Metro Denver’s office space market is outpacing the activity it saw in pre-pandemic times, one of the top three cities in the nation to do so, according to a January report from commercial real estate giant CBRE.

“Office leasing activity in metro Denver jumped 39 points in January, now standing 17% above Denver’s pre-pandemic baseline,” according to the “Pulse of U.S. Office Demand” report.

Denver and Seattle were the only two markets to post gains in leasing activity in January.

The amount of sublease activity is the seventh lowest among the 12 major metropolitan markets surveyed.

When the pandemic began, companies with large amounts of office space had to rethink everything — real estate is the biggest expense for a company behind payroll. Thousands of square feet of office space sat vacant as workers shifted to remote work.

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“Denver’s success is driven by its continued in-migration, both of companies and talent,” said CBRE Senior Vice President Anthony Albanese. “There’s also the diversified nature of the industries here. We’re seeing growth in the burgeoning life sciences industry along the (U.S. Highway) 36 corridor. It’s also got the second-highest concentration of aerospace workers. Denver has become a regional hub overall.”

Using a metric for “space requirements of tenants in the market,” CBRE showed Denver’s tenant requirements are 5% above the city’s pre-pandemic levels, one of only three markets to do so with Boston and Houston scoring higher.

Albanese said the omicron variant of COVID-19, which hit big in November, caused companies to pause just as they were ready with “return to office” plans.

“That’s where the sublease market can provide an advantage,” he said. “It’s ready to go and you can skip the supply-chain logistics and the lumpy environment of building new right now. Costs have increased for things like furniture. So a plug-and-play sublease can help a company delay decisions. That’s making subleases very attractive right now.”

But when new product is available, called Class A space, it’s been leasing quickly.

“There’s been a real flight to quality,” Albanese said. “Companies have been putting an emphasis on recruiting tools and they want employees to come back to a place that’s exciting. They want to create an enjoyable place to work. Some of the new construction projects are really leasing up well.”

As far as the central business district is concerned, Albanese said it’s coming back.

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“People may or may not have been downtown for a long time,” he said. “We’ve had a few different evolutions in the last two years. But it’s a much friendlier feeling place in the last six months. LoDo and the Union Station submarkets are back to pre-pandemic pricing.”

“I want to reiterate that Denver is seeing not just companies coming from the coasts, but international companies as well. They all love our educated workforce,” he said. “It’s not just local companies’ employees coming back. We’re continuing to grow and there’s a great recognition on a global scale that Denver is a great place to live and work.”