Denver's rental rates climb despite downturn in office leasing activity
In Q1 2024, the Denver region has experienced a surge in rental rates, with an overall increase of 5.1% year over year, and an impressive 9.4% uplift in Downtown Denver, despite a concurrent decline in leasing activity - marking the most substantial drop since 2020 - and record-high availability. This counterintuitive trend in rental pricing, typically expected to decrease under such conditions, may be attributed to two main factors. First, a sustained demand for Class A space is likely driving up average rates across all classes. Second, landlords might be maintaining higher rates to meet debt obligations, compensating tenants with extensive concession packages, including free rent and tenant improvement allowances.