A view of downtown Denver from above the Capitol building. (Courtesy Guerilla Capturing)
The vacancy rate for downtown Denver office space, already sky high, ticked up in the first quarter of 2025, according to CBRE.
The total vacancy rate at the end of March was 35.3%, according to the brokerage, up from 34.9% at the end of 2024.Â
Total vacancy includes both direct vacancy, in which unused space is being marketed by a landlord, and space being marketed for sublease by a tenant. Direct vacancy itself was 31.9% during the quarter.
CBRE’s definition of “downtown” includes the Central Business District and LoDo, as well as LoHi’s Platte Street and a portion of Uptown. It doesn’t include RiNo, Cherry Creek or other spots farther afield. (Different brokerages have slightly different statistics. Newmark, with a broader definition of downtown, put its first-quarter vacancy at 37.5%.)
In Denver and other major cities, office vacancy generally has been trending upward since the onset of the pandemic, which prompted many companies to rethink their use of office space.
Total downtown vacancy was 16.5% at the end of 2019, a few months before COVID, according to CBRE. It topped 20% in the first quarter of 2021 and hit 25% one year later. In the third quarter of 2023, it topped 30%.
It took a year and a half – until the most recent quarter – to add another 5 percentage points to that figure.
The biggest downtown lease deal of the first quarter was the Colorado labor department’s 131,000 square feet at 707 17th St., through both a sublease and a direct lease. But that was only a win to an extent. The department is decreasing its footprint by a third as it moves from the nearby 621 and 633 17th St. towers, meaning the deal only added to the amount of vacant space downtown.
Quarterly data previously provided by CBRE only goes back to 2006. But office leasing brokers told BusinessDen in 2023 that downtown hadn’t had 30% vacancy since around 1990. Oil and gas companies, then playing a more dominant role in Denver’s economy, were in a downturn. And a 1980s office building boom locally meant supply was greater than ever.
During the Great Recession, downtown vacancy went only as high as 17.4%, per CBRE.
Within downtown, vacancy varies widely between buildings and geography. The lowest-tier Class C buildings had a vacancy rate of 42%, while the top-tier Class A buildings were at 28.7%. What CBRE considers LoDo and the Central Platte Valley — Larimer Street to Interstate 25, with Union Station in the middle — had total vacancy of just 19.4%, according to the firm.
Andrew Blaustein, a broker with Newmark, told BusinessDen that he continues to see a “flight to quality,” the post-pandemic industry maxim that firms that do want office space generally want the best possible space. And he said he sees more companies pushing employees to actually use the space they’ve leased.
Andrew Blaustein
“The return to office is happening. … It’s not a lot. It’s incremental,” he said.
Sublease deals are getting done, he said, if the space involved hits the quality markers, which generally involve location, building class and amenities. Those deals let companies get in a building at a discount with space that’s already been built out. But top-tier subleasing listings can frustrate landlords attempting to directly lease space.
“If you price it right, it will go quickly,” he said of quality sublease space. “And if it’s commodity space, it doesn’t matter.”
While some lease deals are happening, they generally involve companies already located in the Denver market. Blaustein said he’s not aware of much activity involving firms from outside the market — the deals that would truly grow the pool of Denver employers. He was involved in the last major such deal, representing Bet365 when it took space at 1701 Platte St. in 2023.
“We have yet to see that come back,” Blaustein said.
Downtown saw absorption of negative 86,000 square feet in the first quarter, meaning less space was leased than was vacated or listed for sublease. But, five years after the start of the pandemic, Blaustein said he figures most companies have decided by now whether to shed space. Some businesses returning to the office have even talked about adding space, he said.
“Eventually, we’ll stop the bleeding through organic growth, if not importing companies,” he said.
Looking beyond just downtown, total office vacancy in the Denver metropolitan area was 26.8% in the first quarter, according to CBRE.
