Denver’s commercial real estate market started 2025 with mixed conditions across different asset classes. While retail continues to perform well, the office sector remains challenged by high vacancy rates, and multifamily is dealing with oversupply.
At Corken + Company, we analyze commercial trends to provide investors, landlords, and business owners with expert insights and opportunities. Here’s what January 2025 brought to the Denver market.
Office Market: High Vacancies Persist, Tenant Preferences Shift
The Denver office market remains in a tenant-favorable position, with vacancy rates at 17.5 percent—one of the highest among major U.S. markets. Office availability continues to rise as companies downsize and restructure lease agreements in response to remote and hybrid work preferences.
Lease sizes are getting smaller, with tenants signing reduced footprints compared to pre-pandemic levels. Leasing activity is improving in newer Class A buildings, particularly those built after 2020, but older properties are struggling.
Sublease inventory remains high, with tenants securing sublet spaces at discounts up to 30 percent below market rates. Investment volume has dropped 60 percent from its five-year average, with buyers exercising caution in the face of continued office uncertainty.
Tenant incentives such as longer build-out periods, increased concessions, and flexible lease terms are becoming key strategies for landlords seeking to attract businesses.
Retail Market: Demand Outpaces Supply Despite Slow Rent Growth
Denver’s retail market remains one of the strongest commercial sectors, with low availability at 4.8 percent and strong consumer demand driving leasing activity. However, rent growth is slow, with increases of just 3.6 percent year-over-year, slightly above the national average of 1.8 percent.
Retail vacancy is at record lows, limiting space availability, especially for quick-service restaurants, experiential tenants, and national chains.
Retail construction remains limited, with most new developments being freestanding build-to-suits rather than speculative builds. Investment activity has slowed, with most deals under $5 million, driven by small private investors targeting single-tenant net-leased properties.
Well-located, high-traffic retail centers are performing well. Owners should focus on enhancing tenant mix, negotiating long-term leases, and maximizing property efficiency to stay competitive.
Multifamily Market: High Vacancies and Rent Declines Due to Oversupply
The Denver multifamily market continues to face challenges from excessive supply, with a vacancy rate of 10.9 percent—one of the highest in recent years.
Asking rents declined by 3.2 percent year-over-year, making Denver one of the weaker markets for rental growth. Luxury apartments are experiencing the highest vacancies at 13.4 percent, as supply continues to exceed demand, particularly in Downtown Denver.
Concessions are rising, with more than 50 percent of properties offering incentives, including up to eight weeks of free rent on new leases. Construction remains active, with 13,000 units still under development, though new project starts are slowing.
With rising concessions and slower rent growth, landlords should focus on renewals, flexible lease options, and targeted marketing to attract long-term tenants.
Looking Ahead: What to Watch in Early 2025
Office repositioning will continue, with many underperforming office properties being converted into residential or mixed-use developments.
Retail expansion is expected to remain strong, with neighborhood centers and experiential retail concepts in high demand.
Multifamily oversupply will persist in the short term, but fewer new developments later in 2025 should help balance the market.
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