The first quarter of 2016 ended with a rise in
officevacancyrates,especiallyinintheCentral
Business District (CBD) of Denver where total
availability exceeds 19%, according to JLL’s
Office Insight research report. This number
includes non-vacant spaces and a large
number of oil and gas subleases that are
currently available.
In regards to the sublease market in CBD,
JLL’s Senior Research Manager for Denver,
Thomas Jaroszewski comments, “Vacancy
rates, for the most part, will remain steady
on a direct basis, but the rise comes in when
considering the energy-company sublease
space coming to market. Beginning in 2015,
there was just under 845,000 SF brought back
to the sublease market and currently about
593,000 SF still available.”
As traditional oil and gas companies vacate
the existing office spaces in downtown
Denver, the question remains as to who will
fill these spaces and absorb this negative
net absorption of 349,535 SF in the first
quarter as reported by JLL. Mr. Jaroszewski
attributed a migration of new tenants that
want to occupy office space in the CBD that
was not historically available, as one of the
foreseeable effects of the continued decline
of the oil and gas industry.
One source of viable tenants includes the
waveofco-workingspacescompaniesthatare
taking over offices and industrial warehouses,
and remodeling them to accommodate the
influx of entrepreneurs in Colorado. The 2015
Kauffman Index report, which tracks startup
activity nationwide, ranked Colorado as the
Decline of Oil and Gas
Opens Doors New Office Tenants

2. number four state with the most startup
activity, attributing 350 people out of every
100,000 adults becoming entrepreneurs
each month.
Filling the gap for those entrepreneurs who
are unable to work from home or want to
expand their presence beyond meetings at
the local coffee shop, co-working spaces are
popping up all over Denver and taking over
vacated office space. WeWork Denver Union
Station location just opened their doors in
mid-April and took over approximately 69,000
SF, with their LoHi location occupying about
73,000 SF at the Lab on Platte building.
Additional co-working companies claiming
real estate ranging from 13,000 SF to 152,000
SF in Denver include:
• Industry boasts 152,000 SF of office
space in RiNo
• Galvanize recently added a second
location at 50,000 SF on Platte Street
• Spaces Denver currently renovating
35,000 SF in Ballpark area
• Modworks now occupies 13,000 SF in the
Petroleum Building
SPACES Office Space and Coworking in
Long Island City, New York and Amsterdam, Netherlands

3. With headlines of bankruptcy, job cuts and
continued low oil prices, the decline of oil and
gas companies in Colorado is spilling over
into the commercial real estate market. This
resulting abundance of office sublease space
allowing new tenants such as co-working
companies to occupy the CBD, has the
potential to alter the office real estate culture
in downtown Denver.
Sheldon Shadrach, Area Manager for Spaces
Denver, comments, “Our office is a prime
location and allows us to focus on a creative,
niche market where we can redefine how
people work and enjoy the office space where
they work.”
Graph courtesy of JLL Research
Photos courtesy of Spaces Denver