Denver Downtown Office Figures Q4 2025

Downtown’s market fundamentals trended closer to stabilization to end 2025 with vacancy remaining nearly flat and net absorption only slightly negative. Expectations of a gradual demand recovery in 2026 combined with the pause in new development and removal of several largely vacant buildings planned for conversion will allow for vacancy rates to further stabilize. Total vacancy rose just 10 basis points in Q4 2025 to 38.2%. Although net absorption remained negative at 53,000 sq. ft., it represented a marked improvement compared to the prior quarter’s total and the recent eight-quarter average of negative 172,000 sq. ft.

Sublease availability declined for the seventh straight quarter and was down 30.0% on the year, signaling increased company alignment on in-office attendance and space needs. At 1.5 million sq. ft., rolling four-quarter leasing activity declined 23.2% quarter-over-quarter and 29.7% year-over-year. The average direct asking rent remained largely stable in 2025, posting a slight year-over-year decrease of 2.1% to $40.85 per sq. ft. FSG that was largely tied to the drop in Prime and Class A availability.

Investment sales totaled $391 million in 2025, a strong improvement on the $137 million recorded in 2024. Recent acquisitions and capital allocations targeting distressed assets are anticipated to fuel further activity in 2026 and drive additional office conversions. While debt pressures remain a challenge for certain landlords, they are likely to create opportunities for new ownership backed by fresh capital for building upgrades and tenant improvements.