The Denver commercial real estate market is shifting, reflecting broader economic trends, supply chain challenges, and evolving tenant preferences. Multifamily, office, and retail sectors each tell a different story this quarter, with increasing vacancies in some areas and strong leasing demand in others. Whether you’re an investor, landlord, or business owner, staying informed on market trends is essential. Here’s what you need to know about the latest commercial real estate conditions in Denver.
Multifamily Market: Oversupply Challenges Rent Growth
Denver’s multifamily market is experiencing increasing vacancy rates due to a surge in new deliveries. In the past year:
• 17,562 new units have been delivered, while 9,398 units were absorbed.
• The vacancy rate has climbed to 11.1%, nearly doubling from its 2021 low of 5.6%.
• Rents have declined by 3.4% year-over-year, falling below the national average of 1.1%.
Luxury apartments are leading the market in terms of new construction, with 75% of Denver’s development pipeline concentrated in high-end properties. However, vacancies in luxury units remain elevated at 13.7%, particularly in Downtown Denver, where rent declines have been most pronounced .
Despite current challenges, there is a silver lining: New construction starts have significantly slowed due to rising costs, suggesting that supply-side pressure may ease later in 2025, leading to more stable rent growth. In the meantime, landlords are focusing on retaining tenants through lease renewals and offering incentives to keep occupancy rates steady.
Office Market: High Vacancy and Tenant-Favorable Conditions
The Denver office market continues to struggle with high vacancy rates and shifting workplace preferences:
• 17.6% vacancy rate, one of the highest among major U.S. markets.
• Office leasing trends favor tenants, with 30% discounts available on sublease space compared to direct leases.
• New lease sizes have decreased by 40% since 2015, with companies optimizing space efficiency.
Older office buildings in Downtown Denver are facing the most difficulty, particularly those built before 2020. Newer, high-quality office spaces are absorbing most demand, as tenants seek to improve workplace appeal and attract talent .
For investors, office sales volume is down 60% year-over-year, marking the largest slowdown among all commercial asset classes. With distressed properties increasing, 2025 may present opportunities for value-driven buyers looking for redevelopment projects in underperforming areas.
Retail Market: Resilience Amid Economic Uncertainty
Denver’s retail market remains strong compared to office and multifamily, supported by low availability and stable demand:
• 4.0% vacancy rate, one of the lowest among commercial sectors.
• Market asking rent grew 3.6% year-over-year, slightly above the national average of 1.9%.
• Leasing activity is driven by national chains and experiential tenants, such as entertainment centers, fitness facilities, and restaurants.
The Cherry Creek submarket continues to outperform, with retail rents at $46.50/SF, nearly double the metro average . Meanwhile, ground-floor retail in office buildings downtown is struggling, as lower foot traffic continues to impact leasing demand.
Key Takeaways for Investors and Business Owners
• Multifamily investors should focus on tenant retention strategies while monitoring supply-side constraints that could ease pressure on rent growth in late 2025.
• Office landlords should consider property upgrades to attract tenants looking for modern workspaces, while buyers may find opportunities in distressed properties.
• Retail remains a strong investment sector, particularly in high-demand submarkets like Cherry Creek and areas benefiting from new residential developments.
Navigating the Denver Commercial Market with Corken + Company
The Denver commercial real estate market is evolving, and Corken + Company is here to help you stay ahead. Whether you’re looking to buy, lease, or invest, our expertise ensures you make the most strategic moves in today’s dynamic market.
📞 Call us at 303-858-8003 or visit www.corken.co to explore commercial real estate opportunities with confidence.
