How Denver’s best office buildings are dramatically outperforming the broader market and what this means for investors.
A Tale of Two Markets
While headlines focus on Denver’s elevated office vacancy rates, a deeper look reveals a dramatically bifurcated market. 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. This 15.8 percentage point gap represents one of the starkest divides between quality tiers in any major U.S. office market.
The flight to quality isn’t unique to Denver—it’s a national phenomenon. But understanding how it manifests locally is essential for investors and tenants navigating the market in 2026.
Defining Prime Office in Denver
CBRE researchers collaborated with local brokers to identify each market’s highest quality buildings, designated as prime office buildings. In Denver, prime buildings share several characteristics:
Modern construction or recent renovation: Buildings constructed or substantially renovated within the past 10-15 years with contemporary design, high ceilings, floor-to-ceiling windows, and efficient floor plates.
Premium amenities: On-site fitness centers, conference facilities, outdoor terraces, high-quality food service, bike storage, and showers that support modern workplace expectations.
Prime locations: Walkable neighborhoods with access to restaurants, retail, and public transit—areas like Cherry Creek, LoDo, RiNo, and select suburban nodes.
Strong ownership and management: Well-capitalized owners who invest in ongoing improvements and responsive property management.
The Numbers Tell the Story
| Metric | Prime Office | Total Market |
| Vacancy Rate | 6.7% | 22.5% |
| Rent Premium | +84% above market | Baseline |
| Net Absorption (2020-2024) | +48M SF (national) | -170M SF (national) |
| Q4 2024 Leasing Share | 70.1% | 29.9% |
Source: CoStar, SVN Denver Commercial, CBRE Prime Office Analysis, Denver Office Figures Q4 2024
Nationally, prime buildings attracted an average rent premium of 84% more than the rest of the market in early 2025, up from 60% in mid-2018. This premium has expanded as tenants prioritize quality over quantity in their office footprints.
Why Flight to Quality Has Accelerated
Competing with the Home Office
In the new era of hybrid work, office spaces must compete with the comfort of employees’ homes. Companies seeking to recruit and retain talent are targeting the highest quality office space to make in-person work as effective and enjoyable as possible. A dreary office with outdated finishes and no amenities simply cannot compete when employees have the option to work from home.
Smaller but Better
Many companies have reduced their overall square footage while upgrading the quality of space they occupy. A company that previously leased 50,000 square feet of Class B space might now lease 30,000 square feet of Class A space—spending approximately the same amount but in a much better environment. This trade allows companies to provide premium workspace without increasing real estate costs.
ESG and Employee Expectations
Younger workers increasingly expect sustainable, healthy work environments. Modern prime buildings typically feature better air quality systems, natural light, wellness amenities, and sustainability certifications that align with employee values and corporate ESG commitments.
Where Prime Office Thrives in Denver
Prime office space in Denver is concentrated in several key submarkets:
Cherry Creek: Denver’s premier suburban submarket offers walkability, high-end retail and dining, and a affluent customer base. Cherry Creek has attracted tenants seeking a premium alternative to downtown.
LoDo/Union Station: The area around Union Station combines transit access, historic character, and modern development. LoDo’s vacancy rate of approximately 19% is dramatically lower than the downtown average.
RiNo/River North: Denver’s creative district has attracted technology, creative, and professional services firms seeking hip, amenitized environments. Xcel Energy’s recent relocation to RiNo exemplifies the submarket’s appeal.
Boulder: The Boulder market recorded a notable 170 basis point decline in vacancy quarter-over-quarter in late 2024, with prime tech-oriented buildings performing particularly well.
Investment Implications
The flight to quality has significant implications for commercial real estate investors:
Prime assets command premium pricing: Well-located, high-quality office buildings in Denver trade at significantly tighter cap rates than commodity product. While this means higher entry prices, it also provides greater stability and lower vacancy risk.
Value-add requires capital: Older buildings can potentially be repositioned to capture flight-to-quality demand, but this requires substantial capital investment in amenities, common areas, and building systems. The economics of such renovations must be carefully underwritten.
Commodity office faces headwinds: Class B and C office buildings without significant renovation will continue to struggle for tenants. Some may ultimately be candidates for conversion to other uses or demolition.
Bottom Line
The flight to quality has fundamentally reshaped Denver’s office market, creating distinct investment opportunities depending on risk tolerance and capital availability. Prime office buildings with 6.7% vacancy represent relative safe havens in a challenged sector, while commodity office faces an uncertain future. For investors, the key is matching strategy to the realities of this bifurcated market rather than treating office as a monolithic asset class.
About SVN Denver Commercial
SVN Denver Commercial helps investors identify prime office opportunities and navigate the flight-to-quality trend. Contact us to discuss investment strategies for Denver’s evolving office market.