Vacancy Declines in Denver's Retail Sector for First Time in Five Quarters
Overall, retail in Denver is in a strong position entering 2026, with vacancy finally compressing, coupled with demand returning to positive territory.
The vacancy rate in the market declined by 20 basis points in the fourth quarter compared with the previous three months to 4.7 percent, according to a report from Colliers. While the rate was up by 50 basis points year-over-year, the trend represents a notable shift, as vacancy declined for the first time in five quarters.
"Vacancy declined across nearly all submarkets in Q4, reflecting improving occupancy conditions throughout much of the metro," Colliers explained.
"The four largest submarkets by inventory; Northeast, Northwest, South, and West; together accounting for nearly 52% of total retail square footage, recorded a combined decline in vacancy of approximately 10 basis points."
Another important element in the fourth quarter was net absorption returning to positive territory, at 342,966 square feet compared with -198,302 square feet at the end of 2024. Leasing activity in total exceeded three million square feet. Tenant Total Floors landed the largest lease of the fourth quarter, with its 53,414 square foot signing in the Central submarket. It was followed by Sky Zone and Denver Health & Hospital Authority, which signed for 26,916 and 14,739 square feet, respectively.
Sales were also solid for the full year, coming in at $1.33 billion, up slightly from $1.28 billion posted in 2024.
Rents were up by 2.2 percent quarter-over-quarter in the fourth quarter to $19.58 per square foot, compared with the $18.81 per square foot posted at the end of 2024.
Deliveries are down dramatically, with just 88,500 square feet of product hitting the market in the fourth quarter versus 442,508 square feet posted a year ago. However, construction surged from 442,508 square feet to 791,930 square feet.
"Denver's retail market closed 2025 on stronger footing, as improving fundamentals signaled a sector that is beginning to turn a corner," Colliers said.
"Together, these trends point to a retail market that is stabilizing and entering 2026 with growing momentum and a more balanced supply-demand outlook."
Source: GlobeSt/ALM