Colorado-Real-Estate-Journal_482724

T he downtown Denver office market looks very differ- ent now than before the pandemic. In early 2019, the downtown availability rate sat at 16.4%. Today, that figure has nearly tripled, reaching 39.9%. This sharp rise underscores just how significantly the market has shifted in just a few years. While all major U.S. cities experienced disrup- tions during the pandemic, Denver stands out. To understand why recovery has lagged, we need to look at both the broader workplace transformations that began in 2020 and the specific local factors that have amplified those changes. It is no secret that during the pandemic the office market saw a massive shift to hybrid and remote work. Almost overnight, compa- nies discovered they could oper- ate as normal without employees commuting downtown five days a week. In the years since, many large metro areas have gradu- ally seen a rebound as companies pushed return-to-office mandates and hybrid sched- ules. Some of the largest cities, like Chicago and New York, have almost regained an even stronger office culture as many of the industries in those cities rely on in-person col- laboration. Denver, however, remains an outlier. The composition of Denver’s tenant base includes a variety of industries; however, Den- ver does have a heavier reliance on tech firms compared to other mar- kets. Technology companies were early adopters of remote and hybrid work strategies and found success using these models. Tech compa- nies could now hire talent from anywhere in the world instead of from the local job pool. This made hybrid and remote structures not just a temporary fix, but a perma- nent feature of how the business operates. Tech companies embrac- ing the ability to recruit nationally were able to offer more flexibility to employees while shrinking their physical footprints. Unlike indus- tries such as finance or law, where in-person collaboration is still deep- ly tied to productivity and culture, tech firms were quicker to embrace digital workflows. This left Denver with a sizable chunk of its office market dependent on tenants who had little incentive to return down- town. Denver has also adapted to help support these hybrid and remote business models by creating a sup- ply of creative office alternatives. These include coworking spaces designed for collaboration with open layouts and shared ameni- ties. This has caused some employ- ers who no longer need traditional offices to opt for coworking spaces. Another drag on recovery down- town is the sublease market. Downtown Denver currently has 4.9 million square feet of avail- able sublease space, nearly double the amount seen in 2019. While availability has trended downward more recently, the volume remains historically elevated, creating a surge of low-cost alternatives for occupiers and putting additional pressure on landlords trying to secure new, direct deals. This trend pushes landlords to offer more concessions in a market that is already tenant favorable. At the same time, many downtown build- ings are facing growing financial distress and refinancing challenges. In this type of environment, land- lords are reluctant to cut face rents too aggressively and, instead, offer INSIDE Investors compete PAGE 6 VacantSF 0 200 K 400 K 600 K 800 K 1 M Q 222 Q 422 Q 223 Q 423 Q 224 Q 424 Q 225 ©2025 CoStarRealty Information Inc . 9/2/2025 Denver office may be moving from market dislocation to opportunistic investment September 2025 PAGE 10 PAGE 15 Bull or bear? Boulder’s office market straddles the line between optimists and skeptics Industrial momentum Resilience: Leasing and investment activity surged in the first half of 2025 Please see Deckys, Page 8 Rachael Deckys Senior research analyst, Savills New normal: Downtown Denver finds its footing