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Tenant activity for Colorado Springs office space users requiring 5,000 square feet or less remained relatively strong in the third quarter of 2021, according to a report from commercial real estate brokers Cushman & Wakefield.

“We also saw signs of life in the larger users, with activity increasing on a weekly basis, as the environment seems to be more accepting of what the future will hold for office real estate in our city,” principals Greg Phaneuf and Peter Scoville wrote in their quarterly Class A Office real estate newsletter, released Oct. 11.

Decreased demand due to COVID-19, limited new product and increased construction costs combined to put upward pressure on lease rates, according to the newsletter.

Phaneuf and Scoville anticipate that lease rates will continue to climb as demand rises for the next six months to a year.

The third-quarter vacancy rate stood at 12.88 percent, increasing from Q2’s rate and year over year. Lease rates averaged $17.14 per square foot, also increasing over the previous quarter and year over year.

Absorption, which measures total new square footage leased by tenants, was a negative 25,952 square feet.

“While we saw modest negative absorption in the third quarter, the amount of sublease space did not increase dramatically and we do not anticipate a large amount of negative absorption going forward,” the newsletter stated.

Submarket vacancies were highest in the north I-25 corridor, coming in at 17.51 percent. In the Airport (Southeast) area, vacancies were at 7.72 percent for the quarter, and vacancies stood at 6.37 percent in the central business district.