Updated 1:47 p.m.
Companies vacated more space in the Denver metro area than they took on for the first time in more than three years as the COVID-19 pandemic pushes businesses to rethink their office footprints.
The amount of space available to sublease jumped 33.3 percent in the second quarter, property brokerage CBRE said in a report today. That means companies are trying to offload 3.4 million square feet of office space, the report found. The vacancy rate rose 0.55 percent to 13.6 percent, according to the report.
“Many companies have had to conduct layoffs and are reevaluating space requirements moving forward,” CBRE analysts said in the report.
The pandemic is upending how office workers do their jobs. Many employees are still working from home even as Colorado’s social distancing regulations ease.
Some companies don’t plan on going back to the office full-time ever. Tech giants such as Facebook and Twitter have announced plans to make liberal work-from-home policies permanent. Tech startup Visible, an online mobile-phone company based in Denver, announced Thursday that it’s moving to a permanent work-from-home model, in a move reported earlier by the Denver Business Journal.
“Like most companies, we've been working remotely for well over one hundred days, “ CEO Miguel Quiroga said in an emailed statement. “We found the first few weeks of the COVID-19 pandemic to be challenging, but we’ve adjusted and now see it as the new normal.”
The technology sector was Denver’s most active office segment during the past 12 months, accounting for almost a quarter of total space leased, according to CBRE. The impact on the metro real estate market could be swift with tech firms in the vanguard of a permanent shift to work-from-home.
Cities across the country are facing a seismic shift in how people work, and what that means for everything from property values to transportation options. Denver’s booming job market is heavily weighted toward jobs that are traditionally conducted in an office, such as information, finance and professional services, according to CBRE. Long-term changes in how these companies use space could have profound impacts on downtown Denver’s property market.
So far, the most expensive, up-to-date office space is holding up better than more outdated options, according to CBRE. More moderately priced buildings saw a 78.5 percent jump in the amount of space companies are attempting to unload, according to CBRE.