Denver’s office market has started to improve after years of rising vacancies following the pandemic. 

The rate of empty office real estate in the metro Denver area fell to 28.7%, down by 20 basis points compared to the first quarter of the year, according to a new report from commercial real estate firm CBRE. The vacancy rate in downtown Denver also fell 20 basis points down to 38.6%.

It was the “most encouraging quarter post-pandemic,” according to the report released Thursday.

The real estate firm said vacancy rates in Denver may have reached their ceiling. 

There are several trends suggesting a turnaround. 

There’s been a wide push to get rid of empty office real estate throughout Denver for other uses like housing. Downtown has about 12 million square feet of vacant office space, but more than 2 million square feet of mostly vacant offices are expected to no longer be used as offices within the next 12 to 18 months, the report said. 

One of the most ambitious plans comes from The Luzzatto Co., which bought 621 and 633 17th St. and the Denver Energy Center at steep discounts to convert the old office towers into more than 1,200 units of housing in total. 

There was another major deal last month as the University of Colorado Denver closed on a struggling office for $29.75 million in a prominent spot next to 16th Street and Skyline Park. While some of the 500,000-square-foot complex may still be used for offices, the university is also eyeing converting a portion of it for campus life.

Leasing activity is also heating up.

The measurement tracking the difference between office real estate being leased vs. vacated has also been consistently better over the last year. 

Total net absorption has been positive for two out of the last three quarters, the report said. 

If absorption is positive, it means more companies are leasing office space than vacating. If it’s negative, it’s a signal that more businesses are shrinking or leaving their spaces. 

Denver saw a positive net absorption of 179,000 square feet in the second quarter, compared to negative 258,000 square feet in the first quarter. 

Sometimes absorption can be heavily affected by major companies moving in or out of their space, but CBRE said this positive figure is notable because it wasn’t driven by big moves — but rather by a growing number of small and mid-size companies making commitments. 

The most leasing activity in Q2 was happening downtown, the report said, which recorded 66,000 square feet of positive absorption.

Even though Schlumberger left a 51,000-square-foot office in the Denver Energy Center on 16th Street and Broadway, several smaller move-ins across downtown made up the difference. The report cited Industrious moving into The Lab at 17th and Platte Street, Merrick and Co. leasing from Lincoln Crossing Tower I and Intrepid Potash moving into Republic Plaza.

While trends are improving, they’re still not where they used to be before the pandemic.

Overall absorption in the Denver metro area through all of 2026 is still negative at 79,000 square feet, but CBRE said it’s a stark difference from the same point last year when absorption was a negative 1.8 million square feet.