An in-depth analysis of downtown Denver’s historic office vacancy, its causes, and what it means for investors and tenants.
The Current State of Downtown Denver Office
Downtown Denver’s office market is experiencing vacancy levels not seen since the 1980s oil bust. As of Q3 2025, the downtown office vacancy rate reached 37.7%, according to CBRE data. This represents more than one-third of all downtown office space sitting empty—a staggering figure that has profound implications for property owners, investors, the city’s tax base, and the broader urban economy.
To put this in perspective, downtown Denver had roughly 10 million square feet of directly available office space at the end of 2024, with an additional 1.7 million square feet on the sublease market. The combined total represents enough empty space to accommodate approximately 50,000 to 60,000 office workers—workers who are no longer commuting downtown daily.
Understanding the Geographic Breakdown
Not all of downtown Denver is experiencing the same level of distress. The vacancy situation varies dramatically by micro-location:
| Area | Vacancy | Characteristics |
| Upper Downtown/CBD | 40-46% | Older Class B/C towers, limited amenities |
| Central Business District | ~37% | Mixed quality, some repositioning |
| LoDo/Union Station | 19.4% | Walkable, transit, newer buildings |
| Lower Downtown | ~20% | Restaurant/retail synergy, lifestyle |
What Caused This Historic Vacancy?
Remote Work Revolution
The COVID-19 pandemic fundamentally altered how companies view office space. Many Denver employers adopted permanent hybrid or remote work policies, reducing their space requirements by 30-50% when leases expired. Companies that previously occupied 50,000 square feet might now need only 25,000-35,000 square feet to accommodate a workforce that only comes in three days per week.
Tenant Migration Patterns
Downtown Denver has also lost major tenants to suburban locations or out-of-state relocations. The announcement that TIAA plans to leave its downtown Denver tower three years before its lease expires in 2029, relocating approximately 1,000 jobs to Texas, exemplifies this trend. Similarly, Xcel Energy moved from its 314,000-square-foot downtown headquarters to a smaller, newer building in RiNo.
Flight to Quality
Perhaps counterintuitively, some of downtown’s vacancy stems from tenants leaving for better buildings elsewhere in the metro area. Cherry Creek, RiNo, and the Denver Tech Center have attracted tenants seeking newer buildings with modern amenities. Companies that do maintain office space increasingly demand the highest-quality environments to entice employees back from home offices.
Public Safety Concerns
Downtown Denver faced significant public safety challenges following the pandemic, including visible homelessness, public drug use, and perceived increases in crime. While Mayor Mike Johnston’s administration has made progress clearing homeless encampments from the central business district and crime data shows improvements, these perceptions have lingered and influenced tenant decisions.
Signs of Stabilization
Despite the dire headline numbers, several metrics suggest downtown may be approaching a bottom:
Foot Traffic Recovery: Downtown pedestrian traffic reached 93% of September 2019 levels in September 2025—the highest recovery rate since the pandemic began. This was three percentage points higher than September 2024.
Employee Return: Weekday employee presence reached 64% of 2019 levels in September 2025, a seven percentage point jump from the prior year.
Sublease Decline: Sublease availability decreased by 63,000 square feet to 1.4 million square feet in Q2 2025, down 29.1% year-over-year, suggesting companies are no longer actively shedding excess space.
No New Supply: There are no new office construction projects in the pipeline for downtown Denver since 1900 Lawrence delivered, meaning no additional vacancy pressure from new supply.
16th Street Revival: The completion of the 16th Street Mall renovation in October 2025 has already boosted surrounding retail revenue by 35% in finished sections, and 57 new ground-floor businesses have opened downtown in 2025.
What This Means for Investors
Downtown Denver’s 37% vacancy creates both significant risks and potential opportunities for commercial real estate investors.
Value Destruction: Building values have declined dramatically. Some properties that traded for $300+ per square foot at the market peak are now selling for $150-250 per square foot or less. Properties with high vacancy and near-term debt maturities face the most pressure.
Distressed Opportunities: The CMBS maturity wall and extend-and-pretend strategies running out of runway will force some owners to sell at distressed prices. Well-capitalized investors with long time horizons may find generational buying opportunities.
Conversion Potential: Some downtown office buildings may be candidates for conversion to residential, hotel, or other uses. However, conversion economics remain challenging, and only a subset of buildings have the floor plates, ceiling heights, and structural characteristics suitable for conversion.
The Path Forward
Downtown Denver’s recovery will be measured in years, not quarters. The most likely scenario involves gradual absorption of excess space as return-to-office trends firm and no new supply enters the market. Upper Downtown and older Class B/C buildings face the longest road to recovery, while LoDo and areas near Union Station will likely stabilize first.
The city, the Downtown Denver Partnership, and private stakeholders are actively working to revitalize the urban core through retail recruitment, public safety improvements, and placemaking initiatives. These efforts, combined with natural supply constraints and gradually improving demand, suggest that downtown Denver’s office market will eventually find its footing—though at a new equilibrium that looks quite different from the pre-pandemic peak.
About SVN Denver Commercial
SVN Denver Commercial provides expert guidance on Denver’s office market for investors, tenants, and property owners. Contact us to discuss downtown Denver investment opportunities or office leasing strategies.