According to CBRE’s Q2 Denver Downtown Office Figures, encouraging market signals suggest that the downtown office market is slowly progressing toward recovery, as more occupiers commit to long-term leases and a slowdown in new development sets the stage for stabilizing vacancy rates. Though the total vacancy rate still rose by 90 bps quarter-over-quarter and 150 bps year-over-year, reaching 36.8%.
Denver Downtown Office Figures Q2 2025
- Sublease availability decreased by 63,000 sq. ft. to 1.4 million sq. ft. and was down 29.1% year-over-year.
- Encouraging market signals indicate that downtown Denver’s office market is gradually recovering, as more occupiers commit to long-term leases and a slowdown in new development sets the stage for stabilizing vacancy rates. However, the total vacancy rate still rose by 90 bps quarter-over-quarter and 150 bps year-over-year, reaching 36.8%.
- While the Downtown submarket recorded negative net absorption of 270,000 sq. ft. this quarter, the market would have seen positive absorption if not for a major tenant relocation to the River North submarket.
- Despite the outlier, the broader market signals continued progress toward recovery with sublease availability falling for the fifth consecutive quarter, suggesting more stabilization among companies impacted by remote and hybrid work models.
While the Downtown submarket recorded negative net absorption of 270,000 sq. ft. this quarter, the market would have seen positive absorption if not for Xcel Energy vacating its 314,000-square-foot space at 1800 Larimer, downsizing to the River North submarket. This move alone accounted for a substantial share of the quarterly loss. Despite the outlier, the broader market signals continued progress toward recovery with sublease availability falling for the fifth consecutive quarter, suggesting more stabilization among companies impacted by remote and hybrid work models.
Sublease availability decreased by 63,000 sq. ft. to 1.4 million sq. ft. and was down 29.1% year-over-year. Leasing activity posted a decline this quarter but showed considerable improvement over the past 12 months, with rolling-four-quarter activity having totaled 2.1 million sq. ft., an increase of 21.8% year-over-year. Downtown’s average direct asking rent was largely unchanged for the fourth consecutive quarter after posting a decrease of 0.5% quarter-over-quarter to $41.36 per sq. ft. No new construction projects were in the pipeline for the third consecutive quarter, following the completion of 1900 Lawrence in mid-2024.
”Investment volume in 2025 should resemble 2024, with a significant uptick in transaction volume occurring in the second half of the year – driven by an increase in deal flow and capital flow to match,” said Charley Will, senior vice president at CBRE in Denver.
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