The consensus was clear: 2025 was the floor. 2026 is a recovery year. And 2027 is shaping up to be a “banner” year.
I left the event agreeing with that read. But I also left with a sharper conviction about something I have believed for a while: this recovery is not going to lift all boats. The Denver office market is bifurcating, and the gap between the buildings that win and the ones that struggle is getting wider by the quarter. If you are a business owner leasing or considering purchasing office space, understanding which side of that line your space sits on matters more right now than almost anything else.
What the Brokers Are Actually Seeing on the Ground
The office broker panel was one of the more honest and grounded conversations I have been in this year. Panelists from CBRE, Newmark, Colliers, JLL, and Cresa shared a consistent message: tenant move-outs are slowing, leasing activity is picking up, and the aerospace and defense sectors are driving real demand in the metro area.
Aerospace was described as the current darling of the tenant market. Demand from that sector has grown dramatically, with activity reported up roughly 3.5 times in recent years. Defense, space technology, and clean energy were cited as the industries most likely to fuel sustained demand in Denver and Boulder going forward. That is a meaningful shift from the tech-heavy demand that defined the pre-pandemic cycle.
The flight-to-quality trend everyone has been talking about for three years is real, but the panelists added an important nuance. It is not just about trophy buildings anymore. Tenants are moving toward walkable amenities, quality finishes, and environments that genuinely support getting people back in the office. A well-positioned Class B building in the right location with the right amenities can absolutely compete in this environment. A Class A building in an isolated suburban location with outdated common areas is a harder sell regardless of its star rating.
The data backs this up. CoStar shows Cherry Creek vacancy sitting at just 5.3%, with 130,000 square feet of positive net absorption over the past 12 months. Average asking rents in Cherry Creek are running $43.05 per square foot, second highest in the metro, and have grown 8% since the start of the pandemic for buildings delivered in the last five years. That submarket is genuinely landlord-favorable right now, which is rare in Denver.
Compare that to the CBD, where vacancy is over 32% and more than 3.8 million square feet has been vacated since the start of 2020. Move-outs in the urban core have slowed, with roughly 200,000 square feet of negative net absorption in the past year compared to much steeper declines in prior years. That is progress. But downtown Denver still has meaningful challenges around vibrancy, safety perception, and the low-energy feel of upper downtown that the panelists acknowledged directly.
One of the more candid observations from the broker panel was this: Colorado is losing its reputation as a business-friendly market. That is creating friction around employer engagement and return-to-office mandates. AI legislation, cost of living, and governance concerns were all cited as headwinds. On a more positive note, the Women's Soccer team arriving, the Denver Bronco’s BurnhamYards redevelopment, and broader quality-of-life improvements were mentioned as forces that could help attract people back downtown over time.
Remote employees turning over at roughly 80% compared to in-office employees was cited as a growing awareness point for business owners. The panelists noted that employers who create great office environments are increasingly using that as a competitive advantage in recruiting and retention, not just a nice-to-have.
What the Investment Brokers Are Telling Us About Where Denver Stands
The investment broker panel was equally direct. The word that came up more than once to describe Denver's current standing was bifurcated. One panelist noted that Denver went from a top-five institutional investment market to a bottom-five market in just a few years. That is a significant fall, and it is not something that reverses overnight.
Institutional capital has essentially stepped aside. CoStar confirms this: institutional investors and REITs, which historically accounted for roughly 35% of annual acquisition activity, represented only about 20% of buyer activity over the past year. Private equity and owner-occupiers have filled some of that gap, but the institutional money is watching and waiting.
What would bring them back? The answer given was straightforward: three quarters of positive absorption in the CBD. That is the signal the big money is waiting for before re-engaging seriously. We are not there yet, but the trajectory is improving.
In the meantime, two groups are active and buying. First, opportunistic investors who are acquiring deeply discounted assets and repositioning them. CoStar data shows the average office property traded at $210 per square foot over the past year, down from a peak of $257 per square foot in mid-2021. Some distressed suburban properties have sold at 50% or more below their last purchase price. Second, owner-users and private investors who are making calculated moves in anticipation of the recovery.
SE Denver and Boulder were specifically called out as submarkets likely to produce strong buying opportunities in the coming years. The “Deep Tech” corridor connecting Denver with Boulder, along with defense and clean energy demand, could meaningfully reshape demand in those areas.
The investment brokers also noted that buyer activity in 2026 is running 20 to 25% above 2025 levels, and significantly better than 2024. Pricing is moving up, the number of bidders is improving, and significant deal volume is expected to hit the market in the second half of this year. These are real signs of momentum, even if the headline vacancy number has not yet moved dramatically.
The Development Reality: No New Downtown Office for 7 to 10 Years
This was the single most important practical takeaway from the developer and investor panel, and it deserves a full explanation because it has direct implications for tenants and owner-users alike.
New office construction in Denver has essentially stopped. CoStar data shows only about 1.1 million square feet currently under construction across the entire metro, representing just 0.6% of total inventory. That compares to a pre-pandemic five-year average of 3.5 million square feet under construction at any given time. The number is small, and the vast majority of what is being built is already pre-leased or purpose-built for a specific occupant.
The reason is simple math. Downtown construction costs are running approximately $750 to $850 per square foot. Cherry Creek is around $1,000 per square foot. Southeast Denver comes in at roughly $600 to $625 per square foot. At those cost levels, developers need a 9 to 10% return to make new construction pencil. Given current rental rates and vacancy levels, that is not achievable on a speculative basis. Full recourse lending requirements are back, making most developers pause their development efforts.
The panelists' conclusion was direct: do not expect new office construction in downtown Denver for 7 to 10 years. The CBD is unlikely to see meaningful ground-up development until vacancy comes down substantially, rents rise, and construction costs moderate. Even then, lenders will require significant pre-leasing before they commit.
The exception is owner-user development in the suburbs. If a business owner controls the economics of the entire building, the math can work differently. A company that wants to build for their employees and their brand, and is willing to make a long-term commitment, has options in markets like SE Denver and select suburban corridors. Targeted build-to-suit opportunities were specifically mentioned as a viable path for the right buyer.
For tenants, the implication is significant. The pipeline of new first-generation space is drying up. Quality options in strong locations are becoming more scarce. If you are planning to lease new or better space in the next few years, the window for maximum tenant leverage is open now and is likely shorter than most business owners realize.
What This Means for Business Owners Making Real Estate Decisions
Here is how I translate everything I heard today into practical guidance for the business owners I work with.
If you are in desirable space with strong amenities, a good location, and a landlord who has both maintained the building and who is well capitalized, then consider yourself fortunate. The market remains tenant-favorable at the macro level, and concessions including free rent at approximately one month per year of lease term and realistic tenant improvement allowances are still available. CoStar also notes that tenants can get roughly a 30% discount on built-out sublease space relative to direct space. That kind of flexibility will not last indefinitely.
If you are in aging, poorly located space, now is the time to seriously evaluate your options. The gap between that space and quality alternatives is widening, not narrowing. Your ability to attract and retain employees is directly tied to the quality of your work environment, and the data on remote employee turnover makes that case compellingly.
If you are considering ownership, the opportunity window in certain submarkets is real. Distressed assets in well-located suburban areas are trading at meaningful discounts. Owner-users who buy well today and can hold through the remainder of the recovery cycle are positioning themselves for significant upside. Working with an experienced advisor who understands financial analysis, timing, and negotiation dynamics is essential in this environment.
If your lease expires in the next 12 to 18 months, you should already be evaluating your options. Starting early is not just advice. In this market, it is the difference between having real leverage and being pushed into a renewal on the landlord's terms because time ran out.
The Final Thought
Denver's office market is recovering. The data supports it, the practitioners in the room today believe it, and the trajectory of activity is moving in the right direction. But this recovery has a clear theme: quality and location determine who benefits.
The buildings that win are well-located, well-maintained, and surrounded by the amenities that make people want to show up. The buildings that struggle are aging, isolated, and asking tenants to settle. The gap between those two groups is going to grow as the recovery takes hold and the supply pipeline continues to shrink.
If you are a business owner with a real estate decision in front of you, this is the moment to get informed, get strategic, and move with intention. The market is moving. The question is whether you are positioned to take advantage of it.
A sincere thank you to the Colorado Real Estate Journal for hosting today's Office Summit. It was an educational and informative event that brought together some of the best minds in Denver commercial real estate.
Sources: Colorado Real Estate Journal Office Summit, Denver, May 2026. CoStar Denver Office Market Report, prepared by Justin G. Rayburn, Fountainhead Commercial, May 5, 2026.
