The Denver metro office vacancy rate increased slightly in Q3 2025 due to continued, though slowing, negative net absorption. Net absorption for the quarter amounted to negative 264,000 sq. ft., an improvement from the combined negative 1.5 million sq. ft. seen in the first half of 2025 but still amply removed from a consistent rebound in office demand. As a result, total vacancy rose 30 basis points (bps) to 28.2%. Sublease availability, while still trending above pre-Covid levels, posted an annual decrease of 7.6% to 5.1 million sq. ft. Rolling four-quarter leasing activity amounted to 4.9 million sq. ft., down 13.7% from the 5.6 million sq. ft. seen in Q2 2025.
Investment activity experienced an upswing in Q3 2025, with six properties having traded at a total volume of $220 million compared to $111 million in volume across eight transactions in Q2 2025. The Denver office market continues to trend towards stabilization, with vacancies rising at a slower pace due to fewer office downsizes upon lease expirations and more companies increasing in-office days.
Offsetting the abundance of excess office space are increased owner-user purchases and planned residential conversions, the latter of which, upon receiving sufficient approvals and funding, are expected to sizably reduce leasable office stock and vacancy over the next few years. The expected increase of distressed and less desirable office assets with maturing debt will provide opportunities for new ownership with fresh capital and the potential for more conversions.
