How the sublease market is evolving and what it signals about Denver’s office recovery.
The Sublease Market as Market Indicator
The sublease market serves as a leading indicator for broader office market health. When companies reduce headcount or shift to hybrid work, they often put excess space on the sublease market before their lease expires. Conversely, declining sublease availability suggests companies have worked through their space rationalization and are no longer actively shedding square footage.
In Denver, recent sublease trends offer encouraging signals for the office market’s trajectory.
Current Sublease Conditions
Downtown Denver’s sublease market has shown meaningful improvement. According to CBRE data, sublease availability decreased by 63,000 square feet to approximately 1.4 million square feet in Q2 2025. This represents a 29.1% decline year-over-year—one of the most significant sublease reductions in recent years.
| Sublease Metric | Current Data |
| Downtown Sublease Available | ~1.4 million SF |
| Year-over-Year Change | -29.1% |
| Quarterly Change | -63,000 SF |
| Trend Direction | Declining (positive signal) |
Source: CoStar, SVN Denver Commercial, CBRE Denver Office Figures Q4 2025, Cushman & Wakefield MarketBeat
Why Sublease Availability Is Declining
Space Rationalization Complete
Many companies have completed their post-pandemic space rationalization. The wave of large sublease offerings that hit the market in 2020-2022 as companies adopted hybrid work has largely worked its way through the system. Companies that were going to shed space have done so; those that remain are more likely to hold or even expand.
Sublease Expirations
Some sublease availability has simply expired. Subleases typically have shorter terms than direct leases, and space that was put on the market in 2020-2021 may have underlying leases that have now expired or are approaching expiration, removing that space from the sublease market.
Sublease Absorption
Quality sublease space has attracted tenants seeking value. Companies looking to expand or relocate have found attractive opportunities in sublease space that offered below-market rents, existing buildouts, and shorter-term commitments. This absorption has removed available sublease inventory from the market.
Opportunities in the Sublease Market
For Tenants
Cost savings: Sublease space typically offers 20-40% discounts compared to direct space, depending on the sublessor’s motivation and remaining lease term.
Move-in ready: Many sublease spaces come fully built out with furniture, reducing upfront capital requirements and time to occupancy.
Flexibility: Shorter sublease terms can provide flexibility for companies uncertain about their long-term space needs.
Quality upgrades: Tenants may access higher-quality space through sublease than they could afford through direct lease, as sublessors often discount premium space significantly.
For Tenants: Considerations
Limited customization: Sublease tenants generally take space as-is with limited ability to modify layouts or finishes.
Sublessor credit risk: If the sublessor defaults on their master lease, the subtenant could be affected. Due diligence on sublessor financial health is important.
Term limitations: Sublease terms cannot extend beyond the master lease, which may not align with tenant needs.
What Declining Sublease Signals
The 29.1% year-over-year decline in downtown Denver sublease availability suggests several positive developments for the broader office market:
Stabilizing demand: Companies are no longer actively adding to sublease supply, indicating that space rationalization has largely concluded.
Market clearing: Quality sublease space is being absorbed, demonstrating that tenant demand exists at the right price points.
Reduced overhang: Less sublease competition makes direct space more attractive and supports asking rents for landlords.
Sublease Outlook for 2026
The sublease market should continue to improve in 2026, though several factors could influence the trajectory:
Economic conditions: A recession or significant layoffs in technology and professional services could generate new sublease supply.
Return-to-office policies: Companies mandating increased office presence may absorb some sublease space, while those allowing continued remote work may generate new availability.
Large tenant decisions: Individual large tenant decisions to consolidate or relocate can significantly impact sublease availability in either direction.
Bottom Line
Denver’s declining sublease availability is one of the most encouraging signals in the office market. The 29.1% year-over-year reduction suggests that companies have completed their pandemic-era space rationalization and that quality sublease space is being absorbed by tenants seeking value. While sublease opportunities still exist for tenants seeking discounts and flexibility, the window for the deepest discounts may be narrowing as availability contracts.
About SVN Denver Commercial
SVN Denver Commercial helps tenants identify sublease opportunities and navigate the Denver office market. Contact us to discuss your office space needs and explore available options.