The Denver commercial real estate market is facing one of its sharpest downturns in decades as several office buildings sell for up to 90% below previous valuations. The sustained shift to remote and hybrid work has weakened demand across the Denver office market, leaving many downtown towers under-occupied and financially distressed. Rising vacancy rates and declining rental income continue to pressure owners, contributing to a growing wave of distressed office assets across the urban core. These trends reflect broader post-pandemic CRE shifts, but Denver’s reliance on knowledge-based office employment has amplified the impact.
At the same time, elevated interest rates and tightened lending standards have made it increasingly difficult for property owners to refinance or restructure existing debt. Many Class B and C buildings, already struggling to compete with modern amenities, now face costly upgrades, higher operating expenses, and limited access to capital. This combination has accelerated office building distressed sales and contributed to a significant repricing across the Denver real estate market in 2025. As values fall closer to land pricing, more owners are either selling at steep discounts or turning over properties to lenders, deepening uncertainty in the broader commercial real estate downturn.
Despite these challenges, the current reset presents unique opportunities for seasoned CRE investors. Discounted office assets may offer substantial upside through repositioning, mixed-use redevelopment, or office-to-residential conversion strategies—especially as Denver continues to experience population growth and strong housing demand. Investors equipped with capital and long-term vision see potential in acquiring undervalued properties and transforming them to meet evolving market needs. While the immediate outlook for the downtown Denver office vacancy environment remains uncertain, this period of correction could ultimately create a stronger, more resilient commercial landscape for the future.
