Key Takeaways:

• Multifamily Market: Denver experienced its first annual rent decline since the Great Recession, with a 2.7% decrease in 2024. However, with new supply decreasing in 2025, rents are expected to rebound.
• Retail Market: Retail space availability remains near historic lows at approximately 4.7%, leading to increased competition among tenants. Experiential retailers, such as pickleball clubs, are expanding rapidly.
• Office Market: The office vacancy rate in Denver stands at 17.2%, with new construction at its lowest levels since 2010. Revitalization efforts, including proposed office-to-residential conversions, aim to address these challenges.
• Hospitality Market: Denver ranks fourth among top U.S. hotel markets for new supply, with 6,500 new rooms planned across 43 properties over the next two years. The majority of this new supply is concentrated in Downtown and Eastern Denver.

As 2025 begins, Denver's commercial real estate market is undergoing a significant transition. The past year saw major shifts across key sectors, with the multifamily market experiencing its first annual rent decline since the Great Recession, the retail sector facing record-low availability, and the office market continuing to struggle with high vacancy rates. Meanwhile, the hospitality sector is bracing for a wave of new hotel openings, which could reshape Denver’s lodging landscape.

These changes stem from a combination of economic forces, supply-demand imbalances, and evolving consumer preferences. High interest rates and construction costs have slowed new developments, while demand across sectors remains uneven. The multifamily market, for example, has seen strong renter demand, but an unprecedented level of new supply has driven down rents. Retail space remains scarce due to limited construction, and office landlords continue to grapple with vacancies stemming from hybrid work trends.

This report examines the multifamily market in depth, highlighting the current landscape of rent trends, supply-demand dynamics, and Denver’s position within the national rental market.

Multifamily Market: A Shift Towards Stability

Rent Trends and Vacancy Rates

Denver’s multifamily market saw a notable shift in 2024, as apartment rents recorded their first annual decline (-2.7%) since the Great Recession. This drop was largely driven by an oversupply of new units hitting the market, forcing landlords to offer concessions and reduce rents to attract tenants.

At its peak, the vacancy rate hit 11.1%—the highest recorded in Denver's history. The surge in vacancies was fueled by the completion of 18,400 new apartment units in 2024, a record-breaking number that far outpaced demand. While rental declines moderated toward the end of the year, with December rents falling just 0.2%, the year-over-year dip signals a cooling market.

Looking ahead, however, conditions are expected to improve for landlords. With fewer new developments in the pipeline—just 8,500 units slated for completion in 2025—vacancy rates should begin to stabilize, and rental growth is likely to return. By 2026, the supply pipeline is expected to shrink even further, setting the stage for a more balanced market.

Supply and Demand Dynamics

Despite declining rents, demand for apartments in Denver remained robust throughout 2024. Net absorption—the difference between units rented and vacated—exceeded 9,000 units, marking the highest annual total since 2021. This level of absorption surpassed the 10-year average of 8,000 units, reinforcing that demand for rental housing remains strong.

However, this demand was unable to keep pace with the surge in new supply. The introduction of 18,400 units last year created a temporary oversupply, leading to downward pressure on rents. With deliveries set to drop by more than 50% in 2025, landlords may regain some pricing power, especially in highly desirable submarkets.

By 2026, projections indicate that new deliveries will decline further to 5,800 units. If demand remains stable, this could help tighten the rental market, potentially reversing the rent declines seen in 2024.

National Multifamily Perspective

Denver’s rent struggles mirror broader trends in the national multifamily market. Across the U.S., rent growth slowed to just 1% at the end of 2024, continuing a downward trajectory from the highs of 2021 and 2022 when annual increases exceeded 9.5%.

A key factor in this slowdown has been a national oversupply of apartments. Since early 2021, new deliveries have outpaced tenant move-ins, creating a persistent supply-demand gap. However, this gap began narrowing in late 2024, with the final quarter seeing the smallest disparity between new supply and demand in three years.

Regional differences remain stark. The Midwest has emerged as the strongest-performing region for rent growth, driven by limited new supply. Cities like Detroit (+3.2%), Kansas City (+3.0%), and Cleveland (+2.8%) all saw rents rise significantly in Q4 2024. Meanwhile, Sun Belt markets, including Austin (-4.8%) and Denver (-2.7%), led the country in rent declines due to overbuilding.

Nationally, vacancy rates hovered around 8% by the end of the year, a relatively stable figure despite record-high unit deliveries. Analysts anticipate that as the supply pipeline slows, rent growth will begin to recover in select markets by mid-to-late 2025.

Multifamily Conclusion

Denver’s multifamily market is in a period of transition. While 2024 saw rent declines and rising vacancies, the city’s strong underlying demand suggests that conditions will stabilize as new supply slows. By 2025, landlords may begin regaining pricing power, and by 2026, the market could shift back in their favor.

However, Denver’s performance within the national landscape remains closely tied to supply-side trends. If new developments continue at a measured pace, the city could see rental growth return in the years ahead. In the meantime, renters will likely continue benefiting from a tenant-favorable market with competitive pricing and increased incentives from landlords.

Retail Market: Low Availability Driving Competition

Denver’s retail market is entering 2025 with a historically tight supply, limited new construction, and sustained tenant demand. While other commercial sectors have faced headwinds, retail has remained resilient, with availability near record lows and leasing activity remaining strong. However, retail rent growth has been sluggish, reflecting a mismatch between available space and tenant needs.

Limited New Construction and High Demand

Retail space in Denver is becoming increasingly difficult to secure. Availability rates have hovered below 5% since late 2022, and as of December 2024, they stand at approximately 4.7%, among the lowest in the past decade. This scarcity is primarily due to the limited construction pipeline, as only 188,000 square feet of new retail space is currently under construction, representing a mere 0.1% of the market’s total inventory.

Several factors have contributed to this slowdown in retail development, including:

• High borrowing costs: Rising interest rates have made it more expensive for developers to finance new projects.
• Tighter lending standards: Banks and financial institutions have become more selective, leading to fewer projects receiving funding.
• Rising construction costs: Increased costs for labor and materials have made new development less feasible, particularly for speculative projects.

This combination has created a supply-constrained environment where retailers are competing for a shrinking pool of available space, intensifying competition in prime locations.

Tenant Expansion and Experiential Retail Growth

Despite the limited availability, leasing activity in Denver’s retail sector remained strong in 2024, with approximately 3 million square feet of retail space leased throughout the year. This demand is expected to continue into 2025, driven largely by experiential retail concepts and brands seeking to capitalize on changing consumer behavior.

One of the most notable trends has been the surge in pickleball-themed retail and entertainment spaces, with several operators securing major leases in the Denver area. For example:

• Epic Pickleball Club leased 26,462 square feet in Plaza at Highlands Ranch and 35,000 square feet in Bowles Village Center in Littleton.
• The Picklr, a Utah-based brand offering year-round pickleball facilities, took 30,000 square feet in Thornton Town Center.
• Mile Hi Pickleball leased 35,000 square feet at Havana 37 in Denver.

The rise of experiential retail—ranging from pickleball and indoor sports centers to immersive entertainment venues—reflects a broader shift in consumer spending. With shoppers prioritizing experiences over traditional goods, landlords are increasingly favoring tenants that offer interactive or service-oriented concepts.

Additionally, ground-floor retail spaces in mixed-use developments continue to attract strong interest, particularly in high-density neighborhoods where residential and office demand fuels consistent foot traffic. As Denver's multifamily market remains active, these retail spaces will likely see further expansion in 2025.

Variability in Rental Performance

While demand remains high and availability is low, retail rent growth in Denver has been relatively modest, increasing just 2.7% in 2024. Given the tight market fundamentals, this moderate growth is somewhat surprising. However, several factors are limiting overall rental performance:

• A concentration of obsolete or stagnant retail spaces: Many of the available spaces are in outdated properties, making it difficult for landlords to push rental rates higher.
• Downtown Denver’s struggles with vacant storefronts: While suburban retail centers remain strong, downtown Denver continues to see vacancies, particularly in areas affected by office market weakness. This has dragged down market-level performance.

That said, certain submarkets are outperforming the broader market. One of the strongest areas is Cherry Creek, where retailers have benefited from the neighborhood’s high-end residential growth and strong foot traffic.

• Cherry Creek retail rents have reached $45 per square foot, nearly double the Denver market average, making it one of the most expensive retail submarkets in the city.
• In contrast, downtown Denver continues to struggle with lingering vacancies, particularly in storefronts that rely on office worker foot traffic.

Retail Market Conclusion

Denver’s retail market is highly competitive, with low availability and strong tenant demand setting the tone for 2025. However, growth in rental rates has been uneven, with strong performance in areas like Cherry Creek but challenges in downtown Denver.

As experiential retail and mixed-use developments continue to shape the market, landlords who can offer well-located, modern retail spaces will benefit the most from the ongoing demand. Meanwhile, retailers will need to move quickly to secure space in a market where new construction remains extremely limited.

The next year will be one of continued tight conditions for retail leasing, with selective rental growth based on location and property quality. Denver’s retail market remains a landlord-favorable environment, but tenants willing to invest in experience-driven retail concepts will have the best opportunity to thrive.

Office Market: Searching for Stability Amid High Vacancy

Denver’s office market remains in a period of transition as high vacancy rates, shifting tenant preferences, and declining new construction reshape the landscape. While demand for office space has remained weak, there are early signs of stabilization, particularly in select submarkets like Cherry Creek, where occupancy rates remain healthier than the downtown core.

Efforts to revitalize downtown Denver, combined with a slowdown in new office construction, could help reduce supply-side pressures in the coming years. Meanwhile, the sublease market is contracting, potentially signaling a bottoming-out phase for office vacancies.

Rising Vacancy and Low Construction Activity

Denver continues to grapple with one of the highest office vacancy rates in the country, with vacancies sitting at 17.2% as of the end of 2024. This figure reflects the ongoing challenges faced by urban office markets across the U.S., particularly in cities with a strong presence of remote and hybrid workers.

While office demand has begun to refocus on job growth rather than attendance rates, the market remains imbalanced. Many businesses are downsizing their footprints, leading to an oversupply of office space.

Compounding these challenges, new office construction in Denver has dropped to its lowest level since 2010. As of 2024, less than 700,000 square feet of new office space is under construction, as developers remain cautious about future demand.

Key reasons for this pullback include:

• Weakened tenant demand: Companies continue to reassess their office needs, often opting for smaller footprints or shifting toward hybrid work models.
• Difficulty securing financing: Higher interest rates and tighter lending standards have made it harder for developers to fund speculative office projects.
• Market oversupply concerns: With vacancy rates already high, new developments risk adding further downward pressure on rents.

Despite these headwinds, the slowdown in construction could be a positive sign—by restricting new supply, it may help stabilize Denver’s office market over time.

Downtown Revitalization Efforts

One of the most significant developments in Denver’s office market heading into 2025 is the city’s plan to revitalize its struggling downtown core.

In response to rising office vacancies and economic challenges, Denver is expanding its Downtown Development Authority (DDA) to include all of downtown. This expansion would redirect $500 million in existing property and sales tax revenue into economic development initiatives aimed at transforming the area.

Key priorities for this revitalization include:

• Office-to-residential conversions: Denver officials and developers are exploring ways to repurpose underutilized office buildings into housing, which could help reduce vacancy rates while increasing downtown foot traffic.
• Public safety and infrastructure improvements: The initiative aims to address concerns around security, cleanliness, and accessibility to make downtown a more attractive destination for businesses and residents.
• Business incentives and economic growth: By investing in downtown’s commercial ecosystem, Denver hopes to attract more companies to set up headquarters or regional offices in the area.

Mayor Mike Johnston has emphasized the need for more housing options, particularly in underutilized office buildings. While converting offices to residential space is a complex and expensive process, successful projects could help reshape Denver’s downtown economy.

Sublease Market Trends

One of the more promising signs in Denver’s office market is the declining amount of available sublease space. At its peak in early 2023, sublease availability hit 7 million square feet, but as of late 2024, that figure has fallen to 5.5 million square feet.

This drop can be attributed to two key factors:

1. Increased subleasing activity: More tenants are subleasing existing space, either as a cost-saving measure or as a way to gradually expand their office presence.
2. Fewer companies adding space to the sublease market: Many firms that downsized their office footprints during the pandemic have now stabilized their operations, leading to a slowdown in new sublease listings.

Sublease rates remain significantly lower than direct office leases, with:

• Sublease rents averaging $24.04 per square foot, roughly 30% cheaper than direct office rents, which stand at $31.41 per square foot.
• This discount is attracting more cost-conscious tenants, particularly small-to-medium-sized businesses looking to secure prime office space at a lower cost.

While much of Denver’s office market continues to struggle, Cherry Creek has emerged as a bright spot. Unlike downtown Denver, Cherry Creek’s office vacancy rate has dropped to approximately 6%, as demand remains strong for high-quality office space in well-located submarkets.

Office Conclusion

Denver’s office market remains in flux, but early indicators suggest that vacancies may be approaching a peak. While weak tenant demand and limited new construction continue to weigh on the sector, the declining sublease inventory and revitalization efforts in downtown Denver offer hope for stabilization in the coming years.

Key takeaways for 2025:

• Office vacancies remain high (17.2%) but could begin to level off as supply growth slows.
• Denver’s downtown revitalization plan aims to attract businesses and residents with $500M in investment.
• Sublease space is shrinking, suggesting that tenants are beginning to re-engage with office leasing.
• Cherry Creek remains one of the strongest-performing office submarkets, with a significantly lower vacancy rate (~6%).

Moving forward, the success of Denver’s office recovery will depend on how well it can adapt to new workplace trends. If the city’s revitalization efforts and office-to-residential conversions gain traction, Denver’s office market could see meaningful improvement over the next few years.

Hospitality Market: A Surge in New Hotel Supply

Denver’s hospitality sector is on the brink of a major expansion, with a wave of new hotels set to reshape the city’s lodging landscape over the next two years. Despite economic uncertainty and higher borrowing costs, developers remain bullish on Denver’s long-term potential as a hospitality hub.

With 6,500 new rooms across 43 properties in the pipeline, Denver now ranks 4th among the top 25 U.S. hotel markets for new supply. However, the concentration of new projects in downtown and eastern Denver—combined with the possibility of financing delays—could lead to market imbalances in the near term.

Large Pipeline of Hotel Developments

Denver’s hotel industry is entering a significant growth phase, with thousands of new rooms in various stages of development.

• 6,500 new rooms planned across 43 hotels over the next two years.
• Denver ranks 4th among the top 25 U.S. hotel markets in new hotel supply.
• Marriott-branded hotels dominate the pipeline, accounting for:
  • 50% of under-construction rooms
  • 70% of rooms in final planning

The surge in development reflects strong long-term investor confidence in Denver’s tourism and business travel sectors. With Denver International Airport ranking among the busiest in the country and the city’s reputation as a convention and leisure destination growing, hoteliers are positioning themselves for future demand recovery.

However, the sheer number of new rooms entering the market in a short timeframe raises questions about whether demand can absorb this supply without impacting room rates or occupancy levels.

Market Concentration and Delays

The majority of Denver’s new hotel development is concentrated in two key areas:

• Downtown Denver
• Eastern Denver (near Denver International Airport)

In fact, 70% of the total pipeline is clustered in these two submarkets, reflecting continued confidence in the strength of these locations for business and leisure travelers.

However, there are concerns that some projects may experience delays due to financing challenges:

• Rising interest rates and tightened lending conditions could push back hotel completion dates.
• Some developers are reassessing project timelines, waiting for better borrowing conditions or improved market fundamentals.

Additionally, most of the new hotels cater to higher-end segments, with a focus on extended-stay products and upscale brands. While luxury and high-end hotels are expected to perform well in high-demand areas like downtown, an overconcentration in this segment could create short-term pricing pressures as new rooms come online.

Key Developments and Mixed-Use Integration

One of the most notable hotel projects under development is Denver’s largest luxury-class hotel in years—the Virgin Hotel:

• 241-room luxury-class hotel, expected to open in Q3 2026.
• Located in Fox Park, a major 41-acre mixed-use development near Interstates 70 and 25.
• Will feature an 8,000-square-foot spa and a 2,900-square-foot fitness center.

The Fox Park project, where the Virgin Hotel will be located, is one of Denver’s most ambitious mixed-use developments to date. The first phase of Fox Park will include:

• 1 million square feet of office space
• 100,000 square feet of retail
• 1,100 residential units
• World Trade Center Denver, a 250,000-square-foot office complex repurposed from the former Denver Post Printing facility

The integration of hospitality with office, residential, and retail components at Fox Park aligns with broader trends in urban real estate development, where mixed-use environments drive sustained foot traffic and demand.

Hospitality Conclusion

Denver’s hospitality sector is poised for significant expansion in 2025 and beyond, but the pace of new supply raises concerns about short-term oversaturation. While demand for hotels remains strong in key locations, the success of these projects will depend on economic conditions, financing availability, and long-term visitor trends.

Key takeaways for 2025:

• 6,500 new rooms across 43 properties make Denver a top market for hotel development.
• 70% of new supply is concentrated in Downtown and Eastern Denver, potentially creating localized competition.
• Financing delays could impact hotel openings, with developers reassessing project viability.
• Luxury and extended-stay hotels dominate the pipeline, reflecting investor confidence in high-end travel demand.
• Mixed-use integration, like the Fox Park project, is shaping the next generation of hospitality developments in Denver.

Moving forward, market absorption will be critical in determining how well Denver’s hotel sector adapts to the wave of new supply. If demand keeps pace, the city could solidify its position as a premier hospitality destination. If not, pricing pressures and occupancy challenges may emerge in the short term.

2025 Outlook: Where is Denver’s Market Heading?

As Denver enters 2025, its commercial real estate landscape is evolving across all sectors. While multifamily and retail markets remain strong, the office and hospitality sectors face continued uncertainty. A key theme for 2025 will be rebalancing supply and demand, with some sectors benefiting from a slowdown in new development, while others must adapt to structural shifts in how people live, work, and travel.

Multifamily: Gradual Rent Recovery Expected

After record-high deliveries in 2024 led to rent declines and rising vacancy rates, the multifamily sector is expected to stabilize in 2025 as supply growth slows.

• With only 8,500 new units projected to enter the market in 2025—less than half of 2024’s supply—the market is likely to move toward better equilibrium.
• Vacancy rates should improve as absorption catches up, reducing pressure on landlords to offer concessions.
• Rent declines will likely moderate, with the potential for positive rent growth returning in 2026 as the new supply pipeline contracts further.

While Denver’s multifamily market remains tenant-favorable for now, landlords will benefit from a more supply-constrained environment in the years ahead.

Retail: Tight Market Conditions Persist

Denver’s retail market continues to operate at historically low availability levels, and this trend is expected to persist in 2025.

• With only 188,000 square feet of new retail construction underway (just 0.1% of total inventory), new supply remains extremely limited.
• Experiential retail concepts—such as pickleball venues, entertainment centers, and interactive retail spaces—are expected to continue driving leasing activity.
• Mixed-use retail spaces will see strong demand, particularly in dense residential areas and high-traffic commercial corridors.

Retail landlords remain in a strong position, as limited availability ensures competitive leasing conditions. The biggest challenge for the sector will be finding suitable space for growing retailers, given the lack of new development.

Office: Selective Growth in Key Submarkets

Denver’s office market remains bifurcated, with downtown Denver struggling, while Cherry Creek and other key submarkets remain resilient.

• Cherry Creek continues to outperform, with vacancy rates below 6%, compared to 17.2% citywide. The area benefits from high-end office demand, a strong retail presence, and a live-work-play environment.
• Downtown Denver faces ongoing challenges, but revitalization efforts—including a $500 million expansion of the Downtown Development Authority (DDA)—could help reposition the urban core.
• The declining sublease inventory suggests that Denver’s office market may be nearing a bottom, as fewer companies are offloading excess space.

While major challenges remain, select submarkets will continue to see demand, especially in premium, well-located office buildings.

Hospitality: A Strong Development Pipeline with Uncertain Timing

Denver’s hospitality sector is in a high-growth phase, but the timing of new supply entering the market will be critical in determining overall performance.

• With 6,500 new hotel rooms across 43 properties in the pipeline, Denver is a leading market for hotel development.
• 70% of new supply is concentrated in Downtown and Eastern Denver, which could lead to localized competition and short-term pricing pressures.
• The success of these projects will depend on macroeconomic factors, including interest rates, consumer confidence, and business travel recovery.

If demand keeps pace with supply, Denver could strengthen its position as a key hospitality market. However, an oversupply of rooms in the near term could impact occupancy and pricing.

Conclusion

Denver’s commercial real estate market is in a transition phase, with multifamily and retail sectors showing strength, while office and hospitality face structural challenges.

Key themes shaping 2025 include:

• Multifamily is stabilizing, with rent declines likely to moderate as new supply slows.
• Retail remains highly competitive, with limited new construction and strong demand for experiential and mixed-use spaces.
• The office market is still struggling but select submarkets like Cherry Creek continue to perform well.
• The hospitality sector is expanding rapidly, though new supply could temporarily impact pricing and occupancy.

Overall, 2025 is poised to be a year of recalibration, with opportunities emerging in specific submarkets. Investors and developers will need to navigate shifting market conditions carefully, identifying where demand is strongest and which sectors are best positioned for long-term growth.