Sun Microsystems’ acquisition of StorageTek has brokers worried about the vitality of metro Denver’s northwest office real estate market, which has seen a partial recovery in the past year.
The concern is over whether the companies will make any sudden or dramatic moves, such as layoffs, departures to other states or countries, or a consolidation of their nearby campuses.
The northwest market’s office vacancy rate has shrunk for more than a year. The rate, including space available for sublease, hovers at 36 percent, according to Denver commercial brokerage CB Richard Ellis. That’s down from more than 50 percent one year ago.
“We just have to hope they don’t combine forces in a way that reduces their need for space,” said Alan Seiver, a senior vice president of Grubb & Ellis who specializes in the northwest office market.
Sun officials brush aside such notions. At a meeting of the Interlocken Owners Association on Wednesday, one Sun executive said the company plans to reduce its real estate holdings in California – but has no plans to shrink its 1.1 million-square-foot Broomfield campus.
“Our general impression is that Sun’s activity in Broomfield will continue at positive levels relative to other times we’ve seen,” said Assistant City Manager Charles Ozaki, who attended the meeting.
Sun has, however, tried for a year to find tenants for 375,000 square feet of space in two buildings on its campus. It’s unlikely StorageTek’s operations would be moved there, because that company has continued “to expand and customize its facilities – most recently in 2000 – to meet its own very specific needs,” said Ethan Reed, CB Richard Ellis’ senior information coordinator.
StorageTek’s campus comprises 1.6 million square feet – more than double the available space on the Sun campus.
Researchers peg the northwest office market’s size at 7.4 million square feet – a figure that doesn’t include owner-occupied buildings such as those belonging to StorageTek and Sun.
Staff writer Christine Tatum can be reached at 303-820-1015 or ctatum@denverpost.com.
