Downtown Denver's office vacancy rate climbed to 38.2% last quarter, a sharp rise from 27.2% in late 2022. This glut stems from pandemic-era leases expiring and companies like Freshworks subleasing unused space. New construction added over 1 million square feet since 2022, worsening the oversupply.

The shift reflects a structural reset in how offices are used. Firms like law firm Ballard Spahr are downsizing but upgrading to amenity-rich spaces with hybrid "hoteling" desks. This trend is more pronounced in older Class B and C buildings, some nearing 50% vacancy, while suburbs like Cherry Creek fare better at 12.6%.

Experts see early signs of stabilization, with sublease space down to 1.2 million square feet. The market's recovery depends on adapting older properties for new uses, like converting buildings to hotels or apartments. While vacancy remains high, the decision to cut staff or abandon offices has largely been made, suggesting the floor may be near.