Denver Commercial Office Space for Rent

Q4 2025

Denver Commercial Real Estate Market Report

Focus: Q4 2025 Market Trends

Executive Summary

The Denver commercial real estate (CRE) market is characterized by a high degree of divergence and a "soft landing" outlook, driven primarily by elevated interest rates and evolving tenant demands [1]. The market is highly bifurcated: the Industrial and Retail sectors remain fundamentally resilient due to limited supply and strong underlying demand [1], while the Office sector continues its prolonged transition due to hybrid work models [1]. Investors are becoming more selective, focusing on assets with stable cash flow and strong long-term fundamentals [1].

TenantBase Proprietary Data [20] highlights a significant disconnect between supply and active demand. In the last 90 days, Retail/Storefront activity dominated with 64.3% of all tenant deals, followed by Warehouse at 29.2%, and Office at 6.7% [20, 54].

Office Market

Market Overview

The office sector continues to face significant headwinds as hybrid work reshapes demand [1]. Flight-to-quality remains the defining theme, with high-quality, amenity-rich properties outperforming older, less adaptable buildings [1, 6].

  • Vacancy & Availability: Direct vacancy reached 19.3% in Q1 2025 [1.1], with total metro availability at 27.6% [1.1]. Total vacancy rose to 26.8% in Q1 2025 [1.4]. Downtown Denver maintains the highest total availability at 35.3% [1.1].
  • Net Absorption: The market has posted twelve consecutive quarters of negative net absorption [1.1, 10]. Net absorption for the 12 months leading up to July 2025 totaled -1.98M SF [1.1]. Q1 2025 saw negative net absorption of -338.5K SF [1.1], although Downtown was nearly stable (just -110 SF) [1.1].
  • Rental Rates: Average full-service office rent was $31.64 per SF in Q1 2025, showing a mild softening [1.1]. Downtown still commands the highest average rent at $38.20 per SF [1.1].
  • Investment & Transactions: Sales volume reached $167.5 million in Q1 2025 [1.1]. The average transaction price since the start of 2025 averaged $125 per SF [1.7].

TenantBase Activity [20]

  • Deal Volume: Office accounted for just 6.7% (23 deals) of total tenant search volume [20, 54].
  • Lease Term Preference: Demand is polarized, with tenants seeking both short and long terms [20]:
    • 3-5 Years: 8 deals.
    • Less than one year: 7 deals.
  • Size Requirements (Average SF): Requirements correlate directly with lease length [20, 68]:
    • Less than one year: 500 – 1,000 SF.
    • 5+ Years: 2,250 – 4,625 SF.

Industrial & Warehouse Market

Market Overview

The industrial and logistics sector remains resilient and is still considered an industry "darling" [2]. The high vacancy is viewed as supply digestion, not demand destruction [2.3].

  • Vacancy & Rent: Overall vacancy reached 7.9% in Q3 2025, declining 20 basis points (bps) quarter-over-quarter [2.5]. Average rental rates held steady at $8.96 – $9.00 per SF NNN through Q3 2025 [2.3].
  • Demand & Supply: Net absorption reached a significant 2.4 million SF in Q3 2025 [2.5], marking the third-highest demand level in over a decade [2.5]. Construction starts have fallen to decade lows [2.4], suggesting vacancy compression by mid-2026 [2.3].
  • Tenant Leverage: The next 6-9 months (Q4 2025 – Q2 2026) represent the peak negotiating window for tenants [2.3].

TenantBase Activity [20]

  • Deal Volume: Industrial/Warehouse accounted for 29.2% (100 deals) of total search volume [20, 54].
  • Lease Term Preference: Tenants strongly prefer short-to-mid-term leases [20, 72]:
    • 1-2 Years: 27 deals.
    • 3-5 Years: 11 deals.
  • Size Requirements (Average SF): Tenants seeking longer commitments require significantly larger space [20, 76]:
    • 1-2 Years: 1,200 – 3,938 SF.
    • 3-5 Years: 13,500 – 19,333 SF.

Retail Market

Market Overview

The retail sector remains tight and efficient, supported by stable consumer spending and minimal new construction [2]. Demand is strong for service-oriented businesses and neighborhood centers [2].

  • Vacancy & Availability: Vacancy rates hover around 4.3% to 4.4% [3.2, 3.6]. The availability rate is near a historic low at 4.8% [1.5, 3.6]. Cherry Creek continues to be a standout submarket with a very low vacancy rate of 1.4% in Q4 2024 [3.4].
  • Rental Rates: Average market asking rent reached a record high of $27.00 per SF triple net (NNN) [1.5]. Average market rents were $26.48 per SF in Q2 2025 [3.2].
  • Construction: Retail construction is minimal, accounting for just 0.2% of inventory [3.2], which severely constrains new supply and supports landlord leverage [1.5].

TenantBase Activity [20]

  • Deal Volume: Retail/Storefront activity dominated with 64.3% (220 deals) of total search volume [20, 54].
  • Lease Term Preference: Retail tenants show the greatest stability, preferring mid-term leases [20, 81]:
    • 3-5 Years: 30 deals.
    • 1-2 Years: 21 deals.
    • 2-3 Years: 20 deals.
  • Top Locations: The highest volume of interest is concentrated in Denver, with 43 deals, followed by Aurora with 18 deals [20, 99].

Sources

  1. Brady Martz: Commercial Real Estate Market Forecast: Key Trends for Q4 2025
  2. JPMorganChase: 2025 Commercial Real Estate Trends
  3. NorthPeak CRE: Denver's Real Estate Market is Positioned for a Strong 2025
  4. MMG Real Estate Advisors: 2025 Denver Forecast
  5. National Association of REALTORS®: Research and Statistics
  6. Corken + Company: Mid-Year 2025 Denver Commercial Market Update
  7. Corken + Company: July 2025 Commercial Real Estate Update: Denver Market Snapshot
  8. CommercialCafe: Construction Pipelines Remain Sluggish as Office Utilization Patterns Continue to Settle
  9. WareCRE: Denver Warehouse Market Report 2025
  10. Transwestern: Denver Market Report Q1 2025
  11. CBRE: Denver Office Figures Q3 2025
  12. Newmark: Denver Industrial Market Overview Q3 2025
  13. Cushman & Wakefield: Denver Industrial Market Report Q3 2025
  14. Savills US: Denver Q2 2025 Industrial Market Report
  15. CBRE: Denver Industrial Figures Q3 2025
  16. Lee & Associates: Denver Retail Market Q1 2025
  17. JLL: United States Retail Market Dynamics Q3 2025
  18. CBRE: 2025 Retail Rent Dynamics
  19. Matthews Real Estate Investment Services: Q2 2025 Denver Retail Market Report
  20. TenantBase Proprietary Data (Last 90 Days)

Information in this report is aggregated from various third-party sources and synthesized using artificial intelligence and other research tools. While we believe these sources to be reliable, we cannot guarantee the absolute accuracy or completeness of the data. This report is intended for informational purposes to provide market insight and should be independently verified prior to any use in a real estate transaction or legal commitment.