The Denver Metro retail sector continues to defy broader economic concerns, showcasing resilience in both leasing and investment. As of Q3 2025, the market remains defined by tight vacancy, low new supply, and a strong presence of private capital in sales activity.
Inventory Stays Tight as Demand Persists
Denver’s overall retail vacancy rate sits at 4.3%, holding well below the 10-year average of 5.5%. Despite a modest net absorption loss of 920,000 square feet over the past 12 months, the availability rate remains low at 4.8%, pointing to limited turnover and sustained tenant demand .
This imbalance is increasingly felt by tenants, especially national brands seeking smaller-format or commuter-accessible spaces. Chains like Raising Cane’s (five new locations) and Dutch Bros Coffee (six new locations) led the charge in quick-service retail expansion .
Experiential retail also continues to thrive. SNÖBAHN, an indoor ski and snowboard facility, signed for 32,000 SF in Thornton, and new-to-market restaurant concepts have landed in Cherry Creek, further enriching the submarket’s luxury appeal.
Rent Growth Holds but Remains Cautious
Asking rents reached a record high of $27.00/SF, reflecting 3.0% year-over-year growth. While this marks solid improvement, it’s slightly tempered compared to the market’s fundamentals . The slowdown in inflation-adjusted growth suggests landlords are reaching a cap on what tenants—especially local retailers—are able to afford.
Submarket dynamics show more variation. Neighborhood centers saw the strongest gains, with rents up 4.1% year-over-year, followed by strip centers at 2.9%. Cherry Creek remains Denver’s highest performer, where rents now average $46.50/SF, with top leases reaching $60.00/SF .
Downtown continues to struggle. While retail on LoDo’s western edge is seeing renewed traction, the core CBD remains challenged by lower foot traffic, safety concerns, and a high concentration of vacant vintage office spaces with ground-floor storefronts.
Construction Remains Limited, Focused on Build-to-Suit
Only 590,000 SF of retail space is under construction, which accounts for just 0.4% of total inventory. The pipeline remains conservative, with projects largely limited to freestanding build-to-suit developments or mixed-use ground-floor retail .
The southeast and Cherry Creek submarkets lead in construction, with pre-leasing rates above 98%, indicating strong pre-commitment even before delivery. Redevelopment is also reshaping the urban fabric. At 8th and Lincoln, a former 14,000 SF retail site was razed for a new multifamily community with 5,000 SF of retail space, and similar transitions are occurring in areas like Belcaro .
In the last five years, 2.2 million SF of retail space has been demolished, underlining a shift toward densification and mixed-use functionality.
Investment Activity Driven by Private Capital
Denver recorded $1.3 billion in retail sales volume over the past 12 months, just under the 10-year average. What stands out is the dominance of small private investors, who accounted for nearly 65% of all transactions .
Deals under $5 million, especially single-tenant net-leased properties, remain the sweet spot. These investors often pay all-cash, seeking 1031 exchange opportunities and lower financing risk. Cap rates for this tier now average in the mid-5% range, up roughly half a percentage point since early 2022.
Larger deals, like the $20.4 million sale of Summer Valley Shopping Center in Aurora, remain rare and typically carry higher cap rates (7.25%) due to added management intensity and risk. The 99% leased, 18-tenant center was acquired as a value-add play, financed with a $13 million loan .
Price discovery remains a challenge at the top end of the market. Discrepancies between buyer and seller expectations have slowed larger institutional trades, especially in the current high-interest rate environment.
Economic Context: Growth Slows, Fundamentals Hold
Metro Denver’s population now totals 3.07 million, with growth slowing to 0.8% annually, down from a decade-long average of 1.6%. This deceleration is largely driven by reduced domestic migration, especially among cost-conscious households .
Yet, Denver remains attractive to younger demographics. Over 23% of residents are aged 24–34, supporting long-term demand for retail tied to lifestyle and community hubs. The median household income in the region continues to climb, further reinforcing spending power in key submarkets.
The labor market is anchored by strength in professional services, technology, and aerospace, with nearly 50% of residents holding a bachelor’s degree or higher, outpacing the national average.
