Office buildings in downtown Denver continue to empty out.
The vacancy rate in the area hit 36.8 percent in the second quarter, according to CBRE, a real estate services company. The broader Denver metro region — which includes neighborhoods like RiNo as well as the suburbs and Boulder — is faring slightly better, with a 27 percent vacancy rate, CBRE data show.
Headwinds are building for Denver’s office landlords even with more people returning to the office as companies ratchet back on remote work. Many companies are adopting hybrid work policies. That’s creating some activity as plans firm up, but not enough to fill up all the empty space.
“Some companies are still fine-tuning their hybrid work strategies, which will support office demand, albeit on a smaller scale than in recent years,” CBRE analysts wrote in a recent report.
New leases slowed to a trickle, with 1.1 million square feet leased out in the second quarter. That’s nearly 40 percent less than the same time last year, the data show.
Landlords are increasingly giving up on older buildings that can’t find tenants. The pace of demolitions and conversions of dated properties is starting to outpace new construction, according to CBRE. The trend is expected to accelerate as more property owners face debt burdens they can’t pay off.
There are some bright spots. Cherry Creek is building new office properties and luring companies looking for modern, high-end space, according to CBRE.
