Denver Office Market 2026 Outlook: Recovery or Continued Decline?
A comprehensive analysis of Denver’s office market fundamentals, vacancy trends, and investment outlook for 2026.
Executive Summary
Denver’s office market stands at a critical inflection point as we enter 2026. After years of elevated vacancy rates driven by pandemic-era remote work shifts, the market is showing early signs of stabilization. Metro Denver’s overall vacancy rate declined 20 basis points quarter-over-quarter to 26.3% in Q4 2025, while Class A properties continue to dramatically outperform the broader market. This analysis examines whether these green shoots signal genuine recovery or merely a temporary pause in the market’s challenges.
Current Market Conditions
Vacancy Rate Analysis
The Denver metro office market recorded a total vacancy rate of 26.3% at the end of Q4 2025, representing a modest 20 basis point decline from the previous quarter. While this remains elevated compared to the pre-pandemic rate of approximately 12%, it marks the first quarterly improvement in several years.
Key vacancy metrics reveal a bifurcated market:
| Submarket | Vacancy Rate | Trend |
| Metro Denver Overall | 26.3% | Improving (-20 bps QoQ) |
| Downtown Denver | 36.8-37.7% | Stabilizing |
| Upper Downtown | 40-46% | Challenged |
| LoDo | 19.4% | Strong |
| Prime/Class A Buildings | 6.7% | Outperforming |
Source: CoStar, SVN Denver Commercial, CBRE Denver Office Figures Q4 2025, Cushman & Wakefield MarketBeat
Flight to Quality Accelerates
Perhaps the most significant trend shaping Denver’s office market is the dramatic flight to quality. According to CBRE analysis, prime office buildings in Denver recorded a vacancy rate of just 6.7% as of Q2 2024, compared to the total market vacancy of 22.5% at that time—a gap of 15.8 percentage points.
Prime buildings are also commanding significant rent premiums. Nationally, prime buildings attracted an average rent premium of 84% more than the rest of the market in the first quarter of 2025, up from 60% in mid-2018. In Denver, Class A properties dominated leasing activity in Q4 2024, capturing 70.1% of total transactions with 837,000 square feet of activity.
Leasing Activity and Demand Drivers
Leasing activity showed encouraging momentum in 2024 and early 2025. Total leasing activity reached 12.6 million square feet in 2024, the highest total since 2021, with 65.8% representing new leases and expansions rather than renewals. Class A leasing increased 17.9% year-over-year, while Class B leasing declined 14.6%.
The technology sector continues to drive demand, accounting for 21.4% of office space leased in Denver during 2024. Tech companies also captured 64.6% of venture capital funding in Denver during the first half of 2024, with approximately $1.1 billion granted across 47 deals.
Investment Market Outlook
Investment activity in Denver metro improved significantly in late 2024, recording 19 transactions and sales volume of $277.4 million in Q4 2024 compared to 13 transactions and $152.2 million in Q3 2024. Notable transactions included CommonSpirit Health’s acquisition of a 272,000 square foot property in the Southeast submarket for $45.5 million ($168 per square foot).
However, owners face significant challenges. More owners are facing potential loan defaults and foreclosures, particularly those with high-vacancy properties that need capital improvements. Tradeable assets are garnering buyer activity but transacting at much lower values than pre-pandemic peaks.
2026 Forecast: Recovery or Decline?
The Case for Recovery:
Several factors support cautious optimism for 2026. Net absorption turned positive in Q4 2024 for only the second time in recent years. Sublease availability declined 29.1% year-over-year, suggesting companies are no longer actively shedding space. The construction pipeline has essentially dried up, with no new speculative office development underway in downtown Denver. Downtown foot traffic reached 93% of pre-pandemic levels in September 2025, and weekday employee presence hit 64% of 2019 levels—a seven percentage point improvement from the prior year.
The Case for Continued Challenges:
Despite positive signals, significant headwinds remain. The 26.3% metro vacancy rate remains more than double pre-pandemic levels. Many companies are still fine-tuning hybrid work strategies, which typically results in smaller footprints when leases expire. Upper Downtown faces particularly acute challenges with vacancy rates exceeding 40%. The CMBS maturity wall will force difficult decisions for many property owners in 2026, potentially leading to distressed sales.
Investment Implications
For investors considering Denver office in 2026, the market presents a tale of two cities. Prime, well-amenitized properties in strong locations like LoDo, Cherry Creek, and RiNo offer relatively low vacancy and strong tenant demand. These assets command premium pricing but offer stability. Conversely, Class B and C properties in challenged submarkets like Upper Downtown represent higher-risk, higher-potential-return opportunities. These assets may be available at significant discounts but require substantial capital for repositioning and carry execution risk.
Bottom Line
Denver’s office market is showing genuine signs of stabilization rather than continued decline, but a full recovery to pre-pandemic fundamentals remains years away. The flight to quality will continue to define the market, creating distinct opportunities for investors willing to target either the premium segment or the deep value-add/distressed space. The most likely scenario for 2026 is gradual improvement in fundamentals, with vacancy rates slowly declining as new supply remains constrained and return-to-office trends continue to firm.
About SVN Denver Commercial
SVN Denver Commercial is a full-service commercial real estate brokerage serving the Denver metro area. Our team specializes in office, industrial, retail, and multifamily investment sales, leasing, and advisory services. Contact us today to discuss your Denver commercial real estate needs.