Office Sector Adjusting to New Realities
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Fort Collins/Loveland/
Larimer County
The Larimer County sub-market is comprised of 12.1 million square feet of office space, only up 0.6% from Q1 2022. Currently, there is over 1 million square feet of available space, of that 360,000 square feet is sublease space. The vacancy rate is 5.4%, up 0.1% from Q4 2022. Occupancy rates continued to declined over 2022 and as of Q1 2023, occupancy sits at 94.6%. 12-month net absorption was only 59,700 square feet, down from 237,000 square feet in the prior period, a 74.8% decrease. For the last three quarters, there has been no office space under construction, with constructions starts in Q1/Q2 2022 totaling 16,000 square feet. A stark contrast to 2020 when there was over 166,000 square feet of construction starts in the sub-market. In 2022, there was 230 lease transactions completed; of that only seven leases were over 10,000 square feet and only 7.4% of leases completed were over 5,000 square feet.
Market rent growth is expected to decline over 2023; annual market rents only grew by 2.9% from Q1 2022. Current market rents sit at $24.66 per square foot. Market sale price per square foot increased by 2.8% from the prior period, to $194, an all time high for the sub-market. Market cap rates are at 8.3% and are anticipated to increase over 2023. Condo sales during 2022, sold at a cap rate 2% lower than individual property sales, 4.4% and 6.3% respectively. The total office sales volume for 2022 was $84.4 million.
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Greeley/Weld County
The Weld County sub-market is made up of 5.9 million square feet of office space. There is 749,000 square feet available, of that 321,000 square feet is sublease space. The current vacancy rate is 7.3% or 432,000 square feet, up from 6.8% in Q4 2022. Occupancy rates are declining, with 92.7% of space occupied as of Q1 2023. 12-month net absorption was negative 35,600 square feet, down 688.5% from one year ago. As of Q1 2023, there is only 5,100 square feet under construction, down 53% from the prior period. There were only 59 lease transactions completed in 2022, totaling 83,900 square feet. Only four of the transactions were over 5,000 square feet.
Market rent growth continued to decline over 2022, with a growth of only 3% from Q1 2022. Market rent per square foot is currently $21.57, up from $20.98 from the prior period. Market sale price per square foot increased 4.1% over the past year and sits at $189, an all-time high for the Weld County sub-market, similar to the Larimer County sub-market. Market cap rates remained unchanged from the prior period at 8.6%. Office sales volume totaled $35 million for 2022, with Q3 2022 making up 41.5% of total sales.
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Economic Uncertainty Will Continue to Impact Office Sector
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Realtec Wins Big at NCCAR Titan Awards
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The Northern Colorado Commercial Association of Realtors (NCCAR) held their Annual Titan Awards in February, which honors brokers in commercial real estate. Realtec Founder and Partner, Steve Stansfield, won the NCCAR Legacy Award for his achievements and contributions to the commercial real estate industry over the past 45 years. Stansfield founded Realtec in 1989, which was one of the first brokerage houses in Northern Colorado that strictly focused on commercial real estate and its singular focus allowed it to achieve a dominate presence in the region.
Ron Kuehl, Larry Melton and Jamie Globelnik of Realtec Loveland were awarded Deal of the Year for successfully completing the sale of a 152-acre site to Amazon in Loveland, Colorado. The new Amazon fulfillment center is well underway to completion and will be 3.87 million square feet, which will be the second largest Amazon facility in the U.S. This recognition is an honor to Realtec and the associates who worked hard to bring this transaction to fruition. Last year was a great year in real estate and there will be many opportunities for investors, landlords and tenants in 2023.
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Realtec is here to help navigate the changing market
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CoStar Market Reports - Larimer and Weld County
Q1 2023
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(970) 346-9900
1711 61st Street, Ste. 104
Greeley, CO 80634
Lanny Duggar
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(970) 229-9900
712 Whalers Way, Bldg. B, Suite 300
Fort Collins, CO 80525
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(970) 593-9900
200 E. 7th Street, Ste. 418
Loveland, CO 80537
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This quarterly publication is authored by Jamie Globelnik of Realtec Loveland
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