Downtown Denver’s office vacancy rate climbed to 38.2% in Q4 2025, up 3.3 points from a year ago. If you stop reading there, it sounds like the market is falling apart.
But the real story is in the breakdown.
The Two-Tier Market
Class C space is approaching 50% vacancy — some buildings are 100% empty. Uptown, east of Broadway, is sitting at 45.3%. Meanwhile, Class A prime buildings are at 19.9%, and Cherry Creek is at 12.6%. Tenants aren’t leaving Denver. They’re upgrading.
The numbers back this up. In the first three quarters of 2025, Class A properties absorbed 4.8 million square feet of positive net absorption. Class B and C buildings posted 2.2 million square feet of negative absorption. Tenants are physically moving from one tier to the other.
Who’s Moving and Why
Ballard Spahr relocated to 1800 Larimer in August, actually downsizing their square footage to 19,000 SF despite growing their headcount. The space is designed for hybrid work and hoteling — better space, not more space. Ibotta expanded their downtown office on 16th Street. Freshworks went the other direction, exiting 44,000 SF for coworking. The Colorado Department of Labor reduced by one-third and moved to 707 17th Street.
These aren’t companies retreating from Denver. They’re investing in space that works for how people actually show up to work now.
The Structural Shift Nobody Talks About
The oil and gas sector used to occupy 35% of downtown Denver’s office space. That number is now 7%. That’s a structural shift that’s been underway for years and has opened up millions of square feet. But it’s also created the clearest two-tier market in Denver’s history: buildings that invest in tenant improvements and amenities attract tenants, and buildings that don’t sit empty.
Where the Growth Is
CBRE’s 2026 outlook projects rent growth of 1-2% metro-wide, and up to 5% in top submarkets like Cherry Creek, LoDo, Boulder, and North DTC. That growth is being driven by the flight to quality — tenants moving out of dated Class B and C space and into renovated, amenity-rich environments.
Sublease space has dropped from a peak of 2.5 million SF to 1.2 million — an early stabilization signal. New construction is limited and concentrated in Cherry Creek, which means the competitive landscape for existing building renovations is wide open.
The Conversion Play
On the conversion side, the 14-story Petroleum Building at 16th and Broadway is being converted to hotel and residential use. Several Class B and C buildings in the Southeast submarket are following suit, with three projects receiving Denver Downtown Development Authority special loans. As distressed buildings increase through 2026 due to refinancing challenges, more conversion and repositioning opportunities will emerge.
The Bottom Line
If you’re a property owner or tenant in the Denver metro, the play right now is tenant improvement. The buildings that invest in their space are the ones filling up. The ones that don’t are the ones making the vacancy headlines.
Frequently Asked Questions
What is Denver’s office vacancy rate in 2026?
Downtown Denver’s overall office vacancy reached 38.2% in Q4 2025. However, this varies significantly by class: Class A prime buildings are at 19.9%, regular Class A at 27.2%, and Cherry Creek at just 12.6%. Class C buildings are approaching 50% vacancy.
Are tenants leaving Denver’s office market?
No. Tenants are upgrading to higher-quality space. Class A properties saw 4.8 million square feet of positive absorption in the first three quarters of 2025, while Class B and C buildings lost 2.2 million square feet. Companies like Ballard Spahr and Ibotta are investing in better space, not leaving the market.
What is driving tenant improvement demand in Denver?
The two-tier market between Class A and Class B/C buildings is creating strong demand for TI work. Buildings that invest in amenities and modern buildouts attract tenants. Limited new construction means the competitive landscape for existing building renovations is wide open. CBRE projects up to 5% rent growth in top submarkets in 2026.
Sean Snyder is the owner of Snyder Construction, a Colorado Class A general contractor specializing in commercial tenant improvement and renovation. Snyder works with property owners, tenants, and architects across the Denver metro area to deliver buildouts that attract and retain quality tenants.
Sources: Colorado Sun (January 2026), CBRE 2026 Denver Market Outlook, Jones Lang LaSalle Q4 2025 Denver Office Report.
