Denver’s office market is showing signs of improvement as leasing activity reaches its highest level since early 2022 and tenants begin committing to larger, longer leases.
Office leasing totaled 1.7 million square feet in Q2, up 30% year over year, while tenants absorbed about 120,000 square feet more than they vacated, according to CBRE and Cushman & Wakefield.
The bigger change may be happening in the deals themselves. Brokers say tenants are increasingly pursuing five-, 10- and 15-year leases after years of shorter commitments and smaller footprints, according to Bisnow.
Recent deals include UMB Bank’s 55,000-square-foot prelease in Cherry Creek North, SM Energy’s 50,000-square-foot expansion at 1700 Lincoln St. and Alterra Mountain Co.’s nearly 65,000-square-foot, 12-year lease at 101 W. Colfax Ave.
Vacancy Still Near 30%
Despite the stronger leasing activity, Denver’s office vacancy remains between 26.6% and 28.7%. Some major employers, including Optiv Security and Palantir Technologies, are also relocating their headquarters out of state.
Landlords are competing for tenants with increasingly generous concessions. Tenant improvement allowances have climbed from roughly $90-$100 per square foot to $125-$150 per square foot, while some deals include multiple years of free rent and up to three years of free parking.
The leasing momentum could take time to materially reduce vacancy. Brokers say the market still has significant space to absorb, meaning tenants are likely to retain considerable negotiating power even as larger, longer-term deals become more common.
