American Properties Inc. of New York, owner of the Denver Newspaper Agency Tower, is trying to decide what to do with office space in that building vacated by the defunct Rocky Mountain News.
One of American Properties main options is to find one or more sublease tenants for the Rocky space, which is leased by the Denver Newspaper Agency LLP (DNA), according to local real estate experts. If the real estate company puts the empty space on the market as sublease space, it will add even more to what’s already a glut of such space in Denver’s central business district. We have no details yet, Marwan Dalloul, an American Properties managing director, said of the Rocky space. We should know more in a week. Dalloul said he didn't know how much space the newspapers occupied, but that footage is being calculated.
Rocky Mountain News owner The E.W. Scripps Co. of Cincinnati shut down the 149-year-old newspaper on Feb. 27, laying off more than 200 newsroom staffers. The Rocky occupied the fifth floor of the 11-story, 320,000-square-foot DNA Tower. The L-shaped building floors each measure roughly 29,000 square feet. The DNA Tower is located at 101 W. Colfax Ave. The DNA was created in 2001 as part of a joint operating agreement (JOA) to publish The Denver Post and Rocky, including handling both papers business operations. Those operations included advertising and subscription sales. The agency continues to publish the Post.
The amount of downtown Denver sublease space more than doubled from November 2008 to mid-February from 350,000 square feet to 750,000 square feet as companies downsized because of the recession, according to local office leasing brokers. Of the Rocky space comes on the market, it would be just another piece of sublease space that would soften the sublease market even more, said Todd Roebken, national director for tenant representation at Jones Lang LaSalle Inc. in Denver. The upside of all that available sublease space is that companies can get good space at a bargain price, Roebken said.
Brokers say there is a big gap, ranging from 10 percent to 20 percent, between asking rents and rental rates tenants actually are paying. This is a great time for tenants. We do have a fair amount of sublease space, and there more coming, said Jim McGrath, senior vice president and co-branch manager at the Denver office of Studley Inc., a tenant representation specialist. Some of the largest blocks of downtown sublease space on the market include nearly 100,000 square feet of space on five floors at Wells Fargo Center formerly occupied by Newmont Mining Corp.’s headquarters, and 126,000 square feet of Gates Corp. headquarters space on four floors at 1551 Wewatta.
Asking rent for the Newmont space, whose Wells Fargo Center lease expires in 2012, is $32 to $34 per square foot per year full service, according to a brochure for the space. Studley is marketing the footage. With a full-service rental rate, the building owner pays expenses such as taxes, insurance and utilities. Newmont downtown space is available for sublease because the gold-mining company relocated its main office in late 2008 to the newly built Palazzo Verdi building in suburban Greenwood Village. The Gates building has sublease space because Gates Corp. has downsized.