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.
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.
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.
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.
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.
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.
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:
This combination has created a supply-constrained environment where retailers are competing for a shrinking pool of available space, intensifying competition in prime locations.
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:
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.
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:
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.
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.
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.
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:
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.
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:
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.
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:
Sublease rates remain significantly lower than direct office leases, with:
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.
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:
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.
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.
Denver’s hotel industry is entering a significant growth phase, with thousands of new rooms in various stages of development.
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.
The majority of Denver’s new hotel development is concentrated in two key areas:
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:
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.
One of the most notable hotel projects under development is Denver’s largest luxury-class hotel in years—the Virgin Hotel:
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:
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.
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:
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.
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.
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.
While Denver’s multifamily market remains tenant-favorable for now, landlords will benefit from a more supply-constrained environment in the years ahead.
Denver’s retail market continues to operate at historically low availability levels, and this trend is expected to persist in 2025.
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.
Denver’s office market remains bifurcated, with downtown Denver struggling, while Cherry Creek and other key submarkets remain resilient.
While major challenges remain, select submarkets will continue to see demand, especially in premium, well-located office buildings.
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.
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.
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:
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.